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Eddie Stobart Logistics Plc LSE:ESL London Ordinary Share GB00BD8QVC95 ORD GBP0.01
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Logistics Development Group PLC Interim Results for six months ended 31 May 2021

20/08/2021 7:00am

UK Regulatory (RNS & others)


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TIDMLDG

RNS Number : 2344J

Logistics Development Group PLC

20 August 2021

Logistics Development Group plc

(the "Company")

Interim Results for six months ended 31 May 2021

Logistics Development Group plc, the AIM-quoted investing company, announces its unaudited interim results for the six months ended 31 May 2021.

This period precedes the sale of the Company's indirect interest in GreenWhiteStar Acquisitions Limited ("GWSA") group, the holding company for the Eddie Stobart, The Pallet Network, iForce, Eddie Stobart Europe and The Logistics People businesses, as announced on 1 July 2021.

Summary for the reporting period

-- At the reporting date of 31 May 2021, the Company continued to hold an indirect 49 per cent equity investment in GWSA Group (1) , a leading UK end-to-end supply chain, transport and logistics group.

-- In the reporting period, the Company acquired for GBP6m an indirect 10.9 per cent equity interest in an 18 per cent PIK loan note with indirect exposure to the performance of GWSA.

-- On 31 May 2021, the Company revalued its indirect investment in GWSA to GBP57.9m (thus incurring a GBP22.1m gain) to reflect the market capitalisation of the Company at period end. This valuation is stated after adjusting for the recently acquired indirect investment in the 18 per cent PIK loan note.

-- During the reporting period the GWSA Group trading entities continued to deliver excellent service to its customers and since the start of the HY21 period, despite the challenging operational environment due to Covid-19, had won substantial new contracts and made further progress in filling available warehouse space. The financial performance of the businesses continued to improve throughout the period, and senior debt was reduced on the back of improved cash flow generation.

-- Underlying Profit(2) before tax substantially improved vs the comparative period at GBP21.5m (2020: loss of GBP16.4m) before exceptional items of GBP0.1m (2019: GBP3.4m) and the statutory profit before tax was GBP21.6m (2020: loss of GBP12.9m).

-- On 29 December 2020, in line with its previously communicated intentions, the Board announced the successful fund raising of GBP16.2m (before expenses of GBP1.5m) and its conversion to an AIM Investing Company. The Company appointed DBAY Advisors Limited ("DBAY") as its Investment Manager.

-- On 9 February 2021, the Company announced a change of name to the Logistics Development Group plc.

-- On 1 April 2021, David Facey joined the board as a non-executive director and chair of the Audit Committee.

Subsequent events

-- On 1 July 2021, the Company announced the disposal of its indirect interest in GWSA, the holding company for the Eddie Stobart, The Pallet Network, iForce, Eddie Stobart Europe and The Logistics People businesses, to Culina Group Limited ("Culina") (the "Transaction").

-- As at 31 May 2020, the fair value of Company's investment in a parent company of GWSA was GBP57.9m (2020: GBP35.8m). The Company announced that it expected to receive a net cash inflow from the Transaction of not less than GBP125m.

-- At the date of this report the Company has received a net cash inflow of GBP125m, including repayment of the recent GBP6m investment in the PIK loan. Further amounts may be received when the completion accounts for the Transaction are finalised.

-- The investment return of not less than GBP125m implies a multiple of approximately 3.5x compared to the NAV of GBP35.8m as at 30 November 2020, or an increase of 2.2x compared to the NAV at the end of the reporting period of GBP57.9 million.

-- As at the date of this announcement, following the Transaction, the Company holds no material investment assets, is debt free and has an available cash balance in excess of GBP130m or 18.5p per share.

-- The Board has been informed by the Investment Manager that it is reviewing a number of investment opportunities, and the Board and Investment Manager remain committed to generating attractive investment returns for shareholders.

1 For the purposes of these results the "GWSA Group" means GreenWhiteStar Acquisitions Limited and its subsidiaries at 31 May 2020, which were subsidiaries of the Company prior to the transaction with DBAY in December 2019 (2) Underlying profit/loss before tax is defined as profit/loss before tax adding back exceptional items.

2 Underlying profit/loss before tax is defined as profit/loss before tax adding back exceptional items.

The Interim Results are also available to be viewed on, or downloaded from, the Company's corporate website at www.ldgplc.com

Further enquiries:

 
 Logistics Development Group plc       Via FTI Consulting 
 
 FTI Consulting                        +44 (0) 20 3727 1340 
 Nick Hasell / Alex Le May 
 
 Strand Hanson Limited 
  (Financial and Nominated Adviser) 
  James Dance / James Spinney          +44 (0) 02 7409 3494 
 
  Investec Bank plc 
  (Broker) 
  Gary Clarence / Harry Hargreaves      +44 (0) 20 7597 5970 
 
 

Business update

As highlighted in the Company's announcements in December 2020, the conversion of the Company to an AIM quoted Investing company was overwhelmingly approved by shareholders following the successful fund raising of GBP16.2m before fees of GBP1.5m. Following the conversion to an AIM quoted Investing company, DBAY was appointed as Investment Manager to the Company.

At the reporting date the Company continued to hold an investment in GWSA Group which was held through the Company's 49 per cent. stake in Marcelos Limited ("Marcelos") and Marcelos' wholly owned subsidiary Alpha Cassiopeiae Limited ("Alpha C"). GWSA is the holding company for the Eddie Stobart, The Pallet Network, iForce, Eddie Stobart Europe and The Logistics People businesses. In early May 2021 the Company acquired for GBP6m a 10.9 per cent legal and beneficial interest in Alpha Persei Limited ("Alpha P"), which is the holder of an 18 per cent PIK loan note issued by Alpha C.

The Company has elected to measure its investments in Marcelos and Alpha P at fair value through profit and loss. The election is taken on the basis of the investment being a 'venture capital' investment under IAS 28 'Investments in Associates and Joint Ventures'. The strategy of the Company as an Investing company is to generate value though holding investments for the short to medium term. Therefore, the Directors believe that the fair value method of accounting for the investments is in line with the strategy of the Company.

Throughout the reporting period, the GWSA Group companies continued to thrive and to deliver excellent service to its customers. Since the start of the HY21 period, despite the challenging operational environment due to Covid-19, the trading entities won substantial new contracts and made further progress in filling available warehouse space. The financial performance of the GWSA Group continued to improve and senior debt was reduced on the back of improved cash flow generation.

Outlook and investment update

On 1 July 2021, the Company announced the disposal of its indirect interest in GWSA, the holding company for the Eddie Stobart, The Pallet Network, iForce, Eddie Stobart Europe and The Logistics People businesses. Alpha C completed the sale of its wholly owned subsidiary, GWSA, to Culina Group Limited ("Culina") for an undisclosed consideration (the "Transaction") and the Company consented to the Transaction pursuant to the Marcelos shareholders' agreement. As at 31 May 2021, the fair value of LDG's investment in Marcelos was GBP57.9m (2020: GBP35.8m). The Company announced that it expected to receive a net cash inflow from the Transaction of not less than GBP125m.

At the date of this report the Company has received a net cash inflow of GBP125m, including repayment of the recent GBP6m investment in the PIK loan held by Alpha P Limited. Further amounts may be received when the completion accounts for the Transaction are finalised.

The investment return of not less than GBP125m implies a multiple of approximately 3.5x compared to the NAV of GBP35.8m as at 30 November 2020, or an increase of 2.2x compared to the NAV at the end of the reporting period of GBP57.9 million.

As at the date of this announcement, following the Transaction, the Company holds no material investment assets, is debt free and has an available cash balance in excess of GBP130m or 18.5p per share.

The Board has been informed by DBAY Advisors Limited, the Company's Investment Manager, that it is reviewing a number of investment opportunities, and the Board and Investment Manger remain committed to generating attractive investment returns for all LDG shareholders.

Interim review for the six months ended 31 May 2021

Background

As at 31 May 2021, the Company indirectly owned 49 per cent of the GreenWhiteStar Acquisitions Limited ("GWSA") Group via its 49 per cent equity interest in Marcelos Limited ("Marcelos"). The Company also held a 10.9 per cent equity interest in Alpha Persei Limited, the holder of an 18 per cent PIK note issued by Alpha Cassiopeiae Limited, which it acquired in early May 2021.

Summary of HY21 results

The Company reported an underlying profit before tax of GBP21.5m (2020: loss of GBP16.4m) in the period before exceptional items of GBP0.1m (2020: GBP3.4m). On a statutory basis, the reported profit before tax was GBP21.6m (2020: loss of GBP12.9m). Administrative expenses are significantly lower than in the corresponding period because the Company no longer incurs a share-based payment charge, attracts significantly reduced insurance costs and also much lower professional fees (legal/audit).

Earnings per share

Statutory basic and diluted earnings per share were a profit of 4.2p (2020: loss of 3.4p).

Exceptional items

During the reporting period the Company recognised a GBP0.1m income in respect of a VAT refund. During the comparable period, the Company recognised income in relation to the transition costs of GBP2.9m associated with the disposal of GWSA and audit fees of GBP0.6m. The costs were ultimately borne by GWSA in accordance with the DBAY transaction deal arrangements.

Dividends

The Company did not pay a final dividend for the year ended 30 November 2020 and the Board has decided not to recommend an interim dividend payment.

Tax

For the six months to 31 May 2021, the Company has incurred tax losses and is no longer part of a tax group. Therefore, the Company did not recognise current and deferred assets as the Directors do not consider that there is sufficient certainty over their recovery.

Accounting matters

Investment in GreenWhiteStar Acquisitions Group

At the reporting date, the Company had as its significant investment its indirect ownership of a 49 per cent of GWSA Group via its ownership of 49 per cent of Marcelos. The Directors have elected to measure investments held at fair value through profit or loss rather than to equity account.

The Company has revalued its investment in Marcelos to GBP57.9m (thus incurring a GBP22.1m gain) to reflect the market capitalisation of the Company as at 31 May 2021 after adjusting for other material investments and cash balances. The Directors believe that using observable market inputs at the period end represents the most suitable valuation methodology given the short trading period since the acquisition and the continuing dislocating effects of Covid-19. In addition, the Directors have reviewed other valuation metrics such as peer group trading multiples. Based on these metrics the Directors believe the valuation of GBP57.9m is justifiable, albeit at the lower end of the range of possible values.

Statement of Comprehensive Income

for the six months ended 31 May 2021

 
                                                        Six months   Six months 
                                                             ended        ended 
                                                            31 May       31 May 
                                                              2021         2020 
                                                         Unaudited    Unaudited 
                                                Notes      GBP'000      GBP'000 
---------------------------------------------  ------  -----------  ----------- 
 Gain/(loss) on investments measured 
  at fair value through profit or loss              2       22,175     (15,000) 
---------------------------------------------  ------  -----------  ----------- 
 Administrative expenses: before exceptional 
  items                                                      (657)      (1,345) 
 Administrative expenses: exceptional 
  items                                             3           90        3,445 
---------------------------------------------  ------  -----------  ----------- 
 Total administrative expenses                               (567)        2,100 
 Profit/(loss) from operating activities                    21,608     (12,900) 
---------------------------------------------  ------  -----------  ----------- 
 
 Profit/(loss) before tax                                   21,608     (12,900) 
---------------------------------------------  ------  -----------  ----------- 
 
 Income tax charge                                  5            -            - 
 Profit/(loss) and total comprehensive 
  expense for the period                                    21,608     (12,900) 
---------------------------------------------  ------  -----------  ----------- 
 
 Earnings per share 
 Basic profit/(loss)                                6         4.2p       (3.4p) 
 Diluted profit/(loss)                              6         4.2p       (3.4p) 
---------------------------------------------  ------  -----------  ----------- 
 

There are no items of other comprehensive income to be disclosed.

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes which form part of these extracts of the financial statements.

Statement of Financial Position

as at 31 May 2021

 
                                                                30 Nov 
                                               31 May 2021        2020 
                                                 Unaudited     Audited 
                                       Notes       GBP'000     GBP'000 
------------------------------------  ------  ------------  ---------- 
 Assets 
 Non-current assets 
 Investments at fair value through 
  profit or loss                           2        64,023      35,848 
                                                    64,023      35,848 
------------------------------------  ------  ------------  ---------- 
 Current assets 
 Other receivables                         7            88          28 
 Cash and cash equivalents                           7,943         652 
------------------------------------  ------  ------------  ---------- 
                                                     8,031         680 
------------------------------------  ------  ------------  ---------- 
 
 Total assets                                       72,054      36,528 
------------------------------------  ------  ------------  ---------- 
 Liabilities 
 Current liabilities 
 Amounts owed to group undertakings        7         (910)     (1,235) 
 Other payables                            7         (247)     (2,184) 
------------------------------------  ------  ------------  ---------- 
                                                   (1,157)     (3,419) 
------------------------------------  ------  ------------  ---------- 
 
 Total liabilities                                 (1,157)     (3,419) 
 Net assets                                         70,897      33,109 
------------------------------------  ------  ------------  ---------- 
 
 Equity 
 Share capital                             8         7,022       3,793 
 Share premium                             8       157,439     146,002 
 Own shares                                          (857)     (2,611) 
 Retained earnings                                (92,707)   (114,075) 
 Total equity                                       70,897      33,109 
------------------------------------  ------  ------------  ---------- 
 

The above Statement of Financial Position should be read in conjunction with the accompanying notes which form part of these extracts of the financial statements.

Signed on behalf of the Board on

A J Collins

19 August 2021

Director

Company Number: 8922456

Statement of Changes in Equity

for the six months ended 31 May 2021

 
                                                                         Share 
                              Share      Share     Merger       Own    options    Retained      Total 
                            capital    premium    reserve    shares    reserve    earnings     equity 
                            GBP'000    GBP'000    GBP'000   GBP'000    GBP'000     GBP'000    GBP'000 
------------------------  ---------  ---------  ---------  --------  ---------  ----------  --------- 
 Balance as at 30 
  November 2019               3,793    146,002      7,950   (2,700)      4,218   (117,269)     41,994 
------------------------  ---------  ---------  ---------  --------  ---------  ----------  --------- 
 Loss for the period              -          -          -         -          -    (12,900)   (12,900) 
 Share based payment 
  expense                         -          -          -         -        491           -        491 
 Transfers (see notes 
  8 and 9)                        -          -    (7,950)         -    (4,709)      12,659          - 
 Balance at 31 May 
  2020                        3,793    146,002          -   (2,700)          -   (117,510)     29,585 
------------------------  ---------  ---------  ---------  --------  ---------  ----------  --------- 
 
 
                                                                         Share 
                              Share      Share     Merger       Own    options    Retained      Total 
                            capital    premium    reserve    shares    reserve    earnings     equity 
                            GBP'000    GBP'000    GBP'000   GBP'000    GBP'000     GBP'000    GBP'000 
------------------------  ---------  ---------  ---------  --------  ---------  ----------  --------- 
 Balance as at 30 
  November 2020               3,793    146,002          -   (2,611)          -   (114,075)     33,109 
------------------------  ---------  ---------  ---------  --------  ---------  ----------  --------- 
 Profit for the period            -          -          -         -          -      21,608     21,608 
 Issue of share capital       3,229     12,951          -         -          -           -     16,180 
 Transfers (see notes 
  8 and 9)                        -    (1,514)          -     1,754          -       (240)          - 
 Balance at 31 May 
  2021                        7,022    157,439          -     (857)          -    (92,707)     70,897 
------------------------  ---------  ---------  ---------  --------  ---------  ----------  --------- 
 

Cash Flow Statement

for the six months ended 31 May 2021

 
                                                                 Six months 
                                                    Six months        ended 
                                                         ended       31 May 
                                                   31 May 2021         2020 
                                                     Unaudited    Unaudited 
                                          Notes        GBP'000      GBP'000 
---------------------------------------  ------  -------------  ----------- 
 Cash flows from operating activities 
 Profit/(loss) for the period                           21,608     (12,900) 
 Adjustments for: 
 Equity settled share-based payment 
  expense                                     9              -          491 
 (Gain)/loss on investments measured 
  at fair value through profit or 
  loss                                        2       (22,175)       15,000 
 Changes in: 
 Other receivables                            7           (60)       53,336 
 Other payables                               7        (1,937)     (56,027) 
---------------------------------------  ------  -------------  ----------- 
 Cash used in operating activities                     (2,564)        (100) 
---------------------------------------  ------  -------------  ----------- 
 Cash flows from investing activities: 
 Purchase of investment                                (6,000)            - 
---------------------------------------  ------  -------------  ----------- 
 Net cash outflow from investing 
  activities                                           (6,000)            - 
---------------------------------------  ------  -------------  ----------- 
 Cash flows from financing activities: 
 Issue of share capital                                 16,180            - 
 Repayment of related party loan                         (325)            - 
---------------------------------------  ------  -------------  ----------- 
 Net cash inflow from financing 
  activities                                            15,855            - 
---------------------------------------  ------  -------------  ----------- 
 Increase/(Decrease) in cash and 
  cash equivalents                                       7,291        (100) 
---------------------------------------  ------  -------------  ----------- 
 Cash and cash equivalents at the 
  start of the financial period                            652          362 
 Cash and cash equivalents at the 
  end of the financial period                            7,943          262 
---------------------------------------  ------  -------------  ----------- 
 

The above Statement of Changes in Equity and Cash Flow Statement should be read in conjunction with the accompanying notes which form part of these extracts of the financial statements.

Notes to the Financial Statements

for the six months ended 31 May 2021

   1.   General information 

The Directors of Logistics Development Group plc (the "Company") present their interim report and the unaudited financial statements for the period ended 31 May 2021 ("Interim Financial Statements"). The Company is a public company limited by shares and incorporated and domiciled in the UK. Its registered address is 3 More London Riverside, 4(th) Floor, London SE1 2AQ. The Company changed its name on 9 February 2021.

The Interim Financial Statements have not been audited and were approved by the Board of Directors on 21 August 2021. The information for the period ended 31 May 2021 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Interim Financial Statements should be read in conjunction with the annual financial statements for the year ended 30 November 2020, which were prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified and (ii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The Interim Financial Statements were prepared in accordance with International Financial Reporting Standards ("IFRS") and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Basis of preparation

The interim financial statements for the period ended 31 May 2021 have been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting. The interim financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 November 2020 and any public announcements made by the Company during the interim reporting period.

The Interim Financial Statements are presented in pounds sterling, rounded to the nearest thousand, unless otherwise stated. They were prepared under the historical cost convention, except for financial assets recognised at fair value through profit or loss, which have been measured at fair value.

Prior to the year ended 30 November 2020 the Company presented consolidated financial statements. In the comparative period on 9 December 2019, the Company disposed of its only subsidiary undertaking, GreenWhiteStar Acquisitions Limited ("GWSA"), as discussed further in note 2. At the reporting date of 31 May 2021, the Company has no subsidiaries and, as such, no consolidated financial statements have been presented. The Interim Financial Statements therefore present Company only information for the current and comparative periods.

Going concern

On 1 July 2021, the Company announced the disposal of its indirect interest in GWSA and the Company currently holds no investments and a cash balance in excess of GBP125m and has minimal liabilities at the reporting date, The Directors therefore expect that the Company has sufficient resources to continue in operation for the foreseeable future, a period of at least 12 months from the date of this report. The Directors have prepared a cash flow forecast for period of 3 years which indicate that available funds significantly exceed anticipated expenditure. Consequently, the Directors of the Company continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Accounting policies

The accounting policies adopted in the preparation of the Interim Financial Statements are consistent with those applied in the preparation of the Company's financial statements for the year ended 30 November 2020 .

(a) Fair value measurement of the Company's investments utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different levels based on how observable the inputs used in the valuation technique utilised are (the 'fair value hierarchy'):

- Level 1: Quoted prices in active markets for identical items (unadjusted);

- Level 2: Observable direct or indirect inputs other than Level 1 inputs;

- Level 3: Unobservable inputs (i.e. not derived from market data and may including using multiples of trading results or information from recent transactions).

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.

(b) Financial instruments

- Financial assets - other receivables and amounts owed to related undertakings. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, such assets are measured at amortised cost using the effective interest method, less any impairment losses.

- Cash and cash equivalents - in the Statement of Financial Position, cash includes cash and cash equivalents excluding bank overdrafts. No expected credit loss provision is held against cash and cash equivalents as the expected credit loss is negligible.

- Financial liabilities - other payables and amounts owed to related undertakings. Such liabilities are initially recognised on the date that the Company becomes party to contractual provisions of the instrument. The Company derecognised a financial liability when its contractual obligations are discharged, cancelled or expire. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Share capital - Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

(c) Share-based payments - the Company operated a number of equity-settled, share-based compensation plans, under which GWSA and the Company received services from employees as consideration for equity instruments (options) of the Company. The fair values of the employee services received in exchange for the grant of the options was recognised as an expense. The cancellation of equity-settled plans is accounted for as an acceleration of the vesting period and therefore any amount unrecognised that would otherwise have been charged should be recognised immediately.

(d) Exceptional items - items that are material in size or nature and non-recurring are presented as exceptional items in the Statement of Comprehensive Income. The Directors are of the opinion that the separate recording of exceptional items provides helpful information about the Company's underlying business performance. Events which may give rise to the classification of items as exceptional include restructuring of business units and the associated legal and employee costs, costs associated with business acquisitions, impairments and other significant gains or losses.

(e) Alternative performance measures (APMs) - APMs, such as underlying results, are used in the day-to-day management of the Company, and represent statutory measures adjusted for items which, in the Directors' view, could influence the understanding of comparability and performance of the Company year on year. These items include non-recurring exceptional items and other material unusual items.

(f) Tax - tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

(g) Operating segments - the Company now has a single operating segment on a continuing basis, namely investment in the logistics services business.

(h) Fund raise costs - transaction costs incurred in anticipation of an issuance of equity instruments are recorded as a deduction from the retained earnings reserve in accordance with IAS 32 and the Companies Act 2006.

(i) Own shares reserve - transfer of shares from the trust to employees is treated as a realised loss and recognised as a deduction from the retained earnings reserve.

New and amended standards adopted by the Company

There are no IFRS standards or IFRIC interpretations that are mandatory for the period ending 31 May 2021 that have a material impact on the financial statements of the Company.

Significant accounting judgements

In the application of the Company's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Company's accounting policies

In applying the Company's accounting policies, the Directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below) and have been identified as being particularly complex or involve subjective assessments.

(i) Measurement of the investments - the Company has elected to measure its investments in Marcelos Limited, the new intermediate holding company of Eddie Stobart Group, and Alpha Persei Limited, the holder of an 18 per cent loan note, at fair value through profit and loss. The election is taken on the basis of the investments being 'venture capital' investments under IAS 28 'Investments in Associates and Joint Ventures'.

On 29 December 2020, the Company completed its transition to become an Investing company on AIM with an investment manager in place. The strategy of the Company as an Investing company is to generate value though holding investments for the short to medium term. Therefore, the Directors believe that the fair value method of accounting for the investments is in line with the strategy of the Company.

Had the election not been made, the investments in Marcelos Limited and Alpha Persie Limited would have been subject to equity accounting that involves recognition of the investment at cost and subsequent measurement at cost plus a share of profits and losses of those companies less dividends received.

Key sources of estimation in applying the Company's accounting policies

The Directors believe that there are no key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

2. Investments at fair value through profit or loss

Investment of 100 per cent shares of GWSA, held at cost less impairment, was disposed on 9 December 2019. No gain or loss was recognised on disposal as the investment had been written down to its recoverable value in the second half of 2019.

In exchange for the sale of the shares in GWSA, an investment of 49 per cent of shares of Marcelos Limited, the new intermediate holding company of Eddie Stobart Group, was received and this investment was recognised. The Directors elected to measure the investment at fair value through profit or loss and categorised it within Level 2 of the fair value hierarchy.

 
                                            Alpha Persei 
                         Marcelos Limited        Limited 
                                                           Unaudited 
                                  GBP'000        GBP'000     GBP'000 
 30 November 2020                  35,848              -      35,848 
 Disposals during the 
  period                                -              - 
 Additions during the 
  period                                -          6,000       6,000 
 Change in fair value              22,101             74      22,175 
 31 May 2021                       57,949          6,074      64,023 
----------------------  -----------------  -------------  ---------- 
 

The fair value of the investment in Marcelos Limited was calculated on the basis of the market capitalisation of Logistics Development Group plc after adjusting for the investment in Alpha Persei Ltd and cash balances, as the Directors considered this best represents the value of the GWSA Group. This is because, as at the 31 May 2021, the investment in Marcelos Limited was the material asset held by the Company and therefore the Directors believe it is reasonable to infer a fair value for the GWSA Group based upon the Company's market capitalisation. The Directors will be reviewing whether the valuation method is appropriate at 30 November 2021 depending on the number of investments held by the Company.

The following inputs were used when calculating market capitalisation

 
                          30 November    31 May 
                                 2020      2021 
 Number of shares '000        379,347   702,206 
 Share price, p                  9.45     10.10 
 Market capitalisation         35,848    70,923 
-----------------------  ------------  -------- 
 

The share price of 10.10p (2020: 9.45p) represents the price of Logistics Development Group plc shares at the reporting date.

3. Exceptional items

During the reporting period, the Company recognised income in relation to exceptional charges with respect to the fund-raising activities concluded in December 2020 of GBP90,000.

During the comparative period, the Company recognised income in relation to the transition costs of GBP2,875,000 associated with the disposal of GWSA and 2019-related audit fees of GBP570,000. The costs were ultimately borne by GWSA in accordance with the deal arrangements.

4. Dividends

The Company did not pay a final dividend for the year ended 30 November 2020 and the Board has decided not to recommend an interim dividend payment.

5. Taxation

The Company did not recognise current and deferred income tax charge or credit. The deferred tax asset of GBP363,000 (2020: GBP57,000) was not recognised as the Directors do not consider that there is sufficient certainty over its recovery. This unrecognised asset can be carried forward indefinitely.

6. Earnings per share

Basic earnings per share amounts are calculated by dividing profit/(loss) for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the 12 months to the period end.

Diluted earnings per share amounts are calculated by dividing the loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the potentially dilutive instruments into ordinary shares. The Company's share options were considered anti-dilutive and were cancelled on 9 December (see note 9) and hence there are no dilutive instruments to be included in the calculation.

 
                                                     Six months   Six months 
                                                          ended        ended 
                                                         31 May       31 May 
                                                           2021         2020 
                                                      Unaudited    Unaudited 
                                                        GBP'000      GBP'000 
-------------------------------------------------   -----------  ----------- 
 Profit/(loss) attributed to equity shareholders         21,608     (12,900) 
--------------------------------------------------  -----------  ----------- 
 
 Weighted average number of Ordinary 
  Shares - Basic                                        514,683      379,347 
--------------------------------------------------  -----------  ----------- 
 Weighted average number of Ordinary 
  Shares - Diluted                                      514,683      379,347 
--------------------------------------------------  -----------  ----------- 
 
 Basic profit/(loss) per share for total 
  operations                                               4.2p       (3.4p) 
 Diluted profit/(loss) per share for 
  total operations                                         4.2p       (3.4p) 
--------------------------------------------------  -----------  ----------- 
 
 

7. Financial assets and liabilities

 
                                          Six months     Year ended 
                                               ended    30 November 
                                         31 May 2021           2020 
                                           Unaudited        Audited 
                                             GBP'000        GBP'000 
------------------------------------   -------------  ------------- 
 Financial assets at fair value 
  through the profit or loss 
 Investments at fair value through 
  profit or loss                              64,023         35,848 
 Financial assets at amortised 
  cost 
 Amounts owed by group undertakings                -              - 
 Other receivables                                88             28 
 Total financial assets                       64,111         35,876 
-------------------------------------  -------------  ------------- 
 Financial liabilities at amortised 
  cost 
 Amounts owed to group undertakings              910          1,235 
 Other payables                                  247          2,184 
-------------------------------------  -------------  ------------- 
 Total financial liabilities                   1,157          3,419 
 
 Cash                                        (7,943)          (652) 
 Net (cash)/debt                             (7,033)            583 
-------------------------------------  -------------  ------------- 
 

All financial assets and liabilities mature within one year. The fair value of those assets and liabilities approximates their book value. The net (cash)/debt figure above reflects the net of cash and related party borrowings.

Other receivables represent prepayments. Other payables include accruals of GBP178,000 (2020: GBP595,000). The prior period accruals balance of GBP595,000 consisted predominantly of exceptional accruals utilised in the current period.

8. Capital and reserves

 
                                    No of      Share 
                                   shares    capital   Share premium   Own shares 
                                     '000    GBP'000         GBP'000      GBP'000 
-------------------------------  --------  ---------  --------------  ----------- 
 Ordinary shares in issue 
  at 30 November 2020             379,347      3,793         146,002      (2,611) 
 Issued of share capital in 
  the period                      322,859      3,229          12,951            - 
 Adjustment - exceptional 
  charges                               -          -            (37)            - 
 Transfers - retained earnings          -          -         (1,477)        1,754 
 Ordinary shares in issue 
  at 31 May 2021                  702,206      7,022         157,439        (857) 
-------------------------------  --------  ---------  --------------  ----------- 
 

Following a successful fund-raising exercise completed in December 2020, the Company issued a further 322.9m shares for gross proceeds including share premium of GBP16.2m. The costs incurred in relation to this fund-raising exercise of GBP1.5m were initially charged to Retained earnings in the prior period but are now reclassified in the current period to Share premium in line with accepted accounting practise.

The Own shares reserve of GBP2.6m was created at the inception of Company share award plans (see Note 9) and were held in an employee benefit trust. During the reporting period the qualifying conditions for the share awards were met and consequently the relevant shares were physically transferred to those qualifying employees resulting in a GBP1.8m transfer to Retained earnings from Own shares reserve.

9. Share based payments

On 9 December 2019, the Company cancelled all of its share award plans: Long-term incentive plan (LTIP) and Share incentive plan (SIP). Accelerated charges in respect of both award plans were recognised in 2020; no charges have been recognised in respect of either plan in the reporting period. The balance of the share option reserve was transferred into retained earnings in the 2020 reporting year. SIP shares that remained in the employee benefit trust at the beginning of this reporting period end have, when qualifying conditions were met, now been transferred to those qualifying individuals concerned. The balance remaining in the employee benefit trust represents shares awarded to individuals who did not meet the qualifying conditions and these shares will now be dealt with by the trustees in accordance with the scheme rules and accepted accounting practise.

10. Significant non-cash transactions

No significant non-cash transactions took place in the reporting period of six months to 31 May 2021.

11. Contingent liabilities

As at 30 November 2019, the Company was part of an unlimited bank cross guarantee arrangement with other subsidiary undertakings with a maximum potential liability of GBP124m.

On 9 December 2019, the Company was excluded from the arrangement as, due to the terms of the agreement with the bank, it was no longer part of the GWSA Group. As a result, the Company had no contingent liabilities as at 31 May 2021.

12. Subsequent events

On 1 July 2021, the Company announced the disposal of its interest in the GWSA Group, which is held through the Company's 49 per cent. stake in Marcelos and Marcelos' wholly owned subsidiary Alpha C. GWSA is the holding company for the Eddie Stobart, The Pallet Network, iForce, Eddie Stobart Europe and The Logistics People businesses.

Alpha C has agreed to sell its wholly owned subsidiary, GWSA (the company that heads the GWSA Group), to Culina Group Limited ("Culina") for an undisclosed consideration (the "Transaction") and the Company has consented to the Transaction pursuant to the Marcelos shareholders' agreement.

As at 31 May 2021, the fair value of the Company's investment in Marcelos was GBP57.9 million (2020: GBP35.8m).

The Company now expects to receive a net cash inflow of not less than GBP125 million, including repayment of the recent GBP6m investment in the PIK loan held by Alpha Persei Limited.

Following the transaction, the Company will hold no material investment assets and an available cash balance in excess of GBP130m.

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END

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August 20, 2021 02:00 ET (06:00 GMT)

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