TIDMXPD
RNS Number : 1133K
Xpediator PLC
20 April 2020
20 April 2020
XPEDIATOR PLC
("Xpediator" or "the Company" or "the Group")
Final Results for the Year Ended 31 December 2019
Xpediator Plc, (AIM: XPD) a leading provider of freight
management services across the UK and Central and Eastern Europe,
is pleased to announce its audited results for the year ended 31
December 2019 .
2019 Highlights
Strong revenue growth combined with good cash generation
-- Substantial increase in revenues by 19.0% to GBP213.2 million
-- Like for like revenues increased by 10.4% reflecting good organic growth
-- Delivered ahead of revised expectations with adjusted profit before tax of GBP5.2m(1)
-- Improved cash generation with a strong focus on working capital
-- Maintained financial headroom with positive net cash
(excluding liabilities arising from the impact of right-of-use
assets debt) of GBP7.0 million(,) as at 31 December 2019
-- Adjusted earnings per share decreased by 41.7% to 2.80p
-- Final proposed scrip dividend, with the intention to return
to cash dividends from the 2020 half year results
Operational Highlights
-- Freight forwarding revenues increased by 16.6% to GBP159.6
million with the Baltics and Balkans key areas of strength despite
strong prior year comparators
-- Pall-Ex franchise in Romania also performed strongly again
handling in excess of 730,000 palletised freight (2018: 61,000) a
19.7% increase
-- Logistics revenues increased by 32.2% to GBP47.5 million with
increased occupancy in the Romanian Baltics and Balkans key areas
of strength despite strong prior year comparators
-- Affinity Transport Solutions continued its steady growth
performance, delivering GBP2.5 million of operating profit before
central overhead allocation (excluding exceptional items)
-- Opening of an office in Shanghai to support the operation of a key contract
Prospects for 2020 & COVID-19 Impact
-- Asset light structure and flexible cost base, enabling the
Group to manage the business during the early days of the current
COVID-19 crisis
-- Overall demand for transport services and solutions has
continued with high demand in most sectors, whilst some areas have
seen a slow down due to impacts of COVID-19
-- Trading of the Group in Q1-2020 was broadly in line with management expectations
-- To further protect and manage the business responsibly during
this extraordinary period the Board has introduced temporary pay
reductions across the business, reduced overheads where appropriate
and is minimising capital investment projects. In addition, to
conserve cash, the final dividend for 2019 will be structured as a
scrip dividend
-- At the same time, the Board is mindful of the opportunities
that may arise from the current crisis and is determined the
business will be well placed to capitalise
Stephen Blyth, Chief Executive Officer of Xpediator, said "2019
saw our revenues increase substantially by 19% to GBP213.2 million,
and helping to end the year with strong cash balances. However, the
outbreak of COVID-19 has changed the commercial world, with the
duration and ultimate impact of the virus are as yet unknown. Our
objective is to protect our staff and business, and to ensure we
are well placed to resume normal operations and potentially
capitalise on opportunities when the virus impact subsides. As an
asset light business with low fixed overheads we are better placed
than some, with demand for our services holding up and in some
areas seeing an increase. However, given the current uncertain
environment we have taken measures to protect the business by
reducing salaries and costs across all entities. The Group
continues to seek acquisitions and the current crisis will, we
believe, provide many opportunities to reach our target to grow the
business over the next few years. Ultimately the Board believes
Xpediator is well placed to operate through this crisis and emerge
in a good position"
(1) Adjusted profit before tax excludes the impact of
exceptional costs relating to aborted acquisition costs of GBP0.19m
(2018: GBPnil), additional contingent deferred consideration on
Anglia Group Forwarding Limited of GBP0.451m (2018: GBPnil),
GBP0.215m (2018: GBPnil) relating to additional contingent deferred
consideration due on Regional Express acquisition, GBPnil (2018:
GBP0.318m) relating to acquisition costs, GBP0.294m (2018:
GBP0.232m) unwind and addback of discount on deferred consideration
and GBP1.407m (2018: GBP1.033m) relating to the amortisation on the
intangible assets relating to the acquired entities and GBP0.419m
(2018: GBPnil) relating to the net consolidated income statement
impact following the application of IFRS 16.
Enquiries
Xpediator plc Tel: +44 (0)330 043 2395
Stephen Blyth, Chief Executive Officer Email: info@xpediator.com
Robert Ross, Chief Financial Officer
Cenkos Securities (Nominated Advisor & Joint Broker) Tel: +44 (0)20 7397 8900
Max Hartley, Max Gould (Corporate Finance)
Nick Searle (Sales)
Cantor Fitzgerald Europe (Joint Broker) Tel: +44 (0)20 7894 7000
David Foreman, Michael Boot (Corporate Finance)
Caspar Shand Kydd (Sales)
Novella Communications (Financial Public Relations) Tel: +44 (0)20 3151 7008
Tim Robertson
Fergus Young
This announcement has been released by Stephen Blyth, Chief
Executive Officer, on behalf of the Company.
Chairman's Statement
2019 has demonstrated the growth in demand for the Group's
services. Delivering GBP213 million of revenues reflects the
significant increase in the scale of the business over the last
three years when annual revenues were just GBP73 million.
Importantly, expansion has come from a balanced mix of acquisition
and organic growth further evidenced in these results with like for
like revenues increasing by over 10%.
Adjusted profit before tax was GBP5.2 million (2018: GBP7.2
million) which led to adjusted earnings per share of 2.80 pence
(2018: 4.80 pence). Earnings per share on a statutory basis was
0.60 pence (2018: 3.53 pence).
The Group faced some challenges during the first half of 2019
which negatively impacted our profitability. Our e-commerce
business was slowed by a disruption caused by a tightening of "know
your client rules" following the introduction of GDPR regulations
to the distribution chain in Germany and additional marketing spend
was required to stimulate the business' recovery. Our UK logistics
warehouse in Braintree lost a material client and whilst this
customer has been replaced, the warehouse required a
reconfiguration. The warehouse is now well placed to support new
customers and e-commerce activity, a key growth area for the
Group.
Overall, 2019 was a year of investment in people, facilities and
processes to position us for future growth. We continue to invest
in the Group's IT infrastructure to support the enlarged business.
The year saw the establishment of an outsourced IT department in
India, the installation of enhanced Group wide cyber security
systems and the ongoing development of the digitalisation of the
business. A key target for 2020 is for the business to continue its
development of the e-forwarding platform, which will enable a large
part of the freight forwarding activity to be online by the end of
2020, with resultant overhead savings for the future.
Strategically, Xpediator remains focused on establishing its
network of freight management companies across the UK and Europe
with a particular expertise in the fast growing Central and Eastern
European ("CEE") regions. Recognising the market opportunity, the
Group is seeking to exploit the growth across the CEE regions.
The Group continues to have a good pipeline of acquisition
opportunities which meet the acquisition criteria of enhancing the
Group's geographical capabilities, developing our existing
operational locations and extending the Company's international
presence in air and sea transportation.
The Group's Brexit team has been working closely with leading
transport associations and port authorities to plan ahead. The
Group already holds Authorised Economic Operator status which will
be critical in being able to support both exporters and importers
post Brexit under most forecasted scenarios. As a Group, we are
well prepared for Brexit and we see this as an area to grow the
profitability of the Group.
Dividend
Subject to approval by shareholders, the Group will propose a
final dividend via a scrip issue to shareholders in June 2020. This
has been proposed given the current issues around COVID-19 and the
objective of conserving cash where possible, but it is expected
that the Group's 2020 interim dividend will return to being paid in
cash.
Board and management changes
On 8 November 2019, Wim Pauwels and Charles McGurin were
appointed as non-executive Directors, following the retirement of
Geoff Gillo who stepped down from the role on 6 June 2019. Both Wim
and Charles have extensive experience of the transport and
logistics industry and have held senior roles running comparable
businesses to Xpediator.
On 13 November, following Stuart Howard's resignation on 6
September 2019, the Company confirmed the appointment of Robert
Ross as the Chief Financial Officer of the Group. Robert began
working for Xpediator on 2 January 2020 having previously been the
Finance Director of Europa Worldwide Group. He replaces Richard
Myson (who had been acting CFO) who remains with the business
moving to become Chief Commercial Officer and joining the Group
Operating Board.
COVID-19
As the Group announced on 31 March 2020, the wellbeing and
safety of our people, customers and suppliers is Xpediator's first
priority. Where possible individuals are working remotely from
their homes and we are continuing to operate effectively whilst
also taking the appropriate actions to limit the spread of this
virus.
So far in 2020, activity levels have remained broadly in line
with management expectations, with high demand from some sectors
and other areas slowing. In response we have sought to allocate
resource to match demand across the business. While it is hard to
make any predictions under these extraordinary circumstances, based
on very recent trends, the Board believes that demand for our
freight management and warehouse services, both in the UK and
Europe will remain sufficiently robust overall but will be more
volatile in any given month, and that we have the systems and
protocols in place to meet this demand.
We are benefitting from our diverse operations across the UK and
Europe which has already helped us offset challenges in some areas
with higher activity in other markets. Pall-Ex and European road
freight forwarding have been areas of strength together with good
levels of warehouse utilisation. That said, operating in this
market environment is more complicated involving driver shortages
in certain markets, some supply issues, more complex border checks
and general cost inflation most of which can be passed to
clients.
The Group also has the natural advantage of being an asset light
business and does not own a large fleet of trucks. Instead we have
low fixed overheads and typically act as a broker to our clients
sourcing capacity from the market as it is required. Despite being
in a relatively good position, the Board has taken the prudent
decision to introduce temporary pay reductions, reduce costs in
areas of reduced activity and suspend certain capital investment
projects until the crisis has passed.
Outlook
Notwithstanding COVID-19 the Group has made a solid start to
2020 with revenues slightly up on a like for like basis for the
first 3 months of the financial year. This, together with the new
client wins achieved in 2019 gives the Board confidence in
delivering progress in 2020, subject to the outcome of
COVID-19.
However, given current material uncertainties, it is not
practical to give longer term guidance at this time until there is
greater clarity around the duration and full effects of COVID-19 on
our customers, suppliers and our markets.
Alex Borrelli
Non-Executive Chairman
Chief Executive Officer's Statement
I am excited to outline the vision for the development of the
Group over the next 5 years. I also report on our results for year
ended 31 December 2019, which saw the Group's revenues increase by
19%.
We set out at the beginning of the year with the objective to
continue to develop our pan-European service and enhanced
digitalised platform to support the transport, storage and local
delivery of our global customers goods. To this end, we have been
investing in the development of our Group wide IT platforms and
team to accelerate our move towards digitalisation. We have also
significantly expanded the management team, bringing in highly
skilled individuals to support the enlarged business and implement
our plans for further expansion. Although this investment has added
additional cost to the Group, we are now well positioned and
sufficiently resourced, to deliver rapid growth with limited
further investment required to reach our stated targets over the
next five years.
Demand for freight management in the UK and CEE countries was
strong during the year. Changing consumer trends and economic
growth in our core markets, in particular from the CEE region are
driving demand and helping us to develop a more comprehensive
European network of freight management companies. As a business we
are still heavily CEE centric with c58% of the Group's revenue
being generated between mainland Europe.
The financial results achieved in 2019 evidence the progress we
have made across all our markets. Of the GBP213.2 million of
revenues generated in 2019, GBP123.5 million was generated in
Europe (2018 GBP109.0 million) and GBP89.7 million in the UK (2018
GBP70.2 million). We remain weighted towards the CEE region on the
continent where our experience and infrastructure enable us to win
contracts against the larger competitors in our market, and we are
very pleased with our evolution in this region.
The business is performing well, growing both organically and
through acquisition. Good cash generation during the year reflected
a strong focus on working capital and increased financial
disciplines. The Group has a solid financial base with the
financial headroom to support the Group's future ambitions.
The businesses acquired are being integrated and the process is
ongoing to obtain further synergies. Despite the difficulties
currently caused by COVID-19 we are poised and ready for further
acquisitions and we have strengthened the IT, HR, and finance teams
to facilitate more activity.
The opening of the office in Shanghai, China will facilitate the
development of activity with the Chinese customers and the major
contract win secured in H2 2019.
Divisional Review
Freight forwarding
GBP159.6m (2018: GBP136.9 million)
Revenue
GBP3.4m (2018: GBP3.00 million)
Operating profit before exceptional item
Freight forwarding services, largely provided under the Delamode
brand, specialise in connecting CEE countries with the UK and rest
of Europe . In 2019, freight forwarding revenues increased by
GBP22.7 million all of which related to organic revenue and the
full year impact of acquisitions from 2018.
Like for like turnover increased by GBP16.7 million, 12.2% on
2018, driven by new client wins and the expansion of service
offerings into new markets. This included the development of
consolidation services to Italy from Lithuania as well as increased
sea freight activity in Bulgaria.
Freight forwarding revenues across the Baltics and Balkans have
continued to grow significantly against strong prior year
comparatives, with Delamode Baltics revenue up by GBP8.9 million
and Delamode Bulgaria up by GBP4.2 million year on year.
The remaining increase in freight forwarding revenues in 2019
was due to full year contributions from acquisitions completed
during 2018. Benfleet Forwarding Limited made significant
improvements over 2018 with its Far East activity recommencing,
generating increased revenue of GBP6.0 million and additional
operating profit of GBP0.6 million. Anglia Forwarding, also
outperformed management expectations in terms of turnover and
profit.
We have continued to invest in our cross-border e-commerce
project and whilst this is currently loss making (2019: loss of
GBP0.5m), we continue to closely monitor the performance and
prospects of the project and particularly in relation to its
working capital requirements.
The Regional Express earn-out was completed early in order to
invest appropriately for a major contract win on a three-year
contract that commenced operations in August 2019. This has a slow
build up in the last quarter of 2019 during the implementation
phase and activity levels are expected to ramp up during 2020.
Warehousing & Logistics
GBP47.5m (2018: GBP35.9 million)
Revenue
GBP2.9m (2018: GBP3.0 million)
Operating profit before exceptional item
The Logistics division's activities remain largely focused in
Romania and the UK and revenue increased by GBP11.6 million in 2019
to GBP47.5 million.
The Group's Pall-Ex franchise in Romania continues to perform
strongly, offering a palletised freight delivery service to any
part of the country within 24 hours and handling in excess of
60,000 pallets on average per month in 2019 (2018 50,000 average
pallets per month). This level of growth has continued into the
first quarter 2020, with approximate growth of 20% compared to the
first quarter of 2019.
The development of the new cross dock facility in Sibiu for
Pall-Ex and Delamode storage was completed in H1 2019 and has
enhanced the service and profit levels. During 2019, management was
successful in being awarded significant warehouse contracts in
Romania. This resulted in the occupancy of the main 25,000 sqm
warehouse facility in Bucharest increasing from 48% in March 2019
to 83% in December 2019. Whilst the Bucharest facility lost over
GBP500k in 2019, it is expected that this will move towards a
breakeven position in 2020.
There is a strong pipeline of demand for warehouse space in
Romania and having the ability to deliver palletised freight
throughout Romania overnight by our Pall-Ex operations puts the
business in an enviable position for further growth in the
future.
In the UK, the lease for a new purpose built, 20,000 sqm
facility in the Port of Southampton has been signed and the site is
expected to become operational in February 2021. This will give the
Group almost 70,000 sqm of warehouse space within the UK with
aspirations to double the size of the estate by the end of
2022.
The warehouse in Braintree experienced some challenges during
2019, with the loss of a significant client and the substantial
expansion of an existing customer. During the change over,
management took the opportunity to reconfigure the warehouse which
will drive greater future opportunities and allow the Group to
increase its e-fulfilment for new and existing customers.
Transport Services
GBP6.2m (2018: GBP6.4 million)
Revenue
GBP142.3m (2018: GBP139.1million)
Gross Billing
GBP2.5m (2018: GBP2.3 million)
Operating profit before exceptional item
Transport solutions, trading principally under the Affinity
brand, provides bundled fuel and toll cards, financial and support
services for hauliers in southern Europe. Affinity has been an
agent of DKV in Romania since 2002, one of the world's largest fuel
card providers and provides the DKV fuel card across the Balkans to
a database of approximately 2,000 Eastern European hauliers and
over 15,000 trucks.
In addition, Affinity provides a "one stop shop" of transport
services including roadside assistance and ferry bookings.
Affinity's commercial model fits well within the Group as many of
the hauliers who are customers of Affinity also supply haulage
services to Delamode a key factor that enables the Group to have a
good understanding of its customers/suppliers, which underpins the
strategy to provide further financial services such as insurance
and leasing. With current driver shortages in Europe, having a
supplier base will also become increasingly important for the
forwarding division.
Volumes sold to customers (gross billings) increased in 2019 by
2.3% despite year on year decreases in average fuel prices of 1.4%.
However, revenue decreased slightly due to the Euro/Sterling
exchange rate changes, increases in competition within the market
and a tightening of the division's credit policy.
Romania remains the largest region for the division and now
represents 84% of total activity, (2018: 87.2%, 2017: 89.5%).
Further progress was made towards greater expansion of this
division's services outside of Romania and into other East European
countries, and Affinity commenced operations in Bulgaria during
2019.
There are several opportunities which the Group can capitalise
on in 2020, including further developing the leasing and insurance
products tailored specifically for Affinity's existing customer
base.
Acquisitions
Our strategy is to act as a consolidator of the highly
fragmented freight management market. In the last two years the
Group has completed four transactions which have added over 1,200
new customers together with significantly expanding the Group's air
and sea freight capabilities.
During 2019, the Group had pursued a major acquisition target in
Slovenia which consumed considerable time and expense, and whilst
we reached the final two bidders, unfortunately, this was not
successful.
During 2019 the Group focused on integrating and bedding in the
acquisitions made in 2017 and 2018 which will be completed during
2020. We remain focused on expanding the Group through acquisition
and have a pipeline of opportunities that are in varying stages of
consideration. Acquisition targets are selected on the basis they
will enhance the Group's existing market presence, add further
service capabilities particularly in air and sea and benefit
significantly from being a part of the wider Xpediator Group, plus
be earnings enhancing.
Vision and Strategy
Our Vision
Xpediator is a leading Freight Management provider in a very
fragmented and competitive logistics market.
Our vision over the next five years is to maintain our current
rate of growth and become a leading international freight
management and logistics provider generating revenues in excess of
GBP1 billion.
As a business we want to deliver sustainable solutions to our
clients who are at the centre of our service offerings. We are
focused on offering our clients the optimal solution for their
transport needs with consistently high quality and competitive
services.
We also look to ensure our client base is diverse, not just in
terms of the number of clients, but also the sectors we service. No
single client contributes to more than 2% of Group revenue. As an
acquisitive business, one of the areas of focus, when considering
acquisition opportunities, is how the opportunity can add to this
diversity. Accordingly, strategically selected acquisitions have
added to our ability to be able to offer more services to our
existing client base as well as attracting new clients. We are now
able to offer even stronger industry-specific solutions for our
clients in the retail and fashion, toys and games sector.
As a business our vision is to continue to focus on year on year
double digit revenue growth which will be achieved through several
areas.
First, continued focus on the provision of high-quality services
to the CEE region. This region is experiencing some of the largest
GDP growth across Europe and the growth will be generated across
all three divisions of the Group.
Second, the expansion of our Logistics facilities in Southampton
where we will open a new 20,000 sqm facility in H1 2021.
Third, continued focus on targeted, earnings enhancing
acquisitions. Operating in a large, fragmented market results in
there being numerous acquisition targets and our strategy is to
focus on global freight forwarders and contract logistics providers
which are supported by a strong client base with a strong earnings
track record.
Finally, operating in a low margin industry, we strive to
identify ways in which we can continue to provide high quality
services to our clients in a cost-effective way. During 2019 we
continued our investment in IT, not only to secure our clients and
suppliers data, but also to enhance our online functionality. This
will allow us to offer our clients a seamless online solution to
make bookings and track their consignments. The digitalisation of
these processes will be margin enhancing as we take out overhead
costs, whilst ensuring our clients have a competitive, robust
solution.
Ultimately, at the heart of the Group's vision is client
service, delivered through optimal solutions, whilst being
competitively priced and with consistently high levels of customer
service.
Outlook
We are currently operating in an extraordinary period. I am
proud of the magnificent way everyone across the Group has
responded to the crisis and has pulled together to get through this
period and ensure we have a business that is able to re-emerge in
good health. I would therefore like to thank everyone for their
efforts and wish all stakeholders well during this very difficult
period. We continue with the stated vision to reach our
aspirational goals. In doing so, we will add greater strength and
capability to the Group, which in turn will provide greater job
security and rewards for our employees, plus enhancing returns for
investors.
Stephen Blyth
Chief Executive Officer
Chief Financial Officer Statement
Financial Review
Revenue
Group revenue increased in 2019 by GBP34.1 million (19.0%) to
GBP213.2 million. Of this increase, like-for-like growth was
GBP18.6 million whilst the full year effect of acquisitions made in
2018 contributed the remaining GBP15.5million.
The Freight Forwarding division delivered GBP159.6 million
(16.6% increase v 2018). Our Warehousing and Logistics division
delivered revenue of GBP47.5 million (32.2% increase v 2018). The
Transport Services division delivered GBP6.2 million (2.9% decrease
v 2018).
Group profit before tax
Whilst Group profit before tax decreased in 2019 to GBP2.2
million (2018: GBP5.6 million, 2017: GBP2.4 million), two of the
three operating divisions (before central overheads) increased on
the prior year:
2019 2018 2017
Freight Forwarding GBP3.4m GBP3.0m GBP2.4m
Warehousing & Logistics GBP2.9m GBP3.0m GBP0.9m
Transport Services GBP2.5m GBP2.3m GBP2.0m
The increases in profit before tax from the operating divisions
was offset by year on year increases in central overheads
(GBP2.4m), exceptional costs (GBP0.5m), amortisation (GBP0.4m),
accounting adjustments (GBP0.4m) and interest on deferred
consideration (GBP0.1m).
Adjusted profit before tax
Reconciliation between profit before tax
and adjusted profit before tax 2019 2018 2017
Profit before tax GBP2.175m GBP5.616m GBP2.436m
Exceptional items (note 30) GBP0.856m
GBP0.318m GBP0.912m
Unwind and addback of discount on deferred consideration (1)
GBP0.294m GBP0.232m
GBP0.295m
Amortisation on intangibles (note 12) GBP1.407m
GBP1.033m GBP0.330m
Net Income Statement Impact of application of IFRS 16 GBP0.419m
- -
Adjusted Profit before tax GBP5.151m
GBP7.199m GBP3.973m
1 Unwind of discount of deferred consideration = GBP0.346m plus
addback of the release on discount of deferred consideration =
GBP0.052m (see note 10)
Earnings per Share 2019 2018 2017
---------------------------------------- ----- ----- -----
Basic earnings pence per share (profit
after tax) 0.60 3.53 1.64
Adjusted earnings pence per share (Adj
profit after tax) 2.80 4.80 3.27
The total number of ordinary shares at 31 December 2019 was
136.1 million (2018:133.8 million) following the issue of 2.3
million during the year which gave rise to a weighted number of
shares of 135.1 million (135.8 million diluted). Profit after tax
attributable to the owners of the parent company of GBP0.8 million
provides a basic earnings per share of 0.60p (0.60p diluted) which
is an 83.0% (82.5% diluted) decrease on 2018. Adjusted profit
before tax results in a basic earnings per share of 2.80p (2.79p
diluted) which is a decrease of 41.7% (40.1% diluted) on 2018. (See
note 10 of the financial statements)
Group Adjusted Profit before Tax 2019 v 2018
Group operating profit before exceptional items decreased by
27.8% (GBP1.8 million) year on year fuelled by mix of issues
surrounding the e-commerce activity, the warehouse in Braintree and
the investment in overheads to accommodate future growth and IT
solutions.
The Freight Forwarding division operating profit increased by
GBP0.4 million from 2018 to 2019. Of this, organic growth accounted
for GBP0.2 million and the full year impact of the acquisitions of
Anglia Forwarding in June 2018 contributed a further GBP0.2
million. The loss in the e-commerce activity equated GBP0.5m for
the year, (2018: GBP0.2 million profit).
The Logistics division operating profit decreased by GBP0.1
million from 2018 to 2019.
Organic growth decreased by 25.1% (GBP0.7million loss) year on
year, with the full year impact of the Import Services Limited
contributing additional revenue of GBP9.5 million and operating
profit of GBP0.5 million . This was offset by the Braintree
warehouse that has undergone a reconfiguration project following
the loss of a major customer and is expected to deliver an improved
contribution to the Group during 2020.
The Transport Services division under the Affinity brand saw
operating profit increase by 10.6% (GBP0.2 million) from 2018 to
2019. This was achieved through improved overhead controls despite
revenues decreasing by GBP0.2 million year on year.
Financial Resources
Asset Cover 2019 2018 2017
--------------- ---------- --------- ---------
Total Assets GBP128.9m GBP98.8m GBP76.4m
Net Assets GBP29.0m GBP29.1m GBP14.8m
Current Ratio 1.01 1.14 1.07
Cash
The Group continues to focus on the application of tight cash
controls and the need to maintain a reasonable headroom for future
contingencies and to manage financing risk. The Board regularly
monitors the financing needs of the business through cash flow
projections for the following 12 months. These are expected to be
achieved for the coming year from existing cash balances, loan
facilities and operating cash flows. The Group has sufficient
financial resources and a broad spread of business activities. The
Directors therefore believe it is well placed to manage its
business risks.
Cash 2019 2018 2017
------------------------------------------- ---------- ---------- ----------
Net cash from operating activities GBP14.2m GBP3.7m GBP1.7m
Net cash outflow from investing activities GBP(2.0)m GBP(7.0)m GBP(6.5)m
Net cash outflow from financing activities GBP(9.3)m GBP5.4m GBP7.0m
Effect of foreign exchange movements GBP(0.5)m GBP0.2m GBP(0.1)m
Cash and cash equivalents at end of GBP12.0m GBP9.6m GBP7.3m
year
Cash generated from operations increased by 279.5% from 2018 to
GBP14.2 million reflecting the increased turnover generated as well
as improved control of working capital. In addition, as a result of
the adoption of IFRS 16, this has resulted in a benefit to net cash
from operating activities by GBP6.5 million.
Cash outflows from investing activities decreased on 2018
levels, (71.5%), due to there being no acquisition in 2019,
compared to the acquisition of two subsidiaries in 2018.
Cash from financing activities decreased by 272.7% from 2018 due
mainly to lower proceeds from share issues (GBP6.5 million lower)
and re payment of loan and CID balances. In addition, as a result
of the adoption of IFRS 16, this has impacted cash from financing
activities by GBP(6.5) million.
Overall, this resulted in an increase of GBP2.4 million in cash
and cash equivalents from 2018 with GBP12.0 million balance at the
end of the year 2019 (23.9% increase v 2018).
Working Capital
Trade Receivables and Payables 2019 2018 2017
------------------------------------------ --------- --------- ---------
Trade and other receivables GBP60.9m GBP60.3m GBP51.8m
Trade and other payables GBP58.6m GBP56.1m GBP51.0m
Days Sales Outstanding(2) *(based on
gross billing) 63.5 70.4 81.5
Days Payable Outstanding days(3) *(based
on cost of sales) 71.9 75.6 91.3
Whilst both trade receivables and payables increased in the
year, this was as a result of the increased activity undertaken by
the Group. Trade receivables increased by 1.0% to GBP60.9 million
and trade payables increased by 4.5% to GBP58.6 million. Despite
the increase in trade debtors, debtor days reduced by 9.8%
reflecting the continued focus on managing the Group's working
capital effectively. Creditor days also decreased but by less than
the decrease in debtor days (4.9% year on year) which has reduced
the working capital within the Group.
Administrative Costs Review
As the business has continued to develop, both in terms of
operations and support functions, combined with the full year
impact of the 2018 acquisitions, the average staff numbers have
increased from 902 to 1,037. Consequently, Group administrative
costs increased from GBP36.4 million to GBP50.0 million
(37.1%).
1 CID - Confidential Invoicing Discount facility. Funding is
secured on the value of invoices raised.
2 Debtor days defined as trade receivables / gross billings * 365
3 Creditor days defined as trade payables / cost of sales (gross
billings less gross margin) * 365
Operating Costs (Key Items) 2019 2018 2017
------------------------------------ --------- --------- ---------
Staff costs GBP23.9m GBP18.6m GBP13.4m
Bad debts GBP0.8m GBP1.1m GBP0.6m
Depreciation on right of use assets GBP6.0m GBP5.9m GBP2.3m
/ Rental payable under leases
Insurance GBP0.9m GBP0.7m GBP0.4m
Plant and machinery hire GBP0.7m GBP0.7m GBP0.3m
IT costs GBP1.6m GBP0.6m GBP0.3m
Other administration costs GBP16.1m GBP8.8m GBP8.4m
Finance Costs
Excluding the IRFS 16 impact of GBP1.1 million, finance costs
were in line with 2018, at GBP0.5 million. Improved cash management
has resulted in both loans reducing by GBP0.6 million and lower
utilisation from the confidential invoice discounting by GBP0.6
million.
Called up Share Capital
2.3 million ordinary shares (2018:16.3 million, 2017: 37.4
million) were issued in the year primarily relating to the equity
proportion of deferred consideration payable for the acquisition of
EMT and Regional Express. Called up share capital at 31 December
2019 was GBP6.9 million (2018: GBP6.7 million, 2017:
GBP5.9million). See note 22 of the financial statements.
Impairment
The Group carries out its impairment tests annually in November
as part of the budget process and all newly acquired entities are
also reviewed for impairment at the balance sheet date.
No impairment losses have been recognised during the year.
Robert Ross
Chief Finance Officer
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2019
2019 2018
Notes GBP'000 GBP'000
------------------------------------------------------------------------------ ----- --------- -----------
Gross billing 7 350,121 312,497
------------------------------------------------------------------------------ ----- --------- -----------
CONTINUING OPERATIONS
Revenue 3 213,247 179,174
Cost of sales (160,643) (137,490)
GROSS PROFIT 52,604 41,684
Other operating income 4 1,193 935
Impairment losses on receivables 5 (836) (1,053)
Administrative expenses 5 (49,133) (35,390)
Exceptional items included in administrative expenses above 27 (856) (318)
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS 4,684 6,494
------------------------------------------------------------------------------ ----- --------- ---------
OPERATING PROFIT 5 3,828 6,176
Share of loss of equity accounted associate 16 (60) (78)
Finance costs 8 (1,674) (582)
Finance income 8 81 100
------------------------------------------------------------------------------ ----- --------- -----------
PROFIT BEFORE INCOME TAX 2,175 5,616
Income tax 9 (872) (885)
------------------------------------------------------------------------------ ----- --------- -----------
PROFIT FOR THE YEAR 1,303 4,731
------------------------------------------------------------------------------ ----- --------- -----------
Profit attributable to:
Owners of the parent 810 4,421
Non-controlling interests 493 310
------------------------------------------------------------------------------ ----- --------- -----------
1,303 4,731
------------------------------------------------------------------------------ ----- --------- -----------
Earnings per share attributable to the ordinary equity holders of the parent:
Basic earnings pence per share 10 0.60 3.53
Diluted earnings pence per share 10 0.60 3.43
Adjusted basic earnings pence per share 10 2.80 4.80
Adjusted diluted basic earnings pence per share 10 2.79 4.66
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2019
2019 2018
GBP'000 GBP'000
---------------------------------------------------------- ------- -------
PROFIT FOR THE YEAR 1,303 4,731
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (705) 199
---------------------------------------------------------- ------- -------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 598 4,930
---------------------------------------------------------- ------- -------
Total comprehensive income attributable to:
Owners of the parent 143 4,612
Non-controlling interests 455 318
---------------------------------------------------------- ------- -------
598 4,930
---------------------------------------------------------- ------- -------
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
2019 2018
Notes GBP'000 GBP'000
------------------------------ ----- ------- -----------------
ASSETS
NON-CURRENT ASSET
Intangible assets 12 24,706 24,908
Property, plant and equipment 13 2,516 2,355
Right-of-use assets 25 27,385 -
Investments 16 1 61
Trade and other receivables 17 1,050 1,194
Deferred tax 9 210 225
------------------------------ ----- ------- -----------------
55,868 28,743
------------------------------ ----- ------- -----------------
CURRENT ASSETS
Inventories 118 58
Trade and other receivables 17 60,927 60,310
Cash and cash equivalents 11,951 9,647
------------------------------ ----- ------- -----------------
72,996 70,015
------------------------------ ----- ------- -----------------
TOTAL ASSETS 128,864 98,758
------------------------------ ----- ------- -----------------
2019 2018
Notes GBP'000 GBP'000
--------------------------------------------------------------------------- ----- ------- -------
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 22 6,854 6,736
Share premium 23 11,987 11,868
Equity reserve 23 16 38
Translation reserve 23 70 737
Merger reserve 23 3,102 2,323
Retained earnings 23 6,094 6,773
--------------------------------------------------------------------------- ----- ------- -------
Issued share capital and reserves attributable to the owners of the parent 28,123 28,475
Non-controlling interests 887 586
--------------------------------------------------------------------------- ----- ------- -------
TOTAL EQUITY 29,010 29,061
--------------------------------------------------------------------------- ----- ------- -------
LIABILITIES
NON-CURRENT LIABILITIES
Deferred consideration 18 - 2,089
Provisions 20 1,674 1,523
Lease liabilities - right-of-use assets 25 21,535 -
Interest bearing loans and borrowings 19 2,275 2,648
Trade and other payables 18 101 -
Deferred tax liability 9 1,968 2,204
--------------------------------------------------------------------------- ----- ------- -------
27,553 8,464
--------------------------------------------------------------------------- ----- ------- -------
CURRENT LIABILITIES
Trade and other payables 18 58,579 56,072
Lease liabilities - right-of-use assets 25 6,392 -
Deferred consideration 18 4,607 1,409
Interest bearing loans and borrowings 19 2,723 3,752
--------------------------------------------------------------------------- ----- ------- -------
72,301 61,233
--------------------------------------------------------------------------- ----- ------- -------
TOTAL LIABILITIES 99,854 69,697
--------------------------------------------------------------------------- ----- ------- -------
TOTAL EQUITY AND LIABILITIES 128,864 98,758
--------------------------------------------------------------------------- ----- ------- -------
The financial statements were approved by the Board of Directors
on 17 April 2020 and were signed by:
Stephen Blyth
CEO
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2019
Share Share Equity Translation Merger Retained Total
Capital Premium Reserve Reserve Reserve Earnings Total NCI Equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Carried forward
31 December 2018 6,736 11,868 38 737 2,323 6,773 28,475 586 29,061
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Contributions by and
distribution to owners
Dividends paid 11 - - - - - (1,522) (1,522) (154) (1,676)
Share based consideration
on acquisition 22 87 - - - 779 - 866 - 866
Share option charge 24 - - 11 - - - 11 - 11
Share options exercised 24 31 119 (33) - - 33 150 - 150
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Total contribution by and
distribution to owners 6,854 11,987 16 737 3,102 5,284 27,980 432 28,412
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Profit for the year - - - - - 810 810 493 1,303
Exchange differences on
translation of foreign
operations - - - (667) - - (667) (38) (705)
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Total comprehensive
income for the year - - - (667) - 810 143 455 598
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Balance at
31 December 2019 6,854 11,987 16 70 3,102 6,094 28,123 887 29,010
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Share Share Equity Translation Merger Retained Total
Capital Premium Reserve Reserve Reserve Earnings Total NCI Equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Carried forward
31 December 2017 5,922 5,792 69 546 (1,509) 3,535 14,355 413 14,768
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Contributions by and
distribution to owners
Dividends paid 11 - - - - - (1,323) (1,323) (145) (1,468)
Share based consideration
on acquisition 22 278 - - - 3,832 - 4,110 - 4,110
Share option charge 24 - - 109 - - - 109 - 109
Share options exercised 24 36 - (140) - - 140 36 - 36
Issue of share capital 22 500 6,076 - - - - 6,576 - 6,576
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Total contribution by and
distribution to owners 6,736 11,868 38 546 2,323 2,352 23,863 268 24,131
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Profit for the year - - - - - 4,421 4,421 310 4,731
Exchange differences on
translation of foreign
operations - - - 191 - - 191 8 199
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Total comprehensive
income for the year - - - 191 - 4,421 4,612 318 4,930
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
Balance at
31 December 2018 6,736 11,868 38 737 2,323 6,773 28,475 586 29,061
------------------------- ----- ------- ------- ------- ----------- ------- -------- ------- ------- -------
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2019
2019 2018
Notes GBP'000 GBP'000
--------------------------------------------------- ----- ------- -------
Continuing Operations
Cash flows from operating activities
Cash generated from operations 1 15,803 5,135
Interest paid (909) (305)
Tax paid (729) (1,097)
--------------------------------------------------- ----- ------- -------
Net cash from operating activities 14,165 3,733
--------------------------------------------------- ----- ------- -------
Cash flows from investing activities
Purchase of tangible fixed assets 13 (1,321) (554)
Acquisition of subsidiaries, net of cash acquired 12 - (6,069)
Purchase of intangible fixed assets 12 (498) (171)
Cash paid on deferred consideration of acquisition (206) (315)
Sale of investments 16 - 83
Interest received 8 29 29
--------------------------------------------------- ----- ------- -------
Net cash outflow from investing activities (1,996) (6,997)
--------------------------------------------------- ----- ------- -------
Cash flows from financing activities
New loans in year 19 - 908
Loan repayments in year 19 (1,217) (362)
Share issue (net of share issue costs) 22 150 6,613
Transactions with non-controlling interests 15 (6) (310)
Dividends paid 11 (1,522) (1,323)
Repayment on leases (6,546) -
Non-Controlling interest dividends paid 15 (154) (145)
--------------------------------------------------- ----- ------- -------
Net cash inflow from financing activities (9,295) 5,381
--------------------------------------------------- ----- ------- -------
Increase in cash and cash equivalents 2,874 2,117
Cash and cash equivalents at beginning of year 9,647 7,340
Effect of foreign exchange rate movements (570) 190
--------------------------------------------------- ----- ------- -------
Cash and cash equivalents at end of year 11,951 9,647
--------------------------------------------------- ----- ------- -------
The notes form part of these financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2019
1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED
FROM OPERATIONS
2019 2018
GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Profit before income tax before ordinary activities before
results of associate 2,235 5.694
Loss of equity accounted associate (60) (78)
Depreciation charges 6,990 712
Amortisation charges 1,587 1,105
Loss on disposal of fixed assets 32 13
Finance costs 1,674 582
Finance income (81) (100)
Share based payments charge (11) 109
Impairment of intangible assets - 1,845
Deferred consideration write back and vendor income on
Benfleet Forwarding Limited - (2,592)
Deferred consideration charge on Regional Express Limited
and Anglia Group Forwarding Limited 666 -
13,032 7,290
----------------------------------------------------------- ------- -------
(Increase) in inventories (60) (8)
(Increase) in trade and other receivables (473) (6,957)
Increase in trade and other payables 3,153 3,287
Increase in provisions 151 1,523
----------------------------------------------------------- ------- -------
Cash generated from operations 15,803 5,135
----------------------------------------------------------- ------- -------
2. ACCOUNTING POLICIES
Description of the business
Xpediator Plc (the "Company") is a public limited company,
incorporated in England and Wales, United Kingdom. The registered
office is 700 Avenue West, Skyline 120 Great Notley, Braintree,
Essex, CM77 7AA and the Company registration number is
10397171.
The consolidated financial statements comprise the financial
information of the Company and its subsidiary undertakings
(together the "Group"). Detail of the entities of the Group are
described in Note 14.
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the EU issued by the International Accounting Standards Board,
under the historical cost convention. Accounting policies have been
consistently applied from 2018 except for the introduction of the
new standard IFRS 16.
The presentation currency used for the preparation of the
financial statements is Pounds Sterling (GBP), which is the
currency of choice of the principal investors of the Group. The
amounts are rounded to the nearest thousand, unless otherwise
stated.
The preparation of financial statements in conformity with IFRSs
requires the use of certain accounting estimates. It also requires
the directors to exercise their judgement in the process of
applying the Group's accounting policies (see Note 2.3 - Critical
accounting estimates and judgements).
Going concern
The Group meets its working capital requirements through the
receipt of revenues from the provision of its services in the UK
and in CEE, the management of capital and operating expenditure,
from the working capital and other borrowing facilities available
to it and, from time to time, from the issue of equity capital.
Ultimately the receipt of revenues and charges due to the Group
depends on the availability of liquidity for the company's
customers and the level of transport and logistics activity in the
market. The COVID-19 pandemic has had a significant, immediate
impact on the UK and global economies and on the operations and
operational funding of participants in international and UK supply
chains.
The COVID-19 pandemic has not, to date, had a significant
adverse impact on the Group's operations but the directors are
aware that if the current situation becomes prolonged then this may
change. Further details of the current assessment of the impact on
the business are set out in the strategic report. Based on very
recent trends, the directors believe that demand for the Group's
freight management and warehouse services, both in the UK and CEE
will remain robust overall but will be volatile, and that the Group
has the systems and protocols in place to meet this demand. At the
date of approval of these financial statements it is not clear how
long the current circumstances are likely to last and what the
long-term impact will be.
At 31 December 2019 the Group had cash and cash equivalents of
GBP11,951,000 (2018: GBP9,647,000). The Group also has funding
facilities in place, details of which are set out in note 19 of the
financial statements, which it does not envisage will be
withdrawn.
The directors prepare annual budgets and forecasts in order to
ensure that they have sufficient liquidity in place in the
business. In addition, in response to the rapidly evolving COVID-19
situation, the directors, in formulating the plan and strategy for
the future development of the business have considered a period
beyond that for which formal budgets and forecasts are prepared and
have stress tested the financial projections of the business by
applying a number of scenarios including reductions in forecast
revenues, delays in collection of receivables, delays in new
business pipeline and mitigation or deferral of capital and
operational expenditure.
The directors have taken steps to utilise the various support
mechanisms instigated by UK and various CEE governments, including
the use of the Coronavirus Job Retention Schemes and CEE
equivalents (eg Technical Unemployment Process in Romania). The
Operating and Executive Board began a process of twice weekly phone
calls starting 12 March 2020 where they discuss operational and
financial metrics, including regularly review of volume activity
and revenue. To further protect and manage the business responsibly
during this extraordinary period, the directors have introduced
temporary pay reductions, negotiated rent free periods, recruitment
freezes and reducing other costs through a strategic review of
business overheads, as well as suspending certain capital
investment projects.
Having regard to the above, and based on their latest assessment
of the budgets and forecasts for the business of the company, the
directors consider that there are sufficient funds available to the
Group to enable it to meet its liabilities as they fall due for a
period of not less than twelve months from the date of approval of
the financial statements. The directors therefore consider it
appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
Basis of consolidation
The Group financial statements consolidate the financial
statements of Xpediator Plc and its subsidiaries drawn up to 31
December each year. Subsidiaries are consolidated from the date of
their acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such
control ceases. The Company has control over a subsidiary if all
three of the following elements are present: power over the
investee, exposure to variable returns from the investee, and the
ability of the investor to use its power to affect those variable
returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of
control.
The financial statements of subsidiaries are prepared for the
same reporting year as the parent Company, using consistent
accounting policies. Intra-group balances and transactions,
including unrealised profits arising from intra-Group transactions,
have been eliminated. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Non-controlling interests represent the equity in
subsidiaries that is not attributable, directly or indirectly, to
Xpediator Plc.
Subsequent to the merger accounting noted below the consolidated
financial statements incorporate the results of business
combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations
are included in the consolidated income statement from the date on
which control is obtained. They are deconsolidated from the date on
which control ceases.
Merger accounting
On 25 May 2017, the Company entered into a share swap agreement
with the ultimate beneficiaries of Delamode Group Holdings Limited,
whereby 4,000,000 new ordinary shares of GBP1.00 each were issued
to the ultimate beneficiaries of Delamode Group Holdings Limited in
exchange for their shares in Delamode Group Holdings Limited in the
same proportion as their shareholding in Delamode Group Holdings
Limited. The merger method of accounting is used to consolidate the
results of Xpediator Plc.
On 8 June 2018, the Company issued 1,727,694 new ordinary shares
of GBP0.05 each as part of the deferred consideration of Easy
Managed Transport Limited ("EMT"). The premium on the fair value in
excess of the nominal value of shares issued in consideration of
business combinations is credited to the merger reserve.
On 14 July 2018, the Company issued 3,740,648 new ordinary
shares of GBP0.05 each as part of the acquisition of Import
Services Limited. The premium on the fair value in excess of the
nominal value of shares issued in consideration of business
combinations is credited to the merger reserve.
On 31 December 2018, the Company issued 84,951 new ordinary
shares of GBP0.05 each as part of the deferred consideration of
Regional Express Limited ("Regional"). The premium on the fair
value in excess of the nominal value of shares issued in
consideration of business combinations is credited to the merger
reserve.
On 16 May 2019, the Company issued 1,655,876 shares to the
former owners of EMT as part of the payment of the deferred
consideration relating to the acquisition of the entire equity of
EMT in 2017. The premium on the fair value in excess of the nominal
value of shares issued in consideration of business combinations is
credited to the merger reserve.
On 5 December 2019, the Company issued 89,744 shares to the
former owners of Regional as part of the payment of the deferred
consideration relating to the acquisition of the entire equity of
Regional in 2017. The premium on the fair value in excess of the
nominal value of shares issued in consideration of business
combinations is credited to the merger reserve.
Revenue
The Group generates revenue in the UK and Europe.
The Group operates a number of diverse businesses and
accordingly applies a variety of methods for revenue recognition,
based on the principles set out in IFRS 15. The revenue and profits
recognised in any reporting period are based on the delivery of
performance obligations and an assessment of when control is
transferred to the customer. In determining the amount of revenue
and profits to record, and associated balance sheet items (such as
trade receivables, contract assets and contract liabilities),
management is required to review performance obligations within
individual contracts. This may involve some judgemental areas (for
example within the logistics & warehousing Business), where
revenue is recorded in advance of invoicing the customer.
Revenue is recognised either when the performance obligation in
the contract has been performed (so 'point in time' recognition) or
'over time' as control of the performance obligation is transferred
to the customer. For all contracts, the Group determines if the
arrangement with a customer creates enforceable rights and
obligations, which is in line with our contractual commitments and
industry standard best practice (for example Convention Relative au
Contrat de Transport International de Marchansies par la Route or
CMR).
For each performance obligation to be recognised over time, the
Group applies a revenue recognition method that faithfully depicts
the Group's performance in transferring control of the goods or
services to the customer. This decision requires assessment of the
real nature of the goods or services that the Group has promised to
transfer to the customer. The Group has assessed the period of time
principles as follows:
-- Customers receives the benefits of the good being moved from
the origin to the destination, as another supplier would not need
to re-perform the service performed to date (ie the goods have been
moved partway).
-- The customer becomes committed to pay the Group the moment
that the goods are despatched and collected.
-- The customer accepts that they are liable to pay for the
transaction in full although it is the Group's responsibility to
ensure that the shipment is in transit before invoicing.
-- The customer can usually be invoiced on despatch/export and
has an obligation to pay for services despite any problems that may
arise in transit.
-- The Group would hold any third party liable for any issues
that happen in transit that is beyond its reasonable cont rol.
The Group recognises that it acts as both an agent and a
principal. The Group is a principal if it responsible for the
specified good or service before that good or service is
transferred to a customer. The Group is an agent if it is not
responsible for arranging for the provision of the specified good
or service by another party. In this case, the Group does not
control the specified good or service provided by another party
before that good or service is transferred to the customer. When
the Group acts as an agent, it recognises revenue in the amount of
any fee or commission to which it expects to be entitled in
exchange for arranging for the specified goods or services to be
provided by the other party. The Affinity business (see Affinity
section of revenue recognition policy) primarily operates as an
agent, and largely recognises only the commission earned as
revenue.
Freight forwarding
Under IFRS 15, freight forwarding revenue is recognised over the
period of time based on the principles identified above. Therefore,
revenue will consist of freight delivered during the period as well
as a proportion of revenue for service delivered that are in
process as at the end of the reporting period, which is calculated
on a time proportioned basis.
Logistics & warehousing
Logistics & warehousing revenue is recognised over a period
of time. Invoicing varies by contract but is typically in line with
work performed. Due to the different contractual arrangements in
place, each customer is assessed to determine the amount of work
carried out, which has not been invoiced at the date of the Group's
reporting period. This revenue is recognised by direct reference to
the amount of work carried out to deliver the service and measured
relative to cost or over the time period which the warehousing is
provided. Judgement is therefore required when determining the
appropriate timing and amount of revenue that can be recognised.
The revenue from handling of incoming products is recognised when a
performance obligation is satisfied, but not invoiced at the
reporting date, which is correspondingly accrued on the statement
of financial position within contract assets.
Affinity
Revenue is recognised at a point in time only after the
performance obligation has been actually been delivered. Affinity
and trucking services revenue largely acts as an agent based on the
assessment above, so only commission is recorded as revenue. This
largely relates to provision of DKV fuel cards, which enables the
customer to purchase fuel, tolls and other services.
In addition, the Affinity business operates as a reseller of
ferry crossings, where revenue is recorded at a point in time as it
is based on the performance obligation being delivered. Revenue for
this part of the business is recorded as a principal due to the
assessments identified above.
Gross billings (Affinity)
Recoverable disbursements incurred on behalf of our Affinity
Division customers based in Romania and the West Balkans include
fuel costs, toll charges and breakdown assistance. The gross
billings figure is included within the Groups trade payables and
receivables but are excluded from consolidated income statement
revenue. The gross billing revenue number is a non-statutory
measure but is included to make a more meaningful calculation of
days sales outstanding and days payable outstanding, so it is
important to understand the level of billings going through the
sales and purchase ledgers.
Franchise income
Income relating to franchise fees are not recorded as revenues
by the Group but are shown as other income. This revenue arises
from the sales of services to the franchisees. This income is
recognised over a point in time based on when the services have
been transferred to the franchisee in accordance with the terms and
conditions of the relevant agreements.
Franchise fees comprise of revenue for the initial allocation of
the franchise to the respective member, IT support, marketing and
the use of the intellectual property.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for
using the purchase method. The cost of the business combination is
measured as the aggregate of the fair values (at the date of
exchange) of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of
the acquiree.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3:
Business Combinations are recognised at their fair values at the
acquisition date.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised.
If the cost of the acquisition is less than the Group's interest
in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities, the difference is
recognised directly in the Consolidated Income Statement.
Associates
Management has applied judgement in determining that
International Cargo Centre Limited (ICC) is an associate of the
Group. The Group has significant influence by virtue of holding a
40% equity interest which presumes significant influence per IAS
28, together with having one of three directors on the board, while
taking into account that the remaining 60% interest is held by one
other party.
Non-controlling interests
The total comprehensive income of non-wholly owned subsidiaries
is attributed to owners of the parent and to the non-controlling
interests in proportion to their relative ownership interests.
Goodwill
Goodwill arising on the acquisition of a business represents any
excess of the fair value of the consideration over the fair value
of the identifiable assets and liabilities acquired. The
identifiable assets and liabilities acquired are incorporated into
the consolidated financial statements at their fair value to the
Group.
Goodwill is not amortised but tested for impairment annually.
Any impairment is recognised immediately in the consolidated income
statement and is not subsequently reversed. On disposal of a
business, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Impairment of non-financial assets (excluding inventories and
deferred tax assets)
Impairment tests on goodwill with indefinite useful economic
lives are undertaken annually in November as part of the Group's
budgeting process, except in the year of acquisition when they are
tested at the year-end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount (i.e.
the higher of value in use and fair value less costs to sell), the
asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of
an individual asset, the impairment test is carried out on the
smallest Group of assets to which it belongs for which there are
separately identifiable cash flows; its Cash Generating Units
('CGUs'). Goodwill is allocated on initial recognition to each of
the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill. Impairment charges are
included in profit or loss, except to the extent they reverse gains
previously recognised in other comprehensive income. An impairment
loss recognised for goodwill is not reversed.
Foreign currencies
The financial statements of the Group are presented in its
reporting currency of Sterling. The functional currency of each
Group entity is the currency of the primary economic environment in
which the entity operates.
Transactions in foreign currencies during the period have been
converted at the rates of exchange ruling on the date of the
transaction. Assets and liabilities denominated in foreign
currencies have been translated at the rates of exchange ruling on
the balance sheet date. Any gains or losses arising from these
conversions are credited or charged to the Consolidated Income
Statement.
On consolidation, the results of overseas operations are
translated into Sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of
overseas operations, including goodwill arising on the acquisition
of those operations, are translated at the rate ruling at the
reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income and accumulated in the translation reserve.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign exchange reserve relating to
that operation up to the date of disposal are transferred to the
consolidated statement of comprehensive income as part of the
profit or loss on disposal.
Financial assets
The Group classifies its financial assets into the categories
discussed below, depending on the purpose for which the asset was
acquired. The Group only has financial assets classified as held at
amortised cost. The financial assets comprise of trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position.
Cash and cash equivalents includes cash in hand, deposits held
with banks, and - for the purpose of the statement of cash flows -
bank overdrafts. Bank overdrafts are shown within loans and
borrowings in current liabilities on the consolidated statement of
financial position, unless there is a right of set-off between bank
accounts across the Group. In this instance, the net cash position
will be shown.
These assets arise principally from the provision of goods and
services to customers (eg trade receivables), but also incorporate
other types of financial assets where the objective is to hold
these assets in order to collect contractual cash flows and the
contractual cash flows are solely payments of principal and
interest. Trade receivables are recognised initially at the
transaction price and other financial assets are initially
recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue. They are subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment.
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a historical provision matrix in the determination of
the lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognised
within administration costs in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for receivables from related parties and
loans to related parties are recognised based on a forward looking
expected credit loss model. The methodology used to determine the
amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of
the financial asset. For those for which credit risk has increased
significantly, lifetime expected credit losses are recognised,
unless further information becomes available contrary to the
increased credit risk. For those that are determined to be
permanently credit impaired, lifetime expected credit losses are
recognised.
Capital management
The Group monitors its risk to a shortage of funds using a
recurring liquidity planning tool. This tool considers the maturity
of both its financial investments and financial assets (e.g.
accounts receivables, other financial assets) and projected cash
flows from operations.
The Group's objective is to maintain a balance between
continuity of funding and flexibility through the use of bank
overdrafts, invoice discounting and long term loan finance.
Financial liabilities
The Group classifies its financial liabilities into two
categories:
Other financial liabilities
The Group's other financial liabilities include bank loans,
confidential invoice discounting facility, trade and other payables
and accruals. Bank borrowings are initially recognised at fair
value net of any transaction costs directly attributable to the
issue of the instrument. Such interest bearing liabilities are
subsequently measured at amortised cost using the effective
interest rate method, which ensures that any interest expense over
the period to repayment is at a constant rate on the balance of the
liability carried in the consolidated statement of financial
position. For the purposes of each financial liability, interest
expense includes initial transaction costs and any premium payable
on redemption, as well as any interest or coupon payable while the
liability is outstanding.
Trade payables and other short-term monetary liabilities, which
are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
Fair value through profit and loss
This category only comprises of the element of deferred
consideration on business combinations, which is contingent on the
performance of the acquired businesses. The expected consideration
payable is assessed at each balance sheet date with the movement in
the expected liability being recorded in the income statement.
Share capital
Financial instruments issued by the Company are classified as
equity only to the extent that they do not meet the definition of a
financial liability or financial asset. The company's ordinary
shares are classified as equity instruments.
Leased assets
During the year, the Group has changed its accounting policy for
leases where the group is the lessee. The new policy is set out
below and the impact of the change is described in note 2.1.
Until to 31 December 2018, leases of property, plant and
equipment where the Group, as lessee, had substantially all the
risks and rewards of ownership were classified as finance leases.
Finance leases were capitalised at the lease's inception at the
fair value of the leased property or, if lower, the present value
of the minimum lease payments. The corresponding rental
obligations, net of finance charges, were included in other
short-term and long-term payables.
Leases in which a significant portion of the risks and rewards
of ownership were not transferred to the Group as lessee were
classified as operating leases. Payments made under operating
leases (net of any incentives received from the lessor) were
charged to profit or loss on a straight-line basis over the period
of the lease.
Under the new policy, IFRS 16 has introduced a single,
on-balance sheet accounting model for lessees, eliminating the
distinction between operating and finance leases. IFRS 16 has
impacted how the Group accounts for leases under IAS 17. On initial
application, the Group has performed the following:
-- Recognised right of use assets and lease liabilities in the
consolidated statement of financial position, measured at the
present value of future lease payments, discounted using the rate
implicit in the lease or the lessee's incremental borrowing rate if
this is not stated. These are included within right-of-use assets
and lease liabilities respectively;
-- Recognised depreciation of right of use assets and interest
on lease liabilities in the consolidated income statement;
-- Se parated the total amount of cash paid into a principal
portion (presented within financing activities) and interest
(presented within financing activities) in the consolidated cash
flow statement.
The incremental borrowing rate is calculated on a lease by lease
basis. The weighted average lessee's borrowing rate applied to the
lease liabilities on 1 January was 3.42%.
Policy applicable from 1 January 2019
For contracts entered into on or after 1 January 2019, the Group
assesses at inception whether the contract is, or contains, a
lease. A lease exists if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for
consideration. The Group assessment includes whether:
-- the contract involves the use of an identified asset;
-- the Group has the right to obtain substantially all of the
economic benefits from the use of the asset throughout the contract
period; and
-- the Group has the right to direct the use of the asset.
At the commencement of a lease, the Group recognises a
right-of-use asset along with a corresponding lease liability.
The lease liability is initially measured at the present value
of the remaining lease payments, discounted using the individual
entities incremental borrowing rate. The lease term comprises the
non-cancellable period of the contract, together with periods
covered by an option to extend the lease where the Group is
reasonably certain to exercise that option based on operational
needs and contractual terms. Subsequently, the lease liability is
measured at amortised cost by increasing the carrying amount to
reflect interest on the lease liability, and reducing it by the
lease payments made. The lease liability is remeasured when the
Group changes its assessment of whether it will exercise an
extension or termination option.
Right-of-use assets are initially measured at cost, comprising
the initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement date, lease
incentives received and initial direct costs. Subsequently,
right-of-use assets are measured at cost, less any accumulated
depreciation and any accumulated impairment losses, and are
adjusted for certain remeasurements of the lease liability.
Depreciation is calculated on a straight-line basis over the
length of the lease. The Group has elected to apply exemptions for
short-term leases and leases for which the underlying asset is of
low value. For these leases, payments are charged to the income
statement on a straight-line basis over the term of the relevant
lease. Right-of-use assets are presented within non-current assets
on the face of the balance sheet, and lease liabilities are shown
separately on the statement of financial position in current
liabilities and non-current liabilities depending on the maturity
of the lease payments.
Under IFRS 16, right-of-use assets will be tested for impairment
in accordance with IAS 36 Impairment of Assets. This has replaced
the previous requirements to recognise a provision for onerous
lease contracts.
Payments associated with short-term leases are recognised on a
straight-line basis as an expense in the profit or loss. Short term
leases are leases with a lease term of 12 months or less.
Externally acquired intangible assets
Externally acquired intangible assets, other than Goodwill, are
initially recognised at cost and subsequently amortised on a
straight-line basis over their useful economic lives.
Intangible assets are recognised on business combinations if
they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles
are arrived at by using appropriate valuation techniques (see
section related to critical estimates and judgements below).
The significant intangibles recognised by the Group, their
useful economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Intangible asset Useful economic life Valuation method
----------------------- -------------------- ----------------------------
Licences and trademarks 3-25 years Multiple of historic profits
Customer Related 6-10 Years Excess Earning Model
Technology Based 5 Years Replacement Cost
----------------------- -------------------- ----------------------------
Taxation
The charge for current tax is based on the taxable income for
the period. The taxable result for the period differs from the
result as reported in the statement of comprehensive income because
it excludes items which are not assessable or disallowed and it
further excludes items that are taxable and deductible in other
years. It is calculated using tax rates that have been enacted or
substantially enacted by the statement of financial position
date.
Deferred income tax is provided using the liability method, for
all temporary differences arising between the tax bases of assets
and liabilities and their carrying values for financial reporting
purposes.
Deferred tax assets are recognised only to the extent that
future taxable profit will be available such that realisation of
the related tax benefits is probable. The amount of the asset or
liability is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to
apply when the deferred tax liabilities/ (assets) are
settled/(recovered).
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs and the estimated present value of any future
unavoidable costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
Freehold land is not depreciated. Depreciation on assets under
construction does not commence until they are complete and
available for use. Depreciation is provided on all other items of
property, plant and equipment so as to write off their carrying
value over their expected useful economic lives. It is provided at
the following rates:
Freehold buildings 2%-10% per annum straight line
20-33% per annum straight line/10% - 25% on reducing
Fixtures and fittings balance
Computer equipment 33% per annum straight line/20% - 50% on reducing balance
25-33% per annum straight line/20% - 25% on reducing
Motor vehicles balance
--------------------- ---------------------------------------------------------
Dividends
Dividends are recognised when they become legally payable. In
the case of final dividends, this is when approved by the
shareholders at the annual general meeting.
Holiday pay accrual
All employees accrue holiday pay during the calendar year, the
board encourages all employees to use their full entitlement
throughout the year, however in the unlikely case that an employee
has untaken holiday pay this is accrued for at the daily salary
costs, including costs of employment, such as social security.
Staff pensions
The Group does not operate a pension scheme for its employees
however it does make payments to defined contribution pension
schemes on behalf of employees in the UK in accordance with auto
enrolment legislation. The payments made are recognised as an
expense in the period to which they relate.
Share-based payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest. At each reporting
date, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss over
the remaining vesting period, with a corresponding adjustment to
the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with other
parties are measured at the fair value of the goods or services
received, except where the fair value cannot be estimated reliably,
in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the
goods or the counterparty renders the service.
Provisions
The Group has recognised provisions for liabilities of the
uncertain timing or amount for leasehold dilapidations. The
provision is measured at the best estimate of the expenditure
required to settle the obligation at the reporting date, discounted
at a pre-tax rate reflecting current market assessments of the time
value of money and risks specific to the liability. The provision
takes into account the potential that the properties in question
may be sublet for some or all of the remaining lease term.
2.1 New and amended accounting standards effective during the
year
The Group has applied the following standards and amendments for
the first time during the annual reporting period commencing 1
January 2019:
IFRS 16: Leases
IFRS 16 'Leases' had an effective date for annual periods
beginning on or after 1 January 2019. IFRS 16 results in lessees
accounting for most leases within the scope of the Standard in a
manner similar to the way in which finance leases are currently
accounted for under IAS 17 'Leases'. The Group adopted the Standard
modified retrospectively from its mandatory adoption date, but has
not restated comparative amounts which were reported under the
previous accounting policies.
The details of the changes in accounting policies are described
below.
The Group previously classified leases as either operating or
finance leases based on an assessment of whether the lease
transferred significantly all of the risks and rewards incidental
to ownership of the leased asset. Immediately prior to the initial
application of IFRS 16, the Group had operating leases related to
office premises and equipment and some finance leases for
equipment.
Under IFRS 16, most leases previously classified as operating
leases under IAS 17 are recognised on the balance sheet as a
right-of-use asset along with a corresponding lease liability.
The lease liability is initially measured at the present value
of the remaining lease payments, discounted using the Group's
incremental borrowing rate. The lease term comprises the
non-cancellable period of the contract, together with periods
covered by an option to extend the lease where the Group is
reasonably certain to exercise that option. Subsequently, the lease
liability is measured by increasing the carrying amount to reflect
interest on the lease liability, and reducing it by the lease
payments made. The lease liability is remeasured when the Group
changes its assessment of whether it will exercise an extension or
termination option.
Right-of-use assets are initially measured at cost, comprising
the initial measurement of the lease liability, plus any initial
direct costs, less any lease incentives. Subsequently, right-of-use
assets are measured at cost, less any accumulated depreciation and
any accumulated impairment losses, and are adjusted for certain
remeasurements of the lease liability. Depreciation is calculated
on a straight-line basis over the length of the lease.
For leases previously classified as finance leases the entity
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right-of-use asset and the lease liability at the date of
initial application.
The Group has elected to apply exemptions for short-term leases
and leases for which the underlying asset is of low value. For
these leases, payments are charged to the income statement on a
straight-line basis over the term of the relevant lease. For the
year ended 31 December 2019, payments charged to the income
statement related to low value and short-term leases were
insignificant.
Right-of-use assets are presented within non-current assets on
the face of the statement of financial position and lease
liabilities are shown separately on the statement of financial
position in current liabilities and non-current liabilities
depending on the length of the lease term.
Impact on lessee accounting
The lease liabilities were determined by discounting relevant
lease payments at the Group's incremental borrowing rate of between
2% and 3.5%.
GBP'000
------------------------------------------------------------------------- -------
Operating lease commitments disclosed at 31 December 2018 33,623
Finance lease commitments disclosed at 31 December 2018 185
Short term leases (289)
Adjustments as a result of different treatment of extensions/termination
options 55
Discounted using weighted average of Group's incremental borrowing
rate (2,465)
------------------------------------------------------------------------- -------
Lease liability recognised as at 1 January 2019 31,109
------------------------------------------------------------------------- -------
Consolidated Income Statement - For the year ended 31 December
2019, the administrative expenses have decreased by GBP6,964,000 as
the Group previously recognised rental expenses therein.
Depreciation and finance costs have increased by GBP5,955,000 and
GBP1,009,000 respectively as a result of the requirement to
capitalise a right-of-use asset and depreciate over the term of the
lease.
Consolidated Statement of Financial Position - At 1 January
2019, the Group calculated the lease commitments outstanding and
applied the appropriate discount rate to calculate the present
value of the lease commitment which are recognised as a liability
and a right-of-use assets on the Group statement of financial
position. As a result, at the 1 January 2019, the Group recognised
both right-of-use assets of GBP31,024,000 and lease liabilities of
GBP31,109,000.
2.2 Changes in accounting policies
There are no other standards other than that are expected to
have a material impact on the Group's financial statements.
2.3 Critical Accounting Estimates And Judgements
The Group makes certain estimates and assumptions regarding the
future. Management also needs to exercise judgement in applying the
Group's accounting policies. Estimates and judgements are
continually evaluated based on historical experience and other
factors, including expectations of future events that are believed
to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions.
2.3.1 Principal estimates
-- Fair value measurement of intangible assets acquired in business combination;
A number of assets and liabilities included in the Group's
financial statements require measurement at, and/ or disclosure of,
fair value. As there are no easily identifiable valuation methods
for intangible assets such as customer relationships and licences,
estimation is required in assessing the fair value when accounting
for a business combination. The Group recognised Goodwill and
associated intangibles before amortisation of GBP26,733,000 (2018 -
GBP25,743,000). This is disclosed in note 12.
-- Estimated impairment of goodwill
The Group frequently tests whether goodwill has suffered any
impairment. These calculations require the use of estimates, both
in arriving at the expected future profitability of the entity and
the application of a suitable discount rate in order to calculate
the present value of these flows. As the impairment of goodwill is
based on a future forecast, the Group has used a level of judgement
around key assumptions of future cashflows greater than 12 months.
Details of the impairment and sensitivity of cashflows are
disclosed in note 12.
-- Trade receivables
In accordance with IFRS 9, the Group assesses whether the credit
risk has increased significantly since initial recognition, the
Group compares the risk of a default occurring on the financial
instrument both due within one year and more than one year as at
the reporting date with the risk of a default occurring on the
trade receivable as at the date of initial recognition. In making
this assessment, the Group considers both quantitative and
qualitative information that is reasonable and supportable,
including historical experience and forward-looking information
that is available without undue cost or effort. The Group has trade
receivables less provision for expected credit losses at the
year-end of GBP51,160,000 (2018 - GBP50,659,000).
-- Deferred Tax
Deferred tax assets have been recognised in relation to trading
losses generated in the entities, these have been restricted to
those instances where it is probable that taxable profit will be
available against which the difference. The Group has recognised a
deferred tax asset of GBP210,000 (2018 - GBP225,000) and a deferred
tax liability of GBP1,968,000 (2018 - GBP2,204,000).
2.3.2 Principal judgements
-- Deferred Contingent Consideration
The Group believes that any deferred consideration payable to
sellers who continue to be employed is not part of their
remuneration package and forms part of the cost of investment.
Amounts payable are irrespective of continued employment with the
acquired Company or elsewhere within the Group. The classification
is further determined based on a number of factors including the
breakdown of the acquisition consideration and the level of
remuneration payable to selling shareholder. At 31 December 2019,
the total deferred consideration of GBP4,607,000 (2018 -
GBP3,498,000), all of which is due within one year.
-- Valuation of Goodwill for Import Services
The Directors have reviewed the fair value of the goodwill and
deferred consideration relating to the acquisition of Import
Services Limited in line with IFRS 3 Business Combinations,
paragraph 45. Based on the interpretation of the standard, the
Directors believe that there is new information available relating
to the assumptions used to calculate the consideration payable. As
a result of the new information, the Directors have increased the
value of Goodwill and Consideration Payable to the vendors of
Import Services Limited by GBP990,000.
3. REVENUE ANALYSIS BY COUNTRY
2019 2018
GBP'000 GBP'000
--------------- ------- -------
United Kingdom 89,701 70,210
Lithuania 55,849 47,759
Romania 33,189 31,397
Bulgaria 21,819 17,553
Serbia 6,475 6,813
Other 6,214 5,442
--------------- ------- -------
Total revenue 213,247 179,174
--------------- ------- -------
The table below shows revenue by timing of transfer of goods and
services:
3A) REVENUE FROM CONTRACTS WITH CUSTOMERS
2019 2018
GBP'000 GBP'000
---------------------- ------- -------
Over a period of time 207,080 172,824
At a point in time 6,167 6,350
---------------------- ------- -------
Total revenue 213,247 179,174
---------------------- ------- -------
Revenue is derived from three main divisions: Transport
solutions, referred to as Affinity, Freight forwarding, and
Logistics & warehousing, as detailed in note 7.
3B) CONTRACT ASSETS
2019 2018
GBP'000 GBP'000
----------------------------------------------- ------- -------
At 1 January 2,068 1,273
Cumulative Catch-up - 182
Excess of revenue recognised during the period (701) 613
----------------------------------------------- ------- -------
At 31 December 1,367 2,068
----------------------------------------------- ------- -------
Contract assets are included within trade and other receivables
on the face of the statement of financial position.
By the nature of the Group's invoicing procedures, then the
Group does not have any contract liabilities.
3C) NON CURRENT ASSETS BY COUNTRY
2019 2018
GBP'000 GBP'000
------------------------- ------- -------
United Kingdom 44,113 24,802
Romania 9,744 3,462
Lithuania 1,005 160
Bulgaria 842 97
Serbia 136 136
Other 28 86
------------------------- ------- -------
Total non current assets 55,868 28,743
------------------------- ------- -------
4. OTHER OPERATING INCOME
Other operating income arises mainly from sundry services
executed by the Group, not being freight forwarding, logistics and
warehousing or affinity services. Since this is not considered to
be part of the main revenue generating activities, the Group
presents this income separately from revenue.
2019 2018
GBP'000 GBP'000
------------------------------- ------- -------
Recharges to franchise members 1,028 658
Recovery of fines/penalties 24 51
Rental income 65 225
Other 76 1
------------------------------- ------- -------
Total 1,193 935
------------------------------- ------- -------
5. OPERATING PROFIT
2019 2018
GBP'000 GBP'000
------------------------------------------------------ ------- -------
Operating profit is stated after charging/(crediting)
Hire of plant and machinery 694 731
Depreciation - right-of-use assets (note 25)(1) 5,955 -
Rental payable under operating lease - 5,877
Depreciation - owned assets (note 13) 1,035 712
Amortisation of intangible assets (note 12)(2) 1,587 1,105
Impairment of goodwill - Benfleet (note 12) - 1,845
Deferred consideration write back and vendor income - (2,592)
Auditors' remuneration - audit 295 361
Auditors' remuneration - non audit - 64
Loss on disposal of property, plant and equipment 32 13
Insurance 877 699
Property/Municipal Taxes 1,722 1,090
Legal costs 205 247
Exceptional Items (note 27) 856 318
Bad debt costs (note 17) 836 1,053
Credit provisions on Benfleet vendor income 326 -
Foreign exchange losses (54) 15
Staff expenses (note 6) 23,892 18,563
IT costs 1,641 623
Other administration expenses 10,070 5,719
------------------------------------------------------ ------- -------
Total 49,969 36,443
------------------------------------------------------ ------- -------
1 Under IFRS 16 'Leases', which the Group adopted in the current
year, payments under operating leases are not charged to the
consolidated income statement.
2 Amortisation charges on the Group's intangible assets are
recognised in the administrative expenses line item in the
consolidated income statement.
The remuneration paid to Crowe U.K. LLP and its associates (2018
- BDO LLP), the Group's external auditors is as follows:
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- ------- -------
Audit and Audit Related Services
The audit of the Company and Group financial statements 92 126
The audit of the financial statements of subsidiaries of
the Group 193 187
Other assurance services 10 48
--------------------------------------------------------- ------- -------
Total audit and audit related services 295 361
--------------------------------------------------------- ------- -------
2019 2018
GBP'000 GBP'000
--------------------------------------------------- ------- -------
Non-audit services
Other assurance services - 19
Services related to corporate finance transactions - 34
Taxation advice - 11
--------------------------------------------------- ------- -------
Total audit and non-audit related services - 64
--------------------------------------------------- ------- -------
6. EMPLOYEE BENEFIT EXPENSES
2019 2018
GBP'000 GBP'000
---------------------------------------------------------- ------- -------
Employee benefit expenses (including directors) comprise:
Wages and salaries 20,397 15,930
Short-term non-monetary benefits 200 126
Share based payments 11 108
Defined contribution pension cost 245 173
Social security contributions and similar taxes 3,039 2,226
---------------------------------------------------------- ------- -------
Total 23,892 18,563
---------------------------------------------------------- ------- -------
Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group, including the directors of the
Company.
2019 2018
GBP'000 GBP'000
---------------------------------- ------- -------
Salary 1,367 1,046
Short-term non-monetary benefits 39 25
Share based payments 11 109
Defined contribution pension cost 20 8
---------------------------------- ------- -------
Total 1,437 1,188
---------------------------------- ------- -------
Directors remuneration
2019 2018
GBP'000 GBP'000
--------------------- ------- -------
Salary 552 642
Other remuneration 11 18
Share based payments 25 26
--------------------- ------- -------
Total 588 686
--------------------- ------- -------
Other remuneration comprises of private family medical cover,
and insurance benefits.
Total remuneration regarding the highest paid Director is as
follows:
2019 2018
GBP'000 GBP'000
----------------------------- ------- -------
Total aggregate remuneration 330 331
----------------------------- ------- -------
The average number of employees (including directors) during the
year was as follows:
2019 2018
------------------- ----- ----
Freight forwarding 396 403
Logistics 450 354
Other 191 145
------------------- ----- ----
Total 1,037 902
------------------- ----- ----
7. SEGMENTAL ANALYSIS
Types of services from which each reportable segment derives its
revenues
In 2019 the Group had three main divisions: Transport Solutions,
referred to as Affinity, Freight Forwarding, and Logistics &
Warehousing. All revenue is derived from the provision of
services.
-- Freight Forwarding - This division is the core business and
relates to the movement of freight goods across Europe. This
division accounts for the largest proportion of the Group's
business, generating 75% of its external revenues. (2018 - 76%)
-- Affinity - This division is the Transport Solution's arm of
the Group. It focuses on the reselling of DKV fuel cards, leasing,
ferry crossings and other associated transport related services.
This division accounts for 3% of the Group's business in terms of
revenue (2018 - 4%)
-- Logistics & Warehousing - This division is involved in
the warehousing and domestic distribution; it generates 22% of the
Group's external revenues in 2019 (2018 - 20%).
Factors that management used to identify the Group's reportable
segments
The Group's reportable segments are strategic business units
that offer different products and services. They are managed
separately because each business requires different technology and
marketing strategies.
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the
management team comprising the Divisional Chief Operating Officers,
the Chief Executive Officer and the Chief Financial Officer.
Measurement of operating segment profit or loss
The Group evaluates segmental performance on the basis of profit
or loss from operations calculated in accordance with IFRS. Segment
assets and liabilities are measured in the same way in the
financial statements and they are allocated based on the operations
of the segment.
Inter-segment sales are priced at market rates and at arm's
length basis, along the same lines as sales to external customers.
This policy was applied consistently throughout the current and
prior period.
Logistics
Freight &
Forwarding Warehousing Affinity Overheads Total
2019 2019 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ---------- ----------- --------- --------- ---------
Gross billings 159,588 48,239 142,294 - 350,121
Less recoverable disbursements - - (136,127) - (136,127)
Total revenue 159,588 48,239 6,167 - 213,994
Inter-segmental revenue - (747) - - (747)
---------------------------------- ---------- ----------- --------- --------- ---------
Total revenue from external
customers 159,588 47,492 6,167 - 213,247
---------------------------------- ---------- ----------- --------- --------- ---------
Depreciation & amortisation
(excluding right-of-use asset
depreciation) (1,326) (1,149) (45) (102) (2,622)
Segment profit before central
overhead allocation
(excluding exceptional items) 3,447 2,889 2,534 (4,186) 4,684
Allocation of central overheads (1,120) (301) (47) 1,468 -
Segment profit after central
overhead allocation
(excluding exceptional items) 2,327 2,588 2,487 (2,718) 4,684
Share of loss of equity accounted
associate (60)
Net finance costs (1,593)
Exceptional items (856)
---------------------------------- ---------- ----------- --------- --------- ---------
Profit before income tax 2,175
---------------------------------- ---------- ----------- --------- --------- ---------
Total segment assets 57,002 36,502 29,810 5,550 128,864
Total segment liabilities 57,002 36,502 29,810 5,550 128,864
Logistics
Freight &
Forwarding Warehousing Affinity Overheads Total
2018 2018 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ---------- ----------- --------- --------- ---------
Gross billings 136,898 36,514 139,085 - 312,497
Less recoverable disbursements - - (132,735) - (132,735)
Total revenue 136,898 36,514 6,350 - 179,762
Inter-segmental revenue - (588) - - (588)
---------------------------------- ---------- ----------- --------- --------- ---------
Total revenue from external
customers 136,898 35,926 6,350 - 179,174
---------------------------------- ---------- ----------- --------- --------- ---------
Depreciation & amortisation (714) (1,023) (47) (33) (1,817)
Segment profit (excluding
exceptional items) 2,971 3,011 2,291 (1,779) 6,494
Share of loss of equity accounted
associate (78)
Net finance costs (482)
Exceptional items (318)
---------------------------------- ---------- ----------- --------- --------- ---------
Profit before income tax 5,616
---------------------------------- ---------- ----------- --------- --------- ---------
Total segment assets 40,772 19,310 27,181 11,495 98,758
Total segment liabilities 40,772 19,310 27,181 11,495 98,758
8. NET FINANCE COSTS
2019 2018
GBP'000 GBP'000
---------------------------------------------- ------- -------
Finance income:
Deposit account interest 29 29
Release of discount on deferred consideration - 45
Interest receivable on Benfleet vendor income 52 26
---------------------------------------------- ------- -------
Total finance income 81 100
---------------------------------------------- ------- -------
Finance costs:
Unwind of discount on deferred consideration 346 277
Bank loan interest 319 299
Right-of-use asset interest 1,009 -
Finance lease interest - 6
---------------------------------------------- ------- -------
1,674 582
---------------------------------------------- ------- -------
Net finance costs 1,593 482
---------------------------------------------- ------- -------
9. INCOME TAX
Analysis of tax expense
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- ------- -------
Current tax:
Tax on profits for the year 1,130 1,124
Adjustments in respect of prior periods (25) (28)
--------------------------------------------------------- ------- -------
Total current tax payable 1,105 1,096
--------------------------------------------------------- ------- -------
Deferred tax credit (233) (211)
--------------------------------------------------------- ------- -------
Total tax expense in consolidated statement of profit or
loss 872 885
--------------------------------------------------------- ------- -------
The reconciling items for the difference between the actual tax
charge for the year and the standard rate of corporation tax in UK
(the ultimate parent company's tax residency) applied to profits
for the year are as follows:
2019 2018
GBP'000 GBP'000
--------------------------------------------- ------- -------
Profit before tax 2,175 5,616
UK tax charge at 19% - 77
Overseas tax charge 406 692
Expenses not deductible for tax purposes 171 338
Movement in unrecognised deferred tax 326 (118)
Deferred tax asset not previously recognised - (29)
Adjustment in respect of prior periods (25) (28)
Other (6) (47)
--------------------------------------------- ------- -------
Total tax expense 872 885
--------------------------------------------- ------- -------
Deferred Tax
2019 2018
Assets - Arising from Trading losses GBP'000 GBP'000
-------------------------------------------- ------- -------
Balance as at 1 January 225 196
Movement in the year as a result of trading (15) 29
-------------------------------------------- ------- -------
Balance as at 31 December 210 225
-------------------------------------------- ------- -------
2019 2018
Liabilities GBP'000 GBP'000
-------------------------------------------------------- ------- -------
Balance as at 1 January (2,204) (1,209)
Recognised on the acquisition of subsidiaries (note 30) - (1,172)
Release to income statements 248 182
Movement in foreign exchange (12) (5)
-------------------------------------------------------- ------- -------
Balance as at 31 December (1,968) (2,204)
-------------------------------------------------------- ------- -------
The deferred tax asset relates to losses carried forward at the
rate of tax in the relevant jurisdiction.
The Group has potential deferred tax assets for trading losses
totalling GBP1,257,000 (2018: GBP932,000) arising from certain
subsidiaries across the Group. These assets have not been
recognised due to insufficient certainty that the suitable profits
will be generated in the foreseeable future.
The deferred tax liabilities relates to liabilities arising as
part of the Group's acquisitions.
10. EARNINGS PER SHARE
2019 2018
'000 '000
------------------------------------------------------------- ------- -------
Basic weighted average number of shares 135,147 125,167
Potentially dilutive share options 698 1,650
Deferred consideration on acquisitions - 1,952
------------------------------------------------------------- ------- -------
Diluted weighted average number of shares 135,845 128,769
------------------------------------------------------------- ------- -------
GBP'000 GBP'000
------------------------------------------------------------- ------- -------
Profit for the year attributable to owners of the parent
company 810 4,421
Earnings pence per share - basic 0.60 3.53
------------------------------------------------------------- ------- -------
Earnings pence per share - diluted 0.60 3.43
------------------------------------------------------------- ------- -------
Profit for the year attributable to owners of the parent
company 810 4,421
Exceptional items (note 27) 856 318
Amortisation of intangible assets arising from acquisitions
(note 12) 1,407 1,033
Unwind of discount in deferred consideration (note 8) 346 277
Additional interest charge due to IFRS16 accounting standard
change 419 -
Add back of discount on deferred consideration (note 8) (52) (45)
------------------------------------------------------------- ------- -------
Profit for the year attributable to owners of the parent
company excluding exceptional items 3,786 6,004
------------------------------------------------------------- ------- -------
Earnings pence per share - basic excluding exceptional
items 2.80 4.80
------------------------------------------------------------- ------- -------
Earnings pence per share - diluted excluding exceptional
items 2.79 4.66
------------------------------------------------------------- ------- -------
11. DIVIDS
2019 2018
GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Final dividend of 1.05p (2018:0.84p) per ordinary share 1,141 750
----------------------------------------------------------- ------- -------
Interim dividend of 0.28p (2018:0.42p) per ordinary shares 381 573
----------------------------------------------------------- ------- -------
Subject to approval by shareholders, the Group will propose a
final dividend via a scrip issue to shareholders in June 2020. This
has been proposed given the current issues around COVID-19 and the
objective of conserving cash where possible, but it is expected
that the Group's 2020 interim dividend will return to being paid in
cash.
12. INTANGIBLE ASSETS
Group
Customer Technology
Licences Goodwill Related Related Total
COST GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- ---------- -------
At 1 January 2019 2,871 13,176 12,057 510 28,614
Additions 498 - - - 498
Fair value adjustments - 990 - - 990
Disposals (26) - - - (26)
Exchange differences (95) - - - (95)
---------------------------- -------- -------- -------- ---------- -------
At 31 December 2019 3,248 14,166 12,057 510 29,981
---------------------------- -------- -------- -------- ---------- -------
AMORTISATION
At 1 January 2019 498 1,845 1,315 48 3,706
Charge for the year 180 - 1,305 102 1,587
Disposals (1) - - - (1)
Exchange differences (17) - - - (17)
---------------------------- -------- -------- -------- ---------- -------
At 31 December 2019 660 1,845 2,620 150 5,275
---------------------------- -------- -------- -------- ---------- -------
NET BOOK VALUE
At 31 December 2019 2,588 12,321 9,437 360 24,706
---------------------------- -------- -------- -------- ---------- -------
At 1 January 2019 2,373 11,331 10,742 462 24,908
---------------------------- -------- -------- -------- ---------- -------
Customer Technology
Licences Goodwill Related Related Total
COST GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- -------- ---------- -------
At 1 January 2018 2,675 7,551 5,689 - 15,915
Additions 171 - - - 171
Acquired through business
combination - 5,625 6,387 510 12,522
Transfer between categories 19 - (19) - -
Disposals (7) - - - (7)
Exchange differences 13 - - - 13
---------------------------- -------- -------- -------- ---------- -------
At 31 December 2018 2,871 13,176 12,057 510 28,614
---------------------------- -------- -------- -------- ---------- -------
AMORTISATION
At 1 January 2018 417 - 330 - 747
Charge for the year 72 - 985 48 1,105
Impairment - 1,845 - - 1,845
Disposals (7) - - - (7)
Exchange differences 16 - - - 16
---------------------------- -------- -------- -------- ---------- -------
At 31 December 2018 498 1,845 1,315 48 3,706
---------------------------- -------- -------- -------- ---------- -------
NET BOOK VALUE
At 31 December 2018 2,373 11,331 10,742 462 24,908
---------------------------- -------- -------- -------- ---------- -------
At 1 January 2018 2,258 7,551 5,359 - 15,168
---------------------------- -------- -------- -------- ---------- -------
The goodwill included in the above note, relates to acquisition
of Pallet Express Srl in January 2016, UK Buy in January 2017, Easy
Managed Transport Limited in March 2017, Benfleet Forwarding
Limited in October 2017, Regional Express Limited in November 2017,
Anglia Forwarding Group Limited in June 2018 and Import Services
Limited in July 2018.
Annual test for impairment
The Group carries out its impairment tests annually in November
as part of the budget process and all newly acquired entities are
also reviewed for impairment at the consolidated statement of
financial position sheet date.
Upon acquisition the goodwill and other intangibles are
calculated at Cash Generating Unit ("CGU") level, these are then
measured based on forecast cash flow projections, the first year of
which is based on the CGU's current annual financial budget which
has been approved by the board. The cash flow projections for years
two to five have been derived based on growth rates that are
considered to be in line with the market expectations.
The recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of
future cash flows and the determination of a discount rate in order
to calculate the present value of the cash flows.
In determining the future free cash flow, the main drivers have
been revenue and Earnings Before Interest and Tax ("EBIT") margins,
with margins remaining at expected levels.
The directors have reviewed the future profit and cash flow
forecasts for the next five years and applying a discount rate of
between 12.4%-14.1% to the cash flow projections when determining
the net present value of these cash flows, it believes there is
sufficient headroom in the value of the business to not have to
impair the goodwill, with the exception of Easy Managed Transport
Limited and Import Services Limited ("ISL"). Accordingly, no
impairment provision was recognised in the year (2018 -
GBP1,845,000).
Key assumptions used in the impairment calculations are as
follows:
Short term Long Term
Impairment Revenue Revenue
Growth Rate
Entity WACC % % Growth Rates
-------------------------------- ---------- ------------ ------------
Pallet Express Srl 12.4 4.8 to 20.7 3.0
Easy Managed Transport Limited 14.1 5.0 to 32.4 3.0
Benfleet Forwarding Limited 13.7 5.0 to 19.2 2.5
Regional Express Limited 13.2 44.6 to 53.3 3.0
Ukbuy / Gerviva Fair 14.1 16.6 to 95.4 5.0
Anglia Group Forwarding Limited 13.2 4.9 to 10.1 2.5
Import Services Limited 12.8 2.5 to 21.7 3.0
-------------------------------- ---------- ------------ ------------
The WACC of the Group has been calculated at a rate of between
12.35%-14.12% with each CGU being adjusted to take into
consideration a specific Company premium risk factor.
Sensitivity to changes in key assumptions
The Group has conducted sensitivity analysis on the impairment
test of the CGU's classified within continuing operations. The
directors believe that there is significant headroom on the
carrying value of each CGU except for Import Services Limited
("ISL") and Easy Managed Transport Limited ("EMT") CGU's, where
their recoverable values were approximately at their carrying
value. Given the headroom in the other CGU's, it would require a
significant change in the assumptions for an impairment charge to
be considered material and the level of change is considered
unlikely. The ISL CGU has a carrying value of GBP5,953,000 and EMT
has a carrying value of GBP2,258,000 and is based on the following
assumptions, the effect of a reasonably possible change in the
assumptions as disclosed in the next table:
Plan Impact on
Import Services scenario Change Impairment GBP'000
----------------------- -------- ------ --------------------
Long term growth 3.0% +/- 1% 1,476 (1,203)
Post tax discount rate 12.8% +/- 1% 2,207 (1,792)
EBIT (GBP000s) 9,667 -10% - (879)
Average EBIT margin 5.3% +/- 1% 1,837 (1,837)
----------------------- -------- ------ -------- ----------
Plan Impact on
EMT scenario Change Impairment GBP'000
----------------------- -------- ------ --------------------
Factor
Long term growth 3.0% +/- 1% 420 (350)
Post tax discount rate 14.1% +/- 1% 660 (550)
EBIT (GBP000s) 5,468 -10% - (497)
Average EBIT margin 8.7% +/- 1% 632 (632)
----------------------- -------- ------ -------- ----------
Import Services Limited
The Directors have reviewed the fair value of the goodwill and
deferred consideration relating to the acquisition of ISL in line
with IFRS 3 Business Combinations, paragraph 45. Based on the
interpretation of the standard, the Directors believe that there is
new information available relating to the assumptions used to
calculate the consideration payable. As a result of the new
information, the Directors have increased the value of goodwill and
consideration payable to the vendors of Import Services Limited by
GBP990,000.
The goodwill by CGU is shown below:
Value
Subsidiary Acquired GBP'000
-------------------------------- -------
Pallex Express SRL 722
Easy Managed Transport Limited 2,258
Benfleet Forwarding Limited 1,562
Regional Express Limited 937
UK Buy 227
Anglia Forwarding Group Limited 662
Import Services Limited 5,953
-------------------------------- -------
Total 12,321
-------------------------------- -------
COVID-19
Subsequent to the year-end and in line with other Covid-19, the
Board have reviewed the Impairment assumptions and consider that
there is still significant headroom in these forecasts. As a
result, no impairment provisions have been recognised.
13. PROPERTY, PLANT AND EQUIPMENT
Freehold Fixtures Motor Computer
property and fittings vehicles equipment Totals
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ------------ -------- --------- -------
COST
At 1 January 2019 204 1,895 895 1,919 4,913
Adjustment for change in accounting
policy, see note 2.1 - - (100) - (100)
Restated opening balance 204 1,895 795 1,919 4,813
Additions 75 707 80 459 1,321
Disposals - (218) (88) (60) (366)
Exchange differences (10) (54) (28) 17 (75)
------------------------------------ -------- ------------ -------- --------- -------
At 31 December 2019 269 2,330 759 2,335 5,693
------------------------------------ -------- ------------ -------- --------- -------
DEPRECIATION
At 1 January 2019 22 771 567 1,198 2,558
Charge for year 38 536 131 330 1,035
Eliminated on disposal - (215) (85) (60) (360)
Exchange differences - (14) (19) (23) (56)
------------------------------------ -------- ------------ -------- --------- -------
At 31 December 2019 60 1,078 594 1,445 3,177
------------------------------------ -------- ------------ -------- --------- -------
NET BOOK VALUE
At 31 December 2019 209 1,252 165 890 2,516
------------------------------------ -------- ------------ -------- --------- -------
At 1 January 2019 182 1,124 328 721 2,355
------------------------------------ -------- ------------ -------- --------- -------
Freehold Fixtures Motor Computer
property and fittings vehicles equipment Totals
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ------------ -------- --------- -------
COST
At 1 January 2018 142 972 840 1,593 3,547
Additions - 232 79 243 554
Additions acquired with subsidiary 61 708 43 103 915
Disposals - (24) (72) (28) (124)
Exchange differences 1 7 5 8 21
------------------------------------ -------- ------------ -------- --------- -------
At 31 December 2018 204 1,895 895 1,919 4,913
------------------------------------ -------- ------------ -------- --------- -------
DEPRECIATION
At 1 January 2018 3 628 499 817 1,947
Charge for year 19 156 131 406 712
Eliminated on disposal - (15) (66) (30) (111)
Exchange differences - 2 3 5 10
------------------------------------ -------- ------------ -------- --------- -------
At 31 December 2018 22 771 567 1,198 2,558
------------------------------------ -------- ------------ -------- --------- -------
NET BOOK VALUE
At 31 December 2018 182 1,124 328 721 2,355
------------------------------------ -------- ------------ -------- --------- -------
At 1 January 2018 139 344 341 776 1,600
------------------------------------ -------- ------------ -------- --------- -------
At 31 December 2018, property, plant and equipment included the
following amounts where the group was a lease under finance
leases.
2018
Group GBP'000
------------------------- -------
Leased motor vehicles
Cost 160
Accumulated depreciation (60)
------------------------- -------
Net book value 100
------------------------- -------
From 2019 lease assets are presented as a separate line item in
the statement of financial position, see note 25.
14. SUBSIDIARIES
The subsidiaries of Xpediator Plc, all of which have been
included in these combined financial statements, are as
follows:
Proportion Proportion
of of
ownership ownership
Registered Country of interest interest
Name Office incorporation 2019 2018
-------------------------------- ---------- -------------- ---------- ----------
Delamode Holdings Ltd 1 United Kingdom 100% 100%
Delamode Distribution UK Ltd 1 United Kingdom 51% 51%
Delamode Plc 1 United Kingdom 100% 100%
Delamode Property Ltd 1 United Kingdom 100% 100%
EshopWeDrop Limited 1 United Kingdom 100% 100%
Xpediator Services Limited 1 United Kingdom 100% 100%
Easy Managed Transport Limited 1 United Kingdom 100% 100%
Benfleet Forwarding Limited 1 United Kingdom 100% 100%
Regional Express Limited 1 United Kingdom 100% 100%
Import Services Limited 1 United Kingdom 100% 100%
Anglia Forwarding Group Limited 1 United Kingdom 100% 100%
Anglia Forwarding Limited 1 United Kingdom 100% 100%
Traker International Limited 1 United Kingdom 100% 100%
Affinity Transport Solutions
Srl 2 Romania 100% 100%
Delamode Moldova Srl 3 Moldova 100% 100%
Delamode Bulgaria EOOD 4 Bulgaria 90% 90%
Delamode Balkans DOO 5 Serbia 100% 100%
Affinity Balkans DOO 6 Montenegro 100% 100%
Delamode Macedonia 7 Macedonia 100% 100%
Delamode Baltics UAB 8 Lithuania 80% 80%
Delamode Estonia OÜ 9 Estonia 80% 80%
Delamode Romania Srl 2 Romania 100% 100%
Affinity Leasing IFN 2 Romania 99.95% 99.95%
EshopweDrop Holdings 10 Malta 100% 100%
EshopweDrop Baltics 8 Lithuania 100% 100%
Delamode Group Limited 10 Malta 100% 100%
Delamode Group Holdings Limited 10 Malta 100% 100%
Pallet Express Srl 11 Romania 100% 100%
Eshop Romania 2 Romania 100% 100%
Pallex Hungary 12 Hungary 100% 100%
Regional Express Gmbh 13 Germany 100% -
-------------------------------- ---------- -------------- ---------- ----------
Delamode Group Holdings Limited, Easy Managed Transport Limited,
Benfleet Forwarding Limited, Regional Express Limited, Import
Services Limited and Anglia Group Forwarding Limited are the only
Subsidiaries held directly by Xpediator Plc.
1 700 Avenue West, Skyline 120, Braintree, Essex, CM77 7AA, United Kingdom
2 Bd. Timisoara, nr 111-115 Sector 6, Bucharest, 061327, Romania
3 Bd. Moscova 21/5 of. 1011 MD-2068, Chisinau, Republic of Moldova
4 361 Tsarigradsko Shose Boulevard, 1582, Sofia, Bulgara
5 Bulevar Oslobodenja 113, 11010 Vozdovac, Belgrade, Serbia
6 Dzordza, Vasingtona 51/43, Podgorica, 81000, Montenegro
7 Stefan Jakimov Dedov 14/1 1, 1000 Skopje, Macedonia
8 Eiguliu G, 2 03150, Vilnius, Lithuania
9 Parnu mnt. 139/C-1 11317, Tallinn, Estonia
10 Europa Business Centre, Level 3 - Suite 701, Dun Karn Street Birkirkara BKR 9034, Malta
11 Stefan cel Mare street, no. 193, Sibiu, 550321, Romania
12 1141 Budapest Szuglo utcs 82, Hungary
13 Darmstadter Landstrasse 116, Frankfurt, 60598, Germany
The following companies are exempt from preparing audited
accounts under Section 479A of the UK Companies Act 2006 :
Company Registration
----------------------------- ------------
Delamode Property Limited 06895332
EshopWeDrop Ltd 08429573
Traker International Limited 02068943
Xpediator Services Limited 09724594
----------------------------- ------------
15. NON-CONTROLLING INTERESTS
Non-controlling interests ("NCI") held in the Group are as
follows:
2019 2018
--------------------------------- ----- -----
Delamode Baltics UAB 20.0% 20.0%
Delamode Estonia OÜ 20.0% 20.0%
Delamode Bulgaria EOOD 10.0% 10.0%
Affinity Leasing IFN 0.05% 0.05%
Delamode Distribution UK Limited 49.0% 49.0%
--------------------------------- ----- -----
The summarised financial information in relation to Delamode
Bulgaria and Delamode Baltics before intra-Group eliminations, is
presented below together with amounts attributable to NCI:
Delamode Delamode
Baltics
Bulgaria UAB
GBP'000 GBP'000
------------------- -------- --------
Share capital 1 6
Reserves 142 384
--------------------- -------- --------
Total NCI c/f 2018 143 390
--------------------- -------- --------
Delamode Delamode
Baltics
Bulgaria UAB
GBP'000 GBP'000
---------------------------------------- -------- --------
Total NCI b/f 2019 143 390
------------------------------------------ -------- --------
Non-controlling interest in results
for the year 76 319
Non-controlling interest in dividends
for the year (38) (92)
Non-controlling interest in translation
adjustment on opening reserves (7) (4)
Non-controlling interest in translation
adjustment on results for the year (3) (26)
------------------------------------------ -------- --------
Total NCI c/f 2019 171 587
------------------------------------------ -------- --------
Delamode Baltics
Delamode Bulgaria UAB
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- --------- -------- -------- --------
Revenue 22,467 18,223 56,735 47,875
Cost of sales (19,801) (15,925) (49,718) (42,018)
------------------------------------------------- --------- -------- -------- --------
Gross profit 2,666 2,298 7,017 5,857
------------------------------------------------- --------- -------- -------- --------
Administrative expenses (1,823) (1,443) (5,224) (4,798)
Other income 25 17 105 115
------------------------------------------------- --------- -------- -------- --------
Operating profit 868 872 1,898 1,174
Finance costs (20) (1) (16) (10)
------------------------------------------------- --------- -------- -------- --------
Profit before tax 848 871 1,882 1,164
Tax expense (86) (88) (285) (172)
------------------------------------------------- --------- -------- -------- --------
Profit after tax 762 783 1,597 992
------------------------------------------------- --------- -------- -------- --------
Profit after tax attributable to non-controlling
interests 76 78 319 198
------------------------------------------------- --------- -------- -------- --------
Delamode Baltics
Delamode Bulgaria UAB
2019 2018 2019 2018
For the period to 31 December 2019 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- --------- -------- -------- --------
Assets:
Non-current trade and receivables 10 9 185 122
Property plant and equipment 985 88 50 60
Inventories 10 3 42 -
Trade and other debtors 4,706 3,640 8,977 8,567
Cash and cash equivalents 904 498 1,632 250
-------------------------------------- --------- -------- -------- --------
6,615 4,238 10,886 8,999
-------------------------------------- --------- -------- -------- --------
Liabilities:
Trade and other payables 3,990 2,762 7,952 7,051
Loans and other borrowings 914 46 - -
-------------------------------------- --------- -------- -------- --------
4,904 2,808 7,952 7,051
-------------------------------------- --------- -------- -------- --------
Total net assets 1,711 1,430 2,934 1,948
-------------------------------------- --------- -------- -------- --------
Accumulated non-controlling interests 171 143 587 390
-------------------------------------- --------- -------- -------- --------
The NCI of all the other shareholders, that are not 100% owned
by the Group are considered to be immaterial.
16. INVESTMENTS
Other Associate Total
Investment Investment Investment
COST GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- ----------
At 1 January 2019 1 60 61
Performance of investment - (60) (60)
At 31 December 2019 1 - 1
-------------------------- ---------- ---------- ----------
NET BOOK VALUE
At 31 December 2019 1 - 1
-------------------------- ---------- ---------- ----------
Other Associate Total
Investment Investment Investment
COST GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- ----------
At 1 January 2018 1 - 1
Additions - 60 60
At 31 December 2018 1 60 61
-------------------------- ---------- ---------- ----------
NET BOOK VALUE
At 31 December 2018 1 60 61
-------------------------- ---------- ---------- ----------
Investments represent investments in shares in unlisted
companies.
Associate Investments
As part of the acquisition of Anglia Group Forwarding Limited
made in June 2018, the Group immediately disposed of 60% of the
share capital of International Cargo Centre Limited (ICC). As the
Group now owns 40% of the voting shares and does not have control
over Board decisions, then the Group has accounted for this as an
associate.
In 2018, the Group received consideration of GBP83,000 from the
sale and made a profit on disposal of GBPnil.
The Group's share of the results, assets and liabilities of its
share in ICC is as follows:
2019 2018
GBP'000 GBP'000
------------------------- ------- -------
Revenue 310 188
Loss after tax (107) (78)
------------------------- ------- -------
Non-current assets 18 18
Current assets 120 108
------------------------- ------- -------
Total assets 138 126
------------------------- ------- -------
Current liabilities (282) (167)
Share of net liabilities (144) (41)
------------------------- ------- -------
The registered office of ICC is Blackwater Close, Fairview
Industrial Park, Rainham, Essex, RM13 8UA.
17. TRADE AND OTHER RECEIVABLES
2019 2018
Group GBP'000 GBP'000
---------------------------------------------------- ------- -------
Current:
Trade receivables 53,625 53,555
Less: provision for impairment of trade receivables (2,465) (2,896)
---------------------------------------------------- ------- -------
51,160 50,659
---------------------------------------------------- ------- -------
Current financial assets 2,689 2,302
Prepayments and contract assets 2,933 2,570
Other receivables 4,145 4,779
---------------------------------------------------- ------- -------
Total 60,927 60,310
---------------------------------------------------- ------- -------
Non Current
Trade and other receivables 1,050 1,194
---------------------------------------------------- ------- -------
Current financial assets relate to the security deposits held by
DKV on behalf of the Group which are refundable on termination of
the agreement which can be served giving three month's notice hence
they are classed as current assets.
Included with trade debtors is a balance due from Simplu Romania
of GBP232,000 (2018 - GBP251,000). This debt is guaranteed by the
Directors of Delamode Holdings BV (which include Stephen Blyth and
Shaun Godfrey), who are a related party to the Xpediator Group.
Included within other receivables due within one year is an
amount due of GBP1,207,000 (2018 - GBP840,000) from the Vendors of
Benfleet Forwarding Limited. In addition, there is a further
GBP599,000 (2018 - GBP1,155,000) included in trade and other
receivables due in more than one year.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and aging.
The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts.
The expected loss rates are based on the Group's historical
credit losses experienced. The historical loss rates are then
adjusted for known legal and specific economic factors, including
the credit worthiness and ability of the customer to settle the
receivable.
The movements in the impairment allowance for trade receivables
are as follows:
2019 2018
Group GBP'000 GBP'000
-------------------------------------------------------- ------- -------
At 1 January 2,896 1,498
Increase during the year 1,052 1,311
Acquired from acquisitions - 623
Impairment losses reversed (216) (258)
Receivable written off during the year as uncollectible (1,267) (278)
-------------------------------------------------------- ------- -------
At 31 December 2,465 2,896
-------------------------------------------------------- ------- -------
At 31 December 2019, the lifetime expected loss provision for
trade receivables and contract assets is as follows:
More than More than More than
30 Days 60 Days 90 Days
Current Past Due Past Due Past Due Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------- --------- --------- --------- -------
Expected loss rate 0.8% 1.8% 9.8% 53.3%
Gross carrying amount 46,999 3,301 1,048 3,644 54,922
Loss provision 357 61 103 1,944 2,465
---------------------- ------- --------- --------- --------- -------
18. TRADE AND OTHER PAYABLES
2019 2018
Group GBP'000 GBP'000
-------------------------------- ------- -------
Current:
Trade and other payables 51,197 47,154
Amounts owed to related parties 20 137
Social security and other taxes 2,410 2,222
Other creditors 3,249 4,610
Deferred Consideration 4,607 1,409
Accruals 1,703 1,949
-------------------------------- ------- -------
Total Trade and other payables 63,186 57,481
-------------------------------- ------- -------
Non Current
Deferred Consideration - 2,089
Trade and other payables 101 -
-------------------------------- ------- -------
The deferred consideration of GBP4,607,000 (2018 - GBP1,409,000)
due within one year relates to the deferred consideration on the
acquisitions of Import Services Limited, Regional Express Limited
and Anglia Forwarding Group Limited. Of this balance, GBPnil (2018
- GBP563,000) is contingent on performance related criteria.
19. BANK AND OTHER LOANS
2019 2018
Group GBP'000 GBP'000
------------------------------------------------- ------- -------
Current:
Commitments in relation to finance leases - 102
Bank loans 341 626
Invoice discounting facility 2,382 3,024
------------------------------------------------- ------- -------
2,723 3,752
------------------------------------------------- ------- -------
Non-current:
Commitments in relation to finance leases
Payable 1-2 years - 56
Payable 2-5 Years - 27
Loans - 1-2 years 365 315
Loans - 2-5 years 1,107 1,053
Loans due after 5 years repayable by instalments 803 1,197
------------------------------------------------- ------- -------
2,275 2,648
------------------------------------------------- ------- -------
The Lloyds bank loan due after 5 years is due to be repaid by
November 2026. Interest is being charged at a fixed rate of 6.4%
and a variable rate of 1.1% above the Bank of England base
rate.
The bank loan is partially guaranteed by the personal assets of
some of the Directors and Key Management of the Group.
The book value and fair value of loans and borrowings are as
follows:
2019 2018
Non-Current GBP'000 GBP'000
--------------------------- ------- -------
Bank borrowings and others
- Secured 2,275 2,648
- Unsecured - -
--------------------------- ------- -------
2,275 2,648
--------------------------- ------- -------
Current
Bank borrowings and others
- Secured 2,696 3,425
- Unsecured 27 327
--------------------------- ------- -------
2,723 3,752
--------------------------- ------- -------
Total loans and borrowings 4,998 6,400
--------------------------- ------- -------
Sterling 4,971 5,978
Other 27 422
--------------------------- ------- -------
Total 4,998 6,400
--------------------------- ------- -------
Bank borrowings and overdrafts are secured by a fixed and
floating charge over the Group's assets.
The movements in the bank and other loans are as follows:
2019 2018
Group GBP'000 GBP'000
----------------------------------------------------------- ------- -------
At 1 January 6,400 5,854
New borrowings in the year - 908
Change of accounting treatment of finance leases following
the adoption of IFRS 16 (185) -
Borrowings repaid during the year (1,217) (362)
----------------------------------------------------------- ------- -------
At 31 December 4,998 6,400
----------------------------------------------------------- ------- -------
20. PROVISIONS
Other provisions relate to an assessment of dilapidation of
leasehold properties. In each instance, management have undertaken
surveys to understand the work required to bring the leasehold
properties back to their original condition.
All of these provisions are due to be settled in more than one
year.
2019 2018
GBP'000 GBP'000
-------------------------- ------- -------
Balance at 1 January 1,523 -
Additions during the year 151 1,523
-------------------------- ------- -------
Balance at 31 December 1,674 1,523
-------------------------- ------- -------
21. FINANCIAL INSTRUMENTS - RISK MANAGEMENT
The Group is exposed through its operations to the following
financial risks:
-- Credit risk
-- Fair value or cash flow interest rate risk
-- Foreign exchange risk
-- Other market price risk, and
-- Liquidity risk.
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Trade receivables
-- Cash and cash equivalents
-- Trade and other payables
-- Bank overdrafts
-- Floating-rate bank loans
-- Fixed rate bank loans
-- Bank loan
-- Right of use assets and lease liabilities
Financial instruments by category
Financial assets at amortised costs
2019 2018
GBP'000 GBP'000
------------------------------------- ----------------- ----------------- ------------ ------------
Cash and cash equivalents 11,951 9,647
Right-of-use assets 27,385 -
Trade and other receivables 59,044 58,934
------------------------------------- ----------------- ----------------- ------------ ------------
Total financial assets at amortised
costs 98,380 68,581
------------------------------------- ----------------- ----------------- ------------ ------------
Financial Liabilities
Fair value through profit and loss Loans and other payables
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ----------------- ----------------- ------------ ------------
Trade and other payables - - 56,270 53,850
Bank loans and Invoice discounting - - 4,998 6,400
Right-of-use asset lease liabilities - - 27,927 -
Deferred consideration 666 846 3,941 2,652
------------------------------------- ----------------- ----------------- ------------ ------------
Total financial liabilities 666 846 93,136 62,902
------------------------------------- ----------------- ----------------- ------------ ------------
Financial instruments not measured at fair value
These include cash and cash equivalents, trade and other
receivables, trade and other payables, and loans and borrowings.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, trade and other payables
approximates their fair value.
The Group's activities expose it to a variety of financial
risks: market risk (including foreign exchange risk, price risk and
interest rate risk) credit risk and liquidity risk. The financial
risks relate to the following financial instruments: cash and cash
equivalents, trade and other receivables, trade and other payables,
and loans and borrowings. The accounting policies with respect to
these financial instruments are described above.
Risk management is carried out by the directors under policies,
where they identify and evaluate financial risks in close co --
operation with the Group's operating units. The directors provide
principles for overall risk management.
The reports on the risk management are produced periodically to
the key management personnel of the Group.
(a) Credit Risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. It is Group policy, implemented locally, to
assess the credit risk of new customers before entering contracts.
Such credit ratings are taken into account by local business
practices.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. For banks and
financial institutions, the most suitable bank in the local
territory is selected.
A significant amount of cash is held with the following
institutions:
2019* 2019 2018
Cash at bank Rating GBP'000 GBP'000
--------------------- ------- ------- -------
Barclays Bank BBB 2,528 1,117
Lloyds Bank BBB+ 786 1,773
Raiffeisenbank BBB+ 4,110 2,471
RBS BBB 391 1,135
Swedbank AA- 1,344 169
HSBC A 56 353
Bank of Transylvania BB 470 28
Unicredit Bulbank BBB 60 267
Hipotekarna Bank NA 197 512
Other 819 624
------------------------------ ------- -------
Total 10,761 8,449
------------------------------ ------- -------
* Based on Standard & Poor Rating
2019 2019 2018
Short term deposits Rating GBP'000 GBP'000
------------------------------------------------------- ------- ------- -------
Lloyds Bank BBB+ 1,190 1,198
2019 2018
Reconciliation of cash in bank and deposits to balance
sheet GBP'000 GBP'000
------------------------------------------------------- ------- ------- -------
Cash at bank 10,761 8,449
Short term deposits 1,190 1,198
---------------------------------------------------------------- ------- -------
Total 11,951 9,647
---------------------------------------------------------------- ------- -------
(b) Market risk
(i) Price risk
Certain aspects of the commercial terms relating to the Affinity
division are, directly linked to the commodity costs of fuel
purchased by their clients at roadside fuelling stations across
Europe. As such there is a risk arising from price changes relating
to the fuel prices offered at the respective fuelling stations. In
order to manage this risk the Group partially hedges the way it
charges its commissions.
The table below shows the sensitivity analysis to possible
changes in fuel prices to which the Group is exposed at the end of
each year, with all other variables remaining constant. This arises
due to the commercial arrangements the Affinity division has with
its clients, whereby it will generate income in the form of
commissions based on the value of fuel purchased by its
clients.
2019 2018
Petrol price risk effect on net profit sensitivity analysis: GBP'000 GBP'000
------------------------------------------------------------- ------- -------
Price increased by 10% 179 154
Price decreased by 10% (179) (154)
------------------------------------------------------------- ------- -------
The Group is exposed to the market risk with respect to its
operating income which is subject to changes in performance,
exchange fluctuations and other market influences both economic and
political. The directors manage this risk by reviewing on a regular
basis market fluctuations arising on the Group's activities.
(ii) Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets, its
income and operating cash flows are substantially independent of
changes in market interest rates.
The risk associated with interest-bearing debts is mitigated by
utilising a mix of fixed and variable interest rate loans, as well
as a Confidential Invoice Discounting Facility ("CID").
2019 2018
Interest rate risk effect
on net profit sensitivity
analysis: GBP'000 GBP'000
--------------------------- ------- -------
Interest rates increased
by 0.25% (13) (15)
Interest rates decreased
by 0.25% 13 15
--------------------------- ------- -------
The Group's cash flow and fair value interest rate risk is
periodically monitored by the directors. The cash flow and fair
value risk policy is approved by the directors.
Receivables and trade and other payables are interest free and
have settlement dates within one year.
A sensitivity analysis is normally based on a change in an
assumption while holding all other assumptions constant. In
practice, this is unlikely to occur, and change in some of the
assumptions may be correlated - for example, change in exchange
rates and change in market values.
(iii) Foreign exchange risk
Foreign exchange risk arises because the Group has operations
located in various parts of the world whose functional currency is
not the same as the presentational currency of the Group. Foreign
exchange risk also arises when individual companies enter into
transactions denominated in a currency other than their functional
currency. Certain assets of the Group comprise amounts denominated
in foreign currencies. Similarly, the Group has financial
liabilities denominated in foreign currency. In general, the Group
seeks to maintain the financial assets and financial liabilities in
each of the foreign currencies at a reasonably comparable level,
thereby providing a natural hedge against foreign exchange
risk.
MLD BGN RSD HUF MKD
GBP Euro RON LEU LEV Dinar Forints Denar Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
At 31 December
2019
Financial assets 42,271 41,020 7,288 73 6,207 1,348 2 171 98,380
Financial liabilities 42,247 40,801 3,853 26 4,635 1,409 - 165 93,136
At 31 December
2018
Financial assets 24,868 31,799 6,409 102 3,892 1,297 18 196 68,581
Financial liabilities 22,468 28,478 7,559 47 2,721 1,426 - 203 62,902
An analysis of the Group's exposure to foreign exchange risk,
illustrating the impact on the net financial assets of a 10%
movement in each of the key currencies to which the Group is
exposed, is shown below
2019 2018
Foreign currency risk sensitivity analysis: GBP'000 GBP'000
-------------------------------------------- ------- -------
Euro
Strengthened by 10% 22 332
Weakened by 10% (22) (332)
Romanian Lei
Strengthened by 10% 344 (115)
Weakened by 10% (344) 115
Moldavian Leu
Strengthened by 10% 5 6
Weakened by 10% (5) (6)
Serbian Dinar
Strengthened by 10% (6) (13)
Weakened by 10% 6 13
Bulgarian Lev
Strengthened by 10% 157 117
Weakened by 10% (157) (117)
Macedonian Denar
Strengthened by 10% 1 (1)
Weakened by 10% (1) 1
-------------------------------------------- ------- -------
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash flow for operations. The Group manages its' risk to shortage
of funds by monitoring forecast and actual cash flows.
The Group monitors its risk to a shortage of funds using a
recurring liquidity planning tool. This tool considers the maturity
of both its financial investments and financial assets (e.g.
accounts receivables, other financial assets) and projected cash
flows from operations.
The Group's objective is to maintain a balance between
continuity of funding and flexibility through the use of bank
overdrafts, invoice discounting and long term loan finance.
Between Between
Up to 1 and 2 2 and 5 Over
12 months years years 5 years
At 31 December 2019 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------- ------- -------
Trade and other payables 56,270 - - -
Bank loans & invoice discounting 2,723 365 1,107 803
Lease liabilities 6,392 5,575 13,825 2,135
Deferred consideration 4,607 - - -
--------------------------------- --------- ------- ------- -------
Total 69,992 5,940 14,932 2,938
--------------------------------- --------- ------- ------- -------
Between Between
Up to 1 and 2 2 and 5 Over
12 months years years 5 years
At 31 December 2018 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------- ------- -------
Trade and other payables 53,850 - - -
Bank loans & invoice discounting 3,752 371 1,080 1,197
Deferred consideration 1,409 2,089 - -
--------------------------------- --------- ------- ------- -------
Total 59,011 2,460 1,080 1,197
--------------------------------- --------- ------- ------- -------
22. CALLED UP SHARE CAPITAL
2019 2019 2018 2018
Ordinary Shares of GBP0.05 each Number GBP000s Number GBP000s
---------------------------------- ----------- ------- ----------- -------
At the beginning of the year 133,713,604 6,686 117,431,144 5,872
Issued during the year 2,370,620 118 16,282,460 814
---------------------------------- ----------- ------- ----------- -------
At the end of the year 136,084,224 6,804 133,713,604 6,686
---------------------------------- ----------- ------- ----------- -------
50,000 deferred shares of GBP1.00
each 50,000 50 50,000 50
---------------------------------- ----------- ------- ----------- -------
At the end of the year 136,134,224 6,854 133,763,604 6,736
---------------------------------- ----------- ------- ----------- -------
Shares Issued
On 16 May 2019, the Company issued 1,655,876 shares to the
former owners of Easy Managed Transport Limited ("EMT") as part of
the payment of the deferred consideration relating to the
acquisition of the entire equity of EMT in 2017. The total value of
this transaction was GBP831,250 which was settled by the issuance
of new shares.
In 22 May 2019 Alex Borrelli and Geoff Gillo exercised their
share options. As a result of exercising these options, the Company
issued shares of 416,667 to Alex Borrelli and shares of 208,333 to
Geoff Gillo at an option price of 24 pence per share. The market
value of the shares issued to Alex Borrelli when exercised was
GBP210,000, resulting in a gain of GBP110,000. The market value of
shares issued to Geoff Gillo when exercised was GBP105,000,
resulting in a gain of GBP55,000.
On 5 December 2019, the Company issued 89,744 new ordinary
shares of GBP0.05 each as part of the agreed deferred consideration
for the acquisition of Regional Express Limited. The total value of
this transaction was GBP35,000 which was settled by the issuance of
the new shares.
On 8 June 2018, the Company issued 1,727,694 Ordinary Shares of
GBP0.05 each in the Company as part of the agreed deferred
consideration for the acquisition of EMT. The total value of this
transaction was GBP1,074,625, which was settled by the issuance of
the new shares.
On 11 July 2018, the Group raised a further GBP7,000,000 before
expenses by issuing an additional 10,000,000 Ordinary Shares of
GBP0.05 each in the Company. Costs of GBP424,000 have been taken to
the share premium reserve. Following this fund raising, the Group
acquired lmport Services Limited a contract logistics and
warehousing business based in Southampton, UK. A further 3,740,648
(which equated to consideration of GBP3,000,000) Ordinary Shares of
GBP0.05 each were issued as part of this transaction.
On 10 September 2018, 729,167 Ordinary Shares were issued to
Dana Antohi as she exercised her options. The exercise price of
this option was GBP0.05.
On 31 December 2018, the Company issued 84,951 Ordinary Shares
of GBP0.05 each in the Company as part of the agreed deferred
consideration for the acquisition of Regional Express Limited. The
total value of this transaction was GBP35,000 which was settled by
the issuance of the new shares.
23. RESERVE DESCRIPTION AND PURPOSE
Retained earnings: All other net gains and losses and
transactions with owners (e.g. dividends) not recognised
elsewhere.
Translation reserve: represents the difference arising on the
translation of the net assets and results of subsidiaries into the
presentation currency.
Merger Reserves: represents the difference between the nominal
value of consideration paid for shares acquired in entities under
common control and the nominal value of those shares. This arises
as a result of the business combination falling outside the scope
of IFRS 3 and merger accounting being applied in place of
acquisition accounting. In addition, the premium on the fair value
in excess of the nominal value of shares issued in consideration of
business combinations is credited to the merger reserve.
Share premium is the amount subscribed for share capital in
excess of nominal value.
Equity reserve represents the cost of the share options granted
that have not yet been exercised.
24. SHARE-BASED PAYMENTS
The Company has granted Directors' and key management share
option plans. These are unapproved schemes so they do not satisfy
the requirements of schedule 4, ITEPA. A summary of the options
plans is shown below. All options will vest between 1 to less than
4 years.
Share Option Option Price
Name No GBP Vesting Period Expiry Date
--------------- ------------ ------------ -------------- -----------------
SP Angel 55,250 0.24 July 2022 August 2022
Stephen Blyth
- Tranche 1 214,286 0.70 November 2018 December 202 1(1)
Stephen Blyth
- Tranche 2 214,286 0.70 May 2019 December 2021 (2)
Stephen Blyth
- Tranche 3 -
not earned 214,286 0.70 May 2020 December 2021 (3)
Stephen Blyth
- Tranche 4 214,285 0.70 May 2021 December 2021 (4)
--------------- ------------ ------------ -------------- -----------------
1 Tranche 1 - Options can be exercised from 27 November 2018
2 Tranche 2 - Options can be exercised immediately following the Company's AGM in 2019.
3 Tranche 3 - Options are no longer exercisable as the performance criteria were not met.
4 Tranche 4 - Options can be exercised immediately following the Company's AGM in 2021.
On 26 November 2018, the Company granted options over 857,143
Ordinary Shares (Stephen Blyth) and 642,857 Ordinary shares (Stuart
Howard). These were split into four equal tranches. On 6 September
2019, Stuart Howard left the business, and as a result all unvested
shares options were forfeited.
Tranche 1 (214,286 Ordinary Shares) are exercisable from
November 2018 and have an expiry date of 31 December 2021. The
options may only be exercised in whole and not part. There are no
other vesting conditions.
Tranche 2 (214,286 Ordinary Shares) are exercisable from May
2019 and have an expiry date of 31 December 2021. The options may
only be exercised in whole and not part. The Options are
conditional on earnings per share of the Company increasing 10 per
cent (or more) for the year ending 31 December 2018 compared with
the prior year.
Tranche 3 (214,286 Ordinary Shares) are exercisable from May
2020 and have an expiry date of 31 December 2021. The options may
only be exercised in whole and not part. The Options are
conditional on earnings per share of the Company increasing 10 per
cent (or more) for the year ending 31 December 2019 compared with
the prior year. However, due to the performance of the business,
tranche 3 (214,286) of Stephen Blyth's shares did not fulfil the
criteria of earnings per share growth so can no longer be
exercised.
Tranche 4 (214,285 Ordinary Shares) are exercisable from May
2021 and have an expiry date of 31 December 2021. The options may
only be exercised in whole and not part. The Options are
conditional on earnings per share of the Company increasing 10 per
cent (or more) for the year ending 31 December 2020 compared with
the prior year.
The exercise price of all the share options is GBP0.70.
On 10 September 2018 729,167 Ordinary Shares were issued to Dana
Antohi as she exercised her options. The exercise price of this
option was GBP0.05. The share price at the time of issue of these
shares was GBP0.66.
On 11 August 2017, the Company has granted share options to the
non-executive directors over 416,667 Ordinary Shares (Alex
Borrelli) and 208,333 Ordinary Shares (Geoff Gillo). The options
may only be exercised in whole and not part and exercise of the
options are conditional on the earnings per share of the Company in
each of the two years ending 31 December 2017 and 31 December 2018
increasing by 10 per cent. or more on the previous year. For Alex
Borrelli, the options are also conditional on him being a director
of the Company on the date that the consolidated audited accounts
of the Company for the year ending 31 December 2018 are published
and for Geoff Gillo, for being a non-executive director of the
Company on such date. The exercise price of the options is the
Placing Price. (GBP0.24). These were exercised on 22 May 2019.
The Company has also granted to SP Angel warrants to subscribe
for 55,250 Ordinary Shares at the Placing Price, GBP0.24,
exercisable at any time during the period of five years from
Admission.
Options will normally lapse on cessation of employment. However,
exercise is permitted for a limited period following cessation of
employment for specified reasons, such as redundancy, retirement,
ill-health, and, in other circumstances, at the discretion of the
Remuneration Committee.
The movements in share options are as follows:
2019 2018
No No
---------------------------------------- ---------- ----------
At 1 January 2,180,250 1,409,417
Share options granted during the year - 1,500,000
Share options exercised during the year (625,000) (729,167)
Share options lapsed during the year (857,143) -
At 31 December 698,107 2,180,250
Weighted average share price of options GBP0.66 GBP0.35
Weighted average grant fair value GBP0.04 GBP0.04
Weighted average contractual life 4 Months 14 Months
Exercise price GBP0.24 to GBP0.24 to
GBP0.70 GBP0.70
---------------------------------------- ---------- ----------
The weighted average grant fair value during the year was 2019
GBP0.04 (2018 - GBP0.04) per option. The outstanding options have a
weighted average contractual life of 4 months, and exercise price
between GBP0.24 and GBP0.70.
Options were valued using the Black-Scholes option pricing
model. No performance conditions were included in the fair value
calculations. Expected dividends are not incorporated into the fair
value calculations. The fair value per option granted and the
assumptions used in the calculations are as follows;
2019 2018
--------------------- --------- ---------
Risk free investment 1.39% 1.55%
Expected life 24 Months 31 Months
Expected volatility 54.20% 50.72%
--------------------- --------- ---------
Weighted Average Share Price
For 2019 options granted, a volatility of 54.20% (2018 - 50.72%)
has been used reflecting the historical volatility based on share
transactions since listing. The maximum vesting period was used as
a basis to determine the expected life of the option. The risk-free
rate was based on the Government Gilts rates in effect at the time
of the grant.
The Group recognised total expenses of GBP11,000 (2018 -
GBP109,000) relating to equity-settled share-based payments.
25. LEASES
The Group adopted IFRS 16 with an initial application date of 1
January 2019. The Group applied the modified retrospective approach
and comparative information has not been restated. Further
information on the adoption of IFRS 16 can be found in note
2.1.
The Group as a lessee
The Group's leases consist primarily of property premises and
equipment and is presented below:
Right-of-use assets
Property
Premises Equipment Total
GBP000s GBP000s GBP000s
------------------------------------------------------ -------- --------- -------
Cost
Right-of-use assets recognised at 1 January 2019 30,205 719 30,924
Transfers from property, plant and equipment relating
to finance leases (note 13) - 100 100
------------------------------------------------------ -------- --------- -------
At 1 January 2019 30,205 819 31,024
Additions during the year 1,938 378 2,316
------------------------------------------------------ -------- --------- -------
At 31 December 2019 32,143 1,197 33,340
------------------------------------------------------ -------- --------- -------
Depreciation
Charge for the year (5,623) (332) (5,955)
------------------------------------------------------ -------- --------- -------
At 31 December 2019 (5,623) (332) (5,955)
------------------------------------------------------ -------- --------- -------
NET BOOK VALUE
At 31 December 2019 26,520 865 27,385
------------------------------------------------------ -------- --------- -------
Lease liabilities included in the consolidated statement of
financial position
2019
GBP000s
------------ -------
Current 6,392
Non-Current 21,535
------------ -------
Total 27,927
------------ -------
Amount recognised in the consolidated income statement
2019
GBP000s
-------------------------------------------------- -------
Depreciation on right-of-use property premises 5,623
Depreciation charged on other right-of-use assets 332
Interest on lease liabilities 1,009
-------------------------------------------------- -------
Total 6,964
-------------------------------------------------- -------
The total cash outflow for leases during the current year was
GBP6,546,000, including GBP591,000 of interest.
26. RELATED PARTY TRANSACTIONS
Delamode Holding BV, is indirectly owned by Shaun Godfrey, Sandu
Grigore, and Cogels Investments Limited all of whom are
shareholders of Xpediator Plc.
Delamode International Kft, Delamode Hungary, Kft and Delamode
Consulting Srl are all subsidiaries of Delamode Holding BV.
Delamode Properitati Srl, a Company owned by Delamode Holding
BV, is the landlord of one of the Group's leasehold properties in
Romania. Rent payable under the current lease is at market rates.
Shaun Godfrey, Sandu Grigore and Cogels Investment Limited are
shareholders of Xpediator Plc.
During the year Group companies entered into the following
transactions with related parties who are not members of the
Group.
Amounts owed Amounts owed
Sales Purchases by to
2019 2018 2019 2018 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Related Party
Delamode Holding BV - - - - 117 55 - 446
Delamode Propretati,
Srl 3 3 271 227 4 7 80 2
Delamode Hungary Kft - - - - - 50 - 16
Companies in which directors or their immediate family have
a significant controlling interest
Affinity Group Limited - - - - - 45 4 -
COGELs Investment
Ltd - - - - - 237 - -
Borrelli Capital Limited - - 2 13 - - -
Directors
Shaun Godfrey - - - - - 1 - -
Richard Myson - - - - - - - 1
Stephen Blyth - 13 - - - - - -
------------------------- ------- ------- ------- ------- ------- ------- ------- -------
The maximum amount owed to the Group by the directors at any
time during the year was as follows:
2019 2018
GBP'000 GBP'000
----------------------- ------- -------
Affinity Group Limited 4 45
COGELs Investment Ltd 237 237
Shaun Godfrey - 14
Richard Myson 1 -
Stephen Blyth - 13
----------------------- ------- -------
Details of directors' remuneration and the remuneration of key
management personnel are given in note 6.
At 31 December 2019, the bonuses payable to Stephen Blyth of
GBPnil (2018 - GBP75,000) and Stuart Howard of GBPnil (2018 -
GBP37,500) were accrued within these financial statements.
All related party transactions were made at an arm's length
basis.
Delamode (SW) Limited
On the 1 June 2018, Delamode Holdings Limited entered into a
franchise agreement with Delamode (SW) Limited ("DSW"), with Shaun
Godfrey acting as a Director for both Companies. The Group provides
certain administrative functions on behalf of DSW and charges a fee
at an agreed rate and under the franchise agreement is entitled to
a share of the profits. Included within the consolidated income
statement is a management fee for the administrative functions and
profit share of from DSW of GBP48,000 (2018 - GBP20,000).
At 31 December 2019, the amounts due from DSW was GBP9,000 (2018
- GBP89,000).
27. EXCEPTIONAL ITEMS
During the year, the Group incurred non-recurring costs
totalling GBP856,000 (2018 - GBP318,000) comprising of GBP190,000
(2018 - GBPnil) relating to the aborted acquisition of Intereuropa
DD, GBP451,000 (2018 - GBPnil) relating to additional contingent
deferred consideration on Anglia Forwarding Group Limited and
GBP215,000 (2018 - GBPnil)relating to additional contingent
deferred consideration due on the Regional Express acquisition.
In the previous financial year, the Group incurred costs of
GBP318,000 relating to the acquisitions of Anglia Group Forwarding
Limited and Import Services Limited. These costs relate to external
accountancy, legal support, professional fees and stamp duty
payable to local tax authorities.
28. SUBSEQUENT EVENTS
Robert Ross was appointed as a director on 2 January 2020.
COVID-19
As the Company announced on 31 March 2020 relating to COVID-19,
the wellbeing and safety of our people, customers and suppliers is
Xpediator's first priority. Where possible individuals are working
remotely from their homes and we are continuing to operate
effectively whilst also taking the appropriate actions to limit the
spread of this virus.
So far this year activity levels have remained broadly in line
with management expectations, with high demand from some sectors
and other areas slowing. In response we have sought to allocate
resource to match demand across the business. While it is hard to
make any predictions under these extraordinary circumstances, based
on very recent trends, the Board believes that demand for our
freight management and warehouse services, both in the UK and
Europe will remain sufficiently robust overall but will be more
volatile in any given month, and that we have the systems and
protocols in place to meet this demand.
We are benefitting from our diverse operations across the UK and
Europe which has already helped us offset challenges in some areas
with higher activity in other markets. Pall-EX and European road
freight forwarding have been areas of strength together with good
levels of warehouse utilisation. That said, operating in this
market environment is more complicated involving driver shortages
in certain markets, some supply issues, more complex border checks
and general cost inflation most of which can be passed to
clients.
The Group also has the natural advantage of being an asset light
business and does not own a large fleet of trucks, instead we have
low fixed overheads and typically act as a broker to our clients
sourcing capacity from the market as it is required. Despite being
in a relatively good position, the Board has taken the prudent
decision to introduce temporary pay reductions, reduce costs in
areas of reduced activity and suspend certain. As a result, there
are no subsequent events that have impacted these financial
statements.
29. NATURE OF LEASES
The Group leases a number of properties in the jurisdictions
from which it operates. In some jurisdictions it is customary for
lease contracts to provide for payments to increase each year by
inflation or and in others to be reset periodically to market
rental rates. In some jurisdictions property leases the periodic
rent is fixed over the lease term.
The Group also leases certain items of plant and equipment. In
some contracts for services with distributors, those contracts
contain a lease of vehicles. Leases of plant, equipment and
vehicles comprise only fixed payments over the lease terms.
The percentages in the table below reflect the current
proportions of lease payments that are either fixed or
variable.
The sensitivity reflects the impact on the carrying amount of
lease liabilities and right-of-use assets if there was an uplift of
5% on the balance sheet date to lease payments that are
variable.
Lease Fixed Variable
Contract Payments Payments Sensitivity
Number % % GBP'000
-------------------------------------------------- -------- -------- -------- -----------
Property leases with payments linked to inflation 3 - 3% 302
Property leases with fixed payments 26 26% - -
Leases of plant & equipment 34 35% - -
Vehicle leases 35 36% - -
-------------------------------------------------- -------- -------- -------- -----------
Total 98 97% 3% 302
-------------------------------------------------- -------- -------- -------- -----------
30. BUSINESS COMBINATIONS
Import Services Limited
On 13 July 2018, the Group acquired 100% of the issued share
capital of Import Services Limited ("ISL") an international
port-centric logistics Company. As ISL is based in Southampton, the
Company is close to Britain's second largest deep-sea terminal and
the first port of call for inbound container ships from the Far
East and the USA into Northern Europe.
The principal reason for this acquisition was to enable the
Group to enhance their warehousing and distribution services and to
allow good cross-selling opportunities. The total consideration
payable comprised cash on completion of GBP6,000,000, share based
consideration of GBP3,000,000, Cash at completion equal to
GBP5,773,000, a net working capital adjustment of GBP572,000 and
two earn-out payments payable over two years. The deferred
consideration is calculated as follows, both of which are subject
to a maximum aggregate payment of GBP3,000,000:
-- An amount equal to the amount by which the aggregate value of
the Xpediator Shares is less than GBP4,500,000 on 30th April 2020.
The maximum Additional Consideration shall not be greater than
GBP1,500,000.
-- If the Earnings Before Tax (EBT) is greater than the Target
EBT (GBP1,462,500), GBP1,500,000 shall be payable. If EBT is less
than the target EBT, the Earn Out payment shall be reduced by an
amount by which EBT is less than the Target EBT multiplied by 3. If
the aggregate value of the Xpediator Shares is equal or greater
than GBP6,000,000 for a period of 90 consecutive days between the
Completion Date and 30 April 2020, the additional Consideration and
Earn Out Payment shall be deemed paid, and no payment will be made
to the seller.
Fair Value assessment
As part of the fair value assessment of the Intangible assets of
ISL, a Customer related and technology based intangible asset were
identified. The fair value calculation of customer related
intangible asset was determined by using the income approach based
on the expected future cash flows. This was then discounted to
determine the present value. The technology asset has been valued
using the replacement cost approach. The valuation attempts to
capture the effort required to develop similar technology at the
valuation date. The weighted average cost of capital used in
determining the present value, was 13.0%, which reflected the
business and market risks factors. The outcome of the fair value
calculation was to derive a customer related intangible asset with
a value of GBP5,449,000 and a technology based asset of
GBP510,000.
Economic useful life
When determining the economic useful life of the customer
relationships the historical length of relationships with existing
customers and those reported by listed companies in the sector was
considered as well as an annual attrition rate of 7.0%. Based on
these factors, it was concluded that the useful economic life for
customer relationships in relation to ISL would be up to 12 years.
For the technology based asset, a useful economic life of 5 years
has been used, based on the pace of technological change in the
sector.
Deferred tax
As a result of the creation of these intangible assets, there is
a deferred tax liability, which was calculated as the sum of the
fair values of the intangible assets multiplied by the tax rate. An
average long-term tax rate of 17.0% was used as to determine this.
This resulted in a deferred tax liability of GBP1,013,000.
Deferred Consideration
The deferred consideration consists of the
-- payment relating to the earn out period and;
-- amount by which the Completion Net Asset exceeds Target Net
Assets and is dependent on the future share price of the Xpediator
shares.
In determining the present value of the earn out payment, the
first payment which is due in May 2020 was calculated using a cost
of capital of 13.0%.
Using the forecasted results for the respective periods the
present value of the deferred consideration relating to the earn
out was calculated to be GBP2,573,000 (2018 - GBP1,583,000). The
Directors have reviewed the fair value of the goodwill and deferred
consideration relating to the acquisition of Import Services
Limited in line with IFRS 3 Business Combinations, paragraph 45.
Based on the interpretation of the standard, the Directors believe
that there is new information available relating to the assumptions
used to calculate the consideration payable. As a result of the new
information, the Directors have increased the value of Goodwill and
Consideration Payable to the vendors of Import Services Limited by
GBP990,000.
Acquisition costs of GBPnil (2018 - GBP246,000) have been
expensed to the income statement and are shown as part of the
exceptional expenses.
Goodwill
When determining the revised goodwill arising on the acquisition
the following calculations were used.
Purchase consideration GBP'000
-------------------------------------- -------
Initial consideration - cash paid 6,000
Initial consideration - shares 3,000
Initial consideration - cash in
the business at acquisition 5,773
Net working capital adjustment 572
P.V. of deferred consideration 2,573
-------------------------------------- -------
Total consideration for equity 17,918
-------------------------------------- -------
Allocation of assets and liabilities
acquired
Intangible assets
Customer-related intangible assets 5,449
Technology-related intangible assets 510
Other assets
Inventories 13
Trade receivables 2,584
Other receivables 7,619
Cash 1,605
Fixed assets 727
Liabilities
Trade payables (1,874)
Other payables (2,061)
Finance lease payables due within
one year (100)
Finance lease payables due more
than one year (41)
Provisions (1,453)
Deferred tax liability for intangible
assets (1,013)
-------------------------------------- -------
Goodwill 5,953
-------------------------------------- -------
The goodwill recognised will not be deductible for tax
purposes.
31. ANALYSIS OF CHANGES IN NET DEBT
Non-cash
interest
At 31 Right-of- charge Other At 31
December Foreign IFRS 16 use asset right-of- non-cash December
2018 Cashflow exchange adoption additions use assets movements 2019
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- -------- --------- ---------- --------- --------
Cash at bank 8,449 2,882 (570) - - - - 10,761
Short term deposits 1,198 (8) - - - - - 1,190
----------------------- -------- -------- -------- -------- --------- ---------- --------- --------
Total Cash 9,647 2,874 (570) - - - - 11,951
Finance lease balances 185 - - - - - (185) -
Confidential invoice
discounting facility 3,024 (642) - - - - - 2,382
Bank loans 3,191 (575) - - - - - 2,616
Right-of-use-assets - (6,546) - 31,109 2,316 1,009 39 27,927
----------------------- -------- -------- -------- -------- --------- ---------- --------- --------
Total debt 6,400 (7,763) - 31,109 2,316 1,009 (146) 32,925
----------------------- -------- -------- -------- -------- --------- ---------- --------- --------
Net cash/(debt) 3,247 - - - - - - (20,974)
Net cash excluding
right-of-use assets 3,247 - - - - - - 6,953
At 31 Other At 31
December Foreign non-cash December
2017 Cashflow exchange movement 2018
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- -------- --------
Cash at bank 5,900 2,359 190 - 8,449
Short term deposits 1,485 (287) - - 1,198
Bank overdrafts (45) 45 - - -
-------------------------- -------- -------- -------- -------- --------
Total Cash 7,340 2,117 190 - 9,647
-------------------------- -------- -------- -------- -------- --------
Finance lease balances 131 (43) - 97 185
Confidential invoice
discounting facility 2,213 811 - - 3,024
Bank loans 3,510 (319) - - 3,191
-------------------------- -------- -------- -------- -------- --------
Total debt 5,854 449 - 97 6,400
-------------------------- -------- -------- -------- -------- --------
Net cash 1,486 3,247
Reconciliation of net cash flow to movement in net debt
2019 2018
GBP'000 GBP'000
----------------------------------------------------------- -------- -------
Net increase in cash and cash equivalents 2,874 2,117
Net (increase) in borrowings and right-of-use assets/lease
finance (26,525) (546)
Foreign exchange movements (570) 190
(Increase)/decrease in net debt (24,221) 1,761
Opening net cash 3,247 1,486
Closing net (debt)/cash (20,974) 3,247
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BUGDSGUBDGGC
(END) Dow Jones Newswires
April 20, 2020 02:00 ET (06:00 GMT)
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