25 August 2021
Clipper Logistics plc
Final Results for the year ended 30 April 2021
Structural shift to online driving further momentum
Clipper Logistics plc ("Clipper", the "Group", or the "Company"), a leading provider of value-added logistics solutions, e-fulfilment and returns management services, is pleased to announce its Full Year Results for the year ended 30 April 2021.
Financial Highlights for the year ended 30 April 2021
| · | Group revenue increased by 39.1% from £500.7m to £696.2m. |
| · | Underlying EBIT¹ up 52.4% to £31.4m (2020: £20.6m). Reported EBIT¹ (IFRS 16) up 22.5% to £39.8m (2020: £32.5m). |
| · | Group profit after tax of £21.7m (2020: £16.2m) up 33.8%; on an underlying basis profit after tax is up 61.9% compared to £13.4m in FY20. |
| · | Basic earnings per share were 21.3 pence (2020: 15.9 pence), an increase of 34.0%; on an underlying basis Basic EPS is up 62.6% compared to 13.1p in FY20. |
| · | Cash generated from operations of £86.9m (2020: £60.4m) up 44.0%. |
| · | Strength of performance and cash generation leads the Board to recommend a final dividend of 7.1p per share, making a total dividend per share of 11.1p for the full year (2020: 9.7p), an increase of 14.4%. |
| · | Net debt1 of £16.9m at 30 April 2021 (2020: £45.1m) had reduced to 0.4x EBITDA2 (2020: 1.3x EBITDA2). |
1. This is an alternative performance measure ("APM"). EBIT is defined as operating profit, including the Group's share of operating profit in equity‑accounted investees and before the amortisation of intangible assets and other exceptional costs. Underlying EBIT excludes the impact of IFRS 16 from both years and in the year ended 30 April 2020 a £3.5 million 'negative goodwill' credit release relating to the IFRS 3 business combination. Underlying profit after tax and Basic EPS exclude the impact of the 'negative goodwill' credit of £3.5m in the year ended 30 April 2020. A reconciliation of APMs can been found in Operating and Financial Review. These APMs apply throughout this announcement.
2. EBITDA is defined as profit before interest, tax charges, depreciation and amortisation excluding the impact of IFRS 16 (see note 27).
Operational Highlights for the year ended 30 April 2021
| · | Significant organic growth in the period, particularly driven by high e-fulfilment volumes as a result of the permanent structural shift to online, with volume growth and extension of services on existing contracts, notably with ASOS, Farfetch, John Lewis, Westwing and Wilko. |
| · | Within non e-fulfilment, further organic volume growth with existing customers, including Asda and Morrisons. |
| · | Our flexible, technology-led end-to-end proposition within the e-commerce market resulted in multiple new contract wins including Linenbundle, Revolution Beauty and Unipart. |
| · | Record volumes in Clicklink, our Click & Collect joint venture with John Lewis, which now has nearly 40 retailers on the network. |
| · | Growth in the Life Sciences vertical, being beauty products and the distribution of PPE to hospital trusts and health care providers. |
| · | Significant expansion of the Group estate portfolio to 16.0 million sq. ft. of space now under management in over 50 locations in five territories across Europe. |
| · | We have been delighted to welcome an additional 2,000 new colleagues who will help deliver further growth. |
| · | Technical Services saw significant increases in activity on the Amazon, Panasonic and Vestel contracts. Nintendo repair volumes continued to grow from the prior year. Additional investment has been made to increase processing capacity. We have further developed our solution within the ADC in Northampton adding further television repair lines. |
| · | Commercial vehicles saw an increase in the number of new vehicles sold to 1,517 units, an increase of 8.4%. Used vehicle sales of 376 units; an increase of 38.7%. |
Post Year End Highlights
| · | Acquisition of Wippet which will launch an online B2B marketplace to service the broader healthcare sector in the UK. |
| · | Commencement of new operations with Mountain Warehouse and JD Sports. |
| · | Successful integration of the River Island site in Milton Keynes into the Clipper portfolio following the outsourcing of their logistics. |
| · | Opening of a new facility for Farfetch in Venray, Netherlands providing a pan European solution. |
| · | Recruitment of a Head of ESG to accelerate the Group's sustainability agenda. |
| · | Our new northern flagship site (Sherburn) now at full capacity (1.4 million sq. ft.). |
| · | Commencement of activities on Life Style Sports in Ireland and with John Lewis to provide additional e-commerce and store replenishment services from Clipper's new distribution centre in Bardon in H1 of the year ending 30 April 2022. |
Outlook
The Group continues to be a leading provider of value-added logistics and e-fulfilment solutions to the retail sector in the UK and is rapidly growing its operations in Mainland Europe. The structural shift to online during the pandemic with continuing momentum in e-fulfilment post pandemic together with strategically aligned acquisitions will help drive further shareholder value in future years.
The Group has made a strong start to the new financial year and is trading in line with its recently upgraded guidance for FY22. The Group's pipeline of new opportunities remains buoyant and further momentum with new contract wins is expected during the year.
Steve Parkin, Executive Chairman of Clipper commented:
"I am pleased to report a very strong set of results, which in a very fluid environment demonstrates the ability and agility of the Group and the robustness of our business model to capitalise upon opportunities and deliver growth. We have grown revenue by £195.5 million to £696.2 million and we have also grown Underlying EBIT¹ by a much larger 52.4% to £31.4 million. The market has witnessed significant recent change particularly with the acceleration of the growth in e-fulfilment which now represents 70% of our logistics revenue. Our unique proposition, which offers the full end to end range of services within the e-commerce field, has allowed the Group to benefit from this strong dynamic and will provide further momentum in the coming years. Our recent contract wins demonstrate that we are our customers' partner of choice both in and outside of the UK, for delivering innovative, sustainable, and resilient added value solutions.
I would like to personally thank all of our colleagues throughout the business, for their commitment and engagement in maintaining our services through the pandemic.
Our highly deployable asset-light model has enabled us to reinforce our pan-European proposition during the financial year, which together with a strong pipeline of new business activity ensures that the Group is in an excellent position to achieve further growth both domestically and internationally. The prospects for the Group remain strong and we are confident that we will deliver further shareholder value accretion in the coming years".
Forward Looking Statements
This announcement contains forward looking statements. These have been made by the Directors in good faith using information available up to the date on which they approved this report. The Directors can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both business and economic risk factors underlying such forward looking statements, actual results may differ materially from those expressed or implied by these forward looking statements. Except as required by law or regulation, the Directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.
Publication of Annual Report and Accounts
Clipper's 2021 Annual Report and Accounts will be available on the Company's website: https://www.clippergroup.co.uk/report-accounts/ and will shortly be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Copies of the Annual Report and Accounts will be posted to shareholders who require them in hard copy shortly and a further announcement will be made by the Company at that time.
The results will be presented via conference call at 9.30am for analysts only on the morning of the announcement; please contact Buchanan at clipper@buchanan.uk.com if you would like to join. An audiocast of the meeting will be made available on the Group's investor relations website later on the day of the results.
This announcement is released by Clipper Logistics plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). It is disclosed in accordance with the Group's obligations under Article 17 of MAR. Upon the publication of this announcement, this information is considered to be in the public domain.
For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of Clipper Logistics plc by David Hodkin, Chief Financial Officer.
Enquiries
| Clipper: | +44 (0)11 3204 2050 |
| Steve Parkin, Executive Chairman |
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| Tony Mannix, Chief Executive Officer |
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| David Hodkin, Chief Financial Officer |
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| Greg Lawless, IR & Comms Director |
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| Buchanan: | +44 (0) 20 7466 5000 |
| David Rydell |
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| Stephanie Whitmore |
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| Hannah Ratcliff |
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Chairman's Statement
As Chairman of Clipper Logistics plc, I am pleased to present our financial results for the year ended 30 April 2021.
I am pleased to report the outstanding performance of the Group for the year ended 30 April 2021. Against an uncertain backdrop, the resilience of our business model has been proven once again. We grew revenue by £195.5 million to £696.2 million, an increase of 39.1% from the prior year. Even more pleasing is the fact that underlying EBIT¹ has grown ahead of sales, having increased to £31.4 million representing growth of 52.4% compared to the prior year.
Driving this growth has been the permanent structural shift to online. Approximately 70% of revenue in our value-added logistics services segment is generated from e-commerce activities. As a business we are very well placed to capitalise on further global growth in the coming years. Our recent contract wins demonstrate that our customers are confident that we are their partner of choice both in and outside of the UK in delivering innovative, sustainable, and resilient value add solutions.
Our unique service propositions providing full end-to-end e-commerce solutions is what differentiates us from our competitors. This coupled with our highly deployable asset-light model has enabled us to reinforce our pan-European position during the financial year.
To illustrate this, I am pleased to report the opening of our new facility in Venray, Netherlands, adding another territory to our current portfolio and the significant acceleration of our growth in Poland following the expansion of our contract with ASOS and the implementation of a returns solution for Zalando.
We now have over 16.0 million square feet of space under management in over 50 locations in five territories across Europe. The Group is actively pursuing further organic and M&A opportunities in Europe and North America in order to further position the Clipper brand and expertise as a global e-commerce logistics player.
Since the end of the previous financial year, we have worked in conjunction with the Department of Health and Social Care, Royal Mail and eBay to ensure vital PPE and other healthcare ancillaries are where they are most needed. With our partners we have delivered to over 600 hospitals, and some 70,000 other local healthcare providers during the COVID-19 pandemic. I am proud of the contribution that we as a Group have played to support the country during the pandemic.
We have ensured that our workplaces have been safe environments to work in at all times beyond Government guidelines. I would like to personally thank all of our colleagues throughout the business, for their commitment and engagement to ensure that we as a business have played our part in ensuring the continuity of supply chains in all of the sectors we serve.
We have seen our e-fulfilment & returns management revenues grow by 52.0% and our non e-fulfilment activity grow by 35.4%, well ahead of the market and our industry peers which reinforces our positioning as a retail enabler.
Our Technical Services division continues to grow both within the UK and in Europe. Our investment in existing facilities will allow for additional processing capacity.
I am delighted to welcome our new customers, including Mountain Warehouse and JD Sports with whom we are commencing new operations in the financial year ending 30 April 2022. In addition, we have been able to demonstrate the benefit for customers to outsource their supply-chain by joining our shared user operations and are delighted to integrate the River Island site in Milton Keynes into the Clipper network.
Alongside our logistics activity we are pleased to welcome Wippet to the Group. Wippet will launch an online B2B marketplace to service the broader healthcare sector in the UK. This new investment is aligned to the Group's strategic intent to extend its penetration into the Life Sciences sector, which we have previously highlighted as a potential significant growth opportunity for the Group.
These opportunities will drive further EBIT¹ growth in the next financial year.
Group results
Group revenue increased by 39.1% to £696.2 million for the year ended 30 April 2021 (2020: £500.7 million), and our group underlying EBIT¹ (IAS 17 basis) grew by 52.4% to £31.4 million (2020: £20.6 million).
On an IFRS 16 basis our Group EBIT¹ grew by 22.5% to £39.8 million (2020: £32.5 million).
Diluted earnings per share were 20.9 pence for the year ended 30 April 2021 (2020: 15.8 pence), an increase of 32.3%. Basic earnings per share were 21.3 pence (2020: 15.9 pence), an increase of 34.0%.
People and Board
Clipper Logistics plc is led by a very experienced and international management team which has been able to support the growth acceleration in a highly fluid environment.
The team has a proven track record of identifying key trends within our markets to develop and deliver innovative and cost-effective solutions to drive organic growth, and in addition continues to seek strategic acquisitions in new geographies that will further enhance Group performance and shareholder value.
Governance
The executive management team comprises Tony Mannix (Chief Executive Officer), David Hodkin (Chief Financial Officer) and myself, and the Group benefits from the combined experience of Christine Cross (Senior Independent Director), Dino Rocos and Stuart Watson, our Independent Non-Executive Directors. I would like to thank all members of the Board for their invaluable contribution this year.
Dividends
The Board is recommending a final dividend of 7.1 pence per share, making a total dividend in respect of the year ended 30 April 2021 of 11.1 pence (2020: 9.7 pence) in line with our progressive dividend policy.
The proposed final dividend, if approved by shareholders, will be paid on 15 October 2021 to shareholders on the register at the close of business on 17 September 2021.
Outlook
The Group continues to be a leading provider of value-added logistics and e-fulfilment solutions to the retail sector in the UK, and is rapidly growing its operations in Mainland Europe.
Our pipeline of new opportunities remains strong and we expect further momentum with contract wins in the current financial year.
The Group's strong track record of providing innovative solutions, and supporting retailers in driving growth, cost efficiency and excellent customer service has strategically positioned us well to seize further opportunities. Our very agile and entrepreneurial culture has been a significant advantage to support our customers and enable retail.
The structural shift to online during the pandemic with continuing momentum in e-fulfilment post-pandemic together with strategically aligned acquisitions will drive further shareholder value accretion in the future years.
Steve Parkin
Executive Chairman
Operating and Financial Review
Group performance for the year ended 30 April 2021
The Group delivered a very strong performance in the financial year ended 30 April 2021 against a fluid background arising from the ongoing COVID-19 pandemic. The results reflect the resilience of the business model, being well positioned in a growing e-commerce market, together with the Group's ability to rapidly respond to changing circumstances.
Group revenue grew by 39.1% to £696.2 million. Group EBIT¹ for the year was £39.8 million compared with £32.5 million in the prior year, an increase of 22.5%. Underlying EBIT¹ grew by 52.4%.
Group revenue
|
| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| E‑fulfilment & returns management services | 420.9 | 277.0 | 52.0% |
| Non e‑fulfilment logistics | 194.7 | 143.8 | 35.4% |
| Total value-added logistics services | 615.6 | 420.8 | 46.3% |
| Commercial vehicles | 83.6 | 82.5 | 1.4% |
| Inter-segment sales | (3.0) | (2.6) |
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| Group revenue | 696.2 | 500.7 | 39.1% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
Group revenue growth in the current year is largely attributable to the value-added logistics services segment, which grew by 46.3% to £615.6 million, with e‑fulfilment & returns management services growing by 52.0% to £420.9 million and non e-fulfilment logistics growing by 35.4% to £194.7 million.
Revenue from the commercial vehicles segment was £83.6 million and remained flat year‑on‑year.
Group EBIT¹
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| E‑fulfilment & returns management services | 31.0 | 23.1 | 34.2% |
| Non e‑fulfilment logistics | 17.0 | 16.8 | 1.3% |
| Central logistics overheads | (7.9) | (6.9) | 13.3% |
| Total value-added logistics services | 40.1 | 33.0 | 21.8% |
| Commercial vehicles | 3.3 | 2.3 | 40.4% |
| Head office costs | (3.6) | (2.8) | 28.9% |
| Group EBIT¹ | 39.8 | 32.5 | 22.5% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
Group EBIT¹ grew by 22.5% to £39.8 million in the year ended 30 April 2021 (2020: £32.5 million). Both segments grew strongly with value-added logistics services growing by 21.8% to £40.1 million and the commercial vehicles division growing by 40.4% to £3.3 million.
This growth is in part attributed to the revenue growth in the current year of 39.1%. There is a material non‑underlying factor impacting the prior year.
£3.5 million of favourable contribution resulted from a 'negative goodwill' credit arising on a business combination in the year ended 30 April 2020 (see note 29 to the Group Financial Statements). This has been split equally between e‑fulfilment & returns management services and non e‑fulfilment logistics with £1.75 million in each. There was no similar contribution to EBIT¹ in the current year.
Excluding the 'negative goodwill' credit from the prior year and the impact of IFRS 16 leases (impacting both years), underlying EBIT¹ increased by £10.8 million (52.4%) in the year ended 30 April 2021 compared to the prior year. The table below normalises the effect of these impacts:
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| EBIT¹ | 39.8 | 32.5 | 22.5% |
| IFRS 16 impact | (8.4) | (8.4) |
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| 'Negative goodwill' | - | (3.5) |
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| EBIT¹ (excluding non‑underlying factors) | 31.4 | 20.6 | 52.4% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
EBIT¹ is the primary KPI by which the management team assesses corporate performance. EBIT¹ is assessed against Board approved budgets.
EBIT¹ margin (%) is not considered by the Directors to be a key metric since the high proportion of open book and minimum volume guarantee contracts within the value-added logistics segment distorts reported margins. This is due to an element of management fees on certain contracts being relatively fixed in the short term, so that an increase in revenue in periods of increased activity will not necessarily give rise to a proportionate increase in profit, resulting in lower reported margins. Conversely, in periods of reduced activity levels, reported margins would typically increase. Similarly, revenue derived from minimum volume guarantee contracts is fixed at a minimum level, so that a shortfall in activity levels would give rise to a lower cost base and a higher reported margin. In addition, within the commercial vehicles segment, the level of high value, relatively low margin new vehicle sales also distorts reported margins. Accordingly, EBIT¹ is a more relevant measure of financial performance than EBIT¹ margin (%).
Segmental trading overview
Clipper is managed through two distinct operating segments, being value‑added logistics services and commercial vehicles. The value‑added logistics services segment is further subdivided into two business activities, being e‑fulfilment & returns management services and non e‑fulfilment logistics.
Value-added logistics services
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| Revenue | 615.6 | 420.8 | 46.3% |
| EBIT¹ | 40.1 | 33.0 | 21.8% |
| EBIT¹ (excluding non‑underlying factors) | 31.9 | 21.5 | 48.4% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
Revenue in the year ended 30 April 2021 within the value‑added logistics services operating segment was £615.6 million, representing growth on the previous year of 46.3%.
This growth is due to a combination of the full year impact of new contracts won in the prior year, new contracts won in the year ended 30 April 2021 and organic growth in existing customers in the UK.
These revenue items had a positive impact on EBIT¹. EBIT¹ excluding non-underlying factors grew by £10.4 million to £31.9 million; growth of 48.4% in the year ended 30 April 2021. The trading factors contributing to the growth in this segment are covered in more detail below.
Reported EBIT¹ benefited from:
| · | £3.5 million of favourable contribution from a 'negative goodwill' credit arising on a business combination in the year ended 30 April 2020 (see note 29 to the Group Financial Statements). This has been split equally between e fulfilment & returns management services and non e fulfilment logistics with £1.75 million in each. There was no similar contribution to EBIT¹ in the current year. |
The following table normalises this together with the impact of IFRS 16 (impacting both years):
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| EBIT¹ | 40.1 | 33.0 | 21.8% |
| IFRS 16 impact | (8.2) | (8.0) |
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| 'Negative goodwill' |
| (3.5) |
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| EBIT¹ (excluding non‑underlying factors) | 31.9 | 21.5 | 48.4% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
E-fulfilment & returns management services
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| Revenue | 420.9 | 277.0 | 52.0% |
| EBIT¹ | 31.0 | 23.1 | 34.2% |
| EBIT¹ (excluding non-underlying factors) | 25.3 | 15.8 | 60.1% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
E‑fulfilment & returns management services include the receipt, warehousing, stock management, picking, packing and despatch of products on behalf of customers to support their online trading activities, as well as a range of ancillary support services including returns management, branded as Boomerang™, under which returns of products are managed on behalf of retailers. This business activity also includes click and collect activities (through the Clicklink™ joint venture) and Technical Services.
Revenue from e‑fulfilment & returns management services increased by 52.0% from £277.0 million for the year ended 30 April 2020 to £420.9 million for the year ended 30 April 2021, with EBIT¹ excluding non‑underlying factors growing by 60.1% to £25.3 million. Reported EBIT¹ was 34.2% higher than in the previous year. Included within reported EBIT¹ in the prior year was £1.8 million of 'negative goodwill' relating to the business combination. There was no similar transaction in the current year.
The following table normalises this together with the impact of IFRS 16 (impacting both years):
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| EBIT¹ | 31.0 | 23.1 | 34.2% |
| IFRS 16 impact | (5.7) | (5.5) |
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| 'Negative goodwill' |
| (1.8) |
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| EBIT¹ (excluding non‑underlying factors) | 25.3 | 15.8 | 60.1% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
This growth represents a significant increase on the double digit percentage EBIT¹ growth of prior years and delivers against our stated objective of being a market leader in the provision of value‑added services across the e‑fulfilment sector.
The solid financial performance in e‑fulfilment & returns management services benefited from the following:
| · | the part year impact of operations commenced during the year ended 30 April 2021, including: Linenbundle, Revolution Beauty, T.M.Lewin and the activities arising from the supply of PPE and other ancillary products to healthcare providers through the online portal in partnership with eBay and Royal Mail. The impact of these activities will not be fully realised until the year ending 30 April 2022; |
| · | the full year impact of operations commenced during the year ended 30 April 2020, including: Amara Living, Hope & Ivy, Joules, N Brown, Nutmeg online operation for Morrisons, Simba Sleep and The Very Group; |
| · | volume growth and extension of services on existing contracts, notably with BAT Vype, Browns, LoveCrafts, Wilko and Zara in the UK, in part driven by particularly strong organic growth in the UK e fulfilment market due to the continuing shift in retail trends towards online trading; |
| · | Technical Services saw significant increases in activity on the Amazon, Panasonic and Vestel accounts. Nintendo repair volumes continued to grow from the prior year. The new mezzanine floor at Oldham has allowed for extra processing activity; and |
| · | Clicklink™, our joint venture with John Lewis, contributed significantly to the current year. Many of Clicklink™'s customers were impacted by the closure of non-essential retail. However, we have seen more buoyant volumes being driven through the Waitrose network, having added Sweaty Betty to the Waitrose Collect opportunity, which has driven more volume through this proposition. |
Europe was impacted to a greater degree than the UK as a result of restrictions in response to the pandemic, with revenue falling 10% compared with the prior year.
Whilst we experienced some organic revenue decline with certain of our customers, overall revenue growth was strong due to the structural shift to online.
Since the year end, we have commenced activities with new customers including Mountain Warehouse, River Island and JD Sports which we expect to further drive EBIT¹ growth in the year ending 30 April 2022. In Europe, we are pleased that since the year end, we have experienced the return of high volumes on the Westwing contract, secured a contract extension with ASOS in Poland, commenced a trial with Zalando, and we have commenced operations in the Netherlands, a new jurisdiction for the Group, with Farfetch. The Board expects European logistics to be a high growth area of the Group in future years.
Non e-fulfilment logistics
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| Revenue | 194.7 | 143.8 | 35.4% |
| EBIT¹ | 17.0 | 16.8 | 1.3% |
| EBIT¹ (excluding non‑underlying factors) | 14.5 | 12.5 | 16.0% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
Non e‑fulfilment logistics operations include receipt of inbound product, warehousing, picking, packing and distribution of products on behalf of customers in traditional bricks and mortar retail. Within this business activity, the Group handles high value products, including tobacco, alcohol and designer clothing, and also undertakes traditional retail support services including processing, storage and distribution of products, particularly fashion, to high street retailers.
Despite a difficult background during the pandemic, the Group is pleased to report that revenue from non e‑fulfilment increased by 35.4% for the year ended 30 April 2021, from £143.8 million to £194.7 million.
Reported EBIT¹ grew by 1.3% to £17.0 million in the year ended 30 April 2021. EBIT¹ in this business activity benefited from £1.8 million of 'negative goodwill' in the year ended 30 April 2020.
As a result, EBIT¹ excluding non‑underlying factors increased by 16.0% to £14.5 million in the year ended 30 April 2021. The following table normalises this together with the impact of IFRS 16 (impacting both years):
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| EBIT¹ | 17.0 | 16.8 | 1.3% |
| IFRS 16 impact | (2.5) | (2.5) |
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| 'Negative goodwill' | - | (1.8) |
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| EBIT¹ (excluding non‑underlying factors) | 14.5 | 12.5 | 16.0% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
The following factors contributed positively to the EBIT¹ growth:
| · | the full year effect of the activities commenced in the prior year, including SLG and New Girl Order; |
| · | organic volume growth with existing customers, including Asda, Browns, Ginger Ray, Morrisons and SuperGroup; |
| · | increased activity in contract packing; |
| · | relief operations for H&M and Next, demonstrating the Group's agile nature in responding to retailers' challenges; and |
| · | part year contributions from new activities commenced in the year ended 30 April 2021, in particular growth in the Life Sciences vertical, being the distribution of PPE to hospital trusts and local resilience services and COVID-19 testing kits. Such activities will generate a full year of contribution in the year ending 30 April 2022. |
The following factors had an adverse impact on revenue and EBIT¹ year‑on‑year:
| · | various contracts ceased in the year ended 30 April 2021, including Arcadia (due to liquidation) and Edinburgh Woollen Mill (due to liquidation). However due to ongoing services provided to the administrators for both customers we were able to mitigate some of the losses, and we continue to have ongoing relationships with the majority of the new owners of the brands bought out of administration; and |
| · | some decline with certain other retail customers driven by high street market conditions and the closure of non-essential retail in response to the COVID-19 pandemic. |
Central logistics overheads
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| EBIT¹ | (7.9) | (6.9) | 13.3% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
Central logistics overheads include the costs of the directors of the logistics business, the project delivery and IT support teams, sales and marketing, accounting and finance, and human resources, that cannot be allocated in a meaningful way to business units.
Central logistics overheads increased by £1.0 million (13.3%), from £6.9 million in the year ended 30 April 2020 to £7.9 million in the year ended 30 April 2021.
We have continued to invest in the operational support and back office functions of the business to accommodate revenue growth, thereby increasing the overhead base.
Commercial vehicles
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| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| Revenue | 83.6 | 82.5 | 1.4% |
| EBIT¹ | 3.3 | 2.3 | 40.4% |
| EBIT¹ (excluding non‑underlying factors) | 3.1 | 2.0 | 53.4% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
The commercial vehicles business, Northern Commercials (Mirfield) Limited, operates Iveco and Fiat commercial vehicle dealerships from four dealership locations and has two sub‑dealers. Main dealerships are located in Brighouse, Manchester, Northampton, and Tonbridge. The business operates across the north of England and into Wales, through the Midlands and into the South East.
Commercial vehicles revenue for the year ended 30 April 2021 grew by a marginal 1.4% to £83.6 million despite a significantly reduced service operation with Government mandated closure of non-essential retail at various parts of the year in response to the COVID‑19 pandemic.
New vehicles sold in the year ended 30 April 2021 were 1,517; an increase of 118 units compared with the prior year. Used vehicle sales in the year ended 30 April 2021 were 376 units compared with 271 units in the prior year. Bodyshop and Service hours sold in the year ended 30 April 2021 were 147,758 compared with 147,279 in the prior year.
EBIT¹ for the year increased by 40.4% to £3.3 million as a result of the above, which is encouraging given the difficult background arising from the pandemic. EBIT¹ excluding non-underlying factors grew by 53.4% from £2.0 million to £3.1 million excluding the impact of IFRS 16.
Head office costs
|
| Year ended 30 Apr 2021 £m | Year ended 30 Apr 2020 £m | % change |
| EBIT¹ | (3.6) | (2.8) | 28.9% |
Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.
Head office costs represent the cost of certain Executive and Non‑Executive Directors, other central senior management, plc compliance costs and the costs of the plc head office at Central Square, Leeds.
Head office costs increased by £0.8 million (28.9%), from £2.8 million in the year ended 30 April 2020 to £3.6 million in the year ended 30 April 2021. The year‑on‑year increase in head office costs is largely due to the recruitment of additional SMT members to support the future growth of the Group.
Overview of profit and loss performance for the year ended 30 April 2021
The revenue and EBIT¹ performance of the Group are as discussed above. The other aspects of the Group income statement are discussed below.
Overall share based payment charges
Share based payment charges of £0.7 million have been recognised in the income statement for the current year (2020: £0.3 million) primarily to central logistics overheads and head office costs (as appropriate) in respect of the Sharesave Plan and the Performance Share Plan ("PSP") (see note 25 to the Group Financial Statements and page 74 of the Directors' Remuneration Report contained in the Company's 2021 Annual Report and Accounts (available to download from www.clippergroup.co.uk/report-accounts/)). The increase in the overall charge relates to the timing of grants.
Net finance costs
Net finance costs for the year ended 30 April 2021 decreased by 4.8% to £10.6 million (2020: £11.1 million), the decrease being largely as a result of reduced bank interest due to lower utilisation of the Revolving Credit Facility ("RCF") throughout the year and reduced interest costs on hire purchase and finance lease agreements due to lower requirements of facilities to fund capital expenditure in the year.
IFRS 16 lease interest for the year ended 30 April 2021 was £8.0 million which was comparable to the prior year (2020: £8.0 million).
Profit Before Tax and Amortisation and Exceptional Costs ("PBTA")
PBTA is defined as profit before income tax, before amortisation of intangible assets arising on consolidation, and exceptional costs. Whilst not considered a KPI by management, this measure is used by market analysts. PBTA was £28.8 million (£26.7 million PBT plus £1.3 million amortisation of other intangible assets plus £0.8 million of exceptional costs) for the year ended 30 April 2021, an increase of 31.5% on the PBTA for the year ended 30 April 2020 of £21.3 million (£20.1 million PBT plus £1.2 million amortisation of other intangible assets).
Exceptional costs of £0.8 million relate to £0.5 million of aborted acquisition costs and £0.3 million relating to redundancy costs incurred within our commercial vehicles segment as a direct consequence of the COVID-19 pandemic.
Taxation
The effective rate of taxation of 19.0% (2020: 19.5%) is in line with the standard UK rate of income tax applicable in the year of 19.0% (2020: 19.0%). The impact of certain expenditure which is disallowable for tax purposes and the higher effective rate in Germany and Poland is offset by the significant contribution from Clicklink™ in the year. As it is an equity-accounted investment, the post-tax contribution of Clicklink™ is included in the Group's pre-tax result.
Profit after tax
The profit after tax for the year ended 30 April 2021 was £21.7 million (2020: £16.2 million), an increase of 33.8%.
Earnings per share
Earnings per share were 21.3 pence for the year ended 30 April 2021 (2020: 15.9 pence). Adjusted to remove amortisation of intangible assets arising on consolidation, earnings per share were 22.3 pence (2020: 17.0 pence).
Current trading and outlook
In the year ending 30 April 2022, we expect revenue to benefit from:
| · | the full year effect of the new operations brought online in the logistics segment. As noted previously, the Group commenced activities on a number of new contracts in the year ended 30 April 2021; |
| · | growth with existing customers, either organically - particularly with those in e commerce who will benefit from market growth - or through new service lines for those customers; |
| · | growth from conversion of some of the opportunities on our new business pipeline, including in mainland Europe. These opportunities will be converted through a focus on retail specialisms and provision of cost effective, value added solutions. Some of these new business activities will not reach full year run rate until the year ending 30 April 2023 and beyond; and |
| · | operations which have either recently commenced after the year end or other known new activities which are at various stages of planning. The annualised impact of these activities will not be fully delivered until the year ending 30 April 2023. |
The Board is confident that the Group is strongly positioned to grow in the future.
Balance sheet and cash flow
Capital expenditure and fixed assets
Additions to intangible assets in the year ended 30 April 2021 were £2.6 million (2020: £1.0 million). Noteworthy additions in the year included a new telematics transport management system which will reduce the cost and environmental impact of our fleet operations, maximise utilisation, increase efficiency and improve safety and driver performance. In addition, we completed our migration to Node 4, a cloud based, enterprise level, IT infrastructure solution.
Additions to property, plant and equipment in the year ended 30 April 2021 were £7.1 million (2020: £8.1 million). £7.0 million of this was incurred in the logistics services segment (2020: £7.9 million) and £0.1 million (2020: £0.2 million) in the commercial vehicles segment. Within logistics, noteworthy additions in the year include additional mezzanine capacity at our Peterborough Distribution Centres in order to facilitate new contract wins, installation of energy efficient LED lighting at our Selby site, and further fitout and hardware costs across our sites to accommodate growth in existing contracts.
Additions to right-of-use assets in the year ended 30 April 2021 were £61.6 million (2020: £13.8 million). £51.0 million (2020: £4.4 million) of these related to property leases and £7.1 million (2020: £6.8 million) related to vehicle leases. During the year we entered into new property leases at Sherburn, Lutterworth, a second facility in Sheffield and in Venray in the Netherlands.
The cash outlay on capital expenditure in the year of £9.7 million (2020: £9.1 million) was mitigated by £1.6 million (2020: £5.7 million) of funding for additions in the prior year drawn on hire purchase and finance lease agreements in the year under review.
In the year ended 30 April 2021, we disposed of assets with a net book value of £0.4 million, on which we generated a loss on disposal of £0.2 million.
In the prior year, we disposed of assets with a net book value of £0.4 million, on which we generated a profit on disposal of £0.1 million.
Clipper's outstanding capital expenditure commitment at 30 April 2021 was £12.0 million (2020: £3.6 million), reflecting the timing of investments in new and existing customer contracts.
Cash flow
Cash generated from operations was £86.9 million (2020: £60.4 million).
The business continues to be highly cash generative. Under the UK logistics business model, Clipper is typically paid in the month in which services are delivered on open book and minimum volume guarantee contracts, giving rise to a typically net favourable impact on working capital, whilst in the commercial vehicles division working capital is substantially funded by the manufacturer through stocking facilities for new vehicles and trade credit terms for parts supplied.
In the year ended 30 April 2021, we generated £13.3 million of cash inflow from working capital (2020: £1.3 million inflow).
There are a number of cash flows disclosed outside of cash flow from operating activities which occur regularly, although the magnitude of these can significantly change year‑on‑year.
These cash flows include dividends, drawdown and repayment of bank loans, sales and purchases of fixed assets (including repayments on assets purchased under finance leases), income tax payments, interest payments and share issues. Taking each of these in turn:
| · | dividends paid in the year ended 30 April 2021 amounted to £10.4 million, an increase of 2.0% on the prior year (2020: £10.2 million), and in line with our stated dividend policy; |
| · | cash flows arising from the drawdown and repayments of bank loans were a £3.3 million outflow in the year ended 30 April 2021 (2020: £1.2 million inflow), as financing requirements were reduced in the year; |
| · | net cash purchases of fixed assets amounted to £8.1 million in the year ended 30 April 2021 (2020: £6.7 million), with a further £49.8 million (2020: £43.3 million) of cash used to repay leases. Finance leasing and hire purchase funding remains an attractive means of funding for Clipper, as the future cash outflows can be funded through future cash inflows on open book contracts. Sales of non current assets generated £0.2 million in the year ended 30 April 2021 (2020: £0.6 million); |
| · | included within investing activities is £nil (2020: £2.9 million) of cash outflow relating to the business combination (see note 29 to the Group Financial Statements); |
| · | income tax of £5.4 million was paid in the year ended 30 April 2021 (2020: £3.5 million), due to increased profitability in the year and the deferment of a payment relating to the prior year which was paid in the current year; |
| · | interest paid decreased by £1.9 million to £1.1 million in the year ended 30 April 2021 (2020: £3.0 million), primarily due to decreased utilisation of the RCF over the course of the year and reduced borrowing levels on hire purchase contracts and stocking lines; and |
| · | cash inflows of £0.3 million were generated from shares issued in the year ended 30 April 2021, compared with £0.1 million in the prior year. |
Whilst the timing and magnitude of dividends, tax payments and interest payments can be predicted with relative certainty, the timing of drawdowns on bank loans and fixed asset‑related cash flows is much more dependent on specific one‑off projects, and so can quite easily fall into one financial period or the next.
Net debt3
In addition to EBIT¹, net debt³ is considered a KPI for the Group. The Group had £16.9 million of net debt³ outstanding at 30 April 2021 (2020: £45.1 million) (see note 21 to the Group Financial Statements), a decrease of £28.2 million. The decrease in net debt³ was driven primarily by increased cash of £15.3 million, a reduction in hire purchase and finance lease contracts of £9.2 million and a £3.6 million decrease in bank loans. It is worth noting that where an open book customer has a strong credit rating, Clipper will often fund the initial capital requirements on the condition that the customer commits to repaying this over the term of the contract, together with finance charges and a management fee. At 30 April 2021, Clipper had £31.7 million (2020: £35.4 million) of capital contracted to be recovered from open book customers over the remaining term of the customer contracts.
Alternative performance measures ("APMs")
APMs are used by the Board to assess the Group's financial performance, for analysis and for incentive‑setting purposes. These measures are not defined by International Financial Reporting Standards ("IFRS") and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry. The Operating and Financial Review has used APMs to aid comparability to the prior year.
APMs should be considered in addition to and are not intended to be a substitute for IFRS measurements. The table below reconciles APMs to statutory measures as defined by IFRS.
|
| Year ended April 2021 £m | Year ended April 2020 £m | ||||||
|
| Reported | IFRS 16 impact | APM | Reported | IFRS 16 impact | Excluding IFRS 16 impact | Non-underlying items² | APM |
| EBIT¹ | 39.8 | (8.4) | 31.4 | 32.5 | (8.4) | 24.1 | (3.5) | 20.6 |
| Net debt³ | 223.7 | (206.8) | 16.9 | 217.1 | (172.0) | 45.1 | - | 45.1 |
| 1 | EBIT is defined as operating profit, including the Group's share of operating profit in equity accounted investees and before the amortisation of intangible assets and other exceptional costs. |
| 2 | Non underlying items in the year ended 30 April 2020 were £3.5 million 'negative goodwill' release relating to the IFRS 3 business combination (see note 29 to the Group Financial Statements). |
| 3 | Net debt is defined as financial liabilities: borrowings less cash and cash equivalents less non current financial assets and leases previously classified as finance leases and hire purchase agreements under IAS 17. |
David Hodkin
Chief Financial Officer
Directors' Statement on Basis of Preparation - Announcement
Whilst the financial information included in this announcement has been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, this statement does not itself contain sufficient information to comply with IFRS.
These financial results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Group Income Statement, Group Statement of Comprehensive Income, Group Statement of Financial Position, Group Statement of Changes in Equity, and Group Statement of Cash Flows, and selected notes for the year ended 30 April 2021 have been extracted from the Group's audited Financial Statements for the year then ended.
The financial information contained within the preliminary announcement for the year ended 30 April 2021 was approved by the Board on 24 August 2021. Statutory accounts for the year ended 30 April 2021 were approved on the same date and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on these Financial Statements. Their report was unqualified and did not contain a statement under s.498 (2) or (3) of the Companies Act 2006.
Responsibility Statement of the Directors in respect of the Annual Report and the Financial Statements
The following responsibility statement made by the Directors is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from page 90 of the Company's 2021 Annual Report and Accounts. Responsibility is for the full Annual Report and Accounts not the extracted information presented in this announcement.
We confirm that to the best of our knowledge:
| · | the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and |
| · | the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. |
We consider the Annual Report and the Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
Group Income Statement
For the year ended 30 April
|
| Note | 2021 Group £'000 | 2020 Group £'000 |
| Revenue | 3 | 696,201 | 500,671 |
| Cost of sales |
| (477,637) | (358,653) |
| Gross profit |
| 218,564 | 142,018 |
| Other net gains or losses | 6 | (38) | 4,097 |
| Administration and other expenses |
| (182,666) | (114,686) |
| Operating profit before share of equity-accounted investees, net of tax | 4 | 35,860 | 31,429 |
| Share of equity-accounted investees, net of tax |
| 1,426 | (231) |
| Operating profit | 6 | 37,286 | 31,198 |
| EBIT* |
| 39,772 | 32,454 |
| Less: amortisation of other intangible assets | 4 | (1,269) | (1,240) |
| exceptional costs | 6 | (789) | - |
| share of tax and finance costs of equity-accounted investees | 4 | (428) | (16) |
| Operating profit | 6 | 37,286 | 31,198 |
|
|
|
|
|
| Finance costs | 8 | (10,647) | (11,155) |
| Finance income | 9 | 92 | 64 |
| Profit before income tax |
| 26,731 | 20,107 |
| Income tax expense | 10 | (5,074) | (3,915) |
| Profit for the financial year |
| 21,657 | 16,192 |
|
|
|
|
|
| Basic earnings per share | 11 | 21.3p | 15.9p |
| Diluted earnings per share | 11 | 20.9p | 15.8p |
* EBIT is defined as operating profit, including the Group's share of operating profit in equity-accounted investees and before the amortisation of intangible assets and other exceptional costs.
Group Statement of Comprehensive Income
For the year ended 30 April
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Profit for the financial year |
| 21,657 | 16,192 |
| Other comprehensive expense for the year, net of tax: |
|
|
|
| To be reclassified to the income statement in subsequent periods: |
|
|
|
| Exchange differences on retranslation of foreign operations |
| 64 | (504) |
| Total comprehensive income for the financial year |
| 21,721 | 15,688 |
All activities in the current and prior year are from continuing operations. Total comprehensive income for the year is attributable to equity shareholders of Clipper Logistics plc.
Group Statement of Financial Position
At 30 April
|
| Note | 2021 Group £'000 | 2020 Group £'000 |
| Assets: |
|
|
|
| Non-current assets |
|
|
|
| Goodwill |
| 25,951 | 25,951 |
| Other intangible assets |
| 12,244 | 11,997 |
| Intangible assets | 12 | 38,195 | 37,948 |
| Property, plant and equipment | 14 | 31,151 | 28,966 |
| Right-of-use assets | 15 | 215,799 | 186,213 |
| Interest in equity-accounted investees | 16 | 2,060 | 634 |
| Non-current financial assets | 28 | 1,950 | 1,950 |
| Deferred tax assets | 10 | 2,091 | 1,154 |
| Total non-current assets |
| 291,246 | 256,865 |
| Current assets |
|
|
|
| Inventories | 17 | 22,697 | 27,857 |
| Trade and other receivables | 18 | 143,885 | 102,742 |
| Cash and cash equivalents | 19 | 17,998 | 2,724 |
| Total current assets |
| 184,580 | 133,323 |
| Total assets |
| 475,826 | 390,188 |
| Equity and liabilities: |
|
|
|
| Current liabilities |
|
|
|
| Trade and other payables | 20 | 174,676 | 130,813 |
| Financial liabilities: borrowings | 21 | 160 | 19,315 |
| Lease liabilities: short-term | 22 | 39,349 | 38,378 |
| Short-term provisions | 23 | 6,173 | 99 |
| Current income tax liabilities |
| 1,001 | 1,760 |
| Total current liabilities |
| 221,359 | 190,365 |
| Non-current liabilities |
|
|
|
| Financial liabilities: borrowings | 21 | 15,677 | 126 |
| Lease liabilities: long-term | 22 | 188,468 | 163,906 |
| Long-term provisions | 23 | 7,335 | 6,521 |
| Total non-current liabilities |
| 211,480 | 170,553 |
| Total liabilities |
| 432,839 | 360,918 |
| Equity shareholders' funds |
|
|
|
| Share capital | 24 | 51 | 51 |
| Share premium |
| 2,480 | 2,174 |
| Currency translation reserve |
| (548) | (612) |
| Other reserve |
| 84 | 84 |
| Merger reserve |
| 6,006 | 6,006 |
| Share based payment reserve |
| 3,589 | 1,669 |
| Retained earnings |
| 31,325 | 19,898 |
| Total equity attributable to the owners of the Company |
| 42,987 | 29,270 |
| Total equity and liabilities |
| 475,826 | 390,188 |
Group Statement of Changes in Equity
For the year ended 30 April
|
| Share capital Group £'000 | Share premium Group £'000 | Currency translation reserve Group £'000 | Other reserve Group £'000 | Carried forward Group £'000 |
| Balance at 1 May 2019 | 51 | 2,060 | (108) | 84 | 2,087 |
| IFRS 16 transition adjustment | - | - | - | - | - |
| Profit for the year | - | - | - | - | - |
| Other comprehensive income/(expense) | - | - | (504) | - | (504) |
| Equity settled transactions | - | - | - | - | - |
| Share issue | - | 114 | - | - | 114 |
| Dividends | - | - | - | - | - |
| Balance at 30 April 2020 | 51 | 2,174 | (612) | 84 | 1,697 |
| Profit for the year | - | - | - | - | - |
| Other comprehensive income | - | - | 64 | - | 64 |
| Equity settled transactions | - | - | - | - | - |
| Share issue | - | 306 | - | - | 306 |
| Dividends | - | - | - | - | - |
| Balance at 30 April 2021 | 51 | 2,480 | (548) | 84 | 2,067 |
|
| Brought forward Group £'000 | Merger reserve Group £'000 | Share based payment reserve Group £'000 | Retained earnings Group £'000 | Total Group £'000 |
| Balance at 1 May 2019 | 2,087 | 6,006 | 1,643 | 33,479 | 43,215 |
| IFRS 16 transition adjustment | - | - | - | (19,627) | (19,627) |
| Profit for the year | - | - | - | 16,192 | 16,192 |
| Other comprehensive income/(expense) | (504) | - | - | - | (504) |
| Equity settled transactions | - | - | 26 | 20 | 46 |
| Share Issue | 114 | - | - | - | 114 |
| Dividends | - | - | - | (10,166) | (10,166) |
| Balance at 30 April 2020 | 1,697 | 6,006 | 1,669 | 19,898 | 29,270 |
| Profit for the year | - | - | - | 21,657 | 21,657 |
| Other comprehensive income | 64 | - | - | - | 64 |
| Equity settled transactions | - | - | 1,920 | 144 | 2,064 |
| Share issue | 306 | - | - | - | 306 |
| Dividends | - | - | - | (10,374) | (10,374) |
| Balance at 30 April 2021 | 2,067 | 6,006 | 3,589 | 31,325 | 42,987 |
Group Statement of Cash Flows
For the year ended 30 April
|
| Note | 2021 Group £'000 | 2020 Group £'000 |
| Operating activities: |
|
|
|
| Profit before tax |
| 26,731 | 20,107 |
| Adjustments to reconcile profit before tax to net cash flows: |
|
|
|
| - Depreciation and impairment of property, plant and equipment | 6 | 4,605 | 3,244 |
| - Depreciation of right-of-use assets | 6 | 36,268 | 32,946 |
| - Amortisation and impairment of intangible assets | 6 | 2,295 | 2,114 |
| - Loss/(profit) on disposal of non-current assets | 6 | 167 | (468) |
| - Share of equity-accounted investees, net of tax | 16 | (1,426) | 231 |
| - 'Negative goodwill' | 29 | - | (3,499) |
| - Exchange differences |
| 73 | (582) |
| - Net finance costs | 8 & 9 | 10,555 | 11,091 |
| - Share based payments | 25 | 650 | 348 |
| Working capital adjustments: |
|
|
|
| - (Increase)/decrease in trade and other receivables and prepayments |
| (41,241) | (8,527) |
| - Decrease/(increase) in inventories |
| 5,259 | (3,365) |
| - Increase/(decrease) in trade and other payables |
| 49,313 | 13,182 |
| Cash generated from operating activities before interest and tax |
| 93,249 | 66,822 |
| - Interest received |
| 115 | 46 |
| - Interest paid |
| (1,064) | (2,954) |
| - Income tax paid |
| (5,358) | (3,541) |
| Net cash flows from operating activities |
| 86,942 | 60,373 |
| Investing activities: |
|
|
|
| - Purchase of property, plant and equipment |
| (7,112) | (8,141) |
| - Purchase of right-of-use assets |
| (170) | (3,260) |
| - Purchase of intangible assets |
| (2,583) | (951) |
| - Proceeds from sale of property, plant and equipment |
| 22 | 389 |
| - Proceeds from sale of right-of-use assets |
| 151 | 106 |
| - Proceeds from sale of intangible assets |
| 44 | 117 |
| - Acquisition of a business | 29 | - | (2,899) |
| Net cash flows from investing activities |
| (9,648) | (14,639) |
| Financing activities: |
|
|
|
| - Drawdown of bank loans |
| - | 2,000 |
| - Debt issue costs paid |
| (467) | - |
| - Shares issued | 24 | 306 | 114 |
| - Dividends paid | 7 | (10,374) | (10,166) |
| - Repayment of bank loans |
| (3,315) | (789) |
| - Financing advanced in relation to right-of-use assets |
| 1,627 | 5,654 |
| - Repayment of lease liabilities |
| (49,797) | (43,340) |
| Net cash flows from financing activities |
| (62,020) | (46,527) |
| Net increase/(decrease) in cash and cash equivalents |
| 15,274 | (793) |
| Cash and cash equivalents at start of year |
| 2,724 | 3,517 |
| Cash and cash equivalents at end of year |
| 17,998 | 2,724 |
Notes to the Group Financial Results
1. General information
The results comprise those of Clipper Logistics plc and its subsidiaries for the year ended 30 April 2021 and does not constitute the Group's statutory accounts for the years ended 30 April 2021 or 2020 but is derived from those accounts. The Group Financial Statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and approved by the Directors ("IFRSs").
Statutory accounts for the years ended 30 April 2021 and 30 April 2020 have been reported on by the auditor. Their reports for both years (i) were unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their audit report and (iii) did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 30 April 2020 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 April 2021, which were approved by the Board on 24 August 2021, will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
The Group Financial Statements for the year ended 30 April 2021 were authorised for issue by the Board of Directors on 24 August 2021 and the Group Statement of Financial Position was signed on the Board's behalf by David Hodkin.
Clipper Logistics plc (the "Company") and its subsidiaries (together the "Group") provide value-added logistics and other services predominantly to the retail sector and also operate as distributors of commercial vehicles.
The Company is limited by share capital, incorporated and domiciled in the United Kingdom. The address of its registered office is Clipper Logistics Group, Gelderd Road, Leeds, LS12 6LT.
2. Summary of significant accounting policies
The results for the year have been prepared on a basis consistent with the accounting policies set out in Clipper's Annual Report and Accounts for the year ended 30 April 2020 except as noted below.
As the Group prepares its financial information in accordance with IFRS as adopted by the United Kingdom, the application of new standards and interpretations will be subject to them having been endorsed for use in the UK via the UK Endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the Group's discretion to early adopt standards.
In May 2020, the ("IASB") published an amendment 'COVID-19 Related Rent Concessions (Amendment to IFRS 16). The amendment introduced a practical expedient to IFRS 16 'Leases', which provides relief for lessees in assessing whether specific COVID-19 concessions are considered to be lease modifications.
All conditions need to be met by the lessee for the practical expedient to be applied:
| · | the rent concession provides relief to payments that overall results in consideration for the lease contract being substantially the same or less than the original consideration for lease immediately before the concession provided; |
| · | the rent concession is for relief for payments that were originally due on or before 30 June 2021; and |
| · | there are no other substantive changes to the other terms and conditions of the lease. |
The Group took advantage of delays to rental payments in the first 3 months of the financial year. The consideration due under the lease contract did not change, with the payment just being deferred by up to 12 months. The Group has therefore taken advantage of the practical expedient to not assess the affected lease contracts as lease modifications.
The adoption of the following standards, amendments and interpretations in the current period have not had a material impact on the Group's Financial Statements:
| · | Amendments to references to the Conceptual Framework in IFRS Standards; |
| · | Amendments to IAS 1, IAS 8 regarding the definition of material; |
| · | Amendments to IFRS 7, IFRS 9, regarding pre-replacement issues in the context of the IBOR reform; and |
| · | Amendments to IFRS 16 regarding COVID-19 related rent concessions. |
3. Revenue
Revenue is disaggregated into two distinct operating segments. This is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8 'Operating Segments', as reported in note 4 to the Group Financial Statements.
Revenue recognised in the income statement is analysed as follows:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| E-fulfilment & returns management services |
| 420,914 | 276,979 |
| Non e-fulfilment logistics |
| 194,699 | 143,847 |
| Value-added logistics services |
| 615,613 | 420,826 |
| Commercial vehicles |
| 83,638 | 82,495 |
| Inter-segment sales |
| (3,050) | (2,650) |
| Revenue from external customers |
| 696,201 | 500,671 |
Geographical information - revenue from external customers:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| United Kingdom |
| 591,528 | 424,057 |
| Rest of Europe |
| 104,673 | 76,614 |
| Revenue from external customers |
| 696,201 | 500,671 |
Geography is determined by the location of the end customer.
In the year ended 30 April 2021, the Group had one customer which exceeded 10% of total revenue. Total revenue from this customer amounted to £92,784,000, of which £45,464,000 is reported within E-fulfilment & returns management services and £47,320,000 is reported within Non e-fulfilment logistics. There were no such customers to report in the year ended 30 April 2020.
The following table provides information about receivables, contract assets and contract liabilities from contracts:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Receivables, which are included in 'Trade and other receivables' |
| 100,683 | 62,920 |
| Contract assets, which are included in 'Trade and other receivables' |
| 18,966 | 13,303 |
| Contract liabilities, which are included in 'Trade and other payables' |
| 39,264 | 22,423 |
The contract assets primarily relate to the Group's right to consideration for work completed but not billed as at 30 April 2021. The contract assets are transferred to receivables when the rights become unconditional. The contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities of £39,264,000 (2020: £22,423,000) will be recognised in Revenue in the year ending 30 April 2022 when the performance obligations are expected to be satisfied.
4. Segment information
For the Group, the Chief Operating Decision Maker ("CODM") is the main Board of Directors. The CODM monitors the operating results of each business unit separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss, both before and after exceptional or discontinuing items. This measurement basis excludes Group-wide central services and financing costs which are not allocated to operating segments.
For management purposes, the Group is organised into two main reportable segments:
| · | value-added logistics services; and |
| · | commercial vehicles, including sales, servicing and repairs. |
Within the value-added logistics services segment, the CODM also reviews performance of two separate business activities, and overheads that are impractical to allocate:
| · | e-fulfilment & returns management services; |
| · | non e-fulfilment logistics; and |
| · | central logistics overheads, being the costs of support services specific to the value-added logistics services segment, but which are impractical to allocate between the sub-segment activities. |
These separate business activities comprise one segment, having similar economic characteristics in terms of profitability and costs, customers and operating environment.
Inter-segment transactions are entered into under normal commercial terms and conditions and on an arm's length basis that would also be available to unrelated third parties.
The following tables present profit information for continuing operations regarding the Group's business segments for the two years ended 30 April 2021:
Earnings before interest and tax ("EBIT"):
|
|
| 2021 Group £'000 | 20201 Group £'000 |
| E-fulfilment & returns management services |
| 30,969 | 23,085 |
| Non e-fulfilment logistics |
| 17,003 | 16,781 |
| Central logistics overheads |
| (7,839) | (6,922) |
| Value-added logistics services |
| 40,133 | 32,944 |
| Commercial vehicles |
| 3,273 | 2,330 |
| Head office costs |
| (3,634) | (2,820) |
| Group EBIT |
| 39,772 | 32,454 |
1 Comparatives have been adjusted for the impact of IFRS 16. In the prior year, the impact of this new standard was shown separately to aid comparability with the year ended 30 April 2019. The impact of IFRS 16 is now absorbed into the correct segments for both years; the allocation methodology is the same in both years.
Amortisation of other intangible assets:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| E-fulfilment & returns management services |
| (577) | (562) |
| Non e-fulfilment logistics |
| (692) | (678) |
| Central logistics overheads |
| - | - |
| Value-added logistics services |
| (1,269) | (1,240) |
| Commercial vehicles |
| - | - |
| Head office costs |
| - | - |
| Group total |
| (1,269) | (1,240) |
Share of tax and finance costs of equity-accounted investees:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Net finance costs |
| (67) | (68) |
| Income tax (expense)/credit |
| (361) | 52 |
| Group total |
| (428) | (16) |
Operating profit and profit before income tax:
|
|
| 2021 Group £'000 | 20201 Group £'000 |
| Operating profit: |
|
|
|
| E-fulfilment & returns management services |
| 28,538 | 22,738 |
| Non e-fulfilment logistics |
| 16,311 | 16,103 |
| Central logistics overheads |
| (8,374) | (6,922) |
| Value-added logistics services |
| 36,475 | 31,919 |
| Commercial vehicles |
| 3,019 | 2,330 |
| Head office costs |
| (3,634) | (2,820) |
| Operating profit before share of equity-accounted investees |
| 35,860 | 31,429 |
| Share of equity-accounted investees, net of tax |
| 1,426 | (231) |
| Operating profit |
| 37,286 | 31,198 |
| Finance costs |
| (10,647) | (11,155) |
| Finance income |
| 92 | 64 |
| Profit before income tax |
| 26,731 | 20,107 |
1 Comparatives have been adjusted for the impact of IFRS 16. In the prior year, the impact of this new standard was shown separately to aid comparability with the year ended 30 April 2019. The impact of IFRS 16 is now absorbed into the correct segments for both years; the allocation methodology is the same in both years.
The segment assets and liabilities at the statement of financial position date are as follows:
| At 30 April 2021: |
| Segment assets Group £'000 | Segment liabilities Group £'000 |
| Value-added logistics services |
| 424,302 | (378,497) |
| Commercial vehicles |
| 31,435 | (37,504) |
| Segment assets/(liabilities) |
| 455,737 | (416,001) |
| Unallocated assets/(liabilities): |
|
|
|
| - Cash and cash equivalents |
| 17,998 | - |
| - Financial liabilities: borrowings |
| - | (15,837) |
| - Deferred tax |
| 2,091 | - |
| - Income tax assets/(liabilities) |
| - | (1,001) |
| Total assets/(liabilities) |
| 475,826 | (432,839) |
| At 30 April 2020: |
| Segment assets Group £'000 | Segment liabilities Group £'000 |
| Value-added logistics services |
| 342,930 | (294,135) |
| Commercial vehicles |
| 43,380 | (45,582) |
| Segment assets/(liabilities) |
| 386,310 | (339,717) |
| Unallocated assets/(liabilities): |
|
|
|
| - Cash and cash equivalents |
| 2,724 | - |
| - Financial liabilities: borrowings |
| - | (19,441) |
| - Deferred tax |
| 1,154 | - |
| - Income tax assets/(liabilities) |
| - | (1,760) |
| Total assets/(liabilities) |
| 390,188 | (360,918) |
Capital expenditure, depreciation and amortisation by segment in the year ended 30 April was as follows:
Capital expenditure:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Value-added logistics services |
| 68,250 | 22,083 |
| Commercial vehicles |
| 3,041 | 777 |
| Total |
| 71,291 | 22,860 |
Capital expenditure comprises additions to intangible assets (note 12) property, plant and equipment (note 14) and right-of-use assets (note 15).
Depreciation of property, plant and equipment:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Value-added logistics services |
| 4,267 | 2,998 |
| Commercial vehicles |
| 338 | 246 |
| Total |
| 4,605 | 3,244 |
Depreciation of right-of-use assets:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Value-added logistics services |
| 35,350 | 32,099 |
| Commercial vehicles |
| 918 | 847 |
| Total |
| 36,268 | 32,946 |
Amortisation:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Value-added logistics services |
| 2,295 | 2,113 |
| Commercial vehicles |
| - | 1 |
| Total |
| 2,295 | 2,114 |
Non-current assets held by each geographical area are made up as follows:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| United Kingdom |
| 261,494 | 233,122 |
| Rest of Europe |
| 27,661 | 22,589 |
| Deferred taxation assets |
| 2,091 | 1,154 |
| Total |
| 291,246 | 256,865 |
5. Staff costs
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Wages and salaries |
| 196,786 | 161,048 |
| Social security costs |
| 18,749 | 15,280 |
| Pension costs for the defined contribution scheme |
| 4,699 | 4,155 |
| Share based payments |
| 650 | 348 |
| Total |
| 220,884 | 180,831 |
The UK Government made available a range of financial support to help companies during the COVID-19 pandemic, including the Coronavirus Job Retention Scheme ("CJRS"). During the year ended 30 April 2021, the Group received £3,769,000 in Government grants through CJRS which has been offset against the figure included in wages and salaries above. The scheme has been utilised as it was intended in order to avoid redundancies in areas of the business that have been significantly impacted by the COVID-19 pandemic. Customers under open book contracts benefited from any cost savings received as a result.
The average monthly number of employees during the year was made up as follows:
|
|
| 2021 Group Number | 2020 Group Number |
| Warehousing |
| 6,708 | 5,494 |
| Distribution |
| 464 | 502 |
| Service and maintenance |
| 525 | 465 |
| Administration |
| 1,451 | 1,139 |
| Total |
| 9,148 | 7,600 |
Key management compensation (including Executive Directors):
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Wages and salaries |
| 3,636 | 2,736 |
| Social security costs |
| 429 | 412 |
| Pension costs for the defined contribution scheme |
| 220 | 127 |
| Compensation for loss of office |
| - | 249 |
| Share based payments |
| 388 | 106 |
| Total |
| 4,673 | 3,630 |
Directors' emoluments:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Aggregate emoluments excluding share based payments on unvested awards |
| 1,280 | 1,274 |
| Value of share options vested during the year |
| - | - |
| Pension costs for the defined contribution scheme |
| 10 | 10 |
| Total |
| 1,290 | 1,284 |
The number of Directors who were accruing benefits under a Group Pension Scheme is as follows:
|
|
| 2021 Group Number | 2020 Group Number |
| Defined contribution plans |
| 1 | 1 |
6. Group operating profit
This is stated after charging:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Depreciation of property, plant and equipment |
| 4,605 | 3,244 |
| Depreciation of right-of-use assets |
| 36,268 | 32,946 |
| Amortisation of intangible assets (included within administration and other expenses) |
| 2,295 | 2,114 |
| Total depreciation and amortisation expense |
| 43,168 | 38,304 |
| Provision for impairment of trade receivables (note 18) |
| 7,702 | 477 |
| Auditor's remuneration: |
|
|
|
| - Audit of the Group Financial Statements |
| 232 | 198 |
| - Audit of the subsidiaries |
| 92 | 99 |
| - Fees to prior year auditors |
| - | 71 |
| - Non-audit fees |
| 10 | - |
| Total fees paid to the Group's auditors |
| 334 | 368 |
Operating profit is stated after crediting:
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Other net gains or net losses: |
|
|
|
| - (Loss)/profit on sale of property, plant and equipment |
| (204) | 123 |
| - Profit on disposal of lease liabilities |
| 37 | 345 |
| - Dealership contributions |
| 25 | 44 |
| - Rental income |
| 492 | 335 |
| - Insurance proceeds |
| 201 | - |
| - Net (loss) from other exceptional costs¹ |
| (789) | - |
| - Other income |
| 200 | - |
| - Compensation for loss of office |
| - | (249) |
| - 'Negative goodwill' (see note 29) |
| - | 3,499 |
| Total net (losses)/gains |
| (38) | 4,097 |
1 Other exceptional costs relates to £535,000 relating to aborted acquisition costs and £254,000 relating to redundancy costs incurred within our commercial vehicles segment as a direct result of the COVID-19 pandemic.
7. Dividends
|
| 2021 Group £'000 | 2020 Group £'000 |
| Final dividend for the prior year of 6.2 pence (2020: 6.5 pence) per share | 6,305 | 6,608 |
| Interim dividend for the year of 4.0 pence (2020: 3.5 pence) per share | 4,069 | 3,558 |
| Total dividends paid | 10,374 | 10,166 |
| Proposed final dividend for the year ended 30 April 2021 of 7.1 pence (2020: 6.2 pence) per share | 7,228 | 6,303 |
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these Financial Statements. The proposed dividend is payable to all shareholders on the Register of Members on 17 September 2021. The payment of this dividend will not have any tax consequences for the Group.
8. Finance costs
|
|
| 2021 Group £'000 | 20201 Group £'000 |
| On bank loans and overdrafts |
| 457 | 744 |
| On lease liabilities |
| 9,116 | 9,403 |
| Discount unwind of dilapidations |
| 265 | 331 |
| Amortisation of debt issue costs |
| 178 | 138 |
| Commercial vehicle stocking interest |
| 378 | 385 |
| Invoice discounting |
| 74 | 96 |
| Other interest payable |
| 179 | 58 |
| Total interest expense for financial liabilities measured at amortised cost |
| 10,647 | 11,155 |
1 Comparatives have been revised for the impact of IFRS 16. In the prior year, the impact of this new standard was shown separately to aid comparability with the year ended 30 April 2019; this has now been absorbed into the appropriate cost lines.
9. Finance income
|
|
| 2021 Group £'000 | 2020 Group £'000 |
| Bank interest |
| 1 | 1 |
| Other interest |
| 39 | 4 |
| Amounts receivable from related parties |
| 52 | 59 |
| Total interest income for financial assets measured at amortised cost |
| 92 | 64 |
10. Income tax expense
10.1. Tax charged in the income statement:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Current income tax: |
|
|
| UK and foreign income tax | 5,164 | 4,346 |
| Amounts (over)/under provided in previous years | (564) | 151 |
| Total income tax on continuing operations | 4,600 | 4,497 |
| Deferred tax: |
|
|
| Origination and reversal of temporary differences | 98 | (338) |
| Amounts under/(over) provided in previous years | 376 | (200) |
| Impact of change in tax laws and rates | - | (44) |
| Total deferred tax | 474 | (582) |
| Tax expense in the income statement on continuing operations | 5,074 | 3,915 |
10.2. Tax relating to items charged or credited to other comprehensive income:
There are no tax consequences of any of the items included in other comprehensive income.
10.3. Reconciliation of income tax charge:
The income tax expense in the income statement for the year differs from the standard rate of income tax in the UK. The differences are reconciled below:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Profit before taxation from continuing operations | 26,731 | 20,107 |
| Standard rate of income tax in UK | 19.0% | 19.0% |
| Tax on profit on ordinary activities at standard rate | 5,079 | 3,820 |
|
|
|
|
| Share of equity-accounted investees, already net of tax | (271) | 44 |
| Losses not relieved | 9 | - |
| Expenses not allowable for tax purposes | 425 | 127 |
| Tax (over) provided in previous years | (188) | (49) |
| Difference in tax rates overseas | 20 | 17 |
| Deferred tax rate difference | - | (44) |
| Total tax expense reported in the income statement | 5,074 | 3,915 |
10.4. Deferred tax in the statement of financial position:
| Tax effect of temporary differences due to: | Brought forward Group £'000 | (Charged)/ credited to income statement Group £'000 | Foreign currency adjustment Group £'000 | (Charged)/ credited to share based payment reserve Group £'000 | At 30 April 2021 Group £'000 |
| Share based payments | 425 | 22 | - | 1,416 | 1,863 |
| IFRS 16 adjustment | 4,390 | (1,059) | (5) | - | 3,326 |
| Other temporary differences | 444 | (1) | - | - | 443 |
| Deferred tax asset | 5,259 | (1,038) | (5) | 1,416 | 5,632 |
| Intangible assets | (1,763) | 346 | - | - | (1,417) |
| Accelerated capital allowances | (2,111) | (13) | - | - | (2,124) |
| Other temporary differences | (231) | 231 | - | - | - |
| Deferred tax liability | (4,105) | 564 | - | - | (3,541) |
| Net deferred tax | 1,154 | (474) | (5) | 1,416 | 2,091 |
| Tax effect of temporary differences due to: | Brought forward Group £'000 | IFRS 16 transition Group £'000 | (Charged)/ credited to income statement Group £'000 | Foreign currency adjustment Group £'000 | (Charged)/ credited to share based payment reserve Group £'000 | Acquisitions Group £'000 | At 30 April 2020 Group £'000 |
| Share based payments | 579 | - | 139 | - | (293) | - | 425 |
| IFRS 16 adjustment | - | 3,933 | 461 | (4) | - | - | 4,390 |
| Other temporary differences | 520 | - | (148) | 4 | - | 68 | 444 |
| Deferred tax asset | 1,099 | 3,933 | 452 | - | (293) | 68 | 5,259 |
| Intangible assets | (1,557) | - | 117 | - | - | (323) | (1,763) |
| Accelerated capital allowances | (1,821) | - | 203 | - | - | (493) | (2,111) |
| Other temporary differences | (41) | - | (190) | - | - | - | (231) |
| Deferred tax liability | (3,419) | - | 130 | - | - | (816) | (4,105) |
| Net deferred tax | (2,320) | 3,933 | 582 | - | (293) | (748) | 1,154 |
A rate of 19% (2020: 19%) has been applied in the measurement of the Group's deferred tax assets and liabilities in the year. It was announced in the Budget on 3 March 2021 that the Income tax rate will increase to 25% on 1 April 2023. This rate was substantively enacted on 24 May 2021.
11. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the potentially dilutive instruments into ordinary shares.
|
| 2021 Group Thousands | 2020 Group Thousands |
| Weighted average number of ordinary shares (basic) |
|
|
| Issued ordinary shares at the beginning of the year | 101,656 | 101,512 |
| Shares issued during the year | 70 | 144 |
| Basic weighted average number of shares | 101,726 | 101,656 |
| Weighted average number of ordinary shares (diluted) |
|
|
| Weighted average number of ordinary shares for the year (as above) | 101,726 | 101,656 |
| Effect of share options in issue | 2,075 | 855 |
| Diluted weighted average number of shares | 103,801 | 102,511 |
The number of shares detailed above differ from those in Note 24 due to the effect of weighting for the purposes of the earnings per share calculations.
The following reflects the income and share data used in the earnings per share computation:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Profit attributable to ordinary equity holders of the Company | 21,657 | 16,192 |
|
| 2021 Group | 2020 Group |
| Basic weighted average number of shares (thousands) | 101,726 | 101,656 |
| Basic earnings per share | 21.3p | 15.9p |
| Diluted weighted average number of shares (thousands) | 103,801 | 102,511 |
| Diluted earnings per share | 20.9p | 15.8p |
12. Intangible assets
|
| Goodwill Group £'000 | Contracts, customer relationships and licences Group £'000 | Computer software Group £'000 | Total Group £'000 |
| Cost: |
|
|
|
|
| At 1 May 2019 | 25,951 | 11,623 | 6,173 | 43,747 |
| Additions | - | - | 951 | 951 |
| Acquisitions | (3,499) | 1,882 | - | (1,617) |
| Credited to the income statement | 3,499 | - | - | 3,499 |
| Disposals | - | - | (120) | (120) |
| Foreign currency adjustment | - | - | 6 | 6 |
| At 30 April 2020 | 25,951 | 13,505 | 7,010 | 46,466 |
| Additions | - | - | 2,583 | 2,583 |
| Disposals | - | - | (229) | (229) |
| Foreign currency adjustment | - | - | (2) | (2) |
| At 30 April 2021 | 25,951 | 13,505 | 9,362 | 48,818 |
| Accumulated amortisation: |
|
|
|
|
| At 1 May 2019 | - | 3,437 | 2,969 | 6,406 |
| Charge for the year | - | 1,240 | 874 | 2,114 |
| Disposals | - | - | (3) | (3) |
| Foreign currency adjustment | - | - | 1 | 1 |
| At 30 April 2020 | - | 4,677 | 3,841 | 8,518 |
| Charge for the year | - | 1,264 | 1,031 | 2,295 |
| Disposals | - | - | (185) | (185) |
| Foreign currency adjustment | - | - | (5) | (5) |
| At 30 April 2021 | - | 5,941 | 4,682 | 10,623 |
| Net book value: |
|
|
|
|
| At 1 May 2019 | 25,951 | 8,186 | 3,204 | 37,341 |
| At 30 April 2020 | 25,951 | 8,828 | 3,169 | 37,948 |
| At 30 April 2021 | 25,951 | 7,564 | 4,680 | 38,195 |
The average remaining useful life of contracts and licences at 30 April 2021 is 6.2 years (2020: 7.3 years).
13. Impairment test for goodwill
The carrying amount of goodwill has been allocated to each cash generating unit ("CGU") as follows:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Value-added logistics services | 20,025 | 20,025 |
| Commercial vehicles | 5,926 | 5,926 |
| Total | 25,951 | 25,951 |
A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of a CGU is determined based on value-in-use calculations.
The value-in-use calculations have used pre-tax cash flow projections based on the Board approved business plans for the three years ending 30 April 2024.
The business plans for the value-added logistics services segment take into account the annualised impact of contract wins in the year ended 30 April 2021 as well as confirmed new and ceasing contracts. The key judgment is the assumed new contract wins during the business plan period, which has been based on historical experience.
Subsequent cash flows are extrapolated using an estimated long-term growth rate of 3.0% and 5.0% (2020: 3.0% and 5.0%) to perpetuity (2020: perpetuity). These are in line with what the Group considers the long-term growth rate is for the sectors in which the Group operates. The cash flows have then been discounted using a pre-tax risk adjusted discount rate of between 8.5% and 10.3% (2020: 8.9% and 10.7%). The forecasts of foreign operations are translated at the exchange rate ruling at the year end.
The estimated recoverable amount significantly exceeds the carrying amount. The Group has conducted sensitivity analysis on the impairment testing. The Directors have concluded that no reasonably foreseeable change in the key assumptions would give rise to an impairment.
14. Property, plant and equipment
|
| Leasehold property Group £'000 | Motor vehicles Group £'000 | Plant, machinery, fixtures & fittings Group £'000 | Total Group £'000 |
| Cost: |
|
|
|
|
| At 30 April 2019 | 11,825 | 4,623 | 82,022 | 98,470 |
| Transfer to right-of-use assets on transition1 | (6,925) | (1,527) | (44,292) | (52,744) |
| At 1 May 2019 | 4,900 | 3,096 | 37,730 | 45,726 |
| Transfer to right-of-use assets2 | - | (205) | - | (205) |
| Additions | 6,622 | 152 | 1,366 | 8,140 |
| Acquisitions | - | - | 2,899 | 2,899 |
| Disposals | (20) | (352) | (503) | (875) |
| Foreign currency adjustment | 1 | 17 | (237) | (219) |
| At 30 April 2020 | 11,503 | 2,708 | 41,255 | 55,466 |
| Transfer to right-of-use assets2 | - | - | (1,275) | (1,275) |
| Transfer from right-of-use assets3 | 22 | 162 | 8,958 | 9,142 |
| Additions | 3,296 | 27 | 3,789 | 7,112 |
| Disposals | (51) | (35) | (888) | (974) |
| Foreign currency adjustment | - | (1) | (13) | (14) |
| At 30 April 2021 | 14,770 | 2,861 | 51,826 | 69,457 |
|
|
|
|
|
|
| Accumulated depreciation: |
|
|
|
|
| At 30 April 2019 | 3,448 | 2,807 | 30,745 | 37,000 |
| Transfer to right-of-use assets on transition1 | (240) | (886) | (11,937) | (13,063) |
| At 1 May 2019 | 3,208 | 1,921 | 18,808 | 23,937 |
| Transfer to right-of-use assets2 | - | (61) | - | (61) |
| Charge for the year | 1,090 | 239 | 1,915 | 3,244 |
| Disposals | (20) | (347) | (243) | (610) |
| Foreign currency adjustment | (1) | 8 | (17) | (10) |
| At 30 April 2020 | 4,277 | 1,760 | 20,463 | 26,500 |
| Transfer to right-of-use assets2 | (142) | - | (205) | (347) |
| Transfer from right-of-use assets3 | - | 162 | 8,158 | 8,320 |
| Charge for the year | 1,509 | 203 | 2,893 | 4,605 |
| Disposals | (33) | (35) | (680) | (748) |
| Foreign currency adjustment | (1) | (4) | (19) | (24) |
| At 30 April 2021 | 5,610 | 2,086 | 30,610 | 38,306 |
|
|
|
|
|
|
| Net book value: |
|
|
|
|
| At 30 April 2019 | 8,377 | 1,816 | 51,277 | 61,470 |
| At 30 April 2020 | 7,226 | 948 | 20,792 | 28,966 |
| At 30 April 2021 | 9,160 | 775 | 21,216 | 31,151 |
1 On transition to IFRS 16, assets which were previously recognised within property, plant and equipment have been reclassified as right-of-use assets.
2 Assets which have been funded through finance drawn after initial purchase.
3 Assets where finance has been repaid and ownership of the asset has transferred to the Group.
Plant, machinery, fixtures & fittings include £95,000 (2020: £79,000) in respect of assets in the course of construction.
15. Right-of-use assets
|
| Land and buildings Group £'000 | Vehicles Group £'000 | Other Group £'000 | Total Group £'000 |
| Cost: |
|
|
|
|
| At 30 April 2019 | - | - | - | - |
| Opening balance on transition | 151,811 | 7,158 | 5,536 | 164,505 |
| Transfer from property, plant and equipment1 | 6,925 | 1,527 | 44,292 | 52,744 |
| At 1 May 2019 | 158,736 | 8,685 | 49,828 | 217,249 |
| Transfer from property, plant and equipment2 | - | 205 | - | 205 |
| Additions | 4,426 | 6,847 | 2,496 | 13,769 |
| Remeasurement of asset | 388 | - | - | 388 |
| Acquisitions | 2,407 | - | - | 2,407 |
| Disposals and other movements | (1,704) | (520) | (44) | (2,268) |
| Foreign currency adjustment | (158) | 3 | 20 | (135) |
| At 30 April 2020 | 164,095 | 15,220 | 52,300 | 231,615 |
| Transfer from property, plant and equipment2 | - | - | 1,275 | 1,275 |
| Transfer to property, plant and equipment3 | (22) | (162) | (8,958) | (9,142) |
| Additions | 50,976 | 7,116 | 3,504 | 61,596 |
| Remeasurement of asset | 3,886 | 345 | - | 4,231 |
| Disposals and other movements | - | (456) | (307) | (763) |
| Foreign currency adjustment | (34) | (1) | (25) | (60) |
| At 30 April 2021 | 218,901 | 22,062 | 47,789 | 288,752 |
|
|
|
|
|
|
| Accumulated depreciation: |
|
|
|
|
| At 30 April 2019 | - | - | - | - |
| Transfer from property, plant and equipment1 | 240 | 886 | 11,937 | 13,063 |
| At 1 May 2019 | 240 | 886 | 11,937 | 13,063 |
| Transfer from property, plant and equipment2 | - | 61 | - | 61 |
| Charge for the year | 20,960 | 4,529 | 7,457 | 32,946 |
| Disposals and other movements | (222) | (354) | (10) | (586) |
| Foreign currency adjustment | (76) | - | (6) | (82) |
| At 30 April 2020 | 20,902 | 5,122 | 19,378 | 45,402 |
| Transfer from property, plant and equipment2 | 142 | - | 205 | 347 |
| Transfer to property, plant and equipment3 | - | (162) | (8,158) | (8,320) |
| Charge for the year | 24,630 | 4,513 | 7,125 | 36,268 |
| Disposals and other movements | - | (378) | (271) | (649) |
| Foreign currency adjustment | (60) | (2) | (33) | (95) |
| At 30 April 2021 | 45,614 | 9,093 | 18,246 | 72,953 |
|
|
|
|
|
|
| Net book value: |
|
|
|
|
| At 30 April 2019 | - | - | - | - |
| At 30 April 2020 | 143,193 | 10,098 | 32,922 | 186,213 |
| At 30 April 2021 | 173,287 | 12,969 | 29,543 | 215,799 |
1 On transition to IFRS 16, assets which were previously recognised within property, plant and equipment have been reclassified as right-of-use assets.
2 Assets which have been funded through finance drawn after initial purchase.
3 Assets where finance has been repaid and ownership of the asset has transferred to the Group.
16. Investment in equity-accounted investees
|
| 2021 Group £'000 | 2020 Group £'000 |
| Brought forward | 634 | 865 |
| Share of profit/(loss) after tax for the period | 1,426 | (231) |
| Carried forward | 2,060 | 634 |
The Company owns 50% of the issued capital and voting rights of Clicklink Logistics Limited ("Clicklink"), a company incorporated in Great Britain and registered in England and Wales. Clicklink provides services in respect of the sortation, fulfilment and delivery of one-man orders to click and collect customer collection points in the United Kingdom. On 1 November 2016 the Company subscribed for 1,000,000 A ordinary shares of £1 each in Clicklink, for aggregate consideration of £1,950,000.
Clicklink has a year end of 31 January which is in line with the year end of John Lewis, the other 50% joint venturer.
Summarised financial information from Clicklink's audited accounts for the year ended 31 January 2021 is set out below:
|
| 31 January 2021 £'000 | 31 January 2020 £'000 |
| Current assets | 8,518 | 6,122 |
| Non-current assets | 3,564 | 4,093 |
| Current liabilities | (5,218) | (4,690) |
| Non-current liabilities | (4,075) | (4,060) |
| Equity attributable to owners of the company | 2,789 | 1,465 |
The following amounts are included in the above balances:
|
| 31 January 2021 £'000 | 31 January 2020 £'000 |
| Cash and cash equivalents included in current assets | 5,139 | 2,580 |
| Current financial liabilities | - | - |
| Non-current financial liabilities | (3,900) | (3,900) |
|
| Year ended 31 January 2021 £'000 | Year ended 31 January 2020 £'000 |
| Revenue | 26,131 | 27,315 |
| Operating profit | 1,800 | 42 |
| Interest receivable | 1 | 1 |
| Interest payable and similar charges | (135) | (126) |
| Income tax (expense)/credit | (342) | 7 |
| Total comprehensive income/(loss) for the period | 1,324 | (76) |
Depreciation and amortisation charges of £881,000 (2020: £819,000) are included in operating profit stated above.
The Group considered there to be no significant risks associated with the interest in this joint venture. Further information relating to balances due from and owed to Clicklink can be found in note 28.
17. Inventories
|
| 2021 Group £'000 | 2020 Group £'000 |
| Component parts and consumable stores | 5,416 | 5,515 |
| Commercial vehicles | 4,724 | 5,601 |
| Commercial vehicles on consignment | 12,557 | 16,741 |
| Total inventories net of provision for obsolescence | 22,697 | 27,857 |
See below for the movements in the provision for obsolescence:
|
| Group £'000 |
| At 1 May 2019 | 159 |
| Charged for the year | 215 |
| Utilised | (82) |
| At 30 April 2020 | 292 |
| Charged for the year | 131 |
| Utilised | (240) |
| At 30 April 2021 | 183 |
The cost of inventories recognised as an expense amounted to £90,881,000 (2020: £ 87,066,000).
Included within commercial vehicles is £1,127,000 (2020: £1,299,000) relating to assets held under hire purchase agreements.
18. Trade and other receivables
|
| 2021 Group £'000 | 2020 Group £'000 |
| Trade receivables | 107,437 | 63,383 |
| Less: provision for impairment of receivables | (6,754) | (463) |
| Trade receivables - net | 100,683 | 62,920 |
| Other receivables | 5,453 | 1,749 |
| Amounts receivable from related parties (see note 28) | 69 | 2,069 |
| Contract assets | 18,966 | 13,303 |
| Prepayments | 18,714 | 22,701 |
| Total trade and other receivables | 143,885 | 102,742 |
The contract asset receivables relate to the Group's rights to consideration for work completed but not billed at the reporting date. They are transferred to receivables when the amounts are invoiced.
Included within prepayments is £7,546,000 (2020: £11,296,000) relating to costs to obtain customer contracts. These are amortised over the life of the customer contract with the charge being recognised within administration and other expenses once contract activities have commenced.
See note 27 on credit risk of trade receivables, which explains how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.
See below for the movements in the provision for impairment:
|
| Group £'000 |
| At 1 May 2019 | 316 |
| Credit risk loss | 477 |
| Utilised | (330) |
| At 30 April 2020 | 463 |
| Credit risk loss | 3,055 |
| Amounts written off in the year | 4,647 |
| Utilised | (1,411) |
| At 30 April 2021 | 6,754 |
The amounts written off in the year relate to a customer that entered administration. The Group policy is to write off debts owed by customers who enter administration.
Concentrations of credit risk with respect to trade receivables are limited due to the Group's customer base being large, unrelated and blue chip. Due to this, management believes there is no further credit risk provision required in excess of normal provision for doubtful receivables. The average credit period taken on sale of goods or services is 44 days (2020: 38 days). The Group applies the simplified approach permitted by IFRS 9, which requires the application of a lifetime expected loss provision to trade receivables. The provision calculations are based on historic credit losses applied to older balances. The basis of this provision is the historical credit losses over the past 5 years as a percentage of total revenue. This approach is followed for all receivables unless there are specific circumstances which would render the receivable irrecoverable and therefore require a specific provision. A provision is made against trade receivables until such time as the Group believes the amount to be irrecoverable, after which the trade receivable or contract receivables balance is written off.
18. Trade and other receivables continued
The ageing analysis of trade receivables was as follows:
|
| Total Group £'000 | Neither past due nor impaired Group £'000 | Past due but not impaired | ||
| 30-60 days Group £'000 | 60-90 days Group £'000 | >90 days Group £'000 | |||
| 30 April 2021 | 100,683 | 90,181 | 3,038 | 714 | 6,750 |
| 30 April 2020 | 62,920 | 50,068 | 4,296 | 1,991 | 6,565 |
19. Cash and cash equivalents
|
| 2021 Group £'000 | 2020 Group £'000 |
| Cash and cash equivalents | 17,998 | 2,724 |
| Bank overdraft | - | - |
| Total cash and cash equivalents | 17,998 | 2,724 |
20. Trade and other payables
|
| 2021 Group £'000 | 2020 Group £'000 |
| Trade payables | 73,859 | 47,250 |
| Consignment inventory payables | 15,442 | 23,579 |
| Amounts payable to related parties (see note 28) | 840 | 355 |
| Other taxes and social security | 26,030 | 21,524 |
| Other payables | 3,676 | 2,868 |
| Contract liabilities | 39,264 | 22,423 |
| Accruals | 15,565 | 12,814 |
| Total trade and other payables | 174,676 | 130,813 |
The contract liabilities primarily relate to the consideration invoiced to customers in advance of the work being completed.
21. Financial liabilities: borrowings
|
| 2021 Group £'000 | 2020 Group £'000 | |
| Non-current: |
|
| |
| Bank loans | 15,677 | 126 | |
| Total non-current | 15,677 | 126 | |
| Current: |
|
| |
| Bank loans | 160 | 19,315 | |
| Total current | 160 | 19,315 | |
| Total borrowings | 15,837 | 19,441 | |
| Add: | Lease liabilities (see note 22) | 227,817 | 202,284 |
| Less: | Cash and cash equivalents | 17,998 | 2,724 |
|
| Non-current financial assets (see note 28) | 1,950 | 1,950 |
| Net debt (including leases) | 223,706 | 217,051 | |
| Less: | IAS 17 'operating leases'1 | (206,762) | (172,001) |
| Net debt (Historic IAS 17 basis) | 16,944 | 45,050 | |
1 IAS 17 'operating leases' relate to those leases that were recognised as operating leases prior to the adoption of IFRS 16. Net debt on a historic IAS 17 basis is one of the measures applied to the Group's banking covenants.
The maturity analysis of the bank loans at 30 April is as follows:
|
| 2021 Group £'000 | 2020 Group £'000 |
| In one year or less | 160 | 19,315 |
| Between one and five years | 15,677 | 126 |
| After five years | - | - |
| Total bank loans | 15,837 | 19,441 |
The principal lender has security over all assets of the Group's UK operations. The Group's principal bank facility of £45,000,000 consists of:
| · | a Revolving Credit Facility of £34,000,000 repayable in November 2023; interest rate 1.75% above LIBOR. The amount drawn at 30 April 2021 was £16,000,000 (2020: £19,000,000); |
| · | a committed overdraft of £8,000,000. The amount drawn at 30 April 2021 was £nil (2020: £nil); and |
| · | bonds and guarantees of £3,000,000. |
In July 2020 the Group's principal banking facilities were extended to November 2023. Debt issue costs of £467,000 were incurred in relation to this extension.
In addition to the Revolving Credit Facility above, other items included within bank loans at 30 April 2021 are as follows:
| · | other bank loans - £229,000 repayable in monthly instalments over periods between 4 and 24 months; interest rates fixed at between 3.72% and 4.56%; and |
| · | unamortised debt issue costs of £392,000 in relation to the principal facilities, which have been deducted from the total outstanding bank loans. |
Changes in liabilities from financing activities:
|
| Bank loans Group £'000 | Lease liabilities Group £'000 |
| At 1 May 2020 | 19,441 | 202,284 |
| Charges from financing cash flows |
|
|
| Drawdown of bank loans | - | - |
| Repayment of bank loans | (3,315) | - |
| Debt issue costs paid | (467) | - |
| Repayment of lease liabilities | - | (49,797) |
| Total changes from financing cash flows | (3,782) | (49,797) |
| Changes arising from obtaining or losing control of subsidiaries or other business | - | - |
| The effect of changes in foreign exchange rates | - | 59 |
| Other changes |
|
|
| New lease liabilities in respect of right-of-use assets | - | 61,851 |
| Remeasurement of lease liabilities | - | 4,204 |
| New finance advanced in respect of commercial vehicle inventories | - | 100 |
| Finance costs | 178 | 9,116 |
| Total other changes | 178 | 75,271 |
| At 30 April 2021 | 15,837 | 227,817 |
22. Lease liabilities
22.1 Lease liability movement
|
| Land and buildings Group £'000 | Vehicles Group £'000 | Other Group £'000 | Total Group £'000 |
| At 30 April 2019 | - | - | - | - |
| Opening balance on transition | 174,135 | 7,395 | 5,827 | 187,357 |
| Reclassification of leases within borrowings | - | 1,481 | 31,822 | 33,303 |
| At 1 May 2019 | 174.135 | 8,876 | 37,649 | 220,660 |
| Additions | 2,110 | 7,319 | 6,944 | 16,373 |
| Remeasurement of lease | 388 | - | - | 388 |
| Acquisition | 2,183 | - | - | 2,183 |
| Disposals | (1,569) | (84) | (36) | (1,689) |
| Repayments | (27,233) | (4,791) | (11,316) | (43,340) |
| Interest | 7,418 | 367 | 253 | 8,038 |
| Foreign currency adjustment | (174) | 1 | (156) | (329) |
| At 30 April 2020 | 157,258 | 11,688 | 33,338 | 202,284 |
| Additions | 49,821 | 7,387 | 4,743 | 61,951 |
| Remeasurement of lease | 3,859 | 345 | - | 4,204 |
| Disposals | - | - | - | - |
| Repayments | (30,148) | (6,081) | (13,568) | (49,797) |
| Interest | 7,444 | 377 | 1,295 | 9,116 |
| Foreign currency adjustment | 28 | 3 | 28 | 59 |
| At 30 April 2021 | 188,262 | 13,719 | 25,836 | 227,817 |
22.2 Lease liability outstanding
|
| 2021 Group £'000 | 2020 Group £'000 |
| The present value of lease liabilities is as follows: |
|
|
| Within one year | 39,349 | 38,378 |
| Later than one year and not later than five years | 112,743 | 110,257 |
| Later than five years | 75,725 | 53,649 |
| Total lease liabilities | 227,817 | 202,284 |
The Group leases warehousing facilities, commercial vehicles and other logistics equipment for use in its operations. Typical lease periods for new warehouse rental contracts are between three and ten years although some property leases are for longer periods with intervening break clauses. The average period for vehicles and equipment is four years. The amounts charged to the income statement for depreciation and interest relating to lease liabilities are shown in note 6 and note 8.
Measurement of leases requires judgments to be made by management; for details see note 2.8 for the Group's accounting policy for leases and note 2.26 which details the judgments involved.
The expense relating to short-term leases was £5,414,000 (2020: £2,572,000). The expense relating to variable lease payments not included in lease liabilities was £nil (2020: £nil). Income recognised from sub-leasing was £nil (2020: £nil).
The total cash outflow for leases, including short-term and low value leases, for the year ended 30 April 2021 was £55,211,000 (2020: £45,912,000).
23. Provisions
|
| Redundancy provision Group £'000 | Onerous contracts Group £'000 | Uninsured Losses Group £'000 | Dilapidations Group £'000 | Total Group £'000 |
| At 30 April 2019 | - | - | - | 1,824 | 1,824 |
| IFRS 16 transitional adjustment | - | - | - | 4,086 | 4,086 |
| At 1 May 2019 | - | - | - | 5,910 | 5,910 |
| Additions to right-of-use asset | - | - | - | 233 | 233 |
| Acquisition | 400 | - | - | 224 | 624 |
| Utilised | - | - | (122) | (498) | (620) |
| Charged in year | - | - | 122 | 367 | 489 |
| Foreign exchange adjustment | - | - | - | (16) | (16) |
| At 30 April 2020 | 400 | - | - | 6,220 | 6,620 |
| Additions to right-of-use asset | - | - | - | 1,154 | 1,154 |
| Utilised | - | - | (134) | (245) | (379) |
| Charged in year | 4,853 | 195 | 134 | 935 | 6,117 |
| Foreign exchange adjustment | - | - | - | (4) | (4) |
| At 30 April 2021 | 5,253 | 195 | - | 8,060 | 13,508 |
Provisions have been analysed between current and non-current as follows:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Current | 6,173 | 99 |
| Non-current | 7,335 | 6,521 |
| Total | 13,508 | 6,620 |
Redundancy provision
In the current year, further provisions have been made in relation to a contract lost through insolvency of the customer and another contract where operations have been scaled down. Of the total redundancy costs provided in the year, £4,400,000 is being reimbursed as part of an agreement with a third party and is included within other receivables (see note 18).
Onerous contracts
During the year the Group became aware of a customer's intention to terminate its contract during the year ending 30 April 2022. A review of this contract identified that a loss is anticipated on termination, therefore a provision has been made in the current year for this expected loss.
Uninsured losses
The uninsured losses provision is in respect of the cost of claims (generally for commercial vehicles and employment related) which are either not insured externally or fall below the excess on the Group's insurance policies.
Dilapidations
Prior to adoption of IFRS 16 in the year ended 30 April 2020, provisions were established over the life of leases to cover remedial work necessary at termination under the terms of those leases.
On transition to IFRS 16, the net present value of expected dilapidation provision for each property was included in the calculation of the right-of-use asset.
The charge for the year is made up of £265,000 relating to the unwinding of the discount (see note 8), £130,000 relating to the return in condition provision for hired vehicles which is recognised within administration expenses, and £540,000 relating to a specific provision for a property the Group is due to exit in the year ending 30 April 2022.
24. Capital and reserves
Share capital
|
| 2021 Company £'000 | 2020 Company £'000 |
| Allotted, called up and fully paid: |
|
|
| 101,804,824 (2020: 101,662,415) ordinary shares of 0.05p each | 51 | 51 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time. At general meetings of shareholders each shareholder (or appointed proxy) present in person is entitled to vote; on a show of hands each person has one vote, and on a poll has one vote per share. During the year the Group issued 142,409 ordinary shares to satisfy employee share options, for aggregate consideration of £306,000. The new shares rank pari passu with all existing ordinary shares in issue. See also note 25 below.
Share premium reserve
The share premium reserve represents amounts paid in excess of the nominal value of shares.
Currency translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the Financial Statements of foreign operations as well as from any translation of liabilities that hedge the Group's net investment in foreign subsidiaries.
Merger reserve
At 30 April 2014 the Company went through a restructure which resulted in the recognition of a merger reserve with a balance of £6,006,000. Details of the transaction which resulted in this reserve are included in note 2.3.
Share based payment reserve
The Company operates a Performance Share Plan and a Sharesave Plan for the benefit of its employees, the accounting for which requires a separate reserve as accounted for per the policy described in note 2.20c. Further information on these transactions can be found in note 25.
25. Share based payments
The Clipper Performance Share Plan ("PSP") was approved by shareholders on 29 September 2014. The PSP enables selected Directors and employees of the Group to be granted awards in respect of ordinary shares. Share Awards under the PSP will ordinarily be structured as nil-cost share options with the vesting of Share Awards being subject to performance conditions measured over a period of at least three years. A summary of the principal terms of the PSP, including vesting conditions, is contained in the Directors' Remuneration Report on pages 70 to 85 contained in the Company's 2021 Annual Report and Accounts (available to download from www.clippergroup.co.uk/report-accounts/).
The Clipper Sharesave Plan is a share plan for all UK employees in the Group, and offers them the opportunity to acquire an interest in shares in the Company on favourable terms within the long-standing regime allowed by HMRC legislation. All UK staff are invited to participate on the same terms, and employees who choose to participate are granted an option over shares in the Company, with the exercise of that option being funded by the proceeds of a savings contract taken out by the relevant employee, under which the employee saves a set amount each month over a set period. The options granted in the year were offered with a three year savings contract, under which the employee could elect to save between £5 and £500 per month.
Option movements and weighted average exercise prices ("WAEP") during the year were as follows:
| Date | PSP Number | WAEP | Sharesave Number | WAEP |
| Outstanding 1 May 2019 | 1,812,487 | nil | 2,380,756 | 213.21p |
| Granted during the year | - | nil | - | - |
| Forfeited during the year | (412,510) | nil | (421,652) | 232.38p |
| Exercised during the year | - | nil | (47,893) | 239.34p |
| Outstanding 30 April 2020 | 1,399,977 | nil | 1,911,211 | 208.33p |
| Granted during the year | 428,305 | nil | 632,832 | 485.34p |
| Forfeited during the year | (701,981) | nil | (288,352) | 241.32p |
| Exercised during the year | (48,204) | nil | (94,205) | 324.13p |
| Outstanding 30 April 2021 | 1,078,097 | nil | 2,161,486 | 279.98p |
At 30 April 2021, the range of exercise prices for the various schemes were 193.34p-485.34p (2020: 193.34p-379.74p). At 30 April 2021, the weighted average remaining contractual life was 2.0 years (2020: 2.3 years).
At 30 April 2021, PSP options over 459,364 (2020: 507,568) and Sharesave options over 32,616 (2020: 103,131) of the above shares were exercisable.
The fair value of the share options is measured at the grant date, using the Black-Scholes model and taking into account the terms and conditions upon which the instruments were granted.
The key inputs to the model are:
| Share price at: | 2021 |
| 26 January 2021 | 570.00p |
| 4 February 2021 | 585.00p |
| Expected life of the option | 3.5 years |
| Volatility | 53-54% |
| Dividend yield | 1.71-1.75% |
The expected life of the options has been estimated as six months beyond vesting date. Volatility has been calculated as a rolling three year period up to the week prior to grant. The dividend yield is calculated by applying dividends paid in the preceding 12 months to the share price at the grant date.
The cost of the options is recognised over the expected vesting period. The total charge for the year ended 30 April 2021 relating to employee share based payment plans was £650,000 (2020: £348,000). The fair value of share options at 30 April 2021 to be amortised in future years was £3,578,000 (2020: £809,000).
All share based payments in both years are equity settled.
26. Capital commitments
|
| 2021 Group £'000 | 2020 Group £'000 |
| Authorised and contracted for | 3,656 | 1,243 |
| Authorised but not contracted for | 8,390 | 2,392 |
| Total capital commitments | 12,046 | 3,635 |
27. Financial instruments and financial risk management objectives and policies
In accordance with IFRS 9 the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet certain requirements. The Group did not identify any such derivatives.
The Group is exposed to a number of different market risks in the normal course of business including credit, interest rate and foreign currency risks.
Credit risk
Credit risk predominantly arises from trade receivables and cash and cash equivalents. The Group has a customer credit policy in place and the exposure to credit risk is monitored on an ongoing basis. External credit ratings are generally obtained for customers; Group policy is to assess the credit quality of each customer before accepting any terms of trade.
Internal procedures take into account customers' financial positions as well as their reputation within the industry and past payment experience. Cash and cash equivalents and derivative financial instruments are held with AAA or AA rated banks. Financial instruments classified as fair value through profit or loss and available for sale are all publicly traded on the UK London Stock Exchange. Given the high credit quality of counterparties with whom the Group has investments, the Directors do not expect any counterparty to fail to meet its obligations.
At 30 April 2021 the Group had a significant concentration of credit risk held by two customers, each representing more than 10% of total trade debtors at the year end. The amounts outstanding by these two customers totalled £23,054,000 or 22.9% of total trade debtors. There are no concerns over the recovery of these balances (2020: £nil). The Group's maximum exposure to credit risk, gross of any collateral held, relating to its financial assets is equivalent to their carrying value. All financial assets have a fair value which is equal to their carrying value, as a consequence of their short maturity. The Group did not have any financial instruments that would mitigate the credit exposure arising from the financial assets designated at fair value through profit or loss in either the current or the preceding financial year.
Interest rate risk
The Group adopts a policy of ensuring that there is an appropriate mix of fixed and floating rates in managing its exposure to changes in interest rates on borrowings. Interest rate swaps are entered into, where necessary, to achieve this appropriate mix.
Interest rate sensitivity
The Group's borrowings are largely denominated in Pounds Sterling and the Group is therefore exposed to a change in the relevant interest rate. With all other variables held constant, the impact of a reasonably possible increase in interest rates of 50 basis points (2020: 50 points) on that portion of borrowings affected would be to reduce the Group's profit before tax by £162,000 (2020: £103,000).
Foreign currency risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in currencies other than Pounds Sterling. The currencies giving rise to this risk are primarily the Euro and Polish Złoty. The volume of transactions denominated in foreign currencies is not significant to the Group.
The exposure to a short-term fluctuation in exchange rates on the investment in foreign subsidiaries is not expected to have a material impact on the results of the Group.
Capital management
The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to trade profitably in the foreseeable future. The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates by monitoring its gearing ratio on a regular basis and adjusting the level of dividends paid to ordinary shareholders.
The Group considers its capital to include equity and net debt. Net debt includes short and long-term borrowings (including overdrafts and lease obligations) net of cash and cash equivalents.
The Group has not made any changes to its capital management during the year. The Group has no long-term gearing ratio target. Borrowings are taken out to invest in the acquisition of subsidiaries, new sites or depots and are considered as part of that investment appraisal. Key measures monitored by the Group are interest cover and net debt compared to earnings before interest, tax, depreciation and amortisation.
In order to achieve the overall objective, the Group's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings. The Group has satisfied all such financial covenants in both years.
|
| 2021 Group £'000 | 2020 Group £'000 |
| EBIT (excluding impact of IFRS 16) | 31,346 | 24,077 |
| Finance costs (net) (excluding impact of IFRS 16) | 2,541 | 2,722 |
| Interest cover | 12.3 | 8.8 |
|
| 2021 Group £'000 | 2020 Group £'000 |
| EBIT (excluding impact of IFRS 16) | 31,346 | 24,077 |
| Depreciation and impairment of property, plant and equipment | 10,632 | 9,633 |
| Amortisation and impairment of computer software | 1,031 | 874 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) (excluding impact of IFRS 16) | 43,009 | 34,584 |
| Net debt (note 21) | 16,944 | 45,050 |
| Net debt/EBITDA | 0.39 | 1.30 |
Liquidity risk
Management closely monitors available bank and other credit facilities in comparison to the Group's outstanding commitments on a regular basis to ensure that the Group has sufficient funds to meet the obligations of the Group as they fall due.
The Board receives regular cash forecasts which estimate the cash inflows and outflows over the next 24-36 months, so that management can ensure that sufficient financing can be arranged as it is required. The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management.
Estimation of fair values
The main methods and assumptions used in estimating the fair values of financial instruments are as follows:
| · | interest-bearing loans and borrowings: fair value is calculated based on discounted expected future principal and interest cash flows; and | |||||
| · | trade and other receivables/payables: the notional amount for trade receivables/payables with a remaining life of less than one year are deemed to reflect their fair value. | |||||
|
| 2021 Book value Group £'000 | 2021 Fair value Group £'000 | 2020 Book value Group £'000 | 2020 Fair value Group £'000 |
| |
| Non-current financial assets | 1,950 | 1,950 | 1,950 | 1,907 |
| |
|
|
|
|
|
|
| |
| Current financial assets: |
|
|
|
|
| |
| Cash and cash equivalents | 17,998 | 17,998 | 2,724 | 2,724 |
| |
| Trade and other receivables | 143,885 | 143,885 | 102,742 | 102,742 |
| |
| Liabilities: |
|
|
|
|
| |
| Bank overdraft | - | - | - | - |
| |
| Short-term borrowings | (160) | (160) | (19,315) | (19,315) |
| |
| Lease liabilities: short-term | (39,349) | (39,349) | (38,378) | (38,378) |
| |
| Trade and other payables | (174,676) | (174,676) | (130,813) | (130,813) |
| |
| Long-term borrowings | (15,677) | (15,675) | (126) | (120) |
| |
| Lease liabilities: long-term | (188,468) | (188,051) | (163,906) | (163,411) |
| |
Long-term borrowings are classified as Level 2 (items with significant observable inputs) financial liabilities under IFRS 13. There have been no transfers between Level 1 and Level 2 financial instruments during the year.
The following are the contractual maturities of financial liabilities, including interest payments:
As at 30 April 2021
|
| Carrying amount Group £'000 | Contractual cash flows Group £'000 | Less than 1 year Group £'000 | Between 1 to 5 years Group £'000 | Over 5 years Group £'000 |
| Non-derivative financial liabilities |
|
|
|
|
|
| Bank loans and overdrafts | 15,837 | 15,837 | 160 | 15,677 | - |
| Trade and other payables | 174,676 | 174,676 | 174,676 | - | - |
| Lease liabilities | 227,817 | 280,726 | 48,522 | 138,869 | 93,335 |
As at 30 April 2020
|
| Carrying amount Group £'000 | Contractual cash flows Group £'000 | Less than 1 year Group £'000 | Between 1 to 5 years Group £'000 | Over 5 years Group £'000 |
| Non-derivative financial liabilities |
|
|
|
|
|
| Bank loans and overdrafts | 19,441 | 19,441 | 19,315 | 126 | - |
| Trade and other payables | 130,813 | 130,813 | 130,813 | - | - |
| Lease liabilities | 202,284 | 229,829 | 42,995 | 123,761 | 63,073 |
28. Related party disclosures
Clicklink Logistics Limited (see note 16) is a supplier of logistics services to the Group. The Group provides certain resources to Clicklink, principally people and vehicles, under the terms of the joint venture agreement. Amounts charged for these resources are included in revenue.
Branton Court Stud LLP, in which Steve Parkin is a partner, receives management, recharge of expenditure and administration services from the Company. During the year £4,000 (2020: £590,000) was recharged to Branton Court Stud LLP for management time of Directors and other key management personnel in proportion to the time spent on non-Clipper-related activities.
During the year, £480,000 (2020: £nil) was paid to Branton Court Stud LLP as reimbursement of costs incurred on behalf of the Company in relation to sponsorship related to the year ending 30 April 2022.
During the year, the Company paid £268,000 for flight credits to be utilised for business travel. The amount was paid to Branton Court Stud LLP. The agreement was subsequently cancelled as a result of COVID-19 restrictions and the full amount was refunded on 23 April 2021 by Knaresborough Aviation LLP.
In the year the Company paid Branton Court Stud LLP £57,000 (2020: £70,000) received in relation to horse race winnings. These monies were not intended for the Company and were paid to Branton Court on the same day.
Microlise Group plc supplies IT equipment for use within fleet vehicles to the Group. Microlise Group plc and Clipper Logistics plc have a common director.
Roydhouse Properties Limited is the landlord of two of the Company's leasehold properties and has common directors with Clipper Logistics plc. In addition, during the year, £80,000 was paid to Roydhouse Properties Limited as a contribution towards renovations at one of the leasehold properties. These transactions are conducted at an arm's length on normal commercial terms.
Southerns Office Interiors Limited supplies office furniture to the Company as well being a customer to the Group. Steve Parkin is registered as a person with significant control over Southerns Limited, the ultimate parent of Southerns Office Interiors Limited.
During the year, £26,000 (2020: £138,000) was received from Steve Parkin in relation to repaying Clipper for personal expenditure incurred on a company credit card. At 30 April 2021 £nil (2020: £nil) was outstanding.
Balances owing to or from these related parties at 30 April were as follows:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Non-current financial assets: |
|
|
| Clicklink Logistics Limited - interest-bearing loan | 1,950 | 1,950 |
| Trade and other receivables: |
|
|
| Clicklink Logistics Limited - trading balance | 67 | 2,066 |
| Branton Court Stud LLP | 1 | 2 |
| Southerns Office Interiors Limited | 1 | 1 |
| Trade and other payables: |
|
|
| Clicklink Logistics Limited | 342 | 179 |
| Microlise Group plc | 498 | - |
| Roydhouse Properties Limited | - | 176 |
The shareholders in Clicklink Logistics Limited have jointly made available to that company a term loan facility of £3,900,000 of which the Company's 50% share is £1,950,000. The facility may be drawn in up to ten loans. Interest on each loan is calculated at a margin above 12 month LIBOR and is payable annually. All loans drawn under the facility are repayable in November 2022.
Transactions with these related parties in the year ended 30 April were as follows:
|
| 2021 Group £'000 | 2020 Group £'000 |
| Items credited to the income statement: |
|
|
| Clicklink Logistics Limited - revenue | 16,447 | 19,088 |
| Clicklink Logistics Limited - finance income | 52 | 59 |
| Branton Court Stud LLP | 6 | 590 |
| Southerns Office Interiors Limited | 170 | 9 |
| Items charged to the income statement: |
|
|
| Clicklink Logistics Limited | 3,396 | 2,438 |
| Branton Court Stud LLP | 6 | - |
| Knaresborough Investments Limited | - | 1 |
| Knaresborough Real Estate Limited | - | 265 |
| Roydhouse Properties Limited | 765 | 808 |
| Purchase of non-current assets: |
|
|
| Microlise Group plc | 1,063 | - |
| Roydhouse Properties Limited | 80 | - |
29. Business combinations
Raven Mill operation
In April 2019, the Company entered into a series of contracts with a customer, which when combined represented a business combination in accordance with IFRS 3 'Business Combinations'. The acquisition consists of premises, assets and a workforce, together carrying out a logistics service business that is now carried out by the Company. The business acquired is an unincorporated entity. Several areas required significant judgment by management, in particular that the transfer of employees under TUPE and the lease of the premises commenced only after 30 April 2019 limiting the ability of the Group to control the relevant activities of the acquired business. On balance the Group has concluded that the effective date of the business combination was 1 July 2019 and that this series of transactions should be reflected within the year ended 30 April 2020. This is when management has concluded that control has passed to the Group. The Group has carried out a fair value exercise of the business combination, which gave rise to 'negative goodwill' of £3,499,000. The 'negative goodwill' was recognised within the Group income statement in the year ended 30 April 2020.
The fair value table for the business combination is shown below.
Purchase consideration and cash flows:
|
| Group £'000 |
| Cash consideration paid | 2,899 |
| Cash consideration receivable | (2,765) |
| Total net consideration payable | 134 |
Acquisition:
|
| Fair values Group £'000 |
| Assets: |
|
| Property, plant and equipment | 2,899 |
| Right-of-use asset | 2,407 |
| Customer relationship | 1,882 |
| Liabilities: |
|
| Lease liabilities | (2,183) |
| Long-term provisions | (624) |
| Deferred tax liabilities | (748) |
| Total identifiable net assets at fair value | 3,633 |
| 'Negative goodwill' arising on acquisition | (3,499) |
| Total consideration | 134 |
As part of the series of transactions, in August 2021 the customer paid the Company consideration in return for the Company assuming certain potential liabilities. This results in the net consideration payable being less than the fair value of net assets acquired, principally the customer relationship, which gave rise to 'negative goodwill'.
Professional fees and costs in relation to the acquisition amounting to £41,000 were charged to the income statement in the year ended 30 April 2020 and were included within administrative expenses.
30. Post balance sheet events
On 19 May 2021, Clipper Logistics plc acquired the entire £1,000 share capital of Wippet Ltd, a company registered in England and Wales with registered number 13115709. This transaction does not have a significant impact on the financial statements of the Group.
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