Troubled haulage firm Eddie Stobart announces £200m pre-tax interim loss
Eddie Stobart Logistics published its interim results following delays due to accounting-related items, and announced restoration of trading in the company’s shares from 7.30am today.
On August 23, 2019, and on September 16, 2019, the Warrington-based company announced, among other things, that work was ongoing to clarify the impact of certain accounting-related items following the board’s review of the 2019 half year results.
The company also announced on August 23, that the review would result in a delay to the publication of the results and the company’s shares were suspended from trading on AIM.
This work has now been completed.
Following the detailed review the board has identified a number of accounting-related matters which have significantly impacted the results and also have resulted in restatements of the company’s consolidated audited financial results for 2018 and prior years.
There have been no direct cash outflows as a result of the prior year restatements or adjustments made to the HY19 results. In addition, future net cash flows will not be materially impacted by these adjustments.
PriceWaterhouseCoopers conducted an independent review into the group, and said: “Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and the AIM Rules for Companies.”
Eddie Stobart concluded a deal with DBAY that was approved by shareholders in December 2019, resulting in a new ownership structure under which the company holds a 49% interest in the group.
This transaction provided £70m of additional liquidity, putting the Eddie Stobart group on a stable footing and providing a platform from which to develop.
Half year revenues for the six months to May 31, 2019, were £421.3m, compared with £334.5m, restated, in the same period in 2018.
The group made a £199.842m pre-tax loss in the six months, against a £15.117m pre-tax loss in restated figures for the previous year.
It said the board expects a small underlying EBIT loss for the full year, however, it warns that shareholders should note that losses could be greater and this is subject to audit by the group’s auditors, which may give rise to adjustments.
Today’s announcement said the group was required to undertake an analysis of impairment of its goodwill and assets due to impairment indictors present during the review of its interim results.
Impairment testing has been undertaken on the group’s balance sheet at May 31, 2019, which involved applying revised discount factors and taking in to account appropriate sensitivities on the forecasted profitability of the group.
This analysis has led to the recognition of an impairment charge of £169.2m, reflecting the challenges the business has faced in HY19.
Exceptional costs included within administrative expenses of £174.4m (2018 restated: £2.5m) were incurred in the period, including the impairment charge referred to.
Net debt as at May 31, 2019, was £158.0m (2018 restated: £115.6m).
The announcement added: “The Eddie Stobart group management team is committed to building on the group’s strong fundamentals and is seeking to deliver an improved performance from a more stable footing.
“The business has continued to deliver excellent service to its customers and since the start of the HY19 period has won new customers such as Tilda, Metsa and Lallemand and extended contracts with Tesco, Aldi and Mayborn.
“No significant contracts have been lost since the start of the six months ended 31 May 2019 (HY19), although two underperforming contracts have been exited.
It also announced today the appointment of Saki Riffner as non-executive director with effect from February 27, 2020.