The information contained within this announcement (the “Announcement”) is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this Announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

16 September 2019

Eddie Stobart Logistics plc

(“Eddie Stobart”, the “Company” or the “Group”)

Company Update

Eddie Stobart Logistics plc (AIM: ESL), a leading UK end-to-end supply chain, transport and logistics group, announces an update on its position following its announcement of 23 August 2019.

Interim results

On 23 August 2019, the Company announced, amongst other things, that work was ongoing to clarify the impact of certain accounting-related items following the Group’s review of the unaudited interim results for the six months to 31 May 2019 (the “HY19 Interim Results”).

Whilst work remains ongoing in this regard, the Company expects that revenue for the first half will be approximately £450 million and Underlying EBIT1 for the same period is expected to be in the range of £10 to £11 million. Net debt at 31 May is expected to be approximately £155 million. The Group Auditor’s review is not yet complete, and any impact on the Company’s expectations for the HY19 Interim Results has not yet been determined.

The Board expects to be able to publish the Group’s full interim results following further clarity on the matters set out below.

Trading in the Company’s shares will remain suspended pending release of the HY19 Interim Results.

Full year outlook

The Board has also re-assessed the Group’s outlook for the full year ending 30 November 2019 (“FY19”).

As in past years, a second half weighting to the financial year is anticipated, however the Board continues to expect the Underlying EBIT1 for FY19 will be significantly below the Board’s expectations. The key factors contributing to this lower than expected profitability include:

An adverse performance against an ambitious budget alongside delays in the implementation of operational efficiencies;
Provisions made against customer recoveries, a significant proportion of which relate to underperforming contracts which have been exited during the year; and
Delays on a significant property consultancy project and lower than planned property utilisation.

Steps taken to address these issues

The Group’s senior management team, led by Sebastien Desreumaux, has commenced a wide-ranging review of the Group’s operations with a view to improving operating margins and its overall financial performance, taking into account current market conditions.

The management team is focused on continuing to deliver excellent customer service and commitment, whilst simultaneously prioritising cash generation within the business. Actions to strengthen internal processes are underway and steps to improve cash collection have been taken.

Capital structure

Group revenue has grown at a compound annual growth rate of 19.3 per cent. over the last three years. Set up activities following new business wins, particularly in Road Transport, have continued to place substantial demands on the Group’s working capital as customer payment terms can be significantly longer than the payment terms associated with our principal delivery activities.

In addition, the balance sheet position of the Group has been further impacted by the reduction in EBIT, poor cash collection and its historical dividend policy.

Consequently, the Company is relying more heavily on its available debt facilities and, accordingly, current Group net debt has increased from the amount at the half-year end as indicated above.

The Company, alongside its advisers, is considering all strategic options (including the potential for raising new equity) and is currently engaging with its lenders. The Board has also resolved not to declare any dividend for FY19.

Strategic outlook

Eddie Stobart has seen significant growth in its operational capabilities over the past two years, providing end-to-end supply chain solutions with some of the highest levels of customer satisfaction in the industry.

The Board believes that the immediate issues that the Group faces can be addressed with positive steps already being taken. The Group has a solid business model and a robust customer base, with a clear path to sustainable growth and profitability.

The Board remains confident in the strength of the Company’s network and operational capabilities in providing a full end-to-end supply chain solution to our customers.

Offer update

As announced on 9 September 2019, the Group has received a preliminary expression of interest from DBAY Advisors Limited (“DBAY”) in relation to a possible offer to be made by funds managed by DBAY for the entire issued, and to be issued, share capital of the Company.

There can be no certainty either that an offer will be made nor as to the terms of any offer, if made. A further announcement will be made when appropriate.

The person responsible for arranging the release of this announcement on behalf of the Company is Anoop Kang, Chief Financial Officer of the Company.

1 Underlying EBIT is defined as Profit from operating activities before exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the income statement relating to the management incentive plan and long term incentive plan, and including Group’s share of profit from equity accounted investees.

Further enquiries:

Eddie Stobart Logistics plc (0)1925 605400

Sebastien Desreumaux, Chief Executive Officer

Anoop Kang, Chief Financial Officer

Rothschild & Co (Financial Adviser) (0)20 7280 5000

Ravi Gupta / Niall McBride / David Weinberg

Cenkos Securities plc (Nomad & Joint Broker) (0)20 7397 8900

Nicholas Wells / Giles Balleny / Harry Hargreaves

Berenberg (Joint Broker) (0)20 3207 7800

Chris Bowman / Toby Flaux / Simon Cardron

FTI Consulting (0)20 3727 1340

Nick Hasell / Alex Le May / Matthew O’Keeffe

Notices related to financial adviser

N.M. Rothschild & Sons Limited (“Rothschild & Co”), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Eddie Stobart and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Eddie Stobart for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Cenkos Securities, which is authorised and regulated by the Financial Conduct Authority, and Berenberg, which is authorised by the German Federal Financial Supervisory Authority and subject to limited regulation by the Financial Conduct Authority in the United Kingdom, are acting exclusively for Eddie Stobart and for no one else in connection with the matters referred to herein and will not be responsible to anyone other than Eddie Stobart for providing the protections afforded to clients of Cenkos Securities and Berenberg respectively, nor for providing advice in relation to any of the matters referred to in this announcement.

This Announcement may include statements that are, or may be deemed to be, “forward-looking statements”. These forward looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors’ current intentions, beliefs or expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies and the Company’s markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors’ current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company’s operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by applicable law or by the AIM Rules for Companies, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this Announcement that may occur due to any change in the Directors’ expectations or to reflect events or circumstances after the date of this Announcement.

In accordance with Rule 26.1 of the Takeover Code, a copy of this announcement shall be made available on Eddie Stobart Logistics plc’s website by no later than 12 noon (London time) on 17 September 2019. For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this announcement

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