Eddie Stobart Logistics PLC (lon:esl)
Eddie Stobart Logistics – Good New As In No Bad News

Eddie Stobart Logistics PLC Financials

ItemCurrent PeriodPrevious Period
Year20192018
Period6 Months6 Months
Revenue£421m£334m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA(£12m)£1m
Statutory Profit
Adjusted Profit
Total Debt
Net Debt£158m£115m
Eddie Stobart Logistics PLC Share Price
Grade:The Black Grade - Shares That I Think Could Collapse To Nothing Or Suffer A Massive Share Issue.
Title: Eddie Stobart Logistics – Good New As In No Bad News
Company: ESL - Eddie Stobart Logistics PLC
Share Price Then: 5.75p
Author: Ian Smith
Date: Sun 10 May 2020
Comments: ESL released an RNS announcement on the Thursday just before a bank holiday Friday, looking at the share price this announcement seems to have been at 16:24.

This announced the date of the AGM and stating something that would have been known but possibly not considered.

ESL no longer does anything, since the refinance deal it exists to hold shares (49%) in the companies that do the actual trucking.
This means that it is ineligible for it AIM listing unless it becomes an investment business which would require raising at least £6m which is a bit less that a third of its market cap at 5.75p per share or actually become a trading company.

The trading company route seems unlikely and The Board is continuing to explore opportunities to raise additional funds to permit the Company to become an 'investing company' and remain quoted on AIM.

The problem is that it can’t become an investment company, just hold its existing shares and do nothing else, it would have to be a real investment business which would mean that it would need to raise significantly more than £6m.

If funds cannot be raised, it is likely that the Company's shares will be cancelled from trading on AIM, and that the Company will either continue as a private company or distribute its indirect interest in the
Eddie Stobart trading entities to shareholders.


All of this needed to be done by the 9 June 2020, The global COVID-19 pandemic has impacted public fundraising activities and noting the Company's retained interest in GWSA, AIM has agreed with the Company an extension to this timeline to 9 December 2020.

On the 3 April 2020 Adrian Collins was appointed as chairman but if you look at https://eddiestobart.com/plc-info/directorate-update-2/ you will see that he has been a director of a number of failed business. Whether this is a good sign, has experience with businesses in difficulty or a bad sign is up to you.

On one hand Stobbart has talked about exceptional volumes on the other there has been a lot of talk of haulage companies only partially utilising their capacity. Yes we are delivering a lot between 5am and 9am and are then idle for much of the rest of the day.

This news doesn’t alter the fact that the haulage business was a good buy for DBAY, it was cheap and it loaded the business up with a loan. So ESL shareholders could easily be wiped out whilst the business prospers.

To me it looks like a trading share with a lot of potential for losses or gains over the next few weeks but a terribly risky long term hold.
Read Count: 227

Buy/No Buy In A Nutshell
NegativesToo much debt a lot of which is owed to a major shareholder as the result of a bailout, COVID has hit logistics hard as they often need staff for only part of the working day.
Positives The name, the capacity and the reputation.
Initial Review Price7.98p
Last Review Price7.98p
Last Review Date17-Jul-2020
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Share Commentaries, their purpose.

Previous Commentaries On Eddie Stobart Logistics PLC
Date Share Price Author Commentary
Mon 02 Mar 202012.5pIan Smith

Eddie Stobart Logistics – What Is The Company Worth Now?



The latest accounts, posted Feb 2020 are the delayed ones for the 6 months ending May 2019 and are released at the same time as the share suspension was lifted.

The share suspension was made in Aug 2019 as a result of accounting issues and the result of these accounting issues has been new funds/loans the company and new majority owner in DBay.

The company floated in Apr 2017 at around 162p valuing it at a little bit under £600m, dropping to as low as 71p per share (£251 market cap) when the shares were suspended.

For those new to ESL the structure is a bit odd, ESL owned 100% of Greenwhitestar Acquisitions Limited (GWSA) who actually owned the businesses that we think of as owned by ESL!

After the reorganisation Dbay now own 51% of GWSA shares and ESL 49%, so if ESL was worth 71p per share prior to the GWSA reallocation then it is worth 35.5p afterwards.

The same number of shares in ESL are in issue suggesting a current valuation of £120m and with a current price of 12.5p giving a market cap of £47m there does seem to be a reason to believe in a 25p share price.

Or is the Dbay plan to get their loan, at 18%pa, used as the basis to take total 100% ownership in a debt for equity swap in a couple of years time.

Clearly the £200m loss was headline news and is frightening, as is the cost of the £50m loan.

Of this £200m, £169.2m was an impairment charge reflecting current business performance and challenging trading conditions, an increased discount rate associated with higher gearing and a more prudent assessment of medium and long term forecast profitability.

Debt as always worries me, Net debt at 31 May 2019 was £158.0m (2018: £115.6m). Net debt at 30 November 2019 was approximately £215m.

I am unclear whether the increase to £215m was the result of the Dbay funding.

Although the group did report a loss excluding the exceptional costs they again talk about changes to accounting procedures.

So to an outsider like me it is almost impossible to work out if this one off and we have a healthy company albeit with a a lot of debt and in the future the accounts will look healthy again or will the next set of accounts include more exceptional costs.

Yet during these troubles revenue is up by about 6% to £421m and no big customers were lost.