Half-year Report

RNS Number : 5291A

Xpediator PLC

26 September 2022

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. It forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

XPEDIATOR PLC

("Xpediator", the "Company" or the "Group")

INTERIM RESULTS

Xpediator Plc (AIM: XPD), a leading provider of freight management services across the UK and Central and Eastern Europe, is pleased to announce its unaudited condensed consolidated interim results for the six months ended 30 June 2022 ("H1 2022").

Financial Highlights

· Strong organic growth and significant increase in Group revenue to £189.3m (H1 2021: £126.6m) reflecting continued positive trading in our Central Eastern European ("CEE") freight forwarding operation, in spite of the conflict in Ukraine, a return to pre-covid levels of trading in our Transport Services operations, and Pall-Ex Romania recording a strong period.

· Delivered adjusted profit before tax[1] of £3.1m (H1 2021: £3.6m) after adjusting for:

o  £1.5m goodwill impairment to Delamode Anglia

o  Restructuring costs £0.3m

· Reported profit before tax of £0.2m (H1 2021: £2.3m)

· Adjusted earnings per share of 0.27 pence (H1 2021: 1.58 pence).

· Reported loss per share of 1.74 pence (H1 2021: profit 0.66 pence).

· Net debt (excluding right-of-use assets debt) on 30 June 2022 was £8.0m (31 Dec 2021: £4.8m)

· No interim dividend (H1 2021: 0.50 pence per share) given priority focus of the Board in reducing net debt.

Overview of Divisional Performance

· Freight Forwarding revenue increased 54% to £155.5m (H1 2021: £100.8m) generating operating profit of £5.9m (H1 2021: £4.1m), principally driven by the Group's CEE operations.

· Logistics and Warehousing revenue increased 31% to £30.1m (H1 2021: £22.9m) generating an operating loss of £1.8m (H1 2021: £0.4m profit). Despite a record performance by Pallex in Romania, the impact of the UK logistics activity, which is currently loss making, had a significant impact on overall divisional performance.

· Transport Services revenue increased to £3.7m (H1 2021: £3.0m) and operating profit to £1.4m (H1 2021: £1.3m), representing a return to pre-pandemic levels.

Post Period Highlights

· Good start to the traditionally stronger second half of the year and on track to meet full year management expectations.

· Ongoing business review by the new management team has identified potential cost efficiencies across the Group. Restructuring plans for the underperforming UK operations have begun to be implemented to improve profitability.

· New build 200,000 sq. ft warehouse in Southampton dock fully let and achieving competitive pricing for all types of storage, handling, fulfilment, and distribution services.

· Construction of new, purpose built 180,000 sq. ft (35,000 pallet spaces) storage, fulfilment and distribution warehouse in Roosendaal, Netherlands commenced.

¹ Profit before tax has been adjusted for exceptional items of restructuring costs, £336,000, (H1 2021 £nil), deferred consideration release of £nil (H1 2021: £398,000), amortisation of acquisition related intangibles of £731,000 (H1 2021: £742,000), additional interest charge of £313,000 (H1 2021: £167,000) following the application of IFRS 16, and impairment on of goodwill in Delamode Anglia Limited of £1,474,000, (H1 2021: £nil)

Commenting on trading in H1 2022, Mike Stone, Interim CEO said:

"Demand for the Group's freight management services is robust as shown by the 50% increase in revenues, however, profit after tax in H1 2022 was lower than H1 2021, primarily due to a combination of higher costs, weaker than planned trading by some areas of the business in the UK, and a non-cash goodwill write down of £1.5m. Despite this, the Company remains on track to meet full year management expectations due to the ongoing strength in customer demand and the improving performance of those UK businesses which under-performed in the first half.

Having been in the business now for four months, I have been impressed and encouraged by the commitment and capability of the wider management teams and their operations. In short, Xpediator is a healthy business with solid foundations, with a few, specific, areas of underperformance. We have completed the initial business review and have identified several areas where material operational performance improvement can be achieved, and where changes to the governance structure will support the successful execution of this and sustain it going forward.

I am of course very mindful of the immediate headwinds caused by the inflationary environment and the impact this may have on consumers generally, but with a solid first half performance behind us, the Board look forward to the future with confidence." 

Enquiries:

Xpediator plc	Tel: [phone]
Mike Stone, Interim Chief Executive Officer	Email:  [e-mail]
Richard Myson, Chief Financial Officer
Zeus (Nominated Advisor & Broker)	Tel: [phone]
David Foreman, Jamie Peel, James Hornigold (Investment Banking) Dominic King (Corporate Broking)
Novella Communications  (Financial Public Relations)	Tel: [phone]
Tim Robertson
Safia Colebrook

About Xpediator:

Xpediator is a well-established international provider of freight management services. Established in 1988, the Group's international network of offices provides road, sea and air freight services, together with logistics and warehousing in the UK and Romania. The business offers integrated freight management within the supply chain logistics and fulfilment sector, through its three main areas: freight forwarding, logistics & warehousing and transport services. With headquarters in Braintree, Essex and country offices in nine CEE countries across 34 sites, the Group currently employs over 1,400 people and was successfully listed on London's AIM market in 2017.

For more information, please visit:  www.xpediator.com .

Alternatively, do follow us on Twitter at  @Xpediator  or find us on LinkedIn at  Xpediator Plc .

Chief Executive Statement

Introduction

I am pleased to present these financial results for the first six months of 2022. The significant increase in revenue to a record £189.3 million reflects the high demand for the Group's freight management services in the UK and across Europe. The Group's trading performance was particularly encouraging given the wider macro and economic challenges that emerged during the period which have impacted some parts of the business, but overall, Xpediator has to date weathered these challenges.

Business review

Our CFO Richard Myson, our Non-Executive Chairman, Gillian Wilmot and I all joined the Company in the last four months and so we are a new team.  Our first priority has been to review the whole business, a process that is still ongoing, but it is clear the Company is fundamentally sound and has significant further potential.

With that said, the current level of net debt is too high and needs to reduce to a more sustainable level which we envisage is achievable by the end of 2023.  Following a prudent reassessment of Delamode Anglia, and based on current trading expectations and forecast performance, the Group has impaired the goodwill in Delamode Anglia Limited by £1.5m whilst £0.3m of restructuring costs were also recognised in this period.

These factors have significantly reduced adjusted PBT in H1 2022 but have cleared up the majority of the historical issues we have discovered in the past months. Looking ahead, the business review has highlighted the opportunity to achieve greater operational efficiencies across the business and reduce the cost base of the Group, without impacting the quality of service we provide to our customers.  Our target is to reduce the cost of support functions by 30% over the next 12 months, with efficiencies coming from a range of initiatives that are all scoped, and most of which are underway.

Operationally, several of the UK businesses have lagged the performance of those on the Continent, particularly the CEE operations. There are several reasons for this underperformance, and we are implementing a series of changes to address them.

Specifically, our largest UK freight forwarding business, Delamode Anglia, has not been able to consistently achieve the same profit margins as those achieved by the freight forwarding operations on the Continent, particularly in Lithuania.  Therefore, from September 2022, Justas Versnickas, MD of Delamode Baltics, will also take up the role of MD of Delamode Anglia. Justas will implement the relevant elements of the successful template he has developed for Delamode in Lithuania, the most profitable and dynamic business in the Group, and instil a more entrepreneurial approach to the challenges Delamode Anglia are facing.  Richard Myson and I will work closely with Justas, especially in the coming months, and he already clearly has the support of the Anglia management team and staff for the transformation we will be making to their business.

UK warehousing has also been an area of weakness. Both the Braintree and Beckton warehouses have underperformed, and Southampton suffered badly during its peak trading period last year with the late delivery of the new facility. Beckton which serves the traditional UK retail high street fashion market by specialising in the storage and fulfilment of hanging garments, has struggled since loss of its largest customer, Arcadia, two years ago, and this continues post-pandemic from the well-publicised challenges in this sector. The future of the Beckton warehouse is continually under review as we work in partnership with current key customers to grow their businesses and build a healthy pipeline of prospective new customers.  Braintree has for some time not been profitable on a standalone basis, and very simply this is because the income from the current customers base is too low.  Therefore, we are judiciously increasing prices and refreshing the customer base by attracting new customers with better stock and fulfilment activity profiles. The new Southampton warehouse is now fully operational, is at capacity and fully prepared for the peak period, so it is expected to contribute strongly in the second half of the year.

As mentioned earlier, one of our key areas of focus will be to reduce the net debt position. This has increased over the past 12 months, and even accelerated in the first six months of 2022, to reach (excluding right-of-use assets debt) £8.0m as at 30 June 2022 (31 December 2021: £4.8m).

The increase in net debt is primarily due to an increase of £5.4m in borrowing from Investec which was used to cover the losses in the two UK trading entities and the increased central costs brought about by the implementation of a shared services centre.  It is also a result of the increased early payments to suppliers to secure their services, though it should be noted that these early payments to suppliers attract a discounted rate which has helped the Group mitigate any downturn in margins. The Group also experienced delays in collecting customer payments in the UK following a change in operational systems and personnel within the Delamode Anglia business brought about by the creation of a central Shared Services function in late H1 of 2021.

It takes some time to get to know a business of Xpediator's size, but from the detailed business review we have carried out, and from the many site visits I have made, I feel very comfortable I have clarity on not just the key drivers for the business results, but also the factors affecting the performance and engagement of our people. In my mind, there is no doubt the Group is in a good position to continue to grow from here, but more importantly, to achieve the levels of profitability that the revenue growth deserves. We have identified and prioritised the immediate areas for improvement and initiated the actions required to achieve this. Our review process is ongoing and will be continuous.

Therefore, I am confident the Company is well placed to deliver a healthy performance in the second half of this financial year, and indeed, beyond. 

Board and Management

During the period there have been several changes to the Board. In March, Mark Whiteling, Non-executive Chairman, and Stephen Blyth, Non-Executive Director ("NED"), & Founder, stepped down from the Board. In June Richard Myson re-joined the Company as Chief Financial Officer having previously worked for the Group for 16 years, replacing Mike Williamson the outgoing Chief Financial Officer. In June, Mike Stone joined as Interim Chief Executive and Gillian Wilmot joined as Interim Non-executive Chairman.  Mike replaced Wim Pauwels who had stepped in from his NED role to Interim Chief Executive. Wim left the company on 31 May 2022.

Dividend

Due to the need to reduce the net debt position of the Group, the Board are not recommending an interim dividend. Payment of a final dividend will be considered once trading has been completed for the year and will be predicated on our progress in reducing net debt.

 

Operational Review

Freight Forwarding  

Revenue                             H1 2022: £155.5m         H1 2021: £100.8m

Operating profit  H1 2022: £5.9m   H1 2021: £4.1m

The Freight Forwarding division includes businesses in the UK and CEE operating under the Delamode brand. The division specialises in moving freight, primarily internationally by road, rail, air and sea, and continues to be the largest core service of the Group. The division which accounts for 82% of the Group's revenue continued to grow in 2022 with revenue in H1 2022 increasing by 54% and resulting in an increase of operating profit of 45%.

Growth within Freight Forwarding has been principally driven by strong performances in Lithuania and Bulgaria. In Lithuania in particular, now Xpediator's largest country in terms of revenue, it has been a very successful period with growth in revenue, market share and profit compared to H1 2021. The team in Bulgaria have also had a very good period and overall, all our CEE freight forwarding operations have traded well, despite of the conflict in the Ukraine. However, our largest UK freight forwarding business, Delamode Anglia, underperformed in the same period, so in response, Justas Versnickas, (MD of Delamode Baltics) has been seconded to Delamode Anglia with the aim of transferring the successful business processes and systems used in Lithuania to the UK.

Logistics & Warehousing 

Revenue                                          H1 2022: £30.1m    H1 2021: £22.9m

Operating (loss) / profit  H1 2022: (£1.8m)    H1 2021: £0.4m

The Logistics and Warehousing division include businesses in the UK (with sites in Beckton, Braintree and Southampton) and Romania under the Delamode and Pall-Ex brands. It offers storage, fulfilment, transport and value-added services to customers serving primarily B2B markets for their products.

Overall, revenue increased by 32% but due to the continued poor performance in the UK warehousing activity, the division made an operating loss in the period.

Both the Braintree and Beckton warehouses remain loss making, and continued investment during H1 2022 in the new Southampton facility, much of it in preparation for the peak in 2022, held back the overall result for this facility. With the new Southampton facility now at operational capacity and preparations for the peak period already implemented, the Southampton warehouse is expected to have a positive impact on trading in H2. The steps taken to review customer pricing and to change the customer base in Braintree will result in an improved result in H2. The same will be true for Beckton where we have been working with our largest customer there to launch their direct-to-consumer offer (which will be fulfilled from Beckton), and to selectively add profitable customers from a healthy sales pipeline.

The Group's Pall-Ex franchise in Romania recorded another strong period of trading, handling a record number of pallets, up 16% in H1 2022 against the same period last year. Revenue and operating profit increased by 20% and 11% respectively versus H1 2021.

Warehousing activity in Romania has remained robust. Revenue increased by 18% versus H1 2021 but increased running costs, resulted in reduced operating profit, down by 26%.

Post period end, construction commenced of the new, purpose built 180,000 sq ft (35,000 pallet spaces) storage, fulfilment and distribution warehouse in Roosendaal, Netherlands. This facility serves current UK customers who, post Brexit, find it optimal to split stock between the UK and mainland Europe. Roosendaal is well located for the onward transport to the rest of continental Europe by road and also conveniently located for the import of product via the two major container ports of Rotterdam and Antwerp.

Such is the demand in the short term, the Company has leased 6,500 pallet spaces in a partner warehouse for 12 months in Roosendaal and customer stock has been moved from the UK to this warehouse

Transport Services 

Revenue    H1 2022: £3.7m  H1 2021: £3.0m

Operating profit   H1 2022: £1.4m  H1 2021: £1.3m

Transport Services, trading principally under the Affinity brand, provides bundled fuel and toll cards, financial and support services for hauliers in Southern Europe.  Affinity is an agent of DKV, one of the world's largest fuel card providers, and supplies the DKV fuel card across the East and West Balkan region to a database of approximately 2,000 Eastern European hauliers and over 14,500 trucks. In addition, Affinity offers a "one stop shop" of transport services including ferry bookings, insurances and recently, VAT refund services.

Transport Services performed well in H1 2022 with revenue increasing by 22% and operating profit by 8%. The difference in growth between these two measures being primarily due to the implementation of new services and the increased fuel prices.

Trading has now returned to pre-Covid levels and is expected to continue to benefit from both higher fuel prices and the launch of new products and services to hauliers

Outlook

The Group has continued the strong sales momentum in the first half into the second half of the year this being traditionally the stronger of the two periods. Overall, the business divisions are trading well with the strong performance in the CEE countries now showing a level of profitability exceeding 2021 levels. The Group is therefore well placed for H2 and has actions in place to reduce net debt and address the under-performance of some of the UK operations. These will place the Group in a good position longer term and enable it to return to better capitalise on the synergies inherent in the network of companies in the UK and on the Continent.

At the same time, the Board and Management, both at Group and subsidiary level, remain vigilant to the broader economic challenges, particularly for consumers, stemming from rising inflation and conflict escalation, to create a generally more challenging economic environment. We will react accordingly both to mitigate any risks to our business and people, but also to seize any opportunities identified.

Mike Stone

26 September 2022

Chief Financial Officer Financial Review

Revenue

Revenue for the six months to 30 June 2022 was £189.3m, an increase of £62.7m or 49.5% on the comparable period (H1 2021: £126.6m).

Revenue increased within the Freight Forwarding business by £54.7m, Logistics and Warehousing revenue increased by £7.2m and Transport Services revenue increased by £0.7m.

Gross Profit

Gross profit increased by £12.1m mainly as a result of the increased freight forwarding revenue generated in the Baltics but also from Romania. Margins have seen a slight decline from 22.8% to 21.7%. This is partly due to the mix of activity between the divisions and the losses on the UK logistics activity.

Administration costs

Administration costs have increased by 56% in H1 2022 compared to H1 2021, this is due to an increase in the costs arising from the increased head count in Delamode Baltics. This increase was required to accommodate the increase in the activity in the region

H1 2022 saw a full six months of operating costs for the new warehouse facility in Southampton which came into operation in H2 2021.

In addition to this the Group incurred additional costs associated with the shared services operations.

Operating profit

The Group delivered an operating profit, of £1.5m for the period compared to £2.9m in H1 2021.

Financing costs

The net interest expense for the period was £1.3m (H1 2021: £0.6m), due to the increased borrowing in the period.

Tax

The tax charge for the period was £1.6m (H1 2021: £0.8m). This is due to the amount of taxable profit being generated in Europe compared to the losses and unrecovered costs in the UK for which a deferred tax asset has not been recognised.

Adjusted profit before tax

A reconciliation between reported profit before tax and adjusted profit before tax is shown below:

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	30 June 2022 2022	30 June 2021 2021	31 Dec 2021 2021
	£000	£000	£000
Profit before tax (as reported)	235	2,271	4,287
Exceptional items (See note 12)	336	398	2,610
Impairment of goodwill in Delamode Anglia	1,474	-	-
Amortisation of intangibles relating to acquisitions	731	742	1,462
Additional incurred interest charge - IFRS 16 2	313	167	715
Total adjustments	2,854	1,307	4,787
Adjusted profit before tax	3,089	3,578	9,074

² The additional incurred interest charge - IFRS 16 represents the difference between the cash rental payments and the accounting charges for depreciation and interest.

Statement of Financial Position

Total Assets: The Group had total assets of £207.9m as at 30 June 2022 (31 December 2021: £196.1m).

Total Liabilities: The Group had total liabilities of £180.8m as at 30 June 2022 (31 December 2021: £166.9m).

Net Assets: The Group had net assets of £27.1m as at 30 June 2022 (31 December 2021: £29.2m).

Net debt reconciliation

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	30 June 2022	30 June 2021	31 December 2021
	£000	£000		£000
Cash at bank	9,515	11,194	11,684
Confidential invoice discounting facility	(9,838)	(10,715)	(14,602)
Bank loans	(5,441)	(2,062)	(1,891)
Bank overdraft	(2,254)	-	-
Lease liabilities - right-of-use-assets	(60,112)	(29,160)	(59,678)
Total debt	(75,391)	(41,937)	(76,171)
Net debt	(68,130)	(30,743)	(64,487)
Net debt excluding right-of-use-assets	(8,019)	(1,583)	(4,809)

Net debt (excluding right-of-use assets) at 30 June 2022 was £8.0m (31 December 2021: £4.8m).

The increase in the net debt arose due to the increase in borrowing from Investec in the period of £5.4m, which is secured against the assets of the Group's UK entities. This was used to cover the losses in the UK trading entities and cover the incremental costs of the shared services centre.

The increase in the net debt position is also a result of market dynamics, with increased early payments to suppliers, which is required to secure their services, given the reduced market availability. Early payments to suppliers also attract a discounted rate which has helped the Group mitigate any downturn in margins.

The Group also experienced delays in collecting client payments in the UK, following a change in operational system, personnel and structures between the Delamode Anglia business and the newly created shared service teams. This is being addressed and the resulting issues resolved and will be monitored with an increased focus from senior managers at Group Finance and Delamode Anglia.

Richard Myson

26 September 2022

Condensed Consolidated Income Statement

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		30 June	30 June	31 December
		2022	2021	2021
	Note	£000	£000	£000
Gross billings		296,535	177,676	436,237
Revenue	1	189,289	126,623	296,594
Cost of sales		(148,238)	(97,694)	(228,201)
Gross profit		41,051	28,929	68,393
Other operating income		1,078	546	1,478
Impairment loss on receivables		369	(287)	(1,475)
Administrative expenses		(40,976)	(26,294)	(62,344)
Operating profit		1,522	2,894	6,052
EBIT:
Exceptional items included in administrative expenses above	12	336	398	2,610
Operating profit before exceptional items		1,858	3,292	8,662
Finance income		80	57	172
Finance costs		(350)	(171)	(352)
Right-of-use asset interest charge		(1,017)	(509)	(1,585)
Profit before tax		235	2,271	4,287
Income tax		(1,559)	(786)	(2,410)
(Loss)/profit for period		(1,324)	1,485	1,877
(Loss)/profit attributable to:
Owners of the parent		(2,471)	930	417
Non-controlling interests		1,147	555	1,460
(Loss)/profit for period		(1,324)	1,485	1,877
EPS attributable to the owners of the parent:
Basic (loss)/earnings pence per share	3	(1.74)	0.66	0.29
Diluted (loss)/earnings pence per share	3	(1.74)	0.64	0.29
Adjusted basis earnings pence per share	3	0.27	1.58	3.68
Adjusted diluted earnings pence per share	3	0.27	1.54	3.67

Condensed Consolidated Statement of Comprehensive Income	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	30 June	30 June	31 December
	2022	2021	2021
	£000	£000	£000
(Loss)/profit for the period	(1,324)	1,485	1,877
Other comprehensive income: items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations	666	(660)	(1,289)
Total comprehensive (loss)/income for the period	(658)	825	588
Total comprehensive (loss)/income attributable to:
Owners of the parent	(1,877)	305	(758)
Non-controlling interests	1,219	520	1,346
Total comprehensive (loss)/income for the period	(658)	825	588

Condensed Consolidated Statement of Financial Position

		Unaudited	Unaudited	Audited
		30 June	30 June	31 December 2021
		2022	2021
	Note	£000	£000	£000
Non-current assets
Intangible assets	5	20,098	22,466	21,923
Property, plant and equipment	6	4,918	3,109	4,563
Right-of-use assets	7	58,441	28,160	58,321
Investments - unlisted		-	1	-
Trade and other receivables		-	286	-
Deferred tax		875	719	904
Total non-current assets		84,332	54,741	85,711
Current assets
Inventories		113	55	235
Trade and other receivables		113,916	82,750	98,495
Cash and cash equivalents		9,515	11,194	11,684
Total current assets		123,544	93,999	110,414
Total assets		207,876	148,740	196,125
Equity
Share capital	8	7,134	7,132	7,134
Share premium		13,149	13,139	13,149
Equity reserve		125	121	108
Translation reserve		-	(44)	(594)
Merger reserve		3,102	3,102	3,102
Retained earnings		925	6,831	4,121
Total equity before non-controlling interests		24,435	30,281	27,020
Non-controlling interests	9	2,633	1,468	2,170
Total equity after non-controlling interests		27,068	31,749	29,190
Non-current liabilities
Provisions		2,233	1,477	2,191
Trade and other payables		312	229	343
Interest bearing loans and borrowings	10	4,532	1,720	-
Lease liabilities - right-of-use assets	11	49,766	22,233	50,625
Deferred tax		1,868	1,545	2,011
Total Non-current liabilities		58,711	27,204	55,170
Current liabilities
Provisions		-	732	-
Trade and other payables		98,749	71,071	86,219
Interest bearing loans and borrowings	10	10,748	11,057	16,493
Lease liabilities - right-of-use assets	11	10,346	6,927	9,053
Overdrafts		2,254	-	-
Total current liabilities		122,097	89,787	111,765
Total liabilities		180,808	116,991	166,935
Total equity and liabilities		207,876	148,740	196,125

Condensed Consolidated Statement of Cash Flows

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
Continuing operations	30 June	30 June	31 December
	2022	2021	2021
	£000	£000	£000
Profit before tax	235	2,271	4,287
Adjustment for:
Depreciation	6,251	4,227	9,691
Amortisation	863	989	1,676
Finance costs	1,367	680	1,937
Finance income	(80)	(57)	(172)
Share based payment charge	17	121	107
Loss on disposal of intangible assets	13	6	-
Profit on disposal - property, plant and equipment	148	-	(47)
Profit on disposal - ROU assets	(1)	-	(143)
Impairment on goodwill	1,474	-	-
	10,287	8,237	17,336
Changes in working capital:
Decrease/(increase) in stock	122	4	(176)
Increase in trade and other receivables	(15,392)	(16,062)	(31,520)
Increase in trade and other payables	11,761	6,341	21,043
Increase in provisions	-	56	38
Net cash generated/(used) from operating activities	6,778	(1,424)	6,721
Cash flows from operating activities
Interest paid	(237)	(513)	(299)
Tax paid	(914)	(613)	(1,732)
Net cash from operating activities	5,627	(2,550)	4,690
Cash flows from investing activities
Purchase of property, plant and equipment	(1,024)	(1,022)	(3,262)
Purchase of intangible assets	(463)	(38)	(309)
Proceeds on disposal of property, plant and equipment	-	-	254
Interest received	-	57	172
Net outflow from investing activities	(1,487)	(1,003)	(3,145)

Cash flows from financing activities
New loans	5,441	7,167	10,869
Loan repayments	(6,655)	(176)	(338)
Dividend paid	(725)	-	(2,197)
Non-controlling interest dividends paid	(756)	(384)	(508)
Repayments on Leases	(6,443)	(3,601)	(9,347)
Share issue (net of share issue costs)	-	-	12
Net cash (outflow)/inflow from financing activities	(9,138)	3,006	(1,509)
(Decrease)/increase in cash and cash equivalents from continuing operations	(4,998)	(547)	36
Cash and cash equivalents at beginning of period	11,684	12,720	12,720
Effect of foreign exchange rate movements	575	(979)	(1,072)
Cash and cash equivalents (including overdrafts) at end of period	7,261	11,194	11,684

Condensed Consolidated Statement of Changes in Equity

For the six months to 30 June 2022 (unaudited)

	Share Capital £000	Share Premium £000	Equity Reserve £000	Translation Reserve £000	Merger Reserve £000	Retained Earnings £000	Total £000	NCI £000	Total Equity £000
Balance at 1 January 2022	7,134	13,149	108	(594)	3,102	4,121	27,020	2,170	29,190
Share option charge	-	-	17	-	-	-	17	-	17
Dividends paid	-	-	-	-	-	(725)	(725)	(756)	(1,481)
Total contributions by and distributions to owners	-	-	17	-	-	(725)	(708)	(756)	(1,464)
(Loss)/Profit for the period	-	-	-	-	-	(2,471)	(2,471)	1,147	(1,324)
Exchange differences on foreign operations	-	-	-	594	-	-	594	72	666
Total comprehensive (loss)/income for the period	-	-	-	594	-	(2,471)	(1,877)	1,219	(658)
Balance at 30 June 2022	7,134	13,149	125	-	3,102	925	24,435	2,633	27,068

For the six months to 30 June 2021 (unaudited)

	Share Capital £000		Share Premium £000		Equity Reserve £000		Translation Reserve £000	Merger Reserve £000		Retained Earnings £000		Total £000		NCI £000		Total Equity £000
Balance at 1 January 2021	7,132		13,139		1		581	3,102		5,901		29,856		1,332		31,188
Share option charge	-		-		120		-	-		-		120		-		120
Dividends paid	-		-		-		-	-		-		-		(384)		(384)
Total contributions by and distributions to owners	-		-		120		-	-		-		120		(384)		(264)
Profit for the period	-		-		-		-	-		930		930		555		1,485
Exchange differences on foreign operations	-		-		-		(625)	-		-		(625)		(35)		(660)
Total comprehensive income for the period	-		-		-		(625)	-		930		305		520		825
Balance at 30 June 2021	7,132		13,139		121		(44)	3,102		6,831		30,281		1,468		31,749

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD TO 30 JUNE 2022

General information

The financial information included in this condensed consolidated interim statement of results does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.The unaudited accounts for the six-month period ended 30 June 2022 have been prepared on a consistent basis and using the same accounting policies as those adopted in the financial statements for Xpediator PLC for the year ended 31 December 2021, except as noted below for new standards adopted. The statutory accounts of Xpediator PLC for the year ended 31 December 2021 are available on the Xpediator Plc website, www.xpediator.com. The auditors reported on those accounts: their report was unqualified and did not draw attention to any matters by way of emphasis.

The interim condensed consolidated financial statements were authorised for issue by the board of directors on 26 September 2022.

Basis of preparation

Xpediator Plc (the 'Company') is a company incorporated in England. The condensed consolidated interim financial statements of the Company for the six-month period ended 30 June 2022 comprise the Company and its subsidiaries (together referred to as the 'Group'). The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the United Kingdom. They are unaudited but have been reviewed by the Company's auditor and should be read in conjunction with the condensed consolidated financial statements of the Group for the year ended 31 December 2021.

The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Accounting policies

The financial statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments that are measured at revalued amounts or fair values at the end of each reporting period.

Going concern

The Directors have concluded that it is appropriate that the financial statements have been prepared on a going concern basis given the current funding in place, which it does not envisage will be withdrawn, and the forecast profitability for the next 12 months, there will be sufficient funds available to meet its liabilities as they fall due.  The financial statements have therefore been prepared on a going concern basis.

1)  Revenue analysis by Country & Segment

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		30 June 2022	30 June 2021	31 December 2021
		000	£000	£000
United Kingdom		59,896	47,806	114,943
Lithuania		69,498	38,917	91,261
Romania		28,090	18,541	40,582
Bulgaria		21,494	13,821	33,369
Other		10,311	7,538	16,439
Total Income		189,289	126,623	296,594

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		30 June 2022	30 June 2021	31 December 2021
		000	£000	£000
Freight Forwarding
United Kingdom		40,928	34,813	78,183
Lithuania		69,498	38,917	91,261
Romania		14,508	6,439	16,071
Bulgaria		21,494	13,821	33,369
Other		9,079	6,765	14,691
Total Income Freight Forwarding		155,507	100,755	233,575

Warehousing & Logistics
United Kingdom		18,968	12,993	36,760
Romania		11,122	9,878	19,983
Total Income Warehousing & Logistics		30,090	22,871	56,743

Transport Support Services
Romania		2,460	2,224	4,528
Other		1,192	773	1,748
Total Income Transport Support Services		3,652	2,997	6,276

Other

40

-

-

Total Income

189,289

126,623

296,594

2)  Segmental Analysis

Types of services from which each reportable segment derives its revenues

During the period, the Group had three main divisions: Freight Forwarding, Warehousing & Logistics and Transport Support Services. All revenue is derived from the provision of goods and services.

• Freight Forwarding - This division is the core business and relates to the movement of freight goods across Europe. This division accounts for the largest proportion of the Group's business, generating 82.2% of its external revenues contributed in 2022 (H1 2021: 79.6%)

• Warehousing & Logistics - This division provides warehousing and domestic distribution and generated 15.9% of the Group's external revenues in 2022 (H1 2021: 18.1%).

• Transport Support Services - This division focuses on the reselling of DKV fuel cards, leasing, ferry crossings and other associated transport related solutions. This division accounts for 1.9% of the Group's business in terms of external revenue (H1 2021: 2.3%)

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.  The chief operating decision maker has been identified as the management team comprising the Divisional COOs, the Chief Executive Officer and the Chief Financial Officer.

No single customer accounted for more than 10% of the Group's total revenue.

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS.

Inter-segment sales are priced at market rates and on an arm's length basis, along the same lines as sales to external customers. This policy was applied consistently throughout the current and prior period.

Segmental Analysis for the period to 30 June 2022 (unaudited)	Freight Forwarding	Warehousing & Logistics	Transport Support Services	Unallocated	Total
	2022	2022	2022	2022	2022
	£000	£000	£000	£000	£000
Gross billings	155,507	30,116	110,872	40	296,535
Less recoverable disbursements	-	-	(107,220)	-	(107,220)
Total revenue	155,507	30,116	3,652	40	189,315
Inter-segmental revenue	-	(26)	-	-	(26)
Total revenue from external customers	155,507	30,090	3,652	40	189,289
Depreciation & amortisation (excluding right-of-use assets depreciation)	(505)	(723)	(30)	(157)	(1,415)
					-
Segment Profit before central overhead allocation (excluding exceptional items)	5,907	(1,786)	1,373	(3,636)	1,858
Allocation of central overheads	(798)	(373)	(37)	1,208	-
Segment Profit after central overhead allocation (excluding exceptional items)	5,109	(2,159)	1,336	(2,428)	1,858
Net finance costs					(1,287)
Exceptional items					(336)
Profit before income tax					235

Segmental Analysis for the period to 30 June 2021 (unaudited)	Freight Forwarding	Warehousing & Logistics	Transport Support Services	Unallocated	Total
	2021	2021	2021	2021	2021
	£000	£000	£000	£000	£000
Gross billings	100,755	23,352	53,569	-	177,676
Less recoverable disbursements	-	-	(50,572)	-	(50,572)
Total revenue	100,755	23,352	2,997	-	127,104
Inter-segmental revenue	-	(481)	-	-	(481)
Total revenue from external customers	100,755	22,871	2,997	-	126,623
Depreciation & amortisation (excluding right-of-use assets depreciation)	(520)	(803)	(24)	(151)	(1,498)
Segment Profit before central overhead allocation (excluding exceptional items)	4,081	387	1,272	(2,448)	3,292
Allocation of central overheads	(706)	(341)	(42)	1,089	-
Segment Profit after central overhead allocation (excluding exceptional items)	3,375	46	1,230	(1,359)	3,292
Net finance costs					(623)
Exceptional items					(398)
Profit before income tax					2,271

Segmental Analysis for the year to 31 December 2021 (audited)	Freight Forwarding	Warehousing & Logistics	Transport Support Services	Unallocated	Total
	2021	2021	2021	2021	2021
	£000	£000	£000	£000	£000
Gross billings	234,182	56,136	145,919	-	436,237
Less recoverable disbursements	-	-	(139,643)	-	(139,643)
Total revenue	234,182	56,136	6,276	-	296,594
Inter-segmental revenue	(607)	607	-	-	-
Total revenue from external customers	233,575	56,743	6,276	-	296,594
Depreciation & amortisation (excluding right-of-use assets depreciation)	(973)	(1,482)	(49)	(280)	(2,784)
Segment Profit before central overhead allocation (excluding exceptional items)	9,673	1,498	2,355	(4,864)	8,662
Allocation of central overheads	(1615)	(802)	(79)	2,496	-
Segment Profit after central overhead allocation (excluding exceptional items)	8,058	696	2,276	(2,368)	8,662
Net finance costs					(1,765)
Exceptional items					(2,610)
Profit before income tax					4,287

3)  Earnings per share

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
		30 June 2022	30 June 2021	31 December 2021
		£0003	£000	£000
Weighted average number of shares - basic		141,688	136,867	141,660
Weighted average number of shares - diluted		141,688	136,867	141,927
(Loss)/profit for the period attributable to equity holders of the company		(2,471 )	930	417
Profit for the period attributable to equity holders of the company excluding exceptional, non-trading and certain one-off items (see note 12)		383	2,237	5,213
Basic (loss)/earnings pence per share		(1.74 )	0.66	0.29
Diluted (loss)/earnings pence per share		(1.74)	0.64	0.29
Adjusted basic earnings pence per share (excluding exceptional items)*		0.27	1.58	3.68
Adjusted diluted earnings pence per share (excluding exceptional items)*		0.27	1.54	3.67
*Earnings per share adjusted for exceptional, non-trading and certain one-off costs (see note 12) 3 All numbers presented as £000's except number of shares (presented as number in thousands) and Earnings per share (presented as pence)

4)  Dividends

Given the current cash position of the Group, at present the Directors are not proposing to declare an interim dividend for 2022 (H1 2021: 0.50 pence). The Directors will consider this position later in the year.

5)  Intangible Assets

For the period from 1 January 2022 to 30 June 2022 (unaudited)

	Customer Related	Licences	Goodwill	Technology Related	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2022	12,258	3,387	14,160	510	30,315
Additions	-	463	-	-	463
Disposals	-	(13)	-	-	(13)
Exchange differences	-	83	-	-	83
At 30 June 2022	12,258	3,920	14,160	510	30,848
Amortisation/Impairment
At 1 January 2022	5,241	952	1,845	354	8,392
Amortisation for the period	680	132	-	51	863
Impairment	-	-	1,474	-	1,474
Amortisation eliminated on disposal	-	-	-	-	-
Exchange differences	-	21	-	-	21
At 30 June 2022	5,921	1,105	3,319	405	10,750
Net Book Value at 30 June 2022	6,337	2,815	10,841	105	20,098

For the period from 1 January 2021 to 30 June 2021 (unaudited)	Customer Related £000	Licences £000	Goodwill £000	Technology Related £000	Total £000
Cost
At 1 January 2021	12,258	3,234	14,160	510	30,162
Additions	-	38	-	-	38
Disposals	-	(161)	-	-	(161)
Exchange differences	-	(20)	-	-	(20)
At 30 June 2021	12,258	3,091	14,160	510	30,019
Amortisation/Impairment
At 1 January 2021	3,871	751	1,845	252	6,719
Amortisation for the period	692	247	-	50	989
Disposals	-	(155)	-	-	(155)
At 30 June 2021	4,563	843	1,845	302	7,553
Net Book Value at 30 June 2021	7,695	2,248	12,315	208	22,466

For the period from 1 January 2021 to 31 December 2021 (audited)	Customer Related £000		Licences £000		Goodwill £000		Technology Related £000		Total £000
Cost
At 1 January 2021	12,258		3,234		14,160		510		30,162
Additions	-		309		-		-		309
Disposals	-		(90)		-		-		(90)
Exchange differences	-		(66)		-		-		(66)
At 31 December 2021	12,258		3,387		14,160		510		30,315
Amortisation/Impairment
At 1 January 2021	3,871		751		1,845		252		6,719
Amortisation for the period	1,370		204		-		102		1,676
Disposals	-		(90)		-		-		(90)
Exchange differences	-		87		-		-		87
At 31 December 2021	5,241		952		1,845		354		8,392
Net Book Value at 31 December 2021	7,017		2,435		12,315		156		21,923

The goodwill included in the above note, relates to the acquisitions of Pallet Express Srl in January 2016, Easy Managed Transport in March 2017, Benfleet Forwarding Limited in October 2017, Regional Express Limited in November 2017, Anglia Forwarding Group Limited in June 2018, Import Services Limited in July 2018, International Cargo Centre in January 2020, and Nidd Transport Limited in October 2020. This is the total value of intangible assets with an indefinite useful life allocated to each respective cash generating unit.

During the first half of 2022, a prudent reassessment of Delamode Anglia was carried out and based on current trading expectations and forecast performance, the Group has impaired the goodwill in Delamode Anglia Limited by £1.5m. This resulted in an impairment of £1,474,000 which is included within administrative expenses in the Condensed Consolidated Income Statement.

6)  Property, plant and equipment

For the period from 1 January 2022 to 30 June 2022 (unaudited)	Freehold Property	Fixtures, Fittings and Equipment	Motor Equipment	Computer Equipment	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2022	322	4,248	921	3,824	9,315
Additions	-	246	73	705	1,024
Disposals	-	(20)	(73)	(98)	(191)
Exchange differences	27	20	11	27	85
At 30 June 2022	349	4,494	932	4,458	10,233
Depreciation
At 1 January 2022	121	1,881	529	2,221	4,752
Charge for the period	19	292	21	220	552
Eliminated on disposal	-	-	(43)	-	(43)
Exchange differences	24	9	10	11	54
At 30 June 2022	164	2,182	517	2,452	5,315
Net book value 30 June 2022	185	2,312	415	2,006	4,918

For the period from 1 January 2021 to 30 June 2021 (unaudited)	Freehold Property	Fixtures, Fittings and Equipment	Motor Equipment	Computer Equipment	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2021	258	2,666	1,024	2,745	6,693
Additions	60	444	30	488	1,022
Disposals	(8)	(44)	(83)	(45)	(180)
Exchange differences	(8)	(50)	(115)	(65)	(238)
At 30 June 2021	302	3,016	856	3,123	7,297
Depreciation
At 1 January 2021	97	1,462	671	1,767	3,997
Charge for the period	15	234	19	241	509
Eliminated on disposal	(8)	(44)	(83)	(45)	(180) )
Exchange differences	(8)	(42)	(71)	(17) )	(138)
At 30 June 2021	96	1,610	536	1,946	4,188
Net book value 30 June 2021	206	1,406	320	1,177	3,109

For the period from 1 January 2021 to 31 December 2021 (audited)	Freehold Property	Fixtures Fittings and Equipment	Motor Equipment	Computer Equipment	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2021	258	2,666	1,024	2,745	6,693
Additions	106	1,717	145	1,294	3,262
Disposals	(31)	(74)	(209)	(160)	(474)
Exchange differences	(11)	(61)	(39)	(55)	(166)
At 31 December 2021	322	4,248	921	3,824	9,315
Depreciation
At 1 January 2021	97	1,462	671	1,767	3,997
Charge for the period	35	513	61	499	1,108
Eliminated on disposal	(8)	(70)	(176)	(12)	(266)
Exchange differences	(3)	(24)	(27)	(33)	(87)
At 31 December 2021	121	1,881	529	2,221	4,752
Net book value 31 December 2021	201	2,367	392	1,603	4,563

7)  Right-of-use assets

For the period from 1 January 2022 to 30 June 2022 (unaudited)

	Property Premises	Equipment	Total
	£000	£000	£000
Cost
At 1 January 2022	68,315	7,658	75,973
Additions	3,312	2,231	5,543
Disposals	(383)	(200)	(583)
Exchange differences	361	62	423
At 30 June 2022	71,605	9,751	81,356
Depreciation
At 1 January 2022	16,164	1,488	17,652
Charge for the period	4,484	1,215	5,699
Eliminated on disposal	(382)	(193)	(575)
Exchange differences	128	11	139
At 30 June 2022	20,394	2,521	22,915
Net book value
At 30 June 2022	51,211	7,230	58,441

For the period from 1 January 2021 to 30 June 2021 (unaudited)

	Property Premises	Equipment	Total
	£000	£000	£000
Cost
At 1 January 2021	41,378	2,247	43,625
Additions	798	39	837
Disposals	(1,412)	(83)	(1,495)
Exchange differences	(690)	(19)	(709)
At 30 June 2021	40,074	2,184	42,258
Depreciation
At 1 January 2021	11,223	803	12,026
Charge for the period	3,404	314	3,718
Eliminated on disposal	(1,412)	(83)	(1,495)
Exchange differences	(146)	(5)	(151)
At 30 June 2021	13,069	1,029	14,098
Net book value
At 30 June 2021	27,005	1,155	28,160

For the period from 1 January 2021 to 31 December 2021 (audited)

	Property Premises	Equipment	Total
	£000	£000	£000
Cost
At 1 January 2021	41,378	2,247	43,625
Additions	32,426	6,010	38,436
Disposals	(4,461)	(570)	(5,031)
Exchange differences	(1,028)	(29)	(1,057)
At 31 December 2021	68,315	7,658	75,973
Depreciation
At 1 January 2021	11,223	803	12,026
Charge for the period	7,379	1,204	8,583
Eliminated on disposal	(2,223)	(506)	(2,729)
Exchange differences	(215)	(13)	(228)
At 31 December 2021	16,164	1,488	17,652
Net book value
At 31 December 2021	52,151	6,170	58,321

8)  Share Capital

	Unaudited	Unaudited	Audited
	30 June 2022	30 June 2021	31 December 2021
	£000	£000	£000
Allotted, issued and fully paid
Ordinary shares of £0.05p each	141,688	141,633	141,688
Ordinary shares of £0.05p each	7,084	7,082	7,084
Deferred Shares of £1 each	50	50	50
Total authorised Share Capital	7,134	7,132	7,134

The deferred shares are non-voting shares and have no rights to any distribution or dividend payments.

On 8 July 2021, SP Angel exercised their option to subscribe for 55,250 Ordinary Shares at the price of £0.24 per share.

9)  Non-Controlling Interests

Non-Controlling interests held in the group are as follows:

		Unaudited	Unaudited	Audited
		30 June	30 June	31 December
		2022	2021	2021
Delamode Baltics UAB		20.00%	20.00%	20.00%
Delamode Estonia OÜ		20.00%	20.00%	20.00%
Delamode Bulgaria OOD		10.00%	10.00%	10.00%
Affinity Leasing IFN		0.05%	0.05%	0.05%
Delamode Distribution UK Limited		49.00%	49.00%	49.00%

10) Loans

	Unaudited	Unaudited	Audited
	30 June	30 June	31 December 2021
	2022	2021
	£000	£000	£000
Current
Bank loans & invoicing discount facility	10,748	11,057	16,493
Non Current
Loans 1- 2 years	909	359	-
Loans 2- 5 years	3,623	1,186	-
Loans due after five years repayable by instalments	-	175	-
Total Loans due after one year	4,532	1,720	-

In H1 2022 loans to the value of £5,441,000 were taken out with Investec, these are secured by a fixed and floating charge over the Group's UK entities' assets.

11)  Leases liabilities - right-of-use assets

	Unaudited	Unaudited	Audited
	30 June	30 June	31 December 2021
	2022	2021
	£000	£000	£000
Current
Leases	10,346	6,927	9,053
Non current
Leases 1- 2 years	9,524	6,395	8,528
Leases 2- 5 years	12,904	9,805	13,852
Leases due after five years repayable by instalments	27,338	6,033	28,245
Total Leases due after one year	49,766	22,233	50,625

12)  Exceptional Items

The Group incurred non-recurring costs totalling £336,000 (H1 2021: £398,000) due to: redundancy and restructuring costs of £184,000 (H1 2021: £234,000) and aborted acquisition costs of £152,000, (H1 2021: £nil). Additionally, there were costs for the new facility in Southampton H1 2021: £164,000.

Adjusted earnings per share has been calculated as follows:

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
	30 June	30 June	31 December
	2022	2021	2021
	£000	£000	£000
(Loss)/profit for the period attributable to the owners of the parent	(2,471)	930	417
Exceptional items	336	398	2,610
Amortisation of intangibles relating to acquisitions	731	742	1,472
Impairment of goodwill arising on acquisition	1,474	-	-
Additional incurred interest charge - IFRS 16	313	167	714
Adjusted profit for the period	383	2,237	5,213

INDEPENDENT REVIEW REPORT TO XPEDIATOR PLC

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises:

-  the condensed consolidated income statement and statement of comprehensive income,

-  the condensed consolidated statement of financial position,

-  the condensed consolidated statement of cash flows,

-  the condensed consolidated statement of changes in equity; and

-  the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with UK-adopted International Accounting Standard 34 and the AIM Rules for Companies.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed on page 16, the annual financial statements of the group are prepared in accordance with UK-adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK-adopted International Accounting Standard 34, "Interim Financial Reporting.

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with this ISRE (UK), however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the Company in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have formed.

Crowe U.K. LLP

London, United Kingdom

26 September 2022

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