Eddie Stobart’s new CFO finds accounting error

Warrington-based Eddie Stobart Logistics plc said on Tuesday it will restate parts of last year’s earnings after its new chief financial officer (CFO) Anoop Kang found problems in its accounting “primarily relating to the lease accounting involving four legacy sites.”

“Following the appointment of our CFO Anoop Kang on 1 April 2019 a review has been carried out into the group’s prior year financial statements,” said Eddie Stobart.

“This review has highlighted matters which will be addressed by means of a Prior Year Adjustment.

“The likely cumulative effect on the results for the year ended 30 November 2018 will be to reduce adjusted EBIT by approximately £2m.

“There will be an adjustment to retained earnings as at 30 November 2017 of approximately £11.5m, primarily relating to the lease accounting involving four legacy sites.

“The majority of these adjustments are non-cash and do not affect our banking covenants.

“Although the 2019 adjusted EBIT impact of these matters is £1.6m we expect to deliver a full year result in line with the board’s expectations.”

The company also provided a trading update for the half year ended May 31, 2019.

Group revenues for the period increased by 25% versus the comparable period in 2018.

This was a result of organic growth and a full first half contribution from The Pallet Network.

On a like-for-like basis revenues were up 8%, reflecting continuing organic growth and a number of new contract wins.

“At an adjusted EBIT level the first half results are expected to be towards the lower end of management expectations,” said the firm.

“This is partly due to slower than anticipated productivity improvements in our Contract Logistics and Warehousing business and the short term adverse effect on the operational efficiency of our transport network from exiting, in early March, a problematic contract.

“However, as in previous years our volumes will be weighted substantially towards the second half of the year and the company expects to deliver full year results in line with the board’s expectations.

“The group’s net debt position at 31 May 2019 was £154m (30 November 2018: £160m).”