November 14, 2019 / 8:20 AM / a month ago

UPDATE 1-Stobart Group shares drop after suspending dividend; posts wider loss

(Adds details on results, dividend and shares)

Nov 14 (Reuters) - British airport operator Stobart Group suspended its dividend to conserve cash and reported a bigger first-half loss on Thursday, hurt by impairment charges, sending its shares down 9%.

Stobart’s dividend has largely been funded from asset sales rather than operational cash generation, a practice which the company called unsustainable. The suspension will save the company 22 million pounds per year.

The infrastructure and support services company intends to restore the dividend when it has much more cash at an operating level, but said it will continue to sell assets.

The company, which owns airline Flybe along with Richard Branson’s Virgin Atlantic, said its loss widened to 20.9 million pounds ($26.7 million) in the six months ended Aug. 31, compared with a loss of 17.5 million pounds a year earlier.

The loss includes an 8.5 million pound non-cash impairment of intangible assets in Stobart Rail & Civils, a 3.7 million pound non-cash brand amortisation and 7.4 million pounds of new business and new contract set-up costs.

However, underlying core earnings rose 187% to 12.1 million pounds, bolstered by growth in its core aviation and energy divisions. ($1 = 0.7815 pounds) (Reporting by Tanishaa Nadkar in Bengaluru Editing by Saumyadeb Chakrabarty, Bernard Orr)

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