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Xpediator PLC (XPD)

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Monday 24 September, 2018

Xpediator PLC

Half-year Report

RNS Number : 6292B
Xpediator PLC
24 September 2018
 

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").  Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

 

 

XPEDIATOR PLC

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

 

INTERIM RESULTS

FOR THE SIX MONTHS TO 30 JUNE 2018

 

Xpediator Plc (AIM: XPD), a leading provider of freight management services across the UK and Europe, is pleased to announce its unaudited interim results for the six months ended 30 June 2018.

 

 

Statutory Results

 

Underlying Results 3

 

 

H1 2018

H1

2017

Change4

 

H1 2018

H1 2017

Change

Revenue

£78.9m

£49.1m

60.7%

 

£63.7m

£49.1m

29.8%

Operating Profit

£2.3m

£1.0m

132.9%

 

£1.6m

£1.0m

60.7%

Earnings

£1.7m

£0.5m

212.9%

 

£1.0m

£0.5m

81.7%

 

 

 

 

 

 

 

 

EPS

1.29p

0.50p

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Profit1

£2.1m

£1.4m

44.2%

 

£1.9m

£1.4m

30.6%

Adjusted Earnings2

£1.4m

£1.0m

33.7%

 

£1.2m

£1.0m

18.4%

Adjusted EPS2

1.06p

1.10p

(3.6)%

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash from (used in)/operating activities

 

£(0.1)m m           

 

£1.9m

 

(106.3)%

 

 

 

 

 

 

 

 

Dividend per share (pence)

 

 

 

0.42p

 

        0.347p                21.0%

 

 

 

 

 

                     

 

1:  Adjustment for one-off costs incurred in H1 2018 comprise £91,000 of costs of acquisition relating to Anglia Forwarding Group Limited,  £361,000 amortisation and the net impact of transactions relating to Benfleet totalling £747,000.  In H1 2017, the Group incurred costs associated with the group restructure and AIM IPO of £331,000, goodwill amortisation of £88,000.  Adjusted Earnings is inclusive of the profit from non-controlling interests of £132,000 (2017 - £105,000).

2:  Adjustment for one-off costs incurred in H1 2018 comprise £91,000 of costs of acquisition relating to Anglia Forwarding Group Limited, £17,000 non cash interest charges, £361,000 amortisation and the net impact of transactions relating to Benfleet totalling £747,000.  In H1 2017, the Group incurred costs associated with the group restructure and AIM IPO of £331,000, goodwill amortisation of £88,000 and non cash interest charges of £86,000.  Adjusted Earnings is inclusive of the profit from non-controlling interests of £132,000 (2017 - £105,000).

3: Underlying Results relates to a business that existed in the same period last year, and thus excludes all acquisitions acquired post 30 June 2017.

                                               

4: The percentages are calculated from movements in the Consolidated Income Statement using £000's rather than £m.

 

Trading Highlights

 

·     Group turnover increased by £29.8m of which £14.6m/49.0% was organic growth and £15.2m/51.0% came from acquisitions

 

·    Strong turnover growth (versus H1 2017) and increased contribution from all three operating divisions (Freight Forwarding, Transport Solutions and Logistics):

Freight Forwarding division up 67.1%

Transport Solutions division up 36.0%

Logistics division up 35.7%

 

·     Turnover generated in the UK increased to £28.8m/36.6% of total (H1 2017: £11.5m/23.5%) of which £2.1m was organic growth and £15.2m came from acquisitions, whilst CEE/non-UK turnover increased £12.5m/33.3% to £50.0m (H1 2017: £37.5m) which was entirely organic

 

·     Particularly strong performance from Pall-Ex Romania now consistently achieving in excess of 45,000 pallets of   freight per month (2017: 35,800 average freight per month)

 

·    Following increased customs security checks across the continent, the development of Benfleet Forwarding Limited's ("Benfleet") Far Eastern business was affected. Whilst trading recently recommenced with a key customer, this has and will continue to impact Benfleet's profitability in 2018.  The resultant impairment of goodwill was countered by a positive restructuring of the original acquisition terms.‎

 

·     Successfully completed two further acquisitions being:

 

·     Anglia Forwarding Group Limited ("AFGL") in May 2018 for an initial net consideration of £1.5m with further consideration payable on the final net asset position on the completion and deferred consideration of up to £2.0m payable depending on future profits generated.

·     Import Services Limited ("ISL") post balance sheet date, for an initial net consideration of £9.0m with further consideration payable on the final net asset position on the completion and deferred consideration of up to £3.0m depending on future profits generated

 

·     Appointment of Stuart Howard as Chief Financial Officer from 1 September 2018

 

·     Pleasing start to H2 2018 with trading weighted as usual towards the second half and the Board remains         confident of delivering full year results in line with market expectations

 

·      Interim dividend increased 21.0% to 0.42 pence per share (H1 2017: 0.347 pence)

 

Alex Borrelli, Chairman, commented:

 

"The first half of 2018 has continued the progress made through 2017.  All three divisions are growing well, underlying revenues have increased substantially, and demand for our freight management services across all our core markets is high.

 

"We continue to seek acquisitions in line with our strategy to add to our existing activities and facilitate our expansion internationally.  During the period, we acquired AFGL, an international freight forwarding and courier business based in Essex, for up to £3.5 million in cash.  In July, we acquired ISL for up to £12 million in a mixture of cash and shares, part financed through an over subscribed placing which raised £7 million, before expenses.  ISL has a strong management team and has 40k sqm of warehousing in the Port of Southampton, representing a significant commercial opportunity for Group expansion, and we expect to benefit from operational and cross-selling opportunities.

 

The Group has now completed four acquisitions over the last 18 months and collectively they are expected to be significant drivers of sales and profit growth in the current year and beyond. Although the increasing customs security checks have affected the development of the Far East business within Benfleet,  I am pleased with the positive steps taken to address this, which ultimately resulted in a one-off net credit to the Group's income statement of approximately £0.7m.

"Following the positive start to the year, the Board is pleased to announce an increased interim dividend in line with our progressive dividend policy and we remain confident in the outlook for our full year results for 2018."

 

An interview with Xpediator CEO, Stephen Blyth, discussing today's Interim Results with Vox Markets will be available today from 7.00am. To listen go to  https://bit.ly/2NZ7Sms or visit the Company's account https://twitter.com/@Xpediator.

 

Enquiries

Xpediator plc

Tel: +44 (0)330 043 2395

Stephen Blyth, Chief Executive Officer

Email: [email protected]

Stuart Howard, Chief Financial Officer

 

 

 

SP Angel Corporate Finance LLP (Nominated Advisor & Joint Broker)

Tel: +44 (0)20 3470 0470

Jeff Keating

 

Caroline Rowe

 

    

 

Cantor Fitzgerald Europe (Joint Broker)

Tel: +44 (0)20 7894 7000

David Foreman, Michael Boot (Corporate Finance)

 

Caspar Shand Kydd, Gregor Paterson (Sales)

 

 

 

Novella Communications (Financial Public Relations)

Tel: +44 (0)20 3151 7008

Tim Robertson

 

Toby Andrews

 

 

About Xpediator:

Xpediator is a well-established international provider of freight management services. Established in 1988 by CEO Stephen Blyth today the Group's International network of offices provides road, sea and air freight services, together with logistics and warehousing in the UK and Romania. The business offers integrated freight management within the supply chain logistics and fulfilment sector, through their three main areas: freight forwarding, logistics & warehousing and transport solutions. With headquarters in Braintree, Essex and country offices in nine CEE countries across 31 sites, the Group currently employs 938 people and was successfully listed on London's AIM market in August 2017.

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

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

 

 

CEO Statement

 

Introduction

This has been a successful period for the Group delivering substantial increases in revenues and profitability. Pleasingly, these increases have come in near equal measure from organic growth and contribution from the acquisitions we have made.

Equally importantly, this momentum has continued into the second half of 2018. Xpediator is trading in line with management expectations and is well placed to continue to expand.

Positioned for Growth

Established as a scalable, risk adjusted, platform to support an expanding portfolio of freight management companies across the UK and Europe with a particular expertise in Central and Eastern Europe ("CEE"), Xpediator has been successful in pursuing this objective. Over the last 12 months, the Group has grown substantially, increasing the number of active customers through a balance of strong organic growth and complementary acquisitions.

This growth has been supported by a positive market environment in which demand for transportation solutions has been high and we are confident this will continue. The very visible consumer switch from the high street to home deliveries has been a significant global factor in driving demand together with an increase in commercial activity across our core markets.

The Group has adopted an asset light business model to minimise risk. Operating on a comparatively low fixed cost base, no one customer represents more than 2% of Group turnover and revenues are spread over multiple geographies and market sectors thereby further reducing customer and market risk. This approach is replicated throughout the business and is key to ongoing scalability.

Increasing scale will continue to come from a healthy mix of organic and acquisition led growth. We have the ability to source capacity within our current structure to manage the forecast increase in demand and we continue to see opportunities to acquire complementary businesses which can fit within the Xpediator portfolio.

H1 2018 Trading

The Group generated revenues of £78.9m during the six months ended 30 June 2018 (H1 2017: £49.1m), adjusted operating profit of £2.1m (H1 2017: £1.4m) and unadjusted profit after tax of £1.7m (H1 2017: £0.5m). Pleasingly, all three of the Group's operating divisions (Freight Forwarding, Transport Solutions and Logistics) delivered strong turnover growth and increased contribution, further details of which are set out below.

 

Turnover generated in the UK increased to £28.8m/36.6% of total (H1 2017: £11.5m/23.5%) of which £2.1m was organic and £15.2m came from acquisitions, whilst CEE/non-UK turnover increased £12.5m/33.3% to £50.0m (H1 2017: £37.5m) which was entirely organic.

 

Reflecting confidence in the future, the Board has announced the payment of an interim dividend of 0.42p per share. The dividend will be payable to shareholders on the register on 5 October 2018 with the ex div date being 4 October 2018.  The dividend will be paid on 26 October 2018.

 

Acquisitions

In May 2018, we expanded our position in the international freight forwarding market with the acquisition of Anglia Forwarding Group. Anglia has been well integrated into the Group and its strength in sea and air freight, in particular, has significantly increased the Group's capabilities in these areas.

Post the half-year end in July 2018, Import Services Limited ("ISL") was acquired for up to a maximum consideration of £12 million in part financed through an over subscribed placing which raised £7 million, before expenses.  ISL is a long established contract warehousing business located within the port of Southampton, has 40k sqm of warehousing capacity and a strong presence in the toy, leisure and sports sectors. It is a natural fit with the Group and provides scope to combine with our existing facilities in Southampton and expand the Group's capabilities around port services.  The integration of ISL into the Group is progressing in line with expectations and the ISL team have made a positive start post acquisition.

 

Operational Review

Freight Forwarding                       

Revenue                               H1 2018: £65.4m              H1 2017: £39.1m

Operating profit               H1 2018: £1.0m H1 2017: £0.7m

Freight forwarding services are provided under the Delamode brand. The division specialises in connecting CEE countries and the UK. In the period under review, the freight forwarding division increased revenues by 68.2% of which 30.7% was organic.

This organic growth was principally driven by increased activities in the Baltic region  together with the development of  Greek activity [through our Bulgaria operations]. The Group has also continued to progress the development of the full load activity, which, whilst decreasing gross profit margins, is both revenue and earnings enhancing. The West Balkan activity generated an increase in revenues of 41.7% against the comparable period last year.

The Group's EshopWedrop division is also progressing in line with expectations with franchises having been awarded to companies in Albania and Cyprus in 2017 and, more recently, in the USA. Further franchises are expected to be agreed in the last quarter of 2018.

Transport Solutions                       

Revenue                              H1 2018: £3.1m                  H1 2017: £2.2m

Operating profit               H1 2018: £1.2m                  H1 2017: £1.1m

Transport solutions, 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 in Romania, one of the world's largest fuel card providers and provides the DKV fuel card across the Balkans to a database of approximately 1,700 Eastern European hauliers and over 12,500 trucks. In addition, Affinity provides a "one stop shop" of transport services including roadside assistance and ferry bookings.

Affinity's commercial model fits well within the Group as many of the hauliers who are customers of Affinity also supply haulage services to Delamode a key factor that enables the Group to have a good understanding of its customers/suppliers, which underpins the strategy to provide further financial services such as insurance and leasing.

Affinity generated record revenues during the period.  The majority of this growth was from increased provision of fuel cards in the West Balkan region along with increased ferry crossing sales in Romania, up by 46.7% to approximately 11,000, (H1 2017 : 7,500), albeit this latter service is lower margin and therefore impacted the divisions overall margin in the period compared with H1 2017. 

Logistics & Warehousing                            

Revenue                               H1 2018: £10.5m              H1 2017: £7.7m

Operating profit               H1 2018: £0.3m H1 2017: £0.2m

Logistics and Warehousing comprises:

·     distribution hubs in the UK and southern Europe providing over 50,000 sqm of shared user space (at the period end);

·     pallet distribution services: the Group is the master franchisee of a fast growing pallet distribution network in Romania which trades under the Pall-Ex brand; and

·     EMT, a business based in London specialising in fashion logistics.

Pall-Ex contributed strongly during this period and is now moving over 45,000 pallets of freight monthly, a significant increase over the prior period (2017: 38,500 per month).

Our logistics network continued to develop its offering in 2018 by increasing the customer database and service offerings, including e-commerce. The Group plans to move into a new purpose built cross dock facility in Sibiu in 2019 to accommodate the increased Pall-Ex activity.  The Logistics divisions activities remain largely focused in CEE and the UK.

Warehousing activity increased in the first half 2018 compared to 2017 as a result of a rise in customer activity in the UK and the new warehouse in Romania which opened in the second half of 2017. In the UK, warehouse activity in Braintree is expected to increase in the second half of 2018 following the significant expansion of a contract with an existing customer

Brexit

 

We have consistently said that we see Brexit as an opportunity for Xpediator. The current uncertainty makes planning for all business challenging. We maintain however, that our experience over the last 30 years of providing cross border transport solutions (including customs clearances) leaves us well positioned to adapt to, and indeed benefit from the consequences of Brexit, hard or soft.  Ultimately, our customers will need to understand and find solutions to continue getting their goods to their end-market.

 

People

 

During the period, the Company welcomed Michael Grange as Chief Information Officer (non-Board position) and Rob Riddleston as a Non Executive Director, an experienced corporate banker with extensive knowledge of the logistics sector.  Further, on 20 August 2018, the Company confirmed the appointment of Stuart Howard, previously CEO of Dollar UK, as the Company's new CFO from 1 September 2018.

I am extremely pleased to welcome such experienced individuals to Xpediator and I am confident that they will all make a significant contribution to the future growth of the business.

Outlook

As is usual across our industry, activity levels are second half weighted. In general, there is increasing demand for our range of freight management services, driven by economic growth especially across the CEE region and wider global trends such as e-commerce activity driving up the frequency of goods to be delivered across all our markets. These factors, combined with the increased size and additional capabilities of the Xpediator Group means the business is well positioned to continue growing and to generate increased revenues and higher profits and dividends.

With trading in the second half having begun well, the Board is confident that the Group will deliver financial results for the full year in line with market expectations.

 

Stephen Blyth

CEO

21 September 2018

 

 

 

Financial Review

 

Revenue

The underlying revenue for the six months to 30 June 2018 was £78.9m, an increase of £29.8m/60.7% on the comparable period (H1 2017: £49.1m). Of this revenue increase, £14.6m was organic whilst £15.2m came from newly acquired businesses

Turnover increased across all of our main countries of operations.  UK turnover increased by 150% to £28.8m (H1 2017: £11.5m) arising principally from the acquired businesses and represented approximately 36.5% of Group revenues (H1 2017: 23.5%).  Romania, Lithuania and Bulgaria each grew revenues by over 30.0%, much of this growth due to the successful and ongoing focus and development of the full load activity in the Baltic region and the development of the Bulgarian activity servicing the Greek markets.

Operating profit

Statutory operating profit for the period was £2.3m (H1 2017: £1.0m), a 132.8% increase year on year. However, £0.7m of this increase related to the net effect of one off accounting adjustments in respect of Benfleet (further details provided below). Adjusted operating profit increased by 44.2% in the period to £2.1m (H1 2017: £1.4m).

 

As is usual for the half year period end, the Group made a significant number of deliveries over the period for which the revenue and profit will be recognised on final delivery.  Accordingly, deferred revenue of £1.2m (H1 2017: £0.9m) and deferred operating profit of £0.1m (H1 2017: £0.1m) will be recognised in the second half of 2018. Due to seasonality of the business, the amount of deferred revenue will be considerably smaller at the year-end date.

Financing costs

The net interest expense for the six month period was £0.2m (H1 2017:  £0.2m). The reported net interest expense totalled £0.2m (H1 2017: £0.3m) which included a charge of £17,000 relating to the "unwinding" of the difference between the expected present value of deferred consideration and the expected total consideration relating to acquisitions completed in 2017 and 2018 (H1 2017: £88,000). This is a non-cash interest charge and is not trading related.

Tax

The tax charge for the period to June 2018 was £0.5m compared to £0.2m for the same period in 2017. This equates to an effective tax rate of 23.4% compared to 25.6% for the period to 30 June 2017.

The effective rate was principally affected by the exceptional costs associated from acquisitions made and the non-cash finance charge in 2018.

Balance Sheet

The Group had net assets of £17.5m as at 30 June 2018 (31 December 2017: £14.8m).

Non-current trade and other receivables increased by £1.9m to £2.1 million (31 December 2017: £0.1 million) being the receivable due from the vendors of Benfleet Forwarding as referred to below. 

Current trade and other receivables increased by £2.6m to £54.4m (31 December 2017: £51.8m), partially as a result of the acquisition of AFGL.

Non-current liabilities fell by £1.4m to £4.8m (31 December 2017: £6.2m) principally as a result of the £0.9m reduction in deferred consideration, (which is no longer due on the acquisition of Benfleet and other deferred consideration now falling due within one year) and £0.5m reduction in loans and borrowings.

The Group's cash position was £6.0m as at 30 June 2018 (31 December 2017: £7.4m) partially due to  the acquisition of AFGL.  In addition, the Group sought to pay suppliers more quickly in order to benefit from early settlement discounts which resulted in a net operating cash out flow.  The Group utilised Delamode's UK CID facility to finance the accelerated supplier payments which resulted in Group total borrowings increasing to £6.5m at 30 June 2018 (31 December 2017: £5.8m).

Share Capital

On 8 June 2018, the Group issued 1,727,694 shares to the former owners of EMT as part of the payment of the deferred consideration relating to the acquisition of the entire equity of EMT in 2017. The shares had a market value of £1.1m.

Dividends

The Directors are declaring an interim dividend of 0.42 pence (H1 2017: 0.347 pence) per share totalling £558,000 (H1 2017: £350,000) to be paid on 26 October 2018. This dividend has not been accrued in the consolidated Statement of Financial Position.

 

Benfleet 

In October 2017, the Group acquired the entire issued share capital of Benfleet. As a result of EU concerns over UK under-collection of duty on Chinese imports, HMRC changed the customs clearance processes being applied in the period. Consequently, Benfleet's Far Eastern customers began experiencing delays and incurring additional costs which resulted in those customers suspending sending containers to the UK. This impacted both the revenues and the profitability of Benfleet during the period. The Group therefore obtained legal and taxation advice on the situation and procedures undertaken, and the business re-commenced post 30 June 2018, albeit at significantly lower levels to that previously performed in 2017.

As a result of this reduced profitability, the Group has carried out an impairment review on Benfleet.  Based on the Board's expectations and projected future cash flows, the Group determined an impairment of £1.8m should be made against the goodwill capitalised upon the acquisition of Benfleet (see note 5).  The impairment charge has been recognised in administration expenses through the Income Statement.  

Given this projected, reduced profitability of Benfleet, the Group also determined and has agreed with the original vendors of Benfleet that potential deferred consideration totalling £0.6m, which was the fair value recognised as at 31 December 2017, will no longer be payable.  This liability has therefore been written back.  Further, the vendors of Benfleet have agreed to reimburse Xpediator a total of £2.1m from the original initial consideration paid, to be received by the earlier of the share price reaching 93 pence or December 2020. Both the release of the deferred consideration of £0.6m and the recognition of the receivable from the vendors of Benfleet with a fair value of £1.97m have been recognised within administrative expenses in the Income Statement  (see note 9).

The overall net impact of impairment charge, release of previously recognised deferred consideration payable and recognition of receivable from vendors of £0.7m has been recognised as a credit to the Income Statement

 

Stuart Howard (CFO) and Richard Myson (former CFO)

21 September 2018

 

 

Consolidated income statement

 

Unaudited

Unaudited

Audited

 

 

        6 months to

6 months to

Year to

 

 

 30 June

        2018

30 June

2017

31 December 2017

 

Note

                                £000

          £000

  £000

Gross Billing

 

143,770

106,994

232,070

 

 

 

 

 

Revenue                                                                                                                      

1

78,879

49,063

116,297

Cost of sales

 

(62,049)

(37,389)

(88,186)

Gross profit

 

16,830

11,674

28,111

Other operating income

 

147

365

658

Administrative expenses

 

(14,632)

(11,032)

(25,680)

Operating profit

 

2,345

1,007

3,089

 

EBIT

 

 

 

 

Exceptional items included in Administrative

 

 

 

 

expenses above

   11

91

331

912

Exceptional items - Benfleet

   11

(747)

-

-

Operating profit before exceptional items

 

1,689

1,338

4,001

 

 

 

 

 

Finance income

 

14

2

12

Finance costs

 

(181)

(210)

(370)

Non cash finance costs

   11

(17)

(88)

(295)

Profit before tax

 

2,161

711

2,436

Income tax

 

                     (506)

(182)

(651)

Profit for period

 

1,655

529

                1,785

 

Profit attributable to:

 

 

 

 

Owners of the parent

 

 

1,523

 

424

1,540

Non-controlling interests

 

 

132

 

105

     245

Profit for period

 

 

1,655

 

 529

1,785

 

 

 

 

 

EPS attributable to the owners of the parent

 

 

 

 

Basic earnings pence per share

3

 

1.29

 

0.50

1.64

Diluted earnings pence per share

3

 

1.27

 

0.50

1.63

Adjusted basic earnings pence per share*

3

 

1.06

 

1.10

 

3.27

Adjusted diluted earnings pence per share

3

 

1.04

 

1.10

3.26

           

 

* Earnings per share adjusted for exceptional costs as described in note 11

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

Unaudited

Unaudited

Audited

 

6 months to

6 months to

Year to

 

30 June

2018

30 June

2017

31 December 2017

 

£000

£000

£000

 

 

 

 

Profit for the period

1,655

 529

1,785

 

 

 

 

Other comprehensive income

 

 

 

Exchange differences on translation of foreign operations

(32)

85

112

Total comprehensive income for the period

 

1,623

 

614

 

1,897

                               

 

Total comprehensive income attributable to:

 

 

 

 

Owners of the parent

 

 

1,494

                         

                          501

1,634

Non-controlling interests

 

 

129

                         

                            113

263

Total comprehensive income for the period

 

 

1,623

 

614

1,897

  

 

 

 

 

 

Unaudited

Unaudited

Audited

Consolidated statement of

financial position

 

30 June

2018

30 June

2017

31 December 2017

 

Note

£000

£000

£000

Non-current assets

 

 

 

 

Intangible assets

5

14,439

7,997

15,168

Property, plant and equipment

6

1,713

1,368

1,600

Investments

 

58

15

1

Trade and other receivables

 

2,112

181

149

Deferred tax

 

231

202

196

Total non-current assets

 

18,553

9,763

17,114

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

42

34

50

Trade and other receivables

 

54,405

39,731

51,806

Cash and cash equivalents

 

                5,988

6,927

7,385

Total current assets

 

60,435

46,692

59,241

 

 

 

 

 

Total assets

 

78,988

56,455

76,355

 

 

 

 

 

 

Equity

 

 

 

 

Share capital

7

6,008

4,050

5,922

Share premium

 

5,792

-

5,792

Equity reserve

 

151

-

69

Translation reserve

 

521

529

546

Merger reserve

 

(521)

(3,750)

(1,509)

Retained earnings

 

5,054

2,769

3,535

Total equity

 

17,005

3,598

14,355

 

 

 

 

 

Non-controlling interests

8

487

266

413

Total equity

 

17,492

3,864

14,768

Non-current liabilities

 

 

 

 

Deferred consideration

9

601

-

1,666

Trade and other payables

 

-

1,103

-

Interest bearing loans and borrowings

10

2,810

3,084

3,309

Deferred tax

 

1,374

804

1,209

 

 

4,785

4,991

6,184

Current liabilities

 

 

 

 

Overdrafts

 

267

-

45

Trade and other payables

 

50,764

41,943

50,973

Deferred consideration

9

1,955

-

1,840

Interest bearing loans and borrowings

10

3,725

5,657

2,545

 

 

56,711

47,600

55,403

Total liabilities

 

61,496

52,591

61,587

Total equity and liabilities

 

78,988

56,455

76,355

 

 

Consolidated statement of cash flows

 

Unaudited

Unaudited

Audited

 

 

6 months to

6 months to

Year to

 

 

30 June

2018

30 June

2017

31 December 2017

 

 

£000

£000

£000

Profit before tax

2,161

711

2,436

Adjustment for:

 

 

 

Depreciation

237

159

368

Amortisation

425

145

437

Finance costs

198

298

665

Finance income

(14)

(2)

(12)

Share based payment charge

82

-

69

Impairment of intangible assets

1,845

-

-

Deferred consideration write back and vendor income

(2,592)

-

-

Profit on disposal of investments

                                          -

 

(15)

Loss on disposal of property, plant and equipment

13

29

8

 

2,355

1,340

3,956

Changes in working capital:

 

 

 

Decrease/(increase) in stock

8

10

(6)

Increase/(decrease) in trade and other receivables

325

(11,179)

(17,208)

(Decrease)/increase in trade and other payables

(2,806)

11,710

16,043

Net cash (used in)/generated from operating activities

 

(118)

1,881

 

2,785

 

 

 

 

 

Continuing operations

Cash flows from operating activities

 

 

 

 

Interest paid

 

(181)

(212)

(370)

Tax paid

 

(402)

(309)

(762)

Net cash from operating activities

 

(701)

1,360

1,653

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of tangible fixed assets

 

(195)

(338)

(771)

Acquisition of subsidiary, net of cash acquired

 

(1,352)

(2,500)

 

(5,835)

Cash received from sale of investments

 

83

-

-

Purchase of intangible fixed assets

 

(49)

(38)

(47)

Sale of tangible fixed assets and investment property

 

-

-

 

72

Sale of investments

 

-

 

30

Interest received

 

14

2

12

Net outflow from investing activities

 

(1,499)

(2,874)

(6,539)

Cash flows from financing activities

 

 

 

 

New loans

 

1,029

4,183

 

1,198

Loan repayments

 

(348)

(794)

(696)

Issue of ordinary shares for cash

 

-

-

7,184

Dividend paid

 

-

-

(350)

Transactions with non-controlling interests

 

(3)

(193)

(209)

Non-controlling interest dividends paid

 

(55)

(104)

(107)

Net cash inflow from financing activities

 

623

3,092

7,020

 

 

 

Consolidated statement of cash flows

 

Unaudited

Unaudited

Audited

 

 

6 months to

6 months to

Year to

 

 

30 June

2018

30 June

2017

31 December 2017

 

 

£000

£000

£000

(Decrease)/increase in cash and cash equivalents from continuing operations

 

(1,577)

1,578

 

2,134

Cash and cash equivalents at beginning of period

 

7,340

5,351

 

5,351

Effect of foreign exchange rate movements

 

(42)

(2)

 

(145)

Cash and cash equivalents at end of period

 

5,721

 

6,927

 

7,340

 

Consolidated Statement of Changes in Equity

   For the six months to 30 June 2018 (unaudited)

 

Share

Capital

£'000

Share     Premium    £'000

Equity     Reserve       £'000

Retained earnings

£'000

 

Translation Reserve

£000s

Merger

Reserve

£'000

Total

 

£'000

Non-controlling interests £'000

Total Equity

£'000

Balance at 1 January 2018

 

5,922

 

5,792

 

69

 

3,535

 

546

 

(1,509)

 

14,355

 

413

 

14,768

Dividends

-

 

-

 

-

-

-

-

-

 

(55)

 

(55)

Share options not yet exercised

-

 

-

 

82

-

-

-

82

 

-

 

82

Issue of share Capital

86

 

-

 

-

-

-

988

1,074

 

-

 

1,074

Total contributions by and distributions to owners

86

 

 

 

-

 

 

 

82

-

-

988

1,156

 

 

 

(55)

 

 

 

1,101

 

Profit for the period

 

 

-

 

 

              -

 

 

         -

 

 

1,523

 

 

                   -

 

 

-

 

 

1,523

 

 

132

 

 

1,655

Exchange differences on foreign operations

 

 

 

                     -

 

 

 

-

 

 

 

-

 

 

 

(4)

 

 

 

(25)

 

 

 

-

 

 

 

(29)

 

 

 

(3)

 

 

 

(32)

Total comprehensive income for the period

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,519

 

 

 

(25)

 

 

 

-

 

 

 

1,494

 

 

 

129

 

 

 

1,623

 

Balance at 30 June 2018

 

 

6,008

 

 

5,792

 

 

151

 

 

5,054

 

 

521

 

 

(521)

 

 

17,005

 

 

487

 

 

17,492

 

 

 

For the six months to 30 June 2017 (unaudited)

 

Share

Capital

£'000

Retained earnings

£'000

 

Translation Reserve

£000s

Merger

Reserve

£'000

Total

 

£'000

Non-controlling interests £'000

Total Equity

£'000

Balance at 1 January 2017

4,050

2,466

452

(3,750)

3,218

345

3,563

Acquisition of NCI

-

         (121)

 -

  -

(121)

(88)

(209)

Dividends

-

                 -

-

-

-

(104)

(104)

Total contributions by and distributions to owners

-

(121)

-

-

(121)

 

 

(192)

 

 

(313)

Comprehensive income

 

 

 

 

 

 

 

 

Profit for the period

 

-

       

 424

 

-

 

-

 

424

 

105

 

529

Exchange differences on foreign operations

 

-

 

77

 

-

 

77

 

8

 

85

Total comprehensive income for the period

 

-

 

424

 

77

 

-

 

501

 

113

 

614

 

Balance at 30 June 2017

 

4,050

 

2,769

 

529

 

(3,750)

 

3,598

 

266

 

3,864

 

 

 

 

 

 

 

 

 

 

 

For the year ended 31 December 2017 (audited)

 

 

Share

Capital

£'000

Share       Premium     £'000

Equity       Reserve       £'000

Retained earnings

£'000

 

Translation Reserve

£000s

Merger

Reserve

£'000

Total

 

£'000

Non-controlling interests £'000

Total Equity

£'000

Balance at 1 January 2017

4,050

-

-

2,466

452

(3,750)

3,218

345

3,563

Acquisition of NCI

-

 

   -

 

-

(121)

-

-

(121)

 

  (88)

 

(209)

Dividends

 

 

 

 

 

 

 

 

 

Distributions to owners

-

 

-

 

-

(350)

-

-

(350)

 

(107)

 

(457)

Share Based Consideration on Acquisitions

480

 

 

-

 

 

-

-

-

2,241

2,721

 

 

-

 

 

2,721

Share Options not yet exercised

-

 

 

-

 

 

69

-

-

-

69

 

 

-

 

 

69

Issue of Share Capital

1,392

 

5,792

 

-

-

-

-

7,184

 

-

 

7,184

Total contributions and distribution to owners

1,872

 

 

 

 

5,792

 

 

 

 

69

(471)

-

2,241

9,503

 

 

 

 

(195)

 

 

 

 

9,308

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

Profit for the year

 

-

 

-

 

-

 

1,540

 

-

 

-

 

1,540

 

245

 

1,785

Exchange differences on foreign operations

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

94

 

 

 

-

 

 

 

94

 

 

 

18

 

 

 

112

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

 

 

-

 

 

-

 

 

-

 

 

1,540

 

 

94

 

 

-

 

 

1,634

 

 

263

 

 

1,897

Balance at 31 December 2017

 

5,922

 

5,792

 

69

 

3,535

 

546

 

(1,509)

 

14,355

 

413

 

14,768

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD TO 30 JUNE 2018

 

General information

The financial information included in this 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 2018 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 2017, except as noted below for new standards adopted. The statutory accounts of the Xpediator PLC for the year ended 31 December 2017 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.

Basis of preparation

Xpediator Plc (the 'Company') is a company incorporated in England. The consolidated interim financial statements of the Company for the six month period ended 30 June 2018 comprise the Company and its subsidiaries (together referred to as the 'Group'). The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. They are unaudited but have been reviewed by the Company's auditor and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2017.

The preparation of 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.

 

During the six months ended 30 June 2018, management also reassessed its estimates in respect of deferred contingent consideration and considered the recoverable amount of goodwill and other intangible assets. Please refer to notes 5 and 9 for further details.

 

Merger accounting

On 25 May 2017, Xpediator entered into a share swap agreement with the ultimate beneficiaries of Delamode Group Holdings Limited, whereby 4,000,000 new ordinary shares of £1.00 each were issued to the ultimate beneficiaries of the Delamode Group Holdings Limited in exchange for their shares in Delamode Group Holdings Limited in the same proportion as their shareholding in Delamode Group Holdings Limited. The merger method of accounting is used to consolidate the results of Xpediator and Delamode Group Holdings Limited and subsidiaries.

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.

Changes in significant accounting policies

The Group has adopted IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments' from 1 January 2018. Neither standard has a material effect on the Group's financial statements.

 

Except for the first time application of IFRS 15 and IFRS 9, the significant judgements made by management in applying the Group accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2017.

Revenue recognition

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18 'Revenue', IAS 11 'Construction Contracts' and related interpretations.

 

As the effect of the application of IFRS 15 is not material, further details of the new significant accounting policies will be set out in the Group's consolidated financial statements as at and for the year ending 31 December 2018.

 

Financial instruments

IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 'Financial Instruments: Recognition and Measurement'. The adoption of IFRS 9 resulted in no adjustments to previously reported results.

 

As the effect of the application of IFRS 9 is not material, the details of the new significant accounting policies will be set out in the Group's consolidated financial statements as at and for the year ending 31 December 2018.

 

There have been no material revisions to the nature and amount of estimates of amounts reported in prior period except whether the implementation of IFRS 9 discussed above requires a different approach to the accounting previously applied. Significant estimates and judgments that have been required for the implementation of these new standard are:

•     Estimating the lifetime losses of trade receivables for the purpose of IFRS 9's expected credit loss model

 

New or amended EU endorsed accounting standards

Details of new or revised accounting standards, interpretations or amendments which are effective for periods beginning on or after 1 January 2018 and which are considered to have an impact on the Group can be found in the annual financial statements for the year ended 31 December 2017.

 

IFRS 16 'Leases' is effective 1 January 2019. IFRS 16 will change lease accounting for lessees under operating leases. Such agreements will require recognition of an asset, representing the right to use the leased item, and a liability, representing future lease payments. Lease costs will be recognised in the form of depreciation and interest, rather than as an operating cost. The adoption is likely to have a material impact on the presentation of the Group's assets and liabilities, mainly due to property leases. Due to the quantity of leases under review, the Group has not substantially completed the assessment of lease contracts under the new accounting standard. Therefore, a quantification of the impact on the Group's results cannot yet be reliably estimated.

 

The Group is not expecting any other new standards that would have a significant impact to the Group.

Accounting for associates

Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the group holds between 20% and 50% of the voting rights. Investment in associates are accounted for using the equity method of accounting. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss, and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

Going concern

The Directors have concluded that it is appropriate that the financial statements have been prepared on a going concern basis given the cash balances as at 30 June 2018, and funding facilities in place across the group, which it does not envisage will be withdrawn thus there are sufficient funds available to meet its liabilities as they fall due.  The financial statements have therefore been prepared on a going concern basis.

The directors believe that based on the current budgets and forecast cash flows, there is sufficient resources to meet its liabilities as they fall due.

1)     Turnover analysis by Country & Segment

 

 

 

Unaudited

Unaudited

Audited

 

 

6 months to

6 months to

Year to

 

 

30 June

     2018

30 June

2017

31 December 2017

 

 

     £000

£000

£000

 

 

 

 

 

United Kingdom

 

28,839

                              11,534

32,147

Romania

 

15,397

                              11,594

25,739

Lithuania

 

20,862

                              15,529

36,167

Bulgaria

 

8,489

                                6,372

13,538

 

 

 

 

 

Other

 

5,292

                               4,034

8,706

Total Income

 

78,879

                             49,063

116,297

 

 

 

Unaudited

      Unaudited

Audited

 

 

6 months to

   6 months to

Year to

 

 

30 June

     2018

          30 June

               2017

  31 December 2017

 

 

     £000

               £000

£000

Freight Forwarding

 

 

 

 

United Kingdom

 

24,661

                    8,792

24,952

Romania

 

6,704

4,702

10,513

Lithuania

 

20,862

15,529

36,167

Bulgaria

 

8,489

6,372

13,538

Other

 

4,645

3,710

8,169

Total Income Freight Forwarding

 

65,361

39,105

93,339

                                               

Logistics

 

 

 

 

United Kingdom

 

4,178

2,742

7,195

Romania

 

6,285

4,969

11,181

Total Income Logistics

 

10,463

7,711

18,376

 

Transport Solutions

 

 

 

 

Romania

 

2,408

1,923

4,045

Other

 

647

324

537

Total Income Transport Solutions

 

3,055

2,247

4,582

 

 

Total Income

 

78,879

49,063

116,297

 

 

 

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, Logistics and Transport Solutions. All revenue is derived from the provision of services.

•              Freight Forwarding - This division is the core business and relates to the movement of freight goods across Europe. This division accounts for the largest proportion of the Group's business, generating 82.9% of its external revenues contributed in 2018 (H1 2017: 79.9%)

•              Transport Solutions - This division focuses on the reselling of DKV fuel cards, leasing, ferry crossings and other associated transport related solutions. This division accounts for 3.9% of the Group's business in terms of revenue (H1 2017: 4.6%)

•              Logistics - This division provides warehousing and domestic distribution and generated 13.2% of the Group's external revenues in 2018 (H1 2017: 15.7%).

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 CEOs, the Chief Executive Officer and the Chief Financial Officer.

No single customer accounted for more than 2% 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 2018

Freight Forwarding

Logistics

Transport Solutions

Unallocated

Total

 

2018

2018

2018

2018

2018

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Gross Billings

65,361

10,722

67,687

-

143,770

Less recoverable disbursements

-

-

(64,632)

-

(64,632)

Total revenue

65,361

10,722

3,055

-

79,138

Inter-segmental revenue

-

(259)

-

-

(259)

Total revenue from external customers

65,361

10,463

3,055

-

78,879

Depreciation & amortisation

(423)

(177)

(23)

(39)

(662)

 

 

 

 

 

 

Segment Profit (excluding exceptional items)

986

320

1,192

(809)

1,689

Net Finance costs

 

 

 

 

(184)

Exceptional items

 

 

 

 

656

Profit before income tax

 

 

 

 

2,161

 

 

Segmental Analysis for the period to 30 June 2017

Freight Forwarding

Logistics

Transport Solutions

Unallocated

Total

 

2017

2017

2017

2017

2017

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Gross Billings

39,105

7,945

59,944

-

106,994

Less Recoverable Disbursements

-

-

(57,697)

-

(57,697)

Total revenue

39,105

7,945

2,247

-

49,297

Inter-segmental revenue

-

(234)

-

-

(234)

Total revenue from external customers

39,105

7,711

2,247

-

49,063

 

 

 

 

 

 

Depreciation & amortisation

54

227

18

5

304

 

 

 

 

 

 

Segment profit (excluding exceptional items)

688

221

1,080

(651)

1,338

Net finance costs

 

 

 

 

(296)

Exceptional items

 

 

 

 

(331)

Profit before income tax

 

 

 

 

711

 

Segmental Analysis for the year to 31 December 2017

Freight Forwarding

Logistics

Transport Solutions

Unallocated

Total

 

2017

2017

2017

2017

2017

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Gross Billings

93,339

18,898

119,833

-

232,070

Less recoverable disbursements

-

-

(115,251)

-

(115,251)

Total revenue

93,339

18,898

4,582

-

116,819

Inter-segmental revenue

-

(522)

-

-

(522)

Total revenue from external customers

93,339

18,376

4,582

-

116,297

 

 

 

 

 

 

Depreciation & amortisation

(235)

(530)

(38)

(2)

(805)

 

 

 

 

 

 

Segment profit (excluding exceptional items)

2,434

932

1,952

(1,317)

4,001

Net finance costs

 

 

 

 

(653)

Exceptional items

 

 

 

 

(912)

Profit before income tax

 

 

 

 

2,436

 

3)     Earnings per share

 

 

 

Unaudited

Unaudited

 

 

 

6 months to

6 months to

Year to

 

 

30 June

2018

30 June

2017

31 December 2017

 

 

£000

£000

£000

Weighted average number of shares - basic

 

117,651

84,296

94,004

Weighted average number of shares - diluted

 

119,637

84,296

94,328

Profit for the period attributable to equity holders of the company

 

1,523

424

1,540

Profit for the period attributable to equity holders of the company excluding exceptional items (see note 11)

 

1,245

 

931

 

3,077

Earnings per share - basic (pence)

 

1.29

0.50

1.64

Earnings per share - diluted (pence)

 

1.27

0.50

1.63

 

 

 

 

 

Earnings per share - basic (pence) (excluding exceptional items)*

 

1.06

1.10

3.27

Earnings per share - diluted (pence) (excluding exceptional items)*

 

1.04

1.10

3.26

 

*Earnings per share adjusted for exceptional costs (see note 11)

 

 

 

4)     Dividends

The directors are declaring an interim dividend of 0.42 pence (H1 2017: 0.347 pence) per share totalling £558,000 (H1 2017: £350,000) to be paid on 26 October 2018. This dividend has not been accrued in the consolidated statement of Financial Position.

 

5)     Intangible Asset

For the period from 1 January 2018 to 30 June 2018 (unaudited)

Customer related

Licences

Goodwill

Total

Cost

£'000

£'000

£'000

£'000

At 1 January 2018

5,689

2,675

15,915

Additions

-

49

-

49

Acquired through business combinations

938

-

531

1,469

Transfer between categories

(19)

19

-

-

Exchange differences

-

25

-

25

At 30 June 2018

6,608

2,768

17,458

 

 

 

 

 

Amortisation

 

 

 

 

At 1 January 2018

330

417

-

747

Amortisation for the period

361

64

-

425

Impairment

-

-

1,845

1,845

Exchange differences

-

2

-

2

At 30 June 2018

691

483

3,019

 

 

 

 

 

Net Book Value at 30 June 2018

5,917

2,285

6,237

14,439

 

 

For the period from 1 January 2017 to 30 June 2017 (unaudited)

Customer related

Licences

Goodwill

Total

Cost

£'000

£'000

£'000

£'000

At 1 January 2017

-

2,453

3,135

Additions

-

38

-

38

Acquired through business combinations

2,872

-

2,258

5,130

Exchange differences

-

139

16

155

At 30 June 2017

2,872

2,630

8,458

 

 

 

 

 

Amortisation

 

 

 

 

At 1 January 2017

-

243

-

243

Amortisation for the period

88

57

-

145

Exchange differences

-

73

-

73

At 30 June 2017

88

373

461

Net Book Value at 30 June 2017

2,784

2,257

2,956

7,997

 

 

 

 

For the period from 1 January 2017 to 31st December 2017 (audited)

Customer related

Licences

Goodwill

Total

Cost

£'000

£'000

£'000

£'000

At 1 January 2017

-

2,453

682

3,135

Additions

17

30

-

47

Disposals

-

(6)

-

(6)

Acquired through business combinations

5,670

-

6,829

12,499

Exchange differences

2

198

40

240

At 31 December 2017

5,689

2,675

15,915

 

 

 

 

 

Amortisation

 

 

 

 

At 1 January 2017

-

243

-

243

Amortisation for the period

330

107

-

437

Disposals

-

(6)

-

(6)

Exchange differences

-

73

-

73

At 31 December 2017

330

417

-

747

Net Book Value at 31 December 2017

5,359

2,258

7,551

15,168

 

                                                     

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 and Anglia Forwarding Group Limited in June 2018.  This is the total value of intangible assets with an indefinite useful life allocated to each respective cash generating unit.

 

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.

 

Impairment of Goodwill on Benfleet Forwarding Limited

Early 2018 increased customs security checks across the EU started to affect the Benfleet activity from the Far East. This resulted in those customers suspending sending containers to the UK. This has significantly impacted on the profitability of Benfleet and its projected revenues.

As a result of this reduced profitability the Group has carried out an impairment review on Benfleet. The Board has prepared forecast of future revenue flows based on its best estimate and on discussions with certain main customers.

These cash flows have then been sensitised and probabilities applied, taking into account aspects such as: the likelihood of the revenue streams coming back on line; an estimate of the level of activity which will recommence; the expected timing of the start of the revenue streams; and the margins which will be generated from this activity.

In deriving the probabilities used to calculate the operating revenues, the board has taken into account the current discussions with customers and known factors, including the fact that the business has recommenced post 30 June 2018, albeit at significantly lower levels to that achieved in 2017.

Based on the Board expectations and future cash flow, the Group has identified that there is an impairment required of £1.845 million to the goodwill recognised on acquisition of the company.

In valuing the recoverable amount, a growth assumption of 2.5% and discount rate of 16.99% were used and applied to updated forecast performance for the business. The impairment charge has been recognised in the consolidated income statement within the administration expense line.

 

 

6)     Property, plant and equipment

For the period from 1 January 2018 to 30 June 2018 (unaudited)

Freehold Property

Fixtures, fittings  and equipment

Motor Equipment

 

Computer Equipment

Total

 

£000

£000

£000

£000

£000

Cost

 

 

 

 

 

At 1 January 2018

142

972

840

1,593

3,547

Additions

-

93

32

70

195

Additions acquired with subsidiary

61

111

5

-

177

Disposals

-

(5)

(47)

(27)

(79)

Exchange differences

(1)

(5)

(4)

(3)

(13)

At 30 June 2018

202

1,166

826

1,633

3,827

Depreciation

 

 

 

 

 

At 1 January 2018

3

628

499

817

1,947

Charge for the period

 

2

76

50

109

237

Transfers between categories

-

(131)

-

131

-

Eliminated on disposal

-

(1)

(45)

(18)

(64)

Exchange differences

-

(2)

(2)

(2)

(6)

At 30 June 2018

5

570

502

1,037

2,114

 

 

 

 

 

 

Net book value 30 June 2018

197

596

324

596

1,713

 

For the period from 1 January 2017 to 30 June 2017 (unaudited)

Freehold Property

Fixtures, fittings  and equipment

Motor Equipment

 

Computer Equipment

Total

 

£000

£000

£000

£000

£000

Cost

 

 

 

 

 

At 1 January 2017

122

921

759

1,058

2,860

Additions

-

93

74

171

 

338

Additions acquired with subsidiary

18

1

4

-

23

Disposals

-

(2)

(67)

(9)

(78)

Exchange differences

3

7

6

7

23

At 30 June 2017

143

1,020

776

 

1,227

3,166

Depreciation

 

 

 

 

 

At 1 January 2017

-

508

504

662

1,674

Charge for the period

 

-

58

36

 

65

159

Eliminated on disposal

-

(1)

(42)

(3)

(46)

Exchange differences

-

3

4

4

11

At 30 June 2017

-

568

502

728

1,798

 

 

 

 

 

 

Net book value 30 June 2017

143

452

274

499

1,368

 

 

 

For the period from 1 January 2017 to 31 December 2017 (audited)

Freehold Property

Fixtures, fittings  and equipment

Motor Equipment

 

Computer Equipment

Total

 

£000

£000

£000

£000

£000

Cost

 

 

 

 

 

At 1 January 2017

122

921

759

1,058

2,860

Additions

2

165

224

380

771

Addition with subsidiary

15

30

19

9

73

Disposals

-

(2)

(176)

(19)

(197)

Transfer between categories

-

(154)

-

154

-

Exchange differences

3

12

14

11

40

At 31 December 2017

142

972

840

1,593

3,547

 

 

 

 

 

 

Depreciation

 

 

 

 

 

At 1 January 2017

-

508

504

662

1,674

Charge for the period

 

3

117

89

159

368

Eliminated on disposal

-

(2)

(103)

(12)

(117)

Exchange differences

-

5

9

8

22

At 31 December 2017

3

628

499

817

1,947

 

 

 

 

 

 

Net book value

 

 

 

 

 

At 31 December 2017

139

344

341

776

1,600

 

 

7)     Share Capital

 

 

Unaudited

Unaudited

 

 

 

30 June

2018

30 June

2017

Audited 31 December 2017

 

 

£000

£000

£000

Allotted, issued and fully paid

 

 

 

 

Ordinary shares of £0.05p each - Number

 

 

 

119,158

80,000

117,431

Ordinary shares of £0.05p each - Value

 

5,958

4,000

5,872

Deferred Shares of £1 each - number

 

50

50

50

Total Share Capital

 

6,008

4,050

5,922

On 8 June 2018, the Company issued 1,727,694 ordinary shares of 5p each in the Company as part of the agreed deferred consideration for the acquisition of Easy Managed Transport.  The total value of this transaction was £1,074,625, which was settled by the issuance of the new shares.

 

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

 

8)     Non-Controlling Interests

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

                                                                                                                                                Unaudited             Unaudited             Audited                                                                                                                                                                                                                                                                                                                                                                                 30 June                    30 June           31 December

   2018                       2017                       2017

                                Delamode Baltics UAB                                                                            20.0%                   20.0%                     20.0%

                                Delamode Estonia OÜ                                                                            20.0%                   20.0%                     20.0%

                                Delamode Bulgaria EOOD                                                                     10.0%                   10.0%                     10.0%

                                Delamode Service Financare IFN                                                        0.05%                   0.05%                     0.05%

                                Delamode Distribution UK Limited                                                     49.0%                    49.0%                     49.0%

 

9)    Deferred Consideration

As part of the original sale and purchase agreement (SPA) the consideration due to the original vendors of Benfleet Forwarding Limited was based on an initial payment plus a payment for deferred consideration linked to the profit generated by the company during the earn out period. In addition to this, the SPA included a clawback clause whereby the original vendors would be required to repay some of the initial consideration if the target profit was not achieved, thus ensuring that the total consideration payable is directly linked to the profitability of the entity acquired.

Given the reduced profitability of Benfleet Forwarding Limited, the Group has performed a re-estimation of the deferred consideration payable at balance date. As a result of this exercise, the Group has derecognised the deferred consideration payable of £624k which was originally recognised on acquisition of Benfleet, which was the fair value measured at 31 December 2017.  

Consequently and in accordance with the SPA, the group has recognised a deferred consideration receivable which represent amount owed by vendors. The receivable was measured at fair value with an expected repayment date of December 2020. Using a discount rate of 4.5% the carrying value of the deferred consideration receivable was estimated to be £1.97 million.

 Both the release of the deferred consideration of £624k and the recognition of the receivable from the vendors of £1.97 million has been recognised within the administration expenses through the Income Statement.

10)  Loans

Unaudited

Unaudited

Audited

 

30 June

2018

30 June

2017

31 December      2017

 

£000

£000

£000

Current;

 

 

 

 

Finance Leases

71

35

43

Other Loans

3,654

5,622

2,502

 

3,725

5,657

2,545

Non - Current;

 

 

 

 

Finance Leases 1-2 year

53

62

64

Finance Leases 2-5 Years

38

-

24

Other Loans;

 

 

 

Loans 1- 2 years

310

296

651

Loans 2- 5 years

1,029

971

1,006

Loans due after five years repayable by instalments

1,380

1,755

1,564

 

2,810

3,084

3,309

 

The Finance leases are secured against the assets to which the finance relates. Bank loans and overdrafts are secured by a fixed and floating charge over the Group's assets.

 

11)   Exceptional Costs

 

The Group incurred non-recurring costs of £91,000 relating to the acquisitions of Anglia Forwarding Group Limited and Import Services Limited (see note 12).

 

The exceptional costs relating to Benfleet amounting to £747k net credit as disclosed in the table below is broken down as follows:

 

Impairment of goodwill (see note 5)                                                      £1,845k

Release of deferred consideration payable (see note 9)                       £(624k)

Recognition of receivable from vendors of Benfleet  (see note 9)   £(1,968)k

Total                                                                                                              £(747)k

 

 

 

Adjusted earnings per share has been calculated as follows:-

 

 

Unaudited                 6 months to

Unaudited           6 months to

Audited  Year to

 

 

30 June

2018

30 June

2017

31 December 2017

 

 

£000

£000

£000

Profit for the Period Attributable to the Owners of the Parent

 

1,523

424

1,540

Exceptional Costs - Acquisition Costs

 

91

331

912

Exceptional Costs - Benfleet

 

(747)

-

-

Amortisation relating to acquisitions

 

361

88

330

Non-Cash Interest

 

17

88

295

Adjusted Profit for the Period

 

1,245

931

3,077

 

 

12)   Post balance sheet events

 

On 6 July 2018, the Group raised a further £7.0m before expenses by issuing an additional 10,000,000 ordinary shares of 5 pence each in the Company.  Following this fund raising, the Group acquired Import Services Limited (ISL), a contract logistics and warehousing business based in Southampton, UK.  The acquisition consideration comprised an initial payment of £9.0m, being £6.0m in cash and £3.0m in Xpediator shares and performance based deferred consideration of up to £3.0m payable in two parts on 30 June 2019 and 30 June 2020. 

 

 

 

 

 

 

 

 

13)   Business combinations

Anglia Forwarding Group Limited

On 4 June 2018, the Group acquired 100% of the issued share capital of Anglia Forwarding Group Limited (Anglia), an international freight forwarding and courier business.

The principal reason for this acquisition was to enable the Group to consolidate and enhance their UK freight forwarding distribution services and to allow good cross-selling opportunities, especially within the customs clearance areas.

The total consideration payable comprised cash on completion of £1.5m and Cash equal to £390k based on the net working capital adjustment on completion earn-out payments payable over two years.  The deferred consideration is calculated as follows, both of which are subject to a maximum aggregate payment of £2.0m:

·     5 times Anglia's operating profit before tax less target profit of £0.75m multiplied by 50% in respect of the First Earn-Out Year, with an amount not greater than £1.0m.

·     5 times the Company's operating profit before tax less target profit of £0.75m multiplied by 50% in respect of the Second Earn-Out Year, with an amount not greater than £1.0m.

Fair Value assessment

As part of the fair value assessment of the Intangible assets of Anglia, it was identified that the only intangible asset category to apply, is the customer related intangible assets. The fair value calculation of customer related intangible asset was determined by using the income approach based on the expected future cash flows. This was then discounted to determine the present value.

The weighted average cost of capital used in determining the present value, was 12.0%, which reflected the business and market risks factors.

The outcome of the fair value calculation was to derive a customer related intangible asset with a value of £938,000.

Economic useful life

When determining the economic useful life of the customer relationships the historical length of relationships with existing customers and those reported by listed companies in the sector was considered as well as an annual attrition rate of 10.0%.

Based on these factors, it was concluded that the useful economic life for customer relationships in relation to Anglia would be up to 10 years.

Deferred tax

As a result of the creation of the customer related intangible asset, there is a deferred tax liability, which was calculated as the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was used as to determine this. This resulted in a deferred tax liability of £160,000.

Deferred Consideration

The deferred consideration consists of the

 payment relating to the earn out period and;

 amount by which the Completion Net Asset exceeds Target Net Assets

In determining the present value of the earn out payment, the first payment which is due in May 2019 was calculated using a cost of capital of 12.0%.

Using the forecasted results for the respective periods the present value of the deferred consideration relating to the earn out was calculated to be £797,000.

The completion net assets exceeded target net assets by £390,000, however the completion accounts are currently being agreed and the final consideration payable may be amended. However, it is not thought that this will be material.

 

Goodwill

When determining the goodwill arising on the acquisition the following calculations were used.

Purchase Consideration                                                          £'000

 

 

 

Initial Consideration

1,500

 

 

Net Cash Adjustment

390

 

 

P.V. of Deferred Consideration

797

 

 

Total Consideration for Equity

2,687

 

 

Allocation of Assets and Liabilities Acquired

Intangible Assets

Customer-related Intangible Assets

938

 

 

 

Other Assets

 

 

 

 

Current Assets

3,644

 

 

 

Fixed Assets

177

 

 

 

Non-Current Assets

134

 

 

 

 

Liabilities

 

 

 

Assumed Liabilities

(2,577)

 

 

Deferred Tax Liability for Intangible Assets

(160)

 

 

 

 

 

 

Goodwill

531

 

 

 

                         

 

The goodwill recognised will not be deductible for tax purposes.

Since the acquisition, Anglia has contributed £1,563,000 to Group revenue and £29,000 to Group Profit.

 

 

International Cargo Centre (ICC)

As part of the acquisition of Anglia, the Group disposed of 60% of the share capital of ICC on 4 June 2018.  As the Group now owns 40% of the voting shares and does not have control over Board decisions, then the Group will account for this as an associate.

Anglia Forwarding Group received consideration of £83,000 from the sale and made a profit on disposal of £nil.

 

 

 

INDEPENDENT REVIEW REPORT TO XPEDIATOR PLC

Introduction

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 2018 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

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 by the Financial Reporting Council 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.

Conclusion

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 2018 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

 

 

 

BDO LLP

Chartered Accountants

London

United Kingdom

Date

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).


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