Eddie Stobart, the UK infrastructure and support services company, suspended trading in its shares on Friday morning, after the firm discovered a £2million accounting discrepancies in its 2018 figures. The company also gave a heads up that its half-yearly results for this year would be “significantly lower” than predicted.
The company known for its distinctive green and red, trucks and trailers said that it is suspending its shares till early December. In a statement to share market, it said that it is ‘applying a more prudent approach to revenue recognition … as well as considering the appropriateness of certain provisions’. The group has put its dividend policy up for review. It has also delayed the publication of its half-yearly results for this year, to September, which was about to be out on August 29.
The difference in the amount was brought to light during an account review, undertaken by the chief financial officer, Anoop Kang, alongside PwC auditors. It was found that the company’s 2018 operating profits were overstated by about 4%.
In a shocking move, the firm also announced the stepping down of its chief executive, Alex Laffey, with an immediate effect. Laffey has been part of the company for the past four years. The outgoing head is said to be replaced by Sebastien Desreumaux, who is currently the chief executive of the company’s retail business, iForce, and head of contract logistics.
Over the period of past two years, the company’s share price has gone considerably down, from £1.60 a share in early 2017, to 70p, before trading in its shares got suspended.
Besides the accounting blunder, the firm’s board sounded confident about its future. It said, “The board has full confidence in the ability of Eddie Stobart’s management team to deliver improved performance for the group going forward, and remains confident in the strength of the underlying business.”
The company, named after its founder, established in 1970, claims to operate about 2,700 vehicles and 43 logistical hubs in the UK and Europe, and employ around 6,600 people, as per the website.