Julia Irvine 10 Jul 2019 11:43am

Lease accounting puts brake on Eddie Stobart

Transport and logistics group Eddie Stobart has been forced to adjust its 2018 profits downwards by around £2m after its new CFO found an error in the way the company had been lease accounting for four legacy sites

Anoop Kang, who moved across from health services provider Cambian Group on 1 April this year, spent his first few weeks at Stobarts reviewing the group’s prior year financial statements. He concluded that a prior year adjustment was necessary.

In its half-year trading update statement to the Stock Exchange yesterday, the group revealed that the likely cumulative effect on the results for the year to 30 November 2018 would be to reduce earnings before interest and tax (EBIT) by approximately £2m.

It will also have to adjust retained earnings in 2017 by around £11.5m, largely as a result of the lease accounting involving four legacy sites.

“The majority of these adjustments are non-cash and do not affect our banking covenants,” the statement said.

“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.”

Kang, an ICAEW chartered accountant, took over from Damien Harte who retired at the end of March due to family health reasons.

In his two and a half years as CFO of Stobarts, Harte successfully led the business through its April 2017 flotation, as well as the associated refinancing and subsequent acquisitions.