Interim Results for the six months ended 31 August

23 October 2014

Stobart Group Limited

("Stobart" or the "Group")

Interim Results for the six months ended 31 August 2014

Stobart Group Limited, the Support Services and Infrastructure Group, today announces its interim results for the six months to 31 August 2014.

Group overview

The Board is pleased to announce the Group's first set of results since the disposal of a controlling interest in its transport and distribution division. Stobart is organised into five divisions with a clear focus on driving volume growth in its Energy division and passenger growth in its Aviation division. The Group has created powerful platforms in attractive markets and these results show continued progress towards the Board's medium term objectives.

Group structure

· Energy - supply and transport of biomass fuel

· Aviation - operation of London Southend Airport, Carlisle Lake District Airport and Stobart Air*

· Rail - rail, civil and infrastructure engineering

· Investments - Eddie Stobart (logistics)* and Propius (aircraft leasing)*

· Infrastructure - Group infrastructure assets (including airports and energy plants*) and commercial investment properties

* Non-controlling interests

Operational highlights

· Encouraging increase in biomass tonnages supplied, up 56% to 482,000 tonnes

· Strong biomass supply pipeline, consolidating market-leading reputation

· Passenger numbers increased by 19% at London Southend Airport to over 628,000 passengers in the period

· London Southend Airport rated best UK airport in Which? customer satisfaction survey for second year running

· Launch of Flybe services and positive discussions with potential new airline partners

· Investment property realisation programme on track

· Teesside anaerobic digestion plant investment completed

· Planning permission secured at Carlisle Lake District Airport and Chelford

· Board strengthened through appointment of one Executive Director and two Non-Executive Directors

Financial highlights

· Revenue from continuing operations increased by 17% to £56.2m (2013: £48.1m), due to volume increases in Aviation and Energy

· Underlying EBITDA* reduced by 20% to £8.7m (2013: £10.9m), impacted by lower investment property realisations and revaluations

· Underlying profit before tax** up by c110% to £4.4m (2013: £2.1m), reflecting a 80% reduction in interest charges

· Loss before tax from continuing operations of £8.6m (2013: profit £1.2m), due, principally, to £8.1m separately disclosed finance charges related to debt repayment

· Loss per share from continuing operations of 2.26p (2013: 0.13p)

· Profit from discontinued operation of £7.6m (2013: £9.4m) principally relating to loss on operations and partial disposal of the transport and distribution division

· Maintained interim dividend of 2.0p (2013: 2.0p) per share payable on 5 December 2014

· £48.0m returned to shareholders in the period; net assets at £414.7m (28 February 2014: £461.1m);

· Proceeds from realisations of property related assets of £14.7m (2013: £24.0m)

· £190.6m debt repaid and net debt reduced by 94% to £8.1m (28 February 2014: £127.9m)

Chief Executive Andrew Tinkler commented:

"We have a clear focus on the growth of our Energy and Aviation businesses. The increased volumes we are reporting, along with strengthening pipelines in both divisions, reinforce our confidence in the Group's prospects."

Enquiries:

Stobart Group Limited

("Stobart" or the "Group")

Interim Results for the six months ended 31 August 2014

HALF YEAR REVIEW

Results summary

Results for the six months to 31 August 2014 were as follows:

Divisional underlying profit summary

*Underlying EBITDA is a non-GAAP measure and comprises the underlying operating profit of £5.6m (2013: £8.1m) plus adding back depreciation of £3.1m (2013: £2.8m).

** Underlying profit before tax is a non-GAAP measure and comprises the underlying operating profit of £5.6m (2013: £8.1m) less other finance costs of £1.5m (2013: £6.3m) plus finance income of £0.3m (2013: £0.3m).

*** Underlying divisional EBITDA is measured before internal rents.

****Separately disclosed items comprise finance costs of £8.1m (2013: £nil), amortisation of acquired intangibles (brands) of £1.9m (2013: £0.2m), restructuring costs of £1.0m (2013: £0.3m), new business and new contract set up costs of £0.1m (2013: £nil), transaction costs of £nil (2013: £0.4m) and separately disclosed items included in share of post-tax profits of associates and joint ventures of £1.9m (2013: £nil).

Strategy

Stobart Group Limited is an entrepreneurial group which has invested in recent years to create strong platforms in exciting growth markets. The Group's strategy is to leverage its business development capabilities, its logistics heritage and its respected brand to drive volumes through its Aviation and Energy businesses, grow revenues and profits and generate sustainable value for shareholders. These businesses are complemented by the Group's Infrastructure assets, its Rail and civil engineering operations and its business Investments. These divisions provide reliable cash flows as well as growth opportunities of their own.

The Board has made the changes in senior management roles and responsibilities required to give our five divisions clear leadership, direction and performance targets. We expect all of our divisions to create value but resource is focussed particularly on our Aviation and Energy divisions, which have the greatest growth potential.

Business segments

As reported in May 2014, the Group has revised its internal reporting structure, which distinguishes between business operations and asset ownership. The new reporting segments within continuing operations are Stobart Energy, Stobart Aviation, Stobart Rail, Stobart Investments and Stobart Infrastructure, which owns the Group's infrastructure assets.

Underlying EBITDA is a key financial performance measure for our operating divisions.

Divisional review

Stobart Energy

Stobart Energy's business is the supply and transport of biomass fuel.

The 56% growth in tonnes sold has been driven by the full period effect of the new contracts commenced in 2013 (Iggesund and Helius CoRDe) and an increase in volume supplied to Dalkia Chilton.

The divisional EBITDA is made up of a healthy 35% increase on the supply side of the business to £2.3m with the transport side contributing £0.1m EBITDA. The low level of transport profitability reflects the historical transfer pricing arrangements between Stobart Energy and Eddie Stobart Logistics, which owned the biomass transport fleet at the time of the partial disposal of Eddie Stobart Logistics. Those arrangements have since been restructured and the vehicles taken onto the Group's balance sheet. Had the new arrangements been in place previously, they would have increased Group profits by approximately £2.1m per annum and they will increase biomass transport profits in future periods.

Transport profitability was also impacted, as expected, when a biomass transport contract, which had contributed £2.5m per annum to profits by way of a Management Fee, came to an end at the beginning of the period.

As Stobart Energy negotiates and signs new long term supply contracts the division's management team develops its supply chain to ensure the availability of fuel supplies to underpin these long term contracts. As the division builds supply ahead of anticipated demand, and diverts temporary excess supply overseas (at reduced margins) pending the commencement of contracts, the relationship between volume growth and revenue increases will vary from period to period.

New contract wins in the period included a new biomass plant project in Speyside which reached financial close in August 2014, with supply expected to commence in 2016. The minimum contracted volume is 50,000 tonnes per annum with potential for this to rise to 95,000 tonnes.

Outlook

We have seen encouraging year on year growth in biomass tonnages supplied and remain confident of delivering strong returns over the medium term. The second half of the year, which includes the peak seasonal winter months, will also see the full period benefit of new contracts which commenced in the latter stages of the first half.

The medium term strategy for Stobart Energy is to increase supply of biomass to 2m tonnes pa by 2017/2018, and we remain on course to achieve this objective. We are working on a number of key projects and expect to achieve financial close on at least three of these with a combined supply requirement of over 500,000 tonnes per annum by the year end.  Supply under these contracts will commence in 2016/17 once construction and commissioning of the plants is completed.

The ROC legislation timelines are now certain and prospects have been improved by the introduction, by Ofgem, of a grace period, extending the cut-off point for qualifying plants to become operational from March 2017 to September 2018. Our strategy of selecting those quality projects which involve strong counterparties is working well as finance providers look to back those projects which will either become operational by the March 2017 ROC deadline or which, if not certain of becoming operational by March 2017, are sufficiently advanced and certain of funding such that they will be operational in the 18 month grace period. We remain confident of achieving our medium term target of supplying in excess of 2m tonnes per annum into the biomass market by 2017/2018 under the current legislative framework.

We are close to securing a number of potential sites for new waste wood processing facilities, as part of our strategy to enhance our control of the supply chain and achieve a target for processing in-house up to 60% of the total material sold.

Stobart Aviation

Stobart's Aviation division comprises the operations of London Southend Airport, Carlisle Lake District Airport and Stobart Air, in which the Group owns a 45% interest.

London Southend Airport

The 19% growth in passenger numbers was boosted by the launch of Flybe flights to six destinations, operated by Stobart Air delivering over 27,000 passengers since commencing operations in June.

For the second year running London Southend Airport has topped the Which? airport passenger customer satisfaction survey with a score of 85% and a maximum five star rating in seven of the ten categories assessed, improving upon our first-place scores from 2013.

Existing routes are performing well with improvements in load factors and yields. Commercial income streams have continued to deliver with the hotel, car parking and other retail income all showing good year-on-year improvements in revenue per passenger.

Carlisle Lake District Airport

Planning permission has been secured for the development of the airport and we have commenced a business planning exercise designed to attract airlines, passengers and related operations to the airport. In particular, we are considering a London service and a Dublin route connecting to transatlantic destinations.

Stobart Air

The airline has had a successful summer with record August monthly load factors and passenger numbers and the 14th consecutive month of growth on the Aer Lingus regional network. While the airline is currently loss-making, the modest investment the Group has made provides it with valuable strategic options and the Board expects it to create value in the medium term. Julian Carr was appointed as Managing Director in May 2014.

Outlook

An agreement has recently been reached for Skywork to move its operation from London City Airport and to commence operations at London Southend Airport in October 2014. With the winter season ahead, and from known traffic, we would expect lower volumes in the second half. We anticipate that capacity reduction by easyJet will be partially replaced by the Flybe and Skywork flights.

The Aviation division aims to capitalise further on demand for regional airport capacity, especially at peak times when capacity in London is highly constrained, and grow in both the commercial and executive aviation markets. 94 million journeys are made through London airports annually from destinations within London Southend Airport's target market. Our medium-term target of 2.5m passengers represents just 2.7% of this figure. We have been successful in attracting routes and carriers from other London airports but our passenger volume target could be met from demand growth alone, even if growth is far lower than the market generally anticipates.

We are actively marketing the attractions of London Southend Airport to prospective partners, emphasising the highly-rated passenger experience and the total journey time from the point of origin to the City of London. Airlines' lead times can be long but we have positive, ongoing discussions with a good number about bringing routes to London Southend Airport. Having achieved market-leading customer feedback and as Europe's fastest growing airport we can be confident our approach to the passenger experience is working.

We believe that revenue per passenger can be increased with improved retail offerings and better management information and work is ongoing to address those opportunities.

Stobart Rail

Stobart Rail provides specialist rail, civil and infrastructure engineering and management services to third party customers, including Network Rail, as well as to Group businesses.

Stobart Rail's sales of rail and other engineering works to external customers have increased by 32% in the period and margins on this work have been healthy. Works successfully delivered have included structural strengthening schemes for Skanska, Eden Brow Earthworks and the slab track and permanent way element of the reintroduction of the Chorley Flying Arches for Murphy Rail.

We have completed the development of a proprietary ballast cleaning machine and begun work with Network Rail using the new machines. These machines allow ballast to be replaced more cost effectively, without removal of the track, leading to reduced track access times and significant cost savings. We expect these innovative machines to be very valuable to the Group as their use becomes established.

Internal projects in the first half have been modest but included preparation work at the Group's Widnes site. This has a direct impact on overhead absorption and means margins on external work are impacted. We expect internal work will pick up in the second half with some plans to commence in the next few months.

Outlook

Following an intensive period of activity on external third party contracts, these works now exceed Group contracts. There are further significant opportunities with external projects in the next six months in addition to those on-going or already scheduled to commence in the period. These include contracts awarded to main contractors through Network Rail's control period 5. The construction of a new warehouse for Crown, a leading company in metal packaging technology, in Botcherby, near Carlisle, is expected to be completed in October.

In the second half of the year we expect work to commence at Carlisle Lake District Airport and a biomass plant development.

Stobart Investments

The assets currently held by Stobart Investments comprise the Group's 49% interest in Eddie Stobart Logistics Limited and our 33% interest in Propius, the aircraft owning and leasing business.

The Eddie Stobart Logistics business is performing in line with management's expectations, although our recorded share of profit has been subject to non-cash charges for amortisation of intangibles recognised in the provisional fair value acquisition accounting, and also subject to transaction costs. The Board is pleased to have completed the transaction to dispose of a majority interest in Eddie Stobart Logistics and is confident that the effect of the resulting debt reduction and the value created from the sale proceeds and from the retained stake in a newly-energised business will benefit the Group's shareholders.

Growth continues in the aircraft leasing business where the eighth aircraft has been delivered and all aircraft are operational.

Stobart Infrastructure

Our Infrastructure division holds our growing portfolio of investments in renewable energy infrastructure, primarily biomass and anaerobic digestion energy plants. It also owns infrastructure assets, in particular our airports, from which other Group businesses operate, and a portfolio of commercial investment properties.

The leading position of the Group's Energy division in the market for the supply and transport of biomass fuel creates opportunities for investment which can generate attractive returns in their own right as well as enhancing the credentials of the Stobart Energy business.

The biggest influence on the divisional result is the change in property values, recognised on revaluation or disposal, which impact EBITDA but not revenue. These gains were higher in the corresponding period last year than in the most recent half year. There were five realisations in the period realising net proceeds of £14.7m. This included the sale of the final flat at 37 Soho Square, bringing the total proceeds on the completed development to £18.1m, with an overall profit of £5.5m and a return on investment of 43% over a two year period.

Following a period of extensive negotiations, the re-financing of our investment property loan facility was completed in March 2014, and further repayments of debt were made in the period from the proceeds of realisations. In aggregate £72.7m was repaid and at 31 August 2014 the outstanding debt was £2.2m, all of which is now on flexible, variable rate terms. An early repayment fee and write off of related debt issue costs gave rise to a separately disclosed finance charge in the period of £5.8m.

Planning consent was secured in August 2014 for an air/road distribution centre at Carlisle Lake District Airport. This opens up potential opportunities for further development at the site including passenger and air freight services.

Residential planning consent for 100 houses has been obtained at the Group's Chelford site in Cheshire, currently used by Stobart Energy. The site will be marketed shortly and is expected to generate significant interest from house builders. A new site will be found for the operational business.

Outlook

Since the period end there have been three further investment property realisations realising net proceeds of £5.5m. The Infrastructure division continues to focus on asset management initiatives to reduce unoccupied space further and to maximise exit values. As a result, several properties are ready to market for disposal in the second half of the year.

Progress has been made with our Green Energy investments with construction of the anaerobic digestion plant in Teesside now complete and commissioning to commence in November 2014 and reach full operational capacity by January. We expect to achieve financial close on at least two other major biomass investment projects during the second half.

Board changes

On 1 July 2014 Richard Butcher was appointed Executive Director and John Garbutt and John Coombs joined the Board as Non-Executive Directors. John Garbutt has joined the Remuneration Committee as Chairman and has also joined the Audit Committee and Nomination Committee. John Coombs has joined the Remuneration Committee, the Audit Committee and the Nominations Committee.

Directors' remuneration

During the period, following the disposal of the transport and distribution division, the three Executive Directors were each paid bonuses of £309,000 in cash and were also each awarded shares with a fair value of £292,000. These payments were made to recognise the exceptional performance achieved by each director, delivering on the substantially increased responsibilities which they took on during the period of the disposal. These included successfully preparing the Group for demerger and establishing the new corporate structure for the Group, whilst maintaining business performance during the process. These payments were made net of appropriate deductions for income tax and national insurance. The Group consulted with major shareholders before making these awards.

On 1 October 2014 the Company posted a circular to its shareholders containing details of the proposed new Executive Directors' Remuneration Policy and new Long Term Incentive Plan, as referred to in the 2014 Annual Report and as discussed at the AGM in June. The circular contains a notice convening a General Meeting of shareholders on 24 October 2014 at which approval of the Executive Directors' Remuneration Policy and approval of the new Long Term Incentive Plan will be sought.

Financial review

Restructuring costs

The restructuring costs in the period of £1.0m are principally in connection with site restructuring and rationalisation in Stobart Energy, which has given the division a better, more efficient platform for volume and profit growth.

Tax

The tax credit on continuing operations of £1.0m is at an effective rate of 12.2%. This is lower than the standard rate of 21.2% for the period due to an adjustment in respect of prior years. The profit on disposal reported within discontinued operations is not taxable.

Partial disposal of the transport and distribution division

As reported in May 2014, on 10 April 2014, the Group disposed of a controlling interest in the transport and distribution division for gross consideration of £239.7m, including a brand licence premium of £13.7m. This was a mature business comprising the Eddie Stobart branded transport and logistics operation, the Stobart Automotive operations and the Widnes rail freight terminal operation. The transaction leaves the Group with a remaining 49% interest in this business which we account for as an associate and our share of its results since the transaction are included in the Stobart Investments business segment.

The results of the disposed business up to the transaction date are classified as discontinued operations in the Condensed Consolidated Income Statement and the prior year figures are restated accordingly. This is required by IFRS to be consistent with the current period. The recorded profit on disposal of £10.4m is also included in discontinued operations.

Balance sheet, debt and gearing

The Group has net assets at the period end of £414.7m (28 February 2014: £461.1m). The reduction is principally due to the purchase of own shares of £34.8m and dividend paid of £13.2m. Net assets includes property assets and property related investments with a total book value of £259.9m (28 February 2014: £273.2m).

Net debt fell to £8.1m (28 February 2014: £127.9m). The Group realised net cash (after fees) of £189.9m on the partial disposal of the transport and distribution division including the £13.7m licence premium from Eddie Stobart Limited. At the same time the £100m variable rate loan with M&G Investment Management Limited was fully repaid and the facility was terminated.

In March, £68.1m of the restricted cash held at 28 February 2014 was used to repay a substantial proportion of the property loan with GE Real Estate Finance Limited, plus payment of fees. At the same time, the terms of the remaining debt were renegotiated and the facility was reduced commensurately. Later in the period this loan was further repaid out of proceeds from property realisations, leaving £2.2m outstanding.

Separately disclosed finance costs of £8.1m include the early repayment of fees payable in connection with the two substantial repayments set out above, as well as write off of the debt issue costs carried in relation to the amounts.

The gearing ratio (net debt/equity) was 2.0% (28 February 2014: 27.7%).

Brands

Following the partial disposal of the transport and distribution division, the Group has retained ownership of the Stobart and Eddie Stobart trademarks and designs which remain important and valuable assets to the Group. Both Stobart Group and Eddie Stobart are listed in Business Superbrands with Eddie Stobart brand ranked 45th overall and first in the Supply Chain, Distribution, Freight & Transport Services category. The Group has licensed the use of the Eddie Stobart brand to Eddie Stobart Limited under a 15 year licence agreement.

In September 2014 the Group welcomed more than 12,500 visitors over two days to 'Stobart Fest' which took place at Carlisle Airport. The Eddie Stobart Trucking Songs: Trucking All Over the World went straight to number 1 on the compilations charts demonstrating the potential influence of the brand, although the royalties are modest.

Dividend and purchase of own shares

During the period, the Company purchased 26,403,000 of its own shares for total consideration of £34,764,000. These shares are held as treasury shares at the period end.

The Board has declared an unchanged interim dividend of 2.0p, which will be paid on 5 December 2014 to shareholders on the register as at 7 November 2014. When the interim dividend is paid the Group will have returned an aggregate of £54.6m to shareholders in the past 12 months.

Key risks and uncertainties

As with any business, risk assessment and the implementation of mitigating actions and controls are vital to successfully achieving the Group's strategy. The Board has overall responsibility for risk management and internal control within the context of achieving the Group's objectives. The key risks are set out in our 2014 Annual Report.

Going concern

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the interim financial statements have been prepared on a going concern basis.

Directors' responsibility statement

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

· the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The above statement of directors' responsibilities was approved by the Board on 23 October 2014.

Iain Ferguson Andrew Tinkler Ben Whawell

Richard Butcher Andrew Wood John Garbutt

John Coombs

23 October 2014

For the six months ended 31 August 2014

Unaudited

For the six months ended 31 August 2013

Unaudited

For the year to 28 February 2014

Audited

1 Accounting policies of Stobart Group Limited

Corporate information

The condensed consolidated financial statements of the Group for the six months ended 31 August 2014 were authorised for issue in accordance with a resolution of the directors on 23 October 2014.

Stobart Group Limited is a Guernsey registered company whose ordinary shares are publicly traded on the London Stock Exchange.

The principal activities of the Group are described in note 3.

Basis of preparation

The condensed consolidated financial statements of the Group for the six months ended 31 August 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

The condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 28 February 2014. Except for the 28 February 2014 comparatives, the financial information set out herein is unaudited but has been reviewed by the auditors, KPMG LLP, and their report to the Company is attached.

The comparative financial information set out in these interim consolidated financial statements does not constitute the Group's statutory accounts for the year ended 28 February 2014 but has been derived from the accounts. Statutory accounts for the period ended 28 February 2014 have been published and KPMG LLP has reported on those accounts. Their audit report was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report. The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.

Going concern

The Group has considerable financial resources, together with contracts with a number of customers and suppliers. The financial forecasts show that borrowing facilities are adequate such that the Group can operate within these facilities and meet its obligations when they fall due for the foreseeable future. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

Restatement of 31 August 2013 financial information

The results for the six months ended 31 August 2013 have been restated as the transport & distribution business, which was disposed of in April 2014, has been reclassified as a discontinued operation. This is required by IFRS to be consistent with the current period.

Significant accounting policies

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 28 February 2014. Any new amended Accounting Standards applicable for the period do not have a significant effect. These accounting policies are expected to be applied for the full year to 28 February 2015.

The presentation of the Condensed Consolidated Income Statement has been amended in these interim financial statements to show operating profit before other separately disclosed items, including other separately disclosed items included in Group's share of profits of associates and joint ventures. These items are material incomes and expenses, which because of their nature, infrequency or occurrence, or the events giving rise to them, merit separate presentation to allow shareholders to better understand the financial performance of the period. Underlying operating profit is a non GAAP measure which comprises operating profit before separately disclosed items.

From 1 March 2014 the following standards, amendments and interpretations became effective and were adopted by the Group:

2 Seasonality of operations

There is no significant seasonal effect on revenues and profits between the first and second six months of the financial year for the Group as a whole. The higher seasonal sales in summer in Stobart Aviation are expected to be approximately balanced by the higher seasonal sales in winter in Stobart Energy.

3 Segmental information

As reported in May 2014 the Group has revised its internal reporting structure. The new operating segments within continuing operations are Stobart Infrastructure, Stobart Energy, Stobart Aviation, Stobart Rail and Stobart Investments.

The Stobart Infrastructure segment specialises in management, development and realisation of Group land and buildings assets as well as investments in energy plants.

The Stobart Energy segment specialises in supply of sustainable biomass for the generation of renewable energy.

The Stobart Aviation segment specialises in operation of commercial airports and a joint venture investment in an airline.

The Stobart Rail segment specialises in delivering internal and external civil engineering development projects including rail network operations.

The Stobart Investments segment holds non-controlling interests in a transport & distribution business and an aircraft leasing business.

The Board of Directors is regarded as the Chief Operating Decision Maker (CODM). The Board monitors the results of its business units separately for the purposes of making decisions about resource allocation and performance assessment. The main segmental profit measures are earnings before interest, tax, depreciation, amortisation and internal rent and also profit before tax, both shown before separately disclosed items.

Income taxes, finance costs and certain central costs are managed on a group basis and are not allocated to operating segments.

Inter-segment revenues are eliminated on consolidation.

Included in adjustments and eliminations are central costs of £2,661,000 (2013: £4,011,000) and intragroup loss of £19,000 (2013: £655,000 profit).

4 Underlying operating profit and separately disclosed items

Underlying operating profit

Underlying operating profit is a non GAAP measure. A reconciliation of underlying operating profit is set out below:

Separately disclosed items

New business and new contract set up costs comprise costs of investing in major new business areas or major new contracts to commence or accelerate development of our business presence. These costs include marketing costs, establishment costs, legal and professional fees, losses and certain staff and training costs. The costs in the current period were in relation to the development of business at London Southend Airport.

Transaction costs comprise costs of making investments or costs of financing transactions that are not permitted to be debited to the cost of investment or as issue costs. These costs include costs of any aborted transactions.

Restructuring costs comprise costs of integration plans and other business reorganisation and restructuring undertaken by management. Costs include cost rationalisation, brand harmonisation, site closure costs, certain short term duplicated costs, asset write downs and other costs related to the reorganisation and integration of businesses. These are principally expected to be one off in nature. The costs in the current period were principally in relation to site restructuring in Stobart Energy.

Impairment of property, plant and equipment charges are considered to be non-recurring, due to their nature, and outside of the normal activities of the Group.

Amortisation of acquired intangibles comprises the amortisation of intangible assets identified as fair value adjustments in acquisition accounting.

Separately disclosed finance costs of £8,096,000 comprise the costs associated with early repayment of debt balances. Costs include repayment fees, associated issue costs written off and directly related professional fees. The costs in the period were incurred in connection with the repayment of a £100,000,000 variable rate loan with M&G Investment Management Limited and repayment of a substantial proportion of a property loan with GE Real Estate Finance Limited (see note 10).

5 Partial disposal of the transport & distribution division

The Group disposed of a controlling interest in a substantial proportion of the transport and distribution division on 10 April 2014. The Group has retained a 49% interest in the business, which is accounted for as an associate in the period. The environmental transport business unit, which was previously part of the transport & distribution division, was also retained.

The results of the disposed business have been reported separately as a single amount presented within discontinued operations. The operation represented a separate major line of business.

The consideration received for disposal of the business was £239,700,000, comprising of cash of £190,600,000, including £13,700,000 for the issue of a licence premium, loan notes of £5,000,000 and fair value of the remaining 49% of the business of £44,100,000. The loan notes were repaid on 24 April 2014. The profit on disposal recorded within discontinued operations was £10,436,000 after deducting fees and other costs directly related to the disposal.

The accounting for the Group's share of the results of the remaining 49% of the business requires identification of the fair value of the investee's identifiable assets and liabilities including intangible assets. The accounting for the share of the associate is provisional in this Interim Statement.

The share of the results of the associate of £1,083,000, included in the Condensed Consolidated Income Statement total of £1,360,000, includes a share of transaction costs of £700,000 and a share of amortisation of intangible assets of £1,193,000. These costs are separately disclosed items in accordance with the policies set out in note 4.

6 Taxation

Taxation on profit on ordinary activities

Included in the above tax charge for the current period is a total current tax charge on continuing operations of £745,000 (2013: £2,434,000), total deferred tax credit on continuing operations of £1,793,000 (2013: £750,000) and total tax credit on continuing operations in the income statement of £1,048,000 (2013: £1,684,000 charge).

A reduction in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) was substantively enacted on 2 July 2013. The March 2013 Budget announced that the UK corporation tax rate will further reduce to 20% by 2015. The reduction in the rate to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013.

This will reduce the Group's future current tax charge accordingly. The deferred tax liability at 31 August 2014 has been calculated based on the rate of 20% substantively enacted at the balance sheet date.

7 Dividends

A final dividend of 4.0p per share (2013: 4.0p) totalling £13,249,153 (2013: £13,890,703 paid on 6 July 2013) was declared on 21 May 2014 and was paid on 4 July 2014. £13,249,153 was paid in cash and £nil (2013: £334,478) was satisfied by issue of shares under a scrip offer.

An interim dividend of 2.0p (2013: 2.0p) per share totalling £6,558,517 (2013: £6,952,711 paid on 6 December 2013) was declared on 23 October 2014 and will be paid on 5 December 2014. This is not recognised as a liability at 31 August 2014.

8 Earnings per share

The following table reflects the income and share data used in the basic and diluted earnings per share calculations: