This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

2 March 2023

ESKEN LIMITED

('Esken' or 'the Group')

Update on strategic review and pre-close trading statement

Esken, the aviation and renewables group, issues the following update on its strategic review process and trading performance ahead of the publication of its full year results for the twelve months to 28 February 2023.

Strategic review of operating businesses

The Group provides an update on the strategic review announced in November 2022. The board has been working with its advisers to review options for the operating businesses, with a view to delivering value for shareholders. 

The board has concluded that it is in the best interests of all stakeholders to secure the long-term potential of these businesses and deliver value for Esken shareholders through a managed disposal process. A sale process for Esken Renewables is currently in progress, with a number of interested parties involved in discussions. A decision has also been taken to explore a sale of the Aviation business, primarily London Southend Airport, with initial planning for this phase having commenced. A key objective will be to find the right buyer with the capital to support the growth prospects of the airport over the long term and benefit airline partners, customers and local stakeholders.

The Group continues to seek buyers for its non-core assets which had a net book value of £36m at 31 August 2022.

The net proceeds from disposals will be used firstly to pay down debt and provide liquidity to the remaining Group until the disposal programme has been completed. Esken expects to provide a fuller update on progress at the time of the announcement of the full year results.

Esken Renewables

On 2 February 2023, the Company reported that Esken Renewables' biomass plant customers had experienced unplanned outages during the winter months, reducing the total volume of waste wood supplied by Esken and the associated gate fee income. These unplanned outages have continued throughout February 2023 along with a market wide waste wood supply issue in the month which led to a short term weakening of gate fees. As a result, Esken Renewables is now expected to deliver EBITDA of circa £19m for the full year ended 28 February 2023.

Management expect that normalised plant operating levels and waste wood supply will return in FY 2024 and as of 1 March 2023, all plants are operating. As announced previously, Esken Renewables also entered into a new sub supply agreement to support the Chilton Biomass plant, replacing the supply provided by the Port Clarence processing and storage site, creating an additional £0.9m of annual recurring EBITDA from 1st April 2023. Two additional supply agreements also commenced in September 2022, supporting the total volume of waste wood supplied by Esken Renewables.

London Southend Airport and Star Handling

The outlook across the UK aviation sector for summer 2023 is increasingly positive, with many larger airports expected to be at or close to full capacity. This is expected to result in an increased focus on the available peak time slots at London Southend Airport from next year onwards. The management team continue to engage actively with airline partners about their future plans.

In January 2023, London Southend Airport secured a multi-year partnership agreement with easyJet to operate from the Airport and announced it will operate a new route to Amsterdam. This will be the fourth destination easyJet serves from London Southend Airport, alongside Malaga, Majorca and Faro. The addition of the new Amsterdam route, alongside increased frequencies to Faro means the airline will now operate up to 18 weekly departures this summer - a 30% increase compared with last summer. Flying is scheduled to start for the summer season on 29 March 2023.

London Southend Airport continues to manage its cost base to match activity levels while identifying ancillary sources of revenue. The airport has hosted a number of TV and advertising projects and is also supporting a new logistics partner on a temporary basis from 8 January through to 25 March 2023.

Star Handling is also continuing its recovery post pandemic, and its reputation for excellent customer service resulted in a renewed mandate at Manchester Airport with SAS - Scandinavian Airlines. In addition, Star Handling won a new mandate with TAP Air Portugal to service the airlines' needs at Manchester Airport and has a pipeline of further near term new business mandates.

Legacy issues and liquidity

At the year end the Group had returned four of the eight leased planes to the lessors where it had continuing lease obligations and the remaining four are on track to be returned over the period to September 2023. The costs incurred on handback maintenance and residual lease payments have been within the provisions made.  

Esken had unrestricted cash of c.£49m at close of 28 February 2023, and the Group's headroom is tracking in line with management expectations.

Enquiries:

Esken Limited    C/o Tulchan Communications

Charlie Geller, Group Communications Director

Tulchan Communications

Olivia Peters / Lisa Jarrett-Kerr

020 7353 4200

esken@tulchangroup.com