Logistics Development cashed up after selling Eddie Stobart stake

Investment company Logistics Development Group updated the market on its first half on Friday, which preceded the sale of its indirect interest in the GreenWhiteStar Acquisitions (GWSA) group.

GWSA is the holding company for the Eddie Stobart, Pallet Network, iForce, Eddie Stobart Europe and Logistics People businesses.

The AIM-traded firm said underlying profit before tax for the six months ended 31 May 2as “substantially improved” year-on-year at £21.5m, swinging from a loss of £16.4m, before exceptional items of £0.1m, down from £3.4m a year earlier.

Its statutory profit before tax came in at £21.6m, compared to a loss of £12.9m in the first half of 2020.

As at the reporting date of 31 May, the company continued to hold an indirect 49 % equity investment in GWSA, and acquired an indirect 10.9% equity interest in an 18% payment-in-kind loan note with indirect exposure to the performance of GWSA for £6m.

On 31 May, the firm revalued its indirect investment in GWSA to £57.9m, incurring a £22.1m gain, to reflect its market capitalisation at period end.

That valuation was after adjusting for the recently-acquired indirect investment in the loan note.

During the first half, the GWSA trading entities continued to deliver “excellent service” to customers, with the board reporting that since the start of the first period, despite a “challenging” operational environment due to Covid-19, it 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 six months, with senior debt reduced on the back of improved cash flow generation.

On 29 December, in line with its previously-stated intentions, the directors announced the successful fund raising of £16.2m before expenses, and its conversion to an AIM investing company.

The firm appointed Dbay Advisors as its investment manager.

Following that, on 9 February, the company announced a change of name to Logistics Development Group, from its previous name Eddie Stobart Logistics.

“On 1 July, 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,” the board said of the company’s developments since period-end.

“The company announced that it expected to receive a net cash inflow from the transaction of not less than £125m.”

As of Friday, Logistics Development Group said it had indeed received a net cash inflow of £125m, including repayment of the recent £6m investment in the payment-in-kind loan.

It said further amounts could be received when the completion accounts for the transaction were finalised.

Following the sale, the company said it held no material investment assets, was debt free, and had an available cash balance of more than £130m, 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.”

At 0927 BST, shares in Logistics Development Group were up 5.8% at 14.6p.