Clipper Logistics plc
2016 Annual Report and Accounts
Clipper Logistics plc Annual Report and Accounts 2016
Clipper is a retail logistics and returns
management specialist, providing value-added
services to its blue chip customer base.
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 click and collect platform has been
established to enable the Group to benefit
from anticipated future growth of click and
collect as a method of shopping.
A profitable and cash generative
commercial vehicles business complements
the Group’s logistics activities.
The Group operates from 41 locations
comprising over 6.8 million square feet.
It now has over 3,500 employees,
excluding agency staff.
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Clipper Logistics plc Annual Report and Accounts 2016 Financial Highlights
For the year ended 30 April 2016
Group revenue
Basic earnings per share
£234.8m
FY 2015
£290.3m
FY 2016
23.7%
increase
7.3p
FY 2015
10.3p
FY 2016
41.1%
increase
Group Adjusted EBIT1
Adjusted earnings per share2
£12.0m
FY 2015
£14.5m
FY 2016
21.0%
increase
8.4p
10.3p
FY 2015
FY 2016
22.6%
increase
Group profit for the financial year3
Dividend per share
£7.3m
FY 2015
£10.3m
FY 2016
41.1%
increase
4.8p
FY 2015
6.0p
FY 2016
25.0%
Increase
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 £nil (2015: £0.3m) and exceptional costs of £nil (2015: £0.9m).
Percentages are calculated based on the underlying numbers as presented in the Financial Statements, not on the rounded figures above.
3
Contents
About Clipper
Financial Highlights
Operational Highlights
Strategic Report
Chairman’s Statement
Group Structure
Our Business Model
Our Strategy
Operating and Financial Review
Risk Management
Viability Statement
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 Accounts
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 Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Directors, Secretary, Registered & Head Office, and Advisors
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Clipper Logistics plc Annual Report and Accounts 2016 Operational Highlights
For the year ended 30 April 2016
Successfully launched a
Click and Collect
collaboration with
John Lewis, with plans to
roll out across the Clipper
customer base.
Commenced operations
on the Pep&Co, Haddad and
Zara contracts secured in FY15.
Secured new contract
wins in the year with Browns
(a Farfetch brand) and M&Co,
both of which launched in
FY16, and Kidly which launched
in early FY17. After the year
end, we also secured new
contract wins with Links of
London, and John Lewis for
pre-retail and returns services.
Implemented a significant
project for a single pool
of stock with SuperGroup,
making all inventory
available to retail and
e-commerce operations.
10
Signed two new
flagship 10 year leases
in Northampton, one for
342,000 sq ft for exclusive
use by Zara and one for
304,000 sq ft for a shared
use facility with John Lewis as
the anchor tenant. The John
Lewis facility combines the
service offerings of both Clipper
and Servicecare.
Good progress
in Servicecare in line
with expectations. New
Strong performance in
commercial vehicles
division driven by new vehicle
Managing Director appointed
sales and aftersales activities.
to drive future growth and
development strategy
5
Secured increased space,
rate and/or activity
commitments with
existing customers including
British American Tobacco,
Sainsbury’s, SuperGroup,
Bench, Wilko, Mint Velvet
and Philip Morris.
Increased the
capacity at a number of
our existing sites completing
mezzanine floor builds at
Swadlincote and Milton
Keynes, with another two to
be added in FY17 at Harlow
and Northampton (Zara).
Strategic Report
6
Clipper Logistics plc Annual Report and Accounts 2016 We are particularly excited
about the prospects for our
new dedicated next day
Click and Collect solution,
developed in collaboration
with John Lewis. This is a
service designed to address
the rapidly growing need for
retailers to offer an effective
next day service to store for
orders placed online. After
an initial trial period involving
115 Waitrose stores, the
service will be extended to
the whole Waitrose estate in
late summer 2016, and we
are in advanced discussions
with a number of other
retailers who wish to use
the service.
We remain confident of the
Group’s ability to continue
to evolve and develop,
and to deliver strong
returns to our shareholders.
Chairman’s Statement
The Group has seen a strong
performance throughout
the year under review, with
a number of high-profile
contracts starting, including
those with M&Co, Zara,
Haddad, and Pep&Co. In
addition, our commercial
vehicles business has
performed very strongly.
Servicecare Support Services
Limited (“Servicecare”),
which we acquired in
December 2014, has
extended our ability to offer
a comprehensive returns
management solution
under our “Boomerang”
brand, and Servicecare is
delivering results in line with
our expectations.
Our driving force remains
our focus on identifying new
services, processes and
solutions that address the
operational needs of our
customers. Our unrivalled
understanding of the
dynamics of e-retail and
multi and omni-channel
retailing, coupled with the
dramatic changes taking
place in these sectors,
provide the Group with
exceptionally strong strategic
positioning for the future.
Steve Parkin, Executive Chairman
As Chairman of Clipper
Logistics plc, I am proud to
present our 2016 financial
results following our second
anniversary of listing on the
London Stock Exchange in
June 2014.
During our second year as
a listed company, we have
seen continued growth. This
growth is a result of our ability
to think outside the box and
deliver innovative, best-
practice, low-cost solutions
for our extensive blue-chip
client base. Our recognised
skills in delivering these
solutions mean we remain
confident of our ability to
continue this momentum.
8
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Group revenues increased by
23.7% to
£290.3 million
for the year to 30 April 2016
Group Adjusted EBIT*
increased by
21.0% to
£14.5 million
for the year to 30 April 2016
Chairman’s Statement
continued
Group results
Governance
Group revenues increased by 23.7% to
The Group is proud of its commitment
£290.3 million for the year to 30 April 2016,
and Group Adjusted EBIT* increased by
21.0% to £14.5 million.
to high levels of corporate governance.
Alongside the executive management
team of Tony Mannix (CEO), David Hodkin
(CFO) and Sean Fahey (CIO), the Company
Adjusted earnings per share were
benefits from the combined experience of
10.3 pence for the year to 30 April 2016
its Non-Executive Directors: Paul Hampden
(2015: 8.4 pence), an increase of 22.6%.
Smith (Senior Independent Non-Executive
Director), Stephen Robertson, Ron Series
On an unadjusted basis earnings per share
and Mike Russell.
were 10.3 pence (2015: 7.3 pence).
Net debt was £18.8 million at the year end,
Dividends
in line with our expectations, after planned
The Board is recommending a final
investment in capital projects to support
dividend of 4.0 pence per share, making a
new contracts (much of which involves a
total dividend in respect of the year ended
back-to-back commitment from customers
30 April 2016 of 6.0 pence per share
to reimburse this capital over the duration
(2015: 4.8 pence), an increase of 25.0%.
of their contract), and paying £2.2 million in
deferred consideration in respect of
The proposed final dividend, if approved
the acquisition of Servicecare.
by shareholders, will be paid on
20 October 2016 to shareholders
on the register at the close of business
People and Board
on 23 September 2016.
Clipper Logistics plc is led by an excellent
management team that has been at the
core of the business for many years.
Outlook
The Group continues to be one of the
The team has a well-established track
leading providers of value-added logistics
record of identifying areas for innovation
and e-fulfilment solutions to the retail sector
and value-added services within the
in the UK. The development of our new
sectors we serve, and for delivering on
Click and Collect proposition, together with
commitments to our customers.
recent contract wins and a strong
new business pipeline, place the Group
I would like to take this opportunity to
in an excellent position to continue to
thank all the employees of the Group for
achieve further growth, both in the UK
their commitment and contribution to the
and internationally.
Group’s performance.
I look forward to working with all of the
Group’s stakeholders as we continue to
develop the business.
*Adjusted EBIT is defined as operating profit excluding discontinuing and exceptional costs.
9
Group Structure
Composition of the Group at 30 April 2016
Reporting segments
Clipper expects to continue to experience
Clipper Logistics plc (“Clipper” or the
The results of the Group are reported in
rapid growth in this segment reflecting
“Company”) provides value-added logistics
the following segments:
continuing migration to online retailing due
services in the UK.
- Value-added logistics services,
to the structural changes taking place in
comprising the following business
the retail sector.
The Company has the following wholly
activities:
owned subsidiaries:
- E-fulfilment & returns
The results of Servicecare and Electrotec
- Clipper Logistics KG (GmbH & Co.), which
management services;
are included in this category.
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,
commercial vehicle operation engaging
the above business activities, including
stock management, picking, packing
in the sale, servicing and repair of
directorate, advertising and promotion,
and distribution of products on behalf of
commercial vehicles, and the sale
accounting and IT, and the solutions
customers. Clipper does not take ownership
of parts;
development team; and
of customers’ 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. Electrotec
the Group also separately reports head
traditional retail support services including
International Limited (“Electrotec”)
office costs, representing the costs of the
processing, storage and distribution
is a wholly owned subsidiary of
Executive Chairman, Chief Financial Officer,
of products, particularly fashion, to
Servicecare, which through its website
Deputy Chief Financial Officer, Company
high street retailers.
electrical-deals.co.uk and a number of
Secretary, Non-Executive Directors and plc
other web stores operated on behalf of
compliance costs.
Central logistics overheads
customers, provides a route to market for
refurbished electrical products on behalf
Central logistics overheads are the
costs of support services specific to the
of manufacturers and retailers. On
Segment and business activity details
logistics services segment, but which are
30 April 2016, the trading of Electrotec
E-fulfilment & returns management
impractical to allocate between the sub-
was absorbed into Servicecare; and
services
segment business activities.
E-fulfilment & returns management services
- Genesis Specialised Product Packing
include the receipt, warehousing, value-
Commercial vehicles
Limited (“Genesis”), which provides an
eBay store offering to enable Clipper to
add processing, stock management,
picking, packing and despatch of products
The commercial vehicles business, Northern
Commercials, operates Iveco and Fiat
assist its retail customers with the sale of
on behalf of customers to support their
commercial vehicle dealerships from
excess and end-of-line stock.
online trading activities, as well as a range
six locations, together with three sub-
The above entities, along with a number of
the management of the returns process
provides servicing and repair facilities, and
dormant subsidiaries, comprise the “Group”.
for customers.
sells parts.
of ancillary support services, including
dealerships. It sells new and used vehicles,
At no time does Clipper take ownership of
Vehicles sold and serviced range from
customers’ products. The Company also
small light commercial vans, through to
owns the ‘Boomerang’ brand, under which
articulated tractor units.
returns of products are managed on behalf
of retailers.
10
Clipper Logistics plc Annual Report and Accounts 2016 Our Business Model
The Group creates value for its shareholders
Credibility
A proven and robust business model
from its scalable and risk-mitigated
- The ‘Clipper Way’ ensures that at
Market-leading customer proposition and
business, with a high degree of contractual
every level the success of project
focus on customer service
certainty underpinning financial
implementation and ongoing operational
Clipper focuses on the provision of
predictability and stability. Clipper focuses
excellence are at the core of all activity.
consultancy-led, value-added logistics
on customer service, and aims to create
services. It works closely with existing and
long-term relationships with customers in
- Clipper has a high profile within the
prospective clients to develop tailored
order to become central to that customer’s
industry press, including Drapers and
solutions to meet their specific logistics
strategy, and further underpin the long-term
Retail Week, and is a recognised sector
needs. Strategic-level discussions focused
success of the Group.
‘thought leader’. This further strengthens
on providing solutions to particular
the relevance of Clipper to its retail clients.
challenges ensure that Clipper is central
to its clients’ strategies.
The Company is focused on the retail
sector, and provides services under
formalised contractual arrangements
to a major blue chip customer base
including Asda, ASOS, John Lewis,
Morrisons, SuperGroup, and Zara.
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; 70% of consumers
envisage that on-line will be their main
shopping channel in five years’ time
(Source: JDA & Centiro Customer Pulse
Report 2015).
ABILITY
AGILITY
CREDIBILITY
RETAIL-FOCUSED
‘KNOW HOW’
TRUSTED PARTNER
APPROACH
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:
- is highly respected in the sector; and
- has built successful relationships with
key retail decision makers.
- A customer who partners with Clipper
gets personal accountability and a strong
focus on success.
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Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Our Business Model
continued
A proven and robust business model
- Consolidation centres, where products
High degree of contractual certainty
(continued)
destined for multiple nearby retail outlets
underpins financial predictability
Market-leading customer proposition and
are consolidated, before being delivered
and stability
focus on customer service (continued)
to the destination. Examples include
69% of the UK logistics division’s revenue
- Returns management is expected
Meadowhall Shopping Centre in Sheffield
(excluding Servicecare) in the year to
to become the ‘battle-ground for
and Regent Street in London;
30 April 2016 was on open book contract
competitive advantage’ amongst
terms (2015: 70%). Under the terms of these
retailers, with returns in the UK averaging
- Port deconsolidation supply chain
contracts, all costs incurred in providing
between 25%-40% in fashion and
models, where facilities are located
services (people, property, plant and
footwear (Source: IMRG). Clipper’s
near a port of entry for product
equipment, packaging, etc.) are recharged
successful introduction of its ‘Boomerang’
deconsolidation and onward distribution
to customers together with a management
brand is enabling it to capitalise upon this
through the supply chain;
fee. The contract mechanisms provide
opportunity, leveraging from its already
Clipper’s customer base with total
market-leading proposition in online
- The ‘Boomerang’ brand for returns
transparency, and make for solid long-
fulfilment. The Group’s acquisition of
management, as noted above; and
term relationships with clients, whilst
Servicecare in 2014 is complementary
protecting Clipper from cost inflation, mix
to the returns management proposition,
- Click and Collect services:
changes and, largely, volume downsides,
as the Group is now able to offer a wider
- Over the past couple of years there has
whilst allowing the Company to benefit
range of services, including electrical
been a market shift towards “Click and
from increasing activity levels. Gainshare
returns capability.
Collect” with many retailers reporting
mechanisms and KPI-based incentives also
that over 60% of their online orders are
allow Clipper to enhance profits, through
- The returns process is of vital importance,
collected by consumers rather than
innovation and excelling in service delivery.
as 67% of shoppers check the returns
home delivered.
page of a website before making a
- Working in partnership with John Lewis,
13% of the UK logistics division’s revenue
purchase, and 92% of consumers will buy
Clipper has developed a next day, fully
(excluding Servicecare) in the year to
something again if the returns process
integrated, retail friendly solution that
30 April 2016 was derived from minimum
is easy (Source: Business 2 Community,
not only creates a high quality customer
volume guarantee contracts (2015:
E-Commerce Product Return Statistics
experience but which also allows
12%), which protect Clipper from volume
& Trends, April 2016).
for the ease of handling at the
downsides, whilst allowing the Company
receiving store.
to benefit from growing activity levels. The
- The JDA & Centiro Customer Pulse
- The success of the early trials means
slight growth in the percentage of revenue
Report 2016 reported that 73% of
that the service will be rolled out to the
derived from minimum volume guarantee
customers said that as a result of a poor
whole Waitrose estate in late summer
contracts was driven primarily by the full
online experience, they would be likely to
switch to an alternative retailer. The returns
2016, and the solution will be offered
to the wider Clipper customer base
year effect and growth of the Philip Morris
contract which commenced in the year to
process is the final touch point between
from autumn 2016.
30 April 2015, and the new contract with
the customer and the retailer, and
- The add-on benefit of the Click
M&Co which commenced during the
therefore must be highly efficient.
and Collect solution is the direct
year to 30 April 2016.
link to Boomerang.
The Company’s focus on the retail sector
Thus, the business model within the logistics
ensures that it is able to offer best-practice,
Clipper’s focus on customer service is
division in the UK (excluding Servicecare)
lowest-cost services to its customer base.
demonstrated by its wide portfolio of
provides a high degree of profit resilience,
The Group has a track record of innovation,
blue chip customers both in the UK and
with just 18% of revenue derived from more
including the development of:
Germany, many of whom have been
traditional, closed book arrangements
clients for many years.
(2015: 18%).
13
Our Business Model
continued
A proven and robust business model
The nature of the Clipper service offering
further embedded with those of their
(continued)
results in long-term, mutually beneficial
customers as omni-channel retailing
High degree of contractual certainty
relationships with its customers
increases, and also as more customers
underpins financial predictability
The specialised nature of the services
take on newer service offerings such as
and stability (continued)
provided by Clipper, particularly in the
returns management.
Servicecare has historically operated
e-commerce and high value product
using a traditional closed book charging
sectors, results in real long-term mutually
In addition to the above, credibility
methodology, but also trades under open
beneficial relationships with customers, as
gained in the provision of logistics services
book terms with one of its key customers,
evidenced by the high levels of customer
in relation to high value products represents
and where appropriate, will adopt this
retention experienced by the Group.
a real barrier to entry to this segment
contract methodology for new customers.
of the market.
However, it is likely that many arrangements
Many implementation projects involve
will remain on closed book terms (which is
the development of bespoke software,
This is equally true for the services
normal within this sector), which will have a
integration and other solutions, resulting in
Servicecare provides, which require
slight dilutive effect on the total percentage
Clipper playing a central role in the delivery
specialist skill, knowledge and manufacturer
of revenue derived from open book or
of the retailer’s customer proposition -
certifications/authorisations.
minimum volume guarantee contracts.
Clipper’s consultative approach with
customers leads to its systems becoming
In Germany, the vast majority of business is
embedded with those of the client.
currently conducted on closed book terms,
Clipper creates a unique solution for each
although some activity for s.Oliver (a key
customer, which cannot be easily or quickly
customer) is now charged on a partially
replicated. Clipper’s systems will become
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
open book basis. It is anticipated that as
e-commerce activities develop these are
likely to be on open book terms as such
arrangements are mutually beneficial for
both the retailer and the Group.
Within the commercial vehicles division,
revenues from new vehicle sales are
uncontracted, and can vary due to wider
economic conditions. However, margins on
new vehicle sales tend to be relatively low.
Margins on aftersales activities (i.e. servicing
and parts) are higher, and so the changes
in the sales mix can significantly affect
reported profit margins.
Since most commercial vehicles are
required by law to be inspected every six
weeks, this gives rise to stable profit and
cash streams from this part of the Group.
In addition, all tractor units sold by Northern
Commercials now come with a two year
standard repair and maintenance contract
which further underpins the revenue and
profit derived from aftersales activities.
14
Clipper Logistics plc Annual Report and Accounts 2016 Maximising value
Clipper uses the business model above
to promote new service offerings and
maximise value from existing
customer relationships, as well as to
attract new customers.
Clipper will continue to develop and
provide innovative retail solutions, as
demonstrated by the Boomerang returns
solutions launched in 2014, and the Click
and Collect solution which will shortly be
extended in collaboration with John Lewis,
in order to capitalise on the opportunities
presented to the Group in assisting
retailers to deal with these challenging
logistical issues.
Clipper is also focused on maximising
shareholder value through selective
expansion internationally (as demonstrated
by its recent expansion into Ireland), and
also through selective acquisitions offering
complementary logistics capabilities
(as demonstrated by the acquisition of
Servicecare during the prior year).
The commercial vehicles division
of the Group is robustly profitable
and cash generative – its profitability
driven by higher 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.
Our Strategy
In order to generate and preserve
long-term value for shareholders,
Clipper has four key growth strategies,
as detailed below:
Build on market-
leading customer
proposition to expand
the customer base
Develop new,
complementary
products and
services
ENHANCE
SHAREHOLDER
VALUE
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 and
returns management 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 retail logistics sector, 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 2016
Explore acquisition
Continue European
The full year benefit was realised of contracts that
opportunities
expansion
went live during the previous year with M&S, Ted
Baker and s.Oliver, and additional services for ASOS.
New contracts went live in the year with John Lewis
(Click and Collect), Zara, Browns, Haddad, Pep&Co
and M&Co.
New contracts have been secured which will
commence in the year to 30 April 2017, with
customers including John Lewis (pre-retail and
returns), Kidly, Flyers, Links of London and Inditex.
Further details of the above contract wins can be found
in the Operating and Financial Review on pages 18 to 28.
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 successful integration of Servicecare will
continue to enable the Group to leverage
Servicecare’s skillset in the electrical returns sector
to further enhance its customer proposition and
expand the customer base.
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Clipper Logistics plc Annual Report and Accounts 2016 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 2016
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 another successful
year with approximately 95% of product
successfully returned to prime stock at
By considering bolt-on acquisitions
which provide a platform for it to take
market, to assist both mainland European
retailers to move online, and UK retailers
to expand into Europe – the latter further
first pass.
its core technical expertise into new,
underpinned by Clipper’s strong customer
Clipper has also been developing its Click
adjacent markets.
relationships and reputation with UK retailers
(both pure-play e-tailers and multichannel
and Collect offering in collaboration with
Performance in the year to 30 April 2016
high street retailers).
John Lewis, as well as setting up an Ancillary
Whilst no acquisitions were undertaken
Distribution Centre for John Lewis to provide
during the year, the Group continually
Through considering other European
a wider range of services. The full impact
evaluates potential value-adding
destinations for potential opportunities.
of these projects is not anticipated to be
acquisition targets.
realised until the year ending 30 April 2018.
Going forward
Performance in the year to 30 April 2016
The Group benefited from the full year effect
Clipper has commenced work on
Clipper will continue to explore acquisition
of the new returns management contract
mechanisation and semi-automation
opportunities that enhance shareholder value.
that went live with s.Oliver in Germany
projects to further enhance our service
offering. The full benefit of these will be seen
in the financial years ending 30 April 2017
and 2018.
Further details of the above projects can be found in the
Operating and Financial Review on pages 18 to 28.
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.
in the prior financial year, under the
Boomerang brand.
We have focused on consolidating the
activities of the prior year to create a
sound platform for the future. The strong
opportunities within the UK business have
been the major focus of the team – as
reported previously, the international business
is a longer-term objective.
Further details of the above contract wins can be found in
the Operating and Financial Review on pages 18 to 28.
Going forward
In the medium term, Clipper will continue
to seek opportunities with new and existing
customers to provide services in Germany
and Ireland, and will also consider other
strategic mainland European destinations
for potential expansion.
17
Operating and
Financial Review
1. Overview of results
The Group continued to make
excellent progress in the financial year
to 30 April 2016.
Group revenue
Group revenue increased by 23.7% to
£290.3 million, with strong growth in all
business areas:
18
Revenue
Year to
30 April 2016
£m
Year to
30 April 2015
£m
%
change
E-fulfilment & returns management services
Non e-fulfilment logistics
97.6
108.4
60.6
+61.1%
102.1
+6.1%
Total value-added logistics services
206.0
162.7 +26.6%
Commercial vehicles
Inter-segment sales
85.6
(1.3)
73.6 +16.4%
(1.5)
Group revenue
290.3
234.8 +23.7%
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 logistics services segment,
Revenue growth in commercial vehicles
the Group benefited from:
was driven by:
- the full year impact of contract wins
- a £10.3 million increase in new vehicle
secured in the previous financial year
sales. The number of new units sold
including, amongst others, M&S, Ted
reduced slightly by 1% year-on-year,
Baker and s.Oliver, and additional
services for ASOS;
but the average selling price increased
significantly by 26.5% due to the mix of
vehicles sold; and
- the full year impact of the acquisition of
Servicecare and its subsidiary Electrotec
- a £1.5 million increase in aftersales
in December 2014;
revenues, comprising servicing, body
shop and parts sales.
- organic growth on existing contracts,
including ASOS, SuperGroup and Wilko;
- the ongoing shift in retail trends towards
online trading which continues to bring
particularly strong organic growth to our
e-fulfilment customers; and
- the part-year impact of operations
commenced during the year to
30 April 2016, including Pep&Co,
Haddad, Zara, Browns and M&Co. The
full year benefit of these operations will
be realised in the year to 30 April 2017,
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 2016 and early calendar year 2017.
Clipper Logistics plc Annual Report and Accounts 2016 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
management team assesses corporate
Adjusted EBIT
performance. Adjusted EBIT is assessed
E-fulfilment & returns management services
against Board approved budgets. A further
KPI is net debt, which is discussed on
page 21.
Non e-fulfilment logistics
Central logistics overheads
The Group grew Adjusted EBIT strongly in
all segments and business activities:
Total value-added logistics services
Commercial vehicles
Head office costs
Group Adjusted EBIT
Year to
30 April 2016
£m
Year to
30 April 2015
£m
%
change
8.1
10.7
(4.7)
14.1
2.3
(1.9)
14.5
5.5
+47.6%
10.1
+6.4%
(4.1)
11.5 +22.5%
1.9 +20.8%
(1.4)
12.0 +21.0%
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 21.0% to
Similarly, revenue derived from minimum
Non e-fulfilment operations include
£14.5 million in the year to 30 April 2016,
volume guarantee contracts is fixed at a
receipt, warehousing, picking, packing
and the Group expects to achieve further
minimum level, so that a shortfall in activity
and distribution of products on behalf
EBIT growth in the coming financial year due
levels would give rise to a lower cost base,
of customers. Within this business activity
to the full year benefits of contracts brought
and a higher reported margin.
the Group handles high value products,
on line in the year to 30 April 2016, the
including tobacco, alcohol and designer
commencement of activities on
In addition, within the commercial vehicles
clothing, and also undertakes traditional
further new contracts and a strong new
segment, the level of high value, relatively
retail support services including processing,
business pipeline.
low margin new vehicle sales also distorts
storage and distribution of products,
Adjusted EBIT margin (%) is not a key metric
as the high proportion of open book and
Accordingly, Adjusted EBIT is a more relevant
reported margins.
particularly fashion, to
high street retailers.
minimum volume guarantee contracts
measure of financial performance than
Central logistics overheads include the costs
within the UK logistics division distorts
Adjusted EBIT margin (%).
reported margins.
of the directors of the logistics business, the
project delivery and IT support teams, sales
E-fulfilment & returns management
and marketing, accounting and finance,
This is due to an element of management
services include the receipt, warehousing,
and human resources, that cannot be
fees on certain contracts being relatively
stock management, picking, packing
allocated in a meaningful way to business
fixed in the short term, so that an increase in
and despatch of products on behalf
units. In our 2015 Annual Report, we
revenue in periods of increased activity will
of customers to support their online
stated our intention to invest more in
not necessarily give rise to a proportionate
trading activities, as well as a range of
such resources during the year ended
increase in profit, resulting in lower reported
ancillary support services including returns
30 April 2016 and we have done so,
margins. Conversely in periods of reduced
management, branded as ‘Boomerang’,
particularly in operational support and
activity levels, reported margins would
under which returns of products are
business development.
typically increase.
managed on behalf of retailers.
19
Operating and
Financial Review
continued
1. Overview of results (continued)
Group Adjusted EBIT (continued)
London Stock Exchange in the year ended
Taxation
Additionally, the central logistics overheads
30 April 2015, the Group invites certain
The effective rate of taxation of 21.2%
have increased in the year due to share
employees to participate in an annual
(2015: 22.8%) is higher than the standard
based payment charges. In the year,
iteration of the PSP and all employees to
UK rate of corporation tax of 20.0%
we have restructured the reporting within
participate in an annual iteration of the
(2015: 20.9%) principally due to certain
the central logistics management team,
Sharesave Plan. Each scheme vests over
expenditure incurred which is disallowable
preparing the business for future growth.
a three year period. As a result, the year
for tax purposes and the higher rate of tax
Whilst incremental investment is likely to be
ended 30 April 2016 included a full year of
to which our German business is subject.
required in the logistics overheads base as
charges in respect of options granted in the
The reduction in the year-on-year effective
the business continues to grow, we do not
year ended 30 April 2015, together with a
rate of taxation stems from the reduction in
expect further significant stepped increases
in the overheads base in the foreseeable
part year of charges in respect of options
granted in the year ended 30 April 2016;
the headline rate in the UK, together with a
reduction in the quantum of disallowable
future, other than in respect of share based
the prior year only incurred a part year of
items, some of which related to the
payment charges (see below).
charges in respect of options granted in the
exceptional and discontinuing items in the
year ended 30 April 2015.
year ended 30 April 2015.
The commercial vehicles business, Northern
Commercials (Mirfield) Limited, operates
The profit after tax for the year to 30 April
Iveco and Fiat commercial vehicle
2016 was £10.3 million (2015: £7.3 million).
Earnings per share
dealerships from six locations, together
In the year ended 30 April 2016, there were
As discussed above, there were no
with three sub-dealerships. It sells new and
no discontinuing costs (2015: £0.3 million)
non-recurring costs in the year ended
used vehicles, provides servicing and repair
and no exceptional costs (2015: £0.9
30 April 2016 (2015: £1.2 million).
facilities, and sells parts. Vehicles sold and
million) expensed in arriving at this figure.
serviced range from small light commercial
Earnings per share were 10.3 pence for
vans, through to articulated tractor units.
As such, adjusted profit after tax (which
the year to 30 April 2016 (2015: 8.4 pence
excludes the discontinuing costs,
adjusted, 7.3 pence unadjusted).
Head office costs represent the cost of the
exceptional costs and the tax associated
Executive Chairman, Chief Financial Officer,
with those costs) for the year to 30 April 2016
Deputy Chief Financial Officer, Group
was also £10.3 million (2015: £8.4 million),
Capital expenditure
General Counsel, Non-Executive Directors
an increase of 23.6%.
Of total capital expenditure of £16.2 million
and plc compliance costs. The year-on-year
(2015: £7.8 million), £15.5 million
increase in head office costs is attributable
Of the exceptional costs of £0.9 million
(2015: £7.3 million) related to the logistics
to full year costs of the Group General
incurred in the year to 30 April 2015, £0.7
services segment and £0.7 million
Counsel and Deputy Chief Financial Officer
both appointed during the year ended
million related to the costs of the IPO and
£0.2 million related to legal and professional
(2015: £0.5 million) related to the
commercial vehicles segment. Of the
30 April 2015 to strengthen the senior
expenses incurred on the acquisition
£15.5 million attributable to the logistics
management structure of the Group post-
of Servicecare.
IPO, and incremental Non-Executive Director
costs and share based payment charges
services segment, approximately
£10.7 million is backed by customer
commitments to repay Clipper over the
following the Group’s listing on the London
Net interest charges
term of the customer contracts.
Stock Exchange.
Net interest charges for the year to
30 April 2016 were £1.4 million, in line with
Share based payment charges totalling
the charge incurred in the previous year.
£0.5 million (2015: £0.1 million) have been
charged to central logistics overheads,
commercial vehicles and head office costs
as appropriate in respect of the Sharesave
Plan and the Performance Share Plan
(“PSP”) (see note 22 to the Group Financial
Statements). Since listing on the
20
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
1. Overview of results (continued)
Capital expenditure (continued)
whilst in the commercial vehicles business
Net debt
Clipper has committed to spending a
working capital is substantially funded by the
In addition to Adjusted EBIT, net debt is
significant sum on capital expenditure
manufacturer through stocking facilities for
considered a Key Performance Indicator for
in the year ended 30 April 2017, with
new vehicles, and trade credit terms for parts
the Group. As with Adjusted EBIT, net debt is
£9.5 million contracted at 30 April 2016
supplied. Net cash used in working capital
assessed against Board approved budgets.
and £2.8 million in the course of
was broadly neutral in each of the two years
construction (2015: £0.8 million and £nil).
ended 30 April 2016 and 30 April 2015.
The Group had £18.8 million of net debt
£9.5 million of the total relates to the new
outstanding at 30 April 2016 (2015:
Northampton shared-use facility where
Net cash paid in the year to 30 April 2015 for
£13.6 million), broadly in line with
John Lewis is the core client. Where a
the purchase of Servicecare amounted to
expectations. The increase in net
customer has a strong credit rating, we will
often fund the initial capital requirements
£3.7 million. A further £2.2 million was paid in
deferred consideration in the year ended
debt compared to the prior year was
driven primarily by the need to invest in
and customers will commit to repay us
30 April 2016.
over the term of the contract, together with
capital assets to service significant new
contracts, largely backed by contractual
finance charges and a management fee.
There has been significant investment in
commitments from customers to repay that
the fixed assets base this year, as noted
capital expenditure over the term of the
above. However, providing the terms are
contract, together with both finance and
Goodwill and other intangible assets
commercially acceptable, we typically
management fees.
The goodwill recognised on the acquisition
fund a significant proportion of such capital
of Servicecare in the year ended
expenditure using hire purchase and
The Group renegotiated its principal bank
30 April 2015 amounted to £4.2 million,
finance leases, and so not all of the fixed
facilities in the year ended 30 April 2016.
and the contracts and licences, principally
asset investment actually results in a cash
Before the modification, the Group had
in respect of customer relationships, were
outflow. Cash capital expenditure, including
principal bank facilities comprising a
valued at £1.2 million. We have not revised
intangible assets, for the year ended
Medium Term Loan of £8.75 million, a
the acquisition fair values of the acquired
30 April 2016 was £5.9 million compared to
committed Revolving Credit Facility of
assets in the twelve months’ post-acquisition
£0.3 million in the year ended 30 April 2015.
£12.5 million maturing in April 2019 and
and so the gross value of the goodwill and
an overdraft facility of £5.0 million, renewed
contracts and licences recognised on
The Group repaid £10.1 million of bank
annually. After the modification, the Group’s
30 April 2016 remain at the same values as
loans in the year, including £10.0 million
principal bank facility is a £30.0 million
they were on 30 April 2015. The amortisation
of Medium Term Loans, £8.75 million of
Revolving Credit Facility committed until
recognised through the income statement
which was repaid on the renegotiation of its
January 2021, from which an overdraft of
in the year ended 30 April 2016 in respect of
principal bank facilities with Santander (see
£8.0 million and bonds and guarantee
this acquisition amounted to £156,000.
‘Net debt’ section below). £6.4 million of new
loans, including £5.5 million of the Revolving
facilities of £2.4 million have since been
carved out (£2.3 million of bonds and
Credit Facility under the modified principal
guarantee facilities were in place at
Cash flow
bank facilities, have been drawn in the year.
30 April 2016, with a further £0.1 million
Cash generated from operations was
carved out subsequent to the year
£20.5 million (2015: £12.6 million, after
In line with the stated dividend payment
end). Additionally, the interest margin
paying £2.1 million of IPO transaction costs,
policy, a final dividend for the year ended
and the covenant requirements are
so £14.7 million before taking account of
30 April 2015 of £3.2 million (3.2 pence per
more favourable to Clipper under the
such costs), an increase of 39.8%.
share) and an interim dividend of
renegotiated facility than under the
£2.0 million (2.0 pence per share) for
facilities it replaced.
The Group’s business model gives rise to
the year ended 30 April 2016 were paid in
high levels of cash generation. In the UK
the year to 30 April 2016. This compares to
logistics business, Clipper is typically paid in
the maiden interim dividend of £1.6 million
the month in which services are delivered
(1.6 pence per share) and the dividend
on open book and minimum volume
of £0.3 million paid to the former parent
guarantee contracts, giving rise to a typically
company prior to IPO in the year to
negative investment in working capital,
30 April 2015.
21
Operating and
Financial Review
continued
2. Value-added logistics services
Market overview, size and growth
According to market research (Source:
There are significant challenges faced
of market and market trends
IMRG), the UK’s e-commerce market has
by retailers with such a high volume of
Traditional bricks and mortar retail still
grown from £0.8 billion in 2000 to
heavily-discounted sales concentrated
constitutes the majority of retail sales in
£104 billion in 2014 and £114 billion in 2015
over such a short period, including stock
the UK. However, in fashion the growth of
(10% annual increase), with a further 11%
management, margin preservation and
online retailing and the desire for major
growth forecast in 2016. Within that market
adverse media exposure as a result
retail brands to have as many different
there are also significant changes
of poor customer experiences in the
touch points with their customers as possible
taking place:
scramble to secure the best deals.
means that multi-channel retailing will be a
- orders placed via mobile channels
dynamic driver of change for both the retail
(smartphones and tablets) accounted
In 2015, 12.5% of sales in the UK were online
and logistics markets in the near future. An
increasing number of distribution channels
for 51% of UK e-retail sales in Q4 2015
compared to 34% of UK e-retail sales
(Source: ONS); by 2022, one third of sales in
the UK are forecast to be conducted online
are now required to meet the demands of
in Q1 2015 (and only 1% during 2010)
(Source: Insider Trends). The rest of Europe is
the consumer, including shopping at stores,
(Source: IMRG). In fashion, one of
also experiencing a similar trend. Germany
home delivery, Click and Collect as well as
Clipper’s core sectors, mobile is
is the second largest e-commerce market
the return of purchased items. The fact that
estimated to account for as much
in Europe after the UK. Here, online retail
the penetration of internet-based sales in
as two thirds of fashion e-commerce
sales are forecast to reach €73 billion by
the UK economy (12.5% of total retail sales
traffic (Source: Fashion Focus 2016,
2019, and Europe as a whole is forecast to
in 2015 (Source: ONS)) is one of the highest
Affiliate Window);
in the world leads the Directors to believe
generate €233 billion of online retail sales by
2018 (Source: Forrester Western European
that the UK is at the forefront of the logistics
- UK consumers have embraced Click and
Online Retail Sales Forecast for 2013 to
challenges being posed to retailers by the
Collect (buying online and picking up
2018).
growth in online retail.
in store) and it is growing in importance
rapidly. In their latest financial results,
The retail sector is undergoing structural
Halfords reported 91% of online orders
Structural growth in online,multi-channel
changes and, as a market leader in the
were through Click and Collect, making up
and omni-channel retailing
provision of services to support retailers’
12% of total revenue. Argos, where 54%
The UK has one of the highest rates of
online and returns management challenges,
of total revenue is generated online, drove
internet and smartphone penetration in
the Group is strategically well-placed to
34% of online orders with collection
Western Europe and this level of penetration
capitalise on the very significant growth
in-store. For John Lewis, 54% of online
is expected to increase further in coming
expected in this sector of the market.
orders are Click and Collect, 66% of
years. The proportion of online sales as a
which are collected in Waitrose stores.
percentage of total retail sales in the UK
(Source: Retail Economics, March 2016);
is already one of the highest in the world
(Source: eMarketer December 2014).
- whilst Black Friday has been a mainstay
for bricks and mortar retailers in the UK
This trend has fundamentally altered the
for a number of years, the growth in the
logistical requirements of retailers, who
Black Friday-Cyber Monday weekend in
must meet the challenges of multi-channel
e-commerce is even greater. Whilst multi-
retailing (whereby customers place orders
channel retailers recorded a 4% increase
across a variety of sales channels, for
in November 2015 sales compared to
example retail stores, online stores, mobile
November 2014, online-only retailers
stores and telephone sales), which demands
recorded a 24% increase (Source: IMRG).
complex warehousing, order processing
Indeed, Black Friday 2015 was the first
and stock management systems in order to
£1 billion online shopping day in the
deliver a high quality service to consumers.
UK, and the Black Friday-Cyber Monday
weekend in 2016 is anticipated to result
Omni-channel represents the latest evolution
in a record-breaking £5 billion spent
of multi-channel retailing, whereby retailers
online (Source: Salmon, May 2016).
offer consumers flexibility not only on the
The UK’s e-commerce
market has grown from
£104 billion in
2014 to £114
billion in 2015
(10% annual increase)
22
Clipper Logistics plc Annual Report and Accounts 2016
Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
2. Value-added logistics services (continued)
Structural growth in online, multi-channel
involved, returns rates can vary from less
or a collection point. As well as providing
and omni-channel retailing (continued)
than 10% to over 35% (Source: Metapack).
this range of returns methodologies from
method of order placement (as is the case
A recent market study highlighted that
which consumers can choose, it is good
with multi-channel) but also in respect of the
83% of consumers would stay loyal to
practice for the retailer, particularly e-tailers,
choice of delivery destination – for example,
a retailer if it could provide a reliable
to also provide returns ready packaging and
the consumer might place an order online
and effective returns service (Source:
ready-printed returns labels not requiring
and choose to have the order delivered to
Metapack). Retailers are therefore focusing
pre-authorisation, and for the consumer to
that retailer’s high street store, or at a Click
more and more on consumers’ returns
receive credit for any goods returned as
and Collect site in a third party location,
experience, just as much as they are on
soon as possible.
rather than their home address. Retailers
consumers’ purchase experience. Retailers
are embracing the trend towards Click
and Collect as it brings customers in-store
are increasingly focusing on ensuring that
returns management is handled effectively
This developing returns culture has several
implications for retailers. Returns cost money
inspiring impulse purchases and building
so that their brands are not damaged by
so many retailers bear the cost to ensure
brand loyalty. This development adds
customers using social media to comment
that they don’t risk alienating their customers.
even greater complexities to the logistical
unfavourably on their experience.
Free returns as part of an offer in fashion
requirements of retailers.
for example are used as a sales generator
Where historically customers would return
to help with conversion. By focusing on
the product to the store where the purchase
improving the returns process, retailers can
Returns management demands
was made, more recently as online retail
reduce the adverse impact on their bottom
of retailers increasingly complex
has developed, customers are demanding
lines. In addition, product cleaning and
Returns management continues to be an
choice in their method of return, for
rectification during the returns management
ever-increasing area of importance for
example posting the product back to the
process can maximise the saleable value to
retailers. Depending upon the category
retailer, or taking it into a high street store
the retailer of returned goods.
Supplier
Inbound
INBOUND
COMPLIANT
Warehouse
Retailer DC
INBOUND
COMPLIANT
ENHANCED
CUSTOMER CARE
BRAND
PROTECTION
BOOMERANG™
SOLUTION
NON
COMPLIANT
Clipper Returns Centre
23
Operating and
Financial Review
continued
2. Value-added logistics services (continued)
Returns management demands of retailers
concept, and we are particularly pleased to
- the installation of a switch sorter which
increasingly complex (continued)
report that under Boomerang approximately
routes parcels automatically for specific
Managing the returns process also
95% of products have been successfully
couriers; and
represents a stock management and
returned to prime stock at first pass.
processing challenge for retailers, since
- automated box creation, carton packing
traditional distribution centres are designed
Servicecare brings additional returns
and labelling.
to receive and process bulk quantities of
handling capabilities to Clipper. Servicecare
identical product, rather than to receive
specialises in electrical reverse logistics, a
The majority of capital costs on contracts
individual units of product. Equally, such
solution which had, until the acquisition,
are typically front-loaded and occur in
returned units will inevitably require some
represented a gap in Clipper’s service
the run up to project ‘go live’. A number of
degree of inspection, rectification, cleaning
or repair before going back into available
offering. The Servicecare proposition adds
additional capability into our Boomerang
contracts, including the new Northampton
logistics facility initially providing ancillary
stock, or may even be deemed unfit for
brand. We are promoting the Boomerang
services for John Lewis and Clipper’s Click
prime sale. Traditional warehouses are simply
brand across Servicecare’s existing
and Collect offering, have significant
not geared up for dealing with such a high
customers and are broadening our service
capital commitments authorised at
level of intervention for single products.
offering with existing Clipper customers with
30 April 2016 totalling £16.7 million
the Servicecare electrical returns proposition,
(2015: £9.4 million). Customer-specific
Retailers therefore need to rework the
as evidenced by our securing of the
capital costs such as warehouse fit-out costs
product into a saleable state very quickly
contract with John Lewis which includes an
are typically recovered through depreciation
to reduce working capital investment
electrical returns aspect.
and maintain margins. Clipper’s returns
and finance charges to our customers over
the life of the underlying customer contract;
proposition gets the stock back into a
Our inaugural reverse logistics contract
speculative space fill capital investment
distribution centre compliant format allowing
in mainland Europe commenced in the
such as adding new mezzanine flooring
the distribution centre to focus on its core
year ended 30 April 2015 with s.Oliver in
tends to be recovered from customers when
function of fulfilment. The Group has a strong
Germany, owners of a global fashion brand.
the space is ultimately filled. The majority of
track record of managing these processes
Under the contract, Clipper manages
capital expenditure is financed through hire
for customers, including managing the
s.Oliver’s European wholesale and retail
purchase agreements.
returns operation for ASOS, the UK’s leading
returns management service.
online fashion retailer, and for s.Oliver, one of
the largest fashion and lifestyle companies
E-fulfilment & returns management growth
in Europe.
Mechanisation and technology
Our ability and agility, particularly in respect
Mechanisation and semi-automation is
of omni-channel, multi-channel, returns
Further, the power of social media and
consumer review websites enhances the
becoming increasingly prevalent in the
market for large volume customers. Clipper’s
management and mechanisation noted
above, have enabled the Group to make
importance of returns management as the
in-house knowledge and skill allows us
substantial advances in its revenues and
returns experience represents the final
to work in a collaborative way with our
earnings, significantly outperforming market
touch point between a retailer and the
customers to deliver best practice solutions.
growth. Revenues from e-fulfilment & returns
consumer – a badly handled customer
Clipper has recently completed a number
management services increased by 61.1%
experience in respect of the returns process
of client initiatives in the year just ended
from £60.6 million for the year to
may be quickly communicated by that
and is working on a number of other such
30 April 2015 to £97.6 million for the year
customer to a large number of people,
projects in the current year, including:
to 30 April 2016, with Adjusted EBIT growing
particularly via social media, which has the
- automated sortation: one automated
by 47.6% from £5.5 million to £8.1 million
potential to harm a retailer’s future sales
sorter is currently in operation in Ollerton
over the same period.
prospects.
and we have two others used for Click
and Collect services, one of which
To address the latest challenges faced by
is in operation in Swadlincote and
retailers in relation to returns management
another of which is under construction in
as outlined above, Clipper has successfully
Northampton;
introduced the ‘Boomerang’ brand and
24
Clipper Logistics plc Annual Report and Accounts 2016
Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
2. Value-added logistics services (continued)
E-fulfilment & returns management growth
Despite the increasingly challenging logistics
In April 2016 we appointed a new Managing
(continued)
demands of the Black Friday-Cyber Monday
Director at Servicecare to drive the future
This is a particularly pleasing performance,
weekend in the UK outlined previously,
growth and development strategy of the
as one of our core strategies has been
Clipper delivered a very successful 2015
business. The new Managing Director
to become a market leader in the
Black Friday-Cyber Monday trading period
brings a wealth of experience in electrical
e-commerce sector, and to be a thought
for its clients and maintained excellent
returns, having previously held senior roles
leader in the provision of value-added
service levels throughout.
at Panasonic and Comet. He is working
services across the sector.
alongside the UK Logistics team to broaden
Clipper had been providing e-commerce
the service offering to existing customers
Organic growth in activities with SuperGroup,
fulfilment services to Tesco in a property
to also include electrical returns.
ASOS, Wilko, John Lewis and Tesco, the
full year impact of the s.Oliver operations
leased by Tesco in Daventry. As a result of
underutilised space elsewhere in its property
commenced in the year ended
portfolio, Tesco has opted not to renew its
Non e-fulfilment logistics is central
30 April 2015, and the new operations
Daventry lease and intends to relocate into
to our future strategy too
commenced with Zara, Browns and Ireland’s
its Fenny Lock property from August 2016.
The Group will continue to develop and
largest retailer in the year ended 30 April
The compensation for this early termination
deliver truly value-added services to address
2016 have all contributed favourably to the
means Clipper’s profit and loss account for
the needs of retailers in traditional bricks and
growth in this business activity year-on-year.
the year ended 30 April 2017 will not
mortar logistics, including receipt of inbound
be adversely impacted by this.
product, storage, store-readiness of product,
The results of this business activity include a
and distribution to retail destinations. This
full year contribution from Servicecare in the
In this business activity, since the year end
business activity also includes our transport
year ended 30 April 2016 compared to only
on 30 April 2016:
and high value logistics activities.
five months in the year ended 30 April 2015
- we have commenced activity in the new
following its acquisition in December 2014.
pre-retail and returns facility for John Lewis
Revenue from non e-fulfilment operations
In addition to the full year effect, Servicecare
in Northampton;
also delivered significant organic growth
grew by 6.1% for the year ended
30 April 2016, from £102.1 million to
year-on-year, and profitability is in line
- we have commenced operations with
£108.4 million, with Adjusted EBIT increasing
with our expectations at the time
Kidly, a start-up business which exclusively
by 6.4%, from £10.1 million to £10.7 million.
of the acquisition.
sells baby products through its website;
Within non e-fulfilment, the full year effect
This business activity saw the launch of a
- we have secured a new contract with
of the contracts secured in the prior year
collaboration with John Lewis in
Links of London to provide warehousing,
with Philip Morris and Ted Baker in the UK
September 2015. This collaboration initially
involved providing John Lewis with a Click
e-commerce and ancillary services
from our Milton Keynes facility, the
contributed to revenue and EBIT growth,
as did organic growth on existing contracts
and Collect service, comprising automated
capacity of which has recently been
with Sainsbury’s, British American Tobacco,
parcel sortation and transport distribution
increased through the addition of a
SuperGroup and Bench. Our transport
services, to 115 stores in the Waitrose
mezzanine floor; and
portfolio, 33% of the total Waitrose store
operations at Rotherham and Harlow and
our tobacco contract packing operations
estate. The remainder of the Waitrose store
- we have seen further growth as a result
at Brighouse also performed particularly
estate will be added from August 2016.
of Zara transferring additional logistics
strongly, but this was partly offset by the
We are also in advanced discussions with
activities to Clipper. We have also secured
cessation of the Aurora and Michael Lewis
other Clipper customers who wish to use this
new activity with Inditex post year-end in
contracts during the year.
network. This collaboration with John Lewis
non-Zara brands.
leaves Clipper extremely well-positioned to
exploit this strategically important growth
area of the market.
In the year just ended, we implemented
a complex operational change to the
SuperGroup activity in Burton whereby
the e-commerce and non e-commerce
activities could both be serviced from a
common pool of stock.
25
Operating and
Financial Review
continued
2. Value-added logistics services (continued)
Non e-fulfilment logistics is central to our
Multi-user operations
future strategy too (continued)
The Group encourages the use of multi-user
The Group will continue to innovate to deliver
sites, where a multiplicity of customers is
best in class solutions for its customers.
served from a single location.
Additionally, in the year to 30 April 2016 we
This facilitates the sharing of specialised
commenced operating under new long-
resources, and assists in optimising and
term contracts with:
balancing demand on people and facilities,
- Haddad, specialists in fashion for children
in turn allowing the Group to provide cost-
and teenagers, for warehousing and
effective solutions.
transport services;
- Pepkor UK Retail Limited, the owners of
Investment in key personnel
the fashion brand Pep&Co, to provide
The Group differentiates itself by providing
warehousing and returns management
consultancy-led, value-added services to
services; and
its actual and prospective client base. We
have established ourselves as a thought
- M&Co, to provide transport services.
leader within the logistics sector, and this is
evidenced both by our customers’ buy-
In this business activity, since the year end on
in to our innovative approach, and by
30 April 2016:
brand health reviews conducted by an
- we began operating a forward orders
independent market research consultancy.
service line and transferred the pre-retail
service line formerly performed in Enfield
The Group is central to the achievement
to the new Ancillary Distribution Centre for
by its customers of their own objectives
John Lewis;
and goals.
- we have leveraged our relationship with
Accordingly, we invest in recruiting, training
Haddad to secure additional activity on
and developing people who are specialists
Flyers and others of their brands;
in their relevant fields. These include
information technology, solution design,
- we have been notified that the Ted Baker
facilities specification, implementation and
and Hobbycraft contracts will not be
renewed on expiry in January 2017 and
management, e-commerce and returns
management, and project management.
September 2016 respectively. We are
confident that the business development
The Group has a Senior Leadership
pipeline, together with the new long-term
Development Programme to enhance the
contracts discussed above will provide
skills of its senior team, and to assist with
continued earnings growth in this sector
succession planning.
into the next financial year and
beyond; and
- we have commenced additional
packing activity for certain of our
tobacco customers.
26
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Operating and
Financial Review
continued
3. Commercial vehicles
The commercial vehicles business delivered
The business achieved a number of
EBIT of £2.3 million in the year to
important key performance measures
30 April 2016 (2015: £1.9 million), an
in the year:
increase of 20.8% on the previous year.
- Assistance Non-Stop: Northern
Commercials achieved the best
Northern Commercials operates from six
response time of all Iveco dealers in the
dealership locations and has three sub-
UK, averaging 46.1 minutes to arrive to
dealers. Main dealerships are located
provide assistance to breakdowns;
in Brighouse, Manchester, Northampton,
Dunstable, Tonbridge and Brighton, and
- Vehicles Off-Road: Northern Commercials
in the year ended 30 April 2016 Northern
Commercials added an Iveco sales office
was the number one dealer, with an
average of 1.9 days off-road for repairs;
on the sub-dealer’s site in Liverpool. Thus,
the business operates across the north
- MOT pass rate at our dedicated Test
of England and Wales (with sub-dealers
station in Brighouse of 100%; and
supporting this geographic territory), through
the midlands, and into the south-east.
- parts service: 97% of parts required by
customers were delivered within 24 hours.
The business sold 1,792 new vehicles in the
year to 30 April 2016 (2015: 1,810), and
443 used vehicles (2015: 470). However,
due to a change in mix of vehicles sold,
the average selling price of a new vehicle
in the year to 30 April 2016 was £29,000
compared to £23,000 in the prior year,
an increase of 26.1%, and the average
selling price of a used vehicle was £11,000
compared to £9,000 in the prior year, an
increase of 15.8%. Servicing saw increases
in revenue between the year ended
30 April 2015 and the year ended 30 April
2016, with a 7.2% increase in the number
of hours sold, and parts sales increased
by 4.1%.
Key customers of Northern Commercials
include Allied Bakeries, Asda, Clancy
Docwra, Dawson Rental, Ryder, Variety Club
(the Children’s Charity), and many other
household names.
27
Operating and
Financial Review
continued
4. Current trading and outlook
As noted previously, the Group secured a
Following the UK referendum decision to exit
number of significant contract wins in the
the European Union, we do not anticipate
two years ended 30 April 2016, the full year
any immediate impact on our activities.
benefit of which will not be realised until the
We believe our business model, whereby
years to 30 April 2017 and 30 April 2018.
the majority of our contracts are on an
open-book or minimum volume basis,
As we look ahead to the 2017 financial
coupled with fuel price escalators in our
year, we have a strong new business
other contracts, means we will be able to
pipeline. Since the year end we have won
mitigate the effect of short term economic
new contracts within both e-fulfilment &
uncertainty. We will continue to monitor and
returns management services and non
e-fulfilment logistics, both in the UK and
react accordingly to the development of
the new trading environment as the details
Europe, through our focus on our retail
of the exit process become clearer.
specialisms and provision of cost-effective,
value-added solutions. These contract wins
The Board is confident in the Group’s
will more than compensate for the contract
prospects for the full year ahead. Current
losses mentioned earlier in this report. We
trading is in line with our strategic plan,
look forward to updating shareholders on
and we are confident of achieving another
the progress of these new contracts.
period of excellent financial performance
in the year to 30 April 2017.
The structural management changes
we have made in central logistics, and
key personnel changes in Servicecare,
leave us ideally positioned to proactively
and reactively scale-up our activities as
necessary. These changes will enable us
to cross-fertilise Clipper’s and Servicecare’s
activities and customers and will allow us to
deliver further growth.
Our new Click and Collect solution in
collaboration with John Lewis, soon to
experience an increase in level of activity
when the second sorter hub goes live in
Northampton in August 2016, is expected
to generate a strong financial contribution
from the year ending 30 April 2017 onwards.
The commercial vehicles business is
expected to continue to deliver steady
growth in profitability in the year
to 30 April 2017.
28
Clipper Logistics plc Annual Report and Accounts 2016 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 Board and Senior Management
Team (“SMT”) are collectively responsible
for managing risk across the Group. Risks
are formally reviewed regularly and risk
registers are updated throughout the year.
The Company has carried out a robust
assessment of the principal risks facing
the Group.
Principal risks are identified through an
evaluation of likelihood of occurrence and
potential impact. The SMT also reviews
specific strategic, operational, 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.
The Group adopts the following process:
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 2016 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
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.
The Group has a team of dedicated health and safety professionals who maintain, audit
and review detailed health and safety procedures and processes. The team advises the
board and SMT. It also provides leadership and training to encourage a culture which
values the early identification of situations that could lead to accidents.
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. The Group
maintains an extensive IT team supported where appropriate by external expertise.
Particular focus is given to recovery processes and procedures, infrastructure resilience,
innovation and security.
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.
Health & safety
Our activities are conducted in a variety
of operating environments. A failure to
monitor or manage health and safety
risks appropriately can not only lead to
an unsafe working environment for our
people and others who interact with us
but may cause significant reputational
damage and legal liabilities.
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.
32
Clipper Logistics plc Annual Report and Accounts 2016 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 European Union,
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 employs internal and external experts where appropriate, supported by its
Group General Counsel and external law firms, to set policy and monitor its application.
Data control is a major area of client and regulatory focus. The Group’s IT management
systems and processes are designed to ensure controls over system access and data
flow movements are carefully monitored. The Group undertakes appropriate staff training
to ensure legal compliance. 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
In the year just ended, the Group undertook an assessment of its funding requirements in
the context of its growth plans, and entered into modified facilities with its bank to ensure
that expected future growth plans can be funded within these increased facilities, as it
did in the prior year following IPO.
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 and changes to suppliers’ bank details, including
combinations of oral and written confirmations from known contacts.
Formal whistleblowing and anti-bribery policies are in place.
33
Viability Statement
In accordance with provision C.2.2 of
The Board’s assessment has been made
Based on this assessment, the Directors
the 2014 revision of the UK Corporate
with reference to the resilience of the Group
confirm that they have a reasonable
Governance Code (the “Code”), the
and its historical ability to deliver strong
expectation that the Company and the
Directors have assessed the prospect of
operational cash flows, the Group’s robust
Group will be able to continue in operation
the Company and the Group over a longer
balance sheet, the Group’s current strategy,
and meet all their liabilities as they fall due
period than the 12 months required by the
the Board’s attitude to risk, and the principal
up to 30 April 2019.
‘Going Concern’ principle.
risks documented in the Strategic Report.
The starting point for the Board’s review
Whilst the Board has no reason to believe
was the annual strategic planning process,
the Group will not be viable over a
which results in business plans for the next
longer period, the period over which the
three financial years. These plans are then
Board considers it appropriate to form a
subjected to risk and sensitivity analysis. The
reasonable expectation as to the Group’s
assessment considers the potential impacts
longer term viability, is the three-year
these risks would have under severe
period to 30 April 2019. This period reflects
but plausible scenarios on the Group’s
the period used for the Group’s business
business model, the Group’s solvency and
plans and the typical length of a customer
liquidity, compliance with covenants, likely
contract, and has been selected because
availability to the business of future bank
it gives management and the Board
facilities and other key financial ratios. The
sufficient, realistic visibility on the future
Board considers that the Group’s broad
in the context of the industry and market
spread of customers across independent
environment. The Board has considered
market sectors, the majority of which are
whether it is aware of any specific relevant
underpinned by long-term agreements with
factors beyond the three year horizon and
minimum volume guarantees or
confirmed that there are none.
open-book terms, acts significantly to
mitigate the impact any of these risks
might have on the Group.
34
Clipper Logistics plc Annual Report and Accounts 2016 Corporate Social Responsibility
The Group recognises the importance of
Development at senior level is
Schools and universities
Corporate Social Responsibility (“CSR”),
supported by a Senior Leadership
To encourage a greater number and
and our impact on the environment
Development Programme.
and our people, their development,
higher calibre of students to enter the
logistics sector we have partnered with
commitment and relationships with our
The Group has continued its investment
Huddersfield University.
customers, the community and other
in additional project delivery and senior
stakeholders are central to our plans.
management resource in order to deliver
As a founding member of the Novus Trust
significant organic growth into the future.
we continue to support this initiative aimed
People development
at encouraging high calibre students to
enter the logistics sector. We have attended
At every level we provide excellent
Employee engagement
graduate recruitment fairs, participated
opportunities for our employees. We provide
To encourage employees to give us their
in assessment centres, provided industry
unemployed people in local communities
best we aim to provide a competitive level
mentors, offered students structured holiday
with the opportunity for training,
of pay and other benefits relative to job
jobs, and under this scheme are employing
qualifications and jobs via our Clipper
and skill level, including the provision of retail
our first two twelve month work placements.
Academy programmes. Existing employees
discount schemes, company contribution
As students progress through their degree
develop via driver CPC qualifications, NVQs,
to a pension scheme and life/accident
course we expect to employ our first post-
apprenticeships and Potential Team Leader
cover. All employees with six months or
initiative full graduate trainees in 2017.
Development Programmes.
more service are invited to participate
in each iteration of the Sharesave Plan
Our staff can then apply to join our
(see page 71).
Corporate First Line and Middle
Management Levels 2 and 3 ASPIRE
We encourage alignment with Group goals
Programmes. Interest in the programme
via open communication and appraisals.
continues to increase as we open new sites,
We have an annual conference for our
employ new staff and promote existing
senior staff, site employee forums, health
staff, and is recognised as an excellent
and safety committees, team briefs, our
development tool improving skill levels
Company newsletter ‘Evolve’ and highly
and creating a robust succession pool.
visual notice boards.
As reported last year, and supported by
investment in an open learning portal, 2016
We recognise employee contribution and
saw the programme extended to senior
loyalty by celebrating achievements, for
management with the piloting of Levels 4
example via our Employee of the Month
and 5. We also support relevant professional
qualifications across a range of disciplines
Scheme, and Long Service awards.
e.g. operations (CILT), finance (ACCA/CIMA),
We encourage team working by involving
HR (CIPD), and health and safety
employees in work based project teams,
(IOSH/NEBOSH).
open days and inter-site competitions, as
well as organised themed events on special
In order to improve succession planning
occasions.
and to develop high performance teams,
2016 saw the launch of a new online
performance management system,
which focuses on objectives and values.
It will improve the quality of management
information enabling more informed
decisions for identifying talent and targeting
training and development opportunities.
36
Clipper Logistics plc Annual Report and Accounts 2016 Corporate Social Responsibility
continued
Community events
Equal opportunities
At both corporate and local level we
The Group is committed to an Equal
actively encourage our sites to participate
Opportunities Policy. Supported by training,
in good causes through direct funding,
policies and our 5 Point Code of Behaviour
provision of resource and/or encouraging
we aim to ensure that no employee is
our employees to organise fundraising
discriminated against, directly or indirectly,
events. We again sponsored the Dragon
on the grounds of colour, race, ethnic and
Boat Race for Martin House, cycle rides for
national origins, sexual orientation or gender,
Transaid and many site events for Children
marital status, disability, religion or belief, or
in Need, Red Nose Day, Cancer Research
on the grounds of age. The aforementioned
and local charities.
is included in our staff handbook, induction
We support various local forums and
programmes (including ASPIRE).
sponsor community activities such as
a children’s football team.
The above is reflected in our truly diverse
training and various management
workforce. We are happy to consider
requests for flexible working and wherever
possible will agree shift patterns which
facilitate a balance between work and
family life.
We are also a member of the
Disability Forum.
Gender breakdown as at 30 April 2016:
Male
Female
Total
Male% Female%
Board of Directors
Other Senior Management*
Other employees
8
12
2,148
0
0
1,265
8
12
3,413
Total
2,168
1,265
3,433
100
100
63
63
0
0
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.
38
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Corporate Social Responsibility
continued
Health and safety
Our Carbon Management Reduction
Greenhouse gas (GHG) emissions
The Group seeks to protect employees
Programme complies with the Carbon
The Group records energy and fuel use for
from accidents and injuries at work. Our
Reduction Commitment (CRC) Energy
all areas of the business, based on invoices
health and safety structure is supported by
Efficiency Scheme and the Energy Savings
received for diesel, gas oil, mains electricity
IOSH/NEBOSH qualified representatives and
Opportunity Scheme (ESOS) which between
and natural gas. Fuel used for business
Health and Safety Committees at each site.
them aim to reduce energy consumption
travel in company vehicles is also included.
Each site receives at least two safety audits
and emissions of greenhouse gases from
each year. Serious incidents are escalated
our warehouses and transport fleets.
The Group uses the average monthly price
and accident statistics are monitored.
Accidents are reported and investigated.
To this end:
per litre to convert the diesel, heating oil,
and vehicle fuel costs into litres of fuel used.
Health and safety matters are reported
- we are applying the latest environmental
and monitored at Board level.
standards as and when we upgrade
The kilowatt hours of gas and electricity
Health and safety training is prevalent
our estate;
used, and the litres of each fuel type used,
are then converted into tonnes of CO2
throughout the business – from initial
- we are investing in low energy lighting
equivalent (tCO2e) using the relevant DEFRA
induction training, through risk assessed
and testing the advent of LED lighting;
conversion factors.
task training (e.g. manual handling, fork
lift truck and work equipment training) to
- we now have solar panels installed
In the year to 30 April 2016, both Scope 1
management awareness programmes.
on the warehouse roof at our Ollerton,
and Scope 2 emissions increased from
Gelderd Road and Burton sites, and will
the prior year, driven by an increase in the
The Company partners with an external
continue to investigate the possibility of
warehouse space occupied by the Group
training provider to deliver ‘safe to start’
installing solar panels at our other sites
(which led to higher gas and electricity
training at all newly opened sites to ensure
where appropriate;
staff are fully inducted and receive the
usage), and an increase in the transport
activities within the UK logistics business
aforementioned training prior to taking
- we investigate fuel use, route planning
(which increased the amount of diesel
up their full duties.
and best design of vehicles across
used). However, emissions per £ million
the fleet to become more efficient
of revenue fell by 11%, as a result of
and minimise emissions. We continue
ongoing fuel efficiency programmes and
Environment
to participate in the ECO Stars Fleet
increased utilisation of space within our
We recognise the Group’s activities have
Recognition Scheme which recognises
warehouses, which meant that revenue
an impact on the environment but we
fleet operators who use lower polluting
increased without a proportionate increase
believe we can improve our environmental
vehicles and effective fuel management,
in emissions.
footprint and save energy. This is important
thereby becoming the first multi-regional
to both the Group and our stakeholders.
Last year we employed a Health, Safety and
member of this scheme;
Environmental Advisor to provide additional
- we promote environmental awareness
resource to further develop our agenda,
via training; and
and we have expanded our network
of site based health and safety managers
- we encourage employees to use ‘green’
to ensure compliance as we grow
transport. Our company car lists offer the
our operations.
use of newer, lower emission vehicles and
our sites promote the use of car sharing.
39
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 2016
Year to 30 April 2015
Scope 1
Scope 2
Total emissions
Emissions per £m of revenue
27,089
10,125
37,214
128.2
24,757
9,224
33,981
144.7
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.
business activities. The CSR and related
policies are reviewed and amended
Our expanding returns operations sort,
where appropriate.
reprocess, repair or recycle our clients’
products which are returned from their
Approved by the Board and signed
customers. These processes help to
on its behalf by:
David Hodkin
Chief Financial Officer
1 August 2016
reduce the amount of goods which
may otherwise go to landfill.
Commercial
Wherever possible we work with our
customers to build environmental
considerations into our recommended
solutions. This is particularly evident with
our pioneering retail consolidation centres
which greatly reduce final mile deliveries,
congestion and associated emissions when
delivering to shopping centres. To further
support this initiative we have invested in
three electric 7.5 tonne vehicles.
40
Clipper Logistics plc Annual Report and Accounts 2016 Governance
42
Clipper Logistics plc Annual Report and Accounts 2016 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
The business address of each Director is Gelderd Road, Leeds, West Yorkshire, LS12 6LT.
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
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
of the Nomination Committee.
Tony has particular experience of operating
in complex retail logistics environments,
Management Accountants.
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
44
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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
functions as Chief Information Officer,
Stephen Robertson, Independent
along with his responsibilities on the Board.
Non-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 Director General of the
British Retail Consortium and is currently
an Advisory Board Member of Retail
Week. Stephen’s current non-executive
Paul Hampden Smith, Senior Independent
directorships include Timpson Group plc
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.
Mike Russell, Independent
Non-Executive Director
Mike Russell was appointed
Non-Executive Director
and Hargreaves Lansdown plc. Stephen is
Non-Executive Director of Clipper’s
Paul joined the Group as Senior
a member of the Audit Committee.
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.
Paul is currently non-executive director
and chairman of the audit committee at
Ron Series, Independent
Grafton Group plc and a non-executive
Non-Executive Director
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 appointed Group Finance
Director of Nurdin & Peacock plc, a FTSE
director at Bellway plc.
Ron joined the Group as Non-Executive
250 company, in early 1996 prior to the
Director on 16 May 2014. Over the past
sale of the business to Booker plc. From
During the last ten years, Paul has held non-
20 years, Ron has held executive and
1997 to 2011 he was an executive
executive directorships on the boards of DX
non-executive positions with a number of
director of Prize Food Group, a private
Services plc, Redrow plc and Pendragon
companies with international operations in
equity-backed business, initially as Group
plc. Paul was also appointed as chairman
transport, logistics, shipping, real estate and
Finance Director and, from 2005, as
of the audit committee in each of these
information technology. Included among
Chief Executive Officer. Mike is chairman
non-executive roles. Paul is the chairman of
them are Tuffnells Parcels Express Limited
of the Remuneration Committee and a
the Audit Committee and is a member of
where he was chairman during its ownership
member of the Audit Committee and the
the Remuneration Committee.
Nomination Committee.
45
Corporate Governance Report
Chairman’s introduction
Compliance with the Code
any changes to the capital, corporate and/
The Board recognises the importance of
or management structure of the Group.
Dear Shareholder,
high standards of corporate governance
and is committed to managing the Group’s
The Code indicates at A.4.2 that the
I am pleased to present the Company’s
operations in accordance with the Code.
chairman should hold meetings with non-
Corporate Governance Report for the
A full version of the Code can be found on
executive directors without the executive
year ended 30 April 2016. The Board
the Financial Reporting Council’s website
directors present. Since Steve Parkin as
recognises, understands and is committed
www.frc.org.uk. The Company complied
Executive Chairman also has an executive
to the high standards of corporate
with all of the provisions of the Code
function, he has not met with the Non-
governance across the Group that are
throughout the year ended 30 April 2016,
Executive Directors as a group without the
expected of all premium listed companies
except for provisions A.4.2 and E.1.1.
other Executive Directors present, but the
and follows an approach which complies
Senior Independent Director has done so.
with the provisions of the UK Corporate
In April 2016 the Financial Reporting Council
The Chairman does meet with individual
Governance Code dated September
published a revised 2016 UK Corporate
Non-Executive Directors on a one to one
2014 (the “Code”). The report which follows
Governance Code (“2016 Code”) which
basis from time to time at which meetings
describes how, for the year ended 30 April
will apply to premium listed companies
Board performance and other appropriate
2016, the Group has complied with the
in respect of accounting periods
matters are discussed. The Chairman also
main provisions of the Code.
commencing on or after June 2016.
discusses the Board evaluation review with
This will apply to the Company in the
the Senior Independent Director without the
year ending 30 April 2018.
other Executive Directors present.
This Report, which incorporates reports from
The Board delegates to management the
the Nomination and Audit Committees on
day-to-day running of the business within
pages 52 to 57 together with the Strategic
defined risk parameters. Board meetings
Report on pages 6 to 40, the Directors’
are scheduled to coincide with key events
Remuneration Report on pages 58 to 72
in the corporate calendar and this includes
and the Directors’ Report on pages 74
the interim and final results and annual
to 78, describes how the Company has
general meeting.
applied the relevant principles of the Code.
The Board has adopted a formal schedule
of matters reserved for its approval and has
The role of the Board
delegated other specific responsibilities
The Board consists of four Non-Executive
to its Committees. The formal board
Directors and four Executive Directors.
Biographies and profiles of all members of
agenda currently includes regular reports
from the Chief Executive Officer, the Chief
the Board appear on pages 44 and 45.
Financial Officer and the Chief Information
Officer on the operational and financial
The Board is responsible for leading and
performance of the Group together with
controlling the Group and has overall
feedback from the Non-Executive Directors
authority for the management and
on their engagement with the business. It
conduct of the Group’s business, strategy
also includes a rolling agenda of other key
and development. The Board is also
operational, strategic, governance and risk
responsible for ensuring the maintenance
topics which is regularly updated to ensure
of a sound system of internal control and
the Board is responsive to the operational
risk management (including financial,
and strategic issues affecting the business.
operational and compliance controls and
The Board does not delegate key strategic,
for reviewing the overall effectiveness of
operational and financial issues or other
systems in place) and for the approval of
matters specifically reserved to the Board.
Steve Parkin
Executive Chairman
46
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Corporate Governance Report
continued
The following matters (amongst others) were considered or dealt with at Board meetings during the year:
Strategy and management
Financial and contracts
Governance
- approve and consider strategic
- review of contract performance;
- risk review;
initiatives and plans, including potential
acquisitions;
- Black Friday performance;
- legal and governance updates;
- competitor activity review;
- financial review;
- European strategy review;
- approve capital projects and contracts
- dividend policy;
- growth strategy;
of material importance;
- review of IT support; and
- introduction and impact of Living
- health & safety record; and
Wage.
- approval of SMT reorganisation.
- approving process of training of Persons
Discharging Managerial Responsibility
(“PDMRs”) and senior management on
various regulatory matters including the
new Market Abuse Regulation which
became effective on 3 July 2016;
- the introduction of class leading
bespoke insider management
software; and
- Board and committee evaluation.
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.
47
Corporate Governance Report
continued
Information, meetings and attendance
In the year under review, 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
Stephen Robertson
Non-executive Director
Mike Russell
Non-executive Director
Ron Series
Non-executive Director
Board
Meetings
Audit
Committee
Meetings
Remuneration
Committee
Meetings
Nomination
Committee
Meetings
9/9
9/9
9/9
9/9
9/9
9/9
9/9
9/9
2/2
2/2
2/2
3/3
3/3
3/3
1/1
1/1
1/1
The Board has a full programme of Board
relevant papers and are consulted prior to
Board Committees
meetings planned for 2016 and 2017. At
the meeting and their views made known
Subject to those matters reserved for its
these meetings, the Board will review the
to the other Directors.
Group’s long-term strategic direction and
financial plans and monitor on a regular
decision, the Board has delegated to its
Nomination, Audit, Remuneration and
Executive Committees certain authorities.
basis the Group’s performance against an
Conflicts of interests
There are written terms of reference for each
agreed strategy and business plan.
In line with the requirements of the
of these Committees, available on request
Companies Act, each Director has notified
from the Company Secretary. Separate
In addition, the Board will agree key
the Company of any situation in which
reports for each of the Nomination, Audit
objectives for the Group on an annual basis
he or she has, or could have, a direct or
and Remuneration Committees are
and will then monitor performance against
indirect interest that conflicts, or possibly
included in this Annual Report and
these objectives.
may conflict, with the interests of the
Accounts from pages 52 to 72.
Company (a situational conflict). These were
The Chairman is responsible for ensuring that
the Directors receive accurate, timely and
considered and approved by the Board in
accordance with the Company’s Articles of
clear information. Prior to each scheduled
Association and each Director informed of
Board meeting, a pack is circulated in
the authorisation and any terms on which it
respect of each financial period, which
was given. The Board has formal procedures
includes an update on key performance
to deal with Directors’ conflicts of interest.
targets, trading performance against
budget and includes detailed financial
The Board reviews and, where appropriate,
data and analysis. Board packs are
approves certain situational conflicts of
generally distributed prior to each meeting
interest that were reported to it by Directors,
to provide sufficient time for Directors to
and a register of those situational conflicts
review their papers in advance. If Directors
is maintained and will be reviewed by the
are unable to attend a Board meeting for
Board going forward.
any reason, they nonetheless receive the
48
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Corporate Governance Report
continued
Role of the Executive Chairman
been requested. Notwithstanding this, we
Development
and Chief Executive
have maintained dialogue with our major
There have been no new appointments to
The Board is chaired by Steve Parkin who
shareholders and, overall, the Board believes
the Board since the last AGM. The Group
is Executive Chairman. The Executive
that appropriate steps have been taken
has an induction and training process for
Chairman is responsible for the leadership
throughout the year to ensure that members
new Directors. New Directors will receive
and overall effectiveness of the Board and
of the Board, including the Non-Executive
a detailed induction on joining the Board,
setting the Board’s agenda, having regard
Directors, develop an understanding of the
including meeting other members of the
for the interests of all stakeholders and
views of major shareholders. These steps
Board and the Senior Management Team.
promoting high standards of corporate
include attending the AGM, receiving
New directors will be encouraged to visit the
governance. Tony Mannix is the Chief
feedback on other shareholder meetings
Group’s sites and to provide feedback to
Executive Officer and is responsible for
and analysts’ and brokers’ briefings on
the Board. The Group’s Company Secretary
implementing the Board’s strategy and
a regular basis.
leading the Senior Management Team.
The role is distinct and separate to that of
and General Counsel periodically reports
to the Board on any new legal, regulatory
and governance developments that
Executive Chairman and clear divisions of
Board balance and independence
affect the Group and, where necessary,
accountability and responsibility have been
The Code recommends that at least half the
actions are agreed. External lawyers have
agreed by the Board.
board of directors of UK listed companies,
provided updated training to the Directors
excluding the chairman, should comprise
and Senior Management Team on the
non-executive directors determined by the
changes to the Company’s share dealing
Role of the Senior Independent Director
board to be independent in character and
code, insider dealing and other regulatory
The Code recommends that the board of
judgement and free from relationships or
matters to ensure compliance with the
directors of a company with a premium
circumstances which may affect, or could
new EU regulation on Market Abuse. This
listing on the Official List should appoint
appear to affect, the director’s judgement.
is supplemented by advice and training
one of the non-executive directors to be
provided on certain matters by the
the senior independent director to provide
The Board regards all of the Non-Executive
Company Secretary.
a sounding board for the chairman and
Directors as Independent Non-Executive
to serve as an intermediary for the other
Directors within the meaning of the Code
directors when necessary. The senior
and free from any business or other
independent director should be available
relationship that could materially interfere
to shareholders if they have concerns which
with the exercise of their independent
contact through the normal channels of the
judgement. The Board believes that
chairman, chief executive officer or other
the current directorate will enhance
executive directors has failed to resolve or
considerably its ability to develop the
for which such contact is inappropriate.
Group’s operations.
Paul Hampden Smith has been appointed
Senior Independent Director.
Role of the Company Secretary
Guy Jackson is the Company Secretary.
The Code indicates (at E.1.1) that the
The role of the Company Secretary is to
Senior Independent Director should
develop, implement and maintain good
attend meetings with a range of major
corporate governance practices. This
shareholders to listen to their views in order
includes supporting the Chairman and
to help develop a balanced understanding
Non-Executive Directors as appropriate,
of their issues and concerns. Whilst the
managing Board and Board Committee
Senior Independent Director (and the other
meetings, ensuring that appropriate levels
Non-Executive Directors) are available to
of directors’ and officers’ insurance is in
meet with shareholders to discuss issues
place and that the Group is compliant
and concerns, no such meetings have
with statutory and regulatory requirements.
49
Corporate Governance Report
continued
Board evaluation
or re-appointment. When a Director retires at
Communications with shareholders
The effectiveness of the Board is essential to
an Annual General Meeting in accordance
The Board considers effective
the success of the Group. During the year
with the Articles, the Company may, by
communication with its investors,
an evaluation process was developed and
ordinary resolution at the meeting, fill the
whether institutional, private or employee
implemented. The evaluation process was
office being vacated by re-electing the
shareholders, to be extremely important and
based on a series of questions devised for
retiring Director. If the Company does not
we have set ourselves the target of providing
the purpose by the Senior Independent
fill the vacancy at the meeting, the retiring
information that is timely, clear and concise.
Director and the Company Secretary and
Director shall nevertheless be deemed to
circulated to the Directors. The process
have been re-elected, except in the cases
During the year to 30 April 2016, the
reviewed issues such as: the assessment
identified by the Articles. The Company
Company met regularly with analysts and
and monitoring of the Company’s strategy;
intends to continue this practice but will
institutional investors and such meetings will
the mix of knowledge and skills on the
review it regularly.
Board; succession; and the effectiveness
continue. The Executive Chairman, Chief
Executive Officer and Chief Financial Officer
of the Board and the Directors. Separate
Sean Fahey, Mike Russell and Ron Series
have lead responsibility for investor relations.
questionnaires were devised for each of
will be offering themselves for re-election
They are supported by members of the
the Audit, Remuneration and Nomination
at the 2016 AGM to be held at Clipper
SMT where required and the Company’s
Committees, and circulated to Committee
Logistics, Gelderd Road, Leeds, LS12 6LT on
retained financial PR advisers, Bell Pottinger,
members. The results were collated by
17 October 2016 at 11.00am, full details of
and corporate brokers Numis Securities who,
the Company Secretary and considered
which will be issued under separate cover.
amongst other matters, assist in organising
by the Senior Independent Director. The
performance of the Board as a whole
and of each of its principal Committees
External appointments
presentations for analysts and institutional
investors and ensure that procedures are in
place to keep the Board regularly informed
was considered.
and time commitment
of such investors’ views.
The Board is satisfied that each Director
outside appointments provided that such
Reports from analysts and brokers are
remains competent to discharge his
appointments do not in any way prejudice
circulated to the Board. The Executive
responsibilities as a member of the Board.
their ability to perform their duties as
Chairman, Chief Executive Officer and Chief
The Executive Directors may accept
Executive Directors of the Company.
Financial Officer meet institutional investors
regularly to provide an opportunity to
Election of Directors
The Non-Executive Directors’ appointment
discuss, in the context of publicly available
The Board can appoint any person to be
letters are not specific about the maximum
information, the progress of the Group.
a Director, either to fill a vacancy or as an
time commitment, recognising that there is
addition to the existing Board provided
always the possibility of an additional time
The formal reporting of our full and half
that the total number of Directors does not
exceed twelve, the maximum prescribed
commitment and ad hoc matters that may
arise from time to time, particularly when the
yearly results will be a combination of
presentations, group calls and one-to-one
in the Company’s Articles of Association.
Group is undergoing a period of increased
meetings in a variety of locations where
Any Director so appointed by the Board
activity. The average time commitment
we have institutional shareholders. All the
shall hold office only until the next following
inevitably increases where a Non-Executive
Non-Executive Directors and, in particular,
annual general meeting and shall then be
Director assumes additional responsibilities
the Chairman and Senior Independent
eligible for election by the shareholders.
such as being appointed to a Board
Director, are available to meet with major
In accordance with the Articles of
Director on the boards of any of the
separately from the arrangements as
Committee or as a Non-Executive
shareholders, if they wish to raise issues
Association, at every annual general
Company’s subsidiaries.
meeting of the Company one-third of the
Directors or the number nearest to but not
less than one-third shall retire from office. The
Directors to retire shall be first those who wish
to retire, and then those who have been
longest in office since their last appointment
50
described above. The Company’s investor
website is also regularly updated with news
and information, including this Annual Report
and Accounts which sets out our strategy
and performance together with our plans for
future growth.
Clipper Logistics plc Annual Report and Accounts 2016 Nomination Committee Report
Committee Chairman’s introduction
Composition
Diversity
The UK Corporate Governance Code
Whilst the Group pursues diversity, including
As Chairman of the Nomination Committee
recommends that a majority of the
gender diversity, throughout the business,
(the “Committee”), I am pleased to present
members of a nomination committee
and the Board endorses the aspirations of
the report of the Committee for the year
should be independent Non-Executive
the Davies Review on Women on Boards,
ended 30 April 2016. The Committee is a
Directors. The Nomination Committee
the Board is not committing to any specific
key committee of the Board whose role
is chaired by Steve Parkin and its other
targets. Instead, the Board will engage
is to keep the composition and structure
members are Ron Series and Mike Russell.
executive search firms who have signed up
of the Board and its committees under
review. The Committee’s role also includes
to the voluntary code of conduct setting
out the seven key principles of best practice
enhancing the quality of nominees to the
Roles and responsibilities
to abide by throughout the recruitment
Board and ensuring that the recruitment
Under normal circumstances, it is intended
process and will continue to follow a
and appointment process is conducted
that the Nomination Committee will meet
policy of appointing talented people at
with rigour and integrity.
not less than twice a year to assist the Board
every level to deliver high performance.
in discharging its responsibilities relating to
It is the Company’s policy (whether it be
The Committee will be proactive in
the composition and make-up of the Board
at employee or Board level) to make all
discharging its responsibilities, cognisant
and any committees of the Board. It is also
appointments based on the best candidate
of the importance of succession
responsible for periodically reviewing the
for the role regardless of gender or other
planning and the need to align Board
Board’s structure and identifying potential
diversity. The Board will also ensure that its
and executive leadership skills to the
candidates to be appointed as Directors
own development in this area is consistent
Company’s long-term strategy and I hope
or Committee members as the need
with its strategic objectives and enhances
this report gives you a helpful insight into
may arise. The Nomination Committee is
Board effectiveness.
how the Committee intends to carry out its
responsible for evaluating the balance of
responsibilities moving forwards.
skills, knowledge and experience and the
Steve Parkin
and Committees of the Board, retirements
Committee in 2016
Chairman, Nomination Committee
and appointments of additional and
The Committee met twice during the
size, structure and composition of the Board
Activities of the Nomination
replacement Directors and Committee
financial year and considered the
members and makes appropriate
succession plans for both executive
recommendations to the Board on
appointments to the Board and the Senior
such matters.
Management Team, taking into account
the strategic objectives of the Group and
in that regard considered a reorganisation
of the Senior Management Team below
board level proposed by the CEO. Earlier
in the year Dave Aspin (Managing Director
of Servicecare Support Services Limited),
a member of the Senior Management
Team, indicated that he wished to retire
during 2016. As a result a search for a
replacement was initiated. After careful
consideration of a number of potential
candidates it was recommended to the
Board that Simon Parkinson be appointed as
Managing Director of Servicecare Support
Services Limited. Simon Parkinson was until
recently Marketing Director (UK and Ireland)
at Panasonic. The Board approved such
recommendation and Simon Parkinson
started with the Group on 18 April 2016.
52
Clipper Logistics plc Annual Report and Accounts 2016 Audit Committee Report
Committee Chairman’s introduction
Composition
The Audit Committee gives due
The Code recommends that an audit
consideration to laws and regulations,
The Audit Committee was established
committee should comprise at least three,
the provisions of the Code and the
by a resolution of the Board dated
or in the case of smaller companies, two
requirements of the Listing Rules.
16 May 2014, at which meeting terms of
independent non-executive directors (other
reference were considered and adopted.
than the chairman) and that at least one
The ultimate responsibility for reviewing and
The Board further resolved to appoint Mike
member should have recent and relevant
approving the Annual Report and Accounts
Russell and Stephen Robertson to the Audit
financial experience. Clipper’s Audit
and the half-yearly reports remains with the
Committee under my chairmanship. Under
Committee is chaired by Paul Hampden
Board.
its terms of reference, the Audit Committee
Smith and its other members are Mike
is required to meet at least three times
Russell and Stephen Robertson. By virtue
The Board has requested that the Audit
in each year at appropriate times in the
of their former executive roles, details of
Committee advise them in ensuring that
reporting and auditing cycle. In the year
which are set out on page 45, the Directors
the Financial Statements, when taken
ended 30 April 2016, the Audit Committee
consider that Paul Hampden Smith and
as a whole, are fair, balanced and
has met three times.
Mike Russell have recent and relevant
understandable and provide the information
The primary function of the Audit
therefore compliant with the Code in this
Group’s position and performance, business
Committee is to assist the Board in fulfilling
regard. Other directors or senior financial
model and strategy.
financial experience. The Company is
necessary for shareholders to assess the
its responsibilities to protect the interests
management attend meetings of the Audit
of the shareholders with regard to the
Committee by invitation.
integrity of the financial reporting, audit,
risk management and internal controls.
Roles and responsibilities
In this report, I explain how the Audit
The Audit Committee assists the Board in
Committee has discharged these
discharging its responsibilities with regard to:
responsibilities, with specific reference
- agreeing the scope of the annual audit
to the requirement of the UK Corporate
and the annual audit plan and monitoring
Governance Code, (the “Code”) to
the same;
address significant financial statement
reporting issues and to explain how
- monitoring, making judgements and
the Audit Committee assessed external
recommendations on the financial
audit effectiveness and safeguards in
reporting process and the integrity and
relation to the provision by the auditor
clarity of the Group’s Financial Statements;
- considering the appointment of the
Group’s auditors and their remuneration
including reviewing and monitoring
independence and objectivity and
agreeing and monitoring the extent
of the non-audit work that may be
undertaken; and
- reviewing and monitoring the adequacy
and effectiveness of the internal control
and risk management policies.
of non-audit services.
Paul Hampden Smith
Chairman, Audit Committee
54
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Audit Committee Report
continued
Activities during the year ended
the numbers therein are consistent with
Change of auditor
30 April 2016
those in the Financial Statements or are
Following the conclusion of the audit for
During the year, the Audit Committee
sourced from appropriate data. More
the year ended 30 April 2015, with the
met three times. A summary of the main
importantly, the Audit Committee assesses
Audit Committee’s approval, management
areas dealt with by the Committee
whether the words used are consistent
conducted a competitive bid process
is set out below:
with its understanding of the Group’s
for the Group’s audit. The incumbent
- review and approval for consideration by
business obtained through Board and Audit
auditors, Ernst & Young LLP were invited
the Board of the financial results for the
Committee meetings and other interaction
to participate and submitted a bid. After
year ended 30 April 2015;
they have had with management, using
due consideration of four audit firms,
their experience to assess whether the
management recommended that KPMG
- findings from the external audit for the
Annual Report taken as a whole is fair,
LLP be appointed. The Audit Committee
year ended 30 April 2015;
balanced and understandable. This
reviewed management’s proposal and
- approval of the auditors’ remuneration in
supplemented by advice received from
once Ernst & Young LLP’s resignation had
additional review by the Audit Committee,
approved the appointment, to take place
respect of the year ended 30 April 2015;
external advisors during the drafting process
taken effect.
- discussion around the UK Corporate
report is fair, balanced and understandable
assists the Board in determining that the
Governance Code on risk management,
at the time that it is approved. The Audit
Assessment of effectiveness
internal control, viability and
Committee considers the appropriateness
of external audit
going concern;
of preparing the Financial Statements
The Audit Committee oversees the
- auditors’ confirmation of independence;
consideration of forecast plans and
considers the re-appointment of the Group’s
supporting assumptions.
auditors, before making a recommendation
- review of auditors’ effectiveness;
to the Board to be put to shareholders.
on a going concern basis, including
relationship with the external auditors and
- approving management’s
Significant issues considered in relation
Prior to recommending the appointment of
recommendation for a change
to the Financial Statements
KPMG LLP at the forthcoming AGM to the
in auditors, following a competitive
The Audit Committee, together with
Board, the Audit Committee conducted a
tender process; and
the Board, considered what were the
review of the external auditor’s performance
significant risks and issues in relation to the
and ongoing independence taking into
- discussion with the external auditor
Financial Statements and how these would
consideration input from management,
over the audit planning, with particular
be addressed. The most significant risk
consideration of responses to questions
reference to significant risks highlighted
identified is set out below:
from the Audit Committee and the audit
in the planning documents, together with
the audit scope and timetable.
Revenue recognition
findings reported to the Audit Committee.
Based on this information, the Audit
- The Group has a multiplicity of complex
Committee concluded that the external
Since the year end, the Audit Committee
contract mechanisms. As a result there
audit process had been efficiently run and
has also reviewed and approved for
could be a risk of misstatement
that KPMG LLP proved effective in its role as
consideration by the Board this Annual
of revenue.
external auditor.
Report and reviewed the findings from the
external audit for the year ended
- To mitigate this risk, the revenue
30 April 2016.
recognition methodology adopted is
Independence safeguards
kept under regular review to ensure that it
In accordance with best practice and
As part of their review process, the members
remains appropriate.
of the Audit Committee are provided
with a draft of the full Annual Report and
Accounts enabling them to ensure that
professional standards, external auditors
are required to adhere to a rotation policy
whereby the audit engagement partner is
rotated after five years. Following the
55
Audit Committee Report
continued
Independence safeguards (continued)
Internal audit
The key elements of the Group’s ongoing
change in auditor, the current audit
The Board has considered the benefits that
processes for the provision of effective
engagement partner was appointed in the
an internal audit function might bring to
internal control and risk management
year just ended. The external auditors are
the Group. It has concluded that, due to
systems, in place throughout the year
also required periodically to assess whether,
the tight financial controls in place across
and at the date of this report, include:
in their professional opinion, they are
the Group, and the close management of
- regular Board meetings to
independent and those views are shared
financial matters by the Executive Directors,
consider matters reserved for
with the Audit Committee.
an internal audit function would not currently
the Directors’ consideration;
provide additional assurance.
The Audit Committee has authority to
- regular management reporting, providing
take independent advice as it deems
In terms of operational matters, the
a balanced assessment of key risks
appropriate in order to resolve issues on
specialised nature of the Group’s activities
and controls;
auditor independence. No such advice
means that a non-specialist internal audit
has to date been required.
function would not provide additional
- an annual Board review of corporate
comfort over the Group’s operational
strategy, including a review of material
management. The Board will continue
business risks and uncertainties facing
Independence assessment by the Audit
to evaluate this matter, and the Audit
the business;
Committee
Committee will formally consider the
As required, the external auditor provided
issue annually, in accordance with Code
- established organisational structure with
the Audit Committee with information for
provision C.3.2.
review about policies and procedures
for maintaining its independence and
clearly defined lines of responsibility
and levels of authority;
compliance regarding the rotation of audit
Internal control and risk management
- documented policies and
partners and staff. Separate external firms
The Board is responsible for the overall
procedures; and
are engaged for taxation advisory services.
system of internal controls for the Group and
The Audit Committee is satisfied that the
for reviewing its effectiveness. It carries out
- regular review by the Board of financial
independence of KPMG LLP is not impaired.
such a review at least annually, covering
budgets, forecasts and covenants
all material controls including financial,
with performance reported to the
Furthermore, KPMG LLP has provided
operational and compliance controls and
Board monthly.
an independence report to the Audit
risk management systems.
Committee, in which they have confirmed
In reviewing the effectiveness of the system
that they are independent, that their
The system of internal controls is designed
of internal controls, the Audit Committee
objectivity is not compromised, and that
to manage rather than eliminate the risk
receives self-assurance statements from
they have complied with the Auditing
Practices Board’s Ethical Standards
of failure to achieve business objectives
and can only provide reasonable and
the members of the Senior Management
Team who are responsible for the principal
(including in relation to the supply of non-
not absolute assurance against material
business units, confirming that controls and
audit services).
misstatement or loss.
risk management processes in their business
units have been operated satisfactorily.
KPMG LLP has performed no non-audit
Operating policies and controls are in place
These returns are reviewed by the Audit
work for the Group in the two years ended
and have been in place throughout the
Committee and challenged where
30 April 2016. Since the completion of the
financial year under review, and cover a
appropriate. The Chief Financial Officer
IPO in the year ended 30 April 2015,
wide range of issues including financial
is responsible for compiling and maintaining
Ernst & Young LLP have performed no
reporting, capital expenditure, information
a risk register to monitor all of the risks
further non-audit work for the Group.
technology, business continuity and
facing the business. The key risks are then
The Audit Committee has assessed the
the Audit Committee for inclusion in the
performance and independence of the
Detailed policies ensure the accuracy and
Annual Report. In addition, the Audit
external auditor and recommended to the
reliability of financial reporting and the
Committee also reviews the financial and
management of employees.
summarised for review and approval by
Board the re-appointment of KPMG LLP as
preparation of the Financial Statements,
accounting controls.
auditor until the conclusion of the AGM
including the consolidation process.
in 2017.
56
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Audit Committee Report
continued
Internal control and risk management
Whistleblowing
(continued)
The Group has in place a Whistleblowing
In respect of the Group’s financial reporting,
Policy which encourages employees to
the finance department is responsible for
report any malpractice or illegal acts or
preparing the Group Financial Statements
omissions or matters of similar concern by
using a well-established consolidation
other employees or former employees,
process and ensuring that accounting
contractors, suppliers or advisors using
policies are in accordance with
a prescribed reporting procedure. The
International Financial Reporting Standards.
Whistleblowing Policy is complemented by
All financial information published by the
an Anti-bribery and Corruption Policy, and
Group is subject to the approval of the
a Gifts and Entertainment Policy.
Audit Committee.
These policies facilitate the reporting of
There have been no changes in the Group’s
any ethical wrongdoing or malpractice
internal controls during the financial year
or suspicion which may constitute ethical
under review that have materially affected,
wrongdoing or malpractice. Examples
or are reasonably likely to materially affect,
include bribery, corruption, fraud, dishonesty
the Group’s control over financial reporting.
and illegal practices which may endanger
The Board, with advice from the Audit
Committee, is satisfied that effective
There have been no instances of
systems for internal control and risk
whistleblowing during the year under review.
employees or third parties.
management are in place which enable
the Group to identify, evaluate and
manage key risks, and which accord with
Accountability
the guidance of the Turnbull Committee
The Board is required to present a fair,
on internal control updated by the FRC
balanced and understandable assessment
in 2005. These processes have been
of the Company and Group’s financial
in place throughout the financial year
position, performance, business model and
and up to the date of approval of the
strategy. The responsibilities of the Directors
Financial Statements. Further details of risk
and external auditor are set out on pages
management frameworks and specific
80 and 85 respectively.
material risks and uncertainties facing the
business can be found on pages 30 to 33.
57
Directors’
Remuneration Report
Committee Chairman’s introduction
Although this performance was very
Similar resolutions were proposed at our
positive and the Group is in a position to
2014 and 2015 AGMs and, whilst both
On behalf of the Board, I am pleased to
realise further strong growth going forwards,
resolutions were approved, around 20%
present the Directors’ Remuneration Report
considering both the reported Adjusted
of the votes cast on these resolutions were
for the year to 30 April 2016.
EBIT for the financial year and the very
“votes against”. Accordingly in 2016 the
stretching targets set by the Committee
Company is engaging with its leading
This report contains the material required
and management at the commencement
shareholders and with leading proxy voting
to be set out as the directors’ remuneration
of the year, the Committee determined
agencies to emphasise the importance
report for the purposes of Part 4 of The
that no bonuses should be paid under the
of the strong team culture amongst the
Large and Medium-sized Companies
Annual Incentive Plan (“AIP”) to our Executive
entire Senior Management Team which
and Groups (Accounts and Reports)
Directors for the year ended 30 April 2016.
has served the Company so well to date
(Amendment) Regulations 2013, which
and how, as part of that team culture, it
amended The Large and Medium-sized
Due to our shareholding structure, we are
is integral that all Executive Directors and
Companies and Groups (Accounts
required to seek specific shareholders’
senior managers should participate
and Reports) Regulations 2008 (“the
approval to permit the Executive Chairman,
in the same annual incentive plan and
DRR regulations”). The auditors have
the Chief Financial Officer, the Chief
long-term incentive plan, with all of the
reported on certain parts of the Directors’
Information Officer and the Company
wider team being incentivised on the
Remuneration Report and stated whether,
Secretary and General Counsel to
same performance measures.
in their opinion, those parts have been
participate in awards under our Sharesave
properly prepared in accordance with
and Performance Share Plan (“PSP”).
The Remuneration Committee hopes that
the Companies Act 2006. Those parts
you will continue to support our approach
of the Directors’ Remuneration Report
At the 2016 AGM we will be proposing two
on remuneration matters. The Remuneration
which have been subject to audit are
remuneration related resolutions:
Committee is confident that the approach
clearly indicated.
- a vote to approve the Directors’
we are following is the correct one for
The financial year ended 30 April 2016 was
the support of shareholders for all of the
a significant one for Clipper. The Group
- a vote to authorise the participation
remuneration related resolutions at the
Remuneration Report; and
the Group and hopes that it can rely on
performed strongly, with Group revenue
of Steve Parkin (Executive Chairman),
2016 AGM.
increasing by 23.7% to £290.3 million,
David Hodkin (Chief Financial Officer)
and Adjusted EBIT growing by 21.0%
Sean Fahey (Chief Information Officer)
Mike Russell
to £14.5 million.
and Guy Jackson (Company Secretary
Chairman, Remuneration Committee
and General Counsel) in the PSP in
accordance with the requirements of the
Takeover Panel for “Concert Parties”.
58
Clipper Logistics plc Annual Report and Accounts 2016 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
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Steve Parkin
384
405
Tony Mannix
213
208
David Hodkin
180
180
Sean Fahey
150
150
67
27
2
27
56
25
2
11
nil
nil
nil
nil
42
23
19
16
nil
nil
nil
nil
nil
nil
nil
nil
35
36
23
15
15
39
23
15
486
518
276
295
205
224
192
192
1 Benefits comprise a car allowance or company car, fuel
allowance, private family medical cover, and insurance
benefits. The increase in the value of benefits for the
Executive Chairman in the year principally represents an
increased car value within the Company’s policy.
2 Details of the annual incentive plan for the financial
year ending 30 April 2016 are set out below.
3 No LTIP awards vested in the financial year ending 30
April 2016. For details of the LTIP in operation for the
financial year ending 30 April 2016 refer to page 62
below.
4 David Hodkin’s pension entitlement is paid by way
of an additional allowance, taxed as salary.
5 Base salaries for Steve Parkin and Tony Mannix in the
years ended 30 April 2015 and 2016 were £405,000 and
£225,000 respectively. In the year ended 30 April 2016
both Steve and Tony surrendered part of their salaries in
return for additional employer’s pension contributions.
Tony also surrendered part of his salary in the prior year in
return for additional employer’s pension contributions.
Annual bonus outcomes for the year
ended 30 April 2016
Performance for the Annual Incentive Plan
for the AIP and accordingly this level of
(“AIP”) was measured against Adjusted EBIT
Adjusted EBIT did not allow for the payment
for the year to 30 April 2016. The Adjusted
of any bonuses for Executive Directors when
EBIT achieved for the year was £14.5 million.
compared to the £14.8 million Adjusted EBIT
For the financial year ended 30 April 2016,
target set for the AIP.
very demanding targets had been set
Non-Executive Directors’ fees
Fees
year ended
30 April:
Benefits
year ended
30 April:
Total
year ended
30 April:
£’000
2016
2015
2016
2015
2016
2015
Paul Hampden Smith
Stephen Robertson
Mike Russell
Ron Series
60
40
40
40
55
37
39
37
1
3
-
2
-
1
2
1
61
43
40
42
55
38
41
38
1 As the Non-Executive Directors were appointed in May 2014 the prior year figures represent remuneration for
only 11 months.
2 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.
60
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Implementation Report
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 2016 are set out below:
Steve Parkin
Tony Mannix
David Hodkin
Sean Fahey
Paul Hampden Smith
Stephen Robertson
Mike Russell
Ron Series
Ordinary shares
Number
30,797,100
1,358,613
1,358,613
7,834,397
100,000
9,410
-
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.
61
Implementation Report
on Remuneration
continued
Audited information (continued)
Share plan interests
Performance Share Plan:
Options
held at 1
May 2015
Options
lapsed
Options
granted
Options
exercised
Option
grant
price (p)
Options
held at 30
April 2016
Earliest
exercise
date
Latest
exercise
date
Steve Parkin
229,682
Tony Mannix
127,601
David Hodkin
102,081
Sean Fahey
85,067
Sharesave Plan:
-
-
-
-
135,374
75,208
60,166
50,138
-
-
-
-
nil
nil
nil
nil
365,056
14/01/2018
14/01/2026
202,809
14/01/2018
14/01/2026
162,247
14/01/2018
14/01/2026
135,205
14/01/2018
14/01/2026
Options
held at 1
May 2015
12,820
6,410
12,820
12,820
Options
lapsed
Options
granted
Options
exercised
-
-
-
-
-
3,760
-
-
-
-
-
-
Option
grant
price (p)
Options
held at 30
April 2016
Earliest
exercise
date
Latest
exercise
date
n/a
12,820
01/04/2018
30/09/2018
239.34
10,170
01/04/2018
30/09/2019
n/a
n/a
12,820
01/04/2018
30/09/2018
12,820
01/04/2018
30/09/2018
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 2016 was 188p to
305p. The closing price on 30 April 2016 was 270p.
4 The threshold level of vesting for the PSP options granted
in the year is 25% of the total number of options granted.
2 None of the Directors paid for the award of options.
5 The performance conditions attached to the PSP awards
granted during the year are set out below.
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 299.17p for the options granted
on 14 January 2016.
6 The market value of shares on the date of grant of
Sharesave options in the year (9 February 2016) was
267.25p. The face value of the options was therefore
£10,048.60 for Tony Mannix. The option price for
options granted on 9 February 2016 was 239.34p
as shown above.
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 2018
PSP Award
for the PSP awards made in the year to
30 April 2016 are based on Adjusted EPS
14.7p
performance for the financial year ending
30 April 2018, summarised as follows:
Between 12p and 14.7p
100%
Pro-rata on straight-line basis
between 25% and 100%
12p
Less than 12p
25%
0%
62
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Implementation Report
on Remuneration
continued
Unaudited information
Remuneration Committee
Advisors
The members of the Remuneration
FIT Remuneration Consultants LLP, signatories
Committee are:
to the Remuneration Consultants Group’s
- Mike Russell (Chairman);
Code of Conduct, were appointed by
- Paul Hampden Smith; and
competitive tender process. FIT provides
the Remuneration Committee following a
- Ron Series.
advice to the Remuneration Committee
on all matters relating to remuneration,
including best practice. FIT provided no
The Remuneration Committee’s principal
other services to the Group and accordingly
responsibilities are:
- recommending to the Board the
the Remuneration Committee was satisfied
that the advice provided by FIT was
remuneration strategy and framework
objective and independent. FIT’s fees in
for the Executive Directors and
respect of the year ended 30 April 2016
senior managers;
were £29,000. FIT’s fees were charged on
the basis of the firm’s standard terms of
- determining, within that framework, the
business for advice provided.
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.
63
Implementation Report
on Remuneration
continued
Unaudited information (continued)
Implementation of Policy in the year ending 30 April 2017
Executive Directors
Base salary
sensitive and accordingly are not
Non-Executive Directors
disclosed. Following the conclusion of the
Fees
- Base salaries for the year ending
current financial year, the Remuneration
- The base fee payable to each
30 April 2017 are as follows: £411,075
Committee will consider whether it is
Non-Executive Director is as follows:
for Steve Parkin, £228,375 for Tony Mannix,
feasible to disclose the performance
- Paul Hampden Smith (Senior
£182,700 for David Hodkin and £152,250
targets for the current financial year on
Independent Director and Chair of the
for Sean Fahey. These salaries represent
a retrospective basis.
a 1.5% increase from the financial year
Audit Committee) - £60,000;
- Stephen Robertson - £40,000;
ended 30 April 2016, in line with increases
Performance Share Plan for the year
- Mike Russell - £40,000; and
- Ron Series - £40,000.
made for central functions staff.
Pension
ending 30 April 2017
- Award levels are proposed at 100% of
base salary for each Executive Director.
- Contribution rates for Executive Directors
This is unchanged from the financial year
are as follows (expressed as percentages
ended 30 April 2016.
of base salary): Steve Parkin - 6%, Tony
Mannix - 10%, David Hodkin - 15%.
- The performance measures and targets
Sean Fahey - 10%. These are unchanged
for this award will be based on Adjusted
from the financial year ended 30 April
EPS performance for the financial year
2016, although Steve Parkin and Tony
ending 30 April 2019.
Mannix surrendered part of their salaries
in return for additional employer’s
- The Remuneration Committee selected
pension contributions.
Benefits
- Details of the benefits received by
this performance measure because
growth in earnings is a key measure of
success for the Group.
Executive Directors are set out in note 1 to
- The performance targets for the Adjusted
the single figure table on page 60.
EPS measure will be set by the Committee
shortly before the awards are made, it
- There is no intention to introduce
being the Company’s practice to make
additional benefits in the financial year
the awards following the announcement
ending 30 April 2017.
Annual Incentive Plan for the year ending
of its half-yearly results. Accordingly,
this allows the Committee to ensure
that the targets applied are both
30 April 2017
appropriately stretching, and relevant to
- The AIP maximum is 50% of base salary.
participants. The Company will disclose
This is unchanged from the financial year
the performance targets for the Adjusted
ended 30 April 2016.
EPS measure in next year’s Directors’
Remuneration Report.
- Performance measures for the AIP in the
year to 30 April 2017 will be based on EBIT.
The Remuneration Committee selected
EBIT as the performance measure for
the AIP for the year ending 30 April 2017
as it is regarded as a key performance
indicator for the Group. Given the
competitive nature of the Group’s sectors,
the specific performance targets for the
AIP are considered to be commercially
64
Clipper Logistics plc Annual Report and Accounts 2016
Strategic Report | Governance | Financial Statements
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, part of the
dividend paid by the Company during the
year to 30 April 2015 was to the Company’s
£’000
2016
2015
%
change
Remuneration paid to all employees of the Group1
81,253
66,539
+22.1%
Distributions to shareholders
5,200
1,935 +168.7%
1 Total remuneration reflects overall employee costs. See note 5 to the Group Financial Statements for further information.
2 Distributions to shareholders in the year ended 30 April 2015 include £335,000 paid to the Company’s former
former parent; therefore comparison of
parent company.
profit distributed by way of dividend to
overall expenditure on pay is invalidated for
the years to 30 April 2016 and 30 April 2015.
Comparative Total Shareholder
Return (“TSR”)
The DRR regulations require a line graph
Total Shareholder Return Index (30 May 2014 = 100)
showing the TSR on a holding of shares
in the Company since Admission to the
financial year end, 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:
300
250
200
150
100
50
0
30 May 2014
30 April 2015
30 April 2016
Clipper Logistics plc FTSE SmallCap Index
Source: Thomson Reuters
ex Investment Trusts
Single figure of total
remuneration (£’000)
Annual variable element
award rates against
maximum opportunity
Long-term incentive
vesting rates against
maximum opportunity
Year ended 30 April 2016:
Steve Parkin
Year ended 30 April 2015:
Steve Parkin
486
518
0.0%
20.8%
n/a
n/a
65
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
Year-on-year % change
Salary
Taxable benefits
Annual bonus
percentage change in the prescribed pay
Executive Chairman
-5.1%
+19.1%
-100.0%
elements (salary, taxable benefits, and
annual bonus outcome) of the Executive
All-employees
+1.9%
+6.3%
-6.1%
Chairman and the average percentage
change for all Group staff between the year
ended 30 April 2015 and the year ended
30 April 2016.
In the year ended 30 April 2016 the Executive Chairman surrendered part of his salary for additional employer’s pension
contributions. Subsequently a decrease in salary from the prior year is shown above, but this is offset by an equal and
opposite increase in employer’s pension contributions.
The increase in the value of benefits for the Executive Chairman in the year principally represents an increased
car value within the Company’s policy.
AGM voting results
Details of the votes on remuneration matters held at the 2015 AGM are as follows:
Resolution
Votes for
% for
Votes
against
% against
Total votes
Withheld
Approve Directors’ Remuneration Report
89,072,202
100.00%
0
0.00%
89,072,202
Approve participation by “Concert Party”
in PSP and Sharesave
36,402,635
80.75%
8,679,457
19.25%
45,082,092
0
0
As explained in the Committee Chairman’s
However, this participation in the PSP
letter at the beginning of this report, the
was 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
a key part of the Directors’ Remuneration
raised by certain governance bodies
Policy which received strong shareholder
in relation to the Executive Chairman’s
support at the 2014 AGM.
participation in the PSP given the level of
his existing shareholding in the Company.
66
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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 1 August 2016 and signed on
months’ notice.
its 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
Mike Russell
Ron Series
16 May 2014
16 May 2014
16 May 2014
16 May 2014
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 2016 AGM.
Element and purpose
Policy and operation
Maximum
Performance measures
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.
N/A
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 judgement,
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.
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.
68
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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 53 of the Company’s 2014 Annual Report and Accounts.
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 judgement to adjust
the outcome of the AIP for
any performance measure
(from zero to any cap) should it
consider that to be appropriate.
69
Directors’ Remuneration Policy
continued
Appendix (continued)
Element and purpose
Policy and operation
Maximum
Performance measures
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.
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.
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.
1 Now included at page 53 of the Company’s 2014 Annual Report and Accounts.
70
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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.
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.
The Sharesave Plan is an
all-employee share plan
established under the HMRC
tax-advantaged regime and
follows the usual form for such
plans.
Shareholders’ approval is being
sought at the 2014 AGM for
the Clipper Sharesave Plan
(“Sharesave Plan”).
Executive Directors are able
to participate in all-employee
share plans on the same terms
as other Group employees.
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%.
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.
Non-Executive Director fees
To enable the Group to recruit
and retain Non-Executive
Directors of the highest calibre,
at the appropriate cost.
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.
71
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 of
the Remuneration Committee expressly
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.
72
Clipper Logistics plc Annual Report and Accounts 2016 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 the
interest rate, inflation and equity price
Company’s shares are included in the
year ended 30 April 2016.
risks; details of its financial instruments
Directors’ Remuneration Report on
and hedging activities; and its exposures
page 61. Between 30 April 2016 and
The Corporate Governance Report on
to credit risk and liquidity risk.
29 July 2016 (being the latest practicable
pages 46 to 50 and the Corporate
Social Responsibility Report (with regard
date before publication) there had been
no change in Directors’ interests as set out
to information about the employment of
Results and dividends
on page 61.
disabled persons, employee involvement
The consolidated profit for the Group for
and greenhouse gas emissions) are also
the year after taxation was £10.3 million
incorporated into this report by reference.
(2015: £7.3 million). The results are discussed
Directors’ indemnities
in greater detail in the Operating and
The Company provided indemnities to each
The Company has chosen, in accordance
Financial Review on pages 18 to 28 and
of its Directors during the year ending
with section 414C (11) of the Companies
set out in the Group Income Statement on
30 April 2016 in accordance with the
Act 2006 to include the disclosure of
page 86.
particulars of likely future developments in
provisions of the Company’s Articles of
Association, allowing the indemnification of
the Strategic Report (see pages 6 to 40).
The Directors are recommending the
Directors out of the assets of the Company
payment on 20 October 2016 of a final
to the extent permitted by law. These
dividend of 4.0 pence per ordinary share
indemnities constitute qualifying indemnities
Financial risk management
to shareholders on the register at the close
for the purposes of the Companies Act
The Group’s business activities, together
of business on 23 September 2016 which,
2006 and remain in force at the date of
with the factors likely to affect its future
together with the net interim dividend of
approval of this report without any payment
development, performance and position
2.0 pence per ordinary share paid on
having been made under them.
are set out in the Operating and Financial
31 December 2015, results in a total net
Review on pages 18 to 28, along with the
dividend for the year of 6.0 pence per share
financial position of the Group, its cash flows
(2015: 4.8 pence).
and liquidity.
In addition, note 25 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 44 and 45 of this Annual Report.
The following Directors are current Directors or served the Company during the year ended 30 April 2016:
Name
Position
Steven (Steve) Nicholas Parkin
Antony (Tony) Gerard Mannix
David Arthur Hodkin
Sean Eugene Fahey
Paul Nigel Hampden Smith
Stephen Peter Robertson
Michael (Mike) John Russell
Ronald (Ron) Charles Series
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
74
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Directors’ Report
continued
Significant contracts
The Company has a single class of share
Variation of rights attaching to shares
The only significant contract involving
capital divided into ordinary shares of 0.05p
The Articles provide that rights attached
any Director or controlling shareholder of
each. The ordinary shares are listed on the
to any class of shares may be varied with
the Company during the year was the
London Stock Exchange. The rights and
the written consent of the holders of not
Relationship Agreement (referred to later
obligations attaching to these shares are
less than three-quarters in nominal value
in this report) entered into between the
governed by UK law and the Company’s
of the issued shares, or with the sanction of
Company and Steve Parkin and Carlton
Articles of Association.
Court Investments Limited.
a special resolution passed at a separate
general meeting of the holders of those
shares. At every such separate general
Voting rights attaching to shares
meeting, the quorum shall be two persons
Compensation for loss of office
Ordinary shareholders are entitled to receive
holding or representing by proxy at least
There are no agreements between the
notice and to attend and speak at any
one-third in nominal value of the issued
Company and its Directors or employees
general meeting of the Company. On a
shares (calculated excluding any shares
providing for compensation for loss of office
show of hands every shareholder present in
held in treasury). The rights conferred upon
or employment that occurs as a result of a
person or by proxy (or being a corporation
the holders of any shares shall not, unless
takeover bid. Further details of the Directors’
represented by a duly authorised
otherwise expressly provided in the rights
service contracts can be found in the
representative) shall have one vote, and on
attaching to those shares, be deemed to
Directors’ Remuneration Report on pages
a poll every shareholder who is present in
be varied by the creation or issue of further
58 to 72.
person or by proxy shall have one vote for
shares ranking pari passu with them.
every share of which he is the holder. The
Notice of Annual General Meeting specifies
Directors’ and Officers’ liability insurance
deadlines for exercising voting rights and
Restrictions on the transfer of shares
Directors’ and Officers’ liability insurance
appointing a proxy or proxies.
There are no restrictions on the transfer of
cover is in place at the date of this report,
having been purchased prior to the IPO. The
the ordinary shares other than:
- the standard restrictions for a UK-quoted
Board remains satisfied that an appropriate
Deadlines for exercising voting rights
company where any amount is unpaid on
level of cover is in place and a review of
attaching to shares
a share;
cover will take place on an annual basis.
The Articles provide a deadline for the
submission of proxy forms (whether by
- where, from time to time, certain
an instrument in writing or electronically)
restrictions may become imposed by
Articles of Association
of not less than 48 hours before the time
laws and regulations (for example, insider
The Articles of Association (adopted by
appointed for the holding of the meeting or
trading laws and marketing requirements
special resolution on 15 May 2014) may
the adjourned meeting.
relating to close periods); and
only be amended by special resolution of
the shareholders. A copy of the Articles
- pursuant to the Listing Rules of the
is available on request from the
Shares in uncertificated form
Financial Conduct Authority whereby
Company Secretary.
Directors may determine that shares may
certain Directors, officers or employees of
be held in uncertificated form and title to
the Company require the approval of the
such shares may be transferred by means
Company to deal in the ordinary shares.
Share capital structure
of a relevant system or that shares should
Details of the Company’s share capital are
cease to be so held and transferred.
set out in note 21 to the Group Financial
Statements on page 123. During the year
the Company issued 5,341 new ordinary
shares of 0.05p each pursuant to the
exercise of options granted to certain
employees of the Company under the
Company’s Sharesave Plan approved
by shareholders at the 2014 AGM.
75
Directors’ Report
continued
Restrictions on the transfer of shares
Appointment and replacement
Relationship agreement with controlling
(continued)
of Directors
shareholders
On 30th May 2014 each of the Executive
Unless determined by ordinary resolution of
Carlton Court Investments Limited (“Carlton”)
Directors (save for Steve Parkin) and
the Company, the number of Directors shall
holds 30.0% of the issued share capital
certain persons who held ordinary shares
not be less than two or more than twelve in
of the Company. As such Carlton is a
after the Company’s Admission or whose
number. A Director is not required to hold
Controlling Shareholder as defined in
associates held such shares entered into
any shares in the Company by
the Listing Rules. Carlton is controlled by
an agreement with Steve Parkin agreeing to
way of qualification.
certain restrictions on their ability (and that
Steve Parkin. Steve Parkin and Carlton
have entered into, and the Company’s
of their family) to dispose of ordinary shares
The Board may appoint any person to be
relationship with them is governed by
in which they are interested for a period of
a Director and such Director shall hold
the terms of, the Relationship Agreement
five years from the date of Admission. Under
office only until the next AGM, when he or
referred to above, the principal purpose
the terms of the agreement, the obligors
she shall be eligible for appointment by
of which is to ensure that the Company
may not dispose of any interest in the
the shareholders. The articles provide that
and the Group is capable of carrying on its
ordinary shares held by them at Admission
at each AGM, one-third of the Directors for
business independently of the Controlling
until the fourth year of the five year period.
the time being (or, if their number is not a
Shareholders and that any transactions
During the fourth year of the period, each
multiple of three, then the number nearest
and relationships with the Controlling
obligor may dispose of up to one third of
to but not less than one-third) shall retire
Shareholders are conducted at arm’s length
the ordinary shares in which he is interested
from office. A Director who retires at any
and on normal commercial terms.
at Admission. During the fifth year of the
AGM shall be eligible for re-appointment.
five year period, each obligor may dispose
In addition, any Director appointed by the
The Controlling Shareholders have agreed
of up to two thirds of the ordinary shares in
Board shall hold office only until the next
to procure that their associates also comply
which he is interested at Admission (less a
following AGM and shall then be eligible
with the Relationship Agreement. The
number equal to those ordinary shares sold
for appointment.
during the prior year (if any)).
Relationship Agreement will continue for
so long as the Company is listed on the
On 30th May 2014 the Company
main market for listed securities of London
entered into an agreement (“Relationship
Stock Exchange plc and the Controlling
Authority to purchase own shares
Agreement”) with Steve Parkin and
Shareholders and their associates own or
A resolution to authorise the Company to
his nominee company Carlton Court
control at least 25% of the Company’s
purchase up to 10% of the Company’s
Investments Limited (the “Controlling
issued share capital or voting rights.
issued ordinary share capital will be
Shareholders”). Pursuant to that agreement
proposed at the 2016 AGM.
the Company has agreed with the
The Listing Rules require premium listed
Controlling Shareholders that the Controlling
companies with controlling shareholders to
As at 29 July 2016, being the latest
practicable date prior to the publication of
Shareholders shall be entitled to appoint
and remove one Director to the Board so
provide a confirmation in their annual
reports that all of the independence
this report, the Company did not hold any
long as the Controlling Shareholders (and/or
provisions contained in their agreements
shares in treasury.
any of their associates) when taken together,
have been complied with.
hold 25% or more of the voting rights over
the Company’s issued shares. Where any
In line with this requirement, the Board has
Controlling Shareholder has already been
assessed the Controlling Shareholders’
nominated to the board as a Director
and Company’s compliance with the
himself such appointment will reduce the
Relationship Agreement’s independence
number of persons which the Controlling
requirements and has assessed compliance
Shareholders are entitled to nominate for
with these requirements during the period
appointment by one.
under review.
Any person appointed by the Controlling
Shareholders to the board may be removed
by the Controlling Shareholders by notice
in writing.
76
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Directors’ Report
continued
Relationship agreement with controlling
Employment policies
Branches
shareholders (continued)
Arrangements for consulting and involving
During the year ended 30 April 2016,
As such, the Board can confirm that since
Group employees on matters affecting
Clipper registered a branch in Ireland,
the entry into the Relationship Agreement
their interests at work, and informing them
in order to facilitate performance of a
on 30 May 2014 until 29 July 2016,
of the performance of their employing
contract with Ireland’s largest retailer, and
being the latest practicable date prior
business and the Group, are developed
also to enhance its presence in Ireland in
to the publication of this Annual Report
in ways appropriate to each business. A
order to secure further new business.
and Accounts:
variety of approaches is adopted aimed
(i) the Company has complied with the
at encouraging the involvement of
independence provisions included
employees in effective communication
Political donations
in the Relationship Agreement;
and consultation, and the contribution of
The Company has made no political
(ii) so far as the Company is aware, the
and intends to continue its policy of not
independence provisions included in
Employment policies are designed to
doing so for the foreseeable future.
productive ideas at all levels.
donations since Admission on 4 June 2014
the Relationship Agreement have been
provide equal opportunities irrespective
complied with by each of the Controlling
of race, caste, national origin, religion,
Shareholders and their associates and
age, disability, gender, marital status,
Charitable donations
also by the Company; and
sexual orientation or political affiliation.
During the year to 30 April 2016, the Group
Group policy is to ensure that disabled
made charitable donations totalling
(iii) so far as the Company is aware, the
applicants for employment are given
£72,000 (2015: £52,000).
procurement obligation included in
full and fair consideration having regard
the Relationship Agreement has been
to their particular aptitudes and abilities,
complied with by each of the
and that existing disabled employees are
Controlling Shareholders.
given equal access to training, career
development and promotion opportunities.
In the event of existing employees
Power of Directors
becoming disabled, all reasonable means
Subject to the Articles, the Companies
would be explored to achieve retention in
Act and any directions given by special
employment in the same or an alternative
resolution, the business of the Company
capacity, including arranging appropriate
shall be managed by the Board who may
training. Further details in relation to the
exercise all the powers of the Company
Group’s employment policy are set out in
to, for example, borrow money; mortgage
the Corporate Social Responsibility section
or charge any of its undertaking, property
and uncalled capital; and issue debentures
and other securities, whether outright or as
of the Strategic Report on page 38.
collateral security for any debt, liability or
Significant agreements
obligation of the Company.
There are a number of agreements
which, subject to any discussions with
relevant parties, would terminate upon
Greenhouse gas emissions
a change of control of the Company
The Group’s disclosures on greenhouse gas
such as commercial contracts, bank loan
emissions can be found in the Corporate
agreements, property lease arrangements
Social Responsibility section of the Strategic
and employees’ share plans. None of these
Review on pages 39 and 40 and form part
individually is considered to be significant in
of the Directors’ Report.
terms of their likely impact on the business
of the Group as a whole.
77
Directors’ Report
continued
Major interests in shares
As at 15 July 2016, 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
Hargreave Hale
Liontrust Asset Management
Franklin Templeton Fund Management
Legal and General Investment Management
1 Ultimately controlled by Steve Parkin, Executive Chairman.
2 Ultimately controlled by Sean Fahey, Chief Information Officer.
30,000,000
7,834,397
6,999,999
6,433,002
5,245,140
4,963,416
4,300,000
3,163,436
30.00
7.83
7.00
6.43
5.24
4.96
4.30
3.16
Going concern
Audit information
Annual General Meeting
After making enquiries, the Directors have a
Each of the Directors at the date of the
The Company’s Annual General Meeting will
reasonable expectation that the Company
approval of this report confirms that:
be held at Clipper Logistics, Gelderd Road,
and Group have adequate resources
- so far as he is aware, there is no relevant
Leeds, LS12 6LT on 17 October 2016 at
to continue in operational existence for
audit information of which the Group’s
11:00. Details of the meeting venue and the
the foreseeable future. In making this
auditors are unaware; and
resolutions to be proposed are set out in a
assessment they have considered the
Notice of Meeting which will be issued under
Company and Group budgets and
- he has taken all the reasonable steps
separate cover.
cash flow forecasts for the period to
that he ought to have taken as a Director
30 April 2019. The Company has
to make himself aware of any relevant
The Directors consider that all of the
considerable financial resources, negligible
audit information and to establish that
proposed resolutions are in the best interests
liquidity risk and is operating within a sector
the Group’s auditors are aware
of the Company and its shareholders as a
that is experiencing growing demand
of the information.
for its services. The Directors therefore
whole. It is the Directors’ recommendation
that you support the proposed resolutions
have a reasonable expectation that the
Company and the Group have adequate
The confirmation is given and should
be interpreted in accordance with the
and vote in favour of them, as each of the
Directors intends to do.
resources to continue in operational
provisions of section 418 of the Companies
existence for the foreseeable future. Thus
Act 2006.
they continue to adopt the going concern
basis of accounting in preparing the annual
The Directors’ Report has been approved by
the Board of Directors of Clipper Logistics plc.
Financial Statements. Further information
Auditors
Signed on behalf of the Board.
is disclosed in the Viability Statement
The auditors, KPMG LLP have indicated
on page 34 and note 2.2 to the
their willingness to continue in office and a
Guy Jackson
Group Financial Statements.
resolution seeking to reappoint them will be
Company Secretary
proposed at the Annual General Meeting.
1 August 2016
Clipper Logistics plc
Registered Office:
Gelderd Road
Leeds LS12 6LT
Company No. 03042024
78
Clipper Logistics plc Annual Report and Accounts 2016 Statement of Directors’ Responsibilities
in respect of the Annual Report and
Accounts
The Directors are responsible for preparing
- for the Parent Company Financial
Responsibility statement of the
the Annual Report and the Group and
Statements, state whether applicable
Directors in respect of the Annual
Parent Company Financial Statements
UK Accounting Standards have been
Report and Accounts
in accordance with applicable law
followed, subject to any material
We confirm that to the best of
and regulations.
departures disclosed and explained
our knowledge:
in the Parent Company Financial
- the Financial Statements, prepared in
Company law requires the Directors to
Statements; and
prepare Group and Parent Company
accordance with the applicable set of
accounting standards, give a true and
Financial Statements for each financial
- prepare the Financial Statements on
fair view of the assets, liabilities, financial
year. Under that law they are required to
the going concern basis unless it is
position and profit or loss of the Company
prepare the Group Financial Statements
inappropriate to presume that the Group
and the undertakings included in the
in accordance with IFRSs as adopted
and the Parent Company will continue
consolidation taken as a whole; and
by the EU and applicable law and have
in business.
elected to prepare the Parent Company
- the Strategic Report and Directors’ Report
Financial Statements in accordance with
The Directors are responsible for keeping
includes a fair review of the development
UK Accounting Standards, including FRS 101
adequate accounting records that are
and performance of the business and the
Reduced Disclosure Framework.
sufficient to show and explain the Parent
position of the issuer and the undertakings
Under company law the Directors must not
reasonable accuracy at any time the
whole, together with a description of the
approve the Financial Statements unless
financial position of the Parent Company
principal risks and uncertainties that
Company’s transactions and disclose with
included in the consolidation taken as a
they are satisfied that they give a true and
and enable them to ensure that its Financial
they face.
fair view of the state of affairs of the Group
Statements comply with the Companies Act
and Parent Company and of their profit or
2006. They have general responsibility for
We consider the Annual Report and
loss for that period. In preparing each of
taking such steps as are reasonably open to
Accounts, taken as a whole, is fair,
the Group and Parent Company Financial
them to safeguard the assets of the Group
balanced and understandable
Statements, the Directors are required to:
and to prevent and detect fraud and
and provides the information necessary
- select suitable accounting policies and
other irregularities.
then apply them consistently;
for shareholders to assess the Group’s
position and performance, business
Under applicable law and regulations, the
model and strategy.
- make judgements and estimates that are
Directors are also responsible for preparing
reasonable and prudent;
a strategic report, directors’ report, directors’
remuneration report and corporate
Approved by the Board and signed
- for the Group Financial Statements, state
governance statement that complies with
on its behalf by:
whether they have been prepared in
accordance with IFRSs as adopted by
that law and those regulations.
the EU;
The Directors are responsible for the
Steve Parkin
maintenance and integrity of the corporate
Executive Chairman
and financial information included on
1 August 2016
the Company’s website. Legislation in
the UK governing the preparation and
David Hodkin
dissemination of financial statements may
Chief Financial Officer
differ from legislation in other jurisdictions.
1 August 2016
80
Clipper Logistics plc Annual Report and Accounts 2016 Group Financial Statements
for the year ended 30 April 2016
82
Clipper Logistics plc Annual Report and Accounts 2016 Independent Auditor’s Report
to the members of Clipper Logistics plc only
Opinions and conclusions arising from our audit
Our opinion on the Financial Statements is
each with bespoke billing terms which can
Our application of materiality and an
unmodified
lead to complexity around the calculation
overview of the scope of our audit
We have audited the Financial Statements of
of revenue and any deferred and accrued
The materiality for the Group Financial
Clipper Logistics plc for the year ended
revenue, in the value-added logistics services
Statements as a whole has been set at
30 April 2016 set out on pages 86 to 157.
segment (including Clipper Logistics
£650,000 determined by reference to a
In our opinion:
and Servicecare).
- the Financial Statements give a true and fair
view of the state of the Group’s and of the
Our response:
benchmark of Group profit before taxation (of
which it represents approximately 5%).
Parent Company’s affairs as at 30 April 2016
Our procedures included:
We report to the Audit Committee any
and of the Group’s profit for the year
- checking of the reconciliation of cash
corrected and uncorrected misstatements
then ended;
receipts and movements in opening and
closing related balance sheet captions to
(including disclosure misstatements)
exceeding £32,500, in addition to other
- the Group Financial Statements have been
total revenue for the value-added logistics
identified misstatements that warranted
properly prepared in accordance with
services segment;
reporting on qualitative grounds.
International Financial Reporting Standards
as adopted by the European Union;
- inspecting contracts with key customers
Of the Group’s seven reporting components,
in the value-added logistics services
we subjected six to audits for Group reporting
- the Parent Company Financial Statements
segment to determine whether, based on
purposes; the remainder was not individually
have been properly prepared in
the contract terms and billing schedule,
financially significant enough to require an
accordance with UK Accounting Standards,
the Directors have appropriately captured
audit for Group reporting purposes.
including FRS 101 Reduced Disclosure
these contracts as part of the calculation
Framework; and
of revenue and any accrued or deferred
The components, subjected to audits for
- the Financial Statements have been
cent of Group revenue, 100% per cent of
prepared in accordance with the
- assessing accuracy of accrued and
Group profit before tax and 95% per cent of
requirements of the Companies Act 2006;
deferred income in the value-added
Group total assets.
income at the year end;
Group reporting purposes covered 95% per
and, as regards the Group Financial
logistics services segment by agreeing a
Statements, Article 4 of the IAS Regulation.
sample of balances to invoices raised pre
or post year end and recalculating the
amount accrued or deferred based on
Our assessment of risks of material
contract terms and costs incurred in the
misstatement
period up to year end;
In arriving at our audit opinion above on
the Financial Statements the risk of material
- assessing completeness of accrued and
misstatement that has the greatest effect on
deferred revenue by testing a sample of
our audit was as follows:
- Revenue recognition – £290.3m
transactions around the year end date,
in order to assess whether the associated
- Refer to page 55 (Audit Committee
revenue was recognised in the correct
Report) and pages 97 to 98
period; and
(accounting policy).
The Risk:
- assessing the adequacy of the Group’s
disclosures in respect of the accounting
Accuracy and timing of revenue recognition
policies on revenue recognition set out
is one of the key judgemental areas for our
in note 2.20.
audit, particularly in respect of the different
revenue streams around the Group. These
include the various contractual arrangements,
84
Turnover, 95%
PBT, 100%
Total assets,95%
Analysis at aggregated Group level
Audited for Group reporting purposes
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Independent Auditor’s Report
to the members of Clipper Logistics plc only
continued
Opinions and conclusions arising from our audit (continued)
Our application of materiality and
We have nothing to report in respect of the
Under the Listing Rules we are required to
an overview of the scope of our audit
matters on which we are required to report
review:
(continued)
by exception
- the Directors’ statements, set out on pages
For the remaining component, we
Under ISAs (UK and Ireland) we are required to
34 and 78, in relation to going concern
performed analysis at a Group level to re-
report to you if, based on the knowledge we
and longer-term viability; and
examine our assessment that there were no
acquired during our audit, we have identified
significant risks of material misstatement within
other information in the Annual Report that
- the part of the Corporate Governance
this component.
contains a material inconsistency with either
statement on page 46 in the Corporate
The Group audit team performed and
a material misstatement of fact, or that is
Company’s compliance with the eleven
that knowledge or the Financial Statements,
Governance Report relating to the
reviewed all of the work discussed above.
otherwise misleading.
provisions of the 2014 UK Corporate
Governance Code specified for our review.
Our opinion on other matters prescribed by
- we have identified material inconsistencies
We have nothing to report in respect of the
the Companies Act 2006 is unmodified
between the knowledge we acquired
above responsibilities.
In particular, we are required to report to you if:
In our opinion:
during our audit and the Directors’
- the part of the Directors’ Remuneration
statement that they consider that the
Report to be audited has been properly
Annual Report and Accounts taken as a
Scope and responsibilities
prepared in accordance with the
whole is fair, balanced and understandable
As explained more fully in the Statement of
Companies Act 2006; and
and provides the information necessary for
Directors’ Responsibilities set out on page
shareholders to assess the Group’s position
80, the Directors are responsible for the
- the information given in the Strategic Report
and performance, business model and
preparation of the Financial Statements and
and the Directors’ Report for the financial
strategy; or
year for which the Financial Statements
for being satisfied that they give a true and
fair view. A description of the scope of an
are prepared is consistent with the
- the Audit Committee Report does
audit of financial statements is provided on
Financial Statements.
not appropriately address matters
the Financial Reporting Council’s website at
We have nothing to report on the disclosures
communicated by us to the
www.frc.org.uk/auditscopeukprivate. This report
Audit Committee.
is made solely to the Company’s members
as a body and is subject to important
of principal risks
Under the Companies Act 2006 we are
explanations and disclaimers regarding our
Based on the knowledge we acquired during
required to report to you if, in our opinion:
responsibilities, published on our website at
our audit, we have nothing material to add or
- adequate accounting records have not
www.kpmg.com/uk/auditscopeukco2014a,
draw attention to in relation to:
- the Viability Statement on page 34,
concerning the principal risks, their
management, and, based on that, the
Directors’ assessment and expectations of
been kept by the Parent Company, or
returns adequate for our audit have not
been received from branches not visited
by us; or
which are incorporated into this report as if set
out in full and should be read to provide an
understanding of the purpose of this report,
the work we have undertaken and the basis
of our opinions.
the Group continuing in operation over the
- the Parent Company Financial Statements
three years to 30 April 2019; or
and the part of the Directors’ Remuneration
- the disclosures in note 2 of the Group
with the accounting records and returns; or
for and on behalf of KPMG LLP,
Financial Statements concerning the use of
Statutory Auditor
the going concern basis of accounting.
- certain disclosures of Directors’ remuneration
Chartered Accountants
Report to be audited are not in agreement
Johnathan Pass (Senior Statutory Auditor)
specified by law are not made; or
1 Sovereign Square
Sovereign Street
- we have not received all the information
and explanations we require for our audit.
Leeds
LS1 4DA
1 August 2016
85
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
Profit for the financial year
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share*
2016
Group
£’000
2015
Group
£’000
290,325
(205,742)
234,778
(165,590)
84,583
263
(70,315)
14,531
-
-
14,531
(1,413)
4
13,122
(2,786)
69,188
364
(57,547)
12,005
(278)
(863)
10,864
(1,388)
9
9,485
(2,161)
10,336
7,324
10.3p
10.3p
10.3p
7.3p
7.3p
8.4p
Note
3
6
4
6
6
8
9
10
11
11
11
*Earnings per share adjusted for discontinuing and exceptional costs as described in note 11.
The accompanying notes on pages 92 to 131 form part of these Financial Statements.
86
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Group Statement of
Comprehensive Income
For the year ended 30 April
Profit for the financial year
Other comprehensive expense for the year, net of tax:
To be reclassified to the income statement in subsequent periods:
Exchange differences on retranslation of foreign operations
Note
2016
Group
£’000
2015
Group
£’000
10,336
7,324
(6)
(5)
Total comprehensive income for the financial year
10,330
7,319
The accompanying notes on pages 92 to 131 form part of these Financial Statements.
87
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
Current tax assets
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
Financial 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
2016
Group
£’000
2015
Group
£’000
Note
12
25,564
14,615
13
15
16
17
18
19
20
19
20
10
21
23,252
1,646
24,898
50,462
26,252
39,816
36
715
66,819
117,281
72,183
6,553
10
109
1,747
80,602
12,931
769
202
13,902
94,504
50
56
24
84
6,006
783
15,774
22,777
23,252
1,567
24,819
39,434
21,677
33,443
-
1,854
56,974
96,408
61,708
5,196
70
108
731
67,813
10,226
732
642
11,600
79,413
50
48
31
84
6,006
139
10,637
16,995
96,408
Total equity and liabilities
117,281
The accompanying notes on pages 92 to 131 form part of these Financial Statements.
Approved by the Board on 1 August 2016 and signed on its behalf by:
D A Hodkin – Chief Financial Officer
Company No. 03042024
88
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Group Statement of
Changes in Equity
For the year ended 30 April
Share
capital
Group
£’000
Share
premium
Group
£’000
Currency
translation
reserve
Group
£’000
Other
reserve
Group
£’000
Carried
forward
Group
£’000
Balance at 1 May 2014
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Dividends
Balance at 30 April 2015
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Share issue
Dividends
Balance at 30 April 2016
Balance at 1 May 2014
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Dividends
Balance at 30 April 2015
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Share issue
Dividends
50
-
-
-
-
50
-
-
-
-
-
50
Brought
forward
Group
£’000
218
-
(5)
-
-
213
-
(7)
-
8
-
48
-
-
-
-
48
-
-
-
8
-
56
Merger
reserve
Group
£’000
6,006
-
-
-
-
6,006
-
-
-
-
-
Balance at 30 April 2016
214
6,006
The accompanying notes on pages 92 to 131 form part of these Financial Statements.
36
-
(5)
-
-
31
-
(7)
-
-
-
24
Share based
payment
reserve
Group
£’000
-
-
-
139
-
139
-
-
644
-
-
783
84
-
-
-
-
84
-
-
-
-
-
218
-
(5)
-
-
213
-
(7)
-
8
-
84
214
Retained
earnings
Group
£’000
5,248
7,324
-
-
(1,935)
Total
Group
£’000
11,472
7,324
(5)
139
(1,935)
10,637
16,995
10,336
1
-
-
(5,200)
10,336
(6)
644
8
(5,200)
15,774
22,777
89
Group Statement
of Cash Flows
For the year ended 30 April
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
Note
6
6
6
6
8 & 9
6
6
22
2016
Group
£’000
13,122
4,580
466
(37)
-
-
(82)
1,409
(60)
(1)
454
(6,372)
(3,677)
10,694
20,496
4
(1,362)
(2,063)
2015
Group
£’000
9,485
3,358
292
(38)
671
(2,065)
118
1,379
(98)
(1)
124
(3,073)
(2,270)
4,716
12,598
9
(1,248)
(1,728)
Net cash flows from operating activities
17,075
9,631
Investing activities:
- Purchase of property, plant and equipment
- Proceeds from sale of property, plant & equipment
- Purchase of intangible assets
- Acquisition of subsidiary undertaking net of cash acquired
Net cash flows from investing activities
27
(5,383)
238
(546)
(2,212)
(197)
292
(87)
(3,699)
(7,903)
(3,691)
90
Clipper Logistics plc Annual Report and Accounts 2016 Group Statement
of Cash Flows
For the year ended 30 April (continued)
Financing activities:
- Drawdown of bank loans
- Debt issue costs paid
- Finance leases advanced
- Shares issued
- Dividends paid
- Repayment of bank loans
- Repayment of capital on finance leases
- Net (repayment to)/advance from former parent company
- Receipt in respect of derivative financial instrument
Strategic Report | Governance | Financial Statements
Note
21
7
2016
Group
£’000
6,442
(232)
207
8
(5,200)
(10,141)
(3,212)
-
-
2015
Group
£’000
12,762
(370)
91
-
(1,935)
(2,920)
(2,976)
(14,181)
168
Net cash flows from financing activities
(12,128)
(9,361)
Net (decrease)/increase in cash and cash equivalents
(2,956)
(3,421)
Cash and cash equivalents at start of year
1,854
5,275
Cash and cash equivalents at end of year
17
(1,102)
1,854
The accompanying notes on pages 92 to 131 form part of these Financial Statements.
91
Notes to the Group
Financial Statements
1. General information
- Clipper Logistics KG (GmbH & Co.)
2.2. Going concern
The Group Financial Statements for the
(Germany)
The Financial Statements have been
year ended 30 April 2016 were authorised
- Servicecare Support Services Limited
prepared on a going concern basis. In
for issue by the Board of Directors on
(see note 27)
determining the appropriate basis of
1 August 2016 and the Group Statement of
- Electrotec International Limited
preparation of the Financial Statements, the
Financial Position was signed on the Board’s
Directors are required to consider whether
behalf by David Hodkin.
In addition, the Group has a number of
the Group can continue in operational
other subsidiaries as set out in note E to the
existence for the foreseeable future.
Clipper Logistics plc (the “Company”) and
Company Financial Statements.
its subsidiaries (together the “Group”) provide
Further information in relation to the Group’s
value-added logistics and other services
The Group’s Financial Statements have been
business activities, together with the factors
to predominantly the retail sector and
prepared in accordance with International
likely to affect its future development,
also operate as distributors of
Financial Reporting Standards as adopted
performance and position is set out in the
commercial vehicles.
by the European Union (IFRS) and also
Strategic Report section of this report on
in accordance with the provisions of the
pages 6 to 40.
The Company is limited by share capital,
Companies Act 2006.
incorporated and domiciled in the United
Note 25 to the Group Financial Statements
Kingdom. The address of its registered office
The preparation of the financial information
includes the Group’s objectives, policies
is Clipper Logistics, Gelderd Road, Leeds,
under IFRSs requires management to make
and processes for managing its capital, its
LS12 6LT.
judgements, estimates and assumptions
financial risk management objectives and
that affect the application of policies and
its exposure to foreign exchange, credit and
The Group’s Financial Statements have
reported amounts of assets and liabilities,
interest rate risk. Further details of the Group’s
been prepared in accordance with note
income and expenses. The estimates and
net debt at 30 April 2016 are included in
2.1 Basis of preparation, and note 2.3 Basis
associated assumptions are based on
note 19 of the Group Financial Statements.
of consolidation. The principal accounting
historical experience and other factors that
policies adopted by the Group are set out
are believed to be reasonable under the
The Group Statement of Financial Position
in note 2.
circumstances, the results of which form
shows total current assets of £66,819,000
the basis of making the judgements about
and total current liabilities of £80,602,000.
carrying values of assets and liabilities
Net current liabilities at 30 April 2016
2. Summary of significant accounting
that are not readily apparent from other
were therefore £13,783,000 (2015:
policies
sources. Actual results may differ from
£10,839,000). At the year end, the Group
The principal accounting policies applied
these estimates.
in the preparation of these consolidated
had a committed Revolving Credit Facility
of £19,744,000 of which £5,500,000
Financial Statements are set out below.
These policies have been consistently
The accounting policies which follow set out
those policies which apply in preparing the
was drawn and an overdraft facility of
£8,000,000, of which £1,817,000 was
applied to all years presented, unless
Financial Statements for the year ended
drawn. The Directors have assessed the
otherwise stated.
30 April 2016.
future funding requirements of the Group
and the Company and compared them to
The Group’s Financial Statements have
the bank facilities which are now available.
2.1. Basis of preparation
been prepared on a historical cost basis,
The assessment included a detailed review
Clipper Logistics plc (“the Company”), a
except for derivative financial instruments
of financial and cash flow forecasts for at
public limited company incorporated and
which have been measured at fair value.
least the 12 month period from the date
domiciled in the United Kingdom, acts as
The Financial Statements are presented in
of signing the Annual Report. The Directors
parent undertaking for the Clipper group of
Pounds Sterling and all values are rounded
considered a range of potential scenarios
companies. The Company has independent
to the nearest thousand (£’000) unless
within the key markets the Group serves and
operations in its own right and owns 100%
otherwise indicated.
of the share capital and voting rights of the
following principal trading entities:
- Northern Commercials (Mirfield) Limited
how these might impact on the Group’s
cash flow. The Directors also considered
what mitigating actions the Group could
take to limit any adverse consequences.
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Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.2. Going concern (continued)
with a balance of £6,006,000 after the
control over the subsidiary and ceases when
The Group’s forecasts and projections
acquisition of the fellow subsidiaries from
the Group loses control of the subsidiary.
show that the Group should be able to
Clipper Group Holdings Limited as part
Assets, liabilities, income and expenses of
operate without the need for any increase in
of the group reorganisation.
a subsidiary acquired or disposed of during
borrowing facilities.
(b) Consolidations
the year are included in the consolidated
financial statements from the date the
Having undertaken this work, the Directors
The consolidated financial statements
Group gains control until the date the
are of the opinion that the Company
comprise the financial statements of the
Group ceases to control the subsidiary.
and the Group have adequate resources
Group and its subsidiaries as at
to continue in operational existence for
30 April 2016. Control is achieved when
Profit or loss and each component of other
the foreseeable future. Accordingly, they
the Group is exposed, or has rights, to
comprehensive income are attributed to
continue to adopt the going concern basis
variable returns from its involvement with the
the equity holders of the parent of the Group
in preparing the Financial Statements.
investee and has the ability to affect those
and to any non-controlling interests, even
returns through its power over the investee.
if this results in the non-controlling interests
Specifically, the Group controls an investee if,
having a deficit balance. When necessary,
2.3. Basis of consolidation
and only if, the Group has:
adjustments are made to the financial
(a) Group reorganisation and merger
- power over the investee (i.e., existing rights
statements of subsidiaries to bring their
reserve
that give it the current ability to direct the
accounting policies into line with the Group’s
relevant activities of the investee);
accounting policies. All intra-group assets
At 30 April 2014 the Company was a wholly
and liabilities, equity, income, expenses and
owned subsidiary of Clipper Group Holdings
- exposure, or rights, to variable returns from
cash flows relating to transactions between
Limited. In April 2014 the Group undertook
its involvement with the investee; and
members of the Group are eliminated in full
a restructuring, whereby the Company
on consolidation The financial statements
acquired certain fellow subsidiaries from
- the ability to use its power over the
of subsidiaries used in the preparation of
Clipper Group Holdings Limited and the
investee to affect its returns.
the consolidated Financial Statements are
remaining 25% ownership interest of the
prepared on the same reporting year as the
Group’s German operations from the
Generally, there is a presumption that a
parent company.
minority shareholders. On 4 June 2014
majority of voting rights result in control.
Clipper Logistics plc was admitted to the
To support this presumption and when
A change in the ownership interest of
premium segment of the London Stock
the Group has less than a majority of the
a subsidiary without loss of control is
Exchange and Clipper Group Holdings
voting or similar rights of an investee, the
accounted for as an equity transaction. If
Limited was no longer the parent company.
Group considers all relevant facts and
the Group loses control over a subsidiary, it
circumstances in assessing whether it has
derecognises the related assets (including
IFRS 3 states that it does not apply to a
combination of entities or businesses
power over an investee, including:
- the contractual arrangement with the
goodwill), liabilities, non-controlling interest
and other components of equity while any
under common control. Accordingly, the
other vote holders of the investee;
resultant gain or loss is recognised in profit or
consolidated information of the Clipper
loss. Any investment retained is recognised
Group has been prepared to reflect the
- rights arising from other contractual
at fair value.
combination of the restructured Clipper
arrangements; and
Group as if it had occurred from
The purchase method of accounting is used
1 May 2010, being the earliest comparative
- the Group’s voting rights and potential
to account for the acquisition of subsidiaries
period reported by the restructured group.
voting rights.
by the Group other than those included in
the restructuring referred to above. The cost
The group reorganisation is a combination
The Group re-assesses whether or not
of an acquisition is measured as the fair
of entities under common control; and
it controls an investee if facts and
value of the assets given, equity instruments
consolidated using a pooling of interests
circumstances indicate that there are
issued and liabilities incurred or assumed
basis. This treats the restructured group as
changes to one or more of the three
at the date of exchange, plus costs directly
if it was formed in May 2010 and a merger
elements of control. Consolidation of a
attributable to the acquisition. Identifiable
reserve has been included to reflect this,
subsidiary begins when the Group obtains
assets acquired and liabilities and
93
Notes to the Group
Financial Statements
continued
2.3. Basis of consolidation (continued)
foreign currency are translated using the
the Group and the cost of the item can be
(b) Consolidations (continued)
exchange rates at the dates of the initial
measured reliably. The carrying amount of
contingent liabilities assumed in a business
transactions. Non-monetary items measured
any replaced part is derecognised. All other
combination are measured initially at
at fair value in a foreign currency are
repairs and maintenance are charged to
their fair values at the acquisition date,
translated using the exchange rates at the
the income statement during the financial
irrespective of the extent of any minority
date when the fair value is determined. The
period in which they are incurred.
interest. The excess of the cost of acquisition
gain or loss arising on translation of non-
over the fair value of the Group’s share of the
monetary items measured at fair value is
Depreciation is calculated using the straight-
identifiable net assets acquired is recorded
treated in line with the recognition of the
line method to allocate their cost to their
as goodwill. If the cost of acquisition is
gain or loss on the change in fair value of
residual values over their estimated useful
less than the fair value of the net assets of
the item (i.e., translation differences on items
lives, as follows:
the subsidiary acquired, the difference is
whose fair value gain or loss is recognised in
- Leasehold property over the length of the
recognised directly in the income statement.
other comprehensive income or profit or loss
lease;
are also recognised in other comprehensive
income or profit or loss, respectively).
- Plant and machinery 2 - 20 years; and
2.4. Segment reporting
Operating segments are reported in
(c) Translation of foreign operations
- Motor vehicles 4 - 8 years.
a manner consistent with the internal
On consolidation, the assets and liabilities of
reporting provided to the Company’s
foreign operations are translated into Pounds
Residual values and useful lives are
Board of Directors, collectively the Group’s
Sterling at the rate of exchange prevailing
reviewed, and adjusted if appropriate,
chief operating decision maker, to assess
at the reporting date and their statements
at each balance sheet date.
performance and allocate capital
of profit or loss are translated at the
or resources.
average exchange rates for the year. The
An asset’s carrying amount is written down
exchange differences arising on translation
immediately to its recoverable amount if the
for consolidation are recognised in other
asset’s carrying amount is greater than its
2.5. Foreign currency translation
comprehensive income.
estimated recoverable amount.
(a) Functional and presentation currency
Items included in the financial statements of
Any goodwill arising on the acquisition of
An item of property, plant and equipment
each of the Group’s entities are measured
a foreign operation and any fair value
and any significant part initially recognised
using the currency of the primary economic
adjustments to the carrying amounts of
is derecognised upon disposal or when no
environment in which the entity operates
assets and liabilities arising on the acquisition
future economic benefits are expected from
(‘the functional currency’). The combined
are treated as assets and liabilities of the
its use or disposal. Any gain or loss arising
Financial Statements are presented in
foreign operation and translated at the spot
on derecognition of the asset (calculated
Pounds Sterling, which is the Company’s
functional and presentation currency.
rate of exchange at the reporting date.
as the difference between the net disposal
proceeds and the carrying amount of the
asset) is included within ‘other net gains’ in
(b) Transactions and balances
2.6. Property, plant and equipment
the income statement when the asset
Foreign currency transactions are translated
Property, plant and equipment is stated
is derecognised.
into the functional currency using the
at historical cost less depreciation and
exchange rates prevailing at the dates of
impairment. Historical cost includes
the transactions. Foreign exchange gains
expenditure that is directly attributable
2.7. Intangible assets
and losses resulting from the settlement of
to the acquisition of the items.
(a) Goodwill
such transactions and from the translation
Goodwill represents the excess of the cost
at year-end exchange rates of monetary
Subsequent costs are included in the
of an acquisition over the fair value of the
assets and liabilities denominated in foreign
asset’s carrying amount or recognised
Group’s share of the net identifiable assets
currencies are recognised in the income
as a separate asset, as appropriate, only
of the acquired subsidiary at the date of
statement. Non-monetary items that are
when it is probable that future economic
acquisition. If the cost of acquisition is less
measured in terms of historical cost in a
benefits associated with the item will flow to
than the fair value of the net assets of
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Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.7. Intangible assets (continued)
Costs associated with developing or
If no such transactions can be identified,
(a) Goodwill (continued)
maintaining computer software programmes
an appropriate valuation model is used.
the subsidiary acquired, the difference is
are recognised as an expense as incurred.
These calculations are corroborated by
‘negative goodwill’ and is recognised in the
Costs that are directly associated with the
valuation multiples, quoted share prices
income statement immediately.
development of identifiable and unique
for publicly traded companies or other
Goodwill on acquisitions of subsidiaries is
software products controlled by the Group,
available fair value indicators.
included in ‘intangible assets’. Separately
and that will probably generate economic
recognised goodwill is tested annually
benefits exceeding costs beyond one
An impairment loss is recognised as an
for impairment and carried at cost
year, are recognised as intangible assets.
expense immediately. Where an impairment
less accumulated impairment losses.
Costs include the software development
loss subsequently reverses, the carrying
Impairment losses on goodwill are not
employee costs and overheads directly
amount of the asset (or CGU) is increased
reversed. Gains and losses on the disposal
attributable to bringing the asset in to use.
to the revised estimate of its recoverable
of an entity include the carrying amount of
amount, but so that the increased carrying
goodwill relating to the entity sold. Goodwill
Computer software development costs
amount does not exceed the carrying
is allocated to cash-generating units for
recognised as assets are amortised over
amount that would have been determined
the purpose of impairment testing. The
their estimated useful lives (not exceeding
had no impairment loss been recognised for
allocation is made to those cash-generating
three years).
units or groups of cash-generating units that
are expected to benefit from the business
the asset (or CGU) in prior years. A reversal
of an impairment loss is recognised as
income immediately.
combination in which the goodwill arose.
2.8. Impairment of non-financial assets
The Group assesses, at each reporting date,
The Group bases its impairment calculation
(b) Contracts and licences
whether there is an indication that an asset
on detailed budgets and forecast
Intangible assets acquired separately are
may be impaired. If any indication exists, or
calculations, which are prepared separately
measured on initial recognition at cost.
when annual impairment testing for an asset
for each of the Group’s CGUs to which
The cost of intangible assets acquired in
is required, the Group estimates the asset’s
the individual assets are allocated. These
a business combination is their fair value
recoverable amount. An asset’s recoverable
budgets and forecast calculations generally
at the date of acquisition. Following initial
amount is the higher of an asset’s or cash-
cover a minimum period of two years. For
recognition, intangible assets are carried at
generating unit’s (“CGU”) fair value less costs
longer periods, a long-term growth rate is
cost less any accumulated amortisation and
to sell and its value in use.
calculated and applied to project future
accumulated impairment losses. Internally
cash flows after the second year.
generated intangibles, excluding capitalised
Where the asset does not generate cash
development costs, are not capitalised and
flows that are independent from other
the related expenditure is reflected in profit
assets, the Group estimates the recoverable
2.9. Financial assets
or loss in the period in which the expenditure
is incurred.
amount of the CGU to which the asset
belongs.
The Group classifies its financial assets in the
following categories: at fair value through
profit or loss and available for sale. The
Intangible assets are amortised over the
When the carrying amount of an asset or
classification depends on the purpose for
useful economic life (five to ten years) and
CGU exceeds its recoverable amount, the
which the financial assets were acquired.
assessed for impairment whenever there is
asset is considered impaired and is written
Management determines the classification
an indication that the intangible asset may
down to its recoverable amount.
of its financial assets at initial recognition. At
be impaired.
30 April 2016 the Group held no financial
In assessing value in use, the estimated
assets available for sale.
(c) Computer software
future cash flows are discounted to their
Acquired computer software licences are
present value using a pre-tax discount rate
Financial assets at fair value through
capitalised on the basis of the costs incurred
that reflects current market assessments
profit or loss
to acquire and bring to use the specific
of the time value of money and the risks
Financial assets at fair value through profit
software. These costs are amortised over
specific to the asset. In determining fair
or loss are financial assets held for trading. A
their estimated useful lives (three to
value less costs to sell, recent market
financial asset is classified in this category if
five years).
transactions are taken into account.
acquired principally for the purpose of
95
Notes to the Group
Financial Statements
continued
2.9. Financial assets (continued)
to its present location and condition. Cost
against ‘administration expenses’ in
selling in the short term. Derivatives are also
is determined using the first-in, first-out
the income statement.
categorised as held for trading unless they
(“FIFO”) method. Net realisable value is the
are designated as hedges. Assets in this
estimated selling price in the ordinary course
category are classified as current assets.
of business, less applicable variable selling
2.13. Cash and cash equivalents
Investments are initially recognised at fair
value plus transaction costs for all financial
expenses.
Cash and cash equivalents includes cash
in hand, deposits held at call with banks,
other short-term highly liquid investments with
assets not carried at fair value through profit
2.11. Vehicles on consignment
original maturities of three months or less,
or loss. Financial assets carried at fair value
Vehicles held on consignment from
and bank overdrafts. Bank overdrafts are
through profit or loss are initially recognised
manufacturers are included in the statement
shown within borrowings in current liabilities
at fair value and transaction costs are
of financial position where it is considered
on the statement of financial position. Cash
expensed in the income statement.
that the Group enjoys the benefits and
and cash equivalents are stated net of bank
Financial assets are derecognised when
carries the risks of ownership.
overdrafts in the cash flow statement.
the rights to receive cash flows from the
investments have expired or have been
transferred and the Group has transferred
2.12. Trade receivables
2.14. Trade payables
substantially all risks and rewards of
Trade receivables are recognised initially at
Trade payables are recognised initially
ownership.
fair value and subsequently measured at
at fair value and subsequently measured
amortised cost using the effective interest
at amortised cost using the effective
Available-for-sale financial assets and
method, less provision for impairment. A
interest method.
financial assets at fair value through profit or
provision for impairment of trade receivables
loss are subsequently carried at fair value.
is established when there is objective
evidence that the Group will not be able to
2.15. Consignment inventory payables
Gains or losses arising from changes in the
collect all amounts due according to the
Inventories of commercial vehicles are
fair value of the ‘financial assets at fair value
original terms of the receivables.
usually funded under stocking finance plans
through profit or loss’ category are presented
offered by either the manufacturer’s own
in the income statement within ‘other net
Significant financial difficulties of the
finance arm, or third party funders.
gains’ in the period in which they arise.
debtor, probability that the debtor will enter
Amounts outstanding are included in
bankruptcy or financial reorganisation, and
trade and other payables.
Dividend income from financial assets at
default or delinquency in payments (more
fair value through profit or loss is recognised
than 30 days overdue) are considered
in the income statement as part of other
indicators that the trade receivable may
2.16. Borrowings
income when the Group’s right to receive
payments is established.
be impaired. The amount of the provision is
the difference between the asset’s carrying
Borrowings are recognised initially at fair
value, net of transaction costs incurred.
amount and the present value of estimated
Borrowings are subsequently stated at
The Group assesses at each balance sheet
future cash flows, discounted at the original
amortised cost; any difference between
date whether there is objective evidence
effective interest rate.
that a financial asset or a Group of financial
the proceeds (net of transaction costs)
and the redemption value is recognised
assets is impaired.
The carrying amount of the asset is
in the income statement over the period
reduced through the use of an allowance
of the borrowings using the effective
Impairment testing of trade receivables is
account, and the amount of the loss is
interest method.
described in note 2.12.
recognised in the income statement within
‘administration expenses’.
Borrowings are classified as current liabilities
unless the Group has an unconditional right
2.10. Inventories
When a trade receivable is uncollectable, it
to defer settlement of the liability for at least
Inventories are stated at the lower of cost
is written off against the allowance account
12 months after the balance sheet date.
and net realisable value. Cost includes all
for trade receivables. Subsequent recoveries
costs incurred in bringing each product
of amounts previously written off are credited
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Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.17. Income tax
2.18. Employee benefits
Any cumulative adjustment prior to vesting
Current tax assets and liabilities are
(a) Pension obligations
is recognised in the current period. Upon
measured at the amount expected to be
Group companies operate various pension
exercise of share options, the proceeds
recovered from or paid to the taxation
schemes. The schemes are generally
received net of attributable transaction costs
authorities, based on tax rates and laws that
funded through payments to insurance
are credited to share capital and where
are enacted or substantively enacted by the
companies. The Group has only defined
appropriate, share premium.
balance sheet date.
contribution plans. A defined contribution
plan is a pension plan under which the
Deferred income tax is provided in full,
Group pays fixed contributions into a
2.19. Provisions
using the liability method, on temporary
separate entity.
differences arising between the tax bases
Provisions for items such as dilapidations
and legal claims are recognised when: the
of assets and liabilities and their carrying
For defined contribution plans, the Group
Group has a present legal or constructive
amounts in the Financial Statements.
pays contributions to privately administered
obligation as a result of past events; it is
pension insurance plans on a contractual
probable that an outflow of resources will
However, the deferred income tax is
or voluntary basis. The Group has no further
be required to settle the obligation; and the
not accounted for, if it arises from initial
payment obligations once the contributions
amount has been reliably estimated.
recognition of goodwill or an asset or liability
have been paid. The contributions are
in a transaction other than a business
recognised as employee benefit expense
Where there are a number of similar
combination that at the time of the
when they are due.
transaction affects neither accounting nor
obligations, the likelihood that an outflow
will be required in settlement is determined
taxable profits or losses.
(b) Profit-sharing and bonus plans
by considering the class of obligations as
The Group recognises a liability and an
a whole. A provision is recognised even if
Deferred income tax is determined using tax
expense for bonuses and profit-sharing,
the likelihood of an outflow with respect to
rates (and laws) that have been enacted or
based on a formula that takes into
any one item included in the same class of
substantially enacted by the balance sheet
consideration the profit attributable to the
obligations may be small.
date and are expected to apply when the
Company’s shareholders after certain
related deferred income tax asset is realised
adjustments. The Group recognises a
Provisions are measured at the present value
or the deferred income tax liability is settled.
provision where contractually obliged or
of the expenditures expected to be required
Deferred income tax assets are recognised
where there is a past practice that has
to settle the obligation using a pre-tax rate
to the extent that it is probable that future
created a constructive obligation.
that reflects current market assessments
taxable profit will be available against which
of the time value of money and the risks
the temporary differences can be utilised.
(c) Share based payments
specific to the obligation. The increase in
IFRS 2 requires the recognition of equity
the provision due to passage of time is
Deferred income tax is provided on
temporary differences arising on investments
settled share based payments at fair value
at the date of the grant. All equity settled
in subsidiaries and associates, except where
share based payments are ultimately
recognised as interest expense.
the timing of the reversal of the temporary
recognised as an expense in the income
2.20. Revenue recognition
difference is controlled by the Group and it is
statement with a corresponding credit to
Revenue is measured at the fair value of the
probable that the temporary difference will
share based payment reserve.
consideration received or receivable for the
not reverse in the foreseeable future.
sale of goods and services in the ordinary
If vesting periods or other non-market vesting
course of the Group’s activities. Revenue
Deferred income tax assets and liabilities are
conditions apply, the expense is allocated
is shown net of value-added tax, returns,
offset, only if a legally enforceable right exists
over the vesting period based on the best
rebates and discounts and after eliminating
to set off current tax assets against current
available estimate of the number of shares
sales within the Group.
tax liabilities, the deferred income taxes
expected to vest. Estimates are revised
relate to the same taxation authority and
subsequently if there is any indication that
The Group recognises revenue when
that authority permits the Group to make a
the number of shares expected to vest
the amount of revenue can be reliably
single net payment.
differs from previous estimates.
measured, it is probable that future
97
Notes to the Group
Financial Statements
continued
2.20. Revenue recognition (continued)
2.22. Leases
provide a clearer indication of the Group’s
economic benefits will flow to the entity and
Leases in which a significant portion of the
underlying business performance.
when specific criteria have been met for
risks and rewards of ownership are retained
each of the Group’s activities. The amount
by the lessor are classified as operating
Items which may give rise to classification
of revenue is not considered to be reliably
leases. Payments made under operating
as exceptional include, but are not limited
measurable until all contingencies relating to
leases (net of any incentives received from
to, restructuring of the business or depot
the sale have been resolved. In practice this
the lessor) are charged to the income
network, asset impairments and litigation
means that revenue is generally recognised
statement on a straight-line basis over the
settlements. As shown in note 4, the Group
as follows:
period of the lease.
has also identified certain discontinuing costs
and disclosed them separately alongside
a) Sale of goods
Assets held under finance leases, which
exceptional costs.
Revenue from the sale of goods is
transfer to the Group substantially all the risks
recognised when the Group has transferred
and benefits incidental to ownership of the
to the buyer the significant risks and rewards
leased item, are capitalised at the inception
2.25. Financial risk management
of ownership of the goods. For vehicles this is
of the lease, with a corresponding liability
The Group carries out treasury hedging
generally on registration; for other goods it is
being recognised for the lower of the fair
activities to manage exposures to interest
when despatched, or packaged and made
value of the leased asset and the present
rate movements on its core borrowings using
available for collection.
value of the minimum lease payments.
interest rate swaps.
Lease payments are apportioned between
b) Services other than repair and
the reduction of the lease liability and
The Group only uses derivatives for hedging
maintenance contracts
finance charges in the income statement
purposes and they are recognised at fair
Revenue is recognised when the service is
so as to achieve a constant rate of interest
value and are re-measured to fair value at
rendered. Invoicing varies by contract, but
on the remaining balance of the liability. The
each balance sheet date. Where an interest
is typically either in line with work performed
property, plant and equipment acquired
rate swap qualifies as an effective hedge
or initially on a budgeted volume basis with
under finance leases is depreciated over
under IAS 39, movements in fair value are
later adjustment to reflect actual activity.
the shorter of the estimated useful life of
shown as an adjustment to the net interest
Calculation of accrued and deferred
the asset and the lease term; where the
charge being hedged.
income is therefore necessary at period
lease contains an option to purchase which
ends, with client billing arrangements
is expected to be exercised, the asset is
Movements in fair value of derivatives that
not always coinciding with the Group’s
depreciated over the useful life of the asset.
do not qualify as an effective hedge under
reporting periods. Judgement is required
The accounting policy adopted for finance
IAS 39 are shown in ‘other net gains’ within
when determining the appropriate timing
leases is also applied to hire purchase
the income statement. The Group identifies,
and amount of revenue that can be
agreements.
recognised, due to the different contractual
arrangements in place.
evaluates and hedges financial risks centrally
under policies approved by the Board
covering specific areas, such as interest rate
2.23. Dividend distribution
risk, foreign exchange risk and credit risk.
c) Repair and maintenance contracts
Dividend distribution to the Company’s
Revenue is recognised over the life of
shareholders is recognised as a liability in the
the contract in proportion to the costs
Group’s Financial Statements in the period
2.26. Critical accounting estimates
of providing the services.
in which the dividends are approved by the
and assumptions
Company’s shareholders.
The Group makes estimates and
2.21. Supplier bonuses
assumptions concerning the future. The
resulting accounting estimates will, by
Cost of sales are recognised net of
2.24. Exceptional items
definition, seldom equal the related actual
vehicle manufacturers’ bonuses. These are
Items that are both material and
results. The estimates and assumptions that
recognised when the Group has met the
non-recurring are presented as exceptional
have a significant risk of causing a material
relevant conditions. There is little judgement
items within their relevant consolidated
adjustment to the carrying amounts of assets
or estimation involved in computing the
income statement category. The separate
and liabilities within the next financial year
amounts.
reporting of exceptional items helps
are discussed below.
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Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
2.26. Critical accounting estimates
The recoverable amounts of cash-
Estimates and judgements are continually
and assumptions (continued)
generating units have been determined
evaluated by management, on a case-by-
(a) Revenue recognition
based on value-in-use calculations. These
case basis, based on historical experience
Judgement is required when determining
calculations require the use of estimates,
and other factors, including expectations
the appropriate timing and amount of
both in arriving at the expected future cash
of future events that are believed to be
revenue to be recognised in the value-
flows and the application of a suitable
reasonable under the circumstances.
added logistics segment. This is due to the
discount rate in order to calculate the
various contractual arrangements in place,
present value of these flows.
each with bespoke terms which can lead to
2.27. Adoption of new and revised
different revenue recognition requirements.
(c) Fair value of intangible assets acquired
reporting standards
in business combinations
The Group has applied all accounting
(b) Estimated impairment of goodwill
As there is no ready market for intangible
standards and interpretations issued by
The Group annually tests whether goodwill
assets such as customer relationships
the IASB and IFRIC except for the following
has suffered any impairment, in accordance
and brands, judgement is required in
standards and interpretations which were in
with the accounting policy stated above.
assessing fair value when accounting
issue but not yet effective:
for a business combination.
Title
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
IFRS 16 Leases
Annual Improvements to IFRSs 2012-2014 Cycle
Effective date (annual
periods beginning on
or after)
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2018
1 January 2018
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2019
1 January 2016
The effective dates stated above are those
standard or interpretation but the need for
financial information in the period of
given in the original IASB/IFRIC standards
endorsement restricts the Group’s discretion
initial application.
and interpretations.
to early adopt standards.
As the Group prepares its financial
Adoption of IFRS 16 is likely to have a
19 and those arising from the annual
information in accordance with IFRS
material impact on the Group’s non-current
improvements to IFRSs 2010-2012
as adopted by the European Union,
assets and borrowings. It is not yet practical
& 2011-2013 cycles have been adopted.
the application of new standards and
to provide a reasonable estimate of the
There has been no material impact,
interpretations will be subject to them having
effect until a detailed review has been
although there have been some minor
been endorsed for use in the EU via the EU
completed. The Directors do not anticipate
changes to disclosure.
In the current year, amendments to IAS
Endorsement mechanism. In the majority
that the adoption of the remaining
of cases this will result in an effective date
standards and interpretations will have a
consistent with that given in the original
material impact on the Group’s historical
99
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
2016
Group
£’000
97,598
108,390
205,988
85,642
(1,305)
2015
Group
£’000
60,563
102,155
162,718
73,561
(1,501)
Revenue from external customers
290,325
234,778
Geographical information - revenue from external customers:
United Kingdom
Germany
Rest of Europe
2016
Group
£’000
264,219
14,234
11,872
2015
Group
£’000
218,997
14,167
1,614
Revenue from external customers
290,325
234,778
Geography is determined by the location of the end customer
4. Segment information
For the Group, the Chief Operating Decision
For management purposes, the Group
These three separate business activities are
Maker (“CODM”) is the main Board of
is organised into two main reportable
aggregated into one reportable segment,
Directors. The CODM monitors the operating
segments:
having similar economic characteristics in
results of each business unit separately for
- Value-added logistics services; and
terms of profitability and costs, customers
the purposes of making decisions about
and operating environment.
resource allocation and performance
- Commercial vehicles, including sales,
assessment. Segment performance is
servicing and repairs.
evaluated based on operating profit or
Inter-segment transactions are entered
into under normal commercial terms and
loss, both before and after exceptional or
Within the value-added logistics services
conditions and on an arm’s length basis
discontinuing items. This measurement basis
segment, the CODM also reviews
that would also be available to unrelated
excludes Group-wide central services and
performance of three separate business
third parties.
financing costs which are not allocated to
activities:
operating segments.
- E-fulfilment & returns
management services;
The Group has no customers that
account for greater than 10%
- Non e-fulfilment logistics; and
of the total Group revenue.
- Central logistics overheads, being the costs
of support services specific to the value-
added logistics services segment, but
which are impractical to allocate between
the sub-segment activities.
100
Clipper Logistics plc Annual Report and Accounts 2016
Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
4. Segment information (continued)
The following tables present profit information for continuing operations regarding
the Group’s business segments for the two years ended 30 April 2016:
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
2016
Group
£’000
8,135
10,711
(4,718)
14,128
2,263
(1,860)
2015
Group
£’000
5,512
10,062
(4,038)
11,536
1,874
(1,405)
Group operating profit before non-recurring items
14,531
12,005
Exceptional and discontinuing costs:
E-fulfilment & returns management services
Non e-fulfilment logistics
Central logistics overheads
Value-added logistics services
Commercial vehicles
Segment total exceptional items
IPO costs1
Head office costs – discontinuing2
Group total exceptional and discontinuing costs
2016
Group
£’000
2015
Group
£’000
-
-
-
-
-
-
-
-
-
(192)
-
-
(192)
-
(192)
(671)
(278)
(1,141)
101
Notes to the Group
Financial Statements
continued
4. Segment information (continued)
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
2016
Group
£’000
8,135
10,711
(4,718)
14,128
2,263
-
(1,860)
2015
Group
£’000
5,320
10,062
(4,038)
11,344
1,874
(671)
(1,683)
Group operating profit
14,531
10,864
Finance costs
Finance income
(1,413)
4
(1,388)
9
Profit before income tax
13,122
9,485
1 Professional fees and other costs paid in relation to the Initial Public Offering. The majority of IPO costs were incurred
in the year ended 30 April 2014.
2 Head office costs in previous years included 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.
102
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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 2016:
Value-added logistics services
Commercial vehicles
Segment
assets
£’000
73,858
42,672
Segment
liabilities
£’000
(39,288)
(33,773)
Segment assets/(liabilities)
116,530
(73,061)
Unallocated assets/(liabilities):
- Cash and cash equivalents
- Financial liabilities
- Deferred tax
- Income tax assets/(liabilities)
715
-
-
36
(1,817)
(17,677)
(202)
(1,747)
Total assets/(liabilities)
117,281
(94,504)
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)
103
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
2016
Group
£’000
15,500
661
2015
Group
£’000
7,297
502
Total
16,161
7,799
Capital expenditure comprises additions to property, plant and equipment (note 12) and intangible assets (note 13).
Depreciation:
2016
Group
£’000
3,883
697
2015
Group
£’000
2,694
664
4,580
3,358
2016
Group
£’000
447
19
466
2016
Group
£’000
46,194
4,268
2015
Group
£’000
266
26
292
2015
Group
£’000
36,772
2,662
50,462
39,434
Value-added logistics services
Commercial vehicles
Total
Amortisation:
Value-added logistics services
Commercial vehicles
Total
United Kingdom
Germany
Total
104
Non-current assets held by each geographical area are made up as follows:
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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
2016
Group
£’000
72,662
6,766
1,371
454
2015
Group
£’000
59,734
5,492
1,189
124
Total
81,253
66,539
The average monthly number of employees during the year was made up as follows:
2016
Group
Number
2015
Group
Number
Warehousing
Distribution
Service and maintenance
Administration
Total
2,097
406
387
490
3,380
Key management compensation (including Executive Directors):
Wages and salaries
Social security costs
Pension costs for the defined contribution scheme
Share based payments
Total
2016
Group
£’000
2,589
378
398
381
3,746
1,789
387
346
442
2,964
2015
Group
£’000
2,695
351
357
93
3,496
105
Notes to the Group
Financial Statements
continued
5. Staff costs (continued)
Directors’ emoluments:
Aggregate emoluments excluding share based payments on unvested awards
Pension costs for the defined contribution scheme
Total
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 58 to 72.
2016
Group
£’000
1,259
86
2015
Group
£’000
1,356
73
1,345
1,429
2016
Group
Number
2015
Group
Number
3
4
106
Clipper Logistics plc Annual Report and Accounts 2016 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
Auditor’s remuneration:
Ernst & Young LLP:
- Group audit fees
- Corporate finance services
KPMG LLP:
- Group audit fees
- Other services
Total auditor’s 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
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
Strategic Report | Governance | Financial Statements
2016
Group
£’000
2,484
2,096
466
5,046
7,808
15,474
30
-
125
-
60
95
-
155
-
-
-
37
165
60
1
263
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
107
Notes to the Group
Financial Statements
continued
7. Dividends
Dividends declared and paid by the Company during the year to former parent company
Final dividend for the prior year of 3.2 pence (2015: nil) per share
Interim dividend for the year of 2.0 pence (2015:1.6 pence) per share
Total dividends paid
2016
Group
£’000
-
3,200
2,000
5,200
Proposed final dividend for the year ended 30 April 2016 of 4.0 pence (2015: 3.2 pence) per share
4,000
2015
Group
£’000
335
-
1,600
1,935
3,200
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability
in these Financial Statements. The proposed dividend is payable to all shareholders on the Register of Members on 23 September 2016.
The payment of this dividend will not have any tax consequences for the Group.
8. Finance costs
On bank loans and overdrafts
On hire purchase agreements
Amortisation of debt issue costs
Commercial vehicle stocking interest
Other interest payable
2016
Group
£’000
533
394
78
370
38
2015
Group
£’000
720
308
64
270
26
Total interest expense for financial liabilities measured at amortised cost
1,413
1,388
9. Finance income
Bank interest
Other interest
Amounts receivable from former parent company
Total interest income for financial assets measured at amortised cost
2016
Group
£’000
2015
Group
£’000
3
1
-
4
7
-
2
9
108
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
10. 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
2016
Group
£’000
2015
Group
£’000
3,066
(28)
2,220
(74)
3,038
2,146
(231)
21
(42)
(252)
(47)
62
-
15
Tax expense in the income statement on continuing operations
2,786
2,161
(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
2016
Group
£’000
2015
Group
£’000
13,122
9,485
20.00%
2,624
20.92%
1,984
169
(7)
42
-
(42)
248
(12)
45
(104)
-
Total tax expense reported in the income statement
2,786
2,161
109
Notes to the Group
Financial Statements
continued
10. Income tax expense (continued)
(d) Deferred tax in the income statement:
Deferred tax on accelerated capital allowances
Deferred tax on other temporary differences
Total
2016
Group
£’000
(123)
(129)
(252)
2015
Group
£’000
(31)
46
15
The UK corporation tax rate reduced from 21% to 20% with effect from 1 April 2015.
Legislation to reduce the rate to 19% with effect from 1 April 2017 and to 18% with effect
from 1 April 2020 was substantively enacted at 30 April 2016. Legislation to further reduce
these rates (to 18% and 17% respectively) was progressing, but not substantively enacted
at 30 April 2016. A rate of 18% (2015: 20%) has been applied in the measurement of the
Group’s deferred tax assets and liabilities in the year.
(e) Deferred tax in the statement of financial position:
Deferred tax liabilities:
Accelerated capital allowances
Other timing differences
Deferred tax asset:
Share based payments
Provisions & other timing differences
2016
Group
£’000
2015
Group
£’000
(356)
(213)
309
58
(479)
(218)
40
15
Net deferred tax liability
(202)
(642)
(f) Deferred tax movement:
At 1 May 2014
Acquisitions
Charged to income statement
Credited to share based payment reserve
Foreign currency adjustment
At 30 April 2015
Credited to income statement
Credited to share based payment reserve
Foreign currency adjustment
At 30 April 2016
110
Group
£’000
(366)
(275)
(15)
15
(1)
(642)
252
190
(2)
(202)
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
11. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary
equity holders of the Company by the weighted average number of ordinary shares outstanding
during the year. Diluted earnings per share amounts are calculated by dividing the profit attributable
to ordinary equity holders of the Company by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of ordinary shares that would be
issued on conversion of all the potentially dilutive instruments into ordinary shares.
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
10,336
2016
Group
£’000
2015
Group
£’000
7,324
2016
Group
2015
Group
Basic weighted average number of shares (thousands)
100,000
100,000
Basic earnings per share
10.3p
7.3p
Diluted weighted average number of shares (thousands)
100,823
100,052
Diluted earnings per share
10.3p
7.3p
111
Notes to the Group
Financial Statements
continued
11. Earnings per share (continued)
Adjusted earnings per share
As set out in note 4, during the year ended 30 April 2015 there were a number of
non-recurring costs. Consequently, the basic measure of earnings per share is distorted by this.
Adjusted earnings per share:
Profit attributable to ordinary equity holders of the Company
Discontinuing costs
Exceptional costs
Tax effect
Adjusted earnings
2016
Group
£’000
10,336
-
-
-
10,336
2015
Group
£’000
7,324
278
863
(102)
8,363
2016
Group
2015
Group
Basic weighted average number of shares (thousands)
100,000
100,000
Adjusted basic earnings per share
10.3p
8.4p
112
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
12. Property, plant and equipment
Leasehold property
Group
£’000
Motor vehicles
Group
£’000
Plant, machinery,
fixtures & fittings
Group
£’000
Cost:
At 1 May 2014
Acquisitions
Additions
Disposals
Foreign currency adjustment
At 30 April 2015
Additions
Disposals
Foreign currency adjustment
At 30 April 2016
Accumulated depreciation:
At 1 May 2014
Charge for the year
Disposals
Foreign currency adjustment
At 30 April 2015
Charge for the year
Disposals
Foreign currency adjustment
At 30 April 2016
Net book value:
At 1 May 2014
At 30 April 2015
At 30 April 2016
4,003
38
52
(236)
(6)
3,851
391
(16)
5
4,231
1,701
298
(236)
(4)
1,759
313
(16)
5
2,061
2,302
2,092
2,170
3,620
-
870
(571)
(83)
3,836
1,875
(680)
68
5,099
1,608
737
(350)
(30)
1,965
784
(488)
34
2,295
2,012
1,871
2,804
Total
Group
£’000
33,160
299
2,267
(1,460)
(355)
33,911
15,615
(955)
282
48,853
17,317
3,358
(1,206)
(173)
19,296
4,580
(754)
167
25,537
261
1,345
(653)
(266)
26,224
13,349
(259)
209
39,523
14,008
2,323
(620)
(139)
15,572
3,483
(250)
128
18,933
23,289
11,529
10,652
20,590
15,843
14,615
25,564
Included within property, plant and equipment are amounts held under finance lease contracts. At 30 April 2016 the net book value of these assets was £10,638,000
(30 April 2015: £5,231,000). Total additions include £8,172,000 (2015: £2,070,000) under finance lease contracts.
Additions to plant, machinery, fixtures & fittings include £2,823,000 (2015: £nil) in respect of assets in the course of construction.
113
Notes to the Group
Financial Statements
continued
13. Intangible assets
Cost:
At 1 May 2014
Acquisitions
Additions
Disposals
Foreign currency adjustment
At 30 April 2015
Additions
Disposals
Foreign currency adjustment
Goodwill
Group
£’000
19,018
4,234
-
-
-
23,252
-
-
-
Contracts and
licenses
Group
£’000
Computer
software
Group
£’000
723
1,210
-
-
-
1,933
98
-
-
1,589
12
87
(173)
(1)
1,514
448
-
5
Total
Group
£’000
21,330
5,456
87
(173)
(1)
26,699
546
-
5
At 30 April 2016
23,252
2,031
1,967
27,250
Accumulated amortisation:
At 1 May 2014
Charge for the year
Disposals
Foreign currency adjustment
At 30 April 2015
Charge for the year
Disposals
Foreign currency adjustment
At 30 April 2016
Net book value:
At 1 May 2014
At 30 April 2015
At 30 April 2016
-
-
-
-
-
-
-
-
-
19,018
23,252
23,252
723
63
-
-
786
187
-
1
974
-
1,147
1,057
1,040
229
(173)
(2)
1,094
279
-
5
1,763
292
(173)
(2)
1,880
466
-
6
1,378
2,352
549
420
589
19,567
24,819
24,898
The average remaining useful life of contracts & licences at 30 April 2016 is 6.5 years (2015: 7.6 years)
114
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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:
Value-added logistics services excluding Servicecare group
Servicecare group
Commercial vehicles
Total
2016
Group
£’000
13,092
4,234
2015
Group
£’000
13,092
4,234
5,926
5,926
23,252
23,252
A CGU is the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. The recoverable
amount of a CGU is determined based on value-in-use calculations.
The value-in-use calculations have used pre-tax cash flow projections based on the Board
approved business plans for the three years ending 30 April 2019.
The business plans for the value-added logistics services segment take into account the
annualised impact of contract wins in the year ended 30 April 2016 as well as confirmed
new and ceasing contracts. The key judgement is the assumed new contract wins during
the business plan period, which has been based on historical experience.
Subsequent cash flows are extrapolated using an estimated long term growth rate of 2.5%
(2015: 2.5%) to 2026 (2015: 2025). The cash flows have then been discounted using a
pre-tax risk adjusted discount rate of between 9 and 11% (2015: 10%). The forecasts
of foreign operations are translated at the exchange rate ruling at the year end.
The Directors have concluded that no reasonably foreseeable change in the key assumptions
would give rise to an impairment.
115
Notes to the Group
Financial Statements
continued
15. Inventories
Component parts and consumable stores
Commercial vehicles
Commercial vehicles on consignment
2016
Group
£’000
4,319
3,768
18,165
2015
Group
£’000
4,063
2,993
14,621
Total inventories net of provision for obsolescence
26,252
21,677
See below for the movements in the provision for obsolescence:
At 1 May 2014
Credited for the year
Utilised
At 30 April 2015
Charged for the year
Utilised
At 30 April 2016
The cost of inventories recognised as an expense amounted to £82,398,000 (2015:£ 69,720,000).
Included within commercial vehicles is £930,000 (2015: £1,141,000) relating to assets held under
hire purchase agreements.
Group
£’000
132
(9)
(106)
17
39
(47)
9
116
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
16. Trade and other receivables
Trade receivables
Less: provision for impairment of receivables
2016
Group
£’000
19,316
(328)
2015
Group
£’000
17,562
(256)
Trade receivables - net
18,988
17,306
Other receivables
Prepayments and accrued income
2,971
17,857
3,494
12,643
Total trade and other receivables
39,816
33,443
See note 25 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 2014
Charged for the year
Utilised
At 30 April 2015
Charged for the year
Foreign currency adjustment
Utilised
At 30 April 2016
Group
£’000
349
34
(127)
256
124
2
(54)
328
Concentrations of credit risk with respect to trade receivables are limited due to the Group’s
customer base being large, unrelated and blue chip. Due to this, management believes
there is no further credit risk provision required in excess of normal provision for doubtful
receivables. The average credit period taken on sale of goods or services is 20 days
(2015: 23 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.
117
Past due but not impaired
30-60 days
£’000
60-90 days
£’000
> 90 days
£’000
231
149
535
267
1,006
764
2015
Group
£’000
1,854
-
1,854
2015
Group
£’000
25,272
14,176
4,507
6,096
11,657
61,708
Notes to the Group
Financial Statements
continued
16. Trade and other receivables (continued)
The ageing analysis of trade receivables was as follows:
Neither past due
nor impaired
£’000
17,216
16,126
2016
Group
£’000
715
(1,817)
(1,102)
2016
Group
£’000
25,984
22,859
3,364
4,338
15,638
72,183
30 April 2016
30 April 2015
17. Cash and cash equivalents
Cash and cash equivalents
Bank overdraft
Total cash and cash equivalents
18. Trade and other payables
Trade creditors
Consignment inventory payables
Other taxes and social security
Other creditors
Accruals and deferred income
Total trade and other payables
118
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
19. Financial liabilities: borrowings
Non-current:
Bank loans
Obligations under finance leases or hire purchase agreements
2016
Group
£’000
5,113
7,818
2015
Group
£’000
7,291
2,935
Total non-current
12,931
10,226
Current:
Bank overdrafts
Bank loans
Obligations under finance leases or hire purchase agreements
Total current
Total borrowings
Less cash and cash equivalents
Net debt
1,817
944
3,792
6,553
-
2,604
2,592
5,196
19,484
15,422
715
1,854
18,769
13,568
119
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
2016
Group
£’000
944
5,113
-
2015
Group
£’000
2,604
7,291
-
Total bank loans
6,057
9,895
The principal lender has security over all assets of the Group’s UK operations.
The Group’s principal bank facilities were increased to £30,000,000 and rescheduled
in January 2016. The facilities now consist of:
- a Revolving Credit Facility of £19,744,000 repayable in January 2021; interest rate 1.75% above
LIBOR. The amount drawn at 30 April 2016 was £5,500,000;
- a committed overdraft of £8,000,000. The amount drawn at 30 April 2016 was £1,817,000; and
- bonds and guarantees of £2,256,000.
In addition to the Revolving Credit Facility above, other items included within bank loans
at 30 April 2016 are as follows:
- other bank loans - £179,000 repayable in monthly or quarterly instalments over periods
between 4 and 38 months; interest rates fixed at between 0% and 4.80%;
- pre-inception capital funding of £839,000; finance leases of 3-5 years will be incepted
in the year ending 30 April 2017 when the relevant capital projects are complete; and
- unamortised debt issue costs of £461,000 have been deducted from the total
outstanding bank loans.
120
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
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
2016
Group
£’000
3,241
7,244
-
10,485
(366)
(483)
-
(849)
2,875
6,761
-
9,636
917
1,057
-
1,974
2015
Group
£’000
1,561
2,112
-
3,673
(151)
(105)
-
(256)
1,410
2,007
-
3,417
1,182
928
-
2,110
Total
11,610
5,527
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 4.0 (2015: 3.5) years. At 30 April 2016 £10,878,000 (2015 £5,234,000) of the Group total
of such obligations is denominated in Pounds Sterling and the remainder is denominated in
Euros. The interest on the variable rate leases is based on a margin above Bank Base Rate
or LIBOR. The Group’s obligations under finance leases are secured by the lessor’s charge
over the assets.
121
Total
Group
£’000
846
48
(239)
185
840
(244)
282
878
Onerous contracts
Group
£’000
Uninsured losses
Group
£’000
Dilapidations
Group
£’000
312
-
(78)
-
234
(92)
30
172
534
48
(82)
106
606
(92)
192
706
-
-
(79)
79
-
(60)
60
-
2015
Group
£’000
108
732
840
Notes to the Group
Financial Statements
continued
20. Provisions
At 1 May 2014
Acquisitions
Utilised
Charged in year
At 30 April 2015
Utilised
Charged in year
At 30 April 2016
Provisions have been analysed between current and non-current as follows:
Current
Non-current
Total
2016
Group
£’000
109
769
878
Onerous contracts
Following a reorganisation of the commercial vehicles business in the year
ended 30 April 2013, which included the closure of a depot, the Group was
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.
Uninsured losses
The uninsured losses provision is in respect of the cost of claims (generally for
commercial vehicles and employment related) which are either not insured
externally or fall below the excess on the Group’s insurance policies.
Dilapidations
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 21 and 12 years from the balance sheet date. All other
leases expire in 10 years or less.
122
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
21. Share capital
2016
Company
£’000
2015
Company
£’000
Allotted, called up and fully paid:
100,005,341 (2015: 100,000,000) ordinary shares of 0.05p each
50
50
During the year the Company issued 5,341 ordinary shares at a price of 140.4p per share to satisfy
share options. See note 22 below.
22. Share based payments
The Clipper Performance Share Plan (“PSP”) was approved by shareholders on 29 September 2014.
The PSP enables selected directors and employees of the Group to be granted awards in respect of
ordinary shares. Share Awards under the PSP will ordinarily be structured as nil cost share options with
the vesting of Share Awards being subject to performance conditions measured over a period of at
least 3 years. A summary of the principal terms of the PSP, including vesting conditions, is contained
in the Directors’ Remuneration Report on pages 58 to 72.
The Clipper Sharesave Plan is a share plan for all UK employees in the Group, and offers them
the opportunity to acquire an interest in shares in the Company on favourable terms within the
long-standing regime allowed by HMRC legislation. All UK staff are invited to participate on the
same terms, and employees who choose to participate are granted an option over shares in the
Company, with the exercise of that option being funded by the proceeds of a savings contract
taken out by the relevant employee, under which the employee saves a set amount each month
over a set period. The options granted in the year were offered with a 3-year savings contract,
under which the employee could elect to save between £10 and £500 per month.
123
Notes to the Group
Financial Statements
continued
22. Share based payments (continued)
Option movements and weighted average exercise prices (“WAEP”) during the year were as follows:
Date
Outstanding 1 May 2014
Granted during the year
Forfeited during the year
Outstanding 30 April 2015
Granted during the year
Forfeited during the year
Exercised during the year
PSP
Number
-
845,895
-
845,895
519,551
-
-
Outstanding 30 April 2016
1,365,446
At 30 April 2016, 6,671 (2015: nil) options were exercisable.
WAEP
-
nil
-
nil
nil
-
-
nil
Sharesave
Number
-
1.352,846
-
1,352,846
299,609
(127,245)
(5,341)
WAEP
-
140.40p
-
140.40p
239.34p
148.70p
140.40p
1,519,869
159.21p
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 2016
9 February 2016
29 March 2016
Expected life of option
Volatility
Dividend yield
2016
301.00p
267.25p
278.00p
3.5 years
35%
1.73% - 1.95%
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 by applying dividends paid in the preceding 12 months to the share
price at the grant date.
The cost of the options is recognised over the expected vesting period. The total charge for the
year ended 30 April 2016 relating to employee share based payment plans was £454,000
(2015: £124,000). The fair value of share options at 30 April 2016 to be amortised in future years
was £1,958,000 (2015: £1,188,000).
All share based payments in both years are equity settled.
124
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
23. Commitments and contingencies
Operating lease commitments – land and buildings:
Less than one year
Between one and five years
More than five years
2016
Group
£’000
14,981
60,549
83,541
2015
Group
£’000
11,391
43,269
59,327
Total minimum lease payments
159,071
113,987
Operating lease commitments – vehicles, plant and equipment:
Less than one year
Between one and five years
More than five years
2016
Group
£’000
4,697
9,148
99
2015
Group
£’000
2,364
3,503
84
Total minimum lease payments
13,944
5,951
24. Capital commitments
Authorised and contracted for
Authorised, but not contracted for
2016
Group
£’000
9,467
7,279
2015
Group
£’000
797
8,569
16,746
9,366
125
Notes to the Group
Financial Statements
continued
25. Financial instruments and financial risk
maturity. The Group did not have any
The exposure to a short-term fluctuation in
management objectives and policies
financial instruments that would mitigate
exchange rates on the investment in foreign
In accordance with IAS 39 (Financial
the credit exposure arising from the
subsidiaries is not expected to have a
Instruments: Recognition and Measurement)
financial assets designated at fair value
material impact on the results of the Group.
the Group has reviewed all contracts for
through profit or loss in either the current
embedded derivatives that are required to
or the preceding financial year.
Capital management
be separately accounted for if they do not
meet certain requirements. The Group did
Interest rate risk
The Group’s main objective when
managing capital is to protect returns
not identify any such derivatives.
The Group adopts a policy of ensuring that
to shareholders by ensuring the Group
there is an appropriate mix of fixed and
will continue to trade profitably in the
The Group is exposed to a number of
floating rates in managing its exposure to
foreseeable future. The Group also aims to
different market risks in the normal course of
changes in interest rates on borrowings.
maximise its capital structure of debt and
business including credit, interest rate and
Interest rate swaps are entered into, where
equity so as to minimise its cost of capital.
foreign currency risks.
necessary, to achieve this appropriate mix.
The Group manages its capital with regard
Credit risk
As part of the novation of bank facilities
to the risks inherent in the business and
Credit risk predominantly arises from
from the former parent on 2 May 2014, the
the sector within which it operates by
trade receivables and cash and cash
Company took on an existing interest rate
monitoring its gearing ratio on a regular
equivalents. The Group has a customer
swap. The notional principal at 30 April 2016
basis and adjusting the level of dividends
credit policy in place and the exposure
is £900,000 which reduces by £450,000
paid to ordinary shareholders.
to credit risk is monitored on an ongoing
on a quarterly basis. The Company pays
basis. External credit ratings are generally
a fixed rate of 3.68% and receives a
The Group considers its capital to include
obtained for customers; Group policy is to
variable LIBOR rate on the notional amount.
equity and net debt. Net debt includes
assess the credit quality of each customer
The fair value of the interest rate swap is
short and long-term borrowings (including
before accepting any terms of trade.
determined by reference to market value
overdrafts and lease obligations) net of
and at 30 April 2016 was a loss of £10,000.
cash and cash equivalents.
Internal procedures take into account
the customers’ financial positions as well
Interest rate sensitivity
The Group has not made any changes to
as their reputation within the industry and
The Group’s borrowings are largely
its capital management during the year.
past payment experience. Cash and
denominated in Pounds Sterling and the
The Group has no long-term gearing ratio
cash equivalents and derivative financial
Group is therefore exposed to a change
target. Borrowings are taken out to invest
instruments are held with AAA or AA rated
in the relevant interest rate. With all other
in the acquisition of subsidiaries, new sites
banks. Financial instruments classified as fair
variables held constant, the impact of a
or depots and are considered as part of
value through profit and loss and available
for sale are all publicly traded on the UK
reasonably possible increase in interest
rates of 50 basis points (2015: 50 points) on
that investment appraisal. Key measures
monitored by the Group are interest cover
London Stock Exchange. Given the high
that portion of borrowings affected, would
and net debt compared to earnings before
credit quality of counterparties with whom
be to reduce the Group’s profit before tax
interest, tax, depreciation and amortisation.
the Group has investments, the Directors do
by £99,000 (2015: £77,000).
not expect any counterparty to fail to meet
In order to achieve the overall objective,
its obligations.
Foreign currency risk
the Group’s capital management, amongst
The Group is exposed to foreign currency
other things, aims to ensure that it meets
At 30 April 2016 there were no significant
risk on sales, purchases and borrowings that
financial covenants attached to the
concentrations of credit risk (2015: £nil).
are denominated in currencies other than
borrowings. The Group has satisfied all
The Group’s maximum exposure to credit
Pounds Sterling. The currencies giving rise to
such financial covenants in both years.
risk, gross of any collateral held, relating
this risk are primarily the Euro and US dollar.
to its financial assets is equivalent to their
The volume of transactions denominated
carrying value. All financial assets have a
in foreign currencies is not significant
fair value which is equal to their carrying
to the Group.
value, as a consequence of their short
126
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
25. Financial instruments and financial risk management
objectives and policies (continued)
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
Liquidity risk
2016
Group
£’000
14,531
1,409
2015
Group
£’000
12,005
1,379
10.3
8.7
2016
Group
£’000
14,531
4,580
466
19,577
18,769
2015
Group
£’000
12,005
3,358
292
15,655
13,568
0.96
0.87
Management closely monitors available bank and other credit facilities in comparison to the Group’s
outstanding commitments on a regular basis to ensure that the Group has sufficient funds to meet
the obligations of the Group as they fall due.
The Board receives regular cash forecasts which estimate the cash inflows and outflows over the next
24-36 months, so that management can ensure that sufficient financing can be arranged as it is
required. The Group would normally expect that sufficient cash is generated in the operating cycle
to meet the contractual cash flows as disclosed above through effective cash management.
127
Notes to the Group
Financial Statements
continued
25. Financial instruments and financial risk management objectives and policies (continued)
Maturity of financial liabilities:
30 April 2015
Fixed rate borrowings
Floating rate borrowings
Total borrowings
Trade and other payables
Total financial liabilities
30 April 2016
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
3,314
1,882
5,196
60,237
65,433
2,980
3,573
6,553
70,388
76,941
2,163
2,320
4,483
-
4,483
2,457
674
3,131
-
3,131
841
5,208
6,049
-
6,049
5,279
4,982
10,261
-
10,261
Total
£’000
6,318
9,410
15,728
60,237
75,965
10,716
9,229
19,945
70,388
90,333
Estimation of fair values
The main methods and assumptions used in estimating the fair values of financial instruments are as follows:
- derivatives: interest rate swaps are marked to market using listed market prices;
- interest-bearing loans and borrowings: fair value is calculated based on discounted expected future
principal and interest cash flows; and
- trade and other receivables/payables: the notional amount for trade receivables/ payables with
a remaining life of less than one year are deemed to reflect their fair value.
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
2016
Book value
£’000
2016
Fair value
£’000
2015
Book value
£’000
2015
Fair value
£’000
715
39,816
(1,817)
(4,736)
(72,183)
(10)
(12,931)
715
39,816
(1,817)
(4,736)
(72,183)
(10)
(12,588)
1,854
33,443
-
(5,196)
(61,708)
(70)
(10,226)
1,854
33,443
-
(5,196)
(61,708)
(70)
(10,106)
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.
128
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
26. Related party disclosures
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.
Knaresborough Real Estate Limited, a company owned by Steve Parkin, is the landlord of one of the Group’s leasehold properties.
Rent payable under the current lease is at the same rate as that with the previous landlord.
Guiseley Association Football Club shares a common director with Clipper Logistics plc.
The Group rents an aircraft from South Acre Aviation Limited, a company owned by Steve Parkin. Charges are on an arm’s length basis.
During the prior year the Company leased racehorses which are beneficially owned by Steve Parkin. These horses ran in the Company
name and in Company colours. Under the terms of the lease, the Company was responsible for all expenditure in connection with the
horses but could retain any monies received for a win or placing up to the value of the costs incurred for that horse. The rights and liabilities
arising under this arrangement ceased on 31 May 2014.
Key management compensation is disclosed in note 5.
There were no balances owing to or from these related parties at 30 April 2016 or 30 April 2015. The dividends paid to the former
parent company can be found in note 7. Interest receivable from the former parent company can be found in note 9.
Items charged to the income statement:
Roydhouse Properties Limited – rent payable
Knaresborough Real Estate Limited – rent payable
Guiseley Association Football Club – advertising and sponsorship
South Acre Aviation Limited – aircraft rental costs
Horse costs
2016
Group
£’000
2015
Group
£’000
885
298
50
19
-
877
157
25
7
56
129
Notes to the Group
Financial Statements
continued
27. Business combinations
Servicecare Support Services Limited
On 3 December 2014, the Group acquired 100% of the voting shares of Servicecare Support Services
Limited (“Servicecare”) and its subsidiary, Electrotec International Limited (together, the “Servicecare
group”), in exchange for cash consideration. Both are unlisted companies based in the UK. The
Servicecare group specialises in providing returns logistics services to consumer electronics manufacturers
and retailers. The Group acquired Servicecare to enhance its returns management service offering.
Purchase consideration:
Cash paid on completion
Deferred consideration paid in the year ended 30 April 2016
Additional consideration paid following receipt of an 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 prior year
£’000
6,475
2,000
212
8,687
£’000
6,475
(2,776)
3,699
130
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Group
Financial Statements
continued
27. Business combinations (continued)
Servicecare Support Services Limited (continued)
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.
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
The goodwill of £4,234,000 comprises the value of expected synergies arising from the acquisition.
Goodwill is allocated entirely to the value-added logistics services segment.
None of the goodwill recognised is expected to be deductible for income tax purposes.
Intangible assets recognised consist of brands, customer relationships and the acquired order book.
131
Clipper Logistics plc Annual Report and Accounts 2016
Company Financial Statements
for the year ended 30 April 2016
132
Clipper Logistics plc Annual Report and Accounts 2016 Company Statement
of Financial Position
At 30 April
2016
Company
£’000
2015
Company
£’000
Note
20,279
19,973
5,712
414
6,126
10,554
19,973
5,770
322
6,092
46,378
36,619
500
27,518
-
212
28,230
74,608
37,429
11,854
10
26
1,118
50,437
11,292
616
55
11,963
62,400
50
56
25
851
783
10,443
12,208
74,608
463
19,030
-
52
19,545
56,164
31,854
6,631
70
25
208
38,788
8,845
531
420
9,796
48,584
50
48
-
851
110
6,521
7,580
56,164
Assets:
Non-current assets
Property, plant and equipment
Investment in subsidiaries
Goodwill
Other intangible assets
Intangible assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current income tax assets
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
Share based payment reserve
Retained earnings
D
E
F
G
H
J
I
J
M
N
J
N
O
P
Total equity attributable to the owners of the Company
Total equity and liabilities
Approved by the Board on 1 August 2016 and signed on its behalf by:
D A Hodkin – Chief Financial Officer
Company No. 03042024
134
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Company Statement
of Changes in Equity
For the year ended 30 April
Share capital
Company
£’000
Share
premium
Company
£’000
Currency
translation
reserve
Company
£’000
Other reserve
Company
£’000
Carried
forward
Company
£’000
50
-
-
-
-
50
-
-
-
-
-
50
48
-
-
-
-
48
-
-
-
8
-
56
-
-
-
-
-
-
-
25
-
-
-
25
851
-
-
-
-
851
-
-
-
-
-
851
949
-
-
-
-
949
-
25
-
8
-
982
Brought
forward
Company
£’000
Share based
payment
reserve
Company
£’000
Retained
earnings
Company
£’000
Total
Company
£’000
949
-
-
-
-
949
-
25
-
8
-
982
-
-
-
110
-
110
-
-
673
-
-
783
3,207
5,249
-
-
(1,935)
6,521
9,122
-
-
-
(5,200)
4,156
5,249
-
110
(1,935)
7,580
9,122
25
673
8
(5,200)
10,443
12,208
Balance at 1 May 2014
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Dividends
Balance at 30 April 2015
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Share issue
Dividends
Balance at 30 April 2016
Balance at 1 May 2014
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Dividends
Balance at 30 April 2015
Profit for the year
Other comprehensive income/(expense)
Equity settled transactions
Share issue
Dividends
Balance at 30 April 2016
135
Notes to the Company
Financial Statements
A. Authorisation of financial statements
B. Accounting policies
(h) the requirements of paragraphs 30
and statement of compliance with
The Financial Statements have been
and 31 of IAS 8 Accounting Policies,
UK GAAP
prepared in accordance with the
Changes in Accounting Estimates
The Parent Company Financial Statements
Companies Act 2006 and with applicable
and Errors;
of Clipper Logistics plc (the “Company”)
accounting standards in the
(i) the requirements of paragraph 17 of
for the year ended 30 April 2016 were
United Kingdom.
authorised for issue by the Board of Directors
on 1 August 2016 and the Company
IAS 24 Related Party Disclosures; the
requirements in IAS 24 Related Party
Disclosures to disclose related party
Statement of Financial Position was signed
B.1. Basis of preparation
transactions entered into between two
on the Board’s behalf by David Hodkin.
The Company has transitioned to FRS
or more members of a group, provided
Clipper Logistics plc is a public limited
101 from previously extant UK Generally
that any subsidiary which is a party to
company incorporated and domiciled
Accepted Accounting Practice for all
the transaction is wholly owned by such
in England and Wales. The Company’s
periods presented. Transition tables showing
a member; and
ordinary shares are traded on the London
all material adjustments are disclosed in
(j) the requirements of paragraphs 134(d)-
Stock Exchange.
note U.
134(f) and 135(c)-135(e) of IAS 36
Impairment of Assets
The Financial Statements are prepared
The Company has taken advantage
in accordance with Financial Reporting
of the following disclosure exemptions
The Company proposes to continue to
Standard 101 Reduced Disclosure
under FRS 101:
adopt the reduced disclosure framework of
Framework (FRS 101). The Financial
(a) the requirements of paragraphs 45(b)
FRS 101 in its next financial statements.
Statements are prepared under the
and 46-52 of IFRS 2 Share based
historical cost convention.
Payment;
(b) the requirements of paragraphs 62,
B.2. Going concern
No profit and loss account is presented
B64(d), B64(e), B64(g), B64(h), B64(j)
The Financial Statements have been
by the Company as permitted by Section
to B64(m), B64(n)(ii), B64 (o)(ii), B64(p),
prepared on a going concern basis. In
408 of the Companies Act 2006. The profit
B64(q)(ii), B66 and B67of IFRS 3
determining the appropriate basis of
after tax attributable to the members of
Business Combinations;
preparation of the Financial Statements,
the Company and other comprehensive
(c) the requirements of IFRS 7 Financial
the Directors are required to consider
income are shown in the Statement of
Instruments: Disclosures;
whether the Company and the Group can
Changes in Equity.
(d) the requirements of paragraphs 91-99
continue in operational existence for the
of IFRS 13 Fair Value Measurement;
foreseeable future.
The results of Clipper Logistics plc are
(e) the requirement in paragraph 38 of IAS
included in the consolidated financial
1 ‘Presentation of Financial Statements’
Further information in relation to the Group’s
statements of Clipper Logistics plc which
are available from Gelderd Road,
to present comparative information in
respect of:
business activities, together with the factors
likely to affect its future development,
Leeds, LS12 6LT.
i. paragraph 79(a)(iv) of IAS 1;
performance and position is set out in the
ii. paragraph 73(e) of IAS 16 Property,
Strategic Report section of this report on
The accounting policies which follow set out
Plant and Equipment;
pages 6 to 40.
those policies which apply in preparing the
iii. paragraph 118(e) of IAS 38
Financial Statements for the year ended
Intangible Assets;
Note 25 to the Group Financial Statements
30 April 2016. The Financial Statements
iv. paragraphs 76 and 79(d) of IAS 40
includes the Group’s objectives, policies
are prepared in Pounds Sterling and are
Investment Property; and
and processes for managing its capital, its
rounded to the nearest thousand
v. paragraph 50 of IAS 41 Agriculture.
financial risk management objectives and
pounds (£’000).
(f) the requirements of paragraphs 10(d),
its exposure to foreign exchange, credit and
10(f), 39(c) and 134-136 of IAS 1
interest rate risk.
Presentation of Financial Statements;
(g) the requirements of IAS 7 Statement
of Cash Flows;
136
Clipper Logistics plc Annual Report and Accounts 2016
Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
B.2. Going concern (continued)
B.3. Property, plant and equipment
B.4. Investments in subsidiary undertakings
The Company Statement of Financial
Property, plant and equipment is stated
Non-current investments are shown at cost
Position at 30 April 2016 shows current
at historical cost less depreciation and
less provision for impairment.
assets of £28,230,000 (2015: £19,545,000)
impairment. Historical cost includes
and current liabilities of £50,437,000
expenditure that is directly attributable to
(2015: £38,788,000). Net current
the acquisition of the items.
B.5. Intangible assets
liabilities are therefore £22,207,000
Subsequent costs are included in the
(a) Contracts and licences
(2015: £19,243,000). Following the
asset’s carrying amount or recognised as a
Intangible assets recognised in relation to
renegotiation of the bank facilities in
separate asset, as appropriate, only when
contracts or licences are amortised over
January 2016 the Group has access to a
it is probable that future economic benefits
the length of the relevant agreement.
five year, non-amortising, Revolving Credit
associated with the item will flow to the
Facility of £19,744,000 and an overdraft
Company and the cost of the item can be
(b) Goodwill
facility of £8,000,000 of which £5,500,000
measured reliably. The carrying amount of
Goodwill representing the excess of the
and £1,817,000 were drawn down at
any replaced part is derecognised. All other
purchase price compared with the fair
30 April 2016 (see note 19 to the Group
repairs and maintenance are charged to
value of net assets acquired is capitalised
Financial Statements).
the income statement during the financial
and included in intangible assets.
period in which they are incurred.
The Directors have assessed the future
Separately recognised goodwill is tested
funding requirements of the Group and
Depreciation is calculated using the straight-
annually for impairment and carried at
the Company and compared them to the
line method to allocate their cost to their
cost less accumulated impairment losses.
bank facilities which are now available.
residual values over their estimated useful
This is not in accordance with The Large
The assessment included a detailed review
lives, as follows:
and Medium-sized Companies and
of financial and cash flow forecasts for at
- Leasehold property over the length
Groups (Accounts and Reports) Regulations
least the 12 month period from the date
of the lease;
of signing the Annual Report. The Directors
2008 which requires that all goodwill be
amortised. The directors consider that this
considered a range of potential scenarios
- Plant and machinery 2 - 20 years; and
would fail to give a true and fair view of the
within the key markets the Group serves and
profit for the year and that the economic
how these might impact on the Group’s
- Motor vehicles 4 - 8 years.
measure of performance in any period is
cash flow. The Directors also considered
properly made by reference only to any
what mitigating actions the Group could
Residual values and useful lives are
impairment that may have arisen. It is not
take to limit any adverse consequences.
reviewed, and adjusted if appropriate, at
practicable to quantify the effect on the
The Group’s forecasts and projections show
each balance sheet date.
Financial Statements of this departure.
that the Group should be able to operate
without the need for any increase in
borrowing facilities.
An asset’s carrying amount is written down
immediately to its recoverable amount if
(c) Computer software
Acquired computer software licences
the asset’s carrying amount is greater than
are capitalised on the basis of the costs
Having undertaken this work, the Directors
its estimated recoverable amount.
incurred to acquire and bring to use the
are of the opinion that the Company
specific software. These costs are amortised
and the Group have adequate resources
An item of property, plant and equipment
over their estimated useful lives (three
to continue in operational existence for
and any significant part initially recognised
to five years).
the foreseeable future. Accordingly, they
is derecognised upon disposal or when no
continue to adopt the going concern basis
future economic benefits are expected
Costs associated with developing
in preparing the Financial Statements.
from its use or disposal. Any gain or loss
or maintaining computer software
arising on derecognition of the asset
programmes are recognised as an
(calculated as the difference between the
expense as incurred. Costs that are directly
net disposal proceeds and the carrying
associated with the development of
amount of the asset) is included within ‘other
identifiable and unique software products
net gains’ in the income statement when
controlled by the Company, and that will
the asset is derecognised.
probably generate economic benefits
exceeding costs beyond one year, are
137
Notes to the Company
Financial Statements
continued
B.5. Intangible assets (continued)
B.7. Inventories - component parts and
B.9. Cash and cash equivalents
(c) Computer software (continued)
consumable stores
Cash and cash equivalents includes
recognised as intangible assets. Costs
Inventories of component parts and
cash in hand, deposits held at call with
include the software development
consumable stores are valued at the lower
banks, other short-term highly liquid
employee costs and overheads directly
of cost and net realisable value on a line by
investments with original maturities of three
attributable to bringing the asset in to use.
line basis. Provision is made for obsolete and
months or less, and bank overdrafts. Bank
Computer software development costs
recognised as assets are amortised over
slow-moving items.
overdrafts are shown within borrowings in
current liabilities on the Company Statement
of Financial Position.
their estimated useful lives (not exceeding
B.8. Trade receivables
three years).
Trade receivables are recognised initially at
fair value and subsequently measured at
B.10. Trade payables
amortised cost using the effective interest
Trade payables are recognised initially
B.6. Leases
method, less provision for impairment.
at fair value and subsequently measured
Leases in which a significant portion of the
A provision for impairment of trade
at amortised cost using the effective
risks and rewards of ownership are retained
receivables is established when there is
interest method.
by the lessor are classified as operating
objective evidence that the Company
leases. Payments made under operating
will not be able to collect all amounts due
leases (net of any incentives received from
according to the original terms
B.11. Borrowings
the lessor) are charged to the income
of the receivables.
statement on a straight-line basis over the
Borrowings are recognised initially at fair
value, net of transaction costs incurred.
period of the lease.
Significant financial difficulties of the
Borrowings are subsequently stated at
debtor, probability that the debtor will enter
amortised cost; any difference between
Assets held under finance leases, which
bankruptcy or financial reorganisation, and
the proceeds (net of transaction costs)
transfer to the Company substantially all the
default or delinquency in payments (more
and the redemption value is recognised
risks and benefits incidental to ownership
than 30 days overdue) are considered
in the income statement over the period
of the leased item, are capitalised at the
indicators that the trade receivable may
of the borrowings using the effective
inception of the lease, with a corresponding
be impaired. The amount of the provision is
interest method.
liability being recognised for the lower
the difference between the asset’s carrying
of the fair value of the leased asset
amount and the present value of estimated
Borrowings are classified as current liabilities
and the present value of the minimum
future cash flows, discounted at the original
unless the Company has an unconditional
lease payments. Lease payments are
effective interest rate.
apportioned between the reduction of
right to defer settlement of the liability for
at least 12 months after the balance
the lease liability and finance charges in
the income statement so as to achieve a
The carrying amount of the asset is reduced
through the use of an allowance account,
sheet date.
constant rate of interest on the remaining
and the amount of the loss is recognised
balance of the liability. The property, plant
in the income statement within
B.12. Income tax
and equipment acquired under finance
‘administration expenses’.
Current tax assets and liabilities are
leases is depreciated over the shorter of
measured at the amount expected to be
the estimated useful life of the asset and
When a trade receivable is uncollectable, it
recovered from or paid to the taxation
the lease term; where the lease contains
is written off against the allowance account
authorities, based on tax rates and laws that
an option to purchase which is expected to
for trade receivables. Subsequent recoveries
are enacted or substantively enacted by
be exercised, the asset is depreciated over
of amounts previously written off are
the balance sheet date.
the useful life of the asset. The accounting
credited against ‘administration expenses’
policy adopted for finance leases is also
in the income statement.
applied to hire purchase agreements.
Deferred income tax is provided in full,
using the liability method, on temporary
differences arising between the tax bases
of assets and liabilities and their carrying
amounts in the Financial Statements.
138
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
B.12. Income tax (continued)
(b) Post-retirement benefits
B.14. Provisions
However, the deferred income tax is
The Company provides no other post-
Provisions for items such as dilapidations
not accounted for, if it arises from initial
retirement benefits to its employees.
and legal claims are recognised when:
recognition of goodwill or an asset or liability
the Company has a present legal or
in a transaction other than a business
(c) Profit-sharing and bonus plans
constructive obligation as a result of past
combination that at the time of the
The Company recognises a liability and
events; it is probable that an outflow of
transaction affects neither accounting nor
an expense for bonuses and profit-
resources will be required to settle the
taxable profits or losses.
sharing, based on a formula that takes
obligation; and the amount has been
into consideration the profit attributable to
reliably estimated.
Deferred income tax is determined using tax
the Company’s shareholders after certain
rates (and laws) that have been enacted or
adjustments. The Company recognises
Where there are a number of similar
substantially enacted by the balance sheet
a provision where contractually obliged
obligations, the likelihood that an outflow
date and are expected to apply when the
or where there is a past practice that has
will be required in settlement is determined
related deferred income tax asset is realised
created a constructive obligation.
by considering the class of obligations as
or the deferred income tax liability is settled.
a whole. A provision is recognised even if
Deferred income tax assets are recognised
(d) Share based payments
the likelihood of an outflow with respect to
to the extent that it is probable that future
IFRS 2 requires the recognition of equity
any one item included in the same class of
taxable profit will be available against which
settled share based payments at fair value
obligations may be small.
the temporary differences can be utilised.
at the date of the grant. All equity settled
share based payments are ultimately
Provisions are measured at the present
Deferred income tax assets and liabilities
recognised as an expense in the income
value of the expenditures expected to
are offset, only if a legally enforceable right
statement with a corresponding credit to
be required to settle the obligation using
exists to set off current tax assets against
share based payment reserve.
a pre-tax rate that reflects current market
current tax liabilities, the deferred income
assessments of the time value of money
taxes relate to the same taxation authority
If vesting periods or other non-market
and the risks specific to the obligation. The
and that authority permits the Company to
vesting conditions apply, the expense is
increase in the provision due to passage of
make a single net payment.
allocated over the vesting period based
time is recognised as interest expense.
on the best available estimate of the
number of shares expected to vest.
B.13. Employee benefits
(a) Pension obligations
Estimates are revised subsequently if there
B.15. Foreign currency translation
is any indication that the number of shares
The Company’s functional currency and
The Company operates various pension
expected to vest differs from previous
presentation currency is Pounds Sterling.
schemes. The schemes are generally
estimates. Any cumulative adjustment
Transactions in foreign currencies are initially
funded through payments to insurance
companies. The Company has only defined
prior to vesting is recognised in the current
period. The financial effect of awards by the
recorded in the functional currency by
applying the spot exchange rate ruling
contribution plans. A defined contribution
Company of options over its equity shares
at the date of the transaction. Monetary
plan is a pension plan under which the
to employees of subsidiary undertakings are
assets and liabilities denominated in foreign
Company pays fixed contributions into a
charged to the employing entity. Amounts
currencies are retranslated at the functional
separate entity.
recharged by the Company are recognised
currency rate of exchange ruling at the
as an intra-Group receivable with a
balance sheet date. All differences are
For defined contribution plans, the
corresponding credit to equity.
taken to the income statement.
Company pays contributions to privately
administered pension insurance plans
Upon exercise of share options, the
Non-monetary items that are measured in
on a contractual or voluntary basis.
proceeds received net of attributable
terms of historical cost in a foreign currency
The Company has no further payment
transaction costs are credited to share
are translated using the exchange rates as
obligations once the contributions have
capital and where appropriate,
at the dates of the initial transactions. Non-
been paid. The contributions are recognised
share premium.
as employee benefit expense when they
are due.
monetary items measured at fair value in
a foreign currency are translated using the
exchange rates at the date when the fair
value was determined.
139
Notes to the Company
Financial Statements
continued
B.15. Foreign currency translation
B.18. Judgements and key sources
(continued)
of estimation uncertainty
The Company does not apply hedge
The preparation of the financial information
accounting of foreign exchange risks
under FRS 101 requires management
in its Company Financial Statements.
to make judgements, estimates and
assumptions concerning the future. The
estimates and associated assumptions
B.16. Revenue recognition
are based on historical experience and
Revenue is measured at the fair value of
other factors that are believed to be
the consideration received or receivable
reasonable under the circumstances, the
for the sale of goods and services in the
results of which form the basis of making the
ordinary course of the Company’s activities.
judgements about carrying values of assets
Revenue is shown net of value-added tax,
and liabilities that are not readily apparent
returns, rebates and discounts.
from other sources. The resulting accounting
estimates will, by definition, seldom equal
The Company recognises revenue when
the related actual results. The estimates
the amount of revenue can be reliably
and assumptions that have a significant
measured, it is probable that future
risk of causing a material adjustment
economic benefits will flow to the entity
to the carrying amounts of assets and
and when specific criteria have been met
liabilities within the next financial year
for each of the Company’s activities. The
are discussed below.
amount of revenue is not considered to be
reliably measurable until all contingencies
(a) Revenue recognition
relating to the sale have been resolved.
Judgement is required when determining
In practice this means that revenue is
the appropriate timing and amount of
generally recognised when the service is
revenue that can be recognised, due to the
rendered. Invoicing varies by contract, but
various contractual arrangements in place,
is typically either in line with work performed
each with bespoke terms which can lead to
or initially on a budgeted volume basis with
different revenue recognition requirements.
later adjustment to reflect actual activity.
Calculation of accrued and deferred
(b) Estimated impairment of goodwill
income is therefore necessary at period
The Company annually tests whether
ends, with client billing arrangements not
goodwill has suffered any impairment,
always coinciding with the Company’s
reporting periods. Judgement is required
in accordance with the accounting
policy stated above. The recoverable
when determining the appropriate timing
amounts of cash-generating units have
and amount of revenue that can be
been determined based on value-in-use
recognised, due to the different contractual
calculations. These calculations require
arrangements in place.
the use of estimates, both in arriving at
the expected future cash flows and the
application of a suitable discount rate in
B.17. Intra-Group guarantees
order to calculate the present value of
Where the Company enters into contracts
these flows.
to guarantee the indebtedness of
other companies within the Group, the
Company treats the guarantee contract
C. Auditor’s remuneration
as a contingent liability until such time as it
Remuneration payable to the Company’s
becomes probable that the Company will
auditor is shown in note 6 to the Group
be required to make a payment under the
Financial Statements.
guarantee.
140
Clipper Logistics plc Annual Report and Accounts 2016 Notes to the Company
Financial Statements
continued
D. Property, plant and equipment
Cost:
At 1 May 2014
Additions
Disposals
At 30 April 2015
Additions
Disposals
At 30 April 2016
Accumulated depreciation:
At 1 May 2014
Charge for the year
Disposals
At 30 April 2015
Charge for the year
Disposals
At 30 April 2016
Net book value:
At 1 May 2014
At 30 April 2015
At 30 April 2016
Leasehold
property
Company
£’000
Motor
vehicles
Company
£’000
Plant, machinery,
fixtures & fittings
Company
£’000
Total
Company
£’000
2,630
25
(106)
2,549
261
(16)
2,794
899
195
(106)
988
194
(16)
1,166
1,731
1,561
1,628
1,324
178
(188)
1,314
268
(213)
1,369
1,030
125
(170)
985
152
(170)
967
294
329
402
22,295
734
(506)
22,523
12,445
(146)
34,822
12,706
1,630
(477)
13,859
2,860
(146)
26,249
937
(800)
26,386
12,974
(375)
38,985
14,635
1,950
(753)
15,832
3,206
(332)
16,573
18,706
9,589
8,664
18,249
11,614
10,554
20,279
Included within property, plant and equipment are amounts held under finance lease contracts. At 30 April 2016 the net book value of these assets was £8,948,000 (2015:£3,447,000).
The depreciation charged to the accounts in the year in respect of such assets amounted to £1,647,000 (2015: £606,000).
Additions to plant, machinery, fixtures & fittings include £2,823,000 (2015: £nil) in respect of assets in the course of construction.
142
Clipper Logistics plc Annual Report and Accounts 2016 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 and 30 April 2016
Provision for impairment:
Company
£’000
11,501
8,687
20,188
At 1 May 2014, 30 April 2015 and 30 April 2016
215
Net book value:
At 1 May 2014
At 30 April 2015
At 30 April 2016
11,286
19,973
19,973
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 27 to the Group Financial Statements).
143
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
Clipper Logistics KG (GmbH & Co.) (Germany)
Northern Commercials (Mirfield) Limited
Electrotec International Limited*
Genesis Specialised Product Packing Limited
Stormont Truck and Van Limited*
Clipper Verwaltungs GmbH (Germany)*
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
Returns management & reverse logistics services
Contract distribution & warehousing
Sale, servicing and repair of commercial vehicles
On-line retail and distribution
On-line retail and distribution
Agency for leasing commitments
Agency for leasing commitments
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
144
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
F. Intangible assets
Cost:
At 1 May 2014
Additions
Disposals
At 30 April 2015
Additions
Disposals
At 30 April 2016
Accumulated amortisation or impairment:
At 1 May 2014
Charge for year/impairment
Disposals
At 30 April 2015
Charge for year/impairment
Disposals
At 30 April 2016
Net book value:
At 1 May 2014
At 30 April 2015
At 30 April 2016
Goodwill
Company
£’000
Contracts and
licenses
Company
£’000
Computer software
Company
£’000
Total
Company
£’000
8,312
-
-
8,312
-
-
8,312
2,535
7
-
2,542
58
-
2,600
5,777
5,770
5,712
723
-
-
723
-
-
723
723
-
-
723
-
-
723
-
-
-
1,381
24
(85)
1,320
287
-
1,607
897
186
(85)
998
195
-
1,193
484
322
414
10,416
24
(85)
10,355
287
-
10,642
4,155
193
(85)
4,263
253
-
4,516
6,261
6,092
6,126
145
Notes to the Company
Financial Statements
continued
G. Inventories
Component parts and consumable stores
500
463
2016
Company
£’000
2015
Company
£’000
H. Trade and other receivables
Amounts falling due within one year:
Trade receivables
Other receivables
Prepayments and accrued income
Amounts owed by fellow Group companies
Amounts falling due after more than one year:
Amounts owed by fellow Group companies
I. Trade and other payables
Trade payables
Other taxes and social security
Other payables
Accruals and deferred income
Amounts owed to fellow Group companies
2016
Company
£’000
2015
Company
£’000
9,490
117
15,986
48
6,303
100
10,885
1,742
25,641
19,030
1,877
-
27,518
19,030
2016
Company
£’000
2015
Company
£’000
16,379
2,506
1,405
13,490
3,649
14,021
3,661
3,475
8,831
1,866
37,429
31,854
146
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
J. 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 borrowings
2016
Company
£’000
2015
Company
£’000
5,060
6,232
11,292
8,510
896
2,448
11,854
7,199
1,646
8,845
2,903
2,533
1,195
6,631
23,146
15,476
Less cash and cash equivalents
212
52
Net debt
22,934
15,424
Bank loans and overdrafts are secured by a charge over the Group’s assets. The Company’s overdraft is offset by cash
balances in subsidiary companies. The net Group overdraft at 30 April 2016 is £1,817,000 (2015: £nil).
Obligations under finance leases or hire purchase agreements are secured by related assets.
K. Bank loans
Bank loans repayable, included within borrowings are analysed as follows:
In one year or less
Between one and five years
After five years
2016
Company
£’000
2015
Company
£’000
896
5,060
-
5,956
2,533
7,199
-
9,732
See note 19 to the Group Financial Statements for the principal features of the bank loans.
147
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 property, plant
and equipment. 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
2016
Company
£’000
2015
Company
£’000
2,775
6,686
9,461
(327)
(454)
(781)
2,448
6,232
8,680
-
1,322
1,721
3,043
(127)
(75)
(202)
1,195
1,646
2,841
-
8,680
2,841
M. Derivative financial instruments
As part of the novation of bank facilities from the former parent on 2 May 2014, the
Company took on an existing interest rate swap. The notional principal at 30 April 2016
is £900,000 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 is determined by reference to market value and at 30 April 2016
was a loss of £10,000 (2015: £70,000).
148
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
N. Provisions
At 1 May 2015
Utilised
(Credited)/charged in year
At 30 April 2016
2016
Company
£’000
2015
Company
£’000
556
(151)
237
642
534
(81)
103
556
Provisions have been analysed between current and non-current as follows:
Current
Non-current
Total
2016
Company
£’000
2015
Company
£’000
26
616
642
25
531
556
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 21
and 12 years from the balance sheet date. All other leases expire in 10 years or less.
O. Deferred tax
Deferred tax balances in the Statement of Financial Position are as follows:
Deferred tax liability:
Accelerated capital allowances
Deferred tax asset:
Share based payment
Provisions & other timing differences
Net deferred tax liability
2016
Company
£’000
2015
Company
£’000
(397)
(464)
300
42
22
22
(55)
(420)
149
Notes to the Company
Financial Statements
continued
O. Deferred tax (continued)
The movement in deferred tax balances is as follows:
At 1 May 2015
Credited/(charged) in year
Credited to share based payment reserve
At 30 April 2016
2016
Company
£’000
2015
Company
£’000
(420)
160
205
(55)
(455)
35
-
(420)
The UK corporation tax rate reduced from 21% to 20% with effect from 1 April 2015. Legislation to
reduce the rate to 19% with effect from 1 April 2017 and to 18% with effect from 1 April 2020 was
substantively enacted at 30 April 2016. Legislation to further reduce these rates (to 18% and 17%
respectively) was progressing, but not substantively enacted at 30 April 2016. A rate of 18%
(2015: 20%) has been applied in the measurement of the Company’s deferred tax assets and
liabilities in the year.
P. Share capital
2016
Company
£’000
2015
Company
£’000
Allotted, called up and fully paid:
100,005,341 (2015: 100,000,000) ordinary shares of 0.05p each
50
50
During the year the Company issued 5,341 ordinary shares at a price of 140.4p per share to satisfy
share options. See note 22 to the Group Financial Statements.
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 income statement for equity settled transactions in the year ended
30 April 2016 was £417,000 (2015: £110,000).
150
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
R. Commitments and contingencies
Operating lease commitments – land and buildings:
Within one year
Between one and five years
After more than five years
Operating lease commitments – vehicles, plant and equipment:
Within one year
Between one and five years
After more than five years
S. Capital commitments
Authorised and contracted for
Authorised, but not contracted for
2016
Company
£’000
2015
Company
£’000
12,457
52,343
79,732
9,258
35,880
54,262
144,532
99,400
2016
Company
£’000
2015
Company
£’000
3,867
8,769
99
1,915
3,147
84
12,735
5,146
2016
Company
£’000
2015
Company
£’000
9,467
7,279
16,746
797
8,569
9,366
151
Notes to the Company
Financial Statements
continued
T. Related party disclosures
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.
Guiseley Association Football Club shares a common director with Clipper Logistics plc.
The Group rents an aircraft from South Acre Aviation Limited, a company owned by Steve Parkin.
Charges are on an arm’s length basis.
During the prior year the Company leased racehorses which are beneficially owned by Steve Parkin.
These horses ran in the Company name and in Company colours. Under the terms of the lease,
the Company was responsible for all expenditure in connection with the horses but could retain any
monies received for a win or placing up to the value of the costs incurred for that horse. The rights and
liabilities arising under this arrangement ceased on 31 May 2014.
The dividends paid to the former parent company can be found in note 7 to the Group Financial
Statements.
Directors’ remuneration can be found in note 5 to the Group Financial Statements.
There were no balances owing to or from these related parties at 30 April 2016 or 30 April 2015.
Items charged to the income statement:
Roydhouse Properties Limited – rent payable
Guiseley Association Football Club – advertising and sponsorship
South Acre Aviation Limited – aircraft rental costs
Horse costs
2016
Company
£’000
2015
Company
£’000
885
50
19
-
877
25
7
56
152
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
U. Transition to FRS 101
Following the publication of FRS 100 ‘Application of Financial Reporting Requirements’ by the Financial
Reporting Council, Clipper Logistics plc was required to change its accounting framework for its entity
financial statements, for its financial year ended 30 April 2016.
For all periods up to and including the year ended 30 April 2015, the Company prepared its financial
statements in accordance with previously extant United Kingdom generally accepted accounting
practice (UK GAAP). These financial statements, for the year ended 30 April 2016, are the first the
Company has prepared in accordance with FRS 101.
Accordingly, the Company has prepared individual financial statements which comply with FRS 101
applicable for periods beginning on or after 1 May 2014 and the significant accounting policies
meeting those requirements are described in the relevant notes.
In preparing these financial statements, the Company has started from an opening balance sheet as
at 1 May 2014, the Company’s date of transition to FRS101, and made those changes in accounting
policies and other restatements required for the first-time adoption of FRS 101. As such, this note
explains the principal adjustments made by the Company in restating its balance sheet as at 1
May 2014 prepared under previously extant UK GAAP and its previously published UK GAAP financial
statements for the year ended 30 April 2015.
On transition to FRS 101, the company has applied the requirements of paragraphs 6-33 of IFRS 1
“First time adoption of International Financial Reporting Standards”.
153
Notes to the Company
Financial Statements
continued
U. Transition to FRS 101 (continued)
Reconciliation of equity at 1 May 2014:
Fixed assets
Tangible assets/Property, plant and equipment
Investment in subsidiaries
Intangible assets
Total fixed/non-current assets
Current assets
Stock/Inventories
Debtors/Trade and other receivables
Current income tax assets
Cash at bank and in hand
Total current assets
Creditors: amounts falling due within one year
Trade and other payables
Financial liabilities: borrowings
Short term provisions
Note
U.1
U.2
Previous UK GAAP
Company
£’000
Re-classifications/
Re-measurements
Company
£’000
FRS 101
Company
£’000
12,026
11,286
5,778
29,090
543
16,743
-
3,302
20,588
42,240
-
-
-
(412)
-
484
72
-
(121)
121
-
-
(42,240)
40,842
1,335
63
11,614
11,286
6,262
29,162
543
16,622
121
3,302
20,588
-
40,842
1,335
63
Net current liabilities
(21,652)
-
(21,652)
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Non-current borrowings
Provisions for liabilities/Long term provisions
Deferred tax liabilities
Net assets
Equity shareholders’ funds
Share capital
Share premium
Other reserve
Share based payment reserve
Profit and loss account/Retained earnings
Total equity
U.3
U.4
7,438
2,438
-
902
-
4,098
50
48
851
-
3,149
4,098
72
(2,438)
2,438
(431)
445
58
-
-
-
-
58
58
7,510
-
2,438
471
445
4,156
50
48
851
-
3,207
4,156
154
Clipper Logistics plc Annual Report and Accounts 2016 Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
U. Transition to FRS 101 (continued)
Reconciliation of equity at 30 April 2015:
Fixed assets
Tangible assets/Property, plant and equipment
Investment in subsidiaries
Intangible assets
Total fixed/non-current assets
Current assets
Stock/Inventories
Debtors/Trade and other receivables
Cash at bank and in hand
Total current assets
Creditors: amounts falling due within one year
Trade and other payables
Financial liabilities: borrowings
Derivative financial instruments
Short term provisions
Current income tax liabilities
Note
U.1
U.2
Previous UK GAAP
Company
£’000
Re-classifications/
Re-measurements
Company
£’000
FRS 101
Company
£’000
10,734
19,973
5,362
36,069
463
19,030
52
19,545
38,788
-
-
-
-
-
(180)
-
730
550
-
-
-
-
(38,788)
31,854
6,631
70
25
208
10,554
19,973
6,092
36,619
463
19,030
52
19,545
-
31,854
6,631
70
25
208
Net current liabilities
(19,243)
-
(19,243)
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Non-current borrowings
Provisions for liabilities/Long term provisions
Deferred tax liabilities
Net assets
Equity shareholders’ funds
Share capital
Share premium
Other reserve
Share based payment reserve
Profit and loss account/Retained earnings
Total equity
U.3
U.4
16,826
8,845
-
923
-
7,058
50
48
851
110
5,999
7,058
550
(8,845)
8,845
(392)
420
522
-
-
-
-
522
522
17,376
-
8,845
531
420
7,580
50
48
851
110
6,521
7,580
155
Notes to the Company
Financial Statements
continued
U.1. Tangible fixed assets/Property, plant and equipment
(a) The Company has reviewed the useful life and residual
value of plant, machinery, fixtures & fittings, resulting in
adjustment of accumulated depreciation as follows:
Brought forward
Charge for the year
Carried forward
(b) Re-classification of computer software to intangible assets
Net re-classification/re-measurement
U.2. Intangible assets
(a) Previously under UK GAAP, purchased goodwill was
amortised over its useful life, estimated at 20 years.
Under FRS101 goodwill is reviewed annually for any
impairment. The review concluded that there was
no impairment and so amounts previously charged
have been adjusted as follows:
Brought forward
Charge for the year
Carried forward
(b) Re-classification of computer software to intangible assets
Net re-classification/re-measurement
30 April 2015
Company
£’000
1 May 2014
Company
£’000
72
70
142
(322)
(180)
-
72
72
(484)
(412)
30 April 2015
Company
£’000
1 May 2014
Company
£’000
-
408
408
322
730
-
-
-
484
484
156
Clipper Logistics plc Annual Report and Accounts 2016
Strategic Report | Governance | Financial Statements
Notes to the Company
Financial Statements
continued
U.3. Provisions for liabilities
Deferred taxation
Under previous UK GAAP
Arising on adjustments above
Under FRS 101
U.4. Profit and loss account/Retained earnings
Under previous UK GAAP
Tangible fixed assets
Intangible asset amortisation
Deferred taxation
Under FRS 101
30 April 2015
Company
£’000
1 May 2014
Company
£’000
392
28
420
431
14
445
30 April 2015
Company
£’000
1 May 2014
Company
£’000
5,999
142
408
(28)
6,521
3,149
72
-
(14)
3,207
157
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:
Auditor:
Registrars:
Financial public relations advisors
to the Company:
158
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
Stephen Robertson, Independent Non-Executive Director
Mike Russell, 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
KPMG LLP
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
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 2016 Clipper Logistics plc
Gelderd Road
Leeds
LS12 6LT
0113 204 2050
Tel:
Email: info@clippergroup.co.uk
Web: www.clippergroup.co.uk