Clipper Logistics plc
2015 Annual Report and Accounts
Clipper Logistics plc Annual Report and Accounts 2015
Clipper is a retail logistics and returns
management specialist, providing value-added
services to its blue chip customer base.
A profitable and cash generative
commercial vehicles business complements
the Group’s logistics activities.
The Group operates from 42 locations
comprising over 6.2 million square feet.
It now has over 3,200 employees,
excluding agency staff.
It is a market leader in e-commerce
(including e-fulfilment and returns
management), fashion, and high value
logistics. A consultancy-led approach is
taken with both existing and prospective
clients to develop innovative solutions.
A platform has been established in
Germany to enable the Group to benefit
from anticipated future growth in European
online retailing, and to support the ambitions
of UK customers who plan to expand
into Europe.
E n t r e preneurial
I
n
n
o
v
a
t
i
v
e
gile
A
A
ble
dible
e
r
C
2
2
Clipper Logistics plc Annual Report and Accounts 2015
Financial Highlights
For the year ended 30 April 2015
Group revenue
Earnings per share
£201.2m
FY 2014
£234.8m
FY 2015
16.7%
increase
2.8p
FY 2014
7.3p
FY 2015
157.0%
increase
Group Adjusted EBIT1
Adjusted earnings per share2
£9.6m
FY 2014
£12.0m
FY 2015
24.9%
increase
7.0p
FY 2014
8.4p
FY 2015
20.1%
increase
Group profit for the financial year3
Net debt
£2.8m
FY 2014
£7.3m
FY 2015
157.3%
increase
£15.4m
FY 2014
£13.6m
FY 2015
11.6%
decrease
1 Adjusted EBIT is defined as operating profit excluding discontinuing and exceptional costs.
2 Adjusted earnings per share is based on profit attributable to ordinary equity holders adjusted by adding back discontinuing and exceptional costs, and adjusting for the tax thereon.
3 Including discontinuing costs of £0.3m (2014: £2.3m) and exceptional costs of £0.9m (2014: £2.5m).
Percentages are calculated based on the underlying numbers as presented in the Financial Statements, not on the rounded figures above.
3
Clipper Logistics plc Annual Report and Accounts 2015
Contents
About Clipper
Financial Highlights for the year ended 30 April 2015
Operational Highlights for the year ended 30 April 2015
Strategic Report
Chairman’s Statement
Group Structure
Our Business Model
Our Strategy
Operating and Financial Review
Risk Management
Corporate Social Responsibility
Governance
Board of Directors
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Directors’ Remuneration Report
- Implementation Report on Remuneration
- Directors’ Remuneration Policy (appendix)
Directors’ Report
Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements
Group Financial Statements
Independent Auditor’s Report
Group Income Statement
Group Statement of Comprehensive Income
Group Statement of Financial Position
Group Statement of Changes in Equity
Group Statement of Cash Flows
Notes to the Group Financial Statements
Company Financial Statements
Company Balance Sheet
Notes to the Company Financial Statements
Directors, Secretary, Registered & Head Office, and Advisors
4
4
2
3
5
6
8
10
12
16
18
30
34
38
40
42
50
51
56
58
68
74
80
82
84
88
89
90
91
92
94
138
140
141
154
Clipper Logistics plc Annual Report and Accounts 2015
Operational Highlights
For the year ended 30 April 2015
Successful Initial
Public Offering (IPO)
on the London Stock
Exchange
Acquisition and integration
of Servicecare Support
Services Limited,
broadening the
Clipper service
offering to include
electrical returns
Significant contract
wins with new customers
including Pep&Co, Philip
Morris and Zara
Long-term extensions
to contracts with
existing major retail
customers including
Harvey Nichols, New Look
and Tesco
Major new contract
with John Lewis to provide
a range of retail support
services from a new
distribution centre
Adoption of the
‘Boomerang’ returns
management brand
proposition by a
number of new and existing
customers, including the
first in mainland Europe
providing value-added
returns management
services to s.Oliver under
a new agreement
Continued strong
growth in the retail
e-commerce market
driving volumes with
existing customers, and
new contract opportunities
Strong new business
pipeline expected
to deliver continued
organic growth in
the 2016 financial year
Subsequent to the
30 April 2015 year
end, the Company
has agreed terms
for a Click and
Collect solution
in collaboration with
John Lewis
5
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report
6
Clipper Logistics plc Annual Report and Accounts 2015 7
Clipper Logistics plc Annual Report and Accounts 2015
Chairman’s Statement
I am pleased to write as Chairman of Clipper Logistics plc
following our first anniversary of listing on the London Stock
Exchange in June 2014.
Our first year as a listed company has seen continued growth
reflecting our ability to demonstrate real value–add services
for our extensive client base, and we remain confident of our
ability to maintain this momentum.
The Group has seen a strong performance throughout the
year under review, with a number of high profile contract wins
and renewals, including those with Harvey Nichols, New Look,
Pep&Co, Philip Morris, and Zara.
The acquisition of Servicecare Support Services Limited
in December 2014 extended our returns management
capabilities to include electrical products, and the business
has performed well, being immediately earnings-enhancing.
Our driving force remains our ethos of constantly identifying
new services, methods and technologies that address
the operational challenges of our clients. Our unrivalled
understanding of the e-fulfilment and returns market, coupled
with our clients’ continually evolving needs in these areas,
will ensure that we retain and expand our market share.
We are excited about the continued opportunities for
progress of the Group in the years ahead, and are proud of
the range and quality of services the Group provides.
We are exceptionally well-positioned to benefit from the
further significant growth expected in the online retail sector,
where independent market research indicates that by 2022
one-third of all retail activity in the UK will take place online.
Further, our innovative value-added solutions are expected to
achieve continued growth in our non e-fulfilment activities, as
evidenced by recent contract wins in this business area.
Steve Parkin, Executive Chairman
8
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Chairman’s Statement
continued
Group Results
Governance
Group revenues increased by 16.7%
The Group is proud of its commitment
to £234.8 million for the year to 30 April
2015, and Group Adjusted EBIT* increased
by 24.9% to £12.0 million. Excluding the
to high levels of corporate governance.
Alongside the executive management
team of Tony Mannix (CEO), David Hodkin
impact of the Servicecare acquisition,
(CFO) and Sean Fahey (CIO), the Company
revenue grew by 13.8% and Group
benefits from the combined experience of
Group revenues increased by
16.7% to
£234.8 million
for the year to 30 April 2015
Group Adjusted EBIT*
increased by
24.9% to
£12.0 million
for the year to 30 April 2015
Adjusted EBIT by 16.6%.
its Non-Executive Directors: Paul Hampden
Smith (Senior Independent Non-Executive
Adjusted earnings per share was 8.4 pence
Director), Stephen Robertson, Ron Series
for the year to 30 April 2015 (2014: 7.0
and Mike Russell.
pence as restated).
On an unadjusted basis earnings per share
Dividends
was 7.3 pence (2014: 2.8 pence).
The Board is recommending a final
Net debt was reduced to £13.6 million at
total dividend in respect of the year ended
year end (2014: £15.4 million as restated),
30 April 2015 of 4.8 pence per share. This
after the payment of £3.7 million in respect
is reflective of the significant increase in
dividend of 3.2 pence per share, making a
of the acquisition of Servicecare Support
underlying profits.
Services Limited, and £2.1 million in respect
of non-recurring IPO transaction costs.
The proposed final dividend, if approved by
shareholders, will be paid on 30 September
2015.
People and Board
Clipper Logistics plc is led by an excellent
management team that has been at the
Outlook
core of the business for many years.
The Group continues to be amongst
the leading providers of value-added
Having guided the Group through periods
and e-fulfilment solutions to the retail
of significant change in the UK retail
sector in the UK. The full year benefits
industry, the management team’s ability to
of the Servicecare acquisition, and the
continue to steer the business along its path
development of Click and Collect delivery
of organic growth through customer focus,
technical innovation and growing brand
services to store, coupled with recent
contract wins, place the Group in an
awareness is well established.
excellent position to continue to achieve
further growth in the medium term, both in
I would like to take this opportunity to
the UK and internationally.
thank all the employees of the Group for
their commitment and contribution to the
I look forward to working with all of the
Group’s performance.
Group’s stakeholders as we continue to
develop the business.
*Adjusted EBIT is defined as operating profit excluding discontinuing and exceptional costs.
9
Clipper Logistics plc Annual Report and Accounts 2015
Group Structure
Composition of the Group at 30 April 2015
Reporting Segments
Clipper Logistics plc (“Clipper” or the
The results of the Group are reported in
Clipper expects to continue to experience
“Company”) provides value-added logistics
the following segments:
rapid growth in this segment reflecting
services in the UK.
- Value-added logistics services,
continuing migration to online retailing due
The Company has the following wholly
activities:
the retail sector.
owned subsidiaries:
- E-fulfilment & returns management
The results of Servicecare and Electrotec
- Clipper Logistics KG (GmbH & Co.), which
services;
are shown in this category.
comprising the following business
to the structural changes taking place in
provides logistics services in Germany;
- Non e-fulfilment logistics; and
- Central logistics overheads, being
Non e-fulfilment logistics
- Northern Commercials (Mirfield) Limited
those costs of the business which are
Non e-fulfilment logistics include receipt,
(“Northern Commercials”), which is a
not allocable in a meaningful way to
warehousing, value-add processing, stock
commercial vehicle operation engaging
the above business activities, including
management, picking and distribution of
in the sale, servicing and repair of
directorate, advertising and promotion,
products on behalf of customers. Clipper
commercial vehicles, and the sale of
accounting and IT, and the solutions
does not take ownership of customers’
parts;
development team; and
products at any time.
- Servicecare Support Services Limited
- Commercial vehicles.
Within this category Clipper handles high
(“Servicecare”), which provides warranty
value products, including tobacco, alcohol
and refurbishment work for electrical
Whilst not a segment in its own right,
and designer clothing, and also undertakes
manufacturers and retailers;
the Group also separately reports head
traditional retail support services including
- Electrotec International Limited
Executive Chairman, Chief Financial Officer,
products, particularly fashion, to high street
office costs, representing the costs of the
processing, storage and distribution of
(“Electrotec”), a wholly owned subsidiary
Deputy Chief Financial Officer, Company
retailers.
of Servicecare, which through its website
Secretary, Non-Executive Directors and plc
electrical-deals.co.uk and a number of
compliance costs.
Central logistics overheads
other web stores operated on behalf of
customers, provides a route to market for
Central logistics overheads are the costs
of support services specific to the value-
refurbished electrical products on behalf
Segment and business activity details
added logistics services segment, but
of manufacturers and retailers; and
E-fulfilment & returns management
which are impractical to allocate between
services
the sub-segment business activities.
- Genesis Specialised Product Packing
E-fulfilment & returns management services
Limited (“Genesis”), which provides an
include the receipt, warehousing, value-
Commercial vehicles
eBay store offering to enable Clipper to
assist its retail customers with the sale of
add processing, stock management,
picking, packing and despatch of products
The commercial vehicles business,
Northern Commercials, operates Iveco
excess and end-of-line stock.
on behalf of customers to support their
and Fiat commercial vehicle dealerships
online trading activities, as well as a range
from six locations, together with four sub-
The above entities, along with a number of
of ancillary support services, including the
dealerships. It sells new and used vehicles,
dormant subsidiaries, comprise the “Group”.
management of the returns process for
provides servicing and repair facilities,
customers.
and sells parts.
At no time does Clipper take ownership
Vehicles sold and serviced range from
of customers’ products. The Company
small light commercial vans, through to
has recently introduced a new brand,
articulated tractor units.
‘Boomerang’, under which returns of
products are managed on behalf of
retailers.
10
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
11
Our Business Model
The Group creates value for its shareholders
Credibility
These foundations underpin a proven and
from its scalable and risk-mitigated
- The ‘Clipper Way’ ensures that at
robust business model
business, with a high degree of contractual
every level the success of project
Market-leading customer proposition and
certainty underpinning financial
implementation and ongoing operational
focus on customer service
predictability and stability. Clipper focuses
excellence are at the core of all activity.
Clipper focuses on the provision of
on customer service, and aims to create
consultancy-led, value-added logistics
long-term relationships with customers in
- Clipper has a high profile within the
services. It works closely with existing and
order to become central to that customer’s
industry press, including Drapers and
prospective clients to develop tailored
strategy, and further underpin the long-term
Retail Week, and is a recognised sector
solutions to meet their specific logistics
success of the Group.
‘thought leader’. This further strengthens
needs. Strategic-level discussions focused
the relevance of Clipper to its retail clients.
on providing solutions to particular
Foundations of Clipper’s business model
Ability – Mission Critical Experience
- Highly efficient supply chains are essential
for retail success.
- The Clipper retail focus and multi-channel
expertise provides:
- targeted and relevant sector experience;
- large scale transformational project skill;
- best practice and innovation;
- shared use approach to support
customers from ‘start-ups’ to ‘blue chip’;
and
- a long-term consultative partner
relationship.
- High profile projects require knowledge,
skill and a proven track record.
Agility – Critical Decisions Made at Pace
- The Clipper ethos is:
- an entrepreneurial spirit; and
- rapid decision making based on
knowledge not assumption.
- The Clipper skillset encompasses property,
solution design and implementation -
allowing all to be managed in parallel
leading to a rapid go live.
- Clipper’s well-known and trusted team:
- are highly respected in the sector; and
- have built successful relationships with
key retail decision makers.
- A customer who partners with Clipper
gets personal accountability and a strong
focus on success.
12
ABILITY
AGILITY
CREDIBILITY
RETAIL-FOCUSED
‘KNOW HOW’
TRUSTED PARTNER
APPROACH
challenges ensure that Clipper is central
to its clients’ strategies.
The Company is focused on the fashion
and non-food retail sectors, and provides
services under formalised contractual
arrangements to a major blue chip
customer base including Asda, ASOS, John
Lewis, Morrisons, SuperGroup, and Tesco.
Its market-leading position in providing
solutions in the e-commerce sector,
including returns management, places the
Company in a strategically strong position
given the structural changes taking place
in retailing, with an increasing proportion
of retail sales represented by online sales,
and the move to multi-channel and omni-
channel retail distribution models:
- The penetration of e-based sales in the
UK is one of the highest in the world. The
trend towards a greater proportion of
retail activity being conducted online is
expected to continue; research indicates
that by 2022 one-third of all sales in the
UK will be conducted online.1
1 Insider Trends
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Our Business Model
continued
These foundations underpin a proven and
High degree of contractual certainty
Servicecare has historically operated
robust business model (continued)
underpins financial predictability
using a traditional closed book charging
Market-leading customer proposition and
and stability
methodology, but has commenced
focus on customer service (continued)
70% of the UK logistics division’s revenue
trading under open book terms with one of
- Returns management is expected
(excluding Servicecare) in the year to 30
their key customers, and where appropriate,
to become the ‘battle-ground for
April 2015 was on open book contract
will adopt this contract methodology for
competitive advantage’ amongst
terms (2014: 65%). Under the terms of these
new customers. However, it is likely that
retailers, with returns in the UK
contracts, all costs incurred in providing
many arrangements will remain on closed
averaging between 25%-40% in
fashion and footwear.1 Clipper’s
successful introduction of its new brand,
services (people, property, plant and
book terms (which is normal within this
equipment, packaging, etc.) are recharged
sector), which will have a slight dilutive
to customers together with a management
effect on the total percentage of revenue
‘Boomerang’, is enabling it to capitalise
fee. The contract mechanisms provide
derived from open book or minimum
upon this opportunity, leveraging from
Clipper’s customer base with total
volume guarantee contracts.
its already market-leading proposition
transparency, and make for solid long-
in online fulfilment. The Group’s new
term relationships with clients, whilst
In Germany, the vast majority of business is
acquisition Servicecare, and its subsidiary
protecting Clipper from cost inflation, mix
currently conducted on closed book terms,
Electrotec, are complementary to the
changes and, largely, volume downsides,
although some activity for s.Oliver (a key
returns management proposition,
whilst allowing the Company to benefit
customer) is now charged on a partially
as the Group is now able to offer a wider
from increasing activity levels. Gainshare
open book basis. It is anticipated that as
range of services, including electrical
mechanisms and KPI-based incentives also
e-commerce activities develop these are
returns capability.
allow Clipper to enhance profits, through
likely to be on open book terms as such
innovation and excelling in service delivery.
arrangements are mutually beneficial for
The Company’s focus on the retail sector
The growth in the percentage of revenue
both the retailer and the Group.
ensures that it is able to offer best-practice,
derived from open book contracts was
lowest-cost services to its customer base.
driven primarily by the full year effect and
Within the commercial vehicles division,
The Group has a track record of innovation,
growth of the ASOS contract, volume growth
revenues from new vehicle sales are
including the development of:
from contracts with John Lewis, SuperGroup,
uncontracted, and can vary due to wider
Tesco and Wilkinsons, and the benefit of
economic conditions. However, margins on
- Consolidation centres, where products
new customers such as M&S and Ted Baker.
new vehicle sales tend to be relatively low.
destined for multiple nearby retail outlets
Margins on aftersales activities (i.e. servicing
are consolidated, before being delivered
12% of the UK logistics division’s revenue
and parts) are higher, and so the changes
to the destination. Examples include
(excluding Servicecare) in the year to 30
in the sales mix can significantly affect
Meadowhall Shopping Centre in Sheffield
April 2015 was derived from minimum
reported profit margins.
and Regent Street in London;
volume guarantee contracts (2014:
14%), which protect Clipper from volume
Since most commercial vehicles are
- Port deconsolidation supply chain
downsides, whilst allowing the Company to
required by law to be inspected every six
models, where facilities are located
benefit from growing activity levels.
weeks, this gives rise to stable profit and
near a port of entry for product
cash streams from this part of the Group,
deconsolidation and onward distribution
Thus, the business model within the logistics
even in the absence of formal contracts.
through the supply chain; and
division in the UK (excluding Servicecare)
In addition, all tractor units sold by Northern
- The ‘Boomerang’ brand for returns
with just 18% of revenue derived from more
standard repair and maintenance contract
management, as noted above.
traditional, closed book arrangements
which further guarantees the revenue and
provides a high degree of profit resilience,
Commercials now come with a two year
(2014: 21%).
profit derived from aftersales activities.
Clipper’s focus on customer service is
demonstrated by its wide portfolio of
blue chip customers both in the UK and
Germany, many of whom have been
clients for many years.
1 IMRG
13
Our Business Model
continued
These foundations underpin a proven
embedded with those of the client.
Maximising value
and robust business model (continued)
Clipper creates a unique solution for
Clipper uses the business model above
The nature of the Clipper service offering
each customer, which cannot be easily
to proactively offer new service offerings
results in long-term, mutually beneficial
or quickly replicated. Clipper’s systems will
and maximise value from existing
relationships with its customers
become further embedded with those of
customer relationships, as well as to
The specialised nature of the services
their customers as omni-channel retailing
attract new customers.
provided by Clipper, particularly in the
increases, and also as more customers take
e-commerce and high value product
on newer service offerings such as returns
Clipper will continue to develop and provide
sectors, results in real long-term mutually
management.
beneficial relationships with customers, as
innovative retail solutions, as demonstrated
by the Boomerang returns solutions
evidenced by the high levels of customer
In addition to the above, credibility gained
launched in 2014, and the Click and Collect
retention experienced by the Group.
in the provision of logistics services in
solution which will shortly be launched in
Many implementation projects involve
a real barrier to entry to this segment of the
capitalise on the opportunities presented to
the development of bespoke software,
market.
integration and other solutions, resulting in
the Group in assisting retailers to deal with
these challenging logistical issues.
relation to high value products represents
collaboration with John Lewis, in order to
Clipper playing a central role in the delivery
This is equally true for the services
of the retailer’s customer proposition -
Servicecare provide, which require
Clipper is also focused on maximising
Clipper’s consultative approach with
specialist skill, knowledge and manufacturer
shareholder value through selective
customers leads to its systems becoming
certifications / authorisations.
expansion internationally (as demonstrated
CLIPPER USP
BESPOKE INTEGRATION TO THE CLIENT - NO TEMPLATES
CLIPPER IS AT
THE HEART OF THE
INTEGRATION
IP OF
INTEGRATION
REMAINS WITH
CLIPPER
CLIPPER CONTROLS
AND SUPPORTS THE
SYSTEMS
REDUCES DEMAND
ON CLIENT IT
BARRIER
TO ENTRY
CLIPPER
MANAGES THE
COMPLEX SYSTEMS
COMMUNICATIONS
by its increasing German presence,
and recent expansion into Ireland),
and also through selective acquisitions
(as demonstrated by the acquisition of
Servicecare during the year under review).
The commercial vehicles division of the
Group is robustly profitable and cash
generative – its profitability driven by
high-margin aftersales activity, which
is underpinned by legal requirements
governing the inspection of commercial
vehicles.
Whilst Northern Commercials is not heavily
dependent on the logistics division of the
Group, it provides Clipper with flexibility
over fleet procurement, and margins on
servicing activity are retained within
the Group.
The Group will carefully consider potential
new territories for commercial vehicles,
in order to further enhance Northern
Commercials’ market share, and enhance
profitability within that segment of
the Group.
14
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
15
Our Strategy
In order to generate and preserve long-
term value for shareholders, Clipper has
four key growth strategies, as set out in
its prospectus dated 30 May 2014
(the “Prospectus”), and detailed below.
Build on market-
leading customer
proposition to expand
customer base
Develop new,
complementary
products and
services
ENHANCE
SHAREHOLDER
VALUE
Selective
acquisitions
European
expansion
16
1
Build on market-leading customer
proposition to expand the customer base
How will this be achieved?
Through a continued focus on the provision of
bespoke, retail-specific logistics solutions, including
retail store support and high value product logistics,
but particularly focused on the e-fulfilment segment
of the retail market.
By utilising Clipper’s best-in-class offering and
extensive implementation expertise to continue to
capitalise on the long-term structural growth drivers
within the online retail market and the increasing
logistical complexities therein.
By taking advantage of selective growth
opportunities in the fashion and non-food retail
logistics segment, where there is the opportunity to
provide innovative solutions to customers that are
also profitable for the Group.
Performance in the year to 30 April 2015
The full year benefit was realised of contracts that
went live during the previous year with Antler, ASOS,
Go Outdoors and SuperGroup.
New contracts went live in the year with M&S,
Philip Morris, s.Oliver (returns management services)
and Ted Baker.
New contracts have been secured for operations
commencing in the year to 30 April 2016 with Flyers
Group, Pep&Co, Zara and Ireland’s largest retailer.
An agreement has been reached with John Lewis
for ancillary services, which will commence during
the year to 30 April 2017.
Further details of the above contract wins can be found in the
Operating and Financial Review on pages 18 to 29.
Going forward
Clipper has an extensive potential customer
pipeline, and will continue to work with these
potential leads to secure further new contract wins.
The acquisition of Servicecare will enable the Group
to leverage Servicecare’s skillset in the electrical
returns sector to further enhance its customer
proposition and expand the customer base.
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Our Strategy
continued
2
Develop new, complementary
products and services
How will this be achieved?
3
Explore acquisition
opportunities
How will this be achieved?
4
Continue European
expansion
How will this be achieved?
By continuing to invest in new product
By considering further selective acquisitions
Through development of Clipper’s
and service offerings which will be value
which are considered value-enhancing to
operations in Germany, which currently
enhancing to Clipper’s existing and future
the Group’s client base, market penetration
consist primarily of retail logistics and
customer base.
and/or service lines and where the Group
transport solutions.
can use its existing expertise, implementation
Performance in the year to 30 April 2015
and delivery platform, scale and reach to
By utilising its existing expertise in e-fulfilment
Clipper’s returns management services
generate synergies and increase profitability.
in the more developed UK online retail
brand ‘Boomerang’ saw its first full year of
market, to assist both mainland European
operation in the year to 30 April 2015, with
approximately 95% of product successfully
By considering bolt-on acquisitions
which provide a platform for it to take
retailers to move online, and UK retailers
to expand into Europe – the latter further
returned to prime stock at first pass.
its core technical expertise into new,
underpinned by Clipper’s strong customer
Clipper has commenced work on
adjacent markets.
relationships and reputation with UK retailers
(both pure-play e-tailers and multichannel
mechanisation and semi-automation
Performance in the year to 30 April 2015
high street retailers).
projects to further enhance our service
During the year, Clipper completed the
offering. The full benefit of these will be seen
acquisition of Servicecare Support Services
Through considering other European
in the financial year ending 30 April 2016.
Limited, and its wholly owned subsidiary
destinations for potential opportunities.
Electrotec International Limited.
During the latter part of the financial year,
Performance in the year to 30 April 2015
Clipper has been working on additional
This was a strategically important
A new returns management contract
solutions to assist retailers with the logistical
acquisition, as it has enabled the Group
went live with s.Oliver in Germany shortly
problems surrounding Click and Collect. This
to offer further services via its Boomerang
before the financial year end, under the
project will go live during the year to 30 April
brand, through the addition of electrical
Boomerang brand.
2016, in collaboration with John Lewis, with
returns services, which require specialist
the full benefit being realised in the following
expertise.
The full benefit of this contract will be seen in
financial years.
the year to 30 April 2016.
Further details of the above projects can be found in the
Operating and Financial Review on pages 18 to 29.
Going forward
Clipper will focus on the successful
implementation of its mechanisation /
semi-automation and Click and Collect
projects, and on expanding these services
to a wider customer base (both existing
and new customers).
In addition, Clipper will continue to innovate
and develop new solutions for the problems
that retailers face in the ever-changing
retail environment.
Robustly profitable in its own right,
Servicecare will also further enhance
Agreement was reached with Ireland’s
shareholder value by increasing its own
largest retailer for the provision of
customer base by leveraging off its position
warehousing and e-fulfilment services, which
in the wider Clipper Group.
will be performed in the UK and Ireland.
Electrotec specialises in the online sale
Shortly after the 30 April 2015 year end,
of returned or refurbished stock, so will
Clipper registered a branch in Ireland,
complement the Group’s subsidiary
to facilitate performance of the above
Genesis, which provides an online route to
agreement, and also to enhance its
market for Clipper’s customers, particularly
presence in Ireland in order to secure further
in relation to sale of excess in-season stock,
new business.
sale of end-of-line stock, and sale of returns.
Further details of the above acquisition can be found in
the Operating and Financial Review on pages 18 to 29.
Further details of the above contract wins can be found in
the Operating and Financial Review on pages 18 to 29.
Going forward
Going forward
Clipper will continue to seek opportunities
Clipper will continue to explore acquisition
with new and existing customers to provide
opportunities that enhance shareholder value.
services in Germany, and will also consider
other strategic mainland European
destinations for potential expansion.
17
Operating and
Financial Review
1. Overview of results
The Group made excellent progress in
the financial year to 30 April 2015.
Group revenue
Group revenues increased by 16.7% to
£234.8 million, with strong growth in all
business areas including e-fulfilment &
returns management services and non
Revenue
Year to
30 April 2015
£m
Year to
30 April 2014
£m
%
change
E-fulfilment & returns management services
60.6
46.0 +31.5%
Non e-fulfilment logistics
102.1
89.6 +14.1%
Total value-added logistics services
162.7
135.6 +20.0%
e-fulfilment logistics:
Commercial vehicles
73.6
66.8 +10.1%
Inter-segment sales
(1.5)
(1.2)
Group revenue
234.8
201.2 +16.7%
Percentages are calculated based on the underlying numbers as presented in the Financial Statements,
not on the rounded figures in the table above
Within the value-added logistics services
Revenue growth in commercial vehicles
segment, the Group benefited from:
was driven by:
- the full-year impact of contract wins
- a £5.3 million increase in new vehicle
secured in the previous financial year
sales. Whilst unit sales were down, the
including, amongst others, Antler, ASOS,
average selling price of each unit
Go Outdoors and SuperGroup;
increased significantly due to the mix of
vehicles sold; and
- the part-year impact of the acquisition of
Servicecare and its subsidiary Electrotec
- a £1.5 million increase in after-sales
in December 2014;
revenues, comprising servicing, bodyshop
and parts sales.
- organic growth on existing contracts,
including Asda, John Lewis, Tesco, and
Wilkinsons;
- the market migration in the retail sector
towards online trading which continues to
bring particularly strong organic growth to
our e-fulfilment customers; and
- the part-year impact of contracts won
during the year to 30 April 2015, including
M&S and Ted Baker, and additional
services for ASOS, as well as the s.Oliver
returns contract win in Germany. The
full year benefit of these contracts will
be realised in the year to 30 April 2016,
together with the part-year benefits of
contracts either recently commenced
or currently in the pipeline and due to
go live during the remainder of calendar
year 2015 and early calendar year 2016.
18
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
1. Overview of results (continued)
Group Adjusted EBIT
Adjusted EBIT is the primary Key
Performance Indicator (“KPI”) by which the
Adjusted EBIT
management team assesses corporate
performance. Adjusted EBIT is assessed
against Board approved budgets. A further
KPI is net debt, which is discussed on
page 21.
E-fulfilment & returns management services
Non e-fulfilment logistics
Year to
30 April 2015
£m
Year to
30 April 2014
£m
%
change
5.5
10.1
3.7 +48.0%
9.2
+9.8%
Central logistics overheads
(4.1)
(4.2)
The Group grew Adjusted EBIT strongly in
Total value-added logistics services
all segments and business activities:
Commercial vehicles
11.5
1.9
8.7 +33.2%
1.8
+2.1%
Head office costs
(1.4)
(0.9)
Group Adjusted EBIT
12.0
9.6 +24.9%
Group Adjusted EBIT is defined as Group operating profit excluding discontinuing and exceptional costs.
Percentages are calculated based on the underlying numbers as presented in the Financial Statements,
not on the rounded figures in the table above.
Group Adjusted EBIT increased by 24.9%
Similarly, revenue derived from minimum
Non e-fulfilment operations include receipt,
to £12.0 million in the year to 30 April
volume guarantee contracts is fixed at a
warehousing, picking and distribution of
2015, and the Group is well placed to
minimum level, so that a shortfall in activity
products on behalf of customers. Within
achieve further EBIT growth in the coming
levels would give rise to a lower cost base,
this sector the Group handles high value
financial year due to the full year benefits
and a higher reported margin.
products, including tobacco, alcohol and
of recent contract wins and the Servicecare
designer clothing, and also undertakes
acquisition, coupled with a very strong new
In addition, within the commercial vehicles
traditional retail support services including
business pipeline.
segment, the level of high value, relatively
processing, storage and distribution of
low margin new vehicle sales also distorts
products, particularly fashion, to high
Adjusted EBIT margin is not a key metric
reported margins.
street retailers.
as the high proportion of open book and
minimum volume guarantee contracts
Accordingly, Adjusted EBIT is a more
Central logistics overheads include the
within the UK logistics division distorts
relevant measure of financial performance
costs of the directors of the logistics
reported margins.
than Adjusted EBIT margin.
business, the project delivery and IT support
teams, sales and marketing, accounting
This is due to an element of management
E-fulfilment & returns management
and finance, and human resources that
fees on certain contracts being fixed in the
services include the receipt, warehousing,
cannot be allocated in a meaningful way
short term, so that an increase in revenue
stock management, picking, packing
to business units. Despite continuing to
in periods of increased activity will not
and despatch of products on behalf
invest significantly in such resources during
necessarily give rise to a proportionate
of customers to support their online
the year, particularly in operational support,
increase in profit, resulting in lower reported
trading activities, as well as a range of
and solution design and implementation,
margins. Conversely in periods of reduced
ancillary support services including returns
we managed to recover more of this cost
activity levels, reported margins would
management, branded as ‘Boomerang’,
from customers in the year due to the high
typically increase.
under which returns of products are
volume of new projects.
managed on behalf of retailers.
19
Operating and
Financial Review
continued
1. Overview of results (continued)
Group Adjusted EBIT (continued)
The discontinuing costs in the year to
Incremental investment will inevitably be
30 April 2015 relate to remuneration
required in the logistics overheads base as
of a retiring director, consultancy and
the business continues to grow, including
professional fees in respect of potential
the impact of the full year effect of the
investment opportunity appraisals, the costs
infrastructure investments undertaken in
of operating the Chairman’s private office,
the second half of the year ended
and certain advertising, sponsorship and
30 April 2015.
entertaining expenditure, none of which
have been borne by the Group since
The commercial vehicles business, Northern
Admission (“Admission” being defined as
Commercials (Mirfield) Limited, operates
Iveco and Fiat commercial vehicle
4 June 2014, the date on which Clipper
Logistics plc was admitted to the premium
dealerships from six locations, together
segment of the London Stock Exchange).
with four sub-dealerships. It sells new and
The discontinuing costs in the year to 30
used vehicles, provides servicing and repair
April 2014 also included all of the above.
facilities, and sells parts. Vehicles sold and
serviced range from small light commercial
Of the exceptional costs of £0.9 million
vans, through to articulated tractor units.
(2014: £2.5 million) incurred in the year
to 30 April 2015, £0.7 million (2014: £2.0
Head office costs represent the cost of the
million) related to the costs of the IPO
Executive Chairman, Chief Financial Officer,
and £0.2 million (2014: £nil) related to
Deputy Chief Financial Officer, Company
professional and legal expenses incurred
Secretary, Non-Executive Directors and plc
on the acquisition of Servicecare. In 2014,
compliance costs.
there were also exceptional depot closure
costs of £0.4 million, and redundancy costs
Share based payment charges totalling
on reorganisation of £0.1 million.
£0.1 million have been charged to central
logistics overheads, commercial vehicles
cost and head office costs as appropriate
Net interest charges
in respect of the Sharesave plan and the
Net interest charges for the year to 30 April
Performance Share Plan (see note 22 to
2015 were £1.4 million, an increase of £0.5
the Group Financial Statements).
million from the £0.9 million incurred in the
The profit after tax for the year to 30 April
previous year, reflecting the higher average
level of net debt in the business following
2015 was £7.3 million (2014: £2.8 million),
the payment of £18.5 million in dividends
as set out on page 88. This is stated after
and other distributions to the former parent
charging £0.3 million (2014: £2.3 million)
company in the prior year, related to the
of discontinuing costs, and £0.9 million
reorganisation of the Group in preparation
(2014: £2.5 million) of exceptional costs.
for the IPO. In addition, the interest charges
in the year to 30 April 2015 reflect the net
As such, adjusted profit after tax for the
cash outflow on the Servicecare acquisition
year to 30 April 2015 (which excludes the
of £3.7 million.
discontinuing costs, exceptional costs and
the tax associated with those costs) was
£8.4 million (2014: £6.9 million), an increase
of 21.1%.
20
Operating and
Financial Review
Operating and
Financial Review
continued
1. Overview of results (continued)
Strategic Report | Governance | Financial Statements
Taxation
Key items of capital expenditure during
As detailed in note 28 to the Group
The effective rate of taxation of 22.8%
the year to 30 April 2015 within the value-
Financial Statements, net cash paid in the
(2014: 27.9%) is higher than the standard
added logistics services segment were
year to 30 April 2015 for the purchase of
rate of corporation tax of 20.92% (2014:
IT system upgrades (including enhanced
Servicecare amounted to £3.7 million,
22.84%) principally due to expenditure
back-up solutions), site fit out costs for
disallowable for tax purposes. As the
Clipper’s Harlow site which commenced
The Group’s business model gives rise
discontinuing head office costs include
operations during the year, site fit out costs
to high levels of cash generation. In the
some disallowable items such as customer
in Germany for the new s.Oliver contract,
UK logistics business, Clipper is typically
entertaining and sponsorship and the
and ongoing capital expenditure relating to
paid in the month in which services are
headline UK tax rate reduces by 1%, the
fleet renewals. Within commercial vehicles,
delivered on open book and minimum
effective rate of tax is expected to reduce
again in the year ending 30 April 2016.
capital expenditure related primarily to
ongoing fleet renewals (for demonstrators
volume guarantee contracts, giving rise to
a typically negative investment in working
and parts vans), and also an upgrade to
capital, whilst in the commercial vehicles
the vehicle diagnostic system used for
business working capital is substantially
Earnings per share
Iveco vehicles.
As set out in note 21 to the Group Financial
Statements, during the year to 30 April 2014
funded by the manufacturer through
stocking facilities for new vehicles, and
trade credit terms for parts supplied. Across
there was a group reorganisation involving
Goodwill and other intangible assets
the two years ended 30 April 2015, net
both an issue and a subdivision of shares.
The goodwill arising on the acquisition of
cash generated from working capital was
In addition, there was a large amount
Other intangible assets acquired with
of non-recurring cost. Consequently, the
Servicecare, principally in respect of
basic measure of earnings per share is
customer relationships, had a fair value of
Net debt
Servicecare amounted to £4.2 million.
£4.9 million.
significantly distorted by these factors.
£1.2 million giving rise to a related deferred
In addition to Adjusted EBIT, net debt is
Adjusting earnings to exclude discontinuing
tax liability of £0.2 million.
considered a Key Performance Indicator for
and exceptional costs and the tax effect
thereon, gives adjusted earnings of
£8.4 million for the year to 30 April 2015
Cash flow
the Group. As with Adjusted EBIT, net debt is
assessed against Board approved budgets.
(2014: £6.9 million). In the previous Annual
With the Group reorganisation undertaken
As shown in note 19 to the Group Financial
Report the tax effect was calculated at
as part of the preparation for the IPO and
Statements, the Group’s net debt at 30 April
standard rate. It is now calculated at the
the payment of the IPO transaction costs
2015 was £13.6 million (2014: £15.4 million
effective rate applicable to the specific
falling in two financial years, there has been
as restated). At this date, the Group had
transactions.
some distortion in reported cashflows.
£8.0 million net bank debt, drawn against
available bank facilities of £27.5 million.
Adjusted earnings per share was 8.4 pence
Cash generated from operations was
The net debt at 30 April 2014 included
for the year to 30 April 2015 (2014: 7.0 pence
£12.6 million (2014: £15.8 million) after
£14.2 million payable to the former
as restated).
paying £2.1 million of IPO transaction costs
parent company.
On an unadjusted basis earnings per share
of £1.6 million was paid in the year to 30
The key terms of the Group’s banking
was 7.3 pence (2014: 2.8 pence).
April 2015, in line with the stated dividend
facilities are included in note 19 to the
payment policy. Prior to the IPO, a dividend
Group Financial Statements.
(2014: £0.6 million). An interim dividend
Capital expenditure
of £0.3 million was paid to the former
parent company. In the year to 30 April
Of total capital expenditure of £2.4 million
2014, dividends and other distributions
(2014: £4.9 million), £1.9 million (2014:
totalling £18.5 million were paid to the
£4.0 million) related to the value-added
former parent company.
logistics services segment and £0.5
million (2014: £0.9 million) related to the
commercial vehicles segment.
21
Clipper Logistics plc Annual Report and Accounts 2015
Operating and
Financial Review
continued
2. Acquisition of Servicecare Support Services Limited
In December 2014, Clipper acquired the
In the financial year to 30 April 2014, Clipper
entire issued share capital of Servicecare
launched its ‘Boomerang’ brand, which
Support Services Limited (“Servicecare”)
was introduced to focus on the growing
and its wholly owned subsidiary Electrotec
requirement for returns management
International Limited (“Electrotec”) for a
services by the clothing and non-electrical
cash consideration of £5.7 million. Of this
general merchandise sectors. As part of the
consideration, £1.0 million was deferred for
Group’s strategy to enhance its Boomerang
six months, and a further £1.0 million was
services to both new and existing customers,
deferred for twelve months. In addition, a
the Board has sought to identify potential
further £0.2 million is payable upon receipt
acquisition targets that would enable
of a tax refund due to Servicecare of the
same amount.
the Boomerang service offering to be
expanded to cover electrical goods,
which require specialist expertise. With its
Servicecare is a specialist provider of returns
long trading history and blue chip client
logistics services to consumer electronics
base Servicecare is a strong fit within the
manufacturers and retailers. The business,
Boomerang brand and has proved to be
which operates across the United Kingdom
immediately earnings-enhancing to Clipper,
from sites in Oldham, Greater Manchester
outperforming expectations for the five
and Barton, Burton-on-Trent, has been
months post acquisition to the year ended
trading since 1995 and has a strong client
30 April 2015.
base that includes Argos, Panasonic, Shop
Direct Group and Tefal. Its wholly owned
Electrotec complements the Group’s
subsidiary Electrotec International Limited
subsidiary Genesis, which provides an online
was acquired by Servicecare in 1999
route to market for Clipper’s customers,
and trades as a retail supplier, selling
particularly in relation to sale of excess in-
refurbished consumer electrical goods,
season stock, sale of end-of-line stock, and
predominantly online.
sale of returns.
22
Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
3. Value-added logistics services
Market overview, size and growth of
- we are seeing continued growth in the
Structural growth in online,
market and market trends
level of Click and Collect sales activity,
multichannel retailing
Traditional bricks and mortar retail still
with Click and Collect comprising 16%
The UK has one of the highest rates of
constitutes the majority of retail sales in the
of multichannel online sales in Q4 2014
internet and smartphone penetration in
UK. However, the growth of online retailing
compared to 12% in the same quarter of
Western Europe and this level of penetration
and the desire for major retail brands to
2013. Certain of our customers report that
is expected to increase further in coming
have as many different touch points with
Click and Collect now accounts for 60-
years. The proportion of online sales as a
their customers as possible means that
65% of their overall online volume. Within
multichannel retailing will be a dynamic
the Click and Collect service proposition,
percentage of total retail sales in the UK is
already one of the highest in the world.4
driver of change for both the retail and
time compression is a major issue and the
logistics markets in the near future. An
increasing number of distribution channels
customer demand for next day delivery is
pervading.
This trend is fundamentally altering the
logistical requirements of retailers, who
are now required to meet the demands of
the consumer, including shopping at stores,
home delivery, Click and Collect as well
as the return of purchased items. The fact
By 2022, one third of sales in the UK are
forecast to be conducted online.2 The rest
of Europe is also experiencing a similar
retailing (whereby customers place
orders across a variety of sales channels,
for example retail stores, online stores,
must meet the challenges of multichannel
that the penetration of internet-based sales
trend. Germany is the second largest
mobile stores and telephone sales), which
in the UK economy is one of the highest
e-commerce market in Europe after the UK.
demands complex warehousing, order
in the world leads the Directors to believe
Here, online retail sales are forecast to reach
processing and stock management systems
that the UK is at the forefront of the logistics
€73 billion by 2019, and Europe as a whole
in order to deliver a high quality service to
challenges being posed to retailers by the
growth in online retail.
is forecast to generate €233 billion of online
retail sales by 2018.3
The UK’s e-commerce
market has grown from
£0.8 billion in
2000 to £104
billion in 2014
The retail sector is undergoing structural
changes and, as a market leader in
the provision of services to support
retailers’ online and returns management
challenges, the Group is strategically well
placed to capitalise on the very significant
growth expected in this sector of the market.
According to market research1, the UK’s
e-commerce market has grown from £0.8
billion in 2000 to £91 billion in 2013 and
£104 billion in 2014 (14% annual increase)
with double-digit growth forecast until
around 2017. Within that market there are
also significant changes being experienced:
- orders placed via mobile channels
(smartphones and tablets) accounted
for 34% of UK e-retail sales in Q1 2015
compared to 20% in Q1 2014 (and only
1% during 2010);
1 IMRG
2 Insider Trends
3 Forrester Western European Online Retail Sales
Forecast for 2013 to 2018
4 eMarketer December 2014
5 LCP Consulting
consumers. Further, non-food retailers are
expected to invest approximately £5 billion
in making the transition from multichannel
to ‘omni-channel’ retailing over the next
five years.5
Omni-channel represents the latest
evolution of multichannel retailing, whereby
retailers offer consumers flexibility not only on
the method of order placement (as is the
case with multichannel) but also in respect
of the choice of delivery destination – for
example, the consumer might place an
order online and choose to have the order
delivered to that retailer’s high street store,
or at a Click and Collect site in a third party
location, rather than their home address.
This development adds even greater
complexities to the logistical requirements
of retailers. Our customers have seen
significant growth in Click and Collect in the
year to 30 April 2015. One of our customers
commented that, “this [2014] was the year
that Click and Collect really came into play
with 56% of online orders being collected in
shops as opposed to home delivered”.
23
Operating and
Financial Review
continued
3. Value-added logistics services (continued)
Returns management demands of
Managing the returns process represents
retailers increasingly complex
a stock management and processing
Returns management is an increasingly
challenge for retailers, since traditional
important area for retailers. A smooth returns
warehouses have been designed to receive
process is vital to consumers, with 57%
and process bulk quantities of identical
saying it is very important to their buying
decision.1 It is estimated that 25% to 40%
of all clothing and footwear purchases in
the UK are returned.2 Historically, customers
would return the product to the store where
product, rather than to receive individual
units of product. Equally, such returned
units will inevitably require some degree of
inspection, rectification, cleaning or repair
before going back into available stock,
the purchase was made, but as online retail
has developed, customers are demanding
or may even be deemed unfit for prime
sale. Traditional warehouses are simply not
choice in their method of return, for
geared up for dealing with such a high level
example posting the product back to the
of intervention for single products.
retailer, or taking it into a high street store or
a collection point.
Retailers therefore need to rework the
product into a saleable state very quickly
As a result, retailers are becoming
to reduce working capital investment
increasingly focused on consumers’ returns
and maintain margins. Clipper’s returns
experience, just as much as they are on
proposition gets the stock back into a
consumers’ purchase experience. More
Distribution Centre-compliant format
so now than ever before, retailers are
allowing the Distribution Centre to focus on
trying to ensure that returns management
its core function of fulfilment. The Group
is handled effectively so that their brands
has a strong track record of managing this
are not damaged by customers using
process for customers, including managing
social media to comment unfavourably
the returns operation for ASOS, the UK’s
on their experience. In addition, product
leading online fashion retailer.
rectification during the returns management
process can add value and enhance
Further, the power of social media and
margin for the retailer.
consumer review websites enhances the
importance of returns management as the
returns experience represents the final touch
point between a retailer and the consumer
– a badly handled customer experience
in respect of the returns process may be
quickly communicated by that customer
to a large number of people, particularly
via social media, which has the potential to
harm a retailer’s future sales prospects.
1 Retail Week, March 2015
2 IMRG
24
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
3. Value-added logistics services (continued)
Boomerang – Clipper’s returns
The acquisition of Servicecare brings
We also secured our inaugural reverse
management solution
additional returns handling capabilities to
logistics contract in mainland Europe.
To address the latest challenges faced by
Clipper. Servicecare specialises in electrical
This contract is with s.Oliver in Germany,
retailers in relation to returns management
reverse logistics, a solution which had,
owners of a global fashion brand. Under
as outlined above, Clipper has successfully
until the acquisition, represented a gap in
the contract, Clipper will manage s.Oliver’s
introduced the ‘Boomerang’ brand and
Clipper’s service offering. The Servicecare
European wholesale and retail returns
concept, and we are particularly pleased to
proposition adds additional capability
management service. The operation will
report that under Boomerang approximately
into our Boomerang brand. We intend to
be delivered out of our existing solutions
95% of products have been successfully
leverage the Boomerang brand across
centres in Münchberg and Hof. This
returned to prime stock at first pass.
Servicecare’s existing customers and to
contract win aligns to our clear strategy to
broaden our service offering with existing
Clipper customers with the Servicecare
develop returns management capabilities
in continental Europe to capitalise on our
electrical returns proposition going forwards.
strengths in this key area.
Supplier
INBOUND
COMPLIANT
Warehouse
Courier
Inbound
Retailer DC
INBOUND
COMPLIANT
ENHANCED
CUSTOMER CARE
BRAND
PROTECTION
BOOMERANG™
SOLUTION
NON
COMPLIANT
Clipper Returns Centre
25
Operating and
Financial Review
continued
3. Value-added logistics services (continued)
Mechanisation
E-fulfilment & returns management growth
Whilst we have benefited from the full
Mechanisation and semi-automation
Our ability and agility, particularly in respect
year effect of the ASOS and Go Outdoors
is becoming increasingly prevalent in
of omni-channel, multi-channel, returns
e-commerce contracts won in the year to
the market for large volume customers.
management and mechanisation noted
30 April 2014, we have also had a number
Clipper’s in-house knowledge and skill allows
above, have enabled the Group to make
of operational successes in e-fulfilment &
us to work in a collaborative way with our
very significant advances in its revenues
returns management services in the year
customers to deliver best practice solutions.
and earnings, significantly outperforming
to 30 April 2015 including: the relocation
Clipper is currently working on a number of
market growth. Revenues from e-fulfilment
of the Tesco online clothing operation from
client initiatives, including:
& returns management services increased
our Selby site to a new site at Daventry
- mechanisation of elements of the
by 31.5% from £46.0 million for the year to
following the securing of a five year
Boomerang returns process;
30 April 2014 to £60.6 million for the year
to 30 April 2015, with Adjusted EBIT growing
extension to our existing contract, the
additional space at Daventry allowing Tesco
- automated sortation for Click and Collect
by 48.0% from £3.7 million to £5.5 million
to realise its growth ambitions; the securing
services;
over the same period. We are particularly
of a new contract with ME+EM to provide
pleased with this performance, as our
multichannel retail logistics solutions for their
- vertical carousel for pick by light small
strategy has been to become a market
range; and securing the s.Oliver returns
item; and
leader in the e-commerce sector, and
management contract. Shortly before the
to be a thought leader in the provision of
2015 year end, we also won the contract
- automated box creation, carton packing
value-added services across the sector. The
to provide e-fulfilment services to Zara in
and labelling.
results of this sector of the business include
certain European countries. Operations
Servicecare’s results for the five months
on this contract commenced shortly after
The majority of capital costs on contracts
following its acquisition in December 2014.
the year end; the full year benefit of this
will not be realised until the year to 30 April
2017. Shortly after the 30 April 2015 year
end we also commenced warehousing
and e-fulfilment services to support Ireland’s
largest retailer’s online retail operations in
Ireland and the UK.
are typically front-loaded and occur in
the run up to project ‘go live’. A number
of contracts, including Zara, were secured
shortly before the 2015 year end and so
there were significant capital commitments
outstanding at that date totalling £9.4
million (2014: £0.3 million). Customer-
specific capital costs such as warehouse
fit-out costs are typically recovered through
depreciation and finance charges to our
customers over the life of the underlying
customer contract; speculative space
fill capital investment such as adding
new mezzanine flooring tends to be
recovered from customers when the
space is ultimately filled. The majority of
capital expenditure is financed through hire
purchase agreements.
26
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
3. Value-added logistics services (continued)
Non e-fulfilment logistics is central to our
- we have reached agreement with John
Multi-user operations
future strategy too
Lewis to provide a range of retail support
The Group encourages the use of multi-user
The Group will continue to develop and
services from a new distribution centre
sites, where a multiplicity of customers is
deliver truly value-added services to address
close to their existing distribution centre
served from a single location.
the needs of retailers in traditional bricks and
network. This activity will commence in the
mortar logistics, including receipt of inbound
year to 30 April 2017; and
This facilitates the sharing of specialised
product, storage, store-readiness of product,
resources, and assists in optimising and
and distribution to retail destinations.
- we have secured a new contract with
balancing demand on people and
The Group will continue to innovate
the fashion brand Pep&Co, to provide
provide cost-effective solutions.
Pepkor UK Retail Limited, the owners of
facilities, in turn allowing the Group to
to deliver best in class solutions for its
customers.
warehousing and returns management
services commencing July 2015.
Revenue from non e-fulfilment operations
Investment in key personnel
The Group differentiates itself by providing
grew by 14.1% for the year ended 30 April
Retail consolidation centres
consultancy-led, value-added services to
2015, from £89.6 million to £102.1 million,
Clipper continues to innovate in retail
its actual and prospective client base. We
with Adjusted EBIT increasing by 9.8%, from
consolidation centres, which allow multiple
have established ourselves as a thought
£9.2 million to £10.1 million.
deliveries to be made to retail outlets
leader within the logistics sector, and
from a single, localised centre, providing
this is evidenced both by our customers’
Within non e-fulfilment, the full year effect
benefits in:
buy-in to our innovative approach, and
of the Antler and SuperGroup contracts,
- retail space availability, as the need for
by independent brand health reviews
which both commenced in the year to
on-site stock rooms is obviated;
conducted by an independent market
30 April 2014, contributed to the revenue
research consultancy.
and Adjusted EBIT growth in the year to 30
- a wider range of stock being available to
April 2015. We also secured and began
the end customer; and
The Group is central to the achievement by
operations under new long-term contracts
its customers of their own objectives and
with Philip Morris and Ted Baker in the
- reduced emissions, of increasing
goals.
UK and we secured long-term contract
importance in city centres in particular.
extensions: with Harvey Nichols, principally
Accordingly, we invest in recruiting, training
for warehousing and store delivery, with
Indeed, Clipper’s and Newcastle University’s
and developing people who are specialists
New Look to fulfil their store delivery and
Smartfusion initiative to reduce the number
in their relevant fields. These include
collection requirements; and with Whistles
of delivery vehicles on campus and to cut
information technology, solution design,
to continue to manage the receipt and
distribution of its entire product range to
the carbon footprint won two prestigious
awards: the “outstanding procurement
facilities specification, implementation and
management, e-commerce and returns
customers worldwide.
team” award at the Times Higher Education
management, and project management
Leadership and Management Awards
and implementation resource.
Additionally, in the year to 30 April 2015:
2015 and the Newcastle University “Best
- we have agreed a new contract with
Environmental Initiative” award.
Flyers Group plc, the owners of the
Ben Sherman and Firetrap brands and
specialists in fashion for children and
teenagers, for warehousing and transport
services commencing May 2015;
27
Operating and
Financial Review
continued
4. Commercial vehicles
The commercial vehicles business delivered
The business achieved a number of
Adjusted EBIT of £1.9 million (2014: £1.8
important key performance measures in
million), an increase of 2.1% on the
the year:
previous year.
- Assistance Non-Stop: Northern
Commercials achieved the best
Having fully integrated Stormont Truck and
response time of all Iveco dealers in the
Van Limited into Northern Commercials in
UK, averaging 39.0 minutes to arrive to
the year to 30 April 2014 and rationalised
provide assistance to breakdowns;
the cost base of the two businesses, the
year to 30 April 2015 was back to ‘business
- Vehicles Off-Road: Northern Commercials
as usual’.
was the number one dealer, with an
average of 2.4 days off-road for repairs,
Northern Commercials operates from
compared to an Iveco average of
six dealership locations, and has four
2.7 days;
sub-dealers. Dealerships are located in
Brighouse, Manchester, Northampton,
- MOT pass rate: 98% of vehicles achieved
Dunstable, Tonbridge and Brighton. Thus,
an initial pass; and
the business operates across the north
of England and Wales (with sub-dealers
- parts service: 97% of parts required by
supporting this geographic territory), through
customers were delivered within 24 hours.
the midlands, and into the south-east.
The business sold 1,810 new vehicles in the
year (2014: 2,447), and 470 used vehicles
(2014: 416). New fleet sales were somewhat
depressed in calendar year 2014 due to
the impact of Euro 6 emissions legislation.
However, due to a change in mix of
vehicles sold, the average selling price of a
new vehicle sold in the year to 30 April 2015
was £23,000 compared to £14,000 in the
prior year, an increase of 47.4%. Servicing
and parts sales saw significant increases
in revenue between the year to 30 April
2014 and the year to 30 April 2015, with
incremental technicians being recruited to
cope with the increasing demand.
Key customers of Northern Commercials
include Allied Bakeries, Asda, Clancy
Docwra, Dawsons, Ryder, Variety (the
Children’s Charity), and many other
household names.
28
Clipper Logistics plc Annual Report and Accounts 2015 Operating and
Financial Review
continued
5. Current trading and outlook
As noted above, the Group secured a
Our new Click and Collect solution, recently
number of significant contract wins in the
announced in collaboration with John
year to 30 April 2015, the full year benefit of
Lewis, is planned to go live in September
which will not be realised until the years to
2015, and is expected to generate a strong
30 April 2016 and 30 April 2017.
financial contribution from the year ending
30 April 2017 onwards.
As we look ahead to the 2016 financial
year, we have a very strong new business
The commercial vehicles business is
pipeline. We continue to win new contracts
expected to continue to deliver steady
within both e-fulfilment logistics and non
growth in profitability in the year to 30
e-fulfilment logistics, both in the UK and
Europe, through our focus on our retail
April 2016.
specialisms and provision of cost-effective,
The Board is confident in the Group’s
value-added solutions. We look forward
prospects for the full year ahead. Current
to updating shareholders on these new
trading is in line with our strategic plan, and
contracts when they are formalised.
we are confident of achieving another
period of excellent financial performance in
Since the year end, we have commenced
the year to 30 April 2016.
operations on the new Pep&Co and Zara
contracts, and have also commenced
operations for Flyers and for Ireland’s
largest retailer.
Our returns management service, marketed
under the ‘Boomerang’ brand, continues
to gain traction with retailers in both the UK
and Europe, particularly with the added
service offering of Servicecare, and we
are confident that this represents a major
area of growth going forward. The full year
impact of the Servicecare acquisition,
completed in December 2014, will also
provide revenue and Adjusted EBIT growth in
the year to April 2016.
29
Risk Management
The Group adopts a formal risk identification and
management process designed to ensure that risks are
properly identified, prioritised, evaluated and mitigated
to the extent that is possible, in order that the Group can
achieve its strategic objectives and enjoy long-term success.
Risk management process
The Group adopts the following process:
The Board and senior management team
are collectively responsible for managing
risk across the Group. Risks are formally
reviewed regularly and risk registers are
updated at least four times a year.
Principal risks are identified through an
evaluation of likelihood of occurrence and
potential impact. The senior management
team (“SMT”) also reviews specific strategic,
operational and financial and compliance
risks in regular SMT meetings, contract and
project reviews and other key executive
management meetings to enable the SMT
and the Board to ensure that the Group’s
systems are properly aligned with strategic
objectives and address the Group’s risks.
1. Identify risk:
Identify key risks by category
(including changes since the last review)
5. Review, monitor and report risk
management process:
Review and monitor risk
management process, and report
to Board and Audit Committee
2. Rate risk:
Rate each risk (by evaluating and
assigning a score to each risk)
4. Execute risk mitigation:
Execute agreed risk mitigation
and process improvements
3. Identify risk mitigation:
Identify mitigating actions required
for each risk
30
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Risk Management
continued
Risk management process (continued)
The Group has identified the following key risks through its risk management process:
Strategic:
Risk
Mitigation
Reputation
Clipper’s potential to win new business is
influenced by its reputation for successfully
implementing major customer projects.
Reputational damage from failed project
implementations may have an adverse
impact on Clipper’s ability to win new
business, and thus limit the Group’s long-
term growth and success.
People
Failure to develop and retain key staff
may prevent the Group from delivering
its objectives.
Clipper has developed effective project management and governance techniques
and continues to ensure that the Company works closely with customers using highly
trained and experienced internal staff, to ensure successful project delivery.
All projects are reviewed and evaluated on a weekly basis by the relevant
SMT members.
In addition, independent ‘Brand Health’ reviews are undertaken regularly to
monitor customer perception of, and satisfaction with, the Company.
The Group offers comprehensive training and experiential learning which includes
development, customer relationship and leadership training. The Group keeps in close
contact with employees via flat structures and effective employee engagement.
The Group also ensures that it has competitive terms and conditions with reward
schemes which drive and reward performance and can respond flexibly to the needs
of employees.
31
Risk Management
continued
Risk management process (continued)
The Group has identified the following key risks through its risk management process (continued):
Operational:
Risk
Mitigation
Loss of operational delivery
During periods of major project and
merger activity, the focus could move
away from operational delivery, thus
harming the Group’s relationships with
customers.
Dedicated start-up and project teams are used in order to minimise disruption to
the operation during such times. Contractual KPIs are reviewed regularly to ensure
operational effectiveness at all times.
Failure to achieve contractual KPIs
Failure to achieve contractual KPIs may
result in the loss of existing contracts.
Reporting measures are in place to measure contractual KPI performance of
each contract in a timely manner, to ensure compliance, or to allow immediate
corrective action.
Failure to maintain and enhance
customer relationships
Failure to maintain and enhance
customer relationships may lead to the
non-renewal of contracts, and/or may
prevent the Group from winning new
work with existing customers.
Loss of an operational site through
disaster
Loss of an operational site as a result
of fire, flood or other disaster would
have the potential to seriously disrupt
operations.
Failure of IT system or infrastructure
Any significant failure, inefficiencies
or breakdown of our IT systems or
infrastructure would seriously impair our
ability to deliver operationally and would
put contract renewals at risk.
The Group holds formal monthly reviews with key customers as well as maintaining
frequent close informal contact with customers. This enables corrective action to be
taken quickly in response to customer feedback. In addition, regular brand health
reviews are carried out which give customers the opportunity to comment anonymously
on any aspect of the customer/company relationship and service delivery. The Group
can then take corrective action, if required, based on this feedback.
Regular safety audits and inspections and remedial action seek to limit this risk.
In the event of a serious incident, each site has a business continuity plan which would
come into immediate operation.
Business continuity and disaster recovery plans are kept under review at all locations
and our IT infrastructure is subject to ongoing review with regular testing of systems.
32
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Risk Management
continued
Risk management process (continued)
The Group has identified the following key risks through its risk management process (continued):
Legal and Regulatory:
Risk
Mitigation
Legal and regulatory
As the Group continues its expansion,
particularly in the EU, exposure to
greater regulatory and legal risk will
increase.
Financial:
Risk
Liquidity
Inadequate cash resources could
leave the Group unable to fund its
growth plans, thus affecting future
financial performance.
Credit risk
Customer default or insolvency could
result in a bad debt.
The Group has taken steps to improve its in-house legal and compliance resource by
the recruitment of Guy Jackson as Company Secretary and Group General Counsel.
Operational sites are audited on a frequent, cyclical basis to test for instances of non-
compliance.
External specialist advice is sought to ensure technical compliance with financial,
taxation, listing and other technical legislation.
Individuals responsible for compliance are identified and are specifically recruited with
recognised qualifications. Employees’ technical Continuing Professional Development
course costs are reimbursed by the Group.
Mitigation
As part of the IPO process, the Group undertook an assessment of its funding
requirements in the context of its growth plans, and entered into new facilities with its
bank to ensure that expected future growth plans can be funded within these new
facilities.
The Group will continue to undertake further reviews of funding requirements as its
growth plans evolve.
Credit checks are performed on all new potential customers, and credit terms and
limits are set accordingly. These are reviewed regularly, and adjusted if necessary.
Standard terms of trade give the Company a general lien on the customer’s stock for
amounts owed.
Where customer contracts negate the Company’s standard terms, protections against
non-payment of amounts due are written into the contract.
Fraud risk
Major fraud, including the risks posed
from organised crime, may result in
significant financial loss.
Our accounting procedures manual includes several layers of checking and control for
new customers and suppliers, changes to suppliers’ bank details, and combinations of
verbal and written confirmations from known contacts.
Formal whistleblowing and anti-bribery policies are in place.
33
Corporate Social Responsibility
The Group recognises the importance of
to improve management skills, keep
To encourage a greater number and higher
Corporate Social Responsibility (“CSR”), and
managers abreast of developments in
calibre of students to enter the logistics
our impact on the environment and our
the industry and enhance the succession
sector we have partnered with
people, their development, commitment
planning pipeline.
Huddersfield University.
and relationships with our customers, the
community and other stakeholders are
The Group has continued its investment
As a founding member of the Novus
central to our plans.
in additional project delivery and senior
Trust we continue to support this initiative
management resource in order to deliver
aimed at encouraging high calibre
significant organic growth into the future.
students to enter the Logistics Sector. We
People development
At every level we provide excellent
have attended graduate recruitment
fairs, participated in assessment centres,
opportunities for our employees. We provide
Employee engagement
provided industry mentors, offered students
unemployed people in local communities
To encourage employees to give us their
structured holiday jobs, and under this
with the opportunity for training,
best we aim to provide a competitive level
scheme are employing our first two twelve
qualifications and jobs via our Clipper
of pay and other benefits relative to job and
month work placements. As students
Academy programmes. Existing employees
skill level, including the provision of retail
progress through their degree course we
develop via driver CPC qualifications,
discount schemes, company contribution to
expect to employ our first post-initiative
NVQs, apprenticeship and Potential Team
a pension scheme and life/accident cover.
full graduate trainees in 2017.
Development Programmes.
We encourage alignment with Group goals
Our staff can then apply to join our
via open communication and appraisals.
Community events
Corporate First Line and Middle
We have an annual conference for our
At both corporate and local level we
Management Levels 2 and 3 ASPIRE
senior staff, site employee forums, health
actively encourage our sites to participate
Programmes. Interest in the programme
and safety committees, team briefs, our
in good causes through direct funding,
increased by 30% from the previous
Company newsletter ‘Evolve’ and highly
provision of resource and/or encouraging
year and is recognised as an excellent
visual notice boards.
development tool improving skill levels and
our employees to organise fundraising
events. We again sponsored the Dragon
creating a robust succession pool. We also
We recognise employee contribution and
Boat Race for Martin House, cycle rides for
support relevant professional qualifications
loyalty via our Employee of the Month
Transaid and many site events for Children
across a range of disciplines e.g. operations
Scheme, Driver of the Year Award and Long
in Need, Red Nose Day, Cancer Research
(CILT), Finance (ACCA/CIMA) and HR (CIPD).
Service awards.
and local charities.
In order to improve succession planning
We encourage team working by involving
We support various local forums and
and to develop high performance teams,
2015 will see the launch of a new online
employees in open days and inter-site
competitions, as well as organised themed
sponsor community activities such as a
children’s football team.
performance management system. This
events on special occasions.
will focus on objectives and values. It
will improve the quality of management
information enabling more informed
Schools and universities
decisions for identifying talent and targeting
Many of our distribution centres network
training and development opportunities.
with local schools and colleges to offer
2015 will also see the launch of a new
is represented on the Employer Liaison
in-house Senior Leadership Development
Committee of the Logistics Institute of Hull
Programme. This will operate at two levels –
University.
site visits or support career events. Clipper
providing strategic leadership capabilities
whilst also providing a diverse range of
other leadership development initiatives
34
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Corporate Social Responsibility
continued
Equal Opportunities
Health and safety
The Group is committed to an Equal
The Group seeks to protect employees
Opportunities Policy. Supported by training,
from accidents and injuries at work. Our
policies and our 5 Point Code of Behaviour
health and safety structure is supported by
we aim to ensure that no employee is
IOSH/NEBOSH qualified representatives and
discriminated against, directly or indirectly,
Health and Safety Committees at each site.
on the grounds of colour, race, ethnic and
Each site receives at least two safety audits
national origins, sexual orientation or gender,
each year. Serious incidents are escalated
marital status, disability, religion or belief, or
and accident statistics are monitored.
on the grounds of age. The aforementioned
Accidents are reported and investigated.
is included in our staff handbook, induction
Health and safety matters are reported and
training and various management
monitored at Board level.
programmes (including ASPIRE).
Health and safety training is prevalent
The above is reflected in our truly diverse
throughout the business – from initial
workforce. We are happy to consider
induction training, through risk assessed
requests for flexible working and wherever
task training (e.g. manual handling, fork
possible will agree shift patterns which
lift truck and work equipment training) to
facilitate a balance between work and
management awareness programmes.
family life.
We are also a member of the
training provider to deliver ‘safe to start’
The Company partners with an external
Disability Forum.
training at all newly opened sites to ensure
staff are fully inducted and receive the
aforementioned training prior to taking up
their full duties.
Gender breakdown as at 30 April 2015:
Male
Female
Total
Male%
Female%
Board of Directors
Other Senior Management*
Other employees
8
13
1,984
0
1
1,162
8
14
3,146
Total
2,005
1,163
3,168
100
93
63
63
0
7
37
37
* As defined by the Companies Act this category includes all employees responsible for planning, directing or controlling
the activities of the Group, excluding the Company’s Directors.
35
Corporate Social Responsibility
continued
Environment
- we promote environmental awareness via
We recognise the Group’s activities have
training, including training van and LGV
an impact on the environment but we
drivers in Safe and Fuel Efficient Driving
believe we can improve our environmental
using the latest simulator technology,
footprint and save energy. This is important
which in turn avoids fuel use associated
to both the Group and our stakeholders.
with the training; and
To reflect this we have employed a Health,
Safety and Environmental Advisor to provide
- we encourage employees to use ‘green’
additional resource to further develop
transport. Our company car lists offer the
our agenda.
Our Carbon Management Reduction
Programme complies with the Carbon
use of newer, lower emission vehicles and
our sites promote the use of car sharing.
Reduction Commitment (CRC) Energy
Greenhouse gas (GHG) emissions
Efficiency Scheme and the Energy Savings
The Group records energy and fuel use for
Opportunity Scheme (ESOS) which between
all areas of the business, based on invoices
them aim to reduce energy consumption
received for diesel, gas oil, mains electricity
and emissions of greenhouse gases from
and natural gas. Fuel used for business
our warehouses and transport fleets.
travel in company vehicles is also included.
To this end:
The Group uses the average monthly price
- we are applying the latest environmental
per litre to convert the diesel, heating oil,
standards as and when we upgrade our
and vehicle fuel costs into litres of fuel used.
estate;
- we are investing in low energy lighting and
testing the advent of LED lighting;
- we are investigating the use of warehouse
roof space for solar panels;
The kilowatt hours of gas and electricity
used, and the litres of each fuel type used,
are then converted into tonnes of CO2
equivalent (tCO2e) using the relevant DEFRA
conversion factors.
In the year to 30 April 2015, despite
- we investigate fuel use, route planning
increased revenue and the acquisition of
and best design of vehicles across the
Servicecare, the Group reduced its Scope 1
fleet to become more efficient and
minimise emissions. We participate in
emissions (emissions derived from the
consumption of gas, oil, and vehicle fuel).
the ECO Stars Fleet Recognition Scheme
This was as a result of lower diesel usage
which recognises fleet operators who use
due to, inter alia, better utilisation of our
lower polluting vehicles and effective fuel
out-bases, the increased use of double
management – becoming the first multi-
deck trailers to reduce trunk movements,
regional member of this scheme;
the movement of a customer from a
dedicated fleet to a shared user fleet, and
ongoing fuel efficiency programmes.
36
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Corporate Social Responsibility
continued
Greenhouse gas (GHG) emissions (continued)
The following table shows a summary of GHG emissions for the Group
Emissions (tonnes CO2e)
Year to 30 April 2015
Year to 30 April 2014
Scope 1
Scope 2
Total emissions
Emissions per £m of revenue
24,757
9,224
33,981
144.7
24,798
7,226
32,024
159.1
Scope 1 (direct) GHG emissions are derived from the consumption of gas, oil, and vehicle fuel
Scope 2 (electricity indirect) GHG emissions are derived from the consumption of purchased electricity.
The 2015 figures above include emissions from Servicecare for the five month period following its acquisition.
Waste recycling
CSR policy
The Group considers the best use of
The Group recognises the importance of
raw materials using recycled/recyclable
environmental protection and is committed
products where applicable. Waste is sorted
to conducting business ethically, responsibly
into plastics, paper/cardboard, wood
and in compliance with laws, regulations
and metal. It is then recycled, reused or
and codes of practice applicable to our
compacted on site.
Commercial
business activities. The CSR and related
policies are reviewed and amended where
appropriate.
Wherever possible we work with our
Approved by the Board and signed
customers to build environmental
on its behalf by:
considerations into our recommended
solutions. This is particularly evident with
David Hodkin
our pioneering retail consolidation centres
Chief Financial Officer
which greatly reduce final mile deliveries,
27 July 2015
congestion and associated emissions when
delivering to shopping centres. To further
support this initiative we have invested in
three electric 7.5t vehicles.
37
Clipper Logistics plc Annual Report and Accounts 2015
Governance
38
Clipper Logistics plc Annual Report and Accounts 2015 39
Board of Directors
The following table lists the names, positions and dates of birth of the current members of the Board:
Name
Position
Steven (Steve) Nicholas Parkin
Antony (Tony) Gerard Mannix
David Arthur Hodkin
Sean Eugene Fahey
Paul Nigel Hampden Smith
Stephen Peter Robertson
Ronald (Ron) Charles Series
Michael (Mike) John Russell
Executive Chairman
Chief Executive Officer
Chief Financial Officer
Chief Information Officer
Senior Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Date of Birth
17 December 1960
1 August 1963
14 February 1961
28 March 1970
1 December 1960
17 November 1954
27 August 1951
19 January 1951
The business address of each Director is Gelderd Road, Leeds, West Yorkshire LS12 6LT.
Steve Parkin, Executive Chairman
Tony Mannix, Chief Executive Officer
David Hodkin, Chief Financial Officer
Steve, a fashion logistics specialist, founded
Tony was appointed Chief Executive Officer
David joined the Group as Group Chief
the Group in 1992. As Executive Chairman,
of the Group in May 2014. Tony joined
Financial Officer in 2003. David has held a
Steve is responsible for the strategic
Clipper in 2006 as Managing Director of the
variety of board level roles prior to joining
direction of the Group. Steve has extensive
UK logistics division. Tony has over 25 years’
Clipper, including Group Finance Director
experience of retail logistics particularly in
experience in the logistics sector, and has
of Symphony Group plc, Finance Director
fashion. He holds and pursues strategic
held a number of senior roles with Roseby’s
of Kunick Leisure Limited, and a number
level discussions with major retailers.
plc (which became part of Homestyle
of senior roles in Magnet Limited. David
In addition, Steve drives the Group’s
Group plc) becoming Logistics Director.
is a member of the Chartered Institute of
acquisition strategy. Steve is the chairman
Tony has particular experience of operating
Management Accountants.
of the Nomination Committee.
in complex retail logistics environments,
including the design and specification of
both distribution centres and warehouse
management systems. Tony began his
career in logistics with the Burton Group,
after working in the construction industry
following his graduation with a degree in
Architectural Engineering.
Sean Fahey, Chief Information Officer
Sean joined Clipper in 1992, initially as the
director responsible for accounting and IT.
Sean has extensive experience of designing
40
Clipper Logistics plc Annual Report and Accounts 2015 Board of Directors
continued
Sean Fahey, Chief Information Officer
(continued)
and implementing complex logistics
solutions, based on many years of direct
operational management experience,
which complement his skills as an IT
specialist. As the Group has grown, Sean
has held positions of Development Director,
Project Director, and now has responsibility
for the IT, projects and implementation
Strategic Report | Governance | Financial Statements
by 3i and UK-listed companies such as
Davies and Newman plc and LEP Group
plc. Most recently, he has held executive
positions at iSOFT Group Limited (listed on the
Australian Securities Exchange), SIAC Group
and Viridian Group and was involved in the
successful restructuring of Nakheel PJSC,
the real estate arm of Dubai World. Ron is a
member of the Remuneration Committee
and the Nomination Committee.
functions as Chief Information Officer,
Stephen Robertson, Independent Non-
along with his responsibilities on the Board.
Executive Director
Stephen joined the Group as Non-Executive
Director on 16 May 2014. Stephen has
many years of experience in the retail
industry and has held executive positions
at Kingfisher plc, WH Smith plc and
Woolworths Group plc. Stephen was
previously a director of the British Retail
Consortium and is currently an Advisory
Board Member of Retail Week. Stephen’s
current non-executive directorships include
Mike Russell, Independent Non-Executive
Timpson Group plc and Hargreaves
Lansdown plc. Stephen is a member of
the Audit Committee.
Paul Hampden Smith, Senior Independent
Non-Executive Director
Paul joined the Group as Senior
Independent Non-Executive Director on
16 May 2014. Paul retired from his role as
Group Finance Director of Travis Perkins plc
in 2013, following 25 years with the group.
During that time, the group enjoyed tenfold
growth and Paul oversaw a significant
number of acquisitions ranging from £1
million to £1 billion in size. During the last
ten years, Paul has held non-executive
directorships on the boards of DX Services
Director
Mike Russell was appointed Non-Executive
Director of Clipper’s former parent
company with effect from 3 January
2011, and was appointed Non-Executive
Director of the Company on 16 May 2014.
He qualified as a Chartered Certified
Accountant with a subsidiary of Imperial
Chemical Industries, following which he
held the position of Finance Director of
a subsidiary of Allied Lyons plc. He joined
Asda Stores Limited as Chief Accountant in
1986 and subsequently became Finance
Director of the Stores Division. He was
plc, Redrow plc, Bellway plc and Pendragon
Ron Series, Independent Non-Executive
appointed Group Finance Director of Nurdin
plc. Paul was also appointed as Chairman
Director
& Peacock plc, a FTSE 250 company, in
of the Audit Committee in each of these
Ron joined the Group as Non-Executive
early 1996 prior to the sale of the business
non-executive roles. Paul is the chairman of
Director on 16 May 2014. Over the past
to Booker plc. From 1997 to 2011 he was
the Audit Committee and is a member of
20 years, Ron has held executive and
an executive director of Prize Food Group,
the Remuneration Committee.
non-executive positions with a number of
a private equity-backed business, initially as
companies with international operations in
Group Finance Director and, from 2005, as
transport, logistics, shipping, real estate and
Chief Executive Officer. Mike is chairman
information technology. Included among
of the Remuneration Committee and a
them are Tuffnells Parcels Express Limited
member of the Audit Committee and the
where he was chairman during its ownership
Nomination Committee.
41
Corporate Governance Report
Chairman’s introduction
It was important for a solid governance
continue to develop, implement and
structure to be established in our first
maintain good corporate governance
Dear Shareholder,
year as a listed Group, so that we had a
practices and processes within the Group.
framework of effective systems of internal
The Board has considered the reporting
Following the admission of the Company’s
control, to support and protect our business
requirement that the annual report as
shares to the premium listing segment of
in a practical way whilst promoting a solid
a whole should be ‘fair, balanced and
the Official List maintained by the Financial
structure for us to report to our shareholders.
understandable’ and asked the Audit
Conduct Authority and to trading on the
It was also important that the independent
Committee to give assurance that the
London Stock Exchange (IPO) on 4 June
Non-Executive Directors who joined us at
relevant systems and processes are in
2014, I am pleased to be able to present
flotation gained an understanding of our
place to support that requirement.
the Company’s report on Corporate
key businesses and our short and long-term
Details can be found in the Audit
Governance within the Group which
strategic goals.
Committee Report on pages 51 to 54.
includes the Group’s first eleven months’
trading since Admission.
An induction programme has been in
Open and frequent communication with
place to ensure that this is happening,
our shareholders is very important to us
Before completion of the IPO, we carried
and a ‘strategy day’ is planned for the
and, since the IPO, our investor relations
out a thorough review of the existing
current calendar year to provide a valuable
programme has been led by me together
governance structure of the Group with
opportunity for Board members to further
with the Chief Executive Officer and Chief
various advisers including DWF LLP and
review and discuss the objectives and
Financial Officer with support from other
Ernst & Young LLP in their role as reporting
goals of the businesses directly with the
members of the senior management
accountant. This helped us identify any
management team. This is intended to be
team when needed. We have also been
steps we needed to take before the IPO
an annual event.
to ensure the business would operate
supported by the Company’s retained
financial PR advisers, Bell Pottinger, and our
within the applicable rules and principles.
The Board, under my leadership, has
corporate brokers, Numis Securities, who
It also enabled the Directors to confirm
played a fundamental part in deciding on
help organise presentations and visits to the
that the Group has procedures in place
the direction of the business and in ensuring
Group’s operations and sites for analysts
which provide a reasonable basis for the
that the Group has the appropriate
and shareholders.
Board to make proper judgements on a
strategies, structures and processes in
continuing basis as to the financial position
place to ensure good governance and
The Board recognises, understands and
and prospects of the Group.
stewardship, and to facilitate future growth.
is committed to the high standards of
corporate governance across the Group
The establishment of the Audit,
that are expected of all premium listed
Remuneration and Nomination Committees
companies. The report which follows
(the “Committees”) at the IPO was key in
this respect. Since the IPO we have also
describes how, following the Group’s
Admission on 4th June 2014 and for the
established a Disclosure Committee and,
remainder of the year ended 30 April 2015,
in addition, an Executive Committee of the
the Group complied with the principles and
Board. We have worked hard to ensure that
provisions of the UK Corporate Governance
the terms of reference of the Committees
Code 2012 (the “Code”).
have provided strong governance structures.
There is more on the Company’s principal
The Group’s corporate governance
risks on pages 30 to 33 and its system of
structures were further strengthened in
internal controls on pages 53 and 54.
February of this year by the appointment
of Guy Jackson (formally a partner at DWF
Steve Parkin
LLP) as Group General Counsel, who also
Executive Chairman
took on the role of Company Secretary.
Amongst other things, Guy’s role is to
42
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Corporate Governance Report
continued
Compliance with the UK Corporate
The role of the Board
The Board has adopted a formal schedule
Governance Code 2012
The Board consists of four Non-Executive
of matters reserved for its approval and has
The Board recognises the importance of
Directors and four Executive Directors.
delegated other specific responsibilities to
high standards of corporate governance
Biographies and profiles of all members of
its Committees. The formal board agenda
and is committed to managing the Group’s
the Board appear on pages 40 and 41.
currently includes regular reports from the
operations in accordance with the Code
Chief Executive Officer, the Chief Financial
and the 2014 version of the Code which
The Board is responsible for leading and
Officer and the Chief Information Officer on
will apply to financial years beginning on or
controlling the Group and has overall
the operational and financial performance
after 1 October 2014 (the “2014 Code”).
authority for the management and
of the Group together with regular feedback
A full version of the Code can be found on
conduct of the Group’s business, strategy
from the Non-Executive Directors on their
the Financial Reporting Council’s website
and development. The Board is also
engagement with the business. It also
www.frc.org.uk. The Company complied
responsible for ensuring the maintenance
includes a rolling agenda of other key
with all of the provisions of the Code
of a sound system of internal control and
operational, strategic, governance and risk
throughout the year ended 30 April 2015,
risk management (including financial,
topics which is regularly updated to ensure
except for provisions A.2.1, A.3.1, A.4.2
operational and compliance controls and
the Board is responsive to the operational
and E.1.1. The Group has also adopted
for reviewing the overall effectiveness of
and strategic issues affecting the business.
elements of the 2014 Code in relation to
systems in place) and for the approval of
The Board does not delegate key strategic,
remuneration and the long-term success
any changes to the capital, corporate and/
operational and financial issues or other
of the Company, minimum number of
or management structure of the Group.
matters specifically reserved to the Board.
shares to be held and clawback/malus.
This demonstrates that the Remuneration
The Code indicates at A.4.2 that the
Committee supports the changes in the
chairman should hold meetings with non-
2014 Code.
executive directors without the executive
directors present. Since Steve Parkin as
This Report, which incorporates reports from
Executive Chairman also has an executive
the Nomination and Audit Committees on
function, he has not met with the Non-
pages 50 to 54 together with the Strategic
Executive Directors as a group without the
Report on pages 6 to 37, the Directors’
other Executive Directors present, but the
Remuneration Report on pages 56 to 73
Senior Independent Director has done so.
and the Directors’ Report on pages 74 to 78,
The Chairman does meet with individual
describes how the Company has applied
Non-Executive Directors on a one to one
the relevant principles of the Code.
basis from time to time (including the Senior
Independent Director) at which meetings
Board performance and other appropriate
matters are discussed. The Chairman has
also discussed the Board evaluation review
with the Senior Independent Director without
the other Executive Directors present.
The Board delegates to management the
day-to-day running of the business within
defined risk parameters. Board meetings
are scheduled to coincide with key events
in the corporate calendar and this includes
the interim and final results and annual
general meeting.
43
Corporate Governance Report
continued
The following matters (amongst others) were considered or dealt with at Board meetings during the year:
Strategy and Management
Financial & Contracts
Governance
- approve strategic initiatives and
plans, including acquisitions;
- competitor activity review;
- European strategy review;
- dividend policy;
- review of contract performance;
- risk review;
- Black Friday performance;
- legal and governance updates;
- financial review;
- approve capital projects and contracts
of material importance; and
- approving process of training of Persons
Discharging Managerial Responsibility
(“PDMRs”) and senior management on
various regulatory matters;
- growth strategy; and
- review of IT support.
- post-IPO review;
- health & safety record.
- Board and committee evaluation;
- Disclosure Committee formation and
terms of reference; and
- formal establishment of Executive
Committee and terms of reference.
All Directors have access to the advice and services of the Company Secretary who has
responsibility for ensuring compliance with the Board’s procedures. All Directors have the
right to have their opposition to or concerns over any Board decision noted in the minutes.
The Board has adopted guidelines by which Directors may take independent professional
advice at the Company’s expense in the performance of their duties.
44
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Corporate Governance Report
continued
Information, meetings and attendance
In the period between completion of the
IPO and the end of this year, the Board
held nine meetings and various Board
committee meetings were also held with
attendance as follows:
Director
Role
Steve Parkin
Executive Chairman
Tony Mannix
Chief Executive Officer
David Hodkin
Chief Financial Officer
Sean Fahey
Chief Information Officer
Paul Hampden Smith
Senior Independent Director
Ron Series
Non-executive Director
Stephen Robertson
Non-executive Director
Mike Russell
Non-executive Director
Board
Meetings
Audit
Committee
Meetings
Remuneration
Committee
Meetings
Nominations
Committee
Meetings
9/9
9/9
9/9
8/9
9/9
9/9
9/9
9/9
1/1
1/1
1/1
4/4
4/4
4/4
1/1
1/1
1/1
The Board has a full programme of Board
meeting for any reason, they nonetheless
Board Committees
meetings planned for 2015 and 2016. At
receive the relevant papers and are
Subject to those matters reserved for
these meetings, the Board will review the
consulted prior to the meeting and their
its decision, the Board has delegated
Group’s long-term strategic direction and
views made known to the other Directors.
to its Nomination, Audit, Remuneration,
financial plans and monitor on a regular
basis the Group’s performance against an
agreed strategy and business plan.
Conflicts of interests
Disclosure and Executive Committees
certain authorities. There are written terms of
reference for each of these Committees,
In line with the requirements of the
available on request from the Company
In addition, the Board will agree key
Companies Act, each Director has notified
Secretary. The Executive Committee and
objectives for the Group on an annual basis
and will then monitor performance against
the Company of any situation in which
he or she has, or could have, a direct or
Disclosure Committee have only recently
been formed. Separate reports for each of
these objectives.
indirect interest that conflicts, or possibly
the other Committees are included in this
may conflict, with the interests of the
Annual Report and Accounts from pages
The Chairman is responsible for ensuring
Company (a situational conflict). These were
50 to 73.
that the Directors receive accurate,
considered and approved by the Board in
timely and clear information. Prior to
accordance with the Company’s Articles of
each scheduled Board meeting, a pack
Association and each Director informed of
is circulated in respect of each financial
the authorisation and any terms on which it
period, which includes an update on key
was given. The Board has formal procedures
performance targets, trading performance
to deal with Directors’ conflicts of interest.
against budget and includes detailed
The Board reviews and, where appropriate,
financial data and analysis. Board packs
approves certain situational conflicts of
are generally distributed seven days prior to
interest that were reported to it by Directors,
each meeting to provide sufficient time for
and a register of those situational conflicts
Directors to review their papers in advance.
is maintained and will be reviewed by the
If Directors are unable to attend a Board
Board going forward.
45
Corporate Governance Report
continued
Role of the Executive Chairman
certain responsibilities which go beyond
and Chief Executive
those contemplated in the Code, notably
The Board is chaired by Steve Parkin who
in relation to the conduct of the Board
is Executive Chairman. The Executive
evaluation process.
Chairman is responsible for the effective
leadership of the Board, having regard
for the interests of all stakeholders and
Role of the Senior Independent Director
promoting high standards of corporate
The Code recommends that the Board of
governance. Tony Mannix is the Chief
Directors of a Company with a premium
Executive Officer and is responsible for
listing on the Official List should appoint
implementing the Board’s strategy and
one of the Non-Executive Directors to be
leading the senior management team.
the Senior Independent Director to provide
The role is distinct and separate to that of
a sounding board for the Chairman and
Executive Chairman and clear divisions of
to serve as an intermediary for the other
accountability and responsibility have been
Directors when necessary. The Senior
agreed by the Board.
Independent Director should be available
to shareholders if they have concerns which
The Code recommends that the roles of
contact through the normal channels of the
chairman and chief executive should not
Chairman, CEO or other Executive Directors
be exercised by the same individual. The
has failed to resolve or for which such
division of responsibilities between the
contact is inappropriate.
chairman and chief executive should be
clearly established, set out in writing and
Paul Hampden Smith has been appointed
agreed by the board. During the year to 30
Senior Independent Director.
April 2015, the Company was not compliant
with the provisions of A.2.1 of the Code for
The Code indicates (at E.1.1) that the
the period 1 May 2014 to 30 May 2014, due
Senior Independent Director should
to the roles of chairman and chief executive
attend meetings with a range of major
both being carried out by Steve Parkin.
shareholders to listen to their views in order
to help develop a balanced understanding
The Code also recommends that the
of their issues and concerns. Whilst the
chairman of the board should meet the
Senior Independent Director (and the other
independence criteria set out in the Code
Non-Executive Directors) are available to
on appointment. Steve Parkin acts as
Executive Chairman and, as detailed in
meet with shareholders to discuss issues
and concerns, no such meetings have
the Prospectus, is not independent, having
been requested. Notwithstanding this,
been the Executive Chairman prior to the
we have maintained dialogue with our
IPO. Whilst the Board recognises that this is
major shareholders and, overall, the Board
not in full compliance with the provisions of
believes that appropriate steps have
A.3.1 of the Code the Board believes that
been taken throughout the year to ensure
Steve Parkin’s experience and knowledge of
that members of the Board, including
the Group justifies his continued appointment
the Non-Executive Directors, develop
as Executive Chairman. Steve is responsible
an understanding of the views of major
for the leadership and overall effectiveness
shareholders. These steps include receiving
of the Board and setting the Board’s
feedback on shareholder meetings and
agenda. Paul Hampden Smith, our Senior
analysts’ and brokers’ briefings on a
Independent Director, has also had
regular basis.
46
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Corporate Governance Report
continued
Board balance and independence
to the Board on any new legal, regulatory
Election of Directors
The Code recommends that at least
and governance developments that affect
The Board can appoint any person to be
half the Board of Directors of UK listed
the Group and, where necessary, actions
a Director, either to fill a vacancy or as an
companies, excluding the chairman,
are agreed. External lawyers have provided
addition to the existing Board provided
should comprise Non-Executive
training to the executive Directors on the
that the total number of Directors does not
Directors determined by the Board to be
Company’s share dealing code, insider
exceed twelve, the maximum prescribed
independent in character and judgement
dealing and other regulatory matters. This
in the Company’s Articles of Association.
and free from relationships or circumstances
is supplemented by advice and training
Any Director so appointed by the Board
which may affect, or could appear to
provided on certain matters by the
shall hold office only until the next following
affect, the director’s judgement.
Company Secretary. Further training and
annual general meeting and shall then be
updates are to be provided to the Non-
eligible for election by the shareholders.
The Board regards all of the Non-Executive
Executive Directors in 2015.
Directors as Independent Non-Executive
Directors within the meaning of the Code
In accordance with the Articles of
Association, at every annual general
and free from any business or other
Board evaluation
meeting of the Company one-third of the
relationship that could materially interfere
The effectiveness of the Board is essential to
Directors or the number nearest to but not
with the exercise of their independent
the success of the Group. During the year
less than one-third shall retire from office.
judgement. The Board believes that
an evaluation process was developed and
The Directors to retire shall be first those
the current directorate will enhance
implemented. The evaluation process was
who wish to retire, and then those who
considerably its ability to develop the
based on a series of questions devised for
have been longest in office since their last
Group’s operations.
the purpose by the Senior Independent
appointment or re-appointment. When
Director and the Company Secretary and
a Director retires at an Annual General
circulated to the Directors. The process
Meeting in accordance with the Articles, the
Role of the Company Secretary
reviewed issues such as: the assessment
Company may, by ordinary resolution at the
Guy Jackson is the Company Secretary.
and monitoring of the Company’s strategy;
meeting, fill the office being vacated by re-
The role of the Company Secretary is to
the mix of knowledge and skills on the
electing the retiring Director. If the Company
develop, implement and maintain good
Board; succession; and the effectiveness
does not fill the vacancy at the meeting,
corporate governance practices. This
of the Board and the Directors. Separate
the retiring Director shall nevertheless be
includes supporting the Chairman and
questionnaires were devised for each of
deemed to have been re-elected, except
Non-Executive Directors as appropriate,
the Audit, Remuneration and Nomination
in the cases identified by the Articles. The
managing Board and Board Committee
Committees, and circulated to Committee
Company intends to continue this practice
meetings, ensuring that appropriate levels
members. The results were collated by
but will review it regularly.
of directors’ and officers’ insurance is in
the Company Secretary and considered
place and that the Group is compliant with
statutory and regulatory requirements.
by the Senior Independent Director. The
performance of the Board as a whole and
David Hodkin, Mike Russell and Ron Series
will be offering themselves for re-election
of each of its principal Committees was
at the 2015 AGM to be held at Clipper
considered. The results of the evaluation will
Logistics, Gelderd Road, Leeds, LS12 6LT
Development
form the basis of Board objectives for the
on 28 September 2015 at 11.00am,
There have been no new appointments
year ending 30 April 2016.
full details of which will be issued under
to the Board since the IPO. The Group
separate cover.
has an induction and training process for
The Board is satisfied that each Director
new Directors. New Directors will receive
remains competent to discharge his
a detailed induction on joining the Board,
responsibilities as a member of the Board.
including meeting other members of the
Board and the senior management team.
New directors will be encouraged to visit the
Group’s sites and to provide feedback to
the Board. The Group’s Company Secretary
and General Counsel periodically reports
47
48
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Corporate Governance Report
continued
External appointments and
Reports from analysts and brokers are
time commitment
circulated to the Board. The Executive
The Executive Directors may accept
Chairman, Chief Executive Officer and
outside appointments provided that such
Chief Financial Officer meet institutional
appointments do not in any way prejudice
investors regularly to provide an opportunity
their ability to perform their duties as
to discuss, in the context of publicly
Executive Directors of the Company.
available information, the progress of the
Group. The Company also holds investor
The Non-Executive Directors’ appointment
days, and held such an event in April 2015.
letters are not specific about the maximum
time commitment, recognising that there is
The formal reporting of our full and half
always the possibility of an additional time
yearly results will be a combination of
commitment and ad hoc matters that may
presentations, group calls and one-to-one
arise from time to time, particularly when the
meetings in a variety of locations where
Group is undergoing a period of increased
we have institutional shareholders. All the
activity. The average time commitment
Non-Executive Directors and, in particular,
inevitably increases where a Non-Executive
the Chairman and Senior Independent
Director assumes additional responsibilities
Director, are available to meet with major
such as being appointed to a Board
shareholders, if they wish to raise issues
Committee or as a Non-Executive Director
separately from the arrangements as
on the boards of any of the Company’s
described above. The Company’s investor
subsidiaries.
website is also regularly updated with news
and information, including this Annual
Report and Accounts which sets out our
Communications with shareholders
strategy and performance together with
The Board considers effective
our plans for future growth.
communication with its investors,
whether institutional, private or employee
shareholders, to be extremely important
and we have set ourselves the target of
providing information that is timely, clear
and concise.
During the year to 30 April 2015, the
Company met regularly with analysts and
institutional investors and such meetings will
continue. The Executive Chairman, Chief
Executive Officer and Chief Financial Officer
have lead responsibility for investor relations.
They are supported by members of the
SMT where required and the Company’s
retained financial PR advisers, Bell Pottinger,
and corporate brokers Numis Securities who,
amongst other matters, assist in organising
presentations for analysts and institutional
investors and ensure that procedures are in
place to keep the Board regularly informed
of such investors’ views.
49
Nomination Committee Report
Committee Chairman’s introduction
Composition
Diversity
The UK Corporate Governance Code
Whilst the Group pursues diversity, including
I am pleased to have taken on the role
recommends that a majority of the
gender diversity, throughout the business,
of Nomination Committee Chairman as
members of a nomination committee
and the Board endorses the aspirations of
the Company, having completed its IPO
should be independent Non-Executive
the Davies Review on Women on Boards,
last year, continues the next phase of its
Directors. The Nomination Committee
the Board is not committing to any specific
development. Given the relatively short
is chaired by Steve Parkin and its other
targets. Instead, the Board will engage
period of time since the completion of
members are Ron Series and Mike Russell.
executive search firms who have signed up
the IPO, the Committee itself has met only
once in the year to discuss succession
to the voluntary code of conduct setting
out the seven key principles of best practice
planning.
Roles and responsibilities
to abide by throughout the recruitment
Under normal circumstances, it is intended
process and will continue to follow a
The Committee will be proactive in
that the Nomination Committee will meet
policy of appointing talented people at
discharging its responsibilities, cognisant
not less than twice a year to assist the Board
every level to deliver high performance.
of the importance of succession
in discharging its responsibilities relating to
It is the Company’s policy (whether it be
planning and the need to align Board
the composition and make-up of the Board
at employee or Board level) to make all
and executive leadership skills to the
and any committees of the Board. It is also
appointments based on the best candidate
Company’s long-term strategy and I hope
responsible for periodically reviewing the
for the role regardless of gender or other
this report gives you a helpful insight into
Board’s structure and identifying potential
diversity. The Board will also ensure that its
how the Committee intends to carry out its
candidates to be appointed as Directors
own development in this area is consistent
responsibilities moving forwards.
or Committee members as the need
with its strategic objectives and enhances
may arise. The Nomination Committee is
Board effectiveness.
Steve Parkin
responsible for evaluating the balance of
Chairman, Nomination Committee
skills, knowledge and experience and the
size, structure and composition of the Board
and Committees of the Board, retirements
and appointments of additional and
replacement Directors and Committee
members and makes appropriate
recommendations to the Board on such
matters.
50
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Audit Committee Report
Committee Chairman’s introduction
Composition
- considering the appointment of the
The Code recommends that an Audit
Group’s auditors and their remuneration
The Audit Committee was established by
Committee should comprise at least three,
including reviewing and monitoring
a resolution of the Board dated 16 May
or in the case of smaller companies, two
independence and objectivity and
2014, at which meeting terms of reference
independent Non-Executive Directors (other
agreeing and monitoring the extent
were considered and adopted. The Board
than the chairman) and that at least one
of the non-audit work that may be
further resolved to appoint Mike Russell
member should have recent and relevant
undertaken; and
and Stephen Robertson to the Audit
financial experience. The Audit Committee
Committee under my chairmanship. Under
is chaired by Paul Hampden Smith and
- reviewing and monitoring the adequacy
its terms of reference, the Audit Committee
its other members are Mike Russell and
and effectiveness of the internal control
is required to meet at least three times
Stephen Robertson. By virtue of their former
and risk management policies.
in each year at appropriate times in the
executive roles, details of which are set
reporting and auditing cycle. In the year
out on page 41, the Directors consider
The Audit Committee gives due
ended 30 April 2015, the Audit Committee
that Paul Hampden Smith and Mike Russell
consideration to laws and regulations,
has met four times.
have recent and relevant financial
the provisions of the Code and the
experience. The Company is therefore
requirements of the Listing Rules.
The primary function of the Audit
compliant with the Code in this regard.
The ultimate responsibility for reviewing and
Committee is to assist the Board in fulfilling
Other directors or senior financial
approving the Annual Report and Financial
its responsibilities to protect the interests
management attend meetings of the Audit
Statements and the half-yearly reports
of the shareholders with regard to the
Committee by invitation.
remains with the Board.
integrity of the financial reporting, audit,
risk management and internal controls.
Roles and responsibilities
Committee advise them in ensuring
The Board has requested that the Audit
In this report, I explain how the Audit
The Audit Committee assists the Board in
that the Financial Statements, when
Committee has discharged these
discharging its responsibilities with regard to:
taken as a whole, are fair, balanced
responsibilities, with specific reference
- agreeing the scope of the annual audit
and understandable and provide the
to the requirement of the UK Corporate
and the annual audit plan and monitoring
information necessary for shareholders to
Governance Code, (the “Code”) to
the same;
assess the Group’s performance, business
address significant financial statement
model and strategy.
reporting issues and to explain how the
- monitoring, making judgements and
Audit Committee assessed external audit
recommendations on the financial
effectiveness and safeguards in relation to
reporting process and the integrity and
the provision by the auditor of non-audit
clarity of the Group’s Financial Statements;
services.
Paul Hampden Smith
Chairman, Audit Committee
51
Audit Committee Report
continued
Activities during the year ended
management, using their experience to
Assessment of effectiveness of external
30 April 2015
assess whether the Annual Report taken as a
audit
During the period, the Audit Committee
whole is fair, balanced and understandable.
The Audit Committee oversees the
met four times. A summary of the main
This additional review by the Audit
relationship with the external auditors and
areas dealt with by the Committee is set out
Committee, supplemented by advice
considers the re-appointment of the Group’s
below:
received from external advisors during
auditors, Ernst & Young LLP, before making a
- discussion with the external auditor
the drafting process assisted the Board in
recommendation to the Board to be put to
over the audit planning, with particular
determining that the report is fair, balanced
shareholders.
reference to significant risks highlighted
and understandable at the time that it is
in the planning documents, together
approved. The Audit Committee considers
Prior to recommending the appointment
with the audit scope and timetable.
the appropriateness of preparing the
of Ernst & Young LLP at the forthcoming
Due to the timing of the formation of the
Financial Statements on a going concern
AGM to the Board, the Audit Committee
Committee, planning for both the year
basis, including consideration of forecast
conducted a review of the external auditor’s
ended 30 April 2015 and the prior year fell
plans and supporting assumptions.
performance and ongoing independence
within the period of this report;
taking into consideration input from
management, consideration of responses
- review and approval for consideration by
Significant issues considered in relation
to questions from the Audit Committee
the Board the financial results for the year
to the Financial Statements
and the audit findings reported to the Audit
ended 30 April 2014;
The Audit Committee, together with the
Committee. Based on this information,
Board, considered what were the significant
the Audit Committee concluded that the
- findings from the external audit for the
risks and issues in relation to the Financial
external audit process had been efficiently
year ended 30 April 2014;
Statements and how these would
run and that Ernst & Young LLP continued to
be addressed.
prove effective in its role as external auditor.
- approval of the Auditors’ remuneration in
respect of the year ended 30 April 2014;
Revenue Recognition
- discussion around the UK Corporate
contract mechanisms. As a result there
In accordance with best practice and
Governance Code on risk management,
could be a risk of misstatement of
professional standards, external auditors
- The Group has a multiplicity of complex
Independence safeguards
internal control and going concern;
revenue.
are required to adhere to a rotation policy
whereby the audit engagement partner is
- Auditors’ confirmation of independence;
- To mitigate this risk, the revenue
rotated after five years. The current audit
and
recognition methodology adopted is
engagement partner was appointed in
kept under regular review to ensure that it
2014. The external auditors are also required
- review of Auditors’ effectiveness.
remains appropriate.
periodically to assess whether, in their
professional opinion, they are independent
As part of their review process, the members
Accounting for the acquisition of
and those views are shared with the
of the Audit Committee are provided with
Servicecare Support Services Limited
Audit Committee.
a draft of the full Annual Report enabling
- Under International Financial Reporting
them to ensure that the numbers therein
Standards, the Group is required to assess
The Audit Committee has authority to
are consistent with those in the Financial
the fair value of assets acquired and
take independent advice as it deems
Statements or are sourced from appropriate
liabilities assumed and specifically to
appropriate in order to resolve issues on
data. More importantly, the Audit
identify any intangible assets.
auditor independence. No such advice has
Committee assesses whether the words
to date been required.
used are consistent with its understanding
- The accounting and related disclosures
of the Group’s business obtained through
were therefore subject to additional review
Board and Audit Committee meetings
by the Audit Committee.
and other interaction they have had with
52
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Audit Committee Report
continued
Independence assessment by the
Internal audit
Detailed policies ensure the accuracy and
Audit Committee
The Board has considered the benefits that
reliability of financial reporting and the
Based on the fact that the audit
an internal audit function might bring to the
preparation of the Financial Statements,
engagement partner rotation policy has
Group. They have concluded that, due to
including the consolidation process. The key
been complied with, and separate external
the tight financial controls in place across
elements of the Group’s ongoing processes
firms are engaged for taxation advisory
the Group, and the close management of
for the provision of effective internal control
services, the Audit Committee is satisfied
financial matters by the Executive Directors,
and risk management systems, in place
that the independence of Ernst & Young LLP
an internal audit function would not currently
throughout the year and at the date of this
is not impaired.
provide additional assurance.
report, include:
Furthermore, Ernst & Young LLP have
In terms of operational matters, the
matters reserved for the Directors’
provided an independence report to
specialised nature of the Group’s activities
consideration;
the Audit Committee, in which they have
means that a non-specialist internal audit
confirmed that they are independent,
function would not provide additional
- regular management reporting, providing
that their objectivity is not compromised,
comfort over the Group’s operational
a balanced assessment of key risks and
and that they have complied with the
management. The Board will continue
controls;
Auditing Practices Board’s Ethical Standards
to evaluate this matter, and the Audit
(including in relation to the supply of non-
Committee will formally consider the
- an annual Board review of corporate
- regular Board meetings to consider
audit services).
issue annually.
The Audit Committee noted that Ernst
& Young LLP had been appointed
Internal control and risk management
strategy, including a review of material
business risks and uncertainties facing the
business;
as Reporting Accountants for the IPO
The Board is responsible for the overall
- established organisational structure with
transaction prior to their appointment as
system of internal controls for the Group and
clearly defined lines of responsibility and
external auditor for the Group. Since the IPO,
for reviewing its effectiveness. It carries out
levels of authority;
Ernst & Young LLP have performed no further
such a review at least annually, covering
non-audit work for the Group.
all material controls including financial,
- documented policies and procedures;
The Audit Committee has assessed the
risk management systems.
operational and compliance controls and
and
performance and independence of the
- regular review by the Board of financial
external Auditor and recommended to the
The system of internal controls is designed
budgets, forecasts and covenants with
Board the re-appointment of Ernst & Young
to manage rather than eliminate the risk
performance reported to the Board
LLP as auditor until the conclusion of the
of failure to achieve business objectives
monthly.
AGM in 2016.
and can only provide reasonable and
not absolute assurance against material
misstatement or loss.
Operating policies and controls are in place
and have been in place throughout the
financial year under review, and cover a
wide range of issues including financial
reporting, capital expenditure, information
technology, business continuity and
management of employees.
53
Audit Committee Report
continued
Internal control and risk management
The Board, with advice from the Audit
Accountability
(continued)
Committee, is satisfied that effective
The Board is required to present a fair,
In reviewing the effectiveness of the system
systems for internal control and risk
balanced and understandable assessment
of internal controls, the Audit Committee
management are in place which enable
of the Company and Group’s financial
receives self-assurance statements from
the Group to identify, evaluate and
position and prospects. The responsibilities of
the Operational Directors and senior
manage key risks, and which accord with
the Directors and external auditor are set out
managers responsible for the principal
the guidance of the Turnbull Committee
on pages 80 and 84 respectively.
business units confirming that controls and
on internal control updated by the FRC
risk management processes in their business
in 2005. These processes have been
units have been operated satisfactorily.
in place throughout the financial year
These returns are reviewed by the Audit
and up to the date of approval of the
Committee and challenged where
Financial Statements. Further details of risk
appropriate. The CFO is responsible for
management frameworks and specific
compiling and maintaining a risk register to
material risks and uncertainties facing the
monitor all of the risks facing the business.
business can be found on pages 30 to 33.
The key risks are then summarised for review
and approval by the Audit Committee for
inclusion in the Annual Report. In addition,
Whistleblowing
the Audit Committee also reviews the
The Group has in place a Whistleblowing
financial and accounting controls.
Policy which encourages employees to
report any malpractice or illegal acts or
In respect of the Group’s financial reporting,
omissions or matters of similar concern by
the finance department is responsible for
other employees or former employees,
preparing the Group Financial Statements
contractors, suppliers or advisors using
using a well-established consolidation
a prescribed reporting procedure. The
process and ensuring that accounting
Whistleblowing Policy is complemented by
policies are in accordance with
an Anti-bribery and Corruption Policy, and a
International Financial Reporting Standards.
Gifts and Entertainment Policy.
All financial information published by the
Group is subject to the approval of the Audit
These policies facilitate the reporting of
Committee.
any ethical wrongdoing or malpractice
or suspicion which may constitute ethical
There have been no changes in the Group’s
wrongdoing or malpractice. Examples
internal controls during the financial year
under review that have materially affected,
include bribery, corruption, fraud, dishonesty
and illegal practices which may endanger
or are reasonably likely to materially affect,
employees or third parties.
the Group’s control over financial reporting.
There have been no instances of
whistleblowing during the year under review.
54
Clipper Logistics plc Annual Report and Accounts 2015 55
Clipper Logistics plc Annual Report and Accounts 2015
Directors’
Remuneration Report
Committee Chairman’s introduction
Although this performance was very positive
resolution received 81.86% support.
and the Group is in a position to realise
As a Remuneration Committee, we were
On behalf of the Board, I am pleased to
further strong growth going forwards, the
disappointed by the voting result for this
present the Directors’ Remuneration Report
Annual Incentive Plan (“AIP”) outcomes for
resolution, particularly as the proposed
for the year to 30 April 2015.
our Executive Directors and senior managers
inclusion of these executives within our
This report contains the material required
were modest.
new share plans was an important part of
our Directors’ Remuneration Policy which
to be set out as the directors’ remuneration
At our 2014 AGM, our first as a listed
had received very strong support from
report for the purposes of Part 4 of The
company, we received strong support for
our shareholders. We understand that
Large and Medium-sized Companies
the resolutions regarding remuneration
the reasons for this level of vote against
and Groups (Accounts and Reports)
matters which were proposed for
the “Concert Party” resolution was the
(Amendment) Regulations 2013, which
shareholders’ approval:
concern raised by certain governance
amended The Large and Medium-sized
- Our Directors’ Remuneration Policy and
bodies regarding whether, in particular, the
Companies and Groups (Accounts
our Directors’ Remuneration Report
Executive Chairman should participate in
and Reports) Regulations 2008 (“the
received approval at a 99.67% and a
PSP given his existing shareholding in the
DRR regulations”). The auditors have
100% level respectively.
Company.
reported on certain parts of the Directors’
Remuneration Report and stated whether,
- Our new Sharesave plan and our new
At the 2015 AGM we will be proposing two
in their opinion, those parts have been
Performance Share Plan (“PSP”) received
remuneration related resolutions:
properly prepared in accordance with
approval at a 100% and a 99.67% level
- A vote to approve the Directors’
the Companies Act 2006. Those parts of
respectively.
Remuneration Report.
the Directors’ Remuneration Report which
have been subject to audit are clearly
Having had our Directors’ Remuneration
- A vote to authorise the participation
indicated.
Policy approved at the 2014 AGM, we are
of Steve Parkin (Executive Chairman),
not including our Policy in the main section
David Hodkin (Chief Financial Officer)
The financial year ending 30 April 2015
of this year’s Directors’ Remuneration Report,
Sean Fahey (Chief Information Officer)
was a significant one for Clipper. The
although we have included the “Policy
and Guy Jackson (Company Secretary
Group performed strongly, with Group
Table” as an appendix to the Directors’
and General Counsel) in the PSP in
revenue increasing by 16.7% to £234.8m,
Remuneration Report for ease of reference.
accordance with the requirements of the
and Adjusted EBIT growing by 24.9% to
Takeover Panel for “Concert Parties”, and
£12.0m.
Due to our shareholding structure, we were
to give the same approval in respect of
additionally required to seek shareholders’
the participation in the Sharesave Plan by
approval to permit the Executive Chairman,
Guy Jackson.
the Chief Financial Officer and the Chief
Information Officer to participate in the
first awards under Sharesave and PSP in
accordance with the requirements of the
Takeover Panel for “Concert Parties”. This
56
Directors’
Remuneration Report
continued
Committee Chairman’s introduction
(continued)
As in 2014, the inclusion of the “Concert
Party” executives within the PSP should be
viewed in the context of the entire Directors’
Remuneration Policy:
- Overall incentive pay at Clipper remains
relatively modest, with maximum annual
bonuses being capped at 50% of base
salary for the Executive Directors and with
a policy to make annual PSP awards to
Executive Directors at 100% of base salary.
- Most importantly, the key ethos behind
the Directors’ Remuneration Policy is
to continue to promote the strong
team culture amongst the entire senior
management team which has served the
Company so well to date. Accordingly,
the Remuneration Committee views it as
very important that there is consistency in
how packages are structured across the
whole senior management team, with the
intention being that all Executive Directors
and senior managers should participate
in the same annual incentive plan and
long-term incentive plan, and with all of
the team being incentivised on the same
performance measures.
The Remuneration Committee hopes that
you will continue to support our approach
on remuneration matters. The Remuneration
Committee is confident that the approach
we are following is the correct one for
the Group and hopes that it can rely on
the support of shareholders for all of the
remuneration-related resolutions at the
2015 AGM.
Mike Russell
Chairman, Remuneration Committee
57
Implementation Report
on Remuneration
Audited Information
Single Figure Table
Salary
year ended
30 April:
Benefits
year ended
30 April:
Annual bonus
year ended
30 April:
Long-term
incentives year
ended 30 April:
Pension
contributions year
ended 30 April:
Total
year ended
30 April:
£’000
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Steve Parkin
405
380
Tony Mannix
208
177
David Hodkin
180
157
Sean Fahey
150
150
56
25
2
11
120
42
24
1
23
23
19
16
-
-
-
-
nil
nil
nil
nil
N/A
N/A
N/A
N/A
15
39
23
15
15
36
23
15
518
515
295
237
224
181
192
188
1 Benefits comprise a car allowance or company car,
fuel allowance, private family medical cover, insurance
benefits and loans. All Director loan accounts were
repaid by 30 April 2014.
2 No bonus was paid in the year ended 30 April 2014.
This decision was made following consideration of the
process towards IPO. Details of the annual incentive plan
for the financial year ending 30 April 2015 are set out
below.
3 No long term incentive plan (“LTIP”) was in operation for
the financial year ended 30 April 2014. No LTIP awards
vested in the financial year ending 30 April 2015. For
details of the LTIP in operation for the financial year
ending 30 April 2015 refer to page 60 below.
4 David Hodkin’s pension entitlement is paid by way of an
additional allowance, taxed as salary.
5 The above table excludes remuneration of Executive
Directors who resigned prior to the IPO. Their
remuneration is included in the totals shown in note 5 to
the Group Financial Statements.
Annual Bonus Outcomes for the year
Performance for the AIP was measured
ended 30 April 2015
against Adjusted EBIT for the year to 30
The Single Figure Table above shows AIP
April 2015. The Adjusted EBIT performance
outcomes for Executive Directors at 10.4%
targets for the 2014/15 AIP are regarded
of base salary, representing 20.8% of the
as commercially sensitive by the Board
50% of base salary maximum available
and are accordingly not disclosed on
under the AIP.
this occasion.
Non-Executive Directors’ Fees
Fees
year ended
30 April:
Benefits
year ended
30 April:
Total
year ended
30 April:
£’000
2015
2014
2015
2014
2015
2014
Paul Hampden Smith
Stephen Robertson
Mike Russell
Ron Series
55
37
39
37
-
-
25
-
-
1
2
1
-
-
-
-
55
38
41
38
-
-
25
-
1 Mike Russell was a Non-Executive Director of the former parent company for the year ended 30 April 2014 and
his remuneration was paid by the Company. Since the 30 April 2014 year end, the Company has appointed three
additional Non-Executive Directors, whose fee details are set out in the Implementation of Policy in the year to 30 April
2015 section.
2 In addition, Mike Russell received £242,000 from the former parent company in compensation for waiving share
options in that company prior to Clipper Logistics plc’s IPO. Since Admission, Mike has not participated in any incentive
arrangements with the Company.
3 Benefits amounts reported relate to expenses such as travel and accommodation expenditure incurred on Group
business. Whilst these payments are the reimbursement of expenses and not benefits per se, they are included as being
a payment which is subject to tax.
58
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Implementation Report
Implementation Report
on Remuneration
on Remuneration
continued
Audited Information (continued)
Directors’ Interests
The interests (all being beneficial) of the Directors in the Company’s ordinary shares as at 30
April 2015 are set out below:
Steve Parkin
Tony Mannix
David Hodkin
Sean Fahey
Paul Hampden Smith
Stephen Robertson
Ron Series
Mike Russell
Ordinary Shares
34,797,100
1,358,613
1,358,613
7,834,397
100,000
-
10,000
-
1 All shares are wholly owned by Directors or connected persons (i.e. none are subject to performance conditions
and none are previously vested but as of yet unexercised share options).
As at the last practicable date prior to publication of this report, there had been no
changes to the above shareholdings.
59
Implementation Report
on Remuneration
continued
Audited Information (continued)
Share Plan Interests
Performance Share Plan
Options
held at 1
May 2014
Options
lapsed
Options
granted
Options
exercised
Options
held at 30
April 2015
Option
price (p)
Earliest
exercise
date
Latest
exercise
date
–
–
–
–
–
–
–
–
229,682
127,601
102,081
85,067
–
–
–
–
229,682
127,601
102,081
85,067
Nil
Nil
Nil
Nil
14/01/2018
14/01/2025
14/01/2018
14/01/2025
14/01/2018
14/01/2025
14/01/2018
14/01/2025
Options
held at 1
May 2014
Options
lapsed
Options
granted
Options
exercised
Options
held at 30
April 2015
Option
price (p)
Earliest
exercise
date
Latest
exercise
date
–
–
–
–
–
–
–
–
12,820
6,410
12,820
12,820
–
–
–
–
12,820
140.40
01/04/2018
30/09/2018
6,410
140.40
01/04/2018
30/09/2018
12,820
140.40
01/04/2018
30/09/2018
12,820
140.40
01/04/2018
30/09/2018
Steve Parkin
Tony Mannix
David Hodkin
Sean Fahey
Sharesave Plan
Steve Parkin
Tony Mannix
David Hodkin
Sean Fahey
1 The range of market price of shares in Clipper Logistics plc during the year ended 30 April 2015 was 100p to 190p.
The closing price on 30 April 2015 was 190p.
2 None of the directors paid for the award of options.
3 Options granted in the year under the PSP represent awards with a face value of 100% of base salary for all Executive
Directors. This has been calculated using the average mid-market price of the three days preceding the date of grant,
being 176.33p for the options granted on 14 January 2015.
4 The threshold level of vesting for the PSP options granted in the year is 25% of the total number of options granted.
5 The performance conditions attached to the PSP awards granted during the year are set out below.
6 The market value of shares on the date of grant of Sharesave options was 174.75p. The face value of the options was
therefore £22,402.95 for Steve Parkin, David Hodkin and Sean Fahey, and £11,201.48 for Tony Mannix.
7 The exercise price for Sharesave options was set at 80% of the three day average market price of shares before
invitations to participate in the Sharesave Plan were made, in accordance with HMRC rules.
8 The Sharesave options were granted under a HMRC tax-advantaged plan and are therefore not subject to performance
conditions.
Performance conditions for PSP awards
The performance measures and targets
EPS - Financial year ending 30 April 2017
PSP Award
for the PSP awards made in the year to 30
April 2015 were based on Adjusted EPS
12p
performance for the financial year ending
30 April 2017, summarised as follows:
Between 10p and 12p
100%
Pro-rata on straight-line basis between
25% and 100%
10p
Less than 10p
25%
0%
60
Clipper Logistics plc Annual Report and Accounts 2015 61
Implementation Report
on Remuneration
continued
Unaudited Information
Remuneration Committee
Advisors
In anticipation of Admission, the Company
FIT Remuneration Consultants LLP, signatories
established the Remuneration Committee.
to the Remuneration Consultants Group’s
The members of the Remuneration
Code of Conduct, were appointed by
Committee are:
- Mike Russell (Chairman);
the Remuneration Committee following a
competitive tender process. FIT provides
advice to the Remuneration Committee
- Paul Hampden Smith; and
on all matters relating to remuneration,
- Ron Series.
The Remuneration Committee’s principal
responsibilities are:
including best practice. FIT provided no
other services to the Group and accordingly
the Remuneration Committee was satisfied
that the advice provided by FIT was
objective and independent. FIT’s fees in
- recommending to the Board the
respect of the year ended 30 April 2015
remuneration strategy and framework
were £37,000. FIT’s fees were charged on
for the Executive Directors and senior
the basis of the firm’s standard terms of
managers;
business for advice provided.
- determining, within that framework, the
individual remuneration arrangements
for the Executive Directors and senior
managers; and
- overseeing any major changes in
employee benefit structures throughout
the Group.
The Executive Chairman is invited to attend
meetings of the Remuneration Committee,
except when his own remuneration is being
discussed, and the Chief Financial Officer
and other Executives attend meetings as
required.
62
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Implementation Report
on Remuneration
continued
Unaudited Information (continued)
Implementation of Policy in the year ending 30 April 2016
Executive Directors
Base Salary
the specific performance targets for the
Non-Executive Directors
AIP are considered to be commercially
Fees
- Base salaries are as follows: £405,000 for
sensitive and accordingly are not
- The base fee payable to each
Steve Parkin, £225,000 for Tony Mannix,
disclosed. Following the conclusion of the
Non-Executive Director is as follows:
£180,000 for David Hodkin and £150,000
current financial year, the Remuneration
Paul Hampden Smith (Senior Independent
for Sean Fahey. These are unchanged
Committee will consider whether it is
Director and Chair of the Audit
from the financial year ended 30 April
feasible to disclose the performance
Committee) - £60,000;
2015, although Tony Mannix surrendered
targets for the current financial year on
Stephen Robertson - £40,000;
part of his salary in return for additional
a retrospective basis.
employer’s pension contributions.
Ron Series - £40,000; and
Mike Russell - £40,000.
Pension
Performance Share Plan for the year
ending 30 April 2016
- Contribution rates for Executive Directors
- Award levels are proposed at 100% of
are as follows (expressed as percentages
base salary for each Executive Director.
of base salary): Steve Parkin - 6%, Tony
This is unchanged from the financial year
Mannix - 10%, David Hodkin - 15%. Sean
ended 30 April 2015.
Fahey - 10%. These are unchanged
from the financial year ended 30 April
- The performance measures and targets
2015, although Tony Mannix surrendered
for this award will be based on Adjusted
part of his salary in return for additional
EPS performance for the financial year
employer’s pension contributions.
ending 30 April 2018, summarised as
follows:
Benefits
- Details of the benefits received by
Executive Directors are set out in note 1
to the single figure table on page 58.
EPS - Financial year ending 30 April 2018
PSP Award
14.7p
100%
- There is no intention to introduce
Between 12p and 14.7p
additional benefits in the financial year
ending 30 April 2016.
Annual Incentive Plan for the year ending
30 April 2016
- The AIP maximum is 50% of base salary.
12p
Less than 12p
This is unchanged from the financial year
- The Remuneration Committee selected
ended 30 April 2015.
this performance condition as it provides
a significant level of growth in earnings
- Performance measures for the AIP in
which is a key measure of success for
the year to 30 April 2016 will be based
the Group.
Pro-rata on straight-line basis between 25%
and 100%
25%
0%
on Adjusted EBIT. The Remuneration
Committee selected Adjusted EBIT as the
performance measure for the AIP for the
year ending 30 April 2016 as it is regarded
as a key performance indicator for the
Group and focuses on the underlying
operating profitability of the business by
removing non-recurring items. Given the
competitive nature of the Group’s sectors,
63
Implementation Report
on Remuneration
continued
Unaudited Information (continued)
Relative importance of spend on pay
The table opposite shows the Group’s
expenditure on remuneration paid to
all employees against distributions to
shareholders. As the Company was only
admitted on 4 June 2014, the dividend
paid by the Company during the year to
30 April 2014, and part of the dividend paid
by the Company during the year to 30 April
2015 was to the Company’s former parent;
therefore comparison of profit distributed by
way of dividend to overall expenditure on
pay is invalidated for the years to 30 April
2015 and 30 April 2014.
Comparative Total Shareholder Return
(“TSR”)
The DRR regulations require a line graph
showing the TSR on a holding of shares
in the Company since Admission to the
financial year end following Admission, as
well as the TSR for a hypothetical holding
of shares in a broad equity market index
for the same period. The graph opposite
compares the Company’s TSR to the TSR of
the FTSE Small Cap (ex IT) over this period.
The FTSE Small Cap (ex IT) was chosen as a
comparator as it is most closely aligned with
Clipper’s activity.
The DRR regulations also require a
table setting out selected details of the
remuneration of the Executive Chairman
over the same period as shown on the TSR
graph. We have additionally included for
comparison details for the financial year
ending 30 April 2014:
Year ended 30 April 2015:
Steve Parkin
Year ended 30 April 2014:
Steve Parkin
£’000
2015
2014 % change
Remuneration paid to all employees of the Group1
66,539
58,496
+13.7%
Distributions to shareholders
1,935
6,349
N/A
1Total remuneration reflects overall employee costs. See note 5 to the Group Financial statements for further information.
Total Shareholder Return Index (30 May 2014 = 100)
200
180
160
140
120
100
80
30 May 2014
30 April 2015
Clipper Logistics plc FTSE SmallCap Index
Source: Thomson Reuters
ex Investment Trusts
Single figure of total
remuneration (£’000)
Annual variable element
award rates against
Long-term incentive
vesting rates against
maximum opportunity
maximum opportunity
518
515
20.8%
0.0%
N/A
N/A
Up until 30 May 2014 Steve Parkin performed the roles of Chief Executive and Chairman, prior to becoming Executive
Chairman only from 30 May 2014.
64
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Implementation Report
on Remuneration
continued
Unaudited Information (continued)
Executive Chairman’s relative pay
In accordance with the DRR regulations,
we present in the table opposite the
percentage change in the prescribed pay
elements (salary, taxable benefits, and
annual bonus outcome) of the Executive
Chairman and the average percentage
change for all Group staff between the year
ended 30 April 2014 and the year ended
30 April 2015.
Year-on-year % change
Salary
Taxable Benefits
Annual Bonus
Executive Chairman
All-employees
+6.6%
+2.2%
-53.3%
N/A
+11.2%
+36.1%
AGM voting results
Details of the votes on remuneration matters held at the 2014 AGM are as follows:
Resolution
Votes for
% For
Votes
against
% Against
Total votes
Withheld
Approve Directors’ Remuneration Policy
90,046,475
99.67%
300,000
0.33%
90,346,475
0
Approve Directors’ Remuneration Report
90,046,475
100.00%
Approve Sharesave Plan
90,346,475
100.00%
0
0
0.00%
90,046,475
300,000
0.00%
90,346,475
Approve PSP
90,046,475
99.67%
300,000
0.33%
90,346,475
Approve Participation by “Concert Party”
in PSP and Sharesave
37,946,177
81.86%
8,410,188
18.14%
46,356,365
As explained in the Committee Chairman’s
However, this participation in PSP was
letter at the beginning of this report, the
consistent with the importance of a
Committee understands that the reason
continued team ethic within the Clipper
for the voting outcome in relation to the
senior management team which forms
“Concert Party” resolution was a concern
raised by certain governance bodies
a key part of the Directors’ Remuneration
Policy which received strong shareholder
in relation to the Executive Chairman’s
support.
participation in PSP given the level of his
existing shareholding in the Company.
0
0
0
65
Implementation Report
on Remuneration
continued
Unaudited Information (continued)
Service Contracts summary
Policy Report
Each Executive Director has a service
Remuneration Policy – Executive Directors
contract of indefinite duration with a notice
The Directors’ Remuneration Policy was
period of twelve months which may be
approved by the Company’s shareholders
given by the Company or the individual.
at the Company’s Annual General Meeting
The date of each Executive Director’s
for all payments made to Directors from
on 29 September 2014 and has effect
contract is:
Steve Parkin
Tony Mannix
David Hodkin
Sean Fahey
30 May 2014
30 May 2014
30 May 2014
30 May 2014
Non-Executive Directors
that date. The Company’s Directors’
Remuneration Policy is available for
inspection in the Company’s 2014 Annual
Report and Accounts via its website at:
http://www.clippergroup.co.uk/report-
accounts/. For ease of reference, the
summary “Policy Table” from the Directors’
Remuneration Policy which was approved
Each Non-Executive Director is engaged
at the 2014 Annual General Meeting is
for an initial period of three years. These
included as an appendix to this report.
appointments can be renewed following the
initial three year term. These engagements
This report was reviewed and approved by
can be terminated by either party on three
the Board on 27 July 2015 and signed on its
months’ notice.
behalf by order of the Board.
The Non-Executive Directors cannot
Mike Russell
participate in the Company’s share
Chairman, Remuneration Committee
schemes from Admission, are not entitled
to any pension benefits and are not entitled
to any payment in compensation for early
termination of their appointment.
For each Non-Executive Director the
effective date of their latest letter of
appointment is:
Paul Hampden Smith
Stephen Robertson
Ron Series
Mike Russell
16 May 2014
16 May 2014
16 May 2014
16 May 2014
66
Clipper Logistics plc Annual Report and Accounts 2015 67
Directors’ Remuneration Policy
Appendix
The following material is the Policy Table from the Directors’ Remuneration Policy approved at the 2014 AGM. It is included in this year’s report for
information only and does not form part of the Directors’ Remuneration Report which is subject to approval by shareholders at the 2015 AGM.
Element and purpose
Policy and operation
Maximum
Performance
measures
N/A
Base salaries will be reviewed
each year by the Remuneration
Committee.
The Remuneration Committee
does not strictly follow data but
uses it as a reference point in
considering, in its judgment,
the appropriate level of salary
having regard to other relevant
factors including corporate and
individual performance and any
changes in an individual’s role
and responsibilities.
Base salary is paid monthly in
cash.
In the normal course of
events, the Executive Directors’
salaries would not normally
be increased by more than
the average awarded to staff
generally. However, given the
need for a formal cap
under the DRR regulations, the
Remuneration Committee has
further limited the maximum
salary which it may award to
£450,000 for the Executive
Chairman, and for all other
Executive Directors to the
median salary level plus
10% for that role in the FTSE
SmallCap.
N/A
The Executive Directors may
receive a car allowance or
company car, fuel allowance,
private family medical cover
and insurance benefits.
The Remuneration Committee
reserves discretion to introduce
new benefits where it
concludes that it is appropriate
to do so, having regard to the
particular circumstances and to
market practice.
Where appropriate, the
Group will meet certain costs
relating to Executive Director
relocations.
It is not possible to prescribe
the likely change in the cost
of insured benefits or the cost
of some of the other reported
benefits year-to-year, but
the provision of benefits will
operate within an annual limit
of £100,000 (plus a further
100% of base salary in the
case of relocations).
The Remuneration Committee
will monitor the costs in
practice and ensure that
the overall costs do not
increase by more than the
Remuneration Committee
considers appropriate in all the
circumstances.
Base salary
This is the core element
of pay and reflects the
individual’s role and
position within the Group
with some adjustment
to reflect their capability
and contribution.
Benefits
To provide benefits
valued by recipients.
68
Clipper Logistics plc Annual Report and Accounts 2015 69
Directors’ Remuneration Policy
continued
Appendix (continued)
Element and purpose
Policy and operation
Maximum
Performance
measures
Pension
To provide retirement
benefits.
Annual Incentive Plan (“AIP”)
To motivate executives
and incentivise delivery
of performance over a
one-year operating cycle,
focusing on the short to
medium term elements of
our strategic aims.
Executive Directors can
receive pension contributions
to personal pension
arrangements, or if a Director is
impacted by annual or lifetime
limits on contribution levels to
qualifying pension plans, the
balance can be paid as a
cash supplement.
AIP levels and the
appropriateness of measures
are reviewed annually at the
commencement of each
financial year to ensure they
continue to support our strategy.
Once set, performance
measures and targets will
generally remain unchanged
for the year, except to reflect
events such as corporate
acquisitions or other major
transactions where the
Remuneration Committee
considers it to be necessary in
its opinion to make appropriate
adjustments.
AIP outcomes are paid in cash
following the determination
of achievement against
performance measures and
targets.
Malus and clawback provisions
apply to the AIP as explained in
more detail in the notes to this
table.
1 Now included at page 58 above
70
The maximum employer’s
contribution is limited to 15%
of base salary.
N/A
The maximum level of AIP
outcomes is 50% of base
salary p.a. for the duration of
this Policy.
The performance measures
applied may be financial or
non-financial and corporate,
divisional or individual and
in such proportions as the
Remuneration Committee
considers appropriate.
Details of the proposed
performance measures for
the year ending 30 April 2015
are set out in the notes to
this table.1
Attaining the threshold level
of performance for any
measure will not produce a
pay-out of more than 20%
of the maximum portion of
overall AIP attributable to that
measure, with a sliding scale
to full pay-out for maximum
performance.
However, the AIP remains a
discretionary arrangement
and the Remuneration
Committee retains a standard
power to apply its judgment
to adjust the outcome of
the AIP for any performance
measure (from zero to any
cap) should it consider that to
be appropriate.
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Directors’ Remuneration Policy
continued
Appendix (continued)
Element and purpose
Policy and operation
Maximum
Long-Term Incentives (“LTI”)
To motivate and incentivise
delivery of sustained
performance over the
long-term, and to promote
alignment with shareholders’
interests, the Group intends to
operate a Performance Share
Plan (“PSP”).
Shareholders’ approval for
the PSP is being sought at the
2014 AGM.
The PSP allows for awards over
shares with a maximum value
of 150% of base salary per
financial year.
The Remuneration Committee
expressly reserves discretion
to make such awards as it
considers appropriate within
these limits.
Awards under the PSP may be
granted as nil-cost options or
conditional awards of shares
which vest to the extent
performance conditions are
satisfied over a period of at
least three years.
Under the PSP rules, vested
awards may also be settled in
cash.
The PSP rules allow that the
number of shares subject to
vested PSP awards may be
increased to reflect the value of
dividends that would have been
paid in respect of any dividend
dates falling between the grant
of awards and the vesting of
awards. Whilst this feature will not
operate for awards to be made
in 2014, the Remuneration
Committee retains discretion to
introduce this feature during the
period of this policy.
Malus and clawback provisions
apply to PSP awards and are
explained in more detail in the
notes to this table.
Performance
measures
The Remuneration Committee
may set such performance
conditions on PSP awards
as it considers appropriate
(whether financial or non-
financial and whether
corporate, divisional or
individual).
Details of the proposed
performance measures for
the initial awards are set out
in the notes to this table.1
Once set, performance
measures and targets will
generally remain unaltered
unless events occur which,
in the Remuneration
Committee’s opinion, make it
appropriate to substitute, vary
or waive the performance
conditions in such manner as
the Remuneration Committee
thinks fit.
Performance periods may
be over such periods as the
Remuneration Committee
selects at grant, which will
not be less than (but may be
longer than) three years.
No more than 25% of awards
vest for attaining the threshold
level of performance
conditions.
Share Ownership Guidelines
To further align the interests of
Executive Directors with those
of shareholders.
1 Now included at page 60 above
Executive Directors are
expected to retain all of the
ordinary shares vesting under
the PSP, after any disposals for
the payment of applicable
taxes, until they have
achieved the required level of
shareholding.
100% of salary for all Executive
Directors.
N/A
The Remuneration Committee
reserves the power to amend
(but not reduce) these levels in
future years.
71
Directors’ Remuneration Policy
continued
Appendix (continued)
Element and purpose
Policy and operation
Maximum
Performance
measures
Consistent with normal
practice, such awards are
not subject to performance
conditions.
The Sharesave Plan is an
all-employee share plan
established under the HMRC
tax-advantaged regime and
follows the usual form for such
plans.
The exercise price of the
options is usually equal to the
market price of the shares
at the date of invitation to
participate less a maximum
discount of 20%.
Executive Directors are able
to participate in all-employee
share plans on the same terms
as other Group employees.
The maximum amount that
can be invested in the plan will
not exceed the statutory limit
from time to time (currently
£500 pcm).
The options vest on the
third anniversary of the
commencement of the
savings period.
Fees are paid monthly in cash.
N/A
Any increases made will be
appropriately disclosed.
The fees paid to Non-Executive
Directors aim to be competitive
with other fully listed companies
of equivalent size and
complexity.
The fees payable to the
Non-Executive Directors are
determined by the Board.
Non-Executive Directors will
not participate in any new
share incentive arrangements
from Admission, although
commitments made under pre-
Admission plans will continue to
be honoured.
All-employee share plans
To encourage share
ownership by employees,
thereby allowing them
to share in the long-term
success of the Group and
align their interests with those
of the shareholders.
Shareholders’ approval
is being sought at the
2014 AGM for the Clipper
Sharesave Plan (“Sharesave
Plan”).
Non-Executive Director fees
To enable the Group to recruit
and retain Non-Executive
Directors of the highest
calibre, at the appropriate
cost.
72
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Directors’ Remuneration Policy
continued
Appendix (continued)
Notes to the Policy Table
1. Malus and Clawback.
3. Travel and hospitality
While the Remuneration Committee does
Malus (being the forfeiture of unvested
not consider it to form part of benefits in
awards) and clawback (being the ability
the normal usage of that term, it has been
of the Company to claim repayment of
advised that corporate hospitality (whether
paid amounts as a debt) provisions apply
paid for by the Group or another company)
to the AIP and PSP if, in the opinion of the
and business travel for Directors (and
Remuneration Committee, any of the
exceptionally their families) may technically
following has occurred:
come within the applicable rules and so
- There has been a material misstatement
the Remuneration Committee expressly
of the Group’s financial results which has
led to an overpayment;
reserves the right for the Remuneration
Committee to authorise such activities within
its agreed policies.
- The assessment of performance targets
is based on an error or inaccurate or
4. Differences between the policy on
misleading information or assumptions;
remuneration for Directors from the policy
on remuneration of other employees
- Circumstances warranting summary
Where the Group’s pay policy for Directors
dismissal in the relevant period; or
differs to its pay policies for groups of
employees, this reflects the appropriate
- Any other act or omission that has had
market rate position for the relevant roles.
a sufficiently significant impact on the
The Company takes into account pay levels,
reputation of the Group to justify the
bonus opportunity and share awards applied
operation of malus/clawback.
across the Group as a whole when setting
the Directors’ Remuneration Policy.
Amounts in respect of awards under both
plans may be subject to clawback for up
to three years post payment or vesting as
appropriate.
2. Stating maximum amounts for the
Remuneration Policy
The DRR regulations and related investor
guidance encourages companies to
disclose a cap within which each element
of the Directors’ Remuneration Policy will
operate. Where maximum amounts for
elements of remuneration have been set
within the Directors’ Remuneration Policy,
these will operate simply as caps and are
not indicative of any aspiration.
73
Directors’ Report
The Directors are pleased to present
information on the Group’s exposures to
Directors’ share interests
their report and the audited Financial
market risk, including foreign currency,
Details of the Directors interests in the
Statements of Clipper Logistics plc for
interest rate, inflation and equity price
Company’s shares are included in the
the year ended 30 April 2015.
risks; details of its financial instruments and
Directors’ Remuneration Report on page
The Corporate Governance Report on
credit risk and liquidity risk.
(being the latest practicable date before
hedging activities; and its exposures to
59. Between 30 April 2015 and 24 July 2015
pages 42 to 49 and the Corporate
Social Responsibility Report (with regard
publication) there had been no change in
Directors’ interests as set out on page 59.
to information about the employment of
Results and dividends
disabled persons, employee involvement
The consolidated profit for the Group for
and greenhouse gas emissions) are also
the year after taxation was £7.3 million
Directors’ indemnities
incorporated into this report by reference.
(2014: £2.8 million). The results are discussed
The Company provided indemnities to each
in greater detail in the Operating and
of its Directors during the year ending 30
The Company has chosen, in accordance
Financial Review on pages 18 to 29 and
April 2015 in accordance with the provisions
with section 414C (11) of the Companies
set out in the Group Income Statement on
of the Company’s Articles of Association,
Act 2006 to include the disclosure of
page 88.
particulars of likely future developments in
allowing the indemnification of Directors
out of the assets of the Company to the
the Strategic Report (see pages 6 to 37).
The Directors are recommending the
extent permitted by law. These indemnities
payment on 30 September 2015 of a final
constitute qualifying indemnities for the
dividend of 3.2 pence per ordinary share
purposes of the Companies Act 2006 and
Financial risk management
to shareholders on the register at the close
remain in force at the date of approval
The Group’s business activities, together
of business on 4 September 2015 which,
of this report without any payment having
with the factors likely to affect its future
together with the net interim dividend of
been made under them.
development, performance and position
1.6 pence per ordinary share paid on
are set out in the Operating and Financial
31 December 2014, results in a total net
Review on pages 18 to 29, along with the
dividend for the year of 4.8 pence per share
financial position of the Group, its cash flows
(2014: not applicable).
and liquidity.
In addition, note 26 to the Group Financial
Directors
Statements includes the Group’s objectives,
The names and biographies of the current
policies and processes for capital and
Directors of the Company are set out on
financial risk management, including
pages 40 and 41 of this Annual Report.
The following Directors are current Directors or served the Company during the year ended 30 April 2015:
Name
Position
Steven (Steve) Nicholas Parkin
Antony (Tony) Gerard Mannix
David Arthur Hodkin
Sean Eugene Fahey
Paul Nigel Hampden Smith
Stephen Peter Robertson
Ronald (Ron) Charles Series
Michael (Mike) John Russell
Nigel John Hinds
Michael (Mike) David Badrock
74
Executive Chairman
Chief Executive Officer
Chief Financial Officer
Chief Information Officer
Senior Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Operations Director
Non-Executive Director
Notes
-
-
-
-
Appointed 16 May 2014
Appointed 16 May 2014
Appointed 16 May 2014
Appointed 16 May 2014
Resigned 13 May 2014
Resigned 13 May 2014
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Directors’ Report
continued
Related party transactions
Share capital structure
Variation of rights attaching to shares
The only material transactions with related
Details of the Company’s share capital
The Articles provide that rights attached
parties during the year were:
are set out in note 21 to the Group Financial
to any class of shares may be varied with
- the Relationship Agreement (referred to
Statements on page 126. The Company
the written consent of the holders of not
later in this report) entered into between
has a single class of share capital divided
less than three-quarters in nominal value
the Company and Steve Parkin and
into Ordinary Shares of 0.05p each.
of the issued shares, or with the sanction of
Carlton Court Investments Limited; and
The Ordinary Shares are listed on the
a special resolution passed at a separate
London Stock Exchange. The rights and
general meeting of the holders of those
- the Placing Agreement (referred to later
obligations attaching to these shares are
shares. At every such separate general
in this report) dated 30 May 2014 and
governed by UK law and the Company’s
meeting, the quorum shall be two persons
entered into between the Company, the
Articles of Association.
Directors and the Selling Shareholders (as
defined in the Prospectus).
holding or representing by proxy at least
one-third in nominal value of the issued
shares (calculated excluding any shares
Voting rights attaching to shares
held in treasury). The rights conferred upon
Ordinary shareholders are entitled to receive
the holders of any shares shall not, unless
Compensation for loss of office
notice and to attend and speak at any
otherwise expressly provided in the rights
There are no agreements between the
general meeting of the Company. On a
attaching to those shares, be deemed to
Company and its Directors or employees
show of hands every shareholder present in
be varied by the creation or issue of further
providing for compensation for loss of office
person or by proxy (or being a corporation
shares ranking pari passu with them.
or employment that occurs as a result of a
represented by a duly authorised
takeover bid. Further details of the Directors’
representative) shall have one vote, and on
service contracts can be found in the
a poll every shareholder who is present in
Restrictions on the transfer of shares
Directors’ Remuneration Report on pages
person or by proxy shall have one vote for
There are no restrictions on the transfer of
56 to 73.
every share of which he is the holder. The
the Ordinary Shares other than:
Notice of Annual General Meeting specifies
- the standard restrictions for a UK-quoted
deadlines for exercising voting rights and
company where any amount is unpaid on
Directors’ and Officers’ liability insurance
appointing a proxy or proxies.
a share;
Directors’ and Officers’ liability Insurance
cover is in place at the date of this report,
- where, from time to time, certain
having been purchased prior to the IPO. The
Deadlines for exercising voting rights
restrictions may become imposed by
Board remains satisfied that an appropriate
attaching to shares
laws and regulations (for example, insider
level of cover is in place and a review of
The Articles provide a deadline for the
trading laws and marketing requirements
cover will take place on an annual basis.
submission of proxy forms (whether by
relating to close periods); and
an instrument in writing or electronically)
of not less than 48 hours before the time
- pursuant to the Listing Rules of the
Articles of Association
appointed for the holding of the meeting or
Financial Conduct Authority whereby
The Articles of Association (adopted by
the adjourned meeting.
special resolution on 15 May 2014) may
only be amended by special resolution of
certain Directors, officers or employees of
the Company require the approval of the
Company to deal in the Ordinary Shares.
the shareholders. A copy of the Articles is
Shares in uncertificated form
available on request from the Company
Directors may determine that shares may
Secretary.
Change of name
On 14 May 2014 the Company changed its
name from Clipper Logistics Group Limited
to Clipper Logistics Limited, and on 15 May
2014 re-registered as a plc.
be held in uncertificated form and title to
such shares may be transferred by means
of a relevant system or that shares should
cease to be so held and transferred.
75
Directors’ Report
continued
Restrictions on the transfer of shares
Authority to purchase own shares
the voting rights over the Company’s issued
(continued)
A resolution to authorise the Company to
shares. Where any Controlling Shareholder
On 30 May 2014, the Company entered
purchase up to 10% of the Company’s
has already been nominated to the board
into a placing agreement with, amongst
issued Ordinary Share capital will be
as a Director himself such appointment
others, the Directors, certain selling
proposed at the 2015 AGM.
will reduce the number of persons which
shareholders and Numis Securities Limited
the Controlling Shareholders are entitled
(“Numis”) in accordance with which subject
As at 24 July 2015, being the latest
to nominate for appointment by one.
to certain customary exceptions:
practicable date prior to the publication of
Any person appointed by the Controlling
- the Company agreed not to issue or
this report, the Company did not hold any
Shareholders to the board may be
dispose of any Ordinary Shares in the
shares in treasury.
removed by the Principal Shareholders by
Company for a period of 365 days
following the date of Admission without
notice in writing.
the prior written consent of Numis; and
Appointment and replacement of
Directors
Relationship agreement with controlling
- the Directors and those selling
Unless determined by ordinary resolution of
shareholders
shareholders who have retained Ordinary
the Company, the number of Directors shall
Carlton Court Investments Limited (“Carlton”)
Shares after Admission agreed not to
not be less than two or more than twelve
holds 34.8% of the issued share capital
dispose of any Ordinary Shares in the
in number. A Director is not required to hold
of the Company. As such Carlton is a
Company for a period of 365 days
any shares in the Company by way
Controlling Shareholder as defined in
following the date of Admission without
of qualification.
the prior written consent of Numis.
the Listing Rules. Carlton is controlled by
Steve Parkin. Steve Parkin and Carlton
The Board may appoint any person to be
have entered into, and the Company’s
On 30th May 2014 each of the Executive
a Director and such Director shall hold
relationship with them is governed by
Directors (save for Steve Parkin) and
office only until the next AGM, when he or
the terms of, the Relationship Agreement
certain persons who held Ordinary Shares
she shall be eligible for appointment by
referred to above, the principal purpose
after the Company’s Admission or whose
the shareholders. The articles provide that
of which is to ensure that the Company
associates held such shares entered into
at each AGM, one-third of the Directors for
and the Group is capable of carrying on its
an agreement with Steve Parkin agreeing to
the time being (or, if their number is not a
business independently of the Controlling
certain restrictions on their ability (and that
multiple of three, then the number nearest
Shareholders and that any transactions
of their family) to dispose of Ordinary Shares
to but not exceeding one-third) shall retire
and relationships with the Controlling
in which they are interested for a period of
from office. A Director who retires at any
Shareholders are conducted at arm’s length
five years from the date of Admission. Under
AGM shall be eligible for re-appointment.
and on normal commercial terms.
the terms of the agreement, the obligors
In addition, any Director appointed by the
may not dispose of any interest in the
Ordinary Shares held by them at Admission
Board shall hold office only until the next
following AGM and shall then be eligible
The Controlling Shareholders have agreed
to procure that their associates also comply
until the fourth year of the five year period.
for appointment.
During the fourth year of the period, each
with the Relationship Agreement. The
Relationship Agreement will continue for
obligor may dispose of up to one third of
On 30th May 2014 the Company entered
so long as the Company is listed on the
the Ordinary Shares in which he is interested
into an agreement (“Relationship Agreement”)
main market for listed securities of London
at Admission. During the fifth year of the five
with Steve Parkin and his nominee company
Stock Exchange plc and the Controlling
year period, each obligor may dispose of
Carlton Court Investments Limited (the
Shareholders and their associates own or
up to two thirds of the Ordinary Shares in
“Controlling Shareholders”). Pursuant tothat
control at least 25% of the Company’s
which he is interested at Admission (less a
agreement the Company has agreed
issued share capital or voting rights.
number equal to those Ordinary Shares sold
with the Controlling Shareholders that the
during the prior year (if any)).
Controlling Shareholders shall be entitled
The Listing Rules require premium listed
to appoint and remove one Director
companies with controlling shareholders
to the Board so long as the Controlling
to provide a confirmation in their annual
Shareholders (and/or any of their associates)
reports that all of the independence
when taken together, hold 25% or more of
provisions contained in their relationship
76
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Directors’ Report
continued
Relationship agreement with controlling
Greenhouse gas emissions
Significant Agreements
shareholders (continued)
The Group’s disclosures on greenhouse gas
There are a number of agreements
agreements have been complied with.
emissions can be found in the Corporate
which, subject to any discussions with
In line with this requirement, the Board has
Social Responsibility section of the Strategic
relevant parties, would terminate upon
assessed the Controlling Shareholders’ and
Review on pages 36 and 37 and form part
a change of control of the Company
Company’s compliance with the
of the Directors’ Report.
Relationship Agreement’s independence
requirements and has assessed
compliance with these requirements
Employment Policies
such as commercial contracts, bank loan
agreements, property lease arrangements
and employees’ share plans. None of these
individually is considered to be significant in
during the period under review. As such,
Arrangements for consulting and involving
terms of their likely impact on the business of
the Board can confirm that since the entry
Group employees on matters affecting
the Group as a whole.
into the Relationship Agreement on 30 May
their interests at work, and informing them
2014 until 24 July 2015, being the latest
of the performance of their employing
Branches
practicable date prior to the publication of
business and the Group, are developed
Shortly after the 30 April 2015 year end,
this Annual Report and Accounts:
in ways appropriate to each business. A
Clipper registered a branch in Ireland,
(i) the Company has complied with the
variety of approaches is adopted aimed
in order to facilitate performance of a
independence provisions included in the
at encouraging the involvement of
contract with Ireland’s largest retailer, and
Relationship Agreement;
employees in effective communication
also to enhance its presence in Ireland in
and consultation, and the contribution of
order to secure further new business.
(ii) so far as the Company is aware, the
productive ideas at all levels.
independence provisions included in
the Relationship Agreement have been
Employment policies are designed to
Political donations
complied with by each of the Controlling
provide equal opportunities irrespective
The Company has made no political
Shareholders and their associates and
of race, caste, national origin, religion,
donations since Admission on 4 June 2014
also by the Company; and
age, disability, gender, marital status,
and intends to continue its policy of not
sexual orientation or political affiliation.
doing so for the foreseeable future.
(iii) so far as the Company is aware, the
Group policy is to ensure that disabled
procurement obligation included in
applicants for employment are given
the Relationship Agreement has been
full and fair consideration having regard
Charitable donations
complied with by each of the Controlling
to their particular aptitudes and abilities,
During the year to 30 April 2015, the Group
Shareholders.
and that existing disabled employees are
made charitable donations totalling
given equal access to training, career
£52,000 (2014: £38,000).
development and promotion opportunities.
Power of Directors
Subject to the Articles, the Companies
In the event of existing employees
becoming disabled, all reasonable means
Act and any directions given by special
would be explored to achieve retention in
resolution, the business of the Company
employment in the same or an alternative
shall be managed by the Board who may
capacity, including arranging appropriate
exercise all the powers of the Company
training. Further details in relation to the
to, for example, borrow money; mortgage
Group’s employment policy are set out in
or charge any of its undertaking, property
the Corporate Social Responsibility section
and uncalled capital; and issue debentures
of the Strategic Report on page 35.
and other securities, whether outright or as
collateral security for any debt, liability or
obligation of the Company.
77
Directors’ Report
continued
Major interests in shares
As at 15 July 2015, being the last practicable date prior to publication of this report, the
Company had been advised, in accordance with the Disclosure and Transparency Rules
of the Financial Conduct Authority, of the following notifiable interests (whether directly or
indirectly held) in 3% or more of its voting rights:
Notification received from
Number of voting rights
%
Carlton Court Investments Limited1
SOMLIE Limited2
The Chima Settlement
Unicorn Asset Management
Liontrust Asset Management
Franklin Templeton Fund Management
Legal and General Investment Management
Artemis Investment Management
Hargreave Hale
1 Ultimately controlled by Steve Parkin, Executive Chairman.
2 Nominee for Sean Fahey, Chief Information Officer.
34,797,100
7,834,397
6,999,999
6,799,990
5,360,188
4,175,000
3,985,000
3,950,406
3,233,000
34.80
7.83
7.00
6.80
5.36
4.18
3.99
3.95
3.23
Going concern
- he has taken all the reasonable steps
The Directors consider that all of the
After making enquiries, the Directors have a
that he ought to have taken as a Director
proposed resolutions are in the best interests
reasonable expectation that the Company
to make himself aware of any relevant
of the Company and its shareholders as a
has adequate resources to continue in
audit information and to establish that
whole. It is the Directors’ recommendation
operational existence for the foreseeable
the Group’s auditors are aware of the
that you support the proposed resolutions
future. In making this assessment they have
information.
and vote in favour of them, as each of the
considered the Company and Group
Directors intends to do.
budgets and cash flow forecasts for the
The confirmation is given and should
period to 30 April 2017. The Company has
be interpreted in accordance with the
The Directors’ Report has been approved by
considerable financial resources, negligible
provisions of section 418 of the Companies
the Board of Directors of Clipper Logistics plc.
liquidity risk and is operating within a sector
Act 2006.
that is experiencing growing demand
for its services. The Directors therefore
Signed on behalf of the Board.
have a reasonable expectation that the
Auditors
Guy Jackson
Company and the Group have adequate
The auditors, Ernst & Young LLP have
Company Secretary
resources to continue in operational
indicated their willingness to continue in
27 July 2015
existence for the foreseeable future. Thus
office and a resolution seeking to reappoint
they continue to adopt the going concern
them will be proposed at the Annual
Clipper Logistics plc
basis of accounting in preparing the annual
General Meeting.
Financial Statements. Further information is
disclosed in note 2.2 to the Group Financial
Registered Office:
Gelderd Road
Leeds LS12 6LT
Statements.
Annual general meeting
Company No. 03042024
Audit information
The Company’s Annual General Meeting will
be held at Clipper Logistics, Gelderd Road,
Leeds, LS12 6LT on 28 September 2015 at
Each of the Directors at the date of the
11:00. Details of the meeting venue and
approval of this report confirms that:
the resolutions to be proposed are set out in
- so far as he is aware, there is no relevant
a separate Notice of Meeting which will be
audit information of which the Group’s
issued under separate cover.
auditors are unaware; and
78
Clipper Logistics plc Annual Report and Accounts 2015 79
Statement of Directors’ Responsibilities
in respect of the Annual Report and
the Financial Statements
The Directors are responsible for preparing
- present information, including
Directors’ Responsibility Statement
the Annual Report and the Group and
accounting policies, in a manner that
Each of the Directors, whose names and
Parent Company Financial Statements
provides relevant, reliable, comparable
functions are listed on pages 40 and
in accordance with applicable law
information; and
41, confirm that, to the best of his or her
and regulations.
knowledge:
- prepare the Financial Statements on
- the Financial Statements, prepared in
Company law requires the Directors to
the going concern basis unless it is
accordance with IFRS as adopted by the
prepare group and parent company
inappropriate to presume that the Group
European Union, give a true and fair view
financial statements for each financial
and the Parent Company will continue
of the assets, liabilities, financial position
year. Under that law the Directors have
in business.
prepared the Group’s Financial Statements
and profit or loss of the Group and the
undertakings included in the consolidation
in accordance with International Financial
The Directors are responsible for keeping
as a whole;
Reporting Standards (IFRSs) as adopted
adequate accounting records that disclose
by the European Union, and the Parent
with reasonable accuracy at any time the
- the Strategic Report and Directors’ Report
Company Financial Statements in
financial position of the Group and Parent
include a fair review of the development
accordance with United Kingdom Generally
Company and which enable them to
and performance of the business and
Accepted Accounting Practice (United
ensure that its Financial Statements and the
the position of the Group and the
Kingdom Accounting Standards and
Directors’ Remuneration Report comply with
undertakings included in the consolidation
applicable law).
the Companies Act 2006 and, as regards
as a whole, together with a description of
the Group Financial Statements, Article 4 of
the principal risks and uncertainties that
Under company law the Directors must not
the IAS Regulation. They also have general
they face; and
approve the Financial Statements unless
responsibility for taking such steps as are
they are satisfied that they give a true and
reasonably open to them to safeguard
- the Annual Report and Financial
fair view of the state of affairs of the Group
the assets of the Group and the Parent
Statements, taken as a whole, are fair,
and Parent Company and of their profit or
Company and to prevent and detect fraud
balanced, and understandable and
loss for that period. In preparing each of
and other irregularities.
the Group and Parent Company Financial
provides the information necessary
for shareholders to assess the Group’s
Statements, the Directors are required to:
Under applicable law and regulations, the
performance, business model and
- select suitable accounting policies and
Directors are also responsible for preparing a
strategy.
then apply them consistently;
Strategic Report, Directors’ Report, Directors’
Remuneration Report, and Corporate
- make judgements and estimates that are
Governance Statement that complies with
Approved by the Board and signed
reasonable and prudent;
that law and those regulations.
on its behalf by:
- for the Group Financial Statements, state
The Directors are responsible for the
Steve Parkin
whether they have been prepared in
maintenance and integrity of the corporate
Executive Chairman
accordance with IFRSs as adopted by
and financial information included on
27 July 2015
the EU, subject to any material departures
the Company’s website. Legislation in
disclosed and explained in the Group
the UK governing the preparation and
David Hodkin
Financial Statements;
dissemination of financial statements may
Chief Financial Officer
differ from legislation in other jurisdictions.
27 July 2015
- for the Parent Company Financial
Statements state whether applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained in the
Parent Company Financial Statements;
80
Clipper Logistics plc Annual Report and Accounts 2015
81
Clipper Logistics plc Annual Report and Accounts 2015
Group Financial Statements
for the year ended 30 April 2015
82
Clipper Logistics plc Annual Report and Accounts 2015 83
Independent
Auditor’s Report
Independent Auditor’s report to the members of Clipper Logistics plc
Opinion on the Financial Statements
This report is made solely to the Company’s
the Financial Statements. In addition, we read
In our opinion:
members, as a body, in accordance with
all the financial and non-financial information
- the Financial Statements give a true and fair
Chapter 3 of part 16 of the Companies Act
in the Annual Report to identify material
view of the state of the Group’s and of the
2006. Our audit work has been undertaken
inconsistencies with the audited Financial
Parent Company’s affairs as at 30 April 2015
so that we might state to the Company’s
Statements and to identify any information
and of the Group’s profit for the year then
members those matters we are required
that is apparently materially incorrect based
ended;
to state to them in an auditor’s report and
on, or materially inconsistent with, the
for no other purpose. To the fullest extent
knowledge acquired by us in the course of
- the Group Financial Statements have been
permitted by law, we do not accept or
performing the audit. If we become aware
properly prepared in accordance with
assume responsibility to anyone other than the
of any apparent material misstatements or
International Financial Reporting Standards
(“IFRSs”) as adopted by the European Union;
Company and the Company’s members as
a body, for our audit work, for this report, or for
inconsistencies we consider the implications
for our report.
- the Parent Company Financial Statements
have been properly prepared in
the opinions we have formed.
Our assessment of risks of material
accordance with United Kingdom Generally
Respective responsibilities of Directors and
misstatement and responses
Accepted Accounting Practice; and
auditor
The following table shows the risks we identified
As explained more fully in the Statement of
that have had the greatest effect on the
- the Financial Statements have been
Directors’ Responsibilities set out on page
overall audit strategy; the allocation of
prepared in accordance with the
80, the Directors are responsible for the
resources in the audit; and directing the efforts
requirements of the Companies Act 2006;
preparation of the Financial Statements and
of the engagement team, together with our
and, as regards the Group Financial
for being satisfied that they give a true and
audit response to the risk.
Statements, Article 4 of the IAS Regulation.
fair view.
What we have audited
Our responsibility is to audit and express
an opinion on the Financial Statements
We have audited the Financial Statements
in accordance with applicable law and
of Clipper Logistics plc for the year ended
International Standards on Auditing (UK and
30 April 2015 which comprise the Group
Ireland). Those standards require us to comply
Income Statement and the Group
with the Auditing Practices Board’s Ethical
Statement of Comprehensive Income, the
Standards for Auditors.
Group Statement of Financial Position, the
Group Statement of Changes in Equity,
the Group Statement of Cash Flows, the
Scope of the audit of the Financial
Parent Company Balance Sheet and the
Statements
related notes 1 to 28 for the Group, and A
An audit involves obtaining evidence about
to V for the Parent Company. The financial
the amounts and disclosures in the financial
reporting framework that has been applied
statements sufficient to give reasonable
in the preparation of the Group Financial
assurance that the financial statements are
Statements is applicable law and IFRSs as
free from material misstatement, whether
adopted by the European Union. The financial
caused by fraud or error. This includes an
reporting framework that has been applied
assessment of: whether the accounting
in the preparation of the Parent Company
policies are appropriate to the Group’s
Financial Statements is applicable law and
and the Parent Company’s circumstances
United Kingdom Accounting Standards (United
and have been consistently applied and
Kingdom Generally Accepted Accounting
adequately disclosed; the reasonableness
Practice).
84
of significant accounting estimates made by
the Directors; and the overall presentation of
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Independent
Auditor’s Report
continued
Independent Auditor’s report to the members of Clipper Logistics plc (continued)
Our assessment of risks of material misstatement and responses (continued)
Risk of material misstatement
Audit response to identified risk
Revenue recognition in relation to logistics sales contracts
and in relation to sales of vehicles, parts and servicing
Within the value added logistics segment there are several
types of logistics contracts with individually negotiated terms
which means each contract can have different points of
revenue recognition, therefore there is a risk that revenue is
accounted for incorrectly.
Within the commercial vehicles segment sales are generally
straightforward, requiring minimal judgment to be exercised.
For all revenue streams an area of particular focus is the risk
that revenue may be inaccurately recorded and/or recorded
in the incorrect period.
Refer also to page 52 (Audit Committee Report).
Accounting for acquisitions
As disclosed in note 28 to the Group Financial Statements the
Group acquired a new subsidiary, Servicecare Support Services
Limited, during the year.
There is a risk that the accounting for acquisitions, including
the allocation of the purchase price and the recognition of
intangible assets and goodwill is not performed in accordance
with IFRS 3.
Refer also to page 52 (Audit Committee Report).
At each of the Group’s locations we performed the following audit
procedures around revenue recognition:
- We performed detailed cut-off testing for a sample of
transactions around the year end date in order to corroborate
that transactions made around the year-end date were
recognised appropriately.
- Detailed analytical review procedures were performed to
identify significant fluctuations and trends. Where items were
noted which were not in line with our expectations, we obtained
explanations and evidence from management and assessed
whether, in our professional judgement, such items were
appropriate.
- We completed journals testing, applying particular professional
scepticism to revenue transactions.
- Furthermore, for the value added logistics segment, a sample
of contracts were reviewed for key and unusual terms. Where
these terms impact the application of revenue recognition we
have reviewed this to ensure that the judgements made were
appropriate and revenue has been recognised in line with the
contract terms.
We also ensured that policies for revenue recognition and
other Financial Statement disclosures were in accordance with
accounting standards.
For the acquisition in the period we obtained and understood the
sales and purchase agreement.
We ensured the appropriateness of the allocation of the purchase
price and the recognition of intangible assets.
In particular we reviewed the judgements made by management
in identifying and valuing the intangible assets acquired. We
challenged the most significant assumptions used to determine the
valuation, which included the discount rate and customer churn.
We have also read the share purchase agreement to ensure that
the deferred consideration has been accounted for correctly and
has no contingent element.
85
Independent
Auditor’s Report
continued
Independent Auditor’s report to the members of Clipper Logistics plc (continued)
Our application of materiality
An overview of the scope of our audit
business units of the Group and account for
We apply the concept of materiality both in
We adopted a risk-based approach in
100% of the Group’s revenue, 100% of the
planning and performing our audit, and in
determining our audit strategy. This approach
Group’s profit before tax, and 100% of the
evaluating the effect of misstatements on
focuses audit effort towards higher risk
Group’s total assets. The chart below shows
our audit and on the Financial Statements.
areas, such as management judgements
how the audit coverage is split between full
For the purposes of determining whether the
and estimates and operating units that are
and specific scope.
Financial Statements are free from material
considered significant based upon size,
misstatement we define materiality as the
complexity and risk. Our Group audit scope
Audits of these operating units are performed
magnitude of misstatement that makes it
focused on two operating units, which were
at a performance materiality level calculated
probable that the economic decisions of a
subject to a full scope audit for the year
with reference to a proportion of the Group
reasonably knowledgeable person, relying on
the Financial Statements, would be changed
ended 30 April 2015 performed by the Group
audit team. An additional two operating
materiality appropriate to the relative scale
and risk associated with each operating unit.
or influenced.
units were selected for specific scope audit
They are also selected to provide a basis for
procedures where the extent of audit work
undertaking audit work to address the risks
We determined materiality for the Group to
was based on our assessment of the risks of
of material misstatement identified above.
be £0.5 million, which is approximately 5%
material misstatement and of the materiality
This percentage is based on the size of the
of pre-tax profit for the year, adjusted for
of those operating units to the Group’s
component relative to the Group as a whole
exceptional items. This provided a basis for
business operations. Together with the Group
and our assessment of the risk of misstatement
determining the nature, timing and extent of
functions which were also subject to a full
at that component. In the current year the
risk assessment procedures, identifying and
scope audit for the year ended 30 April 2015,
range of performance materiality allocated
assessing the risk of material misstatement
these operating units represent the principal
to components was £0.03 million to
£0.20 million.
Full scope
Specific scope
9%
17%
83%
91%
Profit before tax
£9.5 million
Revenue
£234.8 million
and determining the nature, timing and extent
of further audit procedures.
On the basis of our risk assessments, together
with our assessment of the Group’s overall
control environment, our judgement is that
performance materiality (that is our tolerance
for misstatement in an individual account or
balance) was 50% of our materiality, namely
£0.26 million. Our objective in adopting this
approach was to ensure that uncorrected
and undetected audit differences in the
Financial Statements as a whole did not
exceed our planning materiality level.
We agreed with the Audit Committee that we
would report to the Committee all corrected
and uncorrected audit differences in excess
of £26,000, as well as differences below that
threshold that in our view warranted reporting
on qualitative grounds.
We evaluate any uncorrected misstatements
against both the quantitative measures of
materiality discussed above and in the light of
other relevant qualitative considerations.
86
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Independent
Auditor’s Report
continued
Independent Auditor’s report to the members of Clipper Logistics plc (continued)
Opinions on other matters prescribed by the
In particular, we are required to consider
Other matters
Companies Act 2006
In our opinion:
whether we have identified any
The maintenance and integrity of the Clipper
inconsistencies between our knowledge
Logistics plc web site is the responsibility of the
- the part of the Directors’ Remuneration
acquired during the audit and the Directors’
Directors; the work carried out by the Auditors
Report to be audited has been properly
Responsibility Statement that they consider
does not involve consideration of these
prepared in accordance with the
the Annual Report is fair, balanced and
matters and, accordingly, the Auditors accept
Companies Act 2006;
understandable and whether the Annual
no responsibility for any changes that may
- the information given in the Strategic Report
Report appropriately discloses those matters
have occurred to the Financial Statements
and the Directors’ Report for the financial
that we communicated to the Audit
since they were initially presented on the
year for which the Financial Statements are
Committee which we consider should have
web site.
prepared is consistent with the Financial
Statements; and
been disclosed.
Legislation in the United Kingdom governing
- the information given in the Corporate
Under the Companies Act 2006 we are
the preparation and dissemination of financial
Governance Report set out pages 42 to
required to report to you if, in our opinion:
statements may differ from legislation in
49 with respect to internal control and
- adequate accounting records have not
other jurisdictions.
risk management systems in relation to
been kept by the Parent Company, or
financial reporting processes and about
returns adequate for our audit have not
share capital structures is consistent with
been received from branches not visited by
Stuart Watson (Senior statutory auditor)
the Financial Statements.
us; or
for and on behalf of Ernst & Young LLP,
- the Parent Company Financial Statements
Statutory Auditor, Leeds
and the part of the Directors’ Remuneration
27 July 2015
Matters on which we are required to report
Report to be audited are not in agreement
by exception
with the accounting records and returns; or
We have nothing to report in respect of the
- certain disclosures of Directors’ remuneration
following:
specified by law are not made; or
Under the ISAs (UK and Ireland), we are
- we have not received all the information
required to report to you if, in our opinion,
and explanations we require for our audit; or
information in the Annual Report is:
- a Corporate Governance Statement has
- materially inconsistent with the information in
not been prepared by the Company.
the audited Financial Statements; or
- apparently materially incorrect based on, or
Under the Listing Rules we are required to
materially inconsistent with, our knowledge
review:
of the Group acquired in the course of
performing our audit; or
- is otherwise misleading.
- the Directors’ Responsibility Statement,
set out on page 80, in relation to going
concern; and
- the part of the Corporate Governance
Report relating to the Company’s
compliance with the ten provisions of the UK
Corporate Governance Code specified for
our review.
87
Group Income
Statement
For the year ended 30 April
Revenue
Cost of sales
Gross profit
Other net gains
Administration and other expenses
Operating profit before non-recurring items
Discontinuing costs
Exceptional costs
Operating profit
Finance costs
Finance income
Profit before income tax
Income tax expense
Note
3
6
4
6
6
9
10
11
2015
Group
£’000
2014
Group
£’000
234,778
(165,590)
201,248
(141,514)
69,188
364
(57,547)
59,734
285
(50,406)
12,005
(278)
(863)
10,864
(1,388)
9
9,485
(2,161)
9,613
(2,297)
(2,516)
4,800
(952)
101
3,949
(1,103)
Profit for the financial year
7,324
2,846
Attributable to:
Equity holders of the Company
Non-controlling interest
Profit for the financial year
Basic earnings per share
Fully diluted earnings per share
Adjusted basic and diluted earnings per share*
7,324
-
2,826
20
7,324
2,846
7.3p
7.3p
8.4p
2.8p
2.8p
7.0p
7
7
7
*Earnings per share adjusted for discontinuing and exceptional costs as described in note 7.
88
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Group Statement of
Comprehensive Income
For the year ended 30 April
Profit for the financial year
Other comprehensive income for the year, net of tax:
To be reclassified to the income statement in subsequent periods:
Exchange differences on retranslation of foreign operations
Note
2015
Group
£’000
2014
Group
£’000
7,324
2,846
(5)
(1)
Total comprehensive income for the financial year
7,319
2,845
Attributable to:
Equity holders of the Company
Non-controlling interest
Total comprehensive income for the financial year
7,319
-
2,825
20
7,319
2,845
89
Group Statement of
Financial Position
At 30 April
Assets:
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Intangible assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities:
Current liabilities
Trade and other payables
Financial liabilities: borrowings
Derivative financial instruments
Short term provisions
Current income tax liabilities
Total current liabilities
Non-current liabilities
Borrowings
Long term provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Equity shareholders’ funds
Share capital
Share premium
Currency translation reserve
Other reserve
Merger reserve
Share based payment reserve
Retained earnings
Total equity attributable to the owners of the Company
Total equity and liabilities
*2014 restated (see note 2.3)
Approved by the Board on 27 July 2015 and signed on its behalf by:
D A Hodkin – Chief Financial Officer
90
Note
2015
Group
£’000
2014
Group
*
£’000
12
14,615
15,843
23,252
1,567
19,018
549
13
24,819
19,567
39,434
35,410
15
16
17
18
19
20
11
19
20
11
21
23
21,677
33,443
1,854
19,025
28,332
5,360
56,974
52,717
96,408
88,127
61,708
5,196
70
108
731
54,410
16,455
-
147
318
67,813
71,330
10,226
732
642
4,260
699
366
11,600
5,325
79,413
76,655
50
48
31
84
6,006
139
10,637
50
48
36
84
6,006
-
5,248
16,995
11,472
96,408
88,127
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Group Statement of
Changes in Equity
For the year ended 30 April
Balance at 1 May 2013
Profit for the year
Other comprehensive income/(expense)
Share issue - for cash
- on acquisition of minority interest
Increase in ownership interest of subsidiary
Equity settled transactions
Dividends
Investment in subsidiaries charged to merger
Balance at 30 April 2014
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Dividends
Share
capital
£’000
Share
premium
£’000
Currency
translation
reserve
£’000
Other
reserve
£’000
Merger
reserve
£’000
Carried
forward
£’000
8
-
-
42
-
-
-
-
-
50
-
-
-
-
48
36
51
18,168
18,311
-
-
-
-
-
-
-
-
48
-
-
-
-
-
-
-
-
-
-
-
-
36
-
(5)
-
-
-
-
-
800
(767)
-
-
-
-
-
-
-
-
-
-
(12,162)
-
-
42
800
(767)
-
-
(12,162)
84
6,006
6,224
-
-
-
-
-
-
-
-
-
(5)
-
-
Balance at 30 April 2015
50
48
31
84
6,006
6,219
Balance at 1 May 2013
Profit for the year
Other comprehensive income/(expense)
Share issue - for cash
- on acquisition of minority interest
Increase in ownership interest of subsidiary
Equity settled transactions
Dividends
Investment in subsidiaries charged to merger reserve
Balance at 30 April 2014
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Dividends
Brought
forward
£’000
18,311
-
-
42
800
(767)
-
-
(12,162)
6,224
-
(5)
-
-
Share based
payment
reserve
£’000
Retained
earnings
£’000
Non-
controlling
interest
£’000
-
-
-
-
-
-
-
-
-
-
-
-
139
-
8,592
2,826
(1)
-
-
-
180
(6,349)
-
5,248
7,324
-
-
(1,935)
13
20
-
-
-
(33)
-
-
-
-
-
-
-
-
-
Balance at 30 April 2015
6,219
139
10,637
Total
£’000
26,916
2,846
(1)
42
800
(800)
180
(6,349)
(12,162)
11,472
7,324
(5)
139
(1,935)
16,995
91
Group Statement
of Cash Flows
For the year ended 30 April
Note
6
6
6
6
9 & 10
6
6
22
Profit before tax from operating activities
Adjustments to reconcile profit before tax to net cash flows:
- Depreciation and impairment of property, plant
and equipment
- Amortisation and impairment of intangible assets
- Gain on disposal of property, plant and equipment
- IPO transaction costs charged
- IPO transaction costs paid
- Exchange differences
- Finance costs
- Movement in derivative financial instruments
- Amortisation of grants
- Share based payments charge
Working capital adjustments:
- (Increase)/decrease in trade and other receivables and prepayments
- (Increase)/decrease in inventories
- Increase/(decrease) in trade and other payables
Operating activities:
- Cash generated from operations
- Interest received
- Interest paid
- Income tax paid
Net cash flows from operating activities
Investing activities:
- Purchase of property, plant and equipment
- Proceeds from sale of property, plant & equipment
- Purchase of intangible assets
- Transfer of subsidiaries from former parent company
- Acquisition of subsidiary undertaking net of cash acquired
28
Net cash flows from investing activities
*2014 restated (see note 2.3)
2015
Group
£’000
9,485
3,358
292
(38)
671
(2,065)
118
1,379
(98)
(1)
124
(3,073)
(2,270)
4,716
2014
Group
£’000*
3,949
3,685
219
(26)
1,981
(587)
10
851
-
-
180
(4,498)
861
9,205
12,598
9
(1,248)
(1,728)
15,830
101
(962)
(1,644)
9,631
13,325
(197)
292
(87)
-
(3,699)
(2,557)
172
(176)
(12,162)
(64)
(3,691)
(14,787)
92
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Group Statement
of Cash Flows
For the year ended 30 April (continued)
Financing activities:
- Net (repayment to)/advance from former parent company
- Receipt in respect of derivative financial instrument
- New bank loans
- Debt issue costs paid
- Finance leases advanced
- Repayment of bank loans
- Shares issued
- Dividends paid
- Repayment of capital on finance leases
Note
8
2015
Group
£’000
(14,181)
168
12,762
(370)
91
(2,920)
-
(1,935)
(2,976)
2014
Group
£’000
*
11,846
-
146
-
1,941
(266)
42
(6,349)
(2,903)
Net cash flows from financing activities
(9,361)
4,457
Net (decrease)/increase in cash and cash equivalents
(3,421)
2,995
Cash and cash equivalents at start of year
5,275
2,280
Cash and cash equivalents at end of year
17
1,854
5,275
*2014 restated (see note 2.3)
93
Notes to the Group
Financial Statements
1. General information
2.1 Basis of preparation
The accounting policies which follow set out
The Group Financial Statements for the year
Clipper Logistics plc (“the Company”), a
those policies which apply in preparing the
ended 30 April 2015 were authorised for
public limited company incorporated and
Financial Statements for the year ended 30
issue by the Board of Directors on 27 July
domiciled in the United Kingdom, acts as
April 2015.
2015 and the Group Statement of Financial
parent undertaking for the Clipper group of
Position was signed on the Board’s behalf by
companies. The Company has independent
The Group’s Financial Statements have
David Hodkin.
operations in its own right and owns 100%
been prepared on a historical cost basis,
of the share capital and voting rights of the
except for derivative financial instruments
Clipper Logistics plc (the “Company”) and
following principal trading entities:
which have been measured at fair value.
its subsidiaries (together the “Group”) provide
- Northern Commercials (Mirfield) Limited
The Financial Statements are presented in
value-added logistics and other services
Pounds Sterling and all values are rounded
to predominantly the retail sector and
- Clipper Logistics KG (GmbH & Co.)
to the nearest thousand (£’000) unless
also operate as distributors of commercial
(Germany)
otherwise indicated.
vehicles.
- Servicecare Support Services Limited (see
The Company is limited by share capital,
note 28)
incorporated and domiciled in the United
2.2 Going concern
The Financial Statements have been
Kingdom. The address of its registered office
- Electrotec International Limited
prepared on a going concern basis. In
is Clipper Logistics, Gelderd Road, Leeds,
determining the appropriate basis of
LS12 6LT.
In addition, the Group has a number of
preparation of the Financial Statements, the
other subsidiaries as set out in note E to the
Directors are required to consider whether
The Group’s Financial Statements have
Company Financial Statements.
the Group can continue in operational
been prepared in accordance with note
existence for the foreseeable future.
2.1 Basis of preparation, and note 2.4 Basis
The Group’s Financial Statements have been
of consolidation. The principal accounting
prepared in accordance with International
Further information in relation to the Group’s
policies adopted by the Group are set out
Financial Reporting Standards as adopted
business activities, together with the factors
in note 2.
by the European Union (IFRS) and also
likely to affect its future development,
in accordance with the provisions of the
performance and position is set out in the
Companies Act 2006.
Strategic Report section of this report on
2. Summary of significant
accounting policies
The preparation of the financial information
pages 6 to 37.
The principal accounting policies applied
under IFRSs requires management to make
Note 26 to the Group Financial Statements
in the preparation of these consolidated
judgments, estimates and assumptions
includes the Group’s objectives, policies
Financial Statements are set out below.
These policies have been consistently
that affect the application of policies and
reported amounts of assets and liabilities,
and processes for managing its capital, its
financial risk management objectives and
applied to all years presented, unless
income and expenses. The estimates and
its exposure to foreign exchange, credit and
otherwise stated.
associated assumptions are based on
interest rate risk. Further details of the Group’s
historical experience and other factors that
net debt at 30 April 2015 are included in
are believed to be reasonable under the
note 19 of the Group Financial Statements.
circumstances, the results of which form
the basis of making the judgements about
carrying values of assets and liabilities that
are not readily apparent from other sources.
Actual results may differ from these estimates
94
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.2 Going concern (continued)
2.3 Restatement of prior year figures
2.4 Basis of consolidation
The Group statement of financial position
Inventories of commercial vehicles are
(a) Group reorganisation
shows total current assets of £56,974,000
usually funded under stocking finance plans
The restructuring noted in note 2.4 (b) below
and total current liabilities of £67,813,000.
offered by either the manufacturer’s own
is a combination of entities under common
Net current liabilities at 30 April 2015
finance arm, or third party funders. In the
control. IFRS 3 states that it does not apply
were therefore £10,839,000 (2014:
financial statements for the year ended
to a combination of entities or businesses
£18,613,000). At the year end, the Group
30 April 2014, amounts outstanding to the
under common control. All of the entities
had a committed Revolving Credit Facility
manufacturer’s finance arm were included
that make up the Clipper Group have
of £12,504,000 and an overdraft facility of
in trade payables, whereas amounts
remained under common control, in both
£5,000,000, both of which were undrawn.
outstanding to third party stocking finance
of the years disclosed. Accordingly, the
The Directors have assessed the future
providers were included as stocking loans
consolidated financial information of the
funding requirements of the Group and
within borrowings.
the Company and compared them to the
Clipper Group has been prepared to reflect
the combination of the restructured Clipper
bank facilities which are now available.
As the relevant characteristics of the stocking
Group as if it had occurred from 1 May
The assessment included a detailed review
finance facilities are the same, regardless
2010, being the earliest comparative period
of financial and cash flow forecasts for at
of the funder, the Group believes it is
reported by the restructured group.
least the 12 month period from the date
more appropriate to disclose all amounts
of signing the Annual Report. The Directors
outstanding in the same way, in order
The comparative financial information of the
considered a range of potential scenarios
to give a consistent view of the working
Clipper Group for the year ended 30 April
within the key markets the Group serves and
capital requirements. Consequently, in the
2014 has been prepared on a basis that
how these might impact on the Group’s
restated 30 April 2014 Group statement of
combines the results and assets and liabilities
cash flow. The Directors also considered
financial position, trade & other payables
of all entities within the Clipper Group. Prior
what mitigating actions the Group could
have been increased by £2,686,000 (1
to 16 April 2014 the Clipper Group did not
take to limit any adverse consequences.
May 2013: £978,000) and borrowings have
constitute a separate legal group.
been reduced by the same figure. In the
The Group’s forecasts and projections
Group statement of cash flows for the year
(b) Merger reserve
show that the Group should be able to
ended 30 April 2014, cash generated
At 30 April 2014 the Company was a wholly
operate without the need for any increase in
from operations has been increased by
owned subsidiary of Clipper Group Holdings
borrowing facilities.
£1,708,000 and stocking loans advanced
Limited. In April 2014 the Group undertook a
Having undertaken this work, the Directors
the change not been made, the amount
acquired fellow subsidiaries from Clipper
are of the opinion that the Company
of stocking finance which would have been
Group Holdings Limited which comprised
and the Group have adequate resources
included in borrowings at 30 April 2015
100% of the issued share capital of Northern
has been reduced by the same figure. Had
restructuring. On 16 April 2014 the Company
to continue in operational existence for
the foreseeable future. Accordingly, they
continue to adopt the going concern basis
in preparing the Financial Statements.
would have been £5,799,000.
Commercials (Mirfield) Limited and Genesis
Specialised Product Packing Limited and, on
23 April 2014, 75% of the capital of Clipper
Logistics GmbH and its subsidiary R. Geist
Spedition GmbH & Co. KG (collectively
“the Clipper Group”). On 30 April 2014 the
Group acquired the remaining 25% of share
capital of Clipper Logistics GmbH. There
were no remaining non-controlling interests
from this date. On 4 June 2014 Clipper
Logistics plc was admitted to the premium
segment of the London Stock Exchange
and Clipper Group Holdings Limited was no
longer the parent company.
95
Notes to the Group
Financial Statements
continued
2.4 Basis of consolidation (continued)
- Rights arising from other contractual
The purchase method of accounting is used
As described above, the group
arrangements
reorganisation is a combination of entities
to account for the acquisition of subsidiaries
by the Group other than those included
under common control; and consolidated
- The Group’s voting rights and potential
in the restructuring referred to above. The
using a pooling of interests basis. This treats
voting rights
the restructured group as if it was formed in
cost of an acquisition is measured as
the fair value of the assets given, equity
May 2010 and a merger reserve has been
The Group re-assesses whether or not
instruments issued and liabilities incurred
included to reflect this, with a balance of
it controls an investee if facts and
or assumed at the date of exchange, plus
£18,168,000 at this date. In the year ended
circumstances indicate that there are
costs directly attributable to the acquisition.
30 April 2014 a charge of £12,162,000
changes to one or more of the three
Identifiable assets acquired and liabilities
was made to the reserve to reflect the
elements of control. Consolidation of a
and contingent liabilities assumed in a
acquisition of the fellow subsidiaries from
subsidiary begins when the Group obtains
business combination are measured initially
Clipper Group Holdings Limited as part of the
control over the subsidiary and ceases when
at their fair values at the acquisition date,
group reorganisation.
the Group loses control of the subsidiary.
irrespective of the extent of any minority
Assets, liabilities, income and expenses of
interest. The excess of the cost of acquisition
(c) Consolidations
a subsidiary acquired or disposed of during
over the fair value of the Group’s share of the
The consolidated financial statements
the year are included in the consolidated
identifiable net assets acquired is recorded
comprise the financial statements of the
financial statements from the date the
as goodwill. If the cost of acquisition is
Group and its subsidiaries as at 30 April
Group gains control until the date the Group
less than the fair value of the net assets of
2015. Control is achieved when the Group
ceases to control the subsidiary.
the subsidiary acquired, the difference is
is exposed, or has rights, to variable returns
recognised directly in the income statement.
from its involvement with the investee and
Profit or loss and each component of other
has the ability to affect those returns through
comprehensive income are attributed to
its power over the investee. Specifically, the
the equity holders of the parent of the Group
2.5 Segment reporting
Group controls an investee if, and only if, the
and to any non-controlling interests, even
Operating segments are reported in
Group has:
if this results in the non-controlling interests
a manner consistent with the internal
- Power over the investee (i.e., existing rights
having a deficit balance. When necessary,
reporting provided to the Company’s
that give it the current ability to direct the
adjustments are made to the financial
Board of Directors, collectively the Group’s
relevant activities of the investee)
statements of subsidiaries to bring their
chief operating decision maker, to assess
accounting policies into line with the Group’s
performance and allocate capital or
- Exposure, or rights, to variable returns from
accounting policies. All intra-group assets
resources.
its involvement with the investee
and liabilities, equity, income, expenses and
cash flows relating to transactions between
- The ability to use its power over the
investee to affect its returns
members of the Group are eliminated in full
on consolidation The financial statements
2.6 Foreign currency translation
(a) Functional and presentation currency
of subsidiaries used in the preparation of
Items included in the financial statements of
Generally, there is a presumption that a
the consolidated Financial Statements are
each of the Group’s entities are measured
majority of voting rights result in control.
prepared on the same reporting year as the
using the currency of the primary economic
To support this presumption and when
parent company.
the Group has less than a majority of the
environment in which the entity operates
(‘the functional currency’). The combined
voting or similar rights of an investee, the
A change in the ownership interest of
Financial Statements are presented in
Group considers all relevant facts and
a subsidiary without loss of control is
Pounds Sterling, which is the Company’s
circumstances in assessing whether it has
accounted for as an equity transaction. If
functional and presentation currency.
power over an investee, including:
the Group loses control over a subsidiary, it
- The contractual arrangement with the
derecognises the related assets (including
other vote holders of the investee
goodwill), liabilities, non-controlling interest
and other components of equity while any
resultant gain or loss is recognised in profit or
loss. Any investment retained is recognised
at fair value.
96
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.6 Foreign currency translation
2.7 Property, plant and equipment
2.8 Intangible assets
(continued)
Property, plant and equipment is stated
(a) Goodwill
(b) Transactions and balances
at historical cost less depreciation and
Goodwill represents the excess of the cost
Foreign currency transactions are translated
impairment. Historical cost includes
of an acquisition over the fair value of the
into the functional currency using the
expenditure that is directly attributable to the
Group’s share of the net identifiable assets
exchange rates prevailing at the dates of
acquisition of the items.
the transactions. Foreign exchange gains
of the acquired subsidiary at the date
of acquisition. If the cost of acquisition is
and losses resulting from the settlement of
Subsequent costs are included in the
less than the fair value of the net assets of
such transactions and from the translation
asset’s carrying amount or recognised
the subsidiary acquired, the difference is
at year-end exchange rates of monetary
as a separate asset, as appropriate, only
‘negative goodwill’ and is recognised in the
assets and liabilities denominated in foreign
when it is probable that future economic
income statement immediately.
currencies are recognised in the income
benefits associated with the item will flow to
statement. Non-monetary items that are
the Group and the cost of the item can be
Goodwill on acquisitions of subsidiaries is
measured in terms of historical cost in a
measured reliably. The carrying amount of
included in ‘intangible assets’. Separately
foreign currency are translated using the
any replaced part is derecognised. All other
recognised goodwill is tested annually
exchange rates at the dates of the initial
repairs and maintenance are charged to
for impairment and carried at cost
transactions. Non-monetary items measured
the income statement during the financial
less accumulated impairment losses.
at fair value in a foreign currency are
period in which they are incurred.
Impairment losses on goodwill are not
translated using the exchange rates at the
reversed. Gains and losses on the disposal
date when the fair value is determined. The
Depreciation is calculated using the straight-
of an entity include the carrying amount of
gain or loss arising on translation of non-
line method to allocate their cost to their
goodwill relating to the entity sold. Goodwill
monetary items measured at fair value is
residual values over their estimated useful
is allocated to cash-generating units for
treated in line with the recognition of the
lives, as follows:
the purpose of impairment testing. The
gain or loss on the change in fair value of
- Leasehold property over the length of the
allocation is made to those cash-generating
the item (i.e., translation differences on items
lease;
whose fair value gain or loss is recognised in
units or groups of cash-generating units that
are expected to benefit from the business
other comprehensive income or profit or loss
- Plant and machinery 2 - 20 years; and
combination in which the goodwill arose.
are also recognised in other comprehensive
income or profit or loss, respectively).
- Motor vehicles 4 - 8 years.
(b) Contracts and licences
Intangible assets acquired separately are
(c) Translation of foreign operations
Residual values and useful lives are
measured on initial recognition at cost.
On consolidation, the assets and liabilities of
reviewed, and adjusted if appropriate, at
The cost of intangible assets acquired in
foreign operations are translated into Pounds
each balance sheet date.
a business combination is their fair value
Sterling at the rate of exchange prevailing
at the reporting date and their statements
An asset’s carrying amount is written down
at the date of acquisition. Following initial
recognition, intangible assets are carried at
of profit or loss are translated at the
immediately to its recoverable amount if the
cost less any accumulated amortisation and
average exchange rates for the year. The
asset’s carrying amount is greater than its
accumulated impairment losses. Internally
exchange differences arising on translation
estimated recoverable amount.
generated intangibles, excluding capitalised
for consolidation are recognised in other
development costs, are not capitalised and
comprehensive income.
An item of property, plant and equipment
the related expenditure is reflected in profit
and any significant part initially recognised
or loss in the period in which the expenditure
Any goodwill arising on the acquisition of
is derecognised upon disposal or when no
is incurred.
a foreign operation and any fair value
future economic benefits are expected from
adjustments to the carrying amounts of
its use or disposal. Any gain or loss arising
Intangible assets are amortised over the
assets and liabilities arising on the acquisition
on derecognition of the asset (calculated
useful economic life (five to ten years) and
are treated as assets and liabilities of the
as the difference between the net disposal
assessed for impairment whenever there is
foreign operation and translated at the spot
proceeds and the carrying amount of the
an indication that the intangible asset may
rate of exchange at the reporting date.
asset) is included within ‘other net gains’ in
be impaired.
the income statement when the asset is
derecognised.
97
Notes to the Group
Financial Statements
continued
2.8 Intangible assets (continued)
When the carrying amount of an asset or
2.10 Financial assets
(c) Computer software
CGU exceeds its recoverable amount, the
The Group classifies its financial assets in the
Acquired computer software licences are
asset is considered impaired and is written
following categories: at fair value through
capitalised on the basis of the costs incurred
down to its recoverable amount.
profit or loss and available for sale. The
to acquire and bring to use the specific
classification depends on the purpose for
software. These costs are amortised over
In assessing value in use, the estimated
which the financial assets were acquired.
their estimated useful lives (three to five
future cash flows are discounted to their
Management determines the classification of
years).
present value using a pre-tax discount rate
its financial assets at initial recognition. At 30
that reflects current market assessments
April 2015 the Group held no financial assets
Costs associated with developing or
of the time value of money and the risks
available for sale.
maintaining computer software programmes
specific to the asset. In determining fair
are recognised as an expense as incurred.
value less costs to sell, recent market
Financial assets at fair value through profit
Costs that are directly associated with the
transactions are taken into account. If no
or loss
development of identifiable and unique
such transactions can be identified, an
Financial assets at fair value through profit
software products controlled by the Group,
appropriate valuation model is used. These
or loss are financial assets held for trading.
and that will probably generate economic
calculations are corroborated by valuation
A financial asset is classified in this category
benefits exceeding costs beyond one
multiples, quoted share prices for publicly
if acquired principally for the purpose of
year, are recognised as intangible assets.
traded companies or other available fair
selling in the short term. Derivatives are also
Costs include the software development
value indicators.
employee costs and overheads directly
categorised as held for trading unless they
are designated as hedges. Assets in this
attributable to bringing the asset in to use.
An impairment loss is recognised as an
category are classified as current assets.
expense immediately. Where an impairment
Computer software development costs
loss subsequently reverses, the carrying
Investments are initially recognised at fair
recognised as assets are amortised over
amount of the asset (or CGU) is increased
value plus transaction costs for all financial
their estimated useful lives (not exceeding
to the revised estimate of its recoverable
assets not carried at fair value through profit
three years).
amount, but so that the increased carrying
or loss. Financial assets carried at fair value
amount does not exceed the carrying
through profit or loss are initially recognised at
amount that would have been determined
fair value and transaction costs are expensed
2.9 Impairment of non-financial assets
had no impairment loss been recognised for
in the income statement. Financial assets
The Group assesses, at each reporting date,
the asset (or CGU) in prior years. A reversal of
are derecognised when the rights to receive
whether there is an indication that an asset
an impairment loss is recognised as income
cash flows from the investments have expired
may be impaired. If any indication exists, or
immediately.
when annual impairment testing for an asset
or have been transferred and the Group has
transferred substantially all risks and rewards of
is required, the Group estimates the asset’s
recoverable amount. An asset’s recoverable
The Group bases its impairment calculation
on detailed budgets and forecast
ownership.
amount is the higher of an asset’s or cash-
calculations, which are prepared separately
Available-for-sale financial assets and
generating unit’s (“CGU”) fair value less costs
for each of the Group’s CGUs to which
financial assets at fair value through profit or
to sell and its value in use.
the individual assets are allocated. These
loss are subsequently carried at fair value.
budgets and forecast calculations generally
Where the asset does not generate cash
cover a minimum period of two years. For
Gains or losses arising from changes in the
flows that are independent from other
longer periods, a long-term growth rate is
fair value of the ‘financial assets at fair value
assets, the Group estimates the recoverable
calculated and applied to project future
through profit or loss’ category are presented
amount of the CGU to which the asset
cash flows after the second year.
in the income statement within ‘other net
belongs.
gains’ in the period in which they arise.
98
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.10 Financial assets (continued)
Significant financial difficulties of the
2.16 Consignment inventory payables
Dividend income from financial assets at fair
debtor, probability that the debtor will enter
Inventories of commercial vehicles are
value through profit or loss is recognised in the
bankruptcy or financial reorganisation, and
usually funded under stocking finance plans
income statement as part of other income
default or delinquency in payments (more
offered by either the manufacturer’s own
when the Group’s right to receive payments
than 30 days overdue) are considered
finance arm, or third party funders. Amounts
is established.
indicators that the trade receivable may
outstanding are included in trade and other
The Group assesses at each balance sheet
the difference between the asset’s carrying
date whether there is objective evidence
amount and the present value of estimated
that a financial asset or a Group of financial
future cash flows, discounted at the original
2.17 Borrowings
be impaired. The amount of the provision is
payables.
assets is impaired.
effective interest rate.
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings
Impairment testing of trade receivables is
The carrying amount of the asset is reduced
are subsequently stated at amortised cost;
described in note 2.13.
through the use of an allowance account,
any difference between the proceeds (net
and the amount of the loss is recognised in
of transaction costs) and the redemption
the income statement within ‘administration
value is recognised in the income statement
2.11 Inventories
expenses’.
over the period of the borrowings using the
Inventories are stated at the lower of cost
effective interest method.
and net realisable value. Cost includes all
When a trade receivable is uncollectible, it
costs incurred in bringing each product to
is written off against the allowance account
Borrowings are classified as current liabilities
its present location and condition. Cost is
for trade receivables. Subsequent recoveries
unless the Group has an unconditional right to
determined using the first-in, first-out (“FIFO”)
of amounts previously written off are credited
defer settlement of the liability for at least 12
method. Net realisable value is the estimated
against ‘administration expenses’ in the
months after the balance sheet date.
selling price in the ordinary course of business,
income statement.
less applicable variable selling expenses.
2.14 Cash and cash equivalents
Current tax assets and liabilities are
2.18 Income tax
2.12 Vehicles on consignment
Cash and cash equivalents includes cash
measured at the amount expected to be
Vehicles held on consignment from
in hand, deposits held at call with banks,
recovered from or paid to the taxation
manufacturers are included in the statement
other short-term highly liquid investments with
authorities, based on tax rates and laws that
of financial position where it is considered that
original maturities of three months or less,
are enacted or substantively enacted by the
the Group enjoys the benefits and carries the
and bank overdrafts. Bank overdrafts are
balance sheet date.
risks of ownership.
shown within borrowings in current liabilities
on the statement of financial position. Cash
and cash equivalents are stated net of bank
Deferred income tax is provided in full,
using the liability method, on temporary
2.13 Trade receivables
overdrafts in the cash flow statement.
differences arising between the tax bases
Trade receivables are recognised initially at
fair value and subsequently measured at
amortised cost using the effective interest
2.15 Trade payables
of assets and liabilities and their carrying
amounts in the Financial Statements.
method, less provision for impairment. A
Trade payables are recognised initially at
However, the deferred income tax is
provision for impairment of trade receivables
fair value and subsequently measured at
not accounted for, if it arises from initial
is established when there is objective
amortised cost using the effective interest
recognition of goodwill or an asset or liability
evidence that the Group will not be able to
method.
collect all amounts due according to the
original terms of the receivables.
in a transaction other than a business
combination that at the time of the
transaction affects neither accounting nor
taxable profits or losses.
99
Notes to the Group
Financial Statements
continued
2.18 Income tax (continued)
(b) Profit-sharing and bonus plans
2.20 Provisions
Deferred income tax is determined using tax
The Group recognises a liability and an
Provisions for items such as dilapidations
rates (and laws) that have been enacted or
expense for bonuses and profit-sharing,
and legal claims are recognised when: the
substantially enacted by the balance sheet
based on a formula that takes into
Group has a present legal or constructive
date and are expected to apply when the
consideration the profit attributable to the
obligation as a result of past events; it is
related deferred income tax asset is realised
Company’s shareholders after certain
probable that an outflow of resources will
or the deferred income tax liability is settled.
adjustments. The Group recognises a
be required to settle the obligation; and the
Deferred income tax assets are recognised
provision where contractually obliged or
amount has been reliably estimated.
to the extent that it is probable that future
where there is a past practice that has
taxable profit will be available against which
created a constructive obligation.
Where there are a number of similar
the temporary differences can be utilised.
obligations, the likelihood that an outflow
(c) Share based payments
will be required in settlement is determined
Deferred income tax is provided on
IFRS 2 requires the recognition of equity
by considering the class of obligations as
temporary differences arising on investments
settled share based payments at fair value
a whole. A provision is recognised even if
in subsidiaries and associates, except where
at the date of the grant. All equity settled
the likelihood of an outflow with respect to
the timing of the reversal of the temporary
share based payments are ultimately
any one item included in the same class of
difference is controlled by the Group and it is
recognised as an expense in the profit and
obligations may be small.
probable that the temporary difference will
loss account with a corresponding credit to
not reverse in the foreseeable future.
share based payment reserve.
Provisions are measured at the present value
of the expenditures expected to be required
Deferred income tax assets and liabilities are
If vesting periods or other non-market vesting
to settle the obligation using a pre-tax rate
offset, only if a legally enforceable right exists
conditions apply, the expense is allocated
that reflects current market assessments
to set off current tax assets against current
over the vesting period based on the best
of the time value of money and the risks
tax liabilities, the deferred income taxes
available estimate of the number of shares
specific to the obligation. The increase in
relate to the same taxation authority and
expected to vest. Estimates are revised
the provision due to passage of time is
that authority permits the Group to make a
subsequently if there is any indication
recognised as interest expense.
single net payment.
that the number of shares expected to
vest differs from previous estimates. Any
cumulative adjustment prior to vesting is
2.21 Revenue recognition
2.19 Employee benefits
(a) Pension obligations
recognised in the current period. Upon
Revenue is measured at the fair value of the
exercise of share options, the proceeds
consideration received or receivable for the
Group companies operate various pension
received net of attributable transaction costs
sale of goods and services in the ordinary
schemes. The schemes are generally
are credited to share capital and where
course of the Group’s activities. Revenue
appropriate, share premium.
funded through payments to insurance
companies. The Group has only defined
contribution plans. A defined contribution
plan is a pension plan under which the
Group pays fixed contributions into a
separate entity.
For defined contribution plans, the Group
pays contributions to privately administered
pension insurance plans on a contractual
or voluntary basis. The Group has no further
payment obligations once the contributions
have been paid. The contributions are
recognised as employee benefit expense
when they are due.
100
is shown net of value-added tax, returns,
rebates and discounts and after eliminating
sales within the Group.
The Group recognises revenue when
the amount of revenue can be reliably
measured, it is probable that future
economic benefits will flow to the entity and
when specific criteria have been met for
each of the Group’s activities. The amount
of revenue is not considered to be reliably
measurable until all contingencies relating to
the sale have been resolved. In practice this
means that revenue is generally recognised
as follows:
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.21 Revenue recognition (continued)
Assets held under finance leases, which
2.26 Financial risk management
a) Sale of goods
transfer to the Group substantially all the risks
The Group carries out treasury hedging
Revenue from the sale of goods is
and benefits incidental to ownership of the
activities to manage exposures to interest
recognised when the Group has transferred
leased item, are capitalised at the inception
rate movements on its core borrowings using
to the buyer the significant risks and rewards
of the lease, with a corresponding liability
interest rate swaps.
of ownership of the goods. For vehicles this is
being recognised for the lower of the fair
generally on registration; for other goods it is
value of the leased asset and the present
The Group only uses derivatives for hedging
when despatched, or packaged and made
value of the minimum lease payments.
purposes and they are recognised at fair
available for collection.
Lease payments are apportioned between
value and are re-measured to fair value at
the reduction of the lease liability and
each balance sheet date. Where an interest
b) Services other than repair and
finance charges in the income statement
rate swap qualifies as an effective hedge
maintenance contracts
so as to achieve a constant rate of interest
under IAS 39, movements in fair value are
Revenue is recognised when the service is
on the remaining balance of the liability. The
shown as an adjustment to the net interest
rendered
property, plant and equipment acquired
charge being hedged.
under finance leases is depreciated over
c) Repair and maintenance contracts
the shorter of the estimated useful life of
Movements in fair value of derivatives that
Revenue is recognised over the life of
the asset and the lease term; where the
do not qualify as an effective hedge under
the contract in proportion to the costs of
lease contains an option to purchase which
IAS 39 are shown in ‘other net gains’ within
providing the services.
is expected to be exercised, the asset is
the income statement. The Group identifies,
2.22 Supplier bonuses
leases is also applied to hire purchase
covering specific areas, such as interest rate
Cost of sales are recognised net of
agreements.
risk, foreign exchange risk and credit risk.
depreciated over the useful life of the asset.
evaluates and hedges financial risks centrally
The accounting policy adopted for finance
under policies approved by the Board
vehicle manufacturers’ bonuses. These are
recognised when the Group has met the
relevant conditions. There is little judgement
2.24 Dividend distribution
2.27 Critical accounting estimates
or estimation involved in computing the
Dividend distribution to the Company’s
and assumptions
amounts.
shareholders is recognised as a liability in the
The Group makes estimates and
Group’s Financial Statements in the period
assumptions concerning the future. The
in which the dividends are approved by the
resulting accounting estimates will, by
2.23 Leases
Company’s shareholders.
Leases in which a significant portion of the
risks and rewards of ownership are retained
definition, seldom equal the related actual
results. The estimates and assumptions that
have a significant risk of causing a material
by the lessor are classified as operating
leases. Payments made under operating
2.25 Exceptional items
Items that are both material and non-
adjustment to the carrying amounts of assets
and liabilities within the next financial year
leases (net of any incentives received from
recurring are presented as exceptional items
are discussed below.
the lessor) are charged to the income
within their relevant consolidated income
statement on a straight-line basis over the
statement category. The separate reporting
(a) Estimated impairment of goodwill
period of the lease.
of exceptional items helps provide a clearer
The Group annually tests whether goodwill
indication of the Group’s underlying business
has suffered any impairment, in accordance
performance.
with the accounting policy stated above.
The recoverable amounts of cash-
Items which may give rise to classification
generating units have been determined
as exceptional include, but are not limited
based on value-in-use calculations. These
to, restructuring of the business or depot
calculations require the use of estimates,
network, asset impairments and litigation
both in arriving at the expected future cash
settlements. As shown in note 4, the Group
flows and the application of a suitable
has also identified certion discontinuing costs
discount rate in order to calculate the
and disclosed them separately alongside
present value of these flows.
exceptional costs.
101
Notes to the Group
Financial Statements
continued
2.27 Critical accounting estimates
ordinary course of business. The Group
2.28 Borrowing costs
and assumptions (continued)
recognises liabilities for anticipated tax
All borrowing costs are expensed in the
(b) Fair value of intangible assets
audit issues based on estimates of whether
period they occur. Borrowing costs consist of
acquired in business combinations
additional taxes will be due. Where the final
interest and other costs that an entity incurs
As there is no ready market for intangible
tax outcome of these matters is different
in connection with the borrowing of funds.
assets such as customer relationships and
from the amounts that were initially recorded,
brands, judgement is required in assessing
such differences will impact the income tax
fair value when accounting for a business
and deferred tax provisions in the period in
2.29 Adoption of new and revised
combination.
which such determination is made.
reporting standards
(c) Income taxes
Estimates and judgements are continually
standards and interpretations issued by
Significant judgement is required in
evaluated by management, on a case-by-
the IASB and IFRIC except for the following
determining the provision for income
case basis, based on historical experience
standards and interpretations which were in
taxes. There are many transactions and
and other factors, including expectations
issue but not yet effective:
The Group has applied all accounting
calculations for which the ultimate tax
of future events that are believed to be
determination is uncertain during the
reasonable under the circumstances.
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
IFRS 14 Regulatory Deferral Accounts
Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation
Amendments to IFRS 11- Accounting for Acquisition of Interests in Joint Operations
Amendments to IAS 16 and IAS 41- Agriculture: Bearer Plants
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments (issued in 2014)
Amendments to IAS 27- Equity Method in Separate Financial Statements
Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
Amendments to IFRS 10, IFRS 12 and IAS 28 - Investment Entities: Applying the Consolidation Exception
Amendments to IAS 1 – Disclosure Initiative
Annual Improvements to IFRSs 2010-2012 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle
Annual Improvements to IFRSs 2012-2014 Cycle
Effective date
(annual periods
beginning on or after)
1 July 2014
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2017
1 January 2018
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 July 2014
1 July 2014
1 January 2016
The effective dates stated above are those
Endorsement mechanism. In the majority
on the Group’s historical financial information
given in the original IASB/IFRIC standards and
of cases this will result in an effective date
in the period of initial application.
interpretations.
consistent with that given in the original
standard or interpretation but the need for
In the current year, amendments to IFRS
As the Group prepares its financial
endorsement restricts the Group’s discretion
10, 11 and 12 have been adopted.
information in accordance with IFRS
to early adopt standards.
as adopted by the European Union,
There has been no material impact,
although there have been some minor
the application of new standards and
The Directors do not anticipate that the
changes to disclosure.
interpretations will be subject to them having
adoption of the remaining standards and
been endorsed for use in the EU via the EU
interpretations will have a material impact
102
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
3. Revenue
Revenue recognised in the income statement is analysed as follows:
E-fulfilment & returns management services
Non e-fulfilment logistics
Value-added logistics services
Commercial vehicles
Inter-segment sales
2015
Group
£’000
60,563
102,155
162,718
73,561
(1,501)
2014
Group
£’000
46,046
89,557
135,603
66,796
(1,151)
Revenue from external customers
234,778
201,248
Geographical information - revenues from external customers:
United Kingdom
Germany
Rest of Europe
Total
Geography is determined by the location of the end customer
2015
Group
£’000
218,997
14,167
1,614
2014
Group
£’000
186,462
13,112
1,674
234,778
201,248
103
Notes to the Group
Financial Statements
continued
4. Segment information
Within the value-added logistics services
For the Group, the Chief Operating Decision
segment, the CODM also reviews
Maker (“CODM”) is the main Board of
performance of three separate business
Directors. The CODM monitors the operating
activities:
results of each business unit separately for
- E-fulfilment & returns management
the purposes of making decisions about
services (following the acquisition of
resource allocation and performance
Servicecare (see note 28) the definition of
assessment. Segment performance is
this activity has been amended from that
evaluated based on operating profit or
shown in the previous Annual Report)
loss, both before and after exceptional or
discontinuing items. This measurement basis
- Non e-fulfilment logistics
excludes Group-wide central services and
financing costs which are not allocated to
- Central logistics overheads, being the
operating segments.
costs of support services specific to the
value-added logistics services segment,
For management purposes, the Group
but which are impractical to allocate
is organised into two main reportable
between the sub-segment activities
segments:
- Value-added logistics services
Inter-segment transactions are entered
- Commercial vehicles, including sales,
conditions and on an arm’s length basis
servicing and repairs
that would also be available to unrelated
into under normal commercial terms and
third parties.
The Group has no customers that account
for greater than 10% of the total Group
revenue.
The following tables present profit
information for continuing operations
regarding the Group’s business segments
for the two years ended 30 April 2015:
Operating profit before non-recurring items:
E-fulfilment & returns management services
Non e-fulfilment logistics
Central logistics overheads
Value-added logistics services
Commercial vehicles
Head office costs – continuing
2015
Group
£’000
5,512
10,062
(4,038)
11,536
1,874
(1,405)
2014
Group
£’000
3,724
9,163
(4,228)
8,659
1,836
(882)
Group operating profit before non-recurring items
12,005
9,613
104
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
4. Segment information (continued)
Exceptional and discontinuing costs:
E-fulfilment & returns management services
Non e-fulfilment logistics
Central logistics overheads
Value-added logistics services
Commercial vehicles
2015
Group
£’000
(192)
-
-
(192)
-
2014
Group
£’000
(10)
-
(30)
(40)
(495)
Segment total exceptional items
(192)
(535)
IPO costs1
Head office costs – discontinuing2
(671)
(278)
(1,981)
(2,297)
Group total exceptional and discontinuing costs
(1,141)
(4,813)
Operating profit and profit before income tax:
Operating profit:
E-fulfilment & returns management services
Non e-fulfilment logistics
Central logistics overheads
Value-added logistics services
Commercial vehicles
IPO costs1
Head office costs2
2015
Group
£’000
5,320
10,062
(4,038)
11,344
1,874
(671)
(1,683)
2014
Group
£’000
3,714
9,163
(4,258)
8,619
1,341
(1,981)
(3,179)
Group operating profit
10,864
4,800
Finance costs
Finance income
(1,388)
9
(952)
101
Profit before income tax
9,485
3,949
1 Professional fees and other costs paid in relation to the Initial Public Offering.
2 Head office costs include a number of items which are not being borne by the Group post-Admission. These consist of
certain advertising, sponsorship and corporate entertaining expenses, remuneration of a retiring Director, consultancy
and professional fees in respect of potential investment opportunity appraisals and the costs of operating the
Chairman’s private office.
105
Notes to the Group
Financial Statements
continued
4. Segment information (continued)
The segment assets and liabilities at the balance sheet date are as follows:
At 30 April 2015:
Value-added logistics services
Commercial vehicles
Segment
assets
£’000
53,619
40,935
Segment
liabilities
£’000
(33,307)
(29,241)
Segment assets/(liabilities)
94,554
(62,548)
Unallocated assets/(liabilities):
- Cash and cash equivalents
- Financial liabilities
- Deferred tax
- Income tax assets/(liabilities)
1,854
-
-
-
-
(15,492)
(642)
(731)
Total assets/(liabilities)
96,408
(79,413)
At 30 April 2014:
Value-added logistics services
Commercial vehicles
Segment
assets
£’000
44,376
38,391
Segment
liabilities
£’000
(27,249)
(28,007)
Segment assets/(liabilities)
82,767
(55,256)
Unallocated assets/(liabilities):
- Cash and cash equivalents
- Financial liabilities
- Deferred tax
- Income tax assets/(liabilities)
5,360
-
-
-
-
(20,715)
(366)
(318)
Total assets/(liabilities)
88,127
(76,655)
106
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
4. Segment information (continued)
Capital expenditure, depreciation and amortisation by segment in the year ended 30
April was as follows:
Capital expenditure:
Value-added logistics services
Commercial vehicles
2015
Group
£’000
7,297
502
2014
Group
£’000
4,203
936
Total
7,799
5,139
Capital expenditure comprises additions to property, plant and equipment (note 12) and intangible assets (note 13).
Depreciation:
Value-added logistics services
Commercial vehicles
Total
Amortisation:
Value-added logistics services
Commercial vehicles
Total
United Kingdom
Germany
Total
2015
Group
£’000
2,694
664
2014
Group
£’000
3,100
585
3,358
3,685
2015
Group
£’000
266
26
292
2015
Group
£’000
36,772
2,662
2014
Group
£’000
212
7
219
2014
Group
£’000
32,621
2,789
Non-current assets held by each geographical area are made up as follows:
39,434
35,410
107
Notes to the Group
Financial Statements
continued
5. Staff costs
Wages and salaries
Social security costs
Pension costs for the defined contribution scheme
Share based payments
2015
Group
£’000
59,734
5,492
1,189
124
2014
Group
£’000
52,594
4,839
883
180
Total
66,539
58,496
The average monthly number of employees during the year was made up as follows:
Warehousing
Distribution
Service and maintenance
Administration
2015
Group
Number
1,789
387
346
442
2014
Group
Number
1,433
379
237
334
Total
2,964
2,383
Key management compensation (including Executive Directors):
Wages and salaries
Social security costs
Pension costs for the defined contribution scheme
Share based payments
2015
Group
£’000
2,695
351
357
93
2014
Group
£’000
2,411
333
389
180
Total
3,496
3,313
108
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
5. Staff costs (continued)
Directors’ emoluments:
Aggregate emoluments
Pension costs for the defined contribution scheme
2015
Group
£’000
1,416
73
2014
Group
£’000
1,300
139
Total
1,489
1,439
The number of Directors who were accruing benefits under a Group Pension Scheme is
as follows:
Defined contribution plans
More detail is set out in the Directors’ Remuneration Report on pages 56 to 73.
2015
Group
Number
2014
Group
Number
4
5
109
Notes to the Group
Financial Statements
continued
6. Group operating profit
This is stated after charging/(crediting):
Depreciation of property, plant and equipment - owned assets
Depreciation of property, plant and equipment - leased assets
Amortisation of intangible assets (included within administration & other expenses)
Total depreciation and amortisation expense
Operating lease rentals:
- Vehicles, plant and equipment
- Land and buildings
Auditors’ remuneration:
Ernst & Young LLP:
- Group audit fees
- Tax services
- Corporate finance services
Baker Tilly UK Audit LLP & Associates:
- Group audit fees
- Tax services
Total auditors’ remuneration:
- Audit of the Group Financial Statements
- Audit of the subsidiaries
- Non-audit fees
Total fees paid to the Group’s auditors
Exceptional items:
- IPO transaction costs
- Fees & other costs in relation to the acquisition of subsidiaries
- Closure of depots
- Redundancy costs on reorganisation
- Aborted contract exit costs
Total exceptional items
Other net gains:
- Profit on sale of property, plant and equipment
- Dealership contributions
- Fair value adjustment to derivative financial instruments
- Amortisation of grants
Total net gains
110
2015
Group
£’000
2,260
1,098
292
3,650
6,936
13,062
144
-
47
-
-
51
93
47
191
671
192
-
-
-
863
38
227
98
1
364
2014
Group
£’000
1,760
1,925
219
3,904
6,672
12,658
135
-
565
6
24
50
91
589
730
1,981
-
363
162
10
2,516
26
259
-
-
285
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
7. Earnings per share
profit attributable to ordinary equity holders
Basic earnings per share amounts are
of the Company by the weighted average
calculated by dividing profit for the year
number of ordinary shares outstanding
attributable to ordinary equity holders of
during the year plus the weighted average
the Company by the weighted average
number of ordinary shares that would be
number of ordinary shares outstanding
issued on conversion of all the potentially
during the year. Diluted earnings per share
dilutive instruments into ordinary shares.
amounts are calculated by dividing the
The following reflects the income and share data used in the basic earnings per share
computation:
Profit attributable to ordinary equity holders of the Company
2015
Group
£’000
7,324
2014
Group
£’000
2,826
2015
2014
Basic weighted average number of shares (thousands)
100,000
99,160
Basic earnings per share
7.3p
2.8p
Fully diluted weighted average number of shares (thousands)
100,052
99,160
Fully diluted earnings per share
7.3p
2.8p
The weighted average number of shares has been calculated assuming all shares were converted from £1 to 0.05p shares as from
1 May 2013 in accordance with IAS 33.28.
111
Notes to the Group
Financial Statements
continued
7. Earnings per share (continued)
In addition, in both years there was a
Adjusted earnings per share
large amount of non-recurring costs.
As set out in note 21, during the year
Consequently, the basic measure of
ended 30 April 2014 there was a group
earnings per share is significantly distorted
reorganisation involving both an issue and a
by these factors.
subdivision of shares.
Adjusted earnings per share:
Profit attributable to ordinary equity holders of the Company
Discontinuing costs
Exceptional costs
Tax effect*
Adjusted earnings
2015
Group
£’000
7,324
278
863
(102)
8,363
2014
Group
£’000
2,826
2,297
2,516
(735)
6,904
2015
2014
Basic weighted average number of shares (thousands)
100,000
99,160
Adjusted basic earnings per share
8.4p
7.0p
*in the previous Annual Report the tax effect was calculated at standard rate. It is now calculated at the effective rate
applicable to the specific transactions.
112
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
8. Dividends and other distributions
Interim dividend for the year ended 30 April 2015 of 1.6p per share
Dividends declared and paid by the Company during the year to former parent company
Dividends declared and paid by other Group members
Payments charged to merger reserve in respect of the transfer of subsidiaries
Total distributions
2015
Group
£’000
1,600
335
-
-
2014
Group
£’000
-
2,500
3,849
12,162
1,935
18,511
Proposed final dividend for the year ended 30 April 2015 of 3.2 pence (2014: nil) per share
3,200
-
The proposed final dividend is subject to
payable to all shareholders on the Register
approval by shareholders at the Annual
of Members on 4 September 2015. The
General Meeting and has not been
payment of this dividend will not have any
included as a liability in these financial
tax consequences for the Group.
statements. The proposed dividend is
9. Finance costs
On bank loans and overdrafts
On hire purchase agreements
Amortisation of debt issue costs
Commercial vehicle stocking interest
Other interest payable
Amounts payable to former parent company
Total interest expense for financial liabilities measured at amortised cost
10. Finance income
Bank interest
Other interest
Amounts receivable from former parent company
Total interest income for financial assets measured at amortised cost
2015
Group
£’000
720
308
64
270
26
-
1,388
2015
Group
£’000
7
-
2
9
2014
Group
£’000
19
292
-
305
38
298
952
2014
Group
£’000
-
1
100
101
113
Notes to the Group
Financial Statements
continued
11. Income tax expense
a) Tax charged in the income statement:
Current income tax:
UK & foreign corporation tax
Amounts under/(over) provided in previous years
Total income tax on continuing operations
Deferred tax:
Origination and reversal of temporary differences
Amounts under/(over) provided in previous years
Impact of change in tax laws and rates
Total deferred tax
2015
Group
£’000
2014
Group
£’000
2,220
(74)
1,408
3
2,146
1,411
(47)
62
-
15
(267)
4
(45)
(308)
Tax expense in the income statement on continuing operations
2,161
1,103
(b) Tax relating to items charged or credited to other comprehensive income:
There are no tax consequences of any of the items included in other comprehensive income.
(c) Reconciliation of income tax charge:
The income tax expense in the income statement for the year differs from the standard
rate of corporation tax in the UK. The differences are reconciled below:
Profit before taxation from continuing operations
Standard rate of corporation tax in UK
Tax on profit on ordinary activities at standard rate
Expenses not allowable for tax purposes
Tax under (over) provided in previous years
Difference in tax rates overseas
Utilisation of previously unrecognised tax losses
Deferred tax rate difference
2015
Group
£’000
2014
Group
£’000
9,485
3,949
20.92%
1,984
22.84%
902
248
(12)
45
(104)
-
223
7
16
-
(45)
Total tax expense reported in the income statement
2,161
1,103
114
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
11. Income tax expense (continued)
d) Deferred tax in the income statement:
Deferred tax on accelerated capital allowances
Deferred tax on other temporary differences
Total
2015
Group
£’000
(31)
46
15
2014
Group
£’000
(261)
(47)
(308)
The UK corporation tax rate reduced from 21% to 20% with effect from 1 April 2015. As this
was substantively enacted at 30 April 2014, this rate has been applied in the measurement
of the Group’s deferred tax assets and liabilities in both years.
e) Deferred tax in the statement of financial position:
Deferred tax liabilities:
Accelerated capital allowances
Other timing differences
Deferred tax asset:
Provisions & other timing differences
Net deferred tax liability
f) Deferred tax movement:
At 1 May 2013
Credited to income statement
Foreign currency adjustment
At 30 April 2014
Acquisitions
Charged to income statement
Credited to share based payment reserve
Foreign currency adjustment
At 30 April 2015
2015
Group
£’000
(479)
(218)
55
(642)
2014
Group
£’000
(466)
-
100
(366)
Group
£’000
(672)
308
(2)
(366)
(275)
(15)
15
(1)
(642)
115
Notes to the Group
Financial Statements
continued
12. Property, plant and equipment
Group:
Cost:
At 1 May 2013
Acquisitions
Additions
Disposals
Foreign currency adjustment
At 30 April 2014
Acquisitions
Additions
Disposals
Foreign currency adjustment
Leasehold
property
£’000
Motor
vehicles
£’000
Plant, machinery,
fixtures & fittings
£’000
3,439
37
586
(58)
(1)
4,003
38
52
(236)
(6)
2,931
12
1,215
(528)
(10)
3,620
-
870
(571)
(83)
22,723
78
2,929
(159)
(34)
25,537
261
1,345
(653)
(266)
Total
£’000
29,093
127
4,730
(745)
(45)
33,160
299
2,267
(1,460)
(355)
At 30 April 2015
3,851
3,836
26,224
33,911
Accumulated depreciation:
At 1 May 2013
Charge for the year
Disposals
Foreign currency adjustment
At 30 April 2014
Charge for the year
Disposals
Foreign currency adjustment
1,510
250
(58)
(1)
1,701
298
(236)
(4)
1,401
596
(383)
(6)
1,608
737
(350)
(30)
11,347
2,839
(159)
(19)
14,008
2,323
(620)
(139)
14,258
3,685
(600)
(26)
17,317
3,358
(1,206)
(173)
At 30 April 2015
1,759
1,965
15,572
19,296
Net book value:
At 1 May 2013
At 30 April 2014
At 30 April 2015
1,929
2,302
2,092
1,530
2,012
1,871
11,376
11,529
10,652
14,835
15,843
14,615
Included within property, plant and equipment are amounts held under finance lease contracts. At 30 April 2015 the net book value of these assets was £5,231,000 (30 April 2014
£4,767,000).
116
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
13. Intangible assets
Group:
Cost:
At 1 May 2013
Acquisitions
Additions
Disposals
At 30 April 2014
Acquisitions
Additions
Disposals
Foreign currency adjustment
At 30 April 2015
Accumulated amortisation:
At 1 May 2013
Charge for the year
At 30 April 2014
Charge for the year
Disposals
Foreign currency adjustment
At 30 April 2015
Net book value:
At 1 May 2013
At 30 April 2014
At 30 April 2015
The average remaining useful life of contracts & licences at 30 April 2015 is 7.6 years (2014: 0.0 years)
Goodwill
£’000
Contracts and
licenses
£’000
Computer
software
£’000
18,785
233
-
-
19,018
4,234
-
-
-
23,252
-
-
-
-
-
-
18,785
19,018
723
-
-
-
723
1,210
-
-
-
1,933
723
-
723
63
-
786
-
-
23,252
1,147
Total
£’000
20,921
233
176
-
21,330
5,456
87
(173)
(1)
1,413
-
176
-
1,589
12
87
(173)
(1)
1,514
26,699
821
219
1,040
229
(173)
(2)
1,094
592
549
420
1,544
219
1,763
292
(173)
(2)
1,880
19,377
19,567
24,819
117
Notes to the Group
Financial Statements
continued
14. Impairment test for goodwill
The carrying amount of goodwill has been allocated to cash generating units
(“CGU”s) as follows:
2015
Group
£’000
2014
Group
£’000
Value-added logistics services excluding Servicecare group
Servicecare group
13,092
4,234
13,092
-
Commercial vehicles
Total
5,926
5,926
23,252
19,018
A CGU is the smallest identifiable group of assets that generates cash inflows that
are largely independent of the cash inflows from other assets or groups of assets.
The recoverable amount of a CGU is determined based on value-in-use calculations.
The value-in-use calculations have used pre-tax cash flow projections based on the
Board approved business plans for the two years ending 30 April 2017. Subsequent
cash flows are extrapolated using an estimated long term growth rate of 2.5% (2014:
2.5%) to 2025 (2014: 2024). The cash flows have then been discounted using a pre-
tax risk adjusted discount rate of 10% (2014: 10%). The forecasts of foreign operations
are translated at the exchange rate ruling at the year end
The pre-tax adjusted discount rate has been estimated based on other similar sized
companies in similar industries.
The Directors have concluded that no reasonably foreseeable change in the key
assumptions would give rise to an impairment.
118
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
15. Inventories
Component parts and consumable stores
Commercial vehicles
Commercial vehicles on consignment
2015
Group
£’000
4,063
2,993
14,621
2014
Group
£’000
3,427
2,669
12,929
Total inventories net of provision for obsolescence
21,677
19,025
See below for the movements in the provision for obsolescence:
At 1 May 2013
Charged for the year
Utilised
At 30 April 2014
Credited for the year
Utilised
At 30 April 2015
Group
£’000
104
127
(99)
132
(9)
(106)
17
The cost of inventories recognised as an expense amounted to £69,720,000 (2014:£61,789,000).
Included within commercial vehicles is £1,141,000 (2014: £1,071,000) relating to assets held under hire purchase
agreements.
119
Notes to the Group
Financial Statements
continued
16. Trade and other receivables
Trade receivables
Less: provision for impairment of receivables
2015
Group
£’000
17,562
(256)
2014
Group
£’000
16,378
(349)
Trade receivables - net
17,306
16,029
Other receivables
Prepayments and accrued income
3,494
12,643
2,636
9,667
Total trade and other receivables
33,443
28,332
See note 26 on credit risk of trade receivables, which explains how the Group manages and measures credit
quality of trade receivables that are neither past due nor impaired.
See below for the movements in the provision for impairment:
At 1 May 2013
Charged for the year
Utilised
At 30 April 2014
Charged for the year
Utilised
At 30 April 2015
Group
£’000
172
331
(154)
349
34
(127)
256
Concentrations of credit risk with respect to trade receivables are limited due to
the Group’s customer base being large, unrelated and blue chip. Due to this,
management believe there is no further credit risk provision required in excess of normal
provision for doubtful receivables. The average credit period taken on sale of goods or
services is 23 days (2014: 25 days).
An impairment review has been undertaken at the balance sheet date to assess
whether the carrying amount of financial assets is deemed recoverable. The primary
credit risk relates to customers which have amounts due outside of their credit period.
A provision for impairment is made when there is objective evidence of impairment
which is usually indicated by a delay in the expected cash flows or non-payment
from customers.
120
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
16. Trade and other receivables (continued)
The ageing analysis of trade receivables was as follows:
30 April 2015
30 April 2014
17. Cash and cash equivalents
Cash and cash equivalents
Bank overdraft
Neither past due
nor impaired
£’000
16,126
15,032
2015
Group
£’000
1,854
-
Past due but not impaired
30-60 days
£’000
60-90 days
£’000
> 90 days
£’000
764
455
149
190
267
352
2014
Group
£’000
5,360
(85)
Total cash and cash equivalents
1,854
5,275
18. Trade and other payables
Trade creditors
Stocking finance
Other taxes and social security
Other creditors
Accruals and deferred income
2015
Group
£’000
25,272
14,176
4,507
6,096
11,657
2014
Group
£’000*
21,352
17,210
4,915
3,265
7,668
Total trade and other payables
61,708
54,410
*2014 restated (see note 2.3)
121
Notes to the Group
Financial Statements
continued
19. Financial liabilities: borrowings
Non-current:
Bank loans
Obligations under finance leases or hire purchase agreements
Total non-current
Current:
Bank overdrafts
Bank loans
Obligations under finance leases or hire purchase agreements
Total current
Total external borrowings
Add cash and cash equivalents
Net external debt
2015
Group
£’000
2014
Group
£’000*
(7,291)
(2,935)
(216)
(4,044)
(10,226)
(4,260)
-
(2,604)
(2,592)
(85)
(177)
(2,012)
(5,196)
(2,274)
(15,422)
(6,534)
1,854
5,360
(13,568)
(1,174)
Net former parent company balance
-
(14,181)
Net debt
*2014 restated (see note 2.3)
(13,568)
(15,355)
Current financial liabilities:
parent company to fund the group activities.
Prior to the reorganisation, the former parent
Therefore the amounts owed to and from
company arranged a proportion of external
the former parent company have been
borrowings used to finance the group.
disclosed in financial liabilities.
Balances were lent to and from the former
2015
Group
£’000
-
-
-
2014
Group
£’000*
(15,267)
1,086
(14,181)
(5,196)
(2,274)
(5,196)
(16,455)
Amounts owed to former parent company
Amounts owed by former parent company
Net former parent company balance
Current external financial liabilities
Current financial liabilities
*2014 restated (see note 2.3)
122
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
19. Financial liabilities: borrowings (continued)
The maturity analysis of the bank loans at 30 April is as follows:
In one year or less
Between one and five years
After five years
Total bank loans
2015
Group
£’000
2,604
7,291
-
9,895
2014
Group
£’000
177
216
-
393
The principal lender has security over all assets of the Group’s UK operations.
The principal features of the bank loans are as follows:
- Medium term loan from principal lender - £10,000,000 repayable in quarterly
instalments of £625,000 to 30 April 2019; interest rate 3.25% above LIBOR.
- Other bank loans - £201,000 repayable in monthly or quarterly instalments over
periods between 3 and 50 months; interest rates fixed at between 3.90% and 4.80%.
- Unamortised debt issue costs of £306,000 have been deducted from the total
outstanding bank loans
123
Notes to the Group
Financial Statements
continued
19. Financial liabilities: borrowings (continued)
The amounts which are repayable under hire purchase or finance lease
instalments are shown below:
Fixed rate leases:
Minimum lease payments:
In one year or less
Between one and five years
After five years
Interest:
In one year or less
Between one and five years
After five years
Principal of fixed rate leases:
In one year or less
Between one and five years
After five years
Variable rate leases:
In one year or less
Between one and five years
After five years
2015
Group
£’000
1,561
2,112
-
3,673
(151)
(105)
-
(256)
1,410
2,007
-
3,417
1,182
928
-
2,110
2014
Group
£’000
1,451
2,676
-
4,127
(192)
(182)
-
(374)
1,259
2,494
-
3,753
753
1,550
-
2,303
Total
5,527
6,056
It is the Group’s policy to acquire certain of its property, plant and equipment and
inventories under finance leases or hire purchase agreements. The average contract
term is 3.5 (2014: 3.5) years. At 30 April 2015 £5,234,000 (2014 £5,998,000) of the
Group total of such obligations is denominated in sterling and the remainder is
denominated in Euros. The interest on the variable rate leases is based on a margin
above Bank Base Rate, FHBR or LIBOR. The Group’s obligations under finance leases
are secured by the lessor’s charge over the assets.
124
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
20. Provisions
At 1 May 2013
Acquisitions
Utilised
Charged in year
At 30 April 2014
Acquisitions
Utilised
Charged in year
At 30 April 2015
Onerous
contracts
Uninsured
losses
Dilapidations
-
60
(79)
331
312
-
(78)
-
234
350
-
(155)
(195)
-
-
(79)
79
-
705
-
(264)
93
534
48
(82)
106
606
Total
1,055
60
(498)
229
846
48
(239)
185
840
Provisions have been analysed between current and non-current as follows:
Current
Non-current
2015
Group
£’000
108
732
840
2014
Group
£’000
147
699
846
Onerous contracts
Uninsured losses
As part of the consideration for the
The uninsured losses provision is in respect
acquisition of R. Geist Spedition GmbH
of the cost of claims (generally for
& Co. KG in 2013, the Group took
commercial vehicles and employment
on contracts for some staff, vehicles
related) which are either not insured
and premises that were surplus to the
externally or fall below the excess on the
immediate requirements of the business.
Group’s insurance policies.
The onerous element of those contracts
has been recognised within the fair value of
Dilapidations
assets and liabilities acquired. The provision
Provisions are established over the life of
was fully utilised by 30 April 2014.
leases to cover remedial work necessary at
termination under the terms of those leases.
Following a reorganisation of the
Three key sites have leases that expire 22,
commercial vehicles business in the year
13 and 11 years from the balance sheet
ended 30 April 2013, which included
date. All other leases expire in 10 years
the closure of a depot, the Group was
or less.
unsuccessful in its efforts to sub-let the
closed premises. The Directors therefore
made a provision in the year ended 30 April
2014 for the rent that will be payable until
the expiry of the lease in September 2018.
125
Notes to the Group
Financial Statements
continued
21. Share capital
Allotted, called up and fully paid:
100,000,000 ordinary shares of 0.05p each
2015
Company
£’000
2014
Company
£’000
50
50
On 30 April 2014 the following transactions
c) 800,000 ordinary shares of 0.05p each
occurred:
were allotted in exchange for the
a) 3,852 ‘A’ ordinary and 3,851 ‘B’ ordinary
minority shareholding in Clipper Logistics
shares of £1 each were re-designated
GmbH. The fair value of the shares
as 15,406,000 ordinary shares of 0.05p
each.
issued was estimated at £800,000 and
consequently £800,000 was credited to
other reserves.
b) 83,794,000 ordinary shares of 0.05p
each were allotted to the then parent
company for cash consideration of
£42,000.
22. Share based payments
Year ended 30 April 2015
The Clipper Sharesave Plan is a share plan
for all UK employees in the Group, and
The Clipper Performance Share Plan (“PSP”)
offers them the opportunity to acquire
was approved by shareholders on 29
an interest in shares in the Company on
September 2014. The PSP enables selected
favourable terms within the long-standing
directors and employees of the Group to
regime allowed by HMRC legislation. All
be granted awards in respect of ordinary
UK staff are invited to participate on the
shares. Share Awards under the PSP will
same terms, and employees who choose
ordinarily be structured as nil cost share
to participate are granted an option over
options with the vesting of Share Awards
shares in the Company, with the exercise of
being subject to performance conditions
that option being funded by the proceeds
measured over a period of at least 3 years.
of a savings contract taken out by the
A summary of the principal terms of the PSP,
relevant employee, under which the
including vesting conditions, is contained
employee saves a set amount each month
in the Directors’ Remuneration Report on
over a set period. The options granted in
pages 56 to 73.
the year were offered with a 3-year savings
contract, under which the employee could
elect to save between £10 and £500
per month.
126
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Exercise
price
Vesting period
Years
Expiry period
Years
Notes to the Group
Financial Statements
continued
22. Share based payments (continued)
Options granted during the year were as follows:
PSP:
14 January 2015
26 March 2015
Sharesave:
10 February 2015
At 30 April 2015
Number
granted
826,493
19,402
£nil
£nil
1,352,846
£1.404
2,198,741
At 30 April 2015 no options were exercisable.
The fair value of the share options is measured at the grant date, using the Black-
Scholes model and taking into account the terms and conditions upon which the
instruments were granted. The key inputs to the model are:
Share price at: 14 January 2015
10 February 2015
26 March 2015
Bid price discount
Expected life of option
Volatility
Dividend yield
2015
1.7425
1.7475
1.7000
25%
3.5 years
35%
2.75%
The expected life of the options has been estimated as 6 months beyond vesting
date. As there is little historical data the volatility has been estimated at 35% based
on similar quoted companies. The dividend yield is calculated from the Company’s
stated dividend policy applied to the share price at the grant date.
The cost of the options is recognised over the expected vesting period. The total
charge for the year ended 30 April 2015 relating to employee share based payment
plans was £124,000. The fair value of share options at 30 April 2015 to be amortised
in future years was £1,188,000.
All share based payments in both years are equity settled.
Year ended 30 April 2014
The charge for share based payments in the year ended 30 April 2014 related to
options granted over shares in the former parent company. All such options were
exercised or cancelled in May 2014.
The total charge for the year ended 30 April 2014 relating to employee share based
payment plans was £180,000.
3
3
3
10
10
3.5
127
Notes to the Group
Financial Statements
continued
23. Merger reserve
To reflect the group reorganisation a merger reserve with a balance of £18,168,000
was included in the Group statement of financial position at 1 May 2010.
In the year ended 30 April 2014 a charge of £12,162,000 was made to the reserve to
reflect the acquisition of the fellow subsidiaries from Clipper Group Holdings Limited as
part of the group reorganisation.
24. Commitments and contingencies
Operating lease commitments – land and buildings:
Less than one year
Between one and five years
More than five years
2015
Group
£’000
11,391
43,269
59,327
2014
Group
£’000
9,660
35,952
57,816
Total minimum lease payments 113,987 103,428
Operating lease commitments – vehicles, plant and equipment:
2015
Group
£’000
Less than one year 2,364
Between one and five years 3,503
More than five years 84
2014
Group
£’000
2,615
3,750
293
Total minimum lease payments
5,951
6,658
25. Capital commitments
Authorised and contracted for
Authorised, but not contracted for
2015
Group
£’000
797
8,569
9,366
2014
Group
£’000
295
-
295
128
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
26. Financial instruments and financial risk
At 30 April 2015 there were no significant
Interest rate sensitivity
management objectives and policies
concentrations of credit risk (2014: £nil).
The Group’s borrowings are largely
In accordance with IAS 39 (Financial
The Group’s maximum exposure to credit
denominated in Pounds Sterling and the
Instruments: Recognition and Measurement)
risk, gross of any collateral held, relating
Group is therefore exposed to a change
the Group has reviewed all contracts for
to its financial assets is equivalent to their
in the relevant interest rate. With all other
embedded derivatives that are required to
carrying value. All financial assets have a
variables held constant, the impact of a
be separately accounted for if they do not
fair value which is equal to their carrying
reasonably possible increase in interest
meet certain requirements. The Group did
value, as a consequence of their short
rates of 50 basis points (2014: 50 points) on
not identify any such derivatives.
maturity. The Group did not have any
that portion of borrowings affected, would
financial instruments that would mitigate the
be to reduce the Group’s profit before tax
The Group is exposed to a number of
credit exposure arising from the financial
by £77,000 (2014: £23,000).
different market risks in the normal course of
business including credit, interest rate and
assets designated at fair value through
profit or loss in either the current or the
Foreign currency risk
foreign currency risks.
preceding financial year.
The Group is exposed to foreign currency
Credit risk
Interest rate risk
risk on sales, purchases and borrowings that
are denominated in currencies other than
Credit risk predominantly arises from
The Group adopts a policy of ensuring that
Pounds Sterling. The currencies giving rise to
trade receivables and cash and cash
there is an appropriate mix of fixed and
this risk are primarily the Euro and US dollar.
equivalents. The Group has a customer
floating rates in managing its exposure to
The volume of transactions denominated
credit policy in place and the exposure
changes in interest rates on borrowings.
in foreign currencies is not significant to the
to credit risk is monitored on an ongoing
Interest rate swaps are entered into, where
Group.
basis. External credit ratings are generally
necessary, to achieve this appropriate mix.
obtained for customers; Group policy is to
The exposure to a short-term fluctuation in
assess the credit quality of each customer
As part of the novation of bank facilities
exchange rates on the investment in foreign
before accepting any terms of trade.
from the former parent on 2 May 2014, the
subsidiaries is not expected to have a
Company took on an existing interest rate
material impact on the results of the Group.
Internal procedures take into account
swap. The notional principal at 30 April 2015
the customers’ financial positions as well
is £2,700,000 which reduces by £450,000
as their reputation within the industry and
on a quarterly basis. The Company pays
past payment experience. Cash and
a fixed rate of 3.68% and receives a
cash equivalents and derivative financial
variable LIBOR rate on the notional amount.
instruments are held with AAA or AA rated
The fair value of the interest rate swap is
banks. Financial instruments classified as fair
determined by reference to market value
and at 30 April 2015 was £70,000.
value through profit and loss and available
for sale are all publicly traded on the UK
London Stock Exchange. Given the high
credit quality of counterparties with whom
the Group has investments, the Directors do
not expect any counterparty to fail to meet
its obligations.
129
Notes to the Group
Financial Statements
continued
26. Financial instruments and financial
short and long-term borrowings (including
risk management objectives and policies
overdrafts and lease obligations) net of
(continued)
Capital management
cash and cash equivalents.
The Group’s main objective when
The Group has not made any changes to
managing capital is to protect returns
its capital management during the year.
to shareholders by ensuring the Group
The Group has no long-term gearing ratio
will continue to trade profitably in the
target. Borrowings are taken out to invest
foreseeable future. The Group also aims to
in the acquisition of subsidiaries, new sites
maximise its capital structure of debt and
or depots and are considered as part of
equity so as to minimise its cost of capital.
that investment appraisal. Key measures
The Group manages its capital with regard
and net debt compared to earnings before
to the risks inherent in the business and
interest, tax, depreciation and amortisation.
monitored by the Group are interest cover
the sector within which it operates by
monitoring its gearing ratio on a regular
In order to achieve the overall objective,
basis and adjusting the level of dividends
the Group’s capital management, amongst
paid to ordinary shareholders.
other things, aims to ensure that it meets
The Group considers its capital to include
borrowings. The Group has satisfied all such
equity and net debt. Net debt includes
financial covenants in both years.
financial covenants attached to the
Adjusted EBIT
Finance costs (net)
Interest cover
Adjusted EBIT
Depreciation and impairment of property, plant and equipment
Amortisation and impairment of intangible assets
Earnings before interest, tax, depreciation and amortisation (“EBITDA”)
Net debt (note 19)
Net debt/EBITDA
2015
Group
£’000
12,005
1,379
2014
Group
£’000
9,613
851
8.7
11.3
2015
Group
£’000
12,005
3,358
292
15,655
13,568
2014
Group
£’000
9,613
3,685
219
13,517
15,355
0.87
1.14
130
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
26. Financial instruments and financial
The Board receives regular cash
risk management objectives and
forecasts which estimate the cash
policies (continued)
Liquidity risk
inflows and outflows over the next 24-36
months, so that management can
Management closely monitors available
ensure that sufficient financing can be
bank and other credit facilities in
arranged as it is required. The Group
comparison to the Group’s outstanding
would normally expect that sufficient
commitments on a regular basis to
cash is generated in the operating cycle
ensure that the Group has sufficient funds
to meet the contractual cash flows as
to meet the obligations of the Group as
disclosed above through effective cash
they fall due.
management.
30 April 2014
Fixed rate borrowings
Floating rate borrowings
Total borrowings
Trade and other payables
Total financial liabilities
30 April 2015
Fixed rate borrowings
Floating rate borrowings
Total borrowings
Trade and other payables
Total financial liabilities
Due within
one year
£’000
Due between
one and two
years
£’000
Due between
two and five
years
£’000
1,436
15,019
16,455
54,158
70,613
3,314
1,882
5,196
60,237
65,433
1,242
978
2,220
-
2,220
2,163
2,320
4,483
-
4,483
1,469
571
2,040
-
2,040
841
5,208
6,049
-
6,049
Total
£’000
4,147
16,568
20,715
54,158
74,873
6,318
9,410
15,728
60,237
75,965
131
Notes to the Group
Financial Statements
continued
26. Financial instruments and financial
- interest-bearing loans and borrowings:
risk management objectives and
fair value is calculated based on
policies (continued)
Estimation of fair values
The main methods and assumptions
discounted expected future principal
and interest cash flows; and
used in estimating the fair values of
- trade and other receivables/payables:
financial instruments are as follows:
the notional amount for trade
- derivatives: interest rate swaps are
receivables/ payables with a remaining
marked to market using listed market
life of less than one year are deemed
prices;
to reflect their fair value.
Current financial assets:
Cash and cash equivalents
Trade and other receivables
Liabilities:
Bank overdraft
Short term borrowings
Trade and other payables
Derivative financial instruments
Long term borrowings
2015
Book value
£’000
2015
Fair value
£’000
2014
Book value
£’000
2014
Fair value
£’000
1,854
33,443
1,854
33,443
-
(5,196)
(61,708)
(70)
(10,226)
-
(5,196)
(61,708)
(70)
(10,106)
5,360
28,332
(85)
(16,370)
(54,410)
-
(4,260)
5,360
28,332
(85)
(16,370)
(54,410)
-
(4,103)
Long-term borrowings are classified as Level 2 (items with significant observable inputs)
financial liabilities under IFRS 13. Derivative financial instruments consist of interest rate
swaps and are classified as Level 2 (items with significant observable inputs) financial
liabilities under IFRS 13. There have been no transfers between Level 1 and Level 2
financial instruments during the year.
132
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
27. Related party disclosures
Knaresborough Real Estate Ltd, a company
The Group rented an aircraft from South
owned by Steve Parkin, is the landlord of
Acre Aviation Limited, a company owned
one of the Group’s leasehold properties.
by Steve Parkin. Charges are on an arm’s
Rent payable under the current lease is
length basis and the Group had advanced
at the same rate as that with the previous
a loan to South Acre Aviation Limited.
landlord.
The loan was repaid to the Company in
April 2014 and bore interest at 3.25% per
Guiseley Association Football Club shares a
annum. The rental agreement terminated
common director with Clipper Logistics plc.
on 30 May 2014.
The dividends paid to the former parent
During the year the Company leased
company can be found in note 8.
racehorses which are beneficially owned
by Steve Parkin. These horses ran in the
Key management compensation is
Company name and in Company colours.
disclosed in note 5.
Under the terms of the lease, the Company
was responsible for all expenditure in
There were no balances owing to or from
connection with the horses but could retain
these related parties at 30 April 2015.
any monies received for a win or placing
Balances due to and from the former
up to the value of the costs incurred for
parent company at 30 April 2014 can
that horse. The rights and liabilities arising
be found in note 19. Interest receivable
under this arrangement ceased on
from and payable to the former parent
31 May 2014.
company can be found in notes 9 and 10.
Roydhouse Properties Limited is the
landlord of two of the Company’s
leasehold properties and is classed as
a related party due to the company
having common directors with
Clipper Logistics plc.
Items charged to the income statement:
South Acre Aviation Limited – aircraft rental costs
Horse costs
Roydhouse Properties Limited – rent payable
Knaresborough Real Estate Limited – rent payable
Guiseley Association Football Club – advertising and sponsorship
2015
Group
£’000
2014
Group
£’000
7
56
877
157
25
69
414
819
-
275
133
Notes to the Group
Financial Statements
continued
28. Business combinations
in exchange for cash consideration. Both
28.1. Servicecare Support Services Limited
are unlisted companies based in the UK. The
On 3 December 2014, the Group acquired
Servicecare group specialises in providing
100% of the voting shares of Servicecare
returns logistics services to consumer
Support Services Limited (“Servicecare”)
electronics manufacturers and retailers. The
and its subsidiary, Electrotec International
Group acquired Servicecare to enhance its
Limited (together, the “Servicecare group”),
returns management service offering.
Purchase consideration:
Cash paid
Deferred consideration payable in the year ending 30 April 2016
Additional consideration payable on receipt of equivalent tax refund
Total consideration payable
Analysis of cash flows on acquisition:
Cash paid
Net cash acquired with the subsidiary (included in cash flows from investing activities)
Net cash flow on acquisition in the year
Acquisition:
Assets:
Property, plant and equipment
Intangible assets
Cash and cash equivalents
Inventories
Trade receivables (at cost and fair value)
Other receivables
Current tax asset
Liabilities:
Trade payables
Other payables
Borrowings
Current tax liability
Deferred tax liability
Total identifiable net assets (liabilities) at fair value
Goodwill arising on acquisition
Total consideration
The fair values above are considered to be final.
134
£’000
6,475
2,000
212
8,687
6,475
(2,776)
3,699
Fair value recognised on
acquisition
£’000
299
1,222
2,776
219
1,801
260
49
(1,125)
(622)
(151)
-
(275)
4,453
4,234
8,687
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
28. Business combinations (continued)
From the date of acquisition, Servicecare
28.1. Servicecare Support Services Limited
has contributed £5,706,000 of revenue
(continued)
and £794,000 to the profit before tax from
The goodwill of £4,234,000 comprises the
continuing operations of the Group. If
value of expected synergies arising from the
the combination had taken place at the
acquisition. Goodwill is allocated entirely to
beginning of the year, Group revenue from
the value-added logistics services segment.
continuing operations would have been
None of the goodwill recognised is
continuing operations for the Group would
expected to be deductible for income
have been £10,531,000.
£242,698,000 and the profit before tax from
tax purposes.
Intangible assets recognised, consist of
acquisition were £192,000 and have been
brands, customer relationships and the
charged to the income statement.
Professional fees and costs in relation to the
acquired order book.
135
Notes to the Group
Financial Statements
continued
28. Business combinations (continued)
specialising in value-added logistics services,
28.2. R. Geist Spedition GmbH & Co. KG
in exchange for cash consideration.
On 1 October 2013, the Group acquired
The Group acquired Geist to increase its
100% of the voting shares of R. Geist
presence in mainland Europe and therefore
Spedition GmbH & Co. KG (“Geist”), an
assist the Group’s UK customers with their
unlisted company based in Germany and
expansion plans.
Purchase consideration:
Cash paid
Total consideration
Analysis of cash flows on acquisition:
Net cash acquired with the subsidiary (included in cash flows from investing activities)
Net cash flow on acquisition
Acquisition:
Assets:
Property, plant and equipment
Cash and cash equivalents
Inventories
Trade receivables
Other receivables
Liabilities:
Trade payables
Other payables
Borrowings
Current tax liability
Deferred tax liability
Total identifiable net assets (liabilities) at fair value
Goodwill arising on acquisition
Total consideration
136
£’000
224
224
(160)
(64)
Fair value recognised
on acquisition
£’000
127
160
49
841
48
(418)
(475)
(317)
(24)
-
(9)
233
224
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
28. Business combinations (continued)
28.3. Clipper Logistics GmbH
28.2. R. Geist Spedition GmbH & Co. KG
On 23 April 2014, the Company acquired,
(continued)
at book value, the former parent
The fair value of the trade receivables
company’s 75% shareholding in Clipper
amounts to £841,000. The gross amount
Logistics GmbH.
of trade receivables is £878,000. An
impairment provision of £37,000 has
On 30 April 2014 the Company acquired
been made.
the remaining 25% from the minority
shareholders, in exchange for the allotment
The goodwill of £233,000 comprises the
of 800,000 ordinary shares of 0.05p each.
value of expected synergies arising from the
As this is an increase in the Company’s
acquisition and a customer list, which is not
ownership interest that does not result in a
separately recognised. Goodwill is allocated
change of control, this is accounted for as
entirely to the value-added logistics services
an equity transaction through other reserves.
Acquisition of minority shareholding in Clipper Logistics GmbH:
segment.
Due to the contractual terms imposed
on acquisition, the customer list is not
separable. Therefore, it does not meet the
criteria for recognition as an intangible
asset under IAS 38. None of the goodwill
recognised is expected to be deductible for
Fair value of shares issued
Book value of non-controlling interests acquired
income tax purposes.
Difference accounted for through equity
In the year ended 30 April 2014 the Geist
business was merged with Clipper Logistics
GmbH. Following a further change of name
the combined entity now trades as Clipper
Logistics KG (GmbH & Co.).
£’000
800
(33)
767
137
Clipper Logistics plc Annual Report and Accounts 2015
Company Financial Statements
for the year ended 30 April 2015
138
138
Clipper Logistics plc Annual Report and Accounts 2015 139
Company
Balance Sheet
At 30 April
Fixed assets
Tangible assets
Investment in subsidiaries
Intangible assets
Total fixed assets
Current assets
Stock
Debtors
Cash at bank and in hand
Total current assets
Note
2015
Company
£’000
2014
Company
£’000
D
E
F
G
H
10,734
19,973
5,362
12,026
11,286
5,778
36,069
29,090
463
19,030
52
543
16,743
3,302
19,545
20,588
Creditors: amounts falling due within one year
I
38,788
42,240
Net current liabilities
(19,243)
(21,652)
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium
Other reserve
Share based payment reserve
Profit and loss account
Total equity
J
N
P
R
R
R
R
16,826
8,845
923
7,058
50
48
851
110
5,999
7,058
7,438
2,438
902
4,098
50
48
851
-
3,149
4,098
Approved by the Board on 27 July 2015 and signed on its behalf by:
D A Hodkin – Chief Financial Officer
140
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
A. Authorisation of financial statements
B. Accounting policies
performance and position is set out in the
and statement of compliance with UK
The Financial Statements have been
Strategic Report section of this report on
GAAP
prepared in accordance with the
pages 6 to 37.
The parent company financial statements of
Companies Act 2006 and with applicable
Clipper Logistics plc (the “Company”) for the
accounting standards in the United
Note 26 to the Group Financial Statements
year ended 30 April 2015 were authorised
Kingdom.
for issue by the Board of Directors on 27 July
2015 and the balance sheet was signed on
includes the Group’s objectives, policies
and processes for managing its capital, its
financial risk management objectives and
the Board’s behalf by David Hodkin. Clipper
B.1. Basis of preparation
its exposure to foreign exchange, credit and
Logistics plc is a public limited company
A summary of the principal accounting
interest rate risk.
incorporated and domiciled in England and
policies applied by the Company is set
Wales. The Company’s ordinary shares are
out below. These have been applied on a
The Company Balance Sheet at 30
traded on the London Stock Exchange.
consistent basis unless otherwise indicated.
April 2015 shows net current liabilities of
£19,243,000 (2014:£21,652,000). Following
These financial statements are prepared
The Company has taken advantage of
the restructuring of the bank facilities in
under the historical cost convention.
the exemptions in FRS 1 from preparing
May and June 2014 the Group has access
a statement of cash flows as the Group’s
to a five year, non-amortising, revolving
No profit and loss account is presented
consolidated Financial Statements, in
credit facility of £12,504,000 and an
by the Company as permitted by Section
which the company is included, provide
overdraft facility of £5,000,000 neither of
408 of the Companies Act 2006. The profit
equivalent disclosures. The Company has
which were drawn down at 30 April 2015.
after tax attributable to the members of
taken advantage of the exemption in FRS
The Company’s overdraft at 30 April 2015,
the Company was £4,785,000 (2014:
8 from disclosing related party transactions
shown in note I, was covered by cash at
£784,000). There were no other recognised
with Group companies.
bank in other Group companies.
gains or losses in either year.
The Directors have assessed the future
The results of Clipper Logistics plc are
B.2. Judgements and key sources of
funding requirements of the Group and
included in the consolidated financial
estimation uncertainty
the Company and compared them to the
statements of Clipper Logistics plc which
The preparation of financial statements
bank facilities which are now available.
are available from Gelderd Road, Leeds
requires management to make
The assessment included a detailed review
LS12 6LT.
judgements, estimates and assumptions
of financial and cash flow forecasts for at
that affect the amounts reported for assets
least the 12 month period from the date
The accounting policies which follow set
and liabilities as at the balance sheet date
of signing the Annual Report. The Directors
out those policies which apply in preparing
and the amounts reported for revenues
considered a range of potential scenarios
the financial statements for the year ended
30 April 2015. The financial statements
and expenses during the year. However,
the nature of estimation means that actual
within the key markets the Group serves and
how these might impact on the Group’s
are prepared in Pounds Sterling and are
outcomes could differ from those estimates.
cash flow. The Directors also considered
rounded to the nearest thousand pounds
(£000).
what mitigating actions the Group could
take to limit any adverse consequences.
B.3. Basis of accounting
The Group’s forecasts and projections
The Financial Statements have been
show that the Group should be able to
prepared on a going concern basis. In
operate without the need for any increase in
determining the appropriate basis of
borrowing facilities.
preparation of the Financial Statements, the
Directors are required to consider whether
Having undertaken this work, the Directors
the Group can continue in operational
are of the opinion that the Company
existence for the foreseeable future.
and the Group have adequate resources
to continue in operational existence for
Further information in relation to the Group’s
the foreseeable future. Accordingly, they
business activities, together with the factors
continue to adopt the going concern basis
likely to affect its future development,
in preparing the Financial Statements.
141
Notes to the Company
Financial Statements
continued
B.4. Tangible fixed assets
B.6. Intangible assets
B.8. Stock - component parts and
The cost of tangible fixed assets is their
(a) Contracts and licences
consumable stores
purchase cost, together with any incidental
Intangible assets recognised in relation to
Stocks of component parts and
expenses of acquisition.
contracts or licences are amortised over the
consumable stores are valued at the lower
Depreciation is calculated so as to write
line basis. Provision is made for obsolete and
off the cost of tangible fixed assets, less
(b) Goodwill
slow- moving items.
length of the relevant agreement.
of cost and net realisable value on a line by
their estimated residual value, on a straight
Goodwill representing the excess of the
line or reducing balance basis over their
purchase price compared with the fair
estimated economic lives. The estimated
value of net assets acquired is capitalised
B.9. Trade and other debtors
economic lives used for the separate
and included in intangible assets.
Trade debtors, which generally have 30-90
categories of fixed assets for this purpose
Separately recognised goodwill is amortised
day terms, are recognised and carried at
are:
over its estimated useful life of 20 years,
the lower of their original invoiced value
- Leasehold property – over the length of
unless the Directors consider that a shorter
and recoverable amount. Where the time
the lease
period is more appropriate.
value of money is material, receivables are
- Plant and machinery - 2 to 20 years
carried at amortised cost. Provision is made
when there is objective evidence that
- Motor vehicles - 4 to 8 years
Leasing agreements and hire purchase
balances in full. Balances are written off
B.7. Lease assets and obligations
the Company will not be able to recover
contracts which transfer to the Company
when the probability of recovery is assessed
The carrying values of tangible fixed assets
substantially all the benefits and risks of
as being remote.
are reviewed for impairment if events or
ownership of an asset (“finance leases”) are
changes in circumstances indicate the
treated as if the asset had been purchased
carrying value may not be recoverable,
outright. Assets held under such agreements
B.10. Provisions for liabilities
and are written down immediately to their
are included in fixed assets and the capital
A provision is recognised when the
recoverable amount. Useful lives and
element of commitments is shown as
Company has a legal or constructive
residual values are reviewed annually and
obligations under finance leases. Payments
obligation as a result of a past event; it
where adjustments are required these are
under such agreements are treated as
is probable that an outflow of economic
made prospectively.
consisting of capital and interest elements.
benefits will be required to settle the
The interest element is charged to the profit
obligation; and a reliable estimate can be
An item of property, plant and equipment
and loss account over the primary lease
made of the amount of the obligation.
is derecognised upon disposal or when no
period in proportion to the reducing capital
future economic benefits are expected to
element outstanding. Assets held under
Where the effect of the time value of
arise from the continued use of the asset.
Any gain or loss arising on the derecognition
finance leases are depreciated over the
shorter of the lease terms and the useful
money is material provisions are discounted.
of the asset is included in the profit and loss
lives of equivalent owned assets.
Where the company expects some or
account in the period of derecognition.
all of a provision to be reimbursed, the
All other leases are treated as operating
reimbursement is recognised as a separate
leases, the costs of which are charged on a
asset but only when recovery is virtually
B.5. Investments in subsidiary undertakings
straight line basis over the lease term. Lease
certain.
Fixed asset investments are shown at cost
incentives are recognised over the shorter
less provision for impairment.
of the lease term or the period to the next
rent review.
142
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
B.11. Taxation
Non-monetary items that are measured in
At each balance sheet date before vesting,
The charge for taxation is based on the
terms of historical cost in a foreign currency
the cumulative expense is calculated,
result for the year. Deferred tax is provided
are translated using the exchange rates as
representing the extent to which the vesting
in full on timing differences that result in an
at the dates of the initial transactions. Non-
period has expired and management’s
obligation at the balance sheet date to
monetary items measured at fair value in
best estimate of the achievement or
pay more tax, or a right to pay less tax, at
a foreign currency are translated using the
otherwise of non-market vesting conditions
a future date at rates expected to apply
exchange rates at the date when the fair
and of the number of equity instruments
when they crystallise, based on current tax
value was determined.
rates and laws. Deferred tax is not provided
that will ultimately vest or in the case of an
instrument subject to a market condition
on timing differences arising from the
The company does not apply hedge
or a non-vesting condition, be treated as
revaluation of fixed assets where there is no
accounting of foreign exchange risks in its
vesting as described above. The movement
binding contract to dispose of these assets.
company financial statements.
in cumulative expense since the previous
Deferred tax assets are only recognised
to the extent that it is regarded as more
balance sheet date is recognised in the
income statement, with a corresponding
likely than not that they will be recovered.
B.15. Share based payments
entry in equity.
Deferred tax assets and liabilities recognised
Equity-settled transactions
have not been discounted.
The cost of equity-settled transactions with
The former parent company issued equity-
employees of the Company is measured
settled share based payments to certain
by reference to the fair value at the date at
employees. The charge in the prior year
B.12. Pensions
which they are granted and is recognised
represents the fair value at the date of
Contributions are made to the personal
as an expense over the vesting period,
grant of the equity-settled share based
pension plans of certain employees.
which ends on the date on which the
payments, expensed on a straight-line basis
The assets of the scheme are held
relevant employees become fully entitled to
over the vesting period based on the former
separately from those of the Company. The
the award.
expenditure is charged to the profit and loss
parent company’s estimate of shares that
would eventually vest. All such options were
account as incurred.
Fair value is determined by using an
exercised or cancelled in May 2014
appropriate pricing model. In valuing
equity-settled transactions, no account
B.13. Post-retirement benefits
is taken of any service and performance
B.16. Interest-bearing loans and
The Company provides no other post-
(vesting conditions), other than performance
borrowings
retirement benefits to its employees.
conditions linked to the price of the shares
All loans and borrowings are initially
of the Company (market conditions). Any
recognised at fair value less directly
other conditions which are required to be
attributable transaction costs. After initial
B.14. Foreign currencies
The Company’s functional currency and
met in order for an employee to become
fully entitled to an award are considered to
recognition, interest-bearing loans and
borrowings are subsequently measured
presentation currency is pounds sterling.
be non-vesting conditions.
at amortised cost using the effective
Transactions in foreign currencies are initially
interest method. Gains and losses arising
recorded in the functional currency by
No expense is recognised for awards that
on the repurchase, settlement or otherwise
applying the spot exchange rate ruling
do not ultimately vest, except for awards
cancellation of liabilities are recognised
at the date of the transaction. Monetary
where vesting is conditional upon a market
respectively in interest income and
assets and liabilities denominated in foreign
vesting condition or a non-vesting condition,
interest expense.
currencies are retranslated at the functional
which are treated as vesting irrespective of
currency rate of exchange ruling at the
whether or not the market vesting condition
balance sheet date. All differences are
or non-vesting condition is satisfied,
C. Auditors remuneration
taken to the profit and loss account.
provided that all other non-market vesting
Remuneration payable to the Company’s
conditions are satisfied.
auditors is shown in note 6 to the Group
Financial Statements.
143
Notes to the Company
Financial Statements
continued
D. Tangible fixed assets
Cost:
At 1 May 2014
Additions
Disposals
At 30 April 2015
Accumulated depreciation:
At 30 April 2014
Charge for the year
Disposals
At 30 April 2015
Net book value:
At 30 April 2014
At 30 April 2015
Leasehold
property
£’000
Motor
vehicles
£’000
Plant, machinery,
fixtures & fittings
£’000
2,630
25
(106)
2,549
899
195
(106)
988
1,731
1,561
1,324
178
(188)
1,314
1,030
125
(170)
985
294
329
23,677
758
(592)
23,843
13,676
1,886
(563)
14,999
10,001
8,844
Total
£’000
27,631
961
(886)
27,706
15,605
2,206
(839)
16,972
12,026
10,734
Included within tangible fixed assets are amounts held under finance lease contracts. At 30 April 2015 the net book value of these assets was £3,447,000 (2014:£3,560,000).The
depreciation charged to the accounts in the year in respect of such assets amounted to £606,000 (2014:£1,612,000).
144
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
E. Investment in subsidiaries
Cost:
At 1 May 2014
Additions
At 30 April 2015
Provision for impairment:
At 1 May 2014 and 30 April 2015
Net book value:
At 30 April 2014
At 30 April 2015
On 3 December 2014 the company
acquired the entire issued share capital
of Servicecare Support Services Limited
and its subsidiary, Electrotec International
Limited (see note 28 to the Group Financial
Statements).
Company
£’000
11,501
8,687
20,188
215
11,286
19,973
145
Notes to the
Company Financial Statements
continued
E. Investment in subsidiaries (continued)
Subsidiary undertakings
Except where indicated, the subsidiary undertakings are incorporated and operate in Great
Britain, registered in England and Wales and the Company or Group owns 100% of the
issued ordinary share capital and voting rights. The subsidiary undertakings of the Company
are as follows:
Company
Nature of business during the year
Servicecare Support Services Limited
Returns management & reverse logistics services
Clipper Logistics KG (GmbH & Co.) (Germany)
Contract distribution & warehousing
Northern Commercials (Mirfield) Limited
Electrotec International Limited*
Sale, servicing and repair of commercial vehicles
On-line retail and distribution
Genesis Specialised Product Packing Limited
On-line retail and distribution
Stormont Truck and Van Limited*
Agency for leasing commitments
Clipper Verwaltungs GmbH (Germany)*
Agency for leasing commitments
Gagewell Transport Limited
Clipper e-commerce Limited
Clipper Logistics (Processing) Limited
Clipper Logistics (Warehousing) Limited
Clipper Secure Logistics Limited
Clipper Logistics BV (Netherlands)
DTS Logistics Limited
Guardex Security Services Limited
Transference Technology Limited (90% owned)*
Northern Commercial Trailers (Mirfield) Limited*
* shareholding held indirectly
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
146
Clipper Logistics plc Annual Report and Accounts 2015 Strategic Report | Governance | Financial Statements
Notes to the
Company Financial Statements
continued
F. Intangible assets
Cost:
Goodwill
£’000
Contracts and
licenses
£’000
Total
£’000
At 1 May 2014 and 30 April 2015
8,312
723
9,035
Accumulated amortisation:
At 1 May 2014
Charge for the year
At 30 April 2015
Net book value:
At 30 April 2014
At 30 April 2015
G. Stock
2,534
416
2,950
5,778
5,362
723
-
723
-
-
3,257
416
3,673
5,778
5,362
Component parts and consumable stores
463
543
2015
Company
£’000
2014
Company
£’000
H. Debtors
Trade debtors
Corporation tax
Other debtors
Prepayments and accrued income
Amounts owed by fellow Group companies
2015
Company
£’000
6,303
-
100
10,885
1,742
2014
Company
£’000
6,412
121
146
8,232
1,832
19,030
16,743
147
Notes to the
Company Financial Statements
continued
I. Creditors: amounts falling due within one year
2015
Company
£’000
2014
Company
£’000
2,533
2,904
1,195
14,021
3,661
3,475
207
8,926
1,866
-
86
85
1,164
13,999
3,667
1,021
-
6,600
351
15,267
38,788
42,240
2015
Company
£’000
2014
Company
£’000
7,199
1,646
40
2,398
8,845
2,438
2015
Company
£’000
2014
Company
£’000
2,533
7,199
-
86
40
-
9,732
126
Bank loans (note K)
Bank overdrafts
Obligations under finance leases or hire purchase agreements (note L)
Trade creditors
Other taxes and social security
Other creditors
Corporation tax payable
Accruals and deferred income
Amounts owed to fellow Group companies
Amounts owed to former parent company
Bank loans and overdrafts are secured by a charge over the Group’s assets
Obligations under finance leases or hire purchase agreements are secured by related assets.
J. Creditors: amounts falling due after more than one year
Bank loans (note K)
Obligations under finance leases or hire purchase agreements (note L)
K. Bank loans
Bank loans repayable, included within creditors are analysed as follows:
In one year or less
Between one and five years
After five years
The principal features of the bank loans are as follows:
- Medium term loan from principal lender - £10,000,000 repayable in quarterly
instalments of £625,000 to 30 April 2019; interest rate 3.25% above LIBOR
- Other bank loans - £38,000 repayable in monthly or quarterly instalments over
periods between 3 and 18 months; interest rates fixed at between 3.90% and 4.80%
- Unamortised debt issue costs of £306,000 have been deducted from the total
outstanding bank loans
148
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the
Company Financial Statements
continued
L. Finance leases and hire purchase agreements
The Company uses finance leases and hire purchase agreements to acquire tangible
fixed assets. Future minimum amounts repayable are shown below:
Fixed rate leases:
Minimum lease payments:
In one year or less
Between one and five years
Interest:
In one year or less
Between one and five years
Principal of fixed rate leases:
In one year or less
Between one and five years
Variable rate leases:
TOTAL
2015
Company
£’000
2014
Company
£’000
1,322
1,721
3,043
(127)
(75)
(202)
1,195
1,646
2,841
-
1,345
2,571
3,916
(181)
(173)
(354)
1,164
2,398
3,562
-
2,841
3,562
M. Derivative financial instruments
As part of the novation of bank facilities from the former parent, the Company took on an
existing interest rate swap. The notional principal at 30 April 2015 is £2,700,000 which reduces by
£450,000 on a quarterly basis. The Company pays a fixed rate of 3.68% and receives a variable
LIBOR rate on the notional amount. The fair value of the interest rate swap at 30 April 2015,
determined by reference to market value, is £70,000 (2014: not applicable).
149
Notes to the
Company Financial Statements
continued
N. Provisions for liabilities
At 1 May 2014
Utilised
(Credited)/charged in year
At 30 April 2015
Other provisions
Deferred
taxation
£’000
Other provisions
£’000
431
-
(39)
392
471
(43)
103
531
Total
£’000
902
(43)
64
923
Provisions are established over the life of leases to cover remedial work necessary at
termination under the terms of those leases. Two key sites have leases that expire 22 and
13 years from the balance sheet date. All other leases expire in 10 years or less.
O. Deferred tax
Deferred tax liability:
Accelerated capital allowances
Deferred tax asset:
Share based payment
Provisions & other timing differences
Net deferred tax liability
2015
Company
£’000
2014
Company
£’000
(436)
(444)
22
22
(392)
-
13
(431)
A reduction in the UK corporation tax rate from 21% to 20% was substantively enacted
at 30 April 2014 and is effective from 1 April 2015. Accordingly, the rate applied in the
measurement of the Company’s deferred tax assets and liabilities as at 30 April 2014 and
2015 was 20%.
P. Share capital
Allotted, called up and fully paid:
100,000,000 ordinary shares of 0.05p each
2015
Company
£’000
2014
Company
£’000
50
50
Q. Share based payments
Further details of the share option schemes are set out in note 22 to the Group Financial
Statements. The charge to the Company’s profit and loss account for equity settled
transactions in the year ended 30 April 2015 was £110,000 (2014: £175,000)
150
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the
Company Financial Statements
continued
R. Capital and reserves
Balance at 1 May 2013
Profit for the year
Share issue - for cash
- on acquisition of minority interest
Equity settled transactions
Dividends
Balance at 30 April 2014
Profit for the year
Equity settled transactions
Dividends
Share
capital
£’000
Share
premium
£’000
Other
reserve
£’000
8
-
42
-
-
-
50
-
-
-
48
-
-
-
-
-
48
-
-
-
51
-
-
800
-
-
851
-
-
-
Share
based
payment
reserve
£’000
-
-
-
-
-
-
-
Profit
and loss
account
£’000
4,690
784
-
-
175
(2,500)
Total
£’000
4,797
784
42
800
175
(2,500)
3,149
4,098
-
110
-
4,785
-
(1,935)
4,785
110
(1,935)
Balance at 30 April 2015
50
48
851
110
5,999
7,058
S. Commitments and contingencies
The Company has annual commitments under non-cancellable operating leases as
follows:
Operating lease commitments – land and buildings:
Operating leases which expire:
Within one year
Between one and five years
After more than five years
2015
Company
£’000
2014
Company
£’000
182
2,598
6,478
9,258
509
1,905
4,964
7,378
Operating lease commitments – vehicles, plant and machinery:
Operating leases which expire:
Within one year
Between one and five years
After more than five years
2015
Company
£’000
2014
Company
£’000
453
1,311
151
1,915
582
1,358
215
2,155
151
Notes to the
Company Financial Statements
continued
T. Capital commitments
Authorised and contracted for
Authorised, but not contracted for
2015
Company
£’000
2014
Company
£’000
797
8,569
9,366
295
-
295
U. Related party disclosures
Roydhouse Properties Limited is the landlord
The Company rented an aircraft from
South Acre Aviation Limited, a company
of two of the Company’s leasehold
properties and is classed as a related party
owned by Steve Parkin. Charges are on
due to the company having common
an arm’s length basis and the Company
directors with Clipper Logistics plc.
had advanced a loan to South Acre
Aviation Limited. The loan was repaid to the
Guiseley Association Football Club shares a
Company in April 2014 and bore interest at
common director with Clipper Logistics plc.
3.25% per annum. The rental agreement
terminated on 30 May 2014.
The dividends paid to the former parent
company can be found in note 8 to the
During the year the Company leased
Group Financial Statements.
racehorses which are beneficially owned
by Steve Parkin. These horses ran in the
Directors’ remuneration can be found in
Company name and in Company colours.
note 5 to the Group Financial Statements.
Under the terms of the lease, the Company
was responsible for all expenditure in
There were no balances owing to or from
connection with the horses but could retain
these related parties at 30 April 2015.
any monies received for a win or placing
Balances due to and from the former
up to the value of the costs incurred for that
parent company at 30 April 2014 can be
horse. The rights and liabilities arising under
found in note I.
this arrangement ceased on 31 May 2014.
Items charged to the profit & loss account:
South Acre Aviation Limited – aircraft rental costs
Horse Costs
Roydhouse Properties Limited – rent payable
Guiseley Association Football Club – advertising and sponsorship
2015
Company
£’000
2014
Company
£’000
7
56
877
25
69
414
819
275
152
Clipper Logistics plc Annual Report and Accounts 2015
Strategic Report | Governance | Financial Statements
Notes to the
Company Financial Statements
continued
V. Transition to FRS 101
Following the publication of FRS 100
The Board considers that it is in the best
‘Application of Financial Reporting
interests of the Group for Clipper Logistics
Requirements’ by the Financial Reporting
plc to adopt FRS101 ‘Reduced Disclosure
Council, Clipper Logistics plc is required to
Framework’. No disclosures in the current
change its accounting framework for its
UK GAAP financial statements would be
entity financial statements, for its financial
omitted on adoption of FRS 101.
year commencing 1 May 2015.
153
Directors, Secretary, Registered
& Head Office and Advisors
Directors:
Company Secretary:
Registered Office and Head Office
of the Company:
Registered number:
Sponsor, financial advisor,
sole bookrunner and broker:
Legal advisors:
Reporting accountant and auditors:
Registrars:
Financial public relations advisors
to the Company:
154
Steve Parkin, Executive Chairman
Tony Mannix, Chief Executive Officer
David Hodkin, Chief Financial Officer
Sean Fahey, Chief Information Officer
Paul Hampden Smith, Senior Independent Non-Executive Director
Mike Russell, Independent Non-Executive Director
Stephen Robertson, Independent Non-Executive Director
Ron Series, Independent Non-Executive Director
Guy Jackson
Gelderd Road
Leeds
LS12 6LT
03042024
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
Squire Patton Boggs (UK) LLP
2 Park Lane
Leeds
LS3 1ES
Pinsent Masons LLP
1 Park Row
Leeds
LS1 5AB
Ernst & Young LLP
1 Bridgewater Place
Water Lane
Leeds
LS11 5QR
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Bell Pottinger
Holborn Gate
330 High Holborn
London
WC1V 7QD
Clipper Logistics plc Annual Report and Accounts 2015
155
Clipper Logistics plc
Gelderd Road
Leeds
LS12 6LT
0113 204 2050
Tel:
Email: info@clippergroup.co.uk
Web: www.clippergroup.co.uk