The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
12 April 2021
XPEDIATOR PLC
("Xpediator", the "Company" or the "Group")
FINAL RESULTS
Xpediator Plc (AIM: XPD), a leading provider of freight management services across the UK and Central and Eastern Europe, is pleased to announce its final results for the twelve months ended 31 December 2020.
2020 Financial Highlights
· Generated Group turnover of £221.2m (2019: £213.2m) an increase of 3.7% reflecting a generally resilient performance during the Covid-19 impacted months coupled with a strong performance in the last quarter of 2020
· Delivered a 38.5% increase in adjusted profit before tax of £7.2m (2019: £5.2m) helped by early cost reductions in March 2020, alongside some core markets benefiting from Covid-19 related changes and with areas of weakness (e.g. high street retail and transport services) being offset by the diversity of businesses across multiple markets
· Reported profit before tax of £3.9m (2019: £2.2m)Adjusted basic earnings per share of 3.84 pence (2019: 2.80 pence)
· Basic earnings per share of 1.46 pence (2019 : 0.60 pence)
· Strong cash generation and working capital management continues with net cash stable at £6.8 m despite paying £4.4m (2019: £0.2m) in deferred acquisition payments
· Dividend per share increased by 12.8% to 1.50 pence (2019: 1.33 pence)
2020 Operational Highlights
· Appointment of Robert Ross as new CEO in October 2020, previously Group CFO and in March 2021 appointment of Mike Williamson as new CFO
· Reaffirmed core strategic outlook coupled with new CEO vision for how to achieve commercial objectives
· Recorded strong growth in the Freight Forwarding Division supported by resilient and profitable performances by both the Transport and Warehouse & Logistics divisions both of which were held back by the pandemic:
o Freight Forwarding delivered revenue of £171.0m, an increase of 7.1%
o Warehouse & Logistics delivered revenue of £44.5m, a decrease of 6.3%
o Transport Services delivered revenue of £5.7m, a decrease of 6.9%
· On 5 October 2020 completed the successful acquisition of Nidd Transport Ltd
· Disposal of loss making B2C business EshopWedrop
2021 Outlook
· First quarter trading results are positive and ahead of management expectations
· Consolidation and improved overall financing terms of UK banking facilities with a new £18m finance facility with Investec Bank Plc replacing the existing £9.5m facility
· Managing transportation post Brexit more complex than anticipated with customers requiring additional support which is net profitable for the Group
· First full year of benefit from £0.5m of annualised cost savings made as part of the response to the pandemic
· Healthy pipeline of potential acquisitions
Alex Borrelli, Chairman, commented:
"We are naturally very pleased to have delivered this performance during such a challenging year. Increasing both revenues and profitability is an excellent achievement and we think confirms the strength of the platform the Group has. Added to this, we now have a new senior management team led by CEO Robert Ross whilst retaining the expertise and knowledge of Stephen Blyth, the founder of the business, on the Board.
Our aim to become a leading international freight management and logistics provider, is unchanged. We continue to examine strategic acquisitions with a focus on building a scalable and risk adjusted platform to support an expanding portfolio of freight management companies across the UK and Europe with a particular expertise on Central and Eastern Europe. 2021 has begun well and we are quietly confident of our ability to achieve our objectives."
For all investors Robert Ross (CEO) and Mike Williamson (CFO) will be giving a presentation on the FY results today at 10.30am via Investor Meet Company, to register please click on the following link: https://www.investormeetcompany.com/xpediator-plc/register-investor
Enquiries
| Xpediator plc | Tel: +44 (0)330 043 2395 |
| Robert Ross, Chief Executive Officer | Email: info@xpediator.com |
| Michael Williamson, Chief Financial Officer |
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| Cenkos Securities plc (Nominated Advisor & Broker) | Tel: +44 (0)20 7397 8900 |
| Max Hartley, Max Gould (Corporate Finance) |
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| Nick Searle (Sales) |
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| Novella Communications (Financial Public Relations) | Tel: +44 (0)20 3151 7008 |
| Tim Robertson |
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| Fergus Young |
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About Xpediator:
Xpediator is a well-established international provider of freight management services. Established in 1988 by the current Deputy Chairman Stephen Blyth today the Group's International network of offices provides road, sea and air freight services, together with logistics and warehousing in the UK and Romania. The business offers integrated freight management within the supply chain logistics and fulfilment sector, through their three main areas: freight forwarding, logistics & warehousing and transport solutions. With headquarters in Braintree, Essex and country offices in nine CEE countries across 31 sites, the Group currently employs over 1,000 people and was successfully listed on London's AIM market in August 2017.
For more information, please visit: www.xpediator.com.
Alternatively, do follow us on Twitter at @Xpediator or find us on LinkedIn at Xpediator Plc.
CHAIRMAN'S STATEMENT
INTRODUCTION
I am delighted to present these accounts which show strong performance and demand for our services despite the impact of Covid-19 during the year.
With revenues increasing to £221.2 million, which is up by 3.7% on the prior year, we delivered adjusted profit before tax substantially ahead of last year at £7.2 million, up by 38.5%. The Group's asset light business model proved to be very resilient during 2020 and there are strong signs of further growth being delivered in 2021. 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. In terms of Brexit, following the United Kingdom's exit from the European Union, the demands for custom clearance services have increased, and the Group expects additional revenue streams from this, with further profit generation as volumes increase. Importantly, the Company continues to have a good pipeline of acquisition opportunities which meet the criteria of enhancing the Group's geographical capabilities, developing our existing operational locations and extending the Group's international presence in air and sea transportation. Overall, the Group is in a strong position.
Our people
The Group recognises that our people are our greatest asset. During the year, the first Group wide employee engagement survey was launched. As a result of this survey, several focus groups were initiated to discuss the results of the survey and formulate an action plan to promote the wellbeing of our employees and the work environments in which we operate.
During 2021, the Group has launched Group wide values and held its first Senior Leadership Conference to set out the strategic priorities of the Board. We also plan to review the benefits of all of our people to ensure that Xpediator is seen as an employer of choice. In February 2021, the Group launched a Company Share Option Plan for senior employees.
Board and management changes
On 2 January 2020, the Company confirmed the appointment of Robert Rossas Chief Financial Officer ("CFO"). Robert previously held the position of Finance Director at Europa Worldwide Group. On 5 June 2020, the Group announced that Stephen Blyth would retire from the role of Chief Executive Officer ("CEO") moving to a non-executive position as Founder and Deputy Chairman. Stephen has also taken up the position of Chairman of the newly formed Mergers and Acquisitions committee. After an extensive process with both internal and external candidates, Robert was subsequently appointed CEO on 2 October 2020. On 19 January 2021, the Group announced Michael Williamson as the new CFO from 1 March 2021. He joined from international freight forwarding company Rohlig Logistics where he was the Global Director of Finance & Controlling and Regional CFO of Northern Europe. The Board would like to express its thanks to Stephen for his service to the Group over the last 32 years, and for extending the period for which he was CEO, following the changes announced in September 2019.
Dividend
Subject to approval by shareholders, the Board is recommending a final dividend of 1.05p per share to be paid to shareholders in June 2021. Taken with the interim dividend of 0.45p per share, this takes the full year dividend to 1.50p per share, a 12.8% increase on the prior year (2019:1.33p). The final dividend for 2019 was a scrip issue. The final dividend will be payable to shareholders on the register in June 2021, with the ex-dividend date being in July 2021.
Outlook
The Group is well positioned for further growth in 2021, with the first quarter results slightly ahead of the Board's expectations, despite the on-going Covid-19 restrictions. The Board continues to examine strategic acquisitions, whilst completing the integration of those made previously. With the hopeful easing of Covid-19 restrictions across Europe, opportunities arising from Brexit and building on the success of 2020, the Board is confident of delivering results in line with market expectations for 2021. Having joined the Company in 2016 and overseeing the continued growth of Group revenues, profitability and shareholder value, with a strong management team now in place and in recognition of corporate governance guidelines and best practice regarding tenure, I will be standing down subsequent to the Group's 2021 Annual General Meeting, once my successor has been identified.
Alex Borrelli
Non-Executive Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
INTRODUCTION
In my first financial year, initially as Chief Financial Officer, and then as Chief Executive Officer from October, we have overcome many significant challenges and I am grateful to all our staff for their commitment, determination and resilience.
Whilst Covid-19 continues to challenge us and market conditions remain competitive, we are focused on delivering exceptional customer service. Demand for our freight management services, logistics and transport solutions and services remains high and following a strong 2020 final quarter, we delivered an adjusted profit before tax of £7.2 million. Demand for freight management in the UK and CEE countries was extremely buoyant during the year. Whilst volumes reduced during March and April 2020 because of a number of stay-at-home policies throughout Europe, Covid-19 has led to changes in consumer trends that have driven economic growth within our core markets.
The CEE region, in particular, saw increased demand, with 62% (2019: 58%) of the Group's revenue now being generated in mainland Europe. The financial results achieved in 2020 are testament to the hard work of our people and in our core markets our experience and infrastructure enabled us to win contracts against the largest competitors. Whilst growth in the UK was more subdued during 2020, mainly due to the impact of Covid-19, we are confident that higher growth rates will return during 2021.
Cash generation in the Group remains strong. Net cash (excluding right-of-use assets) remained at similar levels to the prior year despite the Group settling £4.4m (2019: £0.2m) of deferred consideration on Import Services Limited (£3.0m), Anglia Forwarding Group Limited (£1.1m) and Regional Express Limited (£0.3m). During 2020, the Group identified £0.5million of annualised savings which will feed through to an improvement in operating profit, as well as maintaining strong cash generation.
Acquisitions and disposals
We remain focused on making strategic acquisitions (both in the UK and in Central and Eastern Europe) and to act as a consolidator of the highly fragmented freight management market. In the last three 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.
On 1 January 2020, the Group obtained operational and management control of International Cargo Centre Limited ("ICC"). This has been accounted for as a business combination on 1 January 2020 under the definition of IFRS 3 "Business Combinations". On 30 April 2020, the Group acquired the remaining 60% of the issued share capital of ICC, having acquired the original 40% on 4 June 2018. On 5 October 2020, the Group acquired the entire share capital of Nidd Transport Limited, a Company that specialises in daily express deliveries to mainland Western Europe and UK distribution, particularly in the North of England. This has also been accounted for as a business combination under the definition of IFRS 3 "Business Combinations". On 31 December 2020, the Group disposed of the EshopWedrop business. This loss-making part of the Group was considered non-core and was sold to the Managing Director, Mircea Bandean. The integration of the acquisitions made during 2017 and 2018 continues with statutory and IT simplification programmes due to be completed by the end of the first half of 2021. The newly formed Mergers and Acquisitions Committee, chaired by Stephen Blyth, will be focused on delivering continued profitable expansion of the Group.
COVID-19
Covid-19 has impacted our business in many ways. Throughout the pandemic our primary focus has been on the well-being and safety of our people, customers and suppliers. The Group has traded strongly through this extraordinary period and whilst activities are broadly similar to prior years, the freight forwarding division has been strong throughout. Those areas which are dependent on either traffic volumes (Affinity) or exposed to market conditions with Government restrictions, such as Easy Managed Transport Limited ("EMT")(UK High Street Fashion) or Benfleet Forwarding Limited (with China and Italy being key markets) experienced reduced trading levels in the earlier part of the year. Whilst conditions for fashion retailers in the UK High Street and therefore EMT, remain tough, all other parts of the Group are back to trading ahead of or broadly in-line with pre-pandemic levels. During the pandemic, the Group identified some good developmental opportunities, whilst challenging and flexing the cost base to meet the demand. In March 2020, the Group took the decision to introduce temporary pay reductions, to reduce costs in areas of reduced activity and suspend certain capital investment projections as the full extent of the pandemic was initially unknown. By August 2020, the Group had reinstated salaries back to their normal levels and any salary reductions have been repaid in full.
BREXIT
Over the last three years, we have allocated resource to be part of a specific BREXIT team. These people have been working closely with customers to ensure a smooth transition and clarity on the new ways of working. Following the announcement of the free trade agreement on 24th December 2020, we have seen a considerable change in the requirements for moving goods between the UK and mainland Europe. These requirements are considerably more complex than initially anticipated. We continue to work closely with our customers to ensure that the correct paperwork is completed, and our services continue.
With the additional paperwork, we have had to allocate and recruit additional people to manage the workload. However, offsetting this additional cost is additional revenue from our customers. We see there being a net benefit to the profitability of the Group from this additional work although we recognise the uncertainty BREXIT may bring.
OUR VISION AND STRATEGY
Xpediator is a leading Freight Management provider in a very fragmented and competitive logistics market.
Our vision as a Group remains unchanged in that over the next five years we want to maintain the rate of growth achieved over the last five years and become a leading international freight management and logistics provider.
Our strategy remains focussed around building a scalable and risk adjusted platform to support an expanding portfolio of freight management companies across the UK and Europe with a particular expertise on CEE.
As we moved into 2021, I challenged all our senior leaders at our inaugural Senior Leadership Conference to focus on three items. Firstly, to simplify their business units by streamlining processes, investing in IT and driving out complexity. Secondly to invest in the growth of our staff so everyone is doing the job they should be doing rather than the job they want to be doing. And finally, to be the best that we can be by working together, encouraging commitment over compliance and living by our new Group values.
As a Group we want to deliver sustainable solutions to our clients who are at the centre of our service offerings. We focus on offering our clients the optimal solution for their transport and logistics 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 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.
We are developing our port centric warehousing and logistics in the UK with the expansion of our Logistics facilities in Southampton where we will open a new 20,000 sqm facility at the end H1 2021.
We continue to focus on targeted, earnings enhancing acquisitions. Operating in a large, fragmented market means there are 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.
As we operate 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. The senior leadership team within the Group is now complete following the recruitment of an Estates Director to manage our property portfolio. As the revenue of the Group grows and we continue to focus on driving out complexity, operational leverage of this senior team will enhance our net profit margin. In addition, we continue to enhance our online functionality that allows us to offer our clients a seamless 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 and robust solution. Ultimately, at the heart of the Group's vision is client service, delivered through optimal solutions, whilst being competitively priced and delivering consistently high levels of customer service.
Outlook
We are currently operating in an extraordinary period, and some of the impacts of Covid-19 may be with us for some time. I am proud of the way everyone across the Group has responded to the crisis. The resilience shown by our people and the willingness to pull together to get through this period has been humbling. We have a strong business that has delivered a fantastic set of results. 2021 has started well and our focuses for the year are on delivering further growth from investment in our sales function, efficiencies in our operations from continued digitalisation and working more closely together as a Group. I would like to thank everyone for their efforts through this extremely challenging year. We will continue with our vision and drive our strategic objectives thus ensuring we provide greater job security and rewards for our employees, and most importantly, enhancing returns for investors.
Robert Ross
Chief Executive Officer
Divisional Review
FREIGHT FORWARDING
REVENUE
£171.0m (2019: £159.6m)
SEGMENT PROFIT BEFORE CENTRAL OVERHEAD ALLOCATION
£6.8m (2019: £3.4m)
Freight forwarding services, largely provided under the Delamode brand, specialising in connecting our local offices in CEE countries and the UK with each other and rest of Europe. In 2020, freight forwarding revenues increased by £11.4 million, of which £8.9 million related to organic growth and £2.5 million related to the acquisitions of Nidd Transport Limited and International Cargo Centre Limited.
Revenues across the Baltics and Balkans continued to grow significantly against prior year comparatives, with Delamode Baltics revenue up by £8.9 million and Delamode Bulgaria up by £3.8 million. Both businesses have benefitted from an increase in online customer demand and the consolidation of new service lines. Profit before tax in Lithuania increased by £2.2 million to £4.1 million (2019 - £1.9million) and in Bulgaria by £0.3million to £1.1m (2019 - £0.8 million). In addition, both Serbia and Estonia delivered a strong performance as these businesses matured.
Like for like revenue in the UK decreased by £6.0 million mainly due to Covid-19 impacting trading volumes, particularly Chinese and Italian related business, however, by the end of 2020, revenues were broadly in line with prior years. Despite revenue being lower, operating profits in the UK were stable following a review of the cost base which was flexed in line with demand.
Regional Express Limited won a major contract that commenced operations in August 2019. Whilst the initial implementation was slow, H2 2020 showed strong growth and trading in 2021 is slightly ahead of management's expectations.
During 2020, our e-commerce business EshopWedrop was sold and our other e-commerce business Buzzbrand was discontinued. EshopWedrop was sold on 31 December 2020 to Mircea Bandean, who was Managing Director of the business. The loss of £0.3 million (2019: loss of £0.5 million) is shown in exceptional costs for 2020.
Divisional Review
WAREHOUSING & LOGISTICS
REVENUE
£44.5m
(2019: £47.5m)
SEGMENT PROFIT BEFORE CENTRAL OVERHEAD ALLOCATION
£2.6m
(2019: £2.9m)
The Logistics division's activities remain focused in Romania and the UK with revenue broadly in line with the prior year.
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 68,000 pallets on average per month in 2020 (2019: 60,000 average pallets per month).
There is a strong pipeline of demand for warehouse space in Romania and having the ability to deliver palletised freight throughout Romania overnight, puts the Pall-Ex business in an enviable position for further growth in the future.
In the UK, the lease for a new purpose built facility in the Port of Southampton has been signed and practical completion is expected to occur in June 2021. The Group has also committed to building a mezzanine level at the facility, which will add a combined 290,000 sq ft of warehousing and will become operational for the peak Q4 period of 2021.
Import Services Limited benefitted from higher volumes in Q4 amongst its customers in the toy sector as it fulfilled a number of internet orders as UK customers stepped away from the High Street following a significant increase in Covid-19 cases.
The warehouse in Braintree experienced some further challenges during 2020, with the loss of a significant client and the substantial expansion of an existing retail customer. During the changeover, 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. There are several potential new clients for the Braintree warehouse, and we look forward to a more successful 2021.
The Beckton warehouse has had a challenging year, with a decline in profit of £0.5 million. The Beckton warehouse is exposed to the UK High Street retail fashion sector, which was one of the industries most impacted by Covid-19. Trading in this business area is likely to remain challenging until Covid-19 restrictions are lifted.
Divisional Review
TRANSPORT SERVICES
REVENUE
£5.7m
(2019: £6.2m)
GROSS BILLINGS
£126.4m
(2019: £142.3m)
SEGMENT PROFIT BEFORE CENTRAL OVERHEAD ALLOCATION
£2.3m
(2019: £2.5m)
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 and 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) decreased in 2020 by 11.2% because of fewer journeys made in Europe due to the Covid-19 pandemic and lower average fuel prices of 13.9%.
Romania remains the largest region for the division representing 72% of total activity, (2019: 84.0%, 2018: 87.2%). The Balkans operation continues to grow leveraging the relationships with the freight forwarding businesses based in Bulgaria and Serbia.
There are several opportunities where Affinity is looking to capitalise on in 2021, including developing the leasing and insurance products tailored specifically for Affinity's existing customer base.
The division's 19 years of experience provides a good platform to expand in new geographical regions, as well as being well placed to further develop its service and product offerings.
CHIEF FINANCIAL OFFICER'S STATEMENT
Mike Williamson
Chief Finance Officer
FINANCIAL REVIEW
Revenue
Group revenue increased in 2020 by £8.0 million (3.7%) to £221.2 million with like for like growth
of £5.5 million and the acquisition of Nidd Transport Limited contributing turnover of £2.5 million
since 5 October 2020.
The Freight Forwarding division delivered £171.0 million (7.2% increase v 2019), the Warehousing
and Logistics division revenue of £44.5 million (6.3% decrease v 2019) and the Transport
Services division delivered £5.7 million (6.9% decrease v 2019).
Segment Profit before Central Overhead Allocation
Segment profit before central overhead allocation and exceptional items increased by 42.6% (£2.0 million) year on year largely driven by increased activity in the freight forwarding division and the sale of the EshopWedrop business, which was loss making and historically reported in the freight forwarding division.
Operating profit in the warehouse and logistics division decreased by £0.3m to £2.6m mainly due
to the reduction in volumes in the UK warehouse business, particularly around those areas exposed
to the UK high street and fashion businesses.
The Transport Services division's operating profit decreased by £0.2m to £2.3m due to a reduction
in the level of trucks moving across European countries and a reduction in diesel prices.
Group Profit before Taxation
Group profit before tax increased in 2020 to £3.9 million (2019 £2.2 million) driven by the freight
forwarding department which more than offset slight reductions in the other two divisions. A
summary of operating profit before central overhead allocation by division is shown below:
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| 2020 | 2019 | 2018 | 2017 |
| Freight Forwarding | £6.8m | £3.4m | £3.0m | £2.4m |
| Warehouse and Logistics | £2.6m | £2.9m | £3.0m | £0.9m |
| Transport Services | £2.3m | £2.5m | £2.3m | £2.0m |
Adjusted profit before tax
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| 2020 | 2019 | 2018 | 2017 |
| Profit Before Tax | £3.9m | £2.2m | £5.6m | £2.4m |
| Exceptional Items (note 27) | £1.4m | £0.9m | £0.3m | £0.9m |
| Net unwind and addback of discount on deferred consideration/Benfleet Vendor Income | £0.1m | £0.3m | £0.2m | £0.3m |
| Amortisation of intangibles (note 12) | £1.5m | £1.4m | £1.1m | £0.4m |
| Net Income Statement Impact of application of IFRS 16 | £0.3 | £0.3m | - | - |
| Adjusted Profit before tax | £7.2m | £5.1m | £7.2m | £4.0m |
Earnings per Share
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| 2020 | 2019 | 2018 | 2017 |
| Basic Earnings Per Share | 1.66 | 0.60 | 3.53 | 1.64 |
| Adjusted Earnings Per Share | 3.84 | 2.80 | 4.80 | 3.27 |
The total number of ordinary shares at 31 December 2020 was 141.6 million (2019: £136.1 million) The increase reflects the issue of 5.5 million shares in June 2020 for the scrip dividend. Profit after tax attributable to the owners of the parent company of £2.0 million (2019 : £0.8m) provides a basic earnings per share of 1.46p (2019 - 0.60p), an increase of 143.3% (2019 : 82.5% decrease) on 2019. Adjusted profit before tax results in a basic & diluted earnings per share of 3.84p (2019: basic 2.80p, diluted 2.79p) an increase of 37.1% (37.6% diluted) on 2019. (See note 10 of the financial statements).
Financial Resources
Asset Cover
| Financial Resources |
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| Asset Cover | 2020 | 2019 | 2018 | 2017 |
| Total Assets | £138.2m | £128.9m | £98.8m | £76.4m |
| Net Assets | £31.2m | £29.0m | £29.1m | £14.8m |
| Current Ratio | 1.05 | 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 that it is well placed to manage its business risks.
| Cash | 2020 | 2019 | 2018 1 | 2017 1 |
| Net cash from operating activities | £14.1m | £14.2m | £8.5m | £3.9m |
| Net cash outflow from investing activities | £(6.0)m | £(2.0)m | £(7.0)m | £(6.5)m |
| Net cash outflow from financing activities | £(7.8)m | £(9.3)m | £(0.4)m | £4.8m |
| Effect of foreign exchange movements | £0.4m | £(0.5)m | £0.2m | £(0.1)m |
| Cash and cash equivalents at end of year | £12.7m | £12.0m | £9.6m | £7.3m |
1 Comparatives for 2017 and 2018 have been restated for consistency with the reporting under IFRS 16. Previously, the cashflow for operating leases was reported within net cash from operating activities (2018, £5.9m, 2017 - £2.2m), but are now reported in net cash outflow from financing activities.
Cash generated improved by £0.7m. However, short term loans increased by £1.4m, with the Group having paid £4.4m of deferred consideration on Import Services Limited, Anglia Forwarding Group Limited and Regional Express Limited acquisitions.
Working Capital
| Trade Receivables and Payables | 2020 | 2019 | 2018 | 2017 |
| Trade and other receivables | £66.7m | £60.9m | £60.3m | £51.8m |
| Trade and other payables | £64.8m | £58.6m | £56.1m | £51.0m |
| Days Sales Outstanding (based on gross billings) | 71.2 | 63.5 | 70.4 | 81.5 |
| Days Payable Outstanding (based on cost of sales) | 82.5 | 71.9 | 75.6 | 91.3 |
Trade receivables and payables increased at the year-end as did days sales outstanding and days payable outstanding. Revenue in November 2020 was 10.8% up on the prior year, whilst revenues in December were 31.6% ahead of the prior year. The increased demand was fuelled by more online shopping following the closure of non-essential retail in a number of major European countries, and increased volumes relating to BREXIT to ensure supply into post the UK transition deadline with the free trade discussions between the UK and the EU only being concluded in the week of Christmas 2020. Whilst days sales outstanding have increased by 8 days (or 12.1%), this has been more than offset by days payable outstanding increasing by 11 days (or 14.7%).
Administrative Costs Review
Average staff numbers have increased from 1,037 in 2019 to 1,080 in 2020. This is largely due to the acquisitions of Nidd Transport Limited and International Cargo Centre Limited.
| Operating Costs (Key Items) | 2020 | 2019 | 2018 | 2017 |
| Staff Costs | £24.6m | £23.9m | £18.6m | £13.4m |
| Bad debts | £0.8m | £0.8m | £1.1m | £0.6m |
| Depreciation on right-of-use assets/rental payable under leases | £6.9m | £6.0m | £5.9m | £2.3m |
| Insurance | £1.1m | £0.9m | £0.7m | £0.3m |
| Plant and machinery hire | £0.6m | £0.7m | £0.7m | £0.3m |
| IT costs | £2.1m | £1.6m | £0.6m | £0.3m |
| Other administration | £15.2m | £16.1m | £8.8m | £8.4m |
Finance Costs
Excluding the IFRS 16 impact of £1.0 million, finance costs were £0.4m compared to £0.6m in the prior year. This is largely as a result of a reduction in the non-cash interest on the deferred consideration payable for the acquisitions made by the Group.
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.
Financing Facilities
The Group has agreed a new £18 million banking facility with Investec Bank plc in the UK. This consolidates the Group's banking facility which had become fragmented as a result of recent acquisitions. The Group benefits from an increased availability in the confidential invoicing discount facility as well an overall improvement of the financing terms.
The Group continues to review is European facilities to support the Group's CEE operations.
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
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| 2020 | 2019 |
|
| Notes | £'000 | £'000 |
| Gross billing | 7 | 342,981 | 350,121 |
| CONTINUING OPERATIONS |
|
|
|
| Revenue | 3 | 221,226 | 213,247 |
| Cost of sales |
| (165,640) | (160,643) |
| GROSS PROFIT |
| 55,586 | 52,604 |
| Other operating income | 4 | 1,250 | 1,193 |
| Impairment losses on receivables | 5 | (853) | (836) |
| Administrative expenses | 5 | (50,680) | (49,133) |
| Exceptional items included in administrative expenses above | 27 | (1,377) | (856) |
| OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS |
| 6,680 | 4,684 |
| OPERATING PROFIT | 5 | 5,303 | 3,828 |
| Share of loss of equity accounted associate | 16 | - | (60) |
| Finance costs | 8 | (1,464) | (1,674) |
| Finance income | 8 | 95 | 81 |
| PROFIT BEFORE INCOME TAX |
| 3,934 | 2,175 |
| Income tax | 9 | (874) | (872) |
| PROFIT FOR THE YEAR |
| 3,060 | 1,303 |
| Profit attributable to: |
|
|
|
| Owners of the parent |
| 2,031 | 810 |
| Non-controlling interests |
| 1,029 | 493 |
|
|
| 3,060 | 1,303 |
| Earnings per share attributable to the ordinary equity holders of the parent: |
|
|
|
| Basic earnings pence per share | 10 | 1.46 | 0.60 |
| Diluted earnings pence per share | 10 | 1.46 | 0.60 |
| Adjusted basic earnings pence per share | 10 | 3.84 | 2.80 |
| Adjusted diluted basic earnings pence per share | 10 | 3.84 | 2.79 |
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| PROFIT FOR THE YEAR | 3,060 | 1,303 |
| OTHER COMPREHENSIVE INCOME |
|
|
| Items that may be reclassified to profit or loss: |
|
|
| Exchange differences on translation of foreign operations | 547 | (705) |
| TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 3,607 | 598 |
| Total comprehensive income attributable to: |
|
|
| Owners of the parent | 2,542 | 143 |
| Non-controlling interests | 1,065 | 455 |
|
| 3,607 | 598 |
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
|
|
| 2020 | 2019 |
|
| Notes | £'000 | £'000 |
| ASSETS |
|
|
|
| NON-CURRENT ASSET |
|
|
|
| Intangible assets | 12 | 23,443 | 24,706 |
| Property, plant and equipment | 13 | 2,696 | 2,516 |
| Right-of-use assets | 25 | 31,599 | 27,385 |
| Investments | 16 | 1 | 1 |
| Trade and other receivables | 17 | 252 | 1,050 |
| Deferred tax | 9 | 707 | 210 |
|
|
| 58,698 | 55,868 |
| CURRENT ASSETS |
|
|
|
| Inventories |
| 59 | 118 |
| Trade and other receivables | 17 | 66,723 | 60,927 |
| Cash and cash equivalents |
| 12,720 | 11,951 |
|
|
| 79,502 | 72,996 |
| TOTAL ASSETS |
| 138,200 | 128,864 |
|
|
| 2020 | 2019 |
|
| Notes | £'000 | £'000 |
| EQUITY |
|
|
|
| SHAREHOLDERS' EQUITY |
|
|
|
| Called up share capital | 22 | 7,132 | 6,854 |
| Share premium | 23 | 13,139 | 11,987 |
| Equity reserve | 23 | 1 | 16 |
| Translation reserve | 23 | 581 | 70 |
| Merger reserve | 23 | 3,102 | 3,102 |
| Retained earnings | 23 | 5,901 | 6,094 |
| Issued share capital and reserves attributable to the owners of the parent |
| 29,856 | 28,123 |
| Non-controlling interests |
| 1,332 | 887 |
| TOTAL EQUITY |
| 31,188 | 29,010 |
| LIABILITIES |
|
|
|
| NON-CURRENT LIABILITIES |
|
|
|
| Provisions | 20 | 2,153 | 1,674 |
| Lease liabilities - right-of-use assets | 25 | 25,376 | 21,535 |
| Interest bearing loans and borrowings | 19 | 1,896 | 2,275 |
| Trade and other payables | 18 | 132 | 101 |
| Deferred tax liability | 9 | 1,697 | 1,968 |
|
|
| 31,254 | 27,553 |
| CURRENT LIABILITIES |
|
|
|
| Trade and other payables | 18 | 64,828 | 58,579 |
| Lease liabilities - right-of-use assets | 25 | 6,864 | 6,392 |
| Deferred consideration | 18 | - | 4,607 |
| Interest bearing loans and borrowings | 19 | 4,066 | 2,723 |
|
|
| 75,758 | 72,301 |
| TOTAL LIABILITIES |
| 107,012 | 99,854 |
| TOTAL EQUITY AND LIABILITIES |
| 138,200 | 128,864 |
The notes form part of these financial statements
The financial statements were approved by the Board of Directors on 12 April 2021 and were signed by:
| Robert Ross |
|
| CEO |
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
|
|
| Share | Share | Equity | Translation | Merger | Retained |
|
| Total |
|
|
| Capital | Premium | Reserve | Reserve | Reserve | Earnings | Total | NCI | Equity |
|
| Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Carried forward |
| 6,854 | 11,987 | 16 | 70 | 3,102 | 6,094 | 28,123 | 887 | 29,010 |
| Contributions by and distribution to owners |
|
|
|
|
|
|
|
|
|
|
| Dividends paid | 11 | 278 | 1,152 | - | - | - | (2,066) | (636) | (546) | (1,182) |
| Transfer on acquisition of |
|
|
|
|
|
|
|
|
|
|
| non-controlling interest |
| - | - | - | - | - | (158) | (158) | 158 | - |
| Acquisition of subsidiary |
| - | - | - | - | - | - | - | (232) | (232) |
| Share option charge | 24 | - | - | (15) | - | - | - | (15) | - | (15) |
| Total contribution by and distribution to owners |
| 278 | 1,152 | (15) | - | - | (2,224) | (809) | (620) | (1,429) |
| Profit for the year |
| - | - | - | - | - | 2,031 | 2,031 | 1,029 | 3,060 |
| Exchange differences |
|
|
|
|
|
|
|
|
|
|
| on translation of |
|
|
|
|
|
|
|
|
|
|
| foreign operations |
| - | - | - | 511 | - | - | 511 | 36 | 547 |
| Total comprehensive income for the year |
| - | - | - | 511 | - | 2,031 | 2,542 | 1,065 | 3,607 |
| Balance at 31 December 2020 |
| 7,132 | 13,139 | 1 | 581 | 3,102 | 5,901 | 29,856 | 1,332 | 31,188 |
|
|
| Share | Share | Equity | Translation | Merger | Retained |
|
| Total |
|
|
| Capital | Premium | Reserve | Reserve | Reserve | Earnings | Total | NCI | Equity |
|
| Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Carried forward |
| 6,736 | 11,868 | 38 | 737 | 2,323 | 6,773 | 28,475 | 586 | 29,061 |
| Contributions by and distribution to owners |
|
|
|
|
|
|
|
|
|
|
| Dividends paid | 11, 22 | - | - | - | - | - | (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 |
| 6,854 | 11,987 | 16 | 70 | 3,102 | 6,094 | 28,123 | 887 | 29,010 |
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
|
|
| 2020 | 2019 |
|
| Notes | £'000 | £'000 |
| Continuing Operations |
|
|
|
| Cash flows from operating activities |
|
|
|
| Cash generated from operations | 1 | 15,862 | 15,803 |
| Interest paid |
| (948) | (909) |
| Tax paid |
| (848) | (729) |
| Net cash from operating activities |
| 14,066 | 14,165 |
| Cash flows from investing activities |
|
|
|
| Purchase of tangible fixed assets | 13 | (860) | (1,321) |
| Purchase of intangible fixed assets | 12 | (489) | (498) |
| Cash proceeds on disposal of intangible assets |
| 397 | - |
| Cash proceeds from sale & leaseback |
| 2,900 | - |
| Net cash acquired from acquisitions |
| (3,650) | - |
| Cash paid on deferred consideration of acquisition |
| (4,368) | (206) |
| Interest received | 8 | 43 | 29 |
| Net cash outflow from investing activities |
| (6,027) | (1,996) |
| Cash flows from financing activities |
|
|
|
| New loans in year | 19 | 1,350 | - |
| Loan repayments in year | 19 | (386) | (1,217) |
| Share issue (net of share issue costs) | 22 | - | 150 |
| Transactions with non-controlling interests | 15 | - | (6) |
| Dividends paid | 11 | (636) | (1,522) |
| Repayment on leases |
| (7,587) | (6,546) |
| Non-Controlling interest dividends paid | 15 | (546) | (154) |
| Net cash outflow from financing activities |
| (7,805) | (9,295) |
| Increase in cash and cash equivalents |
| 234 | 2,874 |
| Cash and cash equivalents at beginning of year |
| 11,951 | 9,647 |
| Effect of foreign exchange rate movements |
| 535 | (570) |
| Cash and cash equivalents at end of year |
| 12,720 | 11,951 |
The notes form part of these financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Profit before income tax before ordinary activities before results of associate | 3,934 | 2,235 |
| Loss of equity accounted associate | - | (60) |
| Depreciation charges | 7,168 | 6,990 |
| Amortisation charges | 1,730 | 1,587 |
| (Profit)/Loss on disposal of property, plant and equipment | (787) | 32 |
| Loss on Disposal of intangible assets | 339 | - |
| Finance costs | 1,464 | 1,674 |
| Finance income | (95) | (81) |
| Share based payments charge | (15) | (11) |
| Deferred consideration (credit)/charge | (344) | 666 |
| Disposal of EshopWedrop subsidiaries | 270 | - |
|
| 13,664 | 13,032 |
| Decrease/(Increase) in inventories | 59 | (60) |
| (Increase) in trade and other receivables | (4,998) | (473) |
| Increase in trade and other payables | 6,735 | 3,153 |
| Increase in provisions | 402 | 151 |
| Cash generated from operations | 15,862 | 15,803 |
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 2019.
The presentation currency used for the preparation of the financial statements is Pounds Sterling (£), 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 2.1 - 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.
Covid-19 has impacted our business in many ways. Throughout the pandemic our primary focus has been on the well‑being and safety of our people, customers and suppliers. The Group has traded strongly through this extraordinary period and whilst activities are broadly similar to prior years, the freight forwarding division has been strong throughout. Those area's which are dependent on either traffic volumes (Transport Solutions) or exposed to market conditions with Government restrictions, such as Easy Managed Transport Limited ("EMT")(UK High Street Fashion) or Benfleet Forwarding Limited (with China and Italy being key markets) experienced reduced trading levels in the earlier part of the year. Whilst conditions for fashion retailers in the UK High Street and therefore EMT, remain tough, all other parts of the Group are back to trading ahead of or broadly in-line with pre-pandemic levels.
During the pandemic, the Group identified some good developmental opportunities, whilst challenging and flexing the cost base to meet the demand. In March 2020, the Group took the decision to introduce temporary pay reductions, to reduce costs in areas of reduced activity and suspend certain capital investment projections as the fully extent of the pandemic was initially unknown. By August 2020, the Group had reinstated salaries back to their normal levels and any salary reductions have been repaid in full.
At 31 December 2020 the Group had cash and cash equivalents of £12,720,000 (2019: £11,951,000). 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.
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 £1.00 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 £0.05 each as part of the deferred consideration of Easy Managed Transport Limited ("EMT"). On 14 July 2018, the Company issued 3,740,648 new ordinary shares of £0.05 each as part of the acquisition of Import Services Limited. On 31 December 2018, the Company issued 84,951 new ordinary shares of £0.05 each as part of the deferred consideration of Regional Express Limited ("Regional"). 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. 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 statement of financial position 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 (i.e. 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 control.
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 satisfied. 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 ferry crossing, 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 period of 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 Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.
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
The Group obtained operational and management control of International Cargo Centre Limited and as a result this has met the conditions for recognition under IFRS 3: Business Combinations from the 1 January 2020. Previously this was reported as an associate company and equity accounted.
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 reporting 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 (e.g. 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 and fair value through profit and loss:
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. There is no deferred consideration outstanding at this reporting date (2019 - £4,607,000).
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
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.
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.
The incremental borrowing rate is calculated on a lease by lease basis. The weighted average lessee's borrowing rate applied to the lease liabilities is 3.27% (2019 - 3.42%).
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 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 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 |
| Fixtures and fittings | 20-33% per annum straight line/10% - 25% on reducing balance |
| Computer equipment | 33% per annum straight line/20% - 50% on reducing balance |
| Motor vehicles | 25-33% per annum straight line/20% - 25% on reducing 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 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.
2.1.1 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 £26,928,000 (2019 - £26,733,00). This is disclosed in note 12 and note 30.
· 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 £55,032,000 (2019 - £51,160,000).
· 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 the assets will be utilised against future trading profits. The Group has recognised a deferred tax asset of £707,000 (2019 - £210,000) and a deferred tax liability of £1,697,000 (2019 - £1,968,000).
3. REVENUE ANALYSIS BY COUNTRY
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| United Kingdom | 83,194 | 89,701 |
| Lithuania | 63,988 | 55,849 |
| Romania | 33,640 | 33,189 |
| Bulgaria | 25,635 | 21,819 |
| Serbia | 6,629 | 6,475 |
| Other | 8,140 | 6,214 |
| Total revenue | 221,226 | 213,247 |
The table below shows revenue by timing of transfer of goods and services:
3A) REVENUE FROM CONTRACTS WITH CUSTOMERS
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Over a period of time | 215,483 | 207,080 |
| At a point in time | 5,743 | 6,167 |
| Total revenue | 221,226 | 213,247 |
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
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| At 1 January | 1,367 | 2,068 |
| Net movement for the year | (32) | (701) |
| At 31 December | 1,335 | 1,367 |
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
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| United Kingdom | 42,277 | 44,113 |
| Romania | 8,796 | 9,744 |
| Lithuania | 782 | 1,005 |
| Bulgaria | 6,432 | 842 |
| Serbia | 124 | 136 |
| Other | 287 | 28 |
| Total non current assets | 58,698 | 55,868 |
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.
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Recharges to franchise members | 833 | 1,028 |
| Recovery of fines/penalties | 74 | 24 |
| Rental income | 64 | 65 |
| Other | 279 | 76 |
| Total | 1,250 | 1,193 |
5. OPERATING PROFIT
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Operating profit is stated after charging/(crediting) |
|
|
| Hire of plant and machinery | 593 | 694 |
| Depreciation - owned assets (note 13) | 915 | 1,035 |
| Depreciation - right of use assets (note 25) | 6,253 | 5,955 |
| Amortisation of intangible assets (note 12)1 | 1,730 | 1,587 |
| Auditors' remuneration - audit | 313 | 295 |
| (Gain) / Loss on disposal of property, plant and equipment | (787) | 32 |
| Lost on disposal of intangible assets (Note 12) | 339 | - |
| Insurance | 1,053 | 877 |
| Property/Municipal Taxes | 1,794 | 1,722 |
| Legal costs | 259 | 205 |
| Other exceptional Items (note 27) | 1,825 | 856 |
| Bad debt costs (note 17) | 853 | 836 |
| Credit note provisions on Benfleet vendor income | 24 | 326 |
| Foreign exchange losses | 603 | (54) |
| Staff expenses (note 6) | 24,593 | 23,892 |
| IT costs | 2,149 | 1,641 |
| Other administration expenses | 9,024 | 10,070 |
| Total | 51,533 | 49,969 |
1 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; the Group's external auditors is as follows:
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Audit and Audit Related Services |
|
|
| The audit of the Company and Group financial statements | 94 | 92 |
| The audit of the financial statements of subsidiaries of the Group | 209 | 193 |
| Other assurance services | 10 | 10 |
| Total audit and audit related services | 313 | 295 |
6. EMPLOYEE BENEFIT EXPENSES
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Employee benefit expenses (including directors) comprise: |
|
|
| Wages and salaries | 22,555 | 20,397 |
| Short-term non-monetary benefits | 124 | 200 |
| Share based payments | (15) | 11 |
| Defined contribution pension cost | 344 | 245 |
| Social security contributions and similar taxes | 1,585 | 3,039 |
| Total | 24,593 | 23,892 |
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.
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Salary | 1,724 | 1,367 |
| Short-term non-monetary benefits | 53 | 39 |
| Share based payments | - | 11 |
| Defined contribution pension cost | 26 | 20 |
| Total | 1,803 | 1,437 |
Directors remuneration
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Salary & Bonuses | 856 | 552 |
| Payment in lieu of notice and other compensation | 458 | - |
| Other remuneration | 35 | 25 |
| Share based payments | - | 11 |
| Total | 1,349 | 588 |
Other remuneration comprises of private family medical cover, company car and insurance benefits.
Total remuneration regarding the highest paid Director is as follows:
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Total aggregate remuneration | 760 | 330 |
The average number of employees (including directors) during the year was as follows:
|
| 2020 | 2019 |
| Freight forwarding | 439 | 396 |
| Logistics | 471 | 450 |
| Other | 170 | 191 |
| Total | 1,080 | 1,037 |
7. SEGMENTAL ANALYSIS
Types of services from which each reportable segment derives its revenues
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 77% of its external revenues. (2019 - 75%)
· 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 (2019 - 3%)
· Logistics & Warehousing - This division is involved in the warehousing and domestic distribution; it generates 20% of the Group's external revenues in 2020 (2019 - 22%).
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.
|
| Freight | Logistics & |
|
|
|
|
| Forwarding | Warehousing | Affinity | Overheads | Total |
|
| 2020 | 2020 | 2020 | 2020 | 2020 |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
| Gross billings | 170,996 | 45,595 | 126,390 | - | 342,981 |
| Less recoverable disbursements | - | - | (120,647) | - | (120,647) |
| Total revenue | 170,996 | 45,595 | 5,743 | - | 222,334 |
| Inter-segmental revenue | - | (1,108) | - | - | (1,108) |
| Total revenue from external customers | 170,996 | 44,487 | 5,743 | - | 221,226 |
| Depreciation & amortisation |
|
|
|
|
|
| (excluding right-of-use asset depreciation) | (793) | (1,461) | (49) | (342) | (2,645) |
| Segment profit before central overhead allocation |
|
|
|
|
|
| (excluding exceptional items) | 6,795 | 2,619 | 2,311 | (5,045) | 6,680 |
| Allocation of central overheads | (1,210) | (1,004) | (67) | 2,281 | - |
| Segment profit after central overhead allocation |
|
|
|
|
|
| (excluding exceptional items) | 5,585 | 1,615 | 2,244 | (2,764) | 6,680 |
| Net finance costs |
|
|
|
| (1,369) |
| Exceptional items |
|
|
|
| (1,377) |
| Profit before income tax |
|
|
|
| 3,934 |
| Total segment assets | 64,407 | 34,475 | 29,670 | 9,648 | 138,200 |
| Total segment equity & liabilities | 64,407 | 34,475 | 29,670 | 9,648 | 138,200 |
|
| Freight | Logistics & |
|
|
|
|
| Forwarding | Warehousing | Affinity | Overheads | Total |
|
| 2019 | 2019 | 2019 | 2019 | 2019 |
|
| £'000 | £'000 | £'000 | £'000 | £'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 equity & liabilities | 57,002 | 36,502 | 29,810 | 5,550 | 128,864 |
8. NET FINANCE COSTS
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Finance income: |
|
|
| Deposit account interest | 43 | 29 |
| Interest receivable on Benfleet vendor income | 52 | 52 |
| Total finance income | 95 | 81 |
| Finance costs: |
|
|
| Unwind of discount on deferred consideration | 140 | 346 |
| Bank loan & confidential invoicing discount interest | 324 | 319 |
| Right-of-use asset interest | 1,000 | 1,009 |
|
| 1,464 | 1,674 |
| Net finance costs | 1,369 | 1,593 |
9. INCOME TAX
Analysis of tax expense
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Current tax: |
|
|
| Tax on profits for the year | 1,748 | 1,130 |
| Adjustments in respect of prior periods | (16) | (25) |
| Total current tax payable | 1,732 | 1,105 |
| Deferred tax credit | (858) | (233) |
| Total tax expense in consolidated statement of profit or loss | 874 | 872 |
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:
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Profit before tax | 3,934 | 2,175 |
| UK tax charge at 19% | 57 | - |
| Overseas tax charge | 1,460 | 406 |
| Expenses not deductible for tax purposes | 116 | 171 |
| Movement in deferred tax | (639) | 326 |
| Adjustment in respect of prior periods | (16) | (25) |
| Other | (104) | (6) |
| Total tax expense | 874 | 872 |
Deferred Tax
|
| 2020 | 2019 |
| Assets - Arising from Trading losses | £'000 | £'000 |
| Balance as at 1 January | 210 | 225 |
| Movement in the year as a result of trading | 497 | (15) |
| Balance as at 31 December | 707 | 210 |
|
| 2020 | 2019 |
| Liabilities | £'000 | £'000 |
| Balance as at 1 January | (1,968) | (2,204) |
| Recognised on the acquisition of subsidiaries (note 30) | (90) | - |
| Release to income statements | 361 | 248 |
| Movement in foreign exchange | - | (12) |
| Balance as at 31 December | (1,697) | (1,968) |
The deferred tax asset relates to losses carried forward at the rate of tax in the relevant jurisdiction.
During the year, the Group recognised a deferred tax asset of £497,000 based on UK profits as forecast in the budget period between 2021 and 2023..
In addition, the Group has potential deferred tax assets for trading losses totalling £1,252,000 (2019: £1,257,000) 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 relate to liabilities arising as part of the Group's acquisitions.
10. EARNINGS PER SHARE
|
| 2020 | 2019 |
|
| '000 | '000 |
| Basic weighted average number of shares | 138,889 | 135,147 |
| Potentially dilutive share options | 55 | 698 |
| Diluted weighted average number of shares | 138,944 | 135,845 |
|
| £'000 | £'000 |
| Profit for the year attributable to owners of the parent company | 2,031 | 810 |
| Earnings pence per share - basic | 1.46 | 0.60 |
| Earnings pence per share - diluted | 1.46 | 0.60 |
| Profit for the year attributable to owners of the parent company | 2,031 | 810 |
| Exceptional items (note 27) | 1,377 | 856 |
| Amortisation of intangible assets arising from acquisitions (note 12) | 1,464 | 1,407 |
| Unwind of discount in deferred consideration (note 8) | 140 | 346 |
| Additional interest charge due to IFRS16 accounting standard change | 376 | 419 |
| Add back of discount on deferred consideration (note 8) | (52) | (52) |
| Profit for the year attributable to owners of the parent company excluding exceptional items | 5,336 | 3,786 |
| Earnings pence per share - basic excluding exceptional items | 3.84 | 2.80 |
| Earnings pence per share - diluted excluding exceptional items | 3.84 | 2.79 |
11. DIVIDENDS
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Final dividend of 1.05p (2019: 1.05p) per ordinary share | 1,487 | 1,430 |
| Interim dividend of 0.45p (2019: 0.28p) per ordinary share | 636 | 381 |
Subject to approval by shareholders, the Group will propose a dividend to shareholders on the register at the close of business on 11 June 2021. The final dividend for 2019 was made by scrip issue of shares.
12. INTANGIBLE ASSETS
Group
|
|
|
| Customer | Technology |
|
|
| Licences | Goodwill | Related | Related | Total |
| COST | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 January 2020 | 3,248 | 14,166 | 12,057 | 510 | 29,981 |
| Additions | 489 | - | - | - | 489 |
| Acquired through business combinations | - | 221 | 424 | - | 645 |
| Disposals | (579) | (227) | (223) | - | (1,029) |
| Exchange differences | 76 | - | - | - | 76 |
| At 31 December 2020 | 3,234 | 14,160 | 12,258 | 510 | 30,162 |
| AMORTISATION |
|
|
|
|
|
| At 1 January 2020 | 660 | 1,845 | 2,620 | 150 | 5,275 |
| Charge for the year | 266 | - | 1,362 | 102 | 1,730 |
| Disposals | (182) | - | (111) | - | (293) |
| Exchange differences | 7 | - | - | - | 7 |
| At 31 December 2020 | 751 | 1,845 | 3,871 | 252 | 6,719 |
| NET BOOK VALUE |
|
|
|
|
|
| At 31 December 2020 | 2,483 | 12,315 | 8,387 | 258 | 23,443 |
| At 1 January 2020 | 2,588 | 12,321 | 9,437 | 360 | 24,706 |
|
|
|
| Customer | Technology |
|
|
| Licences | Goodwill | Related | Related | Total |
| COST | £'000 | £'000 | £'000 | £'000 | £'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 |
The goodwill included in the above note, relates to acquisition of Pallet Express Srl in January 2016, 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, Import Services Limited in July 2018, International Cargo Centre Limited in April 2020 and Nidd Transport Limited in October 2020.
The Group disposed of its goodwill and customer related intangible asset in UK Buy on 31 December 2020.
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 reporting 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. During the current year, the Directors have reviewed the CGU's to bring this in line with the integration of the Freight Forwarding and Logistics businesses, as well as the internal reporting of these businesses. As a result, the Anglia Forwarding Group Limited, International Cargo Centre Limited and Benfleet Forwarding Limited business will now be assessed as one CGU (collectively known as Delamode Anglia Limited), whilst Import Services Limited and Easy Managed Transport Limited will also be assessed as one CGU (collectively known as Delamode International Logistics Limited). 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 12.0%-14.0% 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.
Key assumptions used in the impairment calculations are as follows:
|
|
| Short term | Long Term |
|
| Impairment | Revenue | Revenue |
| Entity | WACC % | Growth Rate % | Growth Rates |
| Pallet Express Srl | 12.0 | 6.8 to 17.9 | 3.0 |
| Delamode Logistics Limited | 13.1 | 8.1 to 17.2 | 3.0 |
| Delamode Anglia Limited | 13.1 | 3.1 to 15.0 | 2.5 |
| Regional Express Limited | 13.2 | 10.0 to 30.0 | 3.0 |
| Nidd Transport Limited | 14.0 | 2.0 to 3.0 | 3.0 |
The WACC of the Group has been calculated at a rate of between 12.0%-14.0% with each CGU being adjusted to take into consideration a specific Company premium risk factor.
The short term rate growth for each CGU looks into a number of factors including the expected new business or the loss of existing business. These growth rates are based on the internal three year plans submitted by local management and reviewed through a thorough board process during the annual budget cycle.
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 sufficient headroom in the value of the business to not have to impair the goodwill so accordingly, no impairment provision was recognised in the year (2019 - £nil).
13. PROPERTY, PLANT AND EQUIPMENT
|
| Freehold | Fixtures | Motor | Computer |
|
|
| property | and fittings | vehicles | equipment | Totals |
| Group | £'000 | £'000 | £'000 | £'000 | £'000 |
| COST |
|
|
|
|
|
| At 1 January 2020 | 269 | 2,330 | 759 | 2,335 | 5,693 |
| Additions | 20 | 280 | 145 | 415 | 860 |
| Additions acquired with subsidiary | 2,104 | 61 | 107 | 58 | 2,330 |
| Disposals | (2,104) | (36) | (9) | (92) | (2,241) |
| Exchange differences | (31) | 31 | 22 | 29 | 51 |
| At 31 December 2020 | 258 | 2,666 | 1,024 | 2,745 | 6,693 |
| DEPRECIATION |
|
|
|
|
|
| At 1 January 2020 | 60 | 1,078 | 594 | 1,445 | 3,177 |
| Charge for year | 38 | 405 | 77 | 395 | 915 |
| Eliminated on disposal | - | (36) | (9) | (92) | (137) |
| Exchange differences | (1) | 15 | 9 | 19 | 42 |
| At 31 December 2020 | 97 | 1,462 | 671 | 1,767 | 3,997 |
| NET BOOK VALUE |
|
|
|
|
|
| At 31 December 2020 | 161 | 1,204 | 353 | 978 | 2,696 |
| At 1 January 2020 | 209 | 1,252 | 165 | 890 | 2,516 |
|
| Freehold | Fixtures | Motor | Computer |
|
|
| property | and fittings | vehicles | equipment | Totals |
| Group | £'000 | £'000 | £'000 | £'000 | £'000 |
| COST |
|
|
|
|
|
| At 1 January 2019 | 204 | 1,895 | 895 | 1,919 | 4,913 |
| Adjustment for change in accounting policy for IFRS 16 | - | - | (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 |
14. SUBSIDIARIES
The subsidiaries of Xpediator Plc, all of which have been included in these combined financial statements, are as follows:
|
|
|
| Proportion of | Proportion of |
|
|
|
| ownership | ownership |
|
| Registered | Country of | interest | interest |
| Name | Office | incorporation | 2020 | 2019 |
| 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% |
| 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% |
| Nidd Transport Limited | 1 | United Kingdom | 100% | - |
| International Cargo Centre Limited | 1 | United Kingdom | 100% | 40% |
| Affinity Transport Solutions Srl | 2 | Romania | 100% | 100% |
| Delamode Moldova Srl | 3 | Moldova | 100% | 100% |
| Delamode Bulgaria OOD | 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% |
| Delamode Group Limited | 10 | Malta | 100% | 100% |
| Delamode Group Holdings Limited | 10 | Malta | 100% | 100% |
| Pallet Express Srl | 11 | Romania | 100% | 100% |
| Pallex Hungary | 12 | Hungary | 100% | 100% |
| Regional Express Gmbh | 13 | Germany | 100% | 100% |
| EshopWeDrop Limited | 1 | United Kingdom | - | 100% |
| EshopweWeDrop.com Holdings | 10 | Malta | - | 100% |
| EshopweWeDrop Baltics | 8 | Lithuania | - | 100% |
| EshopweWeDrop Romania | 2 | Romania | - | 100% |
Delamode Group Holdings Limited, Easy Managed Transport Limited, Benfleet Forwarding Limited, Regional Express Limited, Import Services Limited, Anglia Group Forwarding Limited and Nidd Transport 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, Bulgaria
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
On 1 January 2020, the Group obtained operational and management control of International Cargo Centre Limited and as a result this has been accounted for as a business Combination on 1 January 2020 under the definition of IFRS 3 "Business Combinations.
The following companies are entitled to exemption from audit under Section 479A of the UK Companies Act 2006 relating to subsidiary companies:
| Company | Registration |
| Delamode Property Limited | 06895332 |
| Traker International Limited | 02068943 |
| International Cargo Centre Limited | 02932640 |
| Xpediator Services Limited | 09724594 |
15. NON-CONTROLLING INTERESTS
Non-controlling interests ("NCI") held in the Group are as follows:
|
| 2020 | 2019 |
| 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 |
|
| Bulgaria | Baltics UAB |
|
| £'000 | £'000 |
| Share capital | 1 | 6 |
| Reserves | 170 | 581 |
| Total NCI c/f 2019 | 171 | 587 |
|
| Delamode | Delamode | ||
|
| Bulgaria | Baltics UAB | ||
|
| £'000 | £'000 | ||
| Total NCI b/f 2020 | 171 | 587 | ||
| Non-controlling interest in results for the year | 96 | 695 | ||
| Non-controlling interest in dividends for the year | (117) | (377) | ||
| Non-controlling interest in translation adjustment on opening reserves | 9 | 7 | ||
| Non-controlling interest in translation adjustment on results for the year | 2 | 32 | ||
| Total NCI c/f 2020 | 161 | 944 | ||
|
|
|
| ||
|
| Delamode Bulgaria | Delamode Baltics UAB | ||
|
| 2020 | 2019 | 2020 | 2019 |
|
| £'000 | £'000 | £'000 | £'000 |
| Revenue | 26,276 | 22,467 | 65,685 | 56,735 |
| Cost of sales | (23,215) | (19,801) | (56,208) | (49,718) |
| Gross profit | 3,061 | 2,666 | 9,477 | 7,017 |
| Administrative expenses | (2,022) | (1,823) | (5,602) | (5,224) |
| Other income | 46 | 25 | 173 | 105 |
| Operating profit | 1,085 | 868 | 4,048 | 1,898 |
| Finance costs | (18) | (20) | 48 | (16) |
| Profit before tax | 1,067 | 848 | 4,096 | 1,882 |
| Tax expense | (106) | (86) | (622) | (285) |
| Profit after tax | 961 | 762 | 3,474 | 1,597 |
| Profit after tax attributable to non-controlling interests | 96 | 76 | 695 | 319 |
|
|
|
| ||
|
| Delamode Bulgaria | Delamode Baltics UAB | ||
|
| 2020 | 2019 | 2020 | 2019 |
| For the period to 31 December 2020 | £'000 | £'000 | £'000 | £'000 |
| Assets: |
|
|
|
|
| Non-current trade and receivables | 13 | 10 | 927 | 185 |
| Property plant and equipment | 782 | 985 | 131 | 50 |
| Inventories | 9 | 10 | - | 42 |
| Trade and other debtors | 4,932 | 4,706 | 11,657 | 8,977 |
| Cash and cash equivalents | 1,156 | 904 | 2,336 | 1,632 |
|
| 6,892 | 6,615 | 15,051 | 10,886 |
| Liabilities: |
|
|
|
|
| Trade and other payables | 5,282 | 3,990 | 10,329 | 7,952 |
| Loans and other borrowings | - | 914 | - | - |
|
| 5,282 | 4,904 | 10,329 | 7,952 |
| Total net assets | 1,610 | 1,711 | 4,722 | 2,934 |
| Accumulated non-controlling interests | 161 | 171 | 944 | 587 |
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 | £'000 | £'000 | £'000 |
| At 1 January 2020 & 31 December 2020 | 1 | - | 1 |
|
| Other | Associate | Total |
|
| Investment | Investment | Investment |
| COST | £'000 | £'000 | £'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 |
Investments represent investments in shares in unlisted companies.
International Cargo Centre Limited
On 1 January 2020, the Group obtained operational and management control of International Cargo Centre Limited and as a result this has been accounted for as a business Combination on 1 January 2020 under the definition of IFRS 3 "Business Combinations. The Group owned 40% of ICC, it was accounting as an associate investment until 31 December 2019.
17. TRADE AND OTHER RECEIVABLES
|
| 2020 | 2019 |
| Group | £'000 | £'000 |
| Current: |
|
|
| Trade receivables | 58,008 | 53,625 |
| Less: provision for impairment of trade receivables | (2,976) | (2,465) |
|
| 55,032 | 51,160 |
| Current financial assets | 3,624 | 2,689 |
| Prepayments and contract assets | 3,987 | 2,933 |
| Other receivables | 4,080 | 4,145 |
| Total | 66,723 | 60,927 |
| Non-Current |
|
|
| Trade and other receivables | 252 | 1,050 |
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 months' notice hence they are classed as current assets.
Included within trade debtors is a balance due from Simplu Romania of £92,000 (2019 - £232,000). 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 £1,782,000 (2019 - £1,207,000) from the Vendors of Benfleet Forwarding Limited. In addition, there is a further £nil (2019 - £599,000) included in trade and other receivables due in more than one year.
Included within other receivables due within one year is an amount due of £48,000 (2019 - £nil) due from Inert Logistics LLP following the acquisition of the EshopWedrop Business. In addition, there is a further £252,000 (2019 - £nil) 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 to reflect current and forward-looking information, any 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:
|
| 2020 | 2019 |
| Group | £'000 | £'000 |
| At 1 January | 2,465 | 2,896 |
| Increase during the year | 853 | 1,052 |
| Impairment losses reversed | 20 | (216) |
| Receivable written off during the year as uncollectible | (362) | (1,267) |
| At 31 December | 2,976 | 2,465 |
At 31 December 2020, 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 |
|
| £'000 | £'000 | £'000 | £'000 | £'000 |
| Expected loss rate | 0.8% | 1.9% | 10.5% | 63.1% |
|
| Gross carrying amount | 52,220 | 2,576 | 714 | 3,833 | 59,343 |
| Loss provision | 434 | 49 | 75 | 2,418 | 2,976 |
18. TRADE AND OTHER PAYABLES
|
| 2020 | 2019 |
| Group | £'000 | £'000 |
| Current: |
|
|
| Trade and other payables | 55,557 | 51,197 |
| Amounts owed to related parties | 97 | 20 |
| Social security and other taxes | 3,283 | 2,410 |
| Other creditors | 3,277 | 3,249 |
| Deferred Consideration | - | 4,607 |
| Accruals | 2,614 | 1,703 |
| Total Trade and other payables | 64,828 | 63,186 |
| Non-current |
|
|
| Trade and other payables | 132 | 101 |
The deferred consideration of £nil (2019 - £4,607,000) 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, £nil (2019 - £nil) is contingent on performance related criteria.
19. BANK AND OTHER LOANS
|
| 2020 | 2019 |
| Group | £'000 | £'000 |
| Current: |
|
|
| Bank loans | 334 | 341 |
| Confidential invoice discounting facility | 3,732 | 2,382 |
|
| 4,066 | 2,723 |
| Non-current: |
|
|
| Loans - 1-2 years | 351 | 365 |
| Loans - 2-5 years | 1,159 | 1,107 |
| Loans due after 5 years repayable by instalments | 386 | 803 |
|
| 1,896 | 2,275 |
The Lloyds bank loan due after 5 years is due to be repaid by November 2026. Interest is being charged on this Lloyds bank loan at both a fixed rate of 6.4% and a variable rate of 1.1% above the Bank of England base rate.
The Lloyds 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:
|
| 2020 | 2019 |
| Non-Current | £'000 | £'000 |
| Bank borrowings and others |
|
|
| - Secured | 1,896 | 2,275 |
| Current |
|
|
| Bank borrowings and others |
|
|
| - Secured | 4,066 | 2,696 |
| - Unsecured | - | 27 |
|
| 4,066 | 2,723 |
| Total loans and borrowings | 5,962 | 4,998 |
| Sterling | 5,962 | 4,971 |
| Other | - | 27 |
| Total | 5,962 | 4,998 |
|
|
|
|
| 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: |
|
|
|
|
|
|
|
| 2020 | 2019 |
| Group | £'000 | £'000 |
| At 1 January | 4,998 | 6,400 |
| New borrowings in the year | 1,350 | - |
| Change of accounting treatment of finance leases following the adoption of IFRS 16 | - | (185) |
| Borrowings repaid during the year | (386) | (1,217) |
| At 31 December | 5,962 | 4,998 |
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.
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Balance at 1 January | 1,674 | 1,523 |
| Additions during the year | 402 | 151 |
| Additions acquired from acquisitions - Nidd Transport Limited | 77 | - |
| Balance at 31 December | 2,153 | 1,674 |
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.
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 |
|
|
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Cash and cash equivalents | 12,720 | 11,951 |
| Trade and other receivables | 62,988 | 59,044 |
| Total financial assets at amortised costs | 75,708 | 70,995 |
Financial Liabilities
|
| Fair value through | Loans and other payables | ||
|
| 2020 | 2019 | 2020 | 2019 |
|
| £'000 | £'000 | £'000 | £'000 |
| Trade and other payables | - | - | 61,677 | 56,270 |
| Bank loans and Invoice discounting | - | - | 5,962 | 4,998 |
| Right-of-use asset lease liabilities | - | - | 32,240 | 27,927 |
| Deferred consideration | - | 666 | - | 3,941 |
| Total financial liabilities | - | 666 | 99,879 | 93,136 |
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:
|
| 2020* | 2020 | 2019 |
| Cash at bank | Rating | £'000 | £'000 |
| Barclays Bank plc | BBB+ | 1,881 | 2,528 |
| Lloyds Bank plc | BBB+ | 2,234 | 786 |
| Raiffeisen Bank AG | A- | 3,969 | 4,110 |
| NatWest group plc | BBB | 410 | 391 |
| Swedbank | A+ | 939 | 1,344 |
| HSBC | A- | 619 | 56 |
| Bank of Transylvania | BB | 193 | 470 |
| Unicredit Bulbank | BBB | 431 | 60 |
| Hipotekarna Bank | NA | - | 197 |
| Erste Bank | BBB+ | 182 | - |
| Luminor Bank AB | A+ | 1,142 | - |
| Other |
| 720 | 819 |
| Total |
| 12,720 | 10,761 |
* Based on Standard & Poor Rating
|
|
|
|
|
|
| 2020 | 2020 | 2019 |
| Short term deposits | Rating | £'000 | £'000 |
| Lloyds Bank | BBB+ | 1,757 | 1,190 |
|
|
|
|
|
|
|
| 2020 | 2019 |
| Reconciliation of cash in bank and deposits to balance sheet |
| £'000 | £'000 |
| Cash at bank |
| 10,963 | 10,761 |
| Short term deposits |
| 1,757 | 1,190 |
| Total |
| 12,720 | 11,951 |
(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.
|
| 2020 | 2019 |
| Petrol price risk effect on net profit sensitivity analysis: | £'000 | £'000 |
| Price increased by 10% | 150 | 179 |
| Price decreased by 10% | (150) | (179) |
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 fluctuation 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").
|
| 2020 | 2019 |
| Interest rate risk effect on net profit sensitivity analysis: | £'000 | £'000 |
| Interest rates increased by 0.25% | (15) | (13) |
| Interest rates decreased by 0.25% | 15 | 13 |
|
|
|
|
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 |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 31 December 2020 |
|
|
|
|
|
|
|
|
|
| Financial assets | 25,057 | 36,010 | 7,136 | 122 | 5,571 | 1,618 | 2 | 192 | 75,708 |
| Financial liabilities | 43,448 | 45,687 | 4,071 | 35 | 4,909 | 1,602 | 1 | 126 | 99,879 |
| At 31 December 2019 |
|
|
|
|
|
|
|
|
|
| Financial assets | 22,799 | 33,989 | 7,288 | 73 | 5,325 | 1,348 | 2 | 171 | 70,995 |
| Financial liabilities | 42,247 | 40,801 | 3,853 | 26 | 4,635 | 1,409 | - | 165 | 93,136 |
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
| Foreign currency risk sensitivity analysis: | 2020 | 2019 |
| Euro |
|
|
| Strengthened by 10% | (968) | 22 |
| Weakened by 10% | 968 | (22) |
| Romanian Lei |
|
|
| Strengthened by 10% | 307 | 344 |
| Weakened by 10% | (307) | (344) |
| Moldavian Leu |
|
|
| Strengthened by 10% | 9 | 5 |
| Weakened by 10% | (9) | (5) |
| Serbian Dinar |
|
|
| Strengthened by 10% | 2 | (6) |
| Weakened by 10% | (2) | 6 |
| Bulgarian Lev |
|
|
| Strengthened by 10% | 66 | 157 |
| Weakened by 10% | (66) | (157) |
| Macedonian Denar |
|
|
| Strengthened by 10% | 7 | 1 |
| Weakened by 10% | (7) | (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.
|
|
| Between | Between |
|
|
| Up to | 1 and 2 | 2 and 5 | Over |
|
| 12 months | years | years | 5 years |
| At 31 December 2020 | £'000 | £'000 | £'000 | £'000 |
| Trade and other payables | 61,545 | 132 | - | - |
| Bank loans & invoice discounting | 4,066 | 351 | 1,159 | 386 |
| Lease liabilities | 8,344 | 7,717 | 14,113 | 7,357 |
| Total | 73,995 | 8,200 | 15,272 | 7,743 |
|
|
| Between | Between |
|
|
| Up to | 1 and 2 | 2 and 5 | Over |
|
| 12 months | years | years | 5 years |
| At 31 December 2019 | £'000 | £'000 | £'000 | £'000 |
| Trade and other payables | 56,270 | - | - | - |
| Bank loans & invoice discounting | 2,723 | 365 | 1,107 | 803 |
| Lease liabilities | 7,050 | 6,246 | 13,417 | 3,702 |
| Deferred consideration | 4,607 | - | - | - |
| Total | 70,650 | 6,611 | 14,524 | 4,505 |
22. CALLED UP SHARE CAPITAL
|
| 2020 | 2020 | 2019 | 2019 |
| Ordinary Shares of £0.05 each | Number | £'000 | Number | £'000 |
| At the beginning of the year | 136,084,224 | 6,804 | 133,713,604 | 6,686 |
| Issued during the year | 5,548,951 | 278 | 2,370,620 | 118 |
| At the end of the year | 141,633,175 | 7,082 | 136,084,224 | 6,804 |
| 50,000 deferred shares of £1.00 each | 50,000 | 50 | 50,000 | 50 |
| At the end of the year | 141,683,175 | 7,132 | 136,134,224 | 6,854 |
|
|
|
|
|
|
Shares Issued
On 30 June 2020, the Company issued 5,548,951 shares as part of a scrip dividend. The Scrip Dividend reference price of £0.2575 was calculated as the average of the Company's closing middle market price, as derived from the London Stock Exchange's Daily Official List, for the five consecutive business days commencing from the first day the ordinary shares are quoted as trading ex-dividend, being 12 June 2020.
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 £831,250 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 £0.24 per share. The market value of the shares issued to Alex Borrelli when exercised was £210,000, resulting in a gain of £110,000. The market value of shares issued to Geoff Gillo when exercised was £105,000, resulting in a gain of £55,000.
On 5 December 2019, the Company issued 89,744 new ordinary shares of £0.05 each as part of the agreed deferred consideration for the acquisition of Regional Express Limited. The total value of this transaction was £35,000 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 | £ | Vesting Period | Expiry Date |
| SP Angel | 55,250 | 0.24 | July 2022 | August 2022 |
| Stephen Blyth - Tranche 1 - now lapsed | 214,286 | 0.70 | November 2018 | December 2021 |
| Stephen Blyth - Tranche 2 - now lapsed | 214,286 | 0.70 | May 2019 | December 2021 |
| Stephen Blyth - Tranche 3 - not earned | 214,286 | 0.70 | May 2020 | December 2021 |
| Stephen Blyth - Tranche 4 - now lapsed | 214,285 | 0.70 | May 2021 | December 2021 |
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 5 June 2020, tranche 1, tranche 2 and tranche 4 share options lapsed following the retirement of Stephen Blyth as Chief Executive Officer. Tranche 3 had lapsed at 31 December 2019 as the criteria had not been fulfilled. On 6 September 2019, Stuart Howard left the business, and as a result all unvested shares options were forfeited.
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. (£0.24). 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, £0.24, 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:
|
| 2020 | 2019 |
|
| No | No |
| At 1 January | 698,107 | 2,180,250 |
| Share options exercised during the year | - | (625,000) |
| Share options lapsed during the year | (642,857) | (857,143) |
| At 31 December | 55,250 | 698,107 |
| Weighted average share price of options | £0.24 | £0.66 |
| Weighted average grant fair value | £0.04 | £0.04 |
| Weighted average contractual life | 20 months | 4 Months |
| Exercise price | £0.24 | £0.24 to |
|
|
| £0.70 |
The weighted average grant fair value at the year was 2020 £0.04 (2019 - £0.04) per option. The outstanding options have a weighted average contractual life of 20 months (2019 - 4 months), and exercise price between £0.24 (2019 - £0.24 and £0.70).
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;
|
| 2020 | 2019 |
| Risk free investment | 1.97% | 1.39% |
| Expected life | 20 Months | 24 Months |
| Expected volatility | 43.63% | 54.20% |
The Group recognised a total credit of £15,000 (2019 - charge of £11,000) relating to equity-settled share-based payments.
25. LEASES
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 |
|
| £'000 | £'000 | £'000 |
| Cost |
|
|
|
| At 1 January 2020 | 32,143 | 1,197 | 33,340 |
| Additions during the year | 8,678 | 678 | 9,356 |
| Additions acquired with subsidiary | 252 | 396 | 648 |
| Disposals | (316) | (24) | (340) |
| Translation | 621 | - | 621 |
| At 31 December 2020 | 41,378 | 2,247 | 43,625 |
| Depreciation |
|
|
|
| At 1 January 2020 | 5,623 | 332 | 5,955 |
| Charge for the year | 5,767 | 486 | 6,253 |
| Eliminated on disposal | (244) | (20) | (264) |
| Revaluations | 77 | 5 | 82 |
| At 31 December 2020 | 11,223 | 803 | 12,026 |
| NET BOOK VALUE |
|
|
|
| At 31 December 2020 | 30,155 | 1,444 | 31,599 |
| At 31 December 2019 | 26,520 | 865 | 27,385 |
|
|
|
|
|
Lease liabilities included in the consolidated statement of financial position
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Current | 6,864 | 6,392 |
| Non-Current | 25,376 | 21,535 |
| Total | 32,240 | 27,927 |
Amount recognised in the consolidated income statement
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Depreciation on right-of-use property premises | 6,459 | 5,623 |
| Depreciation charged on other right-of-use assets | 486 | 332 |
| Interest on lease liabilities | 1,000 | 1,009 |
| Total | 7,945 | 6,964 |
The total cash outflow for leases during the current year was £7,587,000 (2019 - £6,546,000), including £624,000 (2019 - £591,000) 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 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.
|
| Sales | Purchases | Amounts owed by | Amounts owed to | ||||
|
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Related Party |
|
|
|
|
|
|
|
|
| Delamode Holding BV | - | - | - | - | - | 117 | - | - |
| Delamode Propretati, Srl | 3 | 3 | 99 | 271 | 1 | 4 | 9 | 80 |
| Companies in which directors or their immediate family have a significant controlling interest | ||||||||
| Affinity Group Limited | - | - | - | - | - | - | - | 4 |
| Borrelli Capital Limited | - | - | 13 | 2 | - | - | - | - |
The maximum amount owed by the Group to Companies in which directors or their immediate family have a significant controlling interest during the year was as follows:
|
|
|
|
|
|
|
| 2020 | 2019 |
|
|
|
|
|
|
|
| £'000 | £'000 |
| Affinity Group Limited |
|
|
|
|
|
| 4 | 4 |
| COGELs Investment Ltd |
|
|
|
|
|
| - | 237 |
| Richard Myson |
|
|
|
|
|
| - | 1 |
Details of directors' remuneration and the remuneration of key management personnel are given in note 6.
At 31 December 2020, bonus payables to Robert Ross of £128,000 were accrued within these financial statements.
The Group has entered into an agreement with Cogels Consultancy Limited to identify potential new acquisition targets. As a result, Cogels Consultancy Limited will be paid a 1% fee for any successful targets that they introduce. This is subject to a minimum payment of £50,000 and a maximum payment of £150,000.
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 £79,708 (2019 - £48,000).
At 31 December 2020, the amounts due from DSW was £31,480 (2019 - £9,000).
27. EXCEPTIONAL ITEMS
During the year, the Group incurred non-recurring costs totalling £1,377,000 (2019 - £856,000).
An analysis by type of expense is show below.
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Redundancy and restructuring | 1,625 | - |
| Acquisition Costs - Nidd Transport Limited | 215 | - |
| Acquisition Costs - International Cargo Centre Limited | 17 | - |
| Aborted Acquisition Costs | 14 | 190 |
| Closure of EshopweWeDrop and Buzzbrand business | 298 | - |
| Disposal of Goodwill UK Buy/EshopWedrop business | 227 | - |
| Intangible Asset write-off UK Buy/EshopWedrop business | 112 | - |
| Anglia Forwarding Group Limited Contingent Consideration | (344) | 451 |
| Additional Deferred Contingent Consideration - Regional Express Limited | - | 215 |
| Exceptional Profit on Disposal of Property in Ripon | (787) | - |
| Total | 1,377 | 856 |
On 31 December 2020, the Group announced that it would sell it's EshopWeDrop ("ESWD") business to Inert Logistics LLP. ESWD recorded a net loss of £(231,000) during the year. In addition there were asset write-offs of £(339,000) relating to the disposal of goodwill and the remaining net book value of the customer intangible, following the acquisition from Gerviva UAB on 6 January 2017. The total consideration payable is £300,000 in cash and is to be paid in monthly instalments over the next three years.
During May 2020, the Directors closed the Buzzbrand business. Buzzbrand recorded a loss of £(67,000) during the year.
Neither the closure of the ESWD or Buzzbrand business have been treated as a discontinued operation.
On 5 October 2020, following the acquisition of Nidd Transport Limited ("Nidd"), the Group immediately sold the property at Ripon and performed a sale and lease back. This generated a profit on disposal of £787,000, and resulted in the Group realising the revaluation reserve of £1,200,000. There was no tax charge arising from this disposal. At the same time the Group, entered into a right-of-use asset agreement for 15 years.
|
| £'000 |
| Cash consideration received | 2,900 |
| Less net book value of assets disposed | (2,100) |
| Transaction Costs | (13) |
| Gain on disposal | 787 |
28. SUBSEQUENT EVENTS
On 5 February 2021, Xpediator PLC granted options over 3,168,539 new ordinary shares to 108 employees under the Group Company Share Option Plan ("CSOP"). The award value is between £5,000 - £30,000 (depending on seniority within the business) divided by closing share price on the day before grant of CSOP options with an exercise price equivalent to 110% of the closing share price on the day before grant. These options vest three years from the award date and are subject to meeting a performance criteria of an average earnings per share (EPS) growth of 10% per annum, from the 1st January 2021 to 31st December 2023.
On 1 March 2021, Michael (Mike) Williamson was appointed as a director.
On 3 March 2021, the Company granted an award over 2,163,281 ordinary shares to Robert Ross and 267,010 ordinary shares to Michael Williamson.
The performance conditions are split equally between adjusted earnings per share growth ("EPS") and compound annual total shareholder return ("TSR").
For both EPS growth and TSR, one quarter of the awards will vest once a compound annual growth rate (CAGR) in excess of 10% has been achieved and will only vest 100% once a compound annual growth rate of 25% has been achieved. Between 10% and 25% CAGR, the awards will vest pro rata.
Under the long-term incentive plan, the awards will vest in portions of one third on each of the third, fourth and fifth anniversaries of grant, subject to continued employment and the satisfaction of two performance conditions.
Both awards contain malus and clawback provisions.
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 jurisdiction's 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 reporting date to lease payments that are variable.
|
| Lease | Fixed | Variable |
|
|
| Contract | Payments | Payments | Sensitivity |
|
| Number | % | % | £'000 |
| Property leases with payments linked to inflation | 3 | - | 3% | 308 |
| Property leases with fixed payments | 22 | 19% | - | - |
| Leases of plant & equipment | 43 | 38% | - | - |
| Vehicle leases | 46 | 40% | - | - |
| Total | 114 | 97% | 3% | 308 |
30. BUSINESS COMBINATIONS
International Cargo Centre Limited
On 1 January 2020, the Group obtained operational and management control of ICC and as a result this has been accounted for as a Business Combination on 1 January 2020 under the definition of IFRS 3 "Business Combinations".
Goodwill
When determining the revised goodwill arising on the acquisition the following calculations were used.
| Purchase consideration | £'000 |
| Total consideration | - |
| Allocation of assets and liabilities acquired |
|
| Other assets |
|
| Inventories | 1 |
| Trade receivables | 193 |
| Other receivables | 82 |
| Cash | 24 |
| Property, Plant & Equipment | 27 |
| Liabilities |
|
| Trade payables | (172) |
| Other payables | (533) |
| Deferred tax liability | (9) |
| Non-controlling interest | 232 |
| Goodwill | 155 |
The goodwill recognised will not be deductible for tax purposes.
On 30 April 2020, the Group acquired the remaining 60% of the issued share capital of International Cargo Centre (ICC) Limited, having acquired the original 40% on 4 June 2018.
Acquisition costs of £17,000 have been expensed to the income statement and are shown as part of the exceptional expenses.
As a result of the acquisition, £24,000 of net cash was acquired.
Since the acquisition, ICC has contributed £1,052,000 to Group revenue and a loss of £ (145,000) to the Group.
Nidd Transport Limited
On 5 October 2020, the Group acquired 100% of the issued share capital of Nidd Transport Limited ("Nidd") a transport Company that specialises in daily express deliveries.
The principal reason for this acquisition was is that Nidd offers complimentary services but works in different geographical markets, with particular focus on France, Spain, Portugal and Germany. Nidd also offers a strong UK distribution platform, particularly in the North of England.
The total consideration payable comprised cash on completion of £4,600,000 and a 50% profit share adjustment from 1 May 2020 to 5 October 2020 of £116,000.
Fair Value assessment
As part of the fair value assessment of the Intangible assets of Nidd, a Customer related intangible asset was 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 weighted average cost of capital used in determining the present value, was 14.0%, 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 £424,000.
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 10.0%. Based on these factors, it was concluded that the useful economic life for customer relationships in relation to Nidd would be up to 10 years.
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 19.0% was used as to determine this. This resulted in a deferred tax liability of £81,000.
Goodwill
When determining the revised goodwill arising on the acquisition the following calculations were used.
| Purchase consideration | £'000 |
| Initial consideration - cash paid | 4,600 |
| Net working capital adjustment | 116 |
| Total consideration | 4,716 |
| Allocation of assets and liabilities acquired |
|
| Intangible assets |
|
| Customer-related intangible assets | 424 |
| Other assets |
|
| Trade receivables | 2,861 |
| Cash | 926 |
| Fixed assets | 2,303 |
| Right-of-use Assets | 648 |
| Liabilities |
|
| Trade payables | (995) |
| Other payables | (963) |
| Right-of-use liabilities | (396) |
| Provisions | (77) |
| Deferred tax liability for intangible assets | (81) |
| Goodwill | 66 |
The goodwill recognised will not be deductible for tax purposes.
Acquisition costs of £215,000 have been expensed to the income statement and are shown as part of the exceptional expenses.
As a result of the acquisition, £926,000 of net cash was acquired.
Since the acquisition, Nidd has contributed £2,491,000 to Group revenue and a profit of £873,000 to the Group. Of this profit, £800,000 relates to the sale and lease back of the Ripon property, which has been disclosed as an exceptional cost.
Had Nidd been part of the Group for the full year, it would have contributed full year revenue of £6,778,000 and full year profit before tax of £1,139,000. Of this profit, £800,000 relates to the sale and lease back of the Ripon property, which has been disclosed as an exceptional cost.
31. ANALYSIS OF CHANGES IN NET DEBT
|
|
|
|
|
|
| Non-cash |
|
|
|
|
|
|
|
|
| interest |
|
|
|
| At 31 |
|
| Right-of- | Right-of- | charge | Other | At 31 |
|
| December |
| Foreign | Use-asset | use asset | right-of- | non-cash | December |
|
| 2019 | Cashflow | exchange | additions | disposals | use assets | movements | 2020 |
| Group | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Cash at bank | 10,761 | (449) | 651 | - | - | - | - | 10,963 |
| Short term deposits | 1,190 | 567 | - | - | - | - | - | 1,757 |
| Total Cash | 11,951 | 118 | 651 | - | - | - | - | 12,720 |
| Confidential invoice discounting facility | 2,382 | 1,350 | - | - | - | - | - | 3,732 |
| Bank loans | 2,616 | (386) | - | - | - | - | - | 2,230 |
| Right-of-use-assets | 27,927 | (7,587) | 1,063 | 9,752 | (76) | 1,000 | 161 | 32,240 |
| Total debt | 32,925 | (6,623) | 1,063 | 9,752 | (76) | 1,000 | 161 | 38,202 |
| Net cash/(debt) | (20,974) |
|
|
|
|
|
| (25,482) |
| Net cash excluding right-of-use assets | 6,953 |
|
|
|
|
|
| 6,758 |
|
|
|
|
|
|
| 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 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'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 |
Reconciliation of net cash flow to movement in net debt
|
| 2020 | 2019 | |
|
| £'000 | £'000 | |
| Net increase in cash and cash equivalents | 118 | 2,874 | |
| Net increase in borrowings and right-of-use assets |
| (6,340) | (26,525) |
| Foreign exchange movements | 1,714 | (570) | |
| (Increase)/decrease in net debt | (4,508) | (24,221) | |
| Opening net (debt) /cash | (20,974) | 3,247 | |
| Closing net debt | (25,482) | (20,974) | |
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