Delivering innovative
Delivering innovative
supply chain solutions
supply chain solutions
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Annual Report and Accounts 2018
Annual Report and Accounts 2018
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Who we are
Eddie Stobart Logistics plc provides full
end-to-end supply chain solutions across
a number of leading brands within our core
Consumer; E-commerce; Retail and
Manufacturing, Industrial and Bulk sectors.
Our specialised offerings in transportation, warehousing
and value added services have helped develop strong
partnerships within our diverse customer base.
Our customers now recognise our overall supply
chain capabilities.
Our strategy is to deliver long-term value for customers
and shareholders by further leveraging our existing
skills to streamline our operations and further
develop industry leading supply chain capabilities.
Our vision is to be recognised for our
pride and professionalism in delivering
innovative customer solutions and
service excellence
Contents
Governance
Board of Directors
Governance
The Board
Audit Committee report
Remuneration report
Directors’ report
Statement of Directors’ responsibilities
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Financial Statements
Independent auditor’s report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Consolidated cash flow statement
Notes to the consolidated
financial statements
Company statement of financial position
Company statement of changes in equity
Notes to the company financial statements
Glossary
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Strategic Report
2018 key highlights
Chairman’s statement
Chief Executive’s statement
Our Group’s network and scale
Our operating model
Our strategy
Chief Financial Officer’s statement
Our Group businesses
Our people
Corporate responsibility
Risk management and principal risks
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Eddie Stobart Logistics plc Annual Report and Account 2018
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2018 key highlights
We continue to implement
our strategy towards
delivering full end-to-end
supply chain capabilities.
As a result, we have
increased our revenues
by 35% and our underlying
EBIT by 14%
Our overall revenue grew by £219 million driven by
new contracts with annualised total revenue of £162
million, organic growth from existing customers and
contributions from our new Group businesses
We have delivered a strong performance across
each of our four core sectors with significant growth
within E-commerce (+65%) and Retail (+43%)
We have combined our Eddie Stobart and iForce
warehousing operations to simplify our offer, improve
productivity and utilisation and extend the range of
solutions we offer to our new and existing customers
In June 2018 we acquired The Pallet Network adding
much needed less-than-full truckload capability
through partner organisations and, as a result,
improved our overall supply chain offer. Integration
with the Group and synergy delivery is proceeding
to plan
We have centralised our IT capabilities across the
Group to simplify service delivery and realise
synergies whilst continuing to deploy innovative
best-in-class solutions
We continue to invest in our people to ensure we
have the right people in the right place to support
our end-to-end supply chain skills and capabilities
Financial
Revenue
£843.1m
+35%
Underlying EBIT*
£55.3m
+14%
Profit before tax
£23.6m
+138%
Net debt
£159.7m
+46%
Adjusted EPS*
11.4p
+16%
Statutory EPS
4.4p
+267%
Proposed total
dividend per share
6.3p
* Non GAAP Alternative Performance Measures (see note 4 on page 61) of the financial statements for reconciliation
to statutory IFRS measures
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Chairman’s statement
We have made great progress
in developing our end-to-end
supply chain capabilities and
remain well placed to access
future growth opportunities
Training for all our people remains a top priority
and we are delighted that our training initiatives
won an industry award this year (for further
detail see page 23.) Through our graduate
training scheme we help graduates gain the
experience they will need to become future
leaders of our business.
Financial performance
We are pleased with our 2018 financial
performance with sales increasing 35% to
£843.1 million (2017: £623.9 million) and
adjusted EBIT increasing 14% to £55.3 million
(2017: £48.5 million). As noted in our January
trading update EBIT margin reduced in the
first half of the year as a consequence of costs
incurred in implementing our major new
contract wins.
Our sales growth demonstrates the increasing
attractiveness of our unique end-to-end
operating model, combined with the
performance and synergies generated by
our acquired businesses.
The Board is recommending a final dividend of
£18.1 million (4.76 pence per share) making
a total of £23.9 million (6.30 pence per share)
for the 2018 financial year.
Outlook
Whilst we remain mindful of the current political
and economic uncertainty, we are confident
that our unique operating model provides us
with the flexibility to respond rapidly to
changing market conditions.
The new financial year has started in line with
the Board's expectations.
Finally, I would like to thank fellow members of
the Board, all employees, customers and wider
stakeholders for their continued support and
much valued contributions.
Philip H Swatman
Chairman
28 March 2019
People
We have appointed a new Chief Financial
Officer, Anoop Kang, who will join us on 1 April
2019, to succeed Damien Harte who is retiring
due to family health reasons. Anoop brings
significant experience gained in a range of
senior financial positions and we look forward
to him joining the Board. We are grateful to
Damien for all he has done to lead us
successfully through the Company’s IPO
and in our subsequent acquisitions.
We have made good progress in strengthening
our executive management team and have
successfully recruited experienced and
talented individuals from within and outside the
logistics sector. Whilst we have developed the
capabilities of our teams across all sectors, we
have been particularly successful in recruiting
individuals with sector-leading experience who
further strengthen our e-commerce skills and
know how providing us with the capabilities to
deliver our future growth plans and continuous
operational improvements.
We continue to invest in the future and remain
focussed on attracting the best people into our
business and developing their skills.
Philip H Swatman
Chairman
I am pleased to report another year
of strong progress at Eddie Stobart
Logistics plc. In addition to winning
a significant level of new contracts
in our core transport and
warehousing operations, we made
another successful acquisition, The
Pallet Network, a leading palletised
freight distribution network.
Building our end-to-end platform
Since the IPO, we have acquired four excellent
businesses, iForce, Speedy Freight, The
Logistic People and The Pallet Network, that
have added to our overall supply chain
capabilities. Having visited the operations of
each of these businesses, the Board was
impressed with the strength of the
management teams and commitment of the
employees. Market-leading IT systems are
used to deliver cost effective and efficient
services.
These businesses complement the core Eddie
Stobart transport and warehousing operations
and are expected to enhance our opportunities
for organic growth in the UK and expansion
in Europe. Going forward into the current year
we expect that these acquired companies
should contribute an increasing proportion of
our turnover, positively impacting our growth
prospects.
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Our end-to-end
delivery journey
With our state-of-the-art technology we track,
monitor and accurately predict all of our vehicle
movements, providing full visibility to our
customers in real time. Here’s how it works...
Start of shift
> At the start of each shift, the driver enters the vehicle and
inserts their digi tacho card. This records their shift start
and finish times as well as providing details of their jobs for
the day to their DriveTab device.
1
Getting on the road
> The driver conducts their vehicle and trailer safety checks.
The list of checks is totally configurable i.e. tyres, lights,
seals etc. The driver then checks their next available job
on the DriveTab device.
Collection /
delivery activities
Customer collection point
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> Arrivals and departures are recorded
automatically using the geofence (digitised location
ring fences) in the tracking solution. The trailer pick-up
and drop-off is also recorded automatically using data
from the trailer EBS (Haldex).
Monitoring progress
(in transit)
> Estimated time of arrival (ETA) boards are available for customers
to monitor progress of deliveries. They can monitor planned,
estimated and actual arrival times and highlight any expected
delays. When the driver records a break the data is automatically
adjusted to give an accurate ETA.
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Driver’s jobs available
on DriveTab device
Digitised location ring
fence shown on DriveTab
Customer arrivals board
Reacting to change
> Updates within the plan are reflected immediately on the DriveTab.
The driver will communicate any issues to the control centre using their
hands-free device.
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2 h 5 min
74 miles
Final destination
> Pictures of proof of delivery (POD) are stored
electronically for retrieval by the customer using a web
portal. Trailer drop and end-of-shift tasks are actioned
on the DriveTab. Driver removes digi tacho card which
ends their shift. Driver performance data and any
improvement points are recorded for review.
Customer delivery point
Message from control centre on DriveTab
Eddie Stobart distribution centre
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Performance overview on DriveTab
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Chief Executive’s statement
Chief Executive’s statement
Our performance in 2018
demonstrates a significant step
forward in terms of delivering our
strategy of becoming a full
service logistics and supply chain
organisation, with revenues
increasing to £843 million
Alex Laffey
Chief Executive
Our strong performance is evidenced
by the revenue increase of more than
£200 million (35%) achieved in the
year including, on an annualised
basis, £162 million of new contract
wins and £119 million of contract
renewals.
Key contracts won include; PepsiCo Walkers,
Britvic, Cemex and Tarmac. In addition, we also
renewed contracts with Johnson & Johnson,
Unilever and Coca-Cola.
Our unique consulting-led, pay-as-you-go
network model, offering unrivalled benefits in
terms of flexibility and competitive cost to our
blue chip customer base, continues to
underpin this success.
This model allows us to leverage value from the
entire supply chain, including solution design,
technology, property and infrastructure.
Our acquired businesses, iForce, Speedy
Freight, The Logistic People and The Pallet
Network continue to trade to expectations and
have contributed significantly to the overall
strategy. The integration of their offerings into
the Group and realisation of identified
synergies are progressing to plan.
We continue to invest in transport operations,
property and infrastructure to ensure we
maintain momentum. Our significant
investment in people and technology will
deliver operational efficiencies and improve
customer service.
Group revenues and profit
I am pleased with our strong revenue
performance in what continues to be a difficult
and challenging time in the market. Across all
areas of our business there have been
significant increases in revenues along with
strong trading performances during the peak
periods.
Group revenue increased by 35% to £843.1
million for the year (2017: £623.9 million).
Underlying EBIT increased by 14% to £55.3
million (2017: £48.5 million) whilst operating
profit before exceptional items increased by
21% to £37.5 million (2017: £31.0 million).
Operational performance
We have delivered a strong performance
across each of the four core sectors of
Consumer; E-commerce; Retail and
Manufacturing, Industrial and Bulk (MIB).
Our Specialist Services and European business
units have also performed well.
In our Retail sector we have seen revenues
increase by 43% to £241.1 million (2017:
£168.6 million), as some retailers continue to
outsource their non-core operations in order
to focus on their in-store and online
businesses. The Eddie Stobart unique pay-as-
you-go transport model offers flexibility and
cost transparency and high levels of service to
our customers.
We are proud to work with the majority of the
UK’s leading food retailers. Our plan is to work
with existing and new customers to simplify
operations and innovate further whilst
leveraging our full end-to-end supply
chain capabilities.
In the Consumer sector revenues were up
26% to £182.1 million (2017: £144.6 million),
The Pallet Network
iForce
Speedy Freight
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primarily from contract wins in the first half
of the year. Our focus remains on delivering
innovative, competitively-priced solutions that
meet the high levels of service demanded by
our customers in this sector.
We have seen significant growth in our
E-commerce sector with revenues up 65%
to £171.0 million (2017: £103.4 million). The
E-commerce sector now represents 20% of
total Group revenues.
Our iForce business has been key to our
success in this sector with a number of
contract wins with leading brands as well as
strong growth from existing customers.
In the MIB sector revenues increased by 16%
to £211.1 million (2017: £182.0 million), as
our customers recognise greater efficiency
and certainty around uninterrupted supply of
resources offered by an outsourced service.
Contract logistics and warehousing
In contract logistics and warehousing, which
includes iForce, we reported revenues of
£246.2 million in the year, an increase of 77%
from £139.5 million in 2017.
We continue to be successful in the
development of our warehousing portfolio as
part of our strategy to become an end-to-end
logistics solutions provider. We have expanded
and repositioned our facilities in response to
the ongoing trend towards e-commerce sales
at the expense of the high street. We now have
8.8m sq ft of modern optimally-located
warehouse assets operating at close to full
capacity.
We have now opened our redeveloped site at
Goresbrook Park, Dagenham, which is already
fully occupied and operating at capacity. We
have also developed and opened our new
multi-user facility at Corby, Northamptonshire
which will support both iForce and Eddie
Stobart contract logistics and E-commerce
growth in 2019 and beyond.
In developing our warehouse portfolio we focus
on location design and site development. This
enables us to work early in the development
cycle with developers to secure competitively-
priced and optimally-located warehousing
space to ensure future growth.
Road transport operations
Our road transport operations reported
revenues of £535.2 million in the year, up 29%
compared to the prior year (2017: £414.3
million). We maintained service quality whilst
facing the challenges of implementing multiple
new major contracts won in the first half of the
year.
Through the efforts of our operational teams,
these new contracts have been successfully
implemented and sales are now flowing
through.
European operations
In continental Europe revenues increased by
6% to £41.0 million (2017: £38.6 million) as a
result of new contract wins in both automotive
and general cargo as well as existing customer
growth, supported by contract renewals.
Eddie Stobart London Distribution Park
Goresbrook Park, Dagenham
Eddie Stobart European operations
Folkestone, Euro Tunnel
Revenue
£843.1m
+35%
MIB Revenue
£211.1m
+16%
E-commerce revenue
£171.0m
+65%
Underlying EBIT*
£55.3m
+14%
Underlying EBIT margin*
6.6%
-1.20ppts
Profit before tax
£23.6m
+138%
* Non GAAP Alternative Performance Measures (see note 4 on page 61 of the financial statements for reconciliation to statutory IFRS measures)
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Chief Executive’s statement continued
Market conditions
Whilst we remain mindful of the current political
and economic uncertainty, we are confident
that our unique operating model provides us
with the flexibility to respond rapidly to
changing market conditions. In Eddie Stobart
Logistics plc, most of our operations are in
either the UK or continental Europe with less
than 2% of our revenue generated through
crossing the English Channel.
Finally, I would like to thank our employees for
their support and hard work over the past year,
in particular for their willingness to embrace
change. I would also like to thank our partners,
customers, shareholders and other
stakeholders for the trust and support they
continue to give us.
Alex Laffey
Chief Executive
28 March 2019
Brand
We remain committed to evaluating all options
around our name and leading brand. We have
engaged with a brand specialist and talked
to customers, shareholders and employees
regarding our brand and their perceptions of
the value it brings.
We recently completed the centralisation of all
our systems and technology activities and our
programme is on track to deliver a
comprehensive upgrade to our end-to-end
supply chain capabilities, through the seamless
flow of information across each of our
operating divisions.
The Board remains confident that whatever the
outcome, value will be created and retained in
the long-term for all key stakeholders.
Leadership and people
Over the past 18 months we have transformed
our leadership team, adding more diverse skills
and broader industry expertise. We have
recruited experienced senior leaders from
within and outside the industry. The senior
leadership team supports our strategy and
shares my ambition and vision for the
business. We remain excited by the
opportunities ahead of us.
Managing talent and investing in our people
remain priorities for the Group. We are
committed both to ensuring that employees
have access to the appropriate resources to
keep their skills up to date and to attracting
the best people.
Technology
The Group remains at the forefront in its use of
state-of-the-art technologies. We continue to
invest in further digitisation to enhance
functionality and streamline and simplify both
the core operations and back-office support
functions, whilst driving further efficiencies and
improving visibility of service to our customers.
Our technology shared service centre is also
now delivering service and cost synergies
through the simplification and rationalisation
of our systems landscape.
We have several ongoing projects, all aligned
to our business strategy, that will deliver
additional functionality to simplify operations,
deliver efficiencies and improve profitability:
• Our new MyWorkforce system
automates and streamlines the often
complex scheduling of our workforce,
leading to the self-management of our
employee base
• Our optimised transport solution is well
advanced and a phased implementation
is scheduled to begin mid-2019. This will
further enhance the service we deliver to
our customers as well as drive significant
operational efficiencies
• Our exploitation of advanced business
analytics tools and “big data” techniques
continues to deliver previously elusive
insights into service and operational
performance
• A newly introduced cloud-based solution,
“Integration Platform as a Service” (IPaaS),
sets the standard for the industry, delivering
real-time integration across the Group’s
systems and enabling an agile response to
our customers’ information needs
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We continue to invest in innovative,
world-class supply chain solutions
Artificial Intelligence (AI)
Eddie Stobart is embracing the most advanced
self-learning AI technologies to further drive operational
efficiency and continuous service improvement.
Internet of Things (IoT)
In today's connected world, real-time
service is a prerequisite. We have
an extensive ecosystem of connected
systems, assets and devices,
delivering new insights into
our customer operations.
Big Data & Analytics
We capture unprecedented
volumes of data in the course
of our daily operations and use
world-class analytics tools and
techniques to deliver unique,
previously illusive insights.
Fully
integrated
supply chain
solutions
Algorithmic
Optimisation
We are deploying world-leading
optimisation software which
uses unique constraint-based
planning algorithms and
techniques to deliver service
and operational efficiency
across the network.
Cloud-Based Deployments
Use of the latest private and public cloud-hosted
services is allowing us to deliver very high availability,
scalability and cost-effective customer solutions.
Automation and
Robotics
We are working with some of the
leading providers of automation
and robotics technologies to
support our advanced
warehousing and fulfilment
operations.
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Eddie Stobart site
iForce site
TPN site
Speedy Freight site
Logistic People site
Eddie Stobart fleet coverage
M90
M9
M74
M8
A74(M)
M77
M6
A1(M)
A1(M)
M62
M62
M1
M180
A1(M)
M6
M58
M53
M56
M6
M40
M5
M50
M5
M1
M6
M40
M4
M3
M27
A1(M)
M1
M25
M23
M11
M25
M26
M2
M20
+3 Eddie Stobart European Sites
M4
Thepalletnetwork.co.uk
M5
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By At a glance
Our Group's network and scale
Eddie Stobart operates throughout the UK and Europe offering
a full end-to-end supply chain service to a range of national and
international customers
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c.2,700
c.5,000
43
c.6,600
c.8.8m
VEHICLES
TRAILERS
OPERATING
CENTRES
EMPLOYEES
SQ FT OF
WAREHOUSING
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Our operating model
Our operating model
Eddie Stobart Logistics is proud to deliver
innovative supply chain solutions
Our job is to get goods from the point they are sourced, manufactured
or imported, to the end customers within the four sectors in which
we operate: Consumer; E-commerce; Retail and Manufacturing,
Industrial and Bulk.
RETURNS MANAGEMENT
If the end user isn't happy with a product, they can
return through our iForce Revive service. Consumers
return their products, we grade them and either send them
back to the supplier, repair for resale or process the product
to iForce Marketzone - a direct business and consumer
clearance stock sales online channel, maximising margin
recovery on returned stock unsuitable to be added back
to inventory.
GROUP SERVICES
iForce, our e-fulfilment specialist, provides a comprehensive
e-commerce offering, including returns management,
warehousing, pick and packaging and distribution facilitated
by delivery and returns, of our bespoke technology systems.
The Pallet Network provides cost effective day one for day two
deliveries for less-than-full truckload consignments across the
UK through their 106 members.
Speedy Freight specialises in urgent, same or next day
deliveries of urgent cargos for commercial and domestic
customers across the UK and Europe.
Goods can be transported to a wholesaler or retailer as channels
to the end user.
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Key:
THE Pallet Network
PORT OF ENTRY
Port and rail connections allow goods
and raw materials to be imported
efficiently, with control of rail and
container logistics to their first stage
within our supply chain cycle to either:
• Warehousing facilities;
• Storage in a manufacturing plant,
or;
• Delivered to a fulfilment centre for
final sortation before delivery to the
end customer
FULFILMENT CENTRE
Within the Retail sector goods can
be transported straight to retailers'
regional distribution centres from port
and rail facilities enabling them to
transport goods to retail outlets in a
timely manner.
Alternatively, imported raw materials
can be transported to warehouses for
storage or directly to manufacturing
plants.
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ROAD OR RAIL TRANSPORTATION
The manufactured product can then be
transported by our road or rail operations to
regional distribution centres or to one of
Eddie Stobart’s UK warehouses.
WAREHOUSE MANAGEMENT SYSTEMS
Warehousing and contract logistics can store products
with state-of-the-art, technology-enhanced facilities.
Highly efficient, cost-effective solutions with a
warehouse management system to handle receipt
of goods to the final storage location facilitate our
automated warehousing capabilities. Products can
be stored within areas of certain set criteria such
as temperature controlled or highly secure.
Regional Distribution Centre
DISTRIBUTION CENTRES
Eddie Stobart offers full truckload services from national and regional distribution
centres, operating a pay-as-you-go model, shared user network and state-of-the-art
technology to minimise empty miles.
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Delivering our strategy
Our strategy
Progress made towards
delivering our strategy
Double digit growth
Maintain our market
leading customer service
proposition
Leverage our unique
pay-as-you-go network
model and consulting-led
approach
Priorities for 2018
We aimed to:
Priorities for 2018
We aimed to:
Priorities for 2018
We aimed to:
Work with existing customers to further
leverage our existing relationships
Develop new customer contacts and grow
those relationships
Focus on high growth sectors such as
E-commerce to deliver growth and also to
drive asset utilisation
Seek to acquire businesses that can add new
capabilities and skills to our service offering
Grow our business in Europe by leveraging
existing customer relationships
Stay close to our customers to ensure high
levels of customer satisfaction, making sure
we become aware of issues and provide
solutions before they become problems
Monitor service related-performance
indicators to ensure we deliver what we
have promised
Continue to upskill our people to enable them
to deliver excellent customer service
Continue to reinforce our corporate values that
encourage us to put customer service at the
heart of everything we do
Build and develop long-term strategic
relationships
Continue to invest in our network to support
growth and cost reductions
Leverage our network into attractive specialist
niche markets
Increase awareness of our skills and
capabilities in delivering effective end-to-end
supply chains
Ensure we have high quality operational sites
capable of meeting customer needs
Performance in 2018
Key highlights
Performance in 2018
Key highlights
Performance in 2018
Key highlights
Acquired The Pallet Network providing day
one for day two deliveries for less-than-full
truckload consignments extending our service
offering to customers
Won major contracts adding annualised
revenues of £162 million
Completed £119 million of contract renewals
with existing customers
Reported E-commerce growth of 65%
Increased our revenue by 6.2% in Europe
Delivered training to further enhance the
overall customer experience
Created a new online training module to
support the development of new and existing
employees
Through our driver, warehouse and staff
engagement sessions we reinforced the
importance of our five core values to maintain
a culture with collaboration and service
excellence for customers
Organic growth of £119 million
Phased implementation of our optimiser
transport solution beginning mid-2019
Utilised our extensive knowledge of the UK
logistics property market and delivered value
by working collaboratively with developers on:
> Our redeveloped 441,000 sq ft site at
Goresbrook Park, Dagenham
> Our 840,000 sq ft multi-user warehouse
facility at Corby
> A proposed new development, subject to
planning permission, close to Appleton
head office of 644,000 sq ft
Priorities for 2019
Priorities for 2019
Priorities for 2019
Align our strategy across the wider Group to
create further cross-selling opportunities
Expansion of our European business
Utilise technology to make service delivery
visible to customers
Upskill our people so they can deliver
excellent customer service
Put customer service at the heart of everything
we do by reinforcing our corporate values
Continue to focus on synergies between
Group companies
Integration of iForce and our contract logistics
and warehousing operations
Measuring our progress
We regularly measure progress towards our strategy to ensure we remain
aligned with our strategic priorities allowing us to flex and adjust as
required to improve delivery and execution.
12
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Continue to innovate and
invest in technology
and our assets
Build a high-performing
team which is
recognised by the industry
Priorities for 2018
We aimed to:
Priorities for 2018
We aimed to:
Further develop our transport optimisation
capability
Leverage our state-of-the-art in cab vehicle
technology
Invest in our warehousing operating systems
Continue to provide the best equipment to
enable employees to perform their roles
efficiently
Optimise systems and processes to deliver
continuous improvement
Recruit new team members with specialist
skills needed to expand our business
Retain and upskill our employees
Continue to broaden the commercial offering of
our training academy to raise the overall quality
and quantity of our skilled and well trained
drivers, as well as for the wider industry
Invest in training courses across a range of
disciplines allowing employees at all levels
to expand their knowledge and skills
Deliver a new online Learning Management
System (LMS) to facilitate extensive training
to all employees
Performance in 2018
Key highlights
Performance in 2018
Key highlights
Invested in systems to align our IT digital
roadmap
Announced MyWorkforce, a bespoke solution
which streamlines the process of rostering our
drivers and automates manning levels
Invested in optimisation technology to reduce
empty vehicle miles, minimising the overall
impact on the environment
Digitised our people processes through the
development of our online HR portal
Introduced MyFleet an industry leading
solution which automates and controls
our assets
Welcomed our first cohort of graduates to
the business and launched a new Driver
Development Programme (DDP) through our
apprenticeship levy
Developed a broader range of online training
courses to senior leaders across the business
Partnered with ACAS to train and coach our
lead driver representatives
Initial steps taken to introduce an Eddie
Stobart logistics degree with the University
of Bolton
Priorities for 2019
Priorities for 2019
Integrate our IT platforms across the Group
Successful phased implementation of
Optimiser
Roll out the Learning Management System
across the wider Group businesses to all
people managers and senior leaders
Further develop strength of the management
team
Introduce a regular feedback and engagement
platform which gathers insight from around the
business
Further develop our apprenticeship offering
across the wider Group, in particular our
warehousing division
Eddie Stobart Logistics plc Annual Report and Accounts 2018
13
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Chief Financial Officer's statement
Chief Financial Officer's
statement
Revenue and underlying
EBIT1 grew by 35% and 14%
respectively
Damien Harte
Chief Financial Officer
Performance summary
Underlying Results*
2018
2017
Change
Statutory Results
2018
2017
Change
Revenue
EBIT1
EBIT1 %
EBITDA2
EBITDA2 %
Adjusted profit before tax3
Adjusted profit after tax4
£843.1m £623.9m
£48.5m
£55.3m
6.6%
£62.9m
7.5%
£49.2m
£41.8m
£55.3m
35.1%
14.0%
7.8% (1.2)ppts
13.7%
8.9% (1.4)ppts
31.9%
29.4%
£37.3m
£32.3m
Revenue
Operating profit before exceptionals
Operating profit after exceptionals
£843.1m £623.9m
£31.0m
£26.6m
£37.5m
£29.7m
35.1%
21.0%
11.7%
Profit before tax
Profit after tax
£23.6m
£16.2m
£9.9m
£4.9m
138.4%
230.6%
Adjusted free cash5
Adjusted earnings per share6
£1.7m
11.4p
£30.0m
9.8p
(94.3)%
16.3%
Dividend per share
Net cash from operating activities
Earnings per share
Net debt
6.30p
£(3.3)m
4.4p
5.80p
8.6%
£18.9m (117.5)%
267.0%
45.8%
1.2p
£159.7m £109.5m
1 Underlying EBIT is defined as Profit from operating activities before exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the
income statement relating to the management incentive plan and long term incentive plan, investor and management charges, the impact of severe weather, start-up costs associated with contract wins,
including the gain arising on any lease agreements and Group’s share of profit from equity accounted investees.
2 Underlying EBITDA is defined as Underlying EBIT before depreciation of property, plant and equipment.
3 Adjusted profit before tax is defined as profit before tax adding back exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the
income statement relating to the management incentive plan and long term incentive plan, the impact of severe weather, start-up costs associated with contract wins and including the gain arising on lease
agreements.
4 Adjusted profit after tax is Adjusted profit before tax less tax.
5 Adjusted Free Cash Flow is defined as Cash generated from operating activities less purchase of property, plant and equipment adding back proceeds from sale of property, plant and equipment and less
taxes paid and adding back the cash impact of exceptional items.
6 Adjusted Earnings per share is defined as adjusted profit after tax divided by the weighted average basic number of shares in issue at 30 November 2018.
• 2018 represents a major milestone in delivering Eddie Stobart’s
strategy of becoming a full end-to-end solution provider
• Underlying EBIT1 growth of 14% to £55.3m (2017: £48.5m)
• Underlying EBIT1 margin reduced from 7.8% to 6.6% reflecting
• Strong revenue growth of 35% to £843.1m (2017: £623.9m), driven by
new contract wins with an annualised total revenue of £162m, organic
growth from existing customers and contributions from our acquired
businesses
• All customer sectors achieved significant growth with E-commerce
temporary costs of re-optimising the provider networks as a result of
major contract wins in the first half of the year. Margins are expected
to improve in 2019
• Statutory profit before tax increased 138% to £23.6m (2017: £9.9m)
• Statutory operating profit before exceptional costs grew 21% from
revenues growing 65% to £171.0m (2017: £103.4m), Retail increasing
by 43% to £241.1m (2017: £168.6m), Consumer increasing by 26%
to £182.1m (2017: £144.6m) and MIB growing 16% to £211.1m
(2017: £182.0m)
• Continued strong performance from our acquired businesses iForce
Group, The Pallet Network Group (TPN), The Logistic People and
Speedy Freight following successful integration and delivery of
planned synergies
£31.0m to £37.5m
• Net debt increased to £159.7m (2017: £109.5m) reflecting new debt
associated with the acquisition of TPN and working capital
investment to support year-on-year sales increase which is expected
to normalise in 2019
• Adjusted earnings per share increased 16.3% to 11.4p (2017: 9.8p)
and statutory earnings per share is 4.4 pence per share for the year
(2017: 1.2 pence per share)
• Final dividend proposed of 4.76 pence per share making a total
dividend of 6.30 pence per share for the full year
14
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The Directors believe that a more relevant presentation of the financial results for the period is arrived at by adjusting for certain items, which
otherwise could distort understanding of the performance of the Group year-on-year. By adjusting certain items a more representative view of the
underlying trading performance of the business is arrived at.
A full reconciliation of adjusting items to their statutory equivalent is set out in note 4 of the financial statements and definitions for these adjusting
items are set out above.
Underlying EBIT and underlying EBITDA, together with net debt and revenue per month and YTD are the primary financial key indicators by which the
.
performance of the business is monitored. EBIT, EBITDA and revenue are assessed against board approved budgets.
Revenue by sector
Revenue by Sector
Retail
Consumer
E-commerce
Manufacturing, Industrial & Bulk (MIB)
Non sector specific
Revenue
The Group’s revenues were £843.1m for the year ended 30 November
2018 (2017: £623.9m) which represented growth of 35%.
This significant revenue increase was a consequence of the continued
strong performance of the businesses we acquired in 2017 and 2018,
the high level of contract wins in the year and organic growth from
existing customers. Like-for-like growth (excluding the revenue impact of
our acquired subsidiaries iForce, Speedy Freight and TPN) was 18%.
All of our customer sectors achieved double digit revenue growth:
• Our E-commerce revenue grew 65% to £171.0m (2017: £103.4m)
and 249% overall since 2016. This confirms the successful
implementation of our E-commerce strategy, with E-commerce
now making up 20% of total Group sales
• Retail revenue grew 43% to £241.1m (2017: £168.6m). Despite the
challenging trading environment in the retail sector, the Group
continues to benefit from the trend towards outsourcing, strong
organic growth from existing customers and low levels of exposure
to customers supplying in the retail fashion sector
• Consumer revenue was £182.1m (2017: £144.6) a 26% increase
compared to 2017 as significant first half contract wins feed through
into sales
• MIB grew £29.1m (16%) to £211.1m (2017: £182.0m)
The annualised, full year impact of new contract wins in the year was
£162m. In addition we renewed contracts with an annual value of £119m.
The high level of new contract wins and renewals demonstrates the
strength and continued attractiveness of the Group’s unique
pay-as-you-go network model.
Profit and margins
Underlying EBIT for the 12 months to 30 November 2018 was £55.3m
(2017: £48.5m), which was broadly in line with market expectations. Our
underlying EBIT margin was 6.6% compared to 7.8% in 2017.
As discussed in the Chief Executive’s report, this reflects investment
(predominantly in the first half of the year) in implementing the significant
contract wins. As expected, margins improved in the second half of the
year and are expected to recover further in 2019.
2018
£m
Weighting
%
2017
£m
Weighting
%
Growth
%
241.1
182.1
171.0
211.1
37.8
843.1
29%
22%
20%
25%
4%
100%
168.6
144.6
103.4
182.0
25.3
623.9
27%
23%
17%
29%
4%
100%
43%
26%
65%
16%
49%
35%
Investment in infrastructure
We continue to invest in our network to ensure we have the required
assets in terms of transport, technology and warehousing to support
future growth plans. In particular, we continue to implement our strategy
of optimising our warehouse portfolio by leveraging our expertise to
generate value.
In 2018 we completed the redevelopment of our Goresbrook, Dagenham
site by commissioning a new 180,000 sq ft warehouse to increase the
total warehouse space at the site to 441,000 sq ft doubling the pallet
capacity of the site to 28,000 pallets spaces. The site synergistically
offers multi-user capacity for Eddie Stobart, TPN and Speedy Freight
operations and is fully occupied and operating at capacity.
In Corby, we worked in partnership with the developer to commission
and build an 840,000 sq ft purpose-built facility which was completed in
Q1 2019. This multi-user site will support both iForce and Eddie Stobart
contract logistics and underpin E-commerce growth in 2019
and beyond.
We also commissioned a new facility for iForce at Rugby, now fully
utilised, to meet the needs of a range of e-commerce customers.
Looking forward, our property team are partnering with a developer and
working with planning and highways specialists on a proposal (subject
to planning permission) to open a 644,000 sq ft warehouse at Appleton,
adjacent to our operational headquarters and Group head office and
training centre. We anticipate this facility will come online, subject to
planning, in Q4 2020.
We have also successfully capitalised on the long-term trend towards
e-commerce and now have 8.8m sq ft of warehouse space (including
warehousing acquired as part of the TPN acquisition), operating at
optimum capacity with rents on or below market. As a consequence,
our future operating lease commitments have increased in line with the
additional space and this is detailed in note 26.
Eddie Stobart Logistics plc Annual Report and Accounts 2018
15
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Chief Financial Officer's statement continued
Cash flow and funding
Cash Flow
Underlying EBITDA
Net capital expenditure
Working capital
Tax
Other items
Adjusted free cash flow
Acquisition of subsidiaries
Proceeds from issue of share capital
Net drawdown / (repayment) of borrowings
Other items
Dividends
Net interest
Exceptionals (cash impact)
Net decrease in cash
Cash at start of year
Cash at end of year
2018
£m
62.9
(10.6)
(42.8)
(3.7)
(4.1)
1.7
(22.1)
29.0
25.6
(3.7)
(21.6)
(7.1)
(8.5)
(6.7)
11.9
5.2
2017
£m
55.3
(5.1)
(12.1)
(2.7)
(5.4)
30.0
(48.3)
118.0
(80.4)
(0.3)
(5.0)
(7.7)
(8.5)
(2.2)
14.1
11.9
Adjusted free cash flow was £1.7m in 2018 (2017: £30.0m). The key
driver underlying the free cash flow performance was the working
capital investment required to support the significant year-on-year sales
increase of £219.2m and, in particular, the significant growth in the
November trading period which impacted the year end working capital
position. In addition certain significant payments expected within the
2018 financial year were received early in the next financial year,
distorting the year end position.
It is anticipated that 2019 will not require the same level of working
capital investment as 2018 and free cash will revert to historical levels.
As a consequence the focus will be on net debt reduction.
In addition the Group increased levels of net capital expenditure to
£10.6m (2017: £5.1m) as the business continues to invest in systems,
technology and specialist assets to support the significant levels of
growth. Major areas of expenditure were the fitting out of our additional
warehouse space and systems and the deployment of the iForce
proprietary suite of e-commerce software and the unique transport
optimisation system to be introduced in the Group transport division
to improve utilisation and reduce cost.
The cash tax charge was a payment of £3.7m in the year as compared
to a £2.7m payment in the prior year reflecting higher tax instalments on
the increased pre-tax profits in the year to 30 November 2018. Within the
year, the cash cost of acquisitions was £22.1m. The table above
reconciles the headline funds raised of £54m with the net cash
consideration of £22.1m.
Allocation of funds raised to acquire
The Pallet Network Group
Cash consideration
Debt assumed and discharged
Acquisition fees
Deferred consideration
Fees taken to equity
Total
2018
£m
22.1
21.2
1.4
8.7
0.6
54.0
Net Debt
Net Debt
Finance leases
Bank loans
Overdraft / (cash)
Net Debt
2018
£m
9.7
126.3
23.7
159.7
2017
£m
17.8
103.6
(11.9)
109.5
Our net debt at 30 November 2018 was £159.7m representing an
increase of £50.2m against the November 2017 position of £109.5m.
Of this, £24.0m was the additional debt drawn down in connection with
the acquisition of TPN on 28 June 2018. This additional debt was
provided by our existing group of lenders on the same terms as the
original term loan facility put in place at April 2017.
The remaining £26.2m increase was primarily for working capital
investment necessary to support the £219m of sales growth delivered
in the year plus the move into early 2019 of certain payments originally
expected in 2018, as well as changes to a more conservative policy
made in February 2019 in relation to cash in transit at year end.
Our financing strategy allows for temporary increases in gearing above
our target of x 2.0 EBITDA to support growth initiatives. Our 2019 target
is to reduce gearing towards the long-term average of x 2.0 EBITDA
Covenant
Leverage ratio1
Net interest cover1
Ratio to
EBITDA
<3.2
>4.0
2018
2.4
10.7
2017
1.9
10.6
As at 30 November 2018 our leverage ratio was 2.4, comfortably within
our banking covenants and we had cash and unused banking facilities
of £76.5m.
Financing costs
Finance Income and Finance Expense
2018
£m
2017
£m
Finance Expense
Interest payable on bank loans and overdrafts
Amortisation of bank fees
Interest payable on loan notes
Interest payable on finance leases
Interest rate swaps - fair value through P&L
Total finance expense
Finance expense: exceptional items
Residual capitalised bank fees relating to the
previous loan
Costs associated with swap closure
TPN banking arrangement exit costs
Total finance expense: exceptional items
5.2
0.6
0.1
0.6
(0.4)
6.1
-
-
0.5
0.5
6.3
1.0
1.7
0.7
-
9.7
6.6
1.1
0.0
7.7
As expected our net finance expense has reduced 38% from £9.7m to
£6.1m in 2018. The 2017 net finance expense cost included five months
of the pre-IPO capital structure which had both a higher level of borrowing
and a more expensive interest structure.
In terms of exceptional costs, we incurred £0.5m in repaying the
pre-existing TPN financing facility which was refinanced at the time of
the acquisition using the substantially cheaper Group additional banking
facilities.
16
2 Leverage ratio and net interest cover are based on banking definitions specific to the banking documentation
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Exceptional items
Exceptional items
2018
£m
2017
£m
IPO related costs
Deferred consideration associated with acquisitions
Fees associated with acquisitions
Gain on lease agreement
Exit from Irish retail sector
Other
Total Exceptional Costs
-
5.4
1.9
-
-
0.5
7.8
4.0
0.9
0.8
(4.6)
2.4
0.9
4.4
Exceptional costs in the year were £7.8m (2017: £4.4m) predominantly
relating to the acquisitions of TPN, Speedy Freight and The Logistic People.
Elements of consideration to the existing shareholders were deferred, in
order to continue to incentivise management. Such elements amounted
to £5.4m during the year (2017: £0.9m). Fees associated with acquisitions
were £1.9m (2017: £0.8m).
Tax
Taxation
Profit before tax
Underlying tax at prevailing tax rate
Non-deductible items
Adjustments in respect of prior periods
Other
Tax as reported
2018
£m
23.6
4.5
2.9
(0.6)
0.6
7.4
2017
£m
9.9
1.9
1.9
1.2
-
5.0
Effective rate of tax
31.4%
50.5%
The relatively high effective tax rate of 31.4% reflects the non-deductibility
of costs associated with acquisitions, deferred consideration, amortisation
of the brand and costs relating to employee and management incentive
plans. The reduction in effective tax rate from 50.5% in 2017 to 31.4% in
2018 is due to the additional non-deductibility of certain IPO related costs
in 2017.
Dividends
Dividends
Interim
Final (recommended)
Total
Interim
Final (recommended)
Total
2018
pence per
share
2017
pence per
share
1.54
4.76
6.30
2017
£m
5.8
18.1
23.9
1.40
4.40
5.80
2017
£m
5.0
15.8
20.8
In line with our dividend policy, the Group paid an interim dividend of
1.5p (2017: 1.4p) per share with a total payment of £5.8m (2017: £5.0m).
We are also recommending a final dividend of £18.1m (4.76 pence per
share) giving a total of £23.9m (6.30 pence per share) for the year. The
final dividend will be paid, subject to shareholder approval, on 7 June
2019. The record date will be 10 May 2019.
Earnings per share
Underlying basic and diluted earnings per share are 11.4 pence (2017:
9.8 pence) and 11.3 pence (2017: 9.8 pence) respectively. Statutory
basic and diluted earnings per share was 4.4 pence (2017: 1.2 pence).
Acquisitions
On 28 June 2018, Eddie Stobart Logistics plc acquired, through its
wholly-owned subsidiary ESLL Group Limited, 100% of the share capital
of TPN, a leading pallet distribution service company which provides
customers with reliable and cost-effective pallet distribution through
a network of hubs and independent hauliers.
Funds raised of £54.0m translates into a consideration of £43.3m, on
a cash and debt free basis, having deducted fund raising fees and
deferred consideration. Debt of £24.0m was raised from the existing
lending syndicate on the same terms as the existing Group debt and the
issue of 21.4m shares, at a price of 140p per share, raised £30m in new
equity before expenses.
Further deferred consideration of £8.7m will be payable, in two even
instalments 12 months and 24 months following the acquisition date.
The amount has been spread evenly over the 24 month period as
an exceptional item, with £2.7m recognised during the year ended
30 November 2018.
TPN was consolidated into the Group as of 28 June 2018 and during
the period has contributed revenues of £54.7m and profit before tax
of £3.5m to the consolidated results of the Group.
Goodwill arising on the acquisition of £17.4m represents the projected
profitability of TPN, including the assembled workforce, together with
further potential to exploit synergies between Group business units and
within the logistics sector as a whole. None of this goodwill is expected
to be deductible for corporation tax purposes.
Subsequent to the acquisition, management performed a review of
the carrying value of all of the identifiable assets and liabilities of the
consolidated companies within TPN. This review resulted in a number of
fair value adjustments primarily arising as a consequence of a purchase
price allocation exercise using a professional independent expert and
done in accordance with IFRS 3 and IAS 38. Please see note 6 of this
document for further details.
In addition, during the year further payments were made in respect of the
acquisition of The Logistic People (£1.2m) and Speedy Freight (£4.5m).
These amounts represent deferred payments linked to conditions
agreed at the time of the relevant acquisitions and are accounted for
within exceptional items.
Annual General Meeting
The Company will hold its Annual General Meeting on 28 May 2019 at Stretton
Green Distribution Park, Appleton, Warrington.
Damien Harte
Chief Financial Officer
28 March 2019
Eddie Stobart Logistics plc Annual Report and Accounts 2018
17
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Our Group businesses
Our business has evolved
significantly over the past few
years, and we now offer a
comprehensive range of
transport solutions to all
our customers
David Pickering
Eddie Stobart transport operations
Eddie Stobart is recognised for providing high
levels of customer service and competitive
operational solutions across container
logistics, rail and primary and secondary
transport.
We deliver operational excellence through
deployment of our pay-as-you-go,
technology-enabled, shared-user network, which
provides innovative transport solutions to our four
key customer sectors. This ensures we stay one
step ahead in today’s competitive market and
maintain and grow our customer relationships.
Our expert and dedicated teams are at the
forefront of our business enabling us to stay close
to our customers and deliver a first-class service.
With our Speedy Freight and TPN operations,
we also now provide less-than-full truckloads
movements which enables us to operate our
fleet more effectively and increase the range
of services we provide.
Customers now demand reliable and flexible ways
of moving their goods from the point they are
sourced, manufactured or imported to the final
delivery point. Our development team’s role is to
explore all operational options and recommend
to the customer the most effective way of moving
their products across the supply chain.
Eddie Stobart Ports
Widnes
18
Our transport offer consists of:
• Container logistics
• Trunking
• Primary - full truck loads and less-than-full
truckloads
• Secondary - full truck loads and less-than-
full truckloads
• Rail
Our rail offering is an integral part of our supply
chain and dovetails with our extensive trunking
fleet and primary and secondary transport
operations to ensure we offer customers
choice in terms of the most effective route to
market for their products. We have added to
our existing UK rail operation with a new
service from the Port of Tilbury to Daventry,
with up to 180 containers moving each week.
This is in addition to the 12 trains a day we
already operated, moving approximately 3,000
containers a week. Our rail operations reduce
the number of road miles in line with our and
our customers’ environmental priorities.
The effective use of technology is key to
the success of our large scale network and
ensures we deliver a diverse range of customer
solutions.
We continue to invest in our technology,
including deploying a new bespoke software
solution called MyWorkforce. This allows
employees to self-manage their attendance,
holidays and absences, along with simplifying
current ways of working.
The focus for the year ahead is to launch our
optimised transport solution; phased
implementation is scheduled to begin
mid-2019. The system will automate our
transport planning and improve our utilisation
rates by reducing empty vehicle miles, as well
as provide enhanced visibility to customers.
This, combined with MyWorkforce, will
significantly improve the overall performance
of our network.
ACCESS TO
c.3,500
DRIVERS
c.2,600
VEHICLES
c.5,000
TRAILERS
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We have ambitious plans; our
strategy is to be seen across the
supply chain as the go-to company
for contract logistics and
e-commerce solutions
Sébastien Desreumaux
iForce
of scale and return on investment. We are
able to adapt to e-commerce seasonality and
complexity by deploying ad hoc resources with
the support of the Group’s internal recruitment
agency, The Logistic People.
By working collaboratively with our customers
we have developed a unique and resilient
model in terms of technology, excellence in
execution and scalability which provides an
innovative, cost effective route to market for
customers who wish to grow in the
e-commerce sector.
Becoming part of the Group provides
increased opportunities for cross-selling our
services to existing Eddie Stobart customers.
iForce fulfilment site
Corby
iForce is at the forefront of the modern
e-commerce market. Some of the UK’s most
well-known brands are our customers.
We have helped them maximise the potential
of multi-channel retailing through our
operational expertise and market-leading
software solutions.
We have a strong IT platform and the
expertise and knowledge to grow at pace,
improve customer service and increase
profitability in the UK and Europe.
We have recently implemented our first iForce
contract in Genk, Belgium which sees us
working with Eddie Stobart’s European
transport operations to deliver a logistics
and transport solution to a major blue-chip
customer.
We have a rich heritage of supporting and
enabling our customers’ growth through
robust, scalable and flexible solutions.
Customers choose us for the combination
of our technology allied with our operational
expertise and consulting skills which enables
us to provide a bespoke service.
The offer consists of:
• E-fulfilment
• Carrier sourcing and management
• Returns management
• Revive - a remedial and repair solution
• Stock clearance - using our Marketzone
web portal
We invest in our proprietary software platform,
which allows us to support specific customer
requirements as well enhancing our overall
offer in the e-commerce market.
We operate single and multi-user sites giving
our customers cost effective solutions at every
stage of their growth, which deliver economies
c.1,200
FTEs (of which 925
are direct employees),
reaching
2,000
over peak
c.84 million
ITEM DESPATCHES
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Our Group businesses
The Pallet Network (TPN) is one
of the UK’s leading palletised freight
distribution networks operating day
one collection for day two delivery
through its 106 members and 125
depot locations across the UK
Mark Duggan
The Pallet Network
TPN’s members delivered c.4 million pallets
in 2018 offering extremely high service
levels, which are underpinned by the quality
of the TPN member companies and TPN’s
scalable and sector-leading systems and
technology.
TPN main hub
Minworth
Since acquisition in June 2018, TPN has
performed strongly. The commercial and
operational success of its members is a priority
for TPN. The network is successful when its
members are successful and the culture is one
of mutual support, partnership and trust.
The acquisition of TPN has extended the Eddie
Stobart Group's overall supply chain offer to
include less-than-full truckload services for new
and existing customers. Access to the services
of TPN's extensive member network has added
to the resilience of the Eddie Stobart transport
network; members collaborate with Eddie
Stobart to provide transport services to existing
Eddie Stobart customers where needed.
Further synergies and opportunities for
collaboration have been identified for 2019.
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The palletised freight market is growing
between 5 and 10% annually, with TPN annual
growth rate being towards the top end of this
range. TPN remains well placed to continue
to grow at these levels going forward.
Core to TPN’s operation is its market-leading
software TPN Connect. This system is free for
members to use for palletised freight
distribution or elsewhere in their business and
offers complete management from collection
through to final delivery and invoicing.
Freight customers can input their own jobs
online, print their own labels, track their pallets
and receive real-time notifications, streamlining
processes and driving efficiency. They can also
access full tracking information for free on their
mobile phones using the TPN app, TAPP.
c.4 MILLION
PALLETS MOVED IN 2018
106
MEMBERS WHO ARE INDEPENDENT
REGIONAL DISTRIBUTION
SPECIALISTS
125
MEMBER LOCATIONS
THROUGHOUT THE UK
367,500 SQ FT
MAIN HUB LOCATION IN
MINWORTH
TPN
TPN
TPN
REGIONAL HUBS IN
NORTHAMPTON AND PRESTON
Speedy Freight specialises in
urgent, same or next day deliveries
for commercial and domestic
customers across the UK
and Europe
Mike Smith
Our acquisitions
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Speedy Freight
deliveries, an increase of 36% (2017: 103,232),
with the monthly figure peaking at over 14,500
deliveries in November.
We are investing in our processes and IT
infrastructure to facilitate further growth of each
franchise and provide wider network
coverage, alongside improving overall
customer experience.
Becoming part of the Eddie Stobart Group
has enabled us to expand into new customer
sectors such as e-commerce and fulfilment,
for example we recently provided a dedicated
same day solution across three large
regional fulfilment centres, for a major
blue-chip customer of Eddie Stobart Logistics
plc. We have also been able to grow our fleet
through competitive lease deals.
For 2019, our strategy is to continue to grow
through a focus on training and development
across the franchise network, coupled with a
national communications plan. The strategy will
be reinforced by local initiatives to develop and
grow individual franchisees' businesses.
c.135,700
DELIVERIES IN 2018
56
BRANCHES COVERING EVERY
UK POSTCODE
We collect items of any size or shape and
supply a wide range of vehicles from vans
to 7.5 tonne and articulated trucks,
operating 24 hours a day, 365 days a year.
Operating from 56 franchised locations and
covering every UK postal code, our business
has achieved annual growth rates of over 38%
since it was established in 2006.
We operate an asset light model with a
scalable large network of preferred drivers
across the UK, operating a wide range of
equipment, thus allowing us to meet our
customer requirements no matter how diverse.
Our dedication to customer service ensures
that our customers stay with us for the
long term.
The same day and express industry has seen
significant growth in the last few years at 11%
per annum, and is forecast to continue to do
so until 2021.
We have seen good growth across newly-
launched franchise offices, whilst continuing to
develop and expand our already established
sites. In 2018 we completed nearly 140,000
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Our people
As an employer of over 6,000 people we are
focused and committed to making Eddie Stobart a
great place to work. We value diversity and ensure
we provide equality of opportunity for all our
employees. Within our workforce, we aim to have
the right people with the appropriate skills to
achieve our ambitions
Focused driver recruitment campaigns working
collaboratively with our in-house specialist
recruitment service provider, The Logistic
People, have yielded a significant response,
allowing us to meet customer requirements
during peak periods and effectively resource
contract start-ups. Our recruitment strategy has
also enabled us to further enhance our
relationship with the Career Transition
Partnership (CTP) in supporting military
service leavers.
Eddie Stobart has a central training team
supporting the development of drivers,
warehouse operatives, support staff and
management, all of whom have differing
needs and skills. There is a range of specialist
trainers within the team such as SQA Grade
One accredited ADR instructors (transportation
of dangerous goods), Association of Lorry
Loaders, Manufactures and Importers (ALLMI)
instructors and Microsoft Office training
specialists. Our driving schools also have
their own DVSA delegated examiner.
The number of drivers trained per month and
year to date, and the number of recruits across
the business, are key performance indicators
that are monitored by senior management.
The expertise of our training team is well
recognised in the industry. We are proud to
have been invited to join an advisory panel to
the Department for Transport (DfT), focusing
on the design of courses to reflect changes
in regulations applicable to the transport of
dangerous goods.
Graduate and apprenticeship
programme
2018 saw our first ever intake for our graduate
training programme which has been designed
to give first-class training that will help develop
their careers. It has been tailor-made to provide
the business knowledge and technical training
they require to become future leaders of our
business.
We are also working alongside the University of
Bolton to explore the design of a collaborative
industry-focused undergraduate programme.
This dedicated degree of BSc (Hons) Global
Logistics, Transportation and Supply Chain
Management (BSc GLTS), will focus on
producing graduates in this discipline, with
state-of-the-art knowledge and skills to support
our business growth.
Developing our people
As we develop our business to deliver
innovative solutions across the whole supply
chain, it is our policy to ensure that employees
are recruited, selected, developed,
remunerated and promoted on the basis
of their skills and suitability for the work
performed.
With our online Learning Management System
(LMS) training platform we have launched a
range of courses which are available to all
senior leaders and people managers. This will
allow us to develop standardised capabilities
across the Group.
Recruitment and training
We recruit individuals with the talents and
results-driven attitude we need to meet the
high standards of performance our customers
expect. We have a robust recruitment process
to select the best candidate for the job using
a variety of aptitude tests and personality
assessments to support our recruitment
processes.
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Our brand is widely recognised by our
customers and the industry throughout the year
with notable award wins including:
• Winners of the ‘Training Award’ at the 2018
Motor Transport Awards for the
improvements our training team had made,
from delivering in-house training to our
employees, to the performance and
commercial offering at our two driving
schools
• Gold winners at the CIPR North West Pride
awards 2018 for ‘Best use of social media’
in collaboration with Intelligent Conversation
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Through utilisation of our apprenticeship levy,
we have launched our first cohort of drivers on
our Driver Development Programme (DDP),
by partnering with The National Logistics
Academy to give our drivers the skills and
knowledge they need to progress within our
industry.
As part of our focus to develop and upskill
all of our employees, we have launched our
Warehouse Operative Level 2 Apprenticeship
Programme.
engagement sessions. In 2018 we established
a new employee forum for office-based staff,
with the aim of increasing engagement and
getting feedback on how these employees
‘think, feel and act’ in relation to their roles.
A focus for 2019 is exploring channels through
which we can engage with our dispersed
workforce. We will be developing the
functionality of our online HR system to
improve the accuracy and flexibility of our HR
service, helping us to improve resource
planning and reduce HR related queries.
Diversity
At Eddie Stobart, we value diversity and believe
in providing equality of opportunity. We have
been striving to improve diversity in all areas
across all levels and types of roles across our
business.
We aim to develop the diversity of our
workforce and support both men and women
to develop the skills and experience they need
to progress in our business of logistics,
transportation, supply chain management
and technology.
Employee engagement
We focus on employee engagement to
motivate and retain our talented people.
We engage with and gather feedback from
our employees through our well-established
monthly driver and warehouse representative
We have recently been shortlisted for AAT
Apprenticeship programme of the year for our
Driver Development Programme.
Our core values
Openness and
honesty
We draw on our huge
depth and breadth of
expertise to make sure
we can be the best in
what we do by working
collaboratively as
one team.
Trust and respect
We take the time to
understand and listen
to our colleagues and
customers. We lead by
example by keeping
things simple, setting
clear goals and achiev-
ing them.
Integrity
We put our employees
and customers first and
act in their best
interests. When things
go wrong, as they will
from time to time, we’ll
hold our hands up and
work to put it right.
Compassion
We’re genuine and
sincere and show
consideration by
supporting others when
they need it most.
We take personal
responsibility for all
of our actions.
Fun
We like to enjoy
ourselves too, we
celebrate when we’ve
done a good job
and we recognise
the achievements of
our people.
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Corporate responsibility
We are committed to running our business in
a responsible way, as we continue to develop our
corporate social responsibility practices to support
our employees, customers and the environment
now and in the future
Business integrity and ethics
We operate our business in an ethical and
responsible manner and we expect our
employees and business operations to
conduct themselves ethically, and to be
honest, fair and courteous in their dealings
with customers, key stakeholders and the
wider public.
We ensure our policies and processes provide
clear guidance to all employees. We have a
Code of Business Conduct which explains our
ethical standards as an organisation and how
we expect our employees and suppliers to act.
Our whistleblowing policy provides guidance
to all employees so that they know they can
raise a concern about any possible
wrongdoing on an anonymous basis.
We are committed to preventing modern
slavery and human trafficking from occurring
within any part of our business and supply
chain and continue to focus on improving the
effectiveness of our systems and controls in
this area. Our Modern Slavery Act statement
is available on our website:
www.eddiestobart.com
Relationships with suppliers
As well as treating our suppliers fairly we
expect our suppliers to conduct their
businesses in a fair and ethical manner.
Our Supply Chain Charter sets out the
standards we expect them to comply with
when conducting their business operations.
Our business continuity planning activities
place significant focus on ensuring that in the
event that key suppliers are affected by
a business disruption we are able to continue
supplying services to our customers.
Health, safety and wellbeing
Eddie Stobart has a strong culture of
promoting health and safety standards
throughout our business and we continue
to seek ways to improve. This year we have
invested in a new IT system using the latest
technology to help us manage our health and
safety processes, accident, incident and near
miss reporting as well as site maintenance
works and audits. This system enables us to
better monitor accident frequency rates and
types of injuries sustained so we can
benchmark health and safety performance of
specific sites and business areas. This helps
us to take targeted actions to introduce safety
improvement initiatives.
We have started the roll out of this new
technology to the businesses we have
acquired and are working with these
companies in other areas to ensure we
adopt a consistent integrated approach
to health and safety across the Group.
We invest in safety training for all employees,
particularly for our drivers and warehouse
operatives. We track individual performance by
reviewing driving records and incident reports.
All employees, including drivers and
warehouse operatives, who join Eddie Stobart
receive an induction course at our Training
Academy which contains a strong emphasis
on health and safety.
All drivers and warehouse operatives who join
the business on a temporary basis receive
a safety briefing before starting work which
emphasises the safety standards we expect
them to adhere to. Our drivers are required
to undertake 35 hours of driving standards
training in every five-year period to retain their
Certificate of Professional Competence (CPC).
We continually seek to raise awareness of the
importance of safe working practices through
the promotion of various initiatives and
campaigns such as National Road Safety
Week, where we raise the importance of safety
on roads and driving within speed limits.
There are dedicated teams within Eddie
Stobart responsible for setting health and
safety standards and monitoring performance
against those across the organisation. The
Group businesses also have specialist teams
who promote our health and safety culture and
ensure appropriate training of employees for
the roles they undertake.
We monitor how we are performing by
assessing Accident Frequency Rate and
reported RIDDORs per month and in the
year to date against the previous year’s
performance figures. Members of the senior
management team regularly review this
performance and safe working practices are
reviewed and revised as appropriate.
We have comprehensive policies on safe
working, accident management and on
maintenance and servicing of our assets and
equipment. Our internal teams undertake
regular risk assessments to check that
appropriate policies and standards are being
adhered to. Remediation plans are put in
place in relation to any issues identified and
implementation of agreed actions are regularly
monitored.
Focus on wellbeing
We believe that work should have a positive
influence on employee wellbeing. We know
that fitter, healthier employees are not only
happier and more productive, but also have
fewer work-related accidents. We support our
employees primarily by focusing on two key
aspects of wellbeing; mental and physical
health.
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Through national health awareness campaigns
we engage with our employees with the aim
of improving their knowledge and
understanding of health issues, particular
to the logistics industry.
In terms of physical health, we offer support
and proactive engagement through our
corporate induction and driver training
programmes. We have also partnered with
a number of fitness centres across our
geographical locations, so that we can provide
discounted gym memberships for employees.
companies are consistent in their approach to
reducing emissions and energy use and are
proactively taking steps to reduce their
environmental impact.
The engines in the Eddie Stobart fleet are the
cleanest available, meeting Euro 6 emission
standards. We continue to investigate new
technologies to further improve our
environmental standards. By investing in our
optimisation technology we will further reduce
empty vehicle miles, minimising the overall
impact on the environment.
In 2018 our people supported causes that
mattered to them most; they chose to donate
to Alzheimer’s UK. Our teams got creative
dressing as elves, they took part in gruelling
muddy obstacle courses and ran marathons
dressed as Santa. They also collected for and
donated to Warrington Food bank, which is
part of the Trussell Trust network, a charity that
provides three-day emergency food supplies to
people living in crisis.
Our Driver Development Programme (DDP),
which includes training in Safe and Efficient
Driving, helps us reduce fuel consumption by
encouraging more efficient driving practices.
Our telematics systems enable us to monitor
drivers’ behaviour by tracking harsh braking,
idling and lack of cruise control which lead to
fuel inefficiency.
We continue to measure and monitor our
operational carbon footprint in order to assess
our environmental impact. As the Group has
expanded and has a larger fleet travelling a
greater total distance, our total scope one
emissions* (relating to fuel usage) have
increased. However, we are pleased that we
have improved the fuel efficiency rates of the
Eddie Stobart fleet and achieved a higher
average km travelled per 100 litres of fuel than
in 2017. Our scope two emissions** (derived
from electricity usage) decreased in 2018.
Supporting our local communities
While ‘When you wish upon a Star’ is our
corporate charity partner, we have
communicated to our employees to champion
and support local causes which are important
to their teams and customers.
Environment
Environmental protection is important to us and
we continue to work with partners such as the
FTA Logistics Emissions Reduction Scheme
(LERS), which provides the logistics sector
with capabilities to enhance the recording and
reporting of progress in reducing emissions
from freight operations and Inspired Energy,
who assist us in reducing electricity and carbon
emissions. We are also members of the CRC
Energy Scheme (formerly the ‘Carbon
Reduction Commitment’) under which we
monitor and assess our energy usage annually.
As a member of the logistics sector’s
Environmental Benchmark Forum, we work with
other logistics companies sharing best practice
and advice on environmental initiatives.
We are seeking to reduce our energy
consumption, working with expert advisers on,
for example, further improving our use of LED
lighting and solar panels. We are also
committed to enhancing our monitoring of
water consumption so we can better manage
usage and to improving recycling initiatives we
have introduced this year.
We are working with the businesses we have
acquired to ensure that all Eddie Stobart
Eddie Stobart is a forces-friendly
employer
We received the Silver Employer Recognition
Scheme (ERS) award in April 2018.
As a signatory to the Armed Forces Covenant,
Eddie Stobart has pledged to support our
Armed Forces. In particular we seek to:
• Provide employment opportunities for
Armed Forces leavers and veterans
• Enable our employees who are members
of the Reserves or are cadet instructors to
be able to undertake their commitments by
offering an extra two-weeks’ paid leave on
top of normal holiday allowance to attend
an annual camp
• Facilitate careers awareness activities for
cadet units
• Raise awareness of and provide support for
Armed Forces charities that are aligned with
Eddie Stobart’s priorities
• Work alongside the Career Transition
Partnership (CTP) to encourage job
applications to increase exposure to the
service leaver community
Our commitment to the Armed Forces is
supported across Eddie Stobart and is led by
our HR Director. We have put in place our own
experienced internal liaison officer who
provides support to our reservists and cadets.
* Scope one (direct) GHG emissions are derived from the consumption of gas, oil and vehicle fuel
** Scope two (indirect) GHG emissions are derived from the consumption of purchased electricity
Scope one and two emissions calculated in accordance with the applicable governmental department requirements in force at relevant time i.e. 2018: requirements of the Department for Business Energy and Industrial Strategy and 2017: DEFRA requirements
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Risk management and principal risks
Risk management framework
The Board is ultimately responsible for setting the Group’s risk appetite
and for overseeing the effective management of risk. The Board has
delegated oversight of risk management and internal controls to the
Audit Committee. Day to day risk management is the responsibility of the
senior management team. A risk management framework setting out the
Group’s risk management’s processes and procedures is in place and is
reviewed by the Audit Committee annually.
A Group level risk register is maintained recording the mitigating factors
and actions in place for each risk and a report on the review of that
register by senior management is submitted to the Audit Committee.
The principal risks facing the Group have been identified by the Directors
(with senior management input) and the mitigating actions agreed.
Principal risks
Mitigation
Economic environment risk
Changes in the economic environment, whether resulting from the UK’s decision
to withdraw from the EU or otherwise, changing government policy and legislation
or other external factors, may adversely affect our business and our customers’
businesses. For example: more complex rules for cross-border transport and
restrictions on the movement of workers from Europe may affect the Group’s
operations and financial position and changes in planning legislation or
property-related policies may adversely affect the property market and our ability
to enter into commercially attractive property transactions and generate value
from our property expertise.
The Group monitors developments and proposed changes in government
policies, legislation, regulation and other factors that may impact our business
and our customers’ businesses. Our strategy is kept under close review to ensure
we respond to any such impact.
The Board views the potential impact of Brexit as an integral part of the economic
environment risk rather than a stand-alone risk. Significant uncertainty continues
as to the outcome of negotiations with the EU following the UK’s decision to
withdraw from the EU. Although we have experienced no significant impact on our
business to date, we will continue to monitor the implications for our business and
respond appropriately. Our unique operating model provides us with the flexibility
to respond rapidly to changing market conditions. During the year, we have
taken steps to improve the resilience of our network, such as acquiring The Pallet
Network, giving us access to the services of its extensive network of members.
We have continued to mitigate risk relating to security of labour transport and
warehousing operation by further developing our in-house recruitment capabilities
following the acquisition of The Logistic People and continuing to invest in our
driving schools.
Operating environment risk
Customer demand for outsourced logistics and warehousing services may change,
reflecting the changing behaviours of consumers. There may be changes in the
availability of high quality warehouse capacity and other property opportunities to
support business growth. New technologies may emerge that change the nature of
the logistics industry.
We continually review and monitor market developments including new technologies,
property opportunities and emerging logistics business models, and review our
strategy accordingly. The Group stays in close contact with its customers to ensure we
understand and can respond to their changing needs. We continue to invest in
developing our own state of the art technology in order to stay at the forefront of
technological expertise in the logistics industry.
People risk
Loss of one or more key members of the senior management team or failure to
retain and attract experienced and skilled people at all levels across the business
could also have an adverse impact.
The management team is appropriately rewarded for its efforts and succession
plans are in place across key positions in each of the businesses. As noted in the
Remuneration report on page 34 a review and benchmarking exercise is
underway in relation to remuneration of Executive Directors and senior
management to ensure our remuneration packages remain appropriate to
attract and retain talented people.
We take pride in creating a positive workplace environment, through training,
engagement, rewards and values.
Customer risk
Loss of one or more of our key customers could have a material impact on Group
revenues.
We believe that the best way to mitigate this risk is to continue to deliver excellent
levels of service at competitive rates.
We monitor our key customer dependency regularly and seek to balance our
exposure to each market sector we operate in by targeting new customer
opportunities. We typically have long-standing customer relationships; a number
of key relationships have lasted for longer than 15 years.
A healthy pipeline of new opportunities is being evaluated. This risk is also
mitigated by our strategy of building a balanced portfolio across the sectors
we operate in.
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Health and safety risk
Our business involves operating vehicles and other assets, and working in
environments that can be a risk to people and property. Our primary concern is
to minimise, to the extent possible, the risk of harm to people who work in our
business or are affected by it.
Induction sessions for new employees (including our drivers and warehouse
operatives) involve health and safety training and we run an on-going health and
safety training programme. We also have a comprehensive suite of health and
safety procedures that all new joiners must confirm they will adhere to.
We have a dedicated Head of Health, Safety, Quality and Environment who
oversees a team responsible for setting our health and safety standards and
monitoring compliance with our comprehensive health and safety processes and
procedures. This team undertakes health and safety reviews of our sites and
customer sites to ensure compliance with appropriate standards. There are well-
established accident reporting procedures and reviews are undertaken after all
significant incidents to ensure our policies have been followed and that we enhance
our standards where we can to reduce the risk of future accidents occurring. We
have invested a new IT system using the latest technology to help us manage our
health and safety processes, accident, incident and near miss reporting as well as
site maintenance works and audits. This system enables us to better monitor
accident frequency rates and types of injuries sustained so we can benchmark
health and safety performance of specific sites and business areas and take
targeted actions to introduce safety improvement initiatives.
Reputational risk
Our potential to win new business or develop existing relationships could be
adversely affected by a material incident and negative press could affect public
perception of our brand. Such incidents could include a significant failure to
deliver a customer project, wrong-doing or fraud by an employee, breach of our
IT security system, a natural disaster such as a fire or flood preventing us from
operating from a site or a major health and safety incident.
We have comprehensive processes and procedures in place to manage
operational risk and adherence to those processes and procedures is regularly
reviewed by our HSQE team. We also have business continuity plans in place
and escalation processes to ensure significant incidents are dealt with promptly
and effectively. Our communications with the press are handled by our Head of
Communications and experienced external PR advisers.
Systems and technical risk
A failure or unavailability of a key IT system, unauthorised access or a cyber
security breach could have a significant impact on operational performance, com-
pany reputation and financial performance.
We partner with industry-leading formally-accredited, data centre hosting
providers. All critical core IT infrastructure and data is replicated across dual data
centres, to provide resilience and availability. A formal testing programme is in
place to provide assurance of recovery in the event of a disaster.
We continue to invest in cyber-security solutions, tools and infrastructure in line
with industry best practice and provide formal governance and risk management
of the cyber security posture through the information security steering group,
which includes senior executive management representation. Independent
security testing is regularly conducted by certified, specialist security
organisations and we have access to specialist technical forensic resources
in the event of a significant cyber incident.
Financial risk
Failure to meet covenants in financing documents could result in lack of available
funding. Lack of available cash could result in the Company being unable to meet
its financial obligations.
Net debt is monitored on a daily basis and banking facilities are reviewed against
future expected cash flow movements to ensure that adequate facilities are in
place.
Legal and regulatory risk
We are required to comply with extensive and complex legal and regulatory
requirements. Non-compliance could result in significant fines, reputational
damage (and possibly criminal proceedings), withdrawal of operating licences
and closure of sites. Changes in laws and regulations could have an adverse
impact on operations and financial performance.
We have systems and procedures in place to ensure compliance with, and to
manage the impact of, and changes in, government legislation and regulation
such as agency worker regulations, vehicle operating procedures and
environmental requirements.
This strategic report was approved by the Board on 28 March 2019 and signed on its behalf by;
Damien Harte
Chief Financial Officer
Eddie Stobart Logistics plc Annual Report and Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Board of Directors
Philip Swatman, Non-executive Chairman
Chair of the Remuneration Committee and member of the
Audit Committee.
Appointed in April 2017.
Skills and experience: Philip has extensive capital markets experience,
having served as a Managing Director and subsequently Co-Head of
Investment Banking of NM Rothschild between 1998 and 2001, thereafter
serving as Vice-Chairman of Investment Banking until 2008. Philip has
been involved in a significant number of high profile transactions including
the IPO of Vodafone and the sale of BPB plc to Saint Gobain.
Other roles: Philip has served as a non-executive director at nine
companies, including as a member of the Council of Lloyd’s. His present
roles include Chairman of Cambria Automobiles plc and non-executive
director of a number of private companies.
Damien Harte, Chief Financial Officer
Joined Eddie Stobart in December 2016. Has resigned effective
31 March 2019.
Skills and experience: Damien has over 30 years’ experience in senior
financial positions of large organisations across a range of sectors in the
UK and internationally, including logistics and distribution, manufacturing,
renewable energy, media and leisure. Most recently he was Global Chief
Financial Officer of LM Windpower, a leading player in the global
renewable energy market.
Damien is a Certified Accountant and holds an MBA from the University
of Chicago.
Alex Laffey, Chief Executive Officer
Joined Eddie Stobart in May 2015.
Skills and experience: Alex is an international logistics expert with over
25 years’ experience in supply chain distribution at a senior level. He has
operated in a number of markets across Europe and Asia for grocery
supply chains and general merchandise, in-store and online operations.
He headed international distribution for Tesco and led a review of the
company’s global logistics blueprint to realise synergies across all of its
markets. This programme delivered significant cost savings and service
improvements. In addition, Alex also managed Tesco’s UK logistics, with
over 50,000 store deliveries per week and a £1.6 billion annual cost base.
28
Christopher Casey, Non-executive Director
Chairman of the Audit Committee and member of the
Remuneration Committee.
Appointed in April 2017.
Skills and experience: Christopher has over 30 years’ strategic financial
experience. He was previously a partner of KPMG LLP and its predecessor
firms from 1992 until 2010. He has extensive experience as an audit
committee chairman and non-executive director of publicly listed
companies.
Other roles: He is currently a Non-Executive Director of TR European
Growth Trust plc, BlackRock North American Income Trust plc, City
Natural Resources High Yield Trust plc and Mobius Investment Trust plc.
Elaine Williams, Company Secretary
Appointed in October 2017.
Skills and experience: Elaine joined the business in 2017, having
formerly held roles as general counsel, company secretary and deputy
company secretary in major FTSE 100 companies. Elaine brings
extensive experience of corporate and commercial legal transactions,
corporate governance and compliance.
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Stephen Harley, Non-executive Director
Member of the Audit Committee and the Remuneration Committee.
Appointed in April 2017.
Skills and experience: Stephen brings significant international logistics
and supply chain expertise to the Board. He spent most of his 42 year
career with Ford in logistics and supply chain management and held the
most senior positions in this area: executive director for global material
planning and logistics and for parts supply and logistics.
Other roles: Stephen is currently Managing Director, Asset Businesses
for Laing O’Rourke.
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Philip H Swatman
Chairman
Governance
We continue to promote
good governance that
supports effective decision
making and the delivery of
our strategy
CONTENTS
Governance
The Board
Audit Committee report
Directors’ Remuneration report
Directors’ report
Statement of Directors’ responsibilities
30
31-32
33
34-35
36-37
38
During the year the Board has continued to focus on promoting good
governance that supports delivery of our strategy and encourages
openness and accountability. We are committed to promoting
a governance structure that enables effective decision-making,
enhances our business and protects the interests of our stakeholders.
As Chairman, one of my principal responsibilities is the effectiveness
of our governance, including the effective operation of the Board and
ensuring it plays a constructive role in the development of our strategy
and objectives.
The Board has overseen the progress made this year in our strategy
of becoming a provider of end-to-end supply chain logistics solutions
including the successful acquisition of The Pallet Network, a specialist
in palletised distribution services. This acquisition has further broadened
the range of services the Eddie Stobart Group, including our
subsidiaries, iForce, Speedy Freight and The Logistic People can offer
to customers. We will continue to focus on growth opportunities for the
business across the supply chain including cross selling new services
to existing customers and will regularly review our strategy.
We welcome Anoop Kang as our new Chief Financial Officer for the
remainder of the 2019 financial year. Board members have been closely
involved in the selection process and we are confident that Anoop’s
appointment will further enhance the breadth of the skills and experience
of the Board. Further information on the work of the Board during the
year is set out in page 32.
The Audit Committee, which has responsibility for oversight of our
internal controls and risk management framework, has progressed the
development of assurance on internal controls during the year, further
enhancing the governance of the Group. Following the appointment of
BDO LLP in January 2018 to provide internal audit services, the Audit
Committee has considered internal audits reports covering a range of
business and functional areas across the Group.
Audit Committee members were also closely involved in the selection
of our new external auditors, PricewaterhouseCoopers LLP, who have
undertaken the audit of the group financial statements for the 2018
financial year. Further information about the work of the Audit Committee
is set out on page 33.
Further information on the work of the Remuneration Committee and the
remuneration arrangements for the Directors and senior management
is set out in the Remuneration report on pages 34 and 35.
Philip H Swatman
Chairman
28 March 2019
Code compliance
The Company complies with the requirements of the QCA
Governance Code, which is considered appropriate for an AIM listed
company. The Governance section of this annual report (pages
30-37) describes the principal elements of our governance structure
which comply with the principles of the QCA Governance Code. The
Company has published a corporate governance statement, which
explains how the Company satisfies the requirements of the QCA
Governance Code and where relevant disclosures made in
accordance with the QCA Governance Code can be found.
The corporate governance statement, which is available on the
Company’s website at www.eddiestobart.com, is reviewed and
approved by the Board annually.
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The Board
Role of the Board
The Board considers and approves the Company’s strategy, budget,
material transactions and corporate actions and oversees the
Company’s progress towards its strategic objectives. There is a written
statement of matters which require Board approval, which is reviewed
annually.
Board members
The Board is comprised of three independent Non-executive Directors
and two Executive Directors. The Non-executive Directors were
appointed shortly before the IPO in April 2017. The two Executive
Directors during the 2018 financial year joined Eddie Stobart prior to the
IPO. Alex Laffey became Chief Executive in May 2015. Damien Harte
joined as Chief Financial Officer in December 2016 and will retire from
the Board on 31 March 2019 due to family health reasons. Anoop Kang
has been appointed Chief Financial Officer with effect from 1 April 2019.
There is a clearly documented division between the executive role of the
Chief Executive and the role of the Non-executive Chairman, which is
reviewed annually. The Directors have determined that, given the size
of the Board, it is not appropriate to appoint a senior independent
non-executive director.
The time commitment expected of the Non-executive Directors is
commensurate with the size and complexity of the Company and as
necessary to properly perform their duties. Attendance at a minimum
of twelve Board meetings a year and the annual general meeting is
expected.
Skills and experience
The Board members bring a wealth of commercial and financial
expertise to the Board from a variety of backgrounds. Please see the
biographies of the Directors as at the date of this report on pages 28
and 29 for further information on their skills and experience.
Anoop Kang, who joins on 1 April, brings to the Board extensive financial
and investor relations experience gained in listed companies. He was
most recently the Chief Financial Officer of Cambian Group plc and
previously held a number of senior financial positions at Keir Group plc
and Balfour Beatty plc. Anoop is a Chartered Accountant. The Directors
at the date of this report believe the Board has, and will continue to have
following the retirement of Damien Harte and the appointment of Anoop
Kang, an appropriate mix of skills and experience to provide strong and
effective leadership.
Each Director is aware of the importance of keeping their skills up to
date. Members of the senior management team provide industry specific
updates and the Company Secretary provides briefings on
developments in corporate governance and the regulatory framework.
Independence
All of the Non-executive Directors (including the Chairman) are
considered to be independent. Independence of the Non-executive
Directors is reviewed annually and the Board has determined that each
of them continues to demonstrate strong independent judgement and
there is no relationship that could materially interfere with the exercise
of their independent judgement.
Board Committees
The Board has established an Audit Committee and a Remuneration
Committee. Each of the Non-executive Directors is a member of these
Committees. The Executive Directors and other members of senior
management attend at the invitation of the Committee. The terms of
reference of these committees are available on the Company’s website.
Given the size of the Board it is not considered necessary to establish
a Nomination Committee.
The Board is responsible for the Company’s strategy and oversees the conduct of its business.
Board
Audit Committee
Remuneration Committee
Executive Management
The Audit Committee has responsibility for:
• Monitoring the integrity of the financial
statements of the Company
• Advising on appropriate accounting
policies and reviewing management
judgements
• Reviewing the effectiveness of the
internal control and risk management
systems
• Approving the internal audit plan
• Approving the external audit plan and
reviewing the effectiveness of the
external auditor
The Remuneration Committee has
responsibility for:
• Determining the Company’s policy
framework for the remuneration of the
executive directors and members of
senior management
• Approving the design of any incentive
schemes and the targets for any
performance related schemes
The Executive Management team
supports the Chief Executive in relation
to the implementation of the Group’s
strategy and management of the day to
day operations of the Group.
Eddie Stobart Logistics plc Annual Report Accounts 2018
31
Eddie Stobart Logistics plc Annual Report and Accounts 2018
The Board continued
Board and Committee meetings and attendance
Board meetings are scheduled to be held monthly with ad hoc meetings
called when needed. Thirteen Board meetings were held in the financial
year ended 30 November 2018. All Directors attended all the Board
meetings. The table below illustrates attendance at Board and
Committee meetings in the 2018 financial year.
Director*
P H Swatman
C Casey
S Harley
A Laffey**
D Harte**
Board
Audit Committee Remuneration Committee
13
13
13
13
13
4
4
4
-
3
1
1
1
1
1
Note: *All Directors attended all Board meetings and all Committee meetings they were entitled
to attend as members.
**The Chief Executive and Chief Financial Officer are not members of the Audit or
Remuneration Committees but attend Committee meetings at the invitation of the Chair
of the Committee.
.
Board activities since the start of the 2018 financial
year have included oversight and consideration of:
• Strategy and progress towards strategic objectives
• The acquisition of The Pallet Network
• The selection and appointment of a new Chief Financial Officer
• The external market environment including the risks and
opportunities as a result of the referendum to leave the EU
• The principal risks faced by the Company
• Updates on business activities and financial performance
• Working capital management
• The Company’s dividend policy
• Business pipeline and future opportunities
• Property-related opportunities to support business growth
• Updates on investor relations and share price performance
• People issues such as recruitment, incentivisation and
succession planning
Role of the Executive Management
The Board has delegated to the Chief Executive the authority to manage
the day-to-day operations of the company. Authority in relation to
financial matters is delegated to the Chief Financial Officer. The
Executive Management team supports the Chief Executive in
discharging his responsibilities. The following members of senior
management report directly to the Chief Executive Officer:
Chief Operating Officer, Transport Operations - David Pickering
iForce and Contract Logistics and Warehousing - Sebastien
Desreumaux
Speedy Freight - Mike Smith
The Logistic People - Simon Edwards
European Operations - Raf Hustinx
Chief Information Officer - John Court
Human Resources Director - Angelina Miley
Legal Director and Company Secretary - Elaine Williams
Corporate Affairs Director - Rupert Nichols
UK Finance Director - David Meir
The Board’s interactions with the business
Spending time with members of the Group’s management team and
visiting our sites enables the Non-executive Directors to develop their
understanding of our operations and the opportunities and the
challenges as the Group expands. Board meetings are regularly held at
the Eddie Stobart Head Office Service Support Centre in Warrington,
with at least one Board meeting a year taking place at another site.
Since the start of 2018 the Non-executive Directors have visited the
iForce operations in Corby, The Pallet Network hub at Minworth, Sutton
Coldfield, the Speedy Freight head office in Knutsford and one of the
Speedy Freight franchisee’s operations.
The Board’s interactions with investors
The Board considers effective communication with its investors to be an
important part of its role. In addition to providing clear and concise
reporting, meetings are held with institutional investors regularly to listen
to their views. Engagement with shareholders and potential investors is
primarily undertaken by the Chief Executive and the Chief Financial
Officer. The Chairman and other Non-executive Directors meet with
investors on request. Shareholders have the opportunity to raise matters
for discussion with the entire Board at the Annual General Meeting.
Strategy Days
As part of the Group’s strategy development process, the Board
held a two-day review session attended by all members of the
Group executive management team. These sessions enabled the
Board to review and provide input on the plans of each of the
Group’s subsidiaries (including for each customer segment) and
the European operations, ensuring these were underpinned by the
Group IT and People strategies.
Culture
Our corporate culture defines who we are and how we do business and
is integral to the success of the Group. Our reputation for customer
service and meeting our customers’ needs across their supply chain,
which is key to the delivery of our strategic objectives, is supported by
our approach to doing business in an ethical and responsible manner.
The Board is committed to upholding high ethical standards and
believes that the tone at the top sets the standard for the rest of the
business. The Board endorses our corporate vision and values, which
shape our culture, and is responsible for our governance structure and
the policies that support our culture. Please see page 24 of the Strategic
report for more information about how we communicate the standards
we expect of our employees and suppliers in doing business.
Performance evaluation
The effectiveness of the Board is essential to the success of the Group.
A performance evaluation process was undertaken based on a series of
questions prepared by the Company Secretary with input from the
Chairman. The questions related to the Board and its Committees and
covered matters such as size of the Board, opportunities to review
strategy; performance of the Chairman, the mix of knowledge and skills
on the Board; succession; quality of reporting to the Board and the
effectiveness of the Board and the Directors. Directors were also asked
for feedback on progress in relation to areas of focus identified in the
previous performance evaluation; succession planning and additional
site visits.
The results of the performance evaluation confirmed that the Board and
its Committees are operating effectively to discharge their responsibilities
and there is an appropriate mix of skills and experience among Board
and Committee members, which facilitates constructive discussion.
Board members indicated that good progress has been made since the
last Board evaluation in relation to the Board’s contribution to succession
planning and increasing frequency of site visits and agreed that focus on
these areas should continue.
Feedback on the strategy days (see above) was extremely positive and
strategy-focused sessions with the senior management team will be
repeated regularly. The Board identified additional areas for focus in the
coming year to enhance further the effectiveness of the Board including
streamlining management reporting in certain areas and supporting
diversity and opportunity initiatives.
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Audit Committee report
External auditor
The Audit Committee oversees the relationship with the external auditor.
Members of the Audit Committee participated in the tender process in
connection with the selection of the new external auditor and the Audit
Committee recommended to the Board the appointment of
PricewaterhouseCoopers LLP as the Group’s external auditor for the financial
year ended 30 November 2018. The Audit Committee has reviewed the
independence of PricewaterhouseCoopers LLP and the conduct of the audit
for the financial year ended 30 November 2018. The Committee concluded
that the external audit process has been effectively run and that
PricewaterhouseCoopers LLP remain independent and has recommended
their appointment by shareholders at the Annual General Meeting in May
2019 as external auditor for the financial year ending 30 November 2019. The
external auditor attends all Committee meetings and the Committee meets
with the external auditor without management present at least once a year.
Internal audit
Following the appointment of BDO LLP to provide internal audit services in
January 2018, an internal audit charter was adopted and an internal audit
plan agreed. BDO LLP has conducted internal audits in relation to a number
of business and control areas across the group, including financial controls,
IT controls and cybersecurity, certain human resources processes and
compliance with specific legal and regulatory obligations. Action plans are
drawn up by management and presented to the Audit Committee in
response to any issues identified in such audits. The Committee has
approved an internal audit charter and has progressed the development of
the 2019 internal audit plan. Internal audits are undertaken on a co-sourced
basis with the internal HSQE team where appropriate.
Internal controls
The Board has delegated responsibility for reviewing the
effectiveness of the Group’s systems of internal control to the Audit
Committee. This covers all material controls including financial,
operational and compliance controls and risk management
systems. In undertaking these reviews, the Committee is supported
by a number of sources of internal assurance from within the Eddie
Stobart business, in particular assurance work done by the HSQE
team, presentations from senior management on risk areas and
internal audits undertaken by BDO LLP.
No material control failings have come to light during the financial
year ended 30 November 2018 and no weaknesses in financial
control resulted in any losses or contingencies that would require
disclosure in the financial statements.
Risk management and internal controls
The Group’s risk management systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives, and can only
provide reasonable and not absolute assurance against material
misstatement or loss.
The Board is responsible for the effectiveness of the Company’s risk
management and internal controls and has delegated to the Committee the
responsibility for oversight of the Company’s risk management framework.
The Committee has received a report on operating policies and procedures
in place, the assurance work done by the Company’s internal assurance
team, HSQE, to check adherence to those polices and tracks follow up
actions taken to address any issues identified. The Committee has also
received internal audit reports from BDO LLP on areas agreed in the internal
audit plan. A whistleblowing policy is in place to encourage employees to
report any malpractice or illegal acts or omissions and is reviewed by the
Committee each year.
Christopher Casey
Chairman of the Audit Committee
28 March 2019
Audit Committee
The Audit Committee consists of Christopher Casey as Chairman and the
two other independent Non-executive Directors.
Meetings and attendance
The Audit Committee met four times during the financial year ended 30
November 2018. All members attended all Committee meetings. The
Committee is scheduled to meet four times during the current financial year.
Committee members meet at least once a year without management
present.
Meetings are usually attended by the Chief Financial Officer and the external
auditor. Other members of senior management attend meetings by invitation.
The internal auditor is invited to report to each meeting. Attendance at
meetings is set out in the table on page 32.
Activities
Activities of the Audit Committee included:
• Reviewing the financial results for the full and half year for approval
by the Board
• Considering the appropriateness of preparing the financial
statements on a going concern basis
• Recommending the appointment of PricewaterhouseCoopers LLP
as the Company’s auditor
• Approving the audit plan and considering the findings of the external
auditor for the financial year ended 30 November 2018
• Recommending the appointment of the internal auditor BDO LLP,
progressing the development of the 2019 internal audit plan and
considering internal audit reports
• Reviewing and considering risk management and internal controls
• Receiving reports on specific risk issues such as insurance risk,
health and safety and cyber security
• Approving polices adopted by the Company such as its treasury
policy
Significant accounting judgements
The Audit Committee considered the areas of significant accounting
judgement in connection with the preparation of the financial statements,
including the following:
•
Impairment of goodwill and intangible assets; judgements were made by
management in relation to key inputs in the value in use discounted cash
flow models when carrying out the goodwill impairment review
• Accounting for consulting and property services; judgements were made
by management in order to determine the appropriate basis and timing of
recognition of revenue deriving from these services
• Accounting for the acquisition of The Pallet Network; judgements were
made by management as part of the purchase price allocation exercise
to identify intangible assets and residual goodwill acquired
• Classification of items as exceptional for the purpose of the disclosure in
the financial statements; judgements were made by management in
relation to exceptional items disclosed in the income statement.
For further information see applicable notes to the financial statements
(page 49 onwards).
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Directors’ Remuneration report
Our approach to remuneration
The Committee aims to ensure that the remuneration of Directors and senior management supports the delivery of the Group’s strategy. We set
remuneration packages at a level that is appropriate for the market the Group operates in whilst taking into account the need to attract and retain
talented people. In addition to base salary, the Executive Directors and senior management have the opportunity to receive long term variable
reward, dependent on achievement of appropriate performance conditions. A review and benchmarking exercise in relation to remuneration of
Executive Directors and senior management is underway as noted below.
Directors’ remuneration in the year ended 30 November 2018
The remuneration of the Directors during the year ended 30 November 2018 is set out below together with comparable figures for the previous
financial year.
Executive Directors
2018
2017
2018
2017
2018
2017
2018
2017
2018
A Laffey
D Harte
407
244
331
220
22
15
14
12
41
24
33
22
-
-
-
-
470
283
Salary/fees*
£,000
Benefits**
£,000
Pension costs***
£,000
Long term incentives****
£,000
Total
£,000
2017
378
254
Non-executive Directors
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
P Swatman
C Casey
S Harley
151
70
60
98
40
39
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
151
70
60
98
40
39
*
This column sets out salary and fees received for the full financial years ended 30 November 2018 and 30 November 2017. Increases in salaries/fees in 2018 were in line with the pay increases for all
employees of Eddie Stobart Logistics plc and Eddie Stobart Limited. During 2017, A Laffey and D Harte were employees of Eddie Stobart Logistics plc from April 2017 and received salaries of £400,000
and £240,000 respectively. Prior to that A Laffey and D Harte were employees of, and received salaries from, subsidiaries of Eddie Stobart Logistics plc. The salaries for Non-executive Directors in 2017
related only to the period from IPO in April 2017.
** Benefits includes private medical insurance, life assurance, car allowance and tax paid by the Company on such benefits.
** A cash allowance was paid to one of the Directors in lieu of a pension contribution.
*** None of the Directors have received cash under any incentive arrangement in the financial ended 30 November 2018. Awards under the MIP were granted to A Laffey and D Harte in the financial
period ended 30 November 2017 but no vesting has taken place by reference to the 2018 financial year. For further details of the MIP and the performance conditions please see note 25 of the
financial statements. The charge to the Company in connection with the MIP awards is set out in note 25 to the financial statements.
This table has been audited.
No payments were made in the financial year ended 30 November 2018 to
past directors and no payments were made in connection with the exit of
any Director.
benefit of professional advice. The outcome of the review will be
implemented in the 2019 financial year as explained below.
Please see section below headed ‘Our approach to remuneration in 2019’
for information about the remuneration of the Executive Directors in 2019.
Membership
The Remuneration Committee consists of Philip H Swatman as
Chairman and the two other Non-executive Directors. All
members are therefore independent Non-executive Directors.
Meetings and attendance
The Committee meets at least once a year and at other times as
appropriate. The Committee met once in the 2018 financial year
and three times since the end of the 2018 financial year.
Activities
Activities of the Remuneration Committee have included:
• Reviewing our approach to remuneration
• Approving the introduction of an annual cash bonus scheme for
Executive Directors and senior management
• Approving the individual packages of Executive Directors
including the package agreed with the new Chief Financial
Officer to join on 1 April 2019 and the participation of the
Executive Directors in the LTIP in the 2019 financial year
• Considering the proposed grant of LTIP awards to members
of the senior management team in in 2019
• Considering and approving the approach to disclosure
of remuneration-related matters
Our approach to remuneration in 2019
Given the growth in the size and complexity of the Eddie Stobart business
since the IPO a comprehensive review and benchmarking of salaries and
short-and long-term incentive schemes has been commenced for
Executive Directors and senior management team members, with the
34
Long-term incentives
Currently the only long-term incentive arrangement in which the Executive
Directors participate is the MIP. The Remuneration Committee has agreed
that it is highly unlikely that the target for the exercise of the options
granted under the MIP will be achievable and that given the importance of
proper incentivisation, the Executive Directors in 2019 should be granted
awards under the LTIP. These awards will be based on performance
criteria related to total shareholder return and earnings per share as
approved by the Remuneration Committee.
The awards to be granted to the Chief Executive under the LTIP will
replace his entitlement under the MIP. The current Chief Financial Officer
will no longer be entitled to exercise his rights under the MIP following his
retirement on 31 March 2019. The new Chief Financial Officer from
1 April 2019 will be entitled to an award under the LTIP for the 2019
financial year. The performance criteria and the value of LTIP awards
granted in 2019 to the Executive Directors will be disclosed in the 2019
remuneration report.
The Executive Directors did not participate in the LTIP in 2017 or 2018 as
the MIP was considered at the relevant time to be an appropriate incentive
scheme for those individuals.
LTIP awards were granted to members of senior management in 2017 but
it was not considered appropriate to grant awards under the LTIP to them
in 2018 because of the level of change in membership of the senior
management team. The acquisition of businesses since has brought new
senior managers into the Group and resulted in differing incentive
schemes being in place across the Group. Also new senior managers
have been recruited externally and allocations of responsibilities have
been changed to align with our strategic priorities.
It is intended that LTIP awards will be granted to senior managers in 2019
as part of the overall remuneration review and benchmarking exercise
referred to above. In assessing the grant of awards to senior managers in
2019 the Remuneration Committee will take into account that 50 per cent
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of the LTIP awards granted to senior managers in 2017 have lapsed (as
the target of achievement of an EBITDA target for the 2018 financial year
was not achieved) and it is highly unlikely that the target the for vesting of
the remaining 50% of these awards (linked to total shareholder return over
a three year period) will be achieved.
In line with guidelines issued by investor representative bodies, no more
than 10% of the issued ordinary share capital of the Company may be
issued or committed to be issued under employee share based incentive
schemes (which includes the LTIP and the SIP (described below)) in the
ten year period from the date of IPO. No more than 5% of the issued
ordinary share capital may be issued or committed to be issued under
discretionary share plans in relation to senior executives of the Company
in that period.
Annual bonus
A cash bonus scheme for the 2019 financial year for the Chief Executive,
the new Chief Financial Officer and the senior management team is in the
final stages of approval and will be implemented as the first element of the
overall remuneration review referred to above. The amounts of cash
bonuses payable will be based on achievement of financial and non-
financial performance measures to be approved by the Remuneration
Committee, which will be disclosed in the 2019 annual report. The
maximum potential bonus opportunity for the Executive Directors will be
an appropriate multiple of salary based on benchmarking data for the
Chief Executive and for the new Chief Financial Officer (pro-rated).
Salaries
The salaries of the Chief Executive and the fees payable to the Non-
executive Directors will increase in 2019 only in line with any pay increases
for all employees of Eddie Stobart Logistics plc and Eddie Stobart Limited.
The new Chief Financial Officer will receive a salary of £280,000 (pro-rated)
plus a pension contribution equal to 15% of basic salary, a car allowance
and other medical and life assurance benefits.
As at the date of this report, the fees payable to the Non-Executive
Directors are as follows:
• Non-executive Director, Chairman of the Board and Remuneration
Committee – £153,000 per annum
• Non-executive Director, Chairman of the Audit Committee – £71,400
per annum
• Non-executive Director – £61,200 per annum
Directors’ interests in shares
The table below shows the interests of Directors in shares as at 30
November 2018, all of which are beneficial except where noted.
Executive Directors
A Laffey
D Harte
Non-executive Directors
P Swatman*
C Casey
S Harley
Total interest
in shares
Percentage of
share capital as at
30 November 2018
875,312
312,656
25,000
7,500
10,000
0.2%
0.1%
0%
0%
0%
12,500 shares are beneficially owned by P Swatman’s wife.
*
** No Directors disposed of shares in the 2018 financial year. The Company’s share capital was
increased at the time of the acquisition of The Pallet Network, resulting in the percentage
holdings of Directors as at 30 November 2018 being lower than as at 30 November 2017.
As at 27 March 2019 the latest practicable date prior to the approval of this
document, there had been no change in the interests of Directors in the
shares of the Company.
Service contracts and letters of appointment
The Executive Directors have service contracts of indefinite duration
terminable on not less than 12 months’ notice by either party.
The Non-executive Directors have letters of appointment for an initial three
year period, continuing thereafter subject to termination upon at least three
months’ notice by either party.
The appointment dates of the Directors are set out below:
P H Swatman
C Casey
S Harley
A Laffey
D Harte
4 April 2017
18 April 2017
4 April 2017
4 April 2017
4 April 2017
Letters of appointment of the three Non-executive Directors, and the
service contracts of Alex Laffey, Chief Executive and Damien Harte, Chief
Financial Officer are dated 18 April 2017.
Share-based incentives schemes
Management Incentive Plan (“MIP”)
On Admission the Executive Directors subscribed for A ordinary shares
(MIP Shares) in a subsidiary of the Company which shares can, subject to
certain conditions, be sold to the Company in future at an aggregate value
equivalent to a maximum of 8% (relevant percentage) of the increase in
shareholder value over a share value hurdle (“hurdle”). The hurdle is 10%
above the placing price per share on Admission and will increase on a
compounding basis by 10% per annum for each of the three years from
the date the MIP Shares were issued.
At the end of the three year period following the issue of the MIP Shares,
the Executive Directors could elect to sell the MIP Shares to the Company
or the Company can elect to purchase them for cash or in return for
shares in the Company (at the Company’s discretion). The value of the
MIP Shares on the date the election is made (Exercise Date) will be the
Relevant Percentage multiplied by the amount by which the Company’s
Ordinary Share price exceeds the Hurdle (based on a 90 day average
share price) multiplied by the number of issued ordinary shares at
Admission. If the Company elected to purchase the MIP Shares in return
for ordinary shares in the Company the number of ordinary shares will be
based on the MIP Share value and share price of the ordinary shares on
the Exercise Date.
No further MIP shares can be issued.
Long-Term Incentive Plan (“LTIP”)
The LTIP was established to reward members of the senior management
team by offering them nil-cost options. The LTIP has been designed
flexibly to be capable for future use by the Company and not only for the
award of nil-cost options. The LTIP requires participants who have
received an award to appoint Link Market Services Trustees Limited to
hold applicable ordinary shares on trust for the LTIP participant for the
applicable holding period. Please see note 25 to the financial statements
for details of the performance conditions for vesting of LTIP awards.
As noted above, LTIP awards were granted to members of the senior
management team in the 2017 financial year.
Share Incentive Plan (“SIP”)
A UK HMRC-approved Share Incentive Plan was established on
Admission and a grant of free shares was made to employees in order to
ensure employees are incentivised and their interests aligned with those of
the Company. No further awards have been made under this scheme. The
trustee is Link Market Services Trustees, an independent professional
body, which has acquired 1,687,500 shares which are held in trust for the
benefit of the participating employees. Eligible employees will forfeit their
shares if they cease to be employed by the Eddie Stobart Group during
the three year period from Admission, except in permitted circumstances.
The SIP has been designed flexibly to be capable of future use by the
Company and not just for the free share offer at the time of Admission.
Further information on the share-based incentive schemes is included in
note 25 on page 78 of the financial statements.
Philip H Swatman
Chairman, Remuneration Committee
28 March 2019
Eddie Stobart Logistics plc Annual Report Accounts 2018
35
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Directors’ report
The Directors submit their report and the audited consolidated financial
statements of Eddie Stobart Logistics plc for the year ended
30 November 2018.
Results
The profit before tax for the year ended 30 November 2018 from
continuing operations was £23.6 million (2017: £9.9 million).
Interests in voting rights
As at 27 March 2019, the latest practicable date prior to the approval of
this document, the Company had been notified of the following interests
held by significant shareholders amounting to 3% or more of the voting
rights attaching to the Company’s issued share capital:
Significant Shareholders
Percentage of Voting Rights Held
Dividends
The Directors recommend a final dividend for the year of 4.76 pence per
share which, together with the interim dividend of 1.54 pence per share
results in a total dividend for the year of 6.30 pence per share (2017: 5.8
pence). If approved by shareholders the total amount of the dividends
paid in respect of the financial year ended on 30 November 2018 will be
£23.9 million (2017: £20.8 million). The final dividend will be payable on
7 June 2019 subject to shareholder approval. The record date is 10 May
2019 and the ex-dividend date is 9 May 2019.
Principal activities, business review and future
developments
The Strategic report on pages 2 to 27 describes the principal activities
of the Company and its subsidiaries, a review of the business for the
financial year ended 30 November 2018 and an indication of likely future
developments.
Directors
The Directors of the Company who were in office during the year and up
to the date of signing the financial statements were:
P Swatman
C Casey
S Harley
A Laffey
D Harte
(appointed 4 April 2017)
(appointed 18 April 2017)
(appointed 4 April 2017)
(appointed 4 April 2017)
(appointed 4 April 2017)*
Woodford Asset Management Limited
Greenwhitestar Topco Limited
Stobart Group Limited
AXA Investment Managers Limited
FIL Limited
Invesco Asset Management Limited
Schroders Investment Management Limited
25%
14.2%
11.8%
6.6%
5.6%
4.8%
3.5%
Employee engagement
Our policy is to employ the best people irrespective of race, gender,
nationality, disability or sexual orientation. Consultation with employees
or their representatives occur regularly, with the aim of ensuring
employees’ views are taken into account when decisions are made that
are likely to affect their interests. Further information on our employee
engagement activities is set out on page 22. Information on the SIP
under which many of our employees hold shares, is given on page 35.
Factors affecting the performance of the Company are shared with
employees as part of the notifications of half-yearly and annual results
and updates about significant events on our internal intranet.
Disabled employees
Applications for employment by disabled persons are given full and fair
consideration, having regard to their particular aptitudes and abilities. In
the event an employee becomes disabled, every effort is made to retrain
them in order that their employment may continue. Our policy is that
opportunities for training, career development and promotion should be
available to all employees.
*
D Harte has resigned with effect from 31 March 2019. Anoop Kang has been appointed
Chief Financial Officer and a Director of the Company with effect from 1 April 2019.
Directors’ remuneration, share options, long-term executive plan awards,
pension contributions and benefits are set out in the Remuneration
report on pages 34 to 35. The Company has Directors’ and Officers’
liability insurance in place.
Health, safety and wellbeing
The Group recognises the importance of maintaining high standards of
health, safety and wellbeing for everyone working within our business.
We aim to achieve high standards of health and safety management
across all our business activities. Further information on our approach
to health and safety is set out on page 24.
Share capital
Details of the authorised and issued share capital of the Company are
set out in note 24 to the financial statements.
Financial risk management
Information in respect of the financial risk management objectives and
policies of the Group, is contained in note 21 of the financial statements.
Environmental policy
Maintaining and improving the quality of the environment in which we live
is an important concern for the Company. We aim to minimise our
impact on the environment wherever this is practical. Further information
on our initiatives to reduce our impact on the environment is set out on
page 25.
Political donations
The Group made no political donations during the year.
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Research and development activities
We undertake research and development activities, predominantly
in connection with our continued investment in IT systems and
technologies that help us deliver logistics solutions to our customers.
Related party transactions
Any related party transactions required to be disclosed under the AIM
rules are disclosed in note 27 to the financial statements.
Disclosure of information to auditor
The Directors in office on 28 March 2019 have confirmed that, as far
as they are aware, there is no relevant audit information of which the
auditors are unaware. Each of the Directors has confirmed that he has
taken all reasonable steps to make himself aware of any relevant audit
information and to establish that it has been communicated to the
auditor.
Directors’ indemnities
The Company’s articles of association allow the indemnification of
Directors out of the assets of the Company to the extent permitted by
law and indemnities in favour of the Directors have been entered into
during the year.
Modern Slavery Act
Our Modern Slavery Act statement, which sets out our commitment to
preventing modern slavery and human trafficking from occurring within
any part of our business and supply chain, is available on our website
at www.eddiestobart.com.
Executive and the Chief Financial Officer although the Chairman is
available to meet investors if requested. Shareholders have the
opportunity to raise matters for discussion the entire Board at the AGM.
Going concern
The Directors are satisfied that the Group has adequate resources to
continue in operation for the foreseeable future and that it is appropriate
to prepare the financial statements on the going concern basis. Please
see note 1 to the financial statements on page 49 for further information.
This Directors’ report was approved by the Board on 28 March 2019
and signed by its order by;
Elaine Williams
Company Secretary
28 March 2019
Eddie Stobart Logistics plc (registered office)
Stretton Green Distribution Park,
Langford Way,
Appleton,
Warrington,
WA4 4TQ
Annual General Meeting
The Annual General Meeting is to be held on 28 May 2019 at Stretton
Green Distribution Park, Langford Way, Appleton, Warrington, WA4 4TQ.
Further details will be set out in the Notice of Annual General Meeting
which will be sent to shareholders separately.
European branches
Stobart Automotive Belgium
Eikelaarstraat 28,
3600 Genk Belgium
Post balance sheet events
No post balance sheet events have been disclosed in the financial
statements (see note 30).
Engagement with stakeholders
The Company keeps up to date with the views of its shareholders by
frequent dialogue and meetings with key investors and responding
promptly to any questions or issues raised by shareholders.
Engagement with shareholders is primarily undertaken by the Chief
Stobart Automotive
Pripotocni 1519/10a,
100 00 Prague 201, Czech Republic
Eddie Stobart Logistics plc Annual Report Accounts 2018
37
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the group
financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and company
financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”, and applicable law). Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the
Group and Company for that period. In preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable IFRSs as adopted by the European Union have been followed for the group financial statements and United Kingdom
Accounting Standards, comprising FRS 101, have been followed for the company financial statements, subject to any material departures
disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in
business.
The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the
financial statements comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
This responsibility statement was approved by the Board on 28 March 2019 and signed on behalf of the Board and each Director by;
Damien Harte
Chief Financial Officer
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Independent auditor’s report
to the members of Eddie Stobart Logistics plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Eddie Stobart Logistics plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the Company’s affairs as at 30 November 2018 and of the Group’s profit and cash flows for the year then
ended;
the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union;
the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
•
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Consolidated
and Company Statements of Financial Position as at 30 November 2018; the Consolidated Income Statement, the Consolidated Statement of
Comprehensive Income, the Consolidated Cash Flow Statement, and the Consolidated and Company Statements of Changes in Equity for the year
then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
Our audit approach
Overview
• Overall Group materiality: £1.5m (2017: £1.1m), based on 5% of profit before tax and exceptional
items (2017: 5% of profit before tax and exceptional items).
• Overall Company materiality: £0.23m (2017: £1m), based on 5% of profit before tax (2017: gross
assets).
• Our audit focused on those entities with the most significant contribution to the Group’s results. Of the
Group’s 31 reporting components, we subjected 10 to full scope audits for Group purposes. The
Group team instructed component auditors as to the significant areas to be covered, including the
relevant risks detailed below and the information to be reported.
• The Group team allocated the component materialities which ranged from £0.23m to £1.43m, having
regard to the mix and size and risk profile of the Group across the components.
• The components within the scope of our work accounted for 97%* of Group revenue and 96%* of the
Group’s earnings before tax.
*Including consolidation journal entries
Key audit matters relate to:
• Impairment of goodwill and intangible assets
• Accounting for consultancy and property services
• Accounting for the acquisition of The Pallet Network Group
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular,
we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain.
As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material misstatement due to fraud.
Eddie Stobart Logistics plc Annual Report Accounts 2018
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Independent auditor’s report
to the members of Eddie Stobart Logistics plc continued
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and intangible assets
Refer to note 1 (Principal Accounting Policies) and note 14 to the
accounts.
The Group has a material level of goodwill (£189.7m) and intangible
assets (£122.5m) at 30 November 2018.
When carrying out the goodwill impairment review, determining the
recoverable amount for each cash-generating unit (“CGU”) requires a
number of judgements over certain key inputs in the value in use
discounted cash flow models. These include budgets, forecasts,
discount rates and long term growth rates.
Accounting for consultancy and property services
Refer to note 1, the Revenue accounting policy part (e) and (f)
(Principal Accounting Policies).
The Group has earned revenues in relation to consultancy and
property services during the year. Certain individual transactions
arising from consultancy and property service provision require
management to make judgements in order to determine the
appropriate basis and timing of recognition of income deriving from
those services, including their associated presentation.
Acquisition of The Pallet Network Group
Refer to note 1 (Principal Accounting Policies) and note 6.
During the year, ESLL Group Limited (ESLL) acquired 100% of the
share capital of The Pallet Network Group Limited on a cash and debt
free basis. This acquisition has had a material impact on the financial
statements, resulting in the recognition of goodwill (£17.4m), intangible
assets (£33.3m) and amounts owing in respect of deferred
consideration (£8.7m).
Management engaged a third party expert to perform a purchase price
allocation exercise to identify the relevant intangible assets and
residual goodwill acquired. There are a number of key assumptions
and judgements which form part of purchase price allocation exercise.
The following procedures were performed:
• We assessed the accuracy of the Group’s historical forecasts by
comparing management’s forecast for the prior year against actual
results. Where relevant we factored this into our sensitivity analysis;
• We engaged an internal valuation expert to review the model and the
discount factor, and challenged management on the long term growth
rate and the discount rate. We sensitised the model to adjust the long
term growth rate and found no issues. The discount rate applied by
management is within the acceptable range;
• We challenged management on the cash flow forecasts and
corroborated any significant growth assumptions;
• We reviewed management’s assessment of the CGUs and
determined these to be reasonable; and
• We performed sensitivities relevant to the individual CGUs to assess
the implications of the Group’s assumptions not being met. We
assessed the remaining headroom between the recoverable and
carrying amount and noted no indicators for impairment.
Specifically for intangible assets:
• We considered whether the development of new software or systems
superseded or impaired any of the existing assets on the balance
sheet and none were noted; and
• We considered whether any specific indicators of impairment exist, for
example loss of key customers, and none were noted.
The following procedures were performed:
• We challenged management as to whether any of the revenue earned
should be spread over the term of the associated commitment or
recognised in the current year. It was concluded that the latter was the
appropriate treatment;
• We obtained third party evidence, including signed contracts, bank
statements and legal correspondence to support the revenue
recognised;
• We performed a review of the parties involved in the transactions to
determine whether any party involved is a related party. No related
parties were identified; and
• We have considered the adequacy of the Group’s disclosures in
respect of the accounting policies and the key areas of judgement in
respect of revenues earned on consultancy and property services.
The following procedures were performed:
• We engaged an internal valuation expert to review the methodology
and key assumptions applied in the purchase price allocation
exercise;
• We challenged management and the third party expert on the use of
specific discount rates used within the model. The rate in relation to
customer related intangibles was subsequently adjusted which
altered the allocation between those intangibles and residual
goodwill;
• We reviewed the sale and purchase agreement to ensure consistency
with management’s accounting;
• We reviewed the treatment of costs associated with the acquisition
and confirmed that they have been treated appropriately;
• We have agreed the amount of consideration accounted for as
remuneration to be reasonable, including the period over which the
remuneration is recognised; and
• We reviewed the disclosures within the financial statements and
considered the adequacy of the disclosures in respect of the
acquisition to be reasonable.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
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How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
The Group is managed on a reporting entity basis, with 31 reporting components, including the Company. The Group’s trading entities operate their
own accounting function, which reports to the Group finance team. Consistent with the Group’s operations, we scoped our audit at a reporting
component level, performing a full scope audit for all financially significant components.
We have obtained reporting from the component auditors, engaged in key meetings including attendance at the clearance meetings and have
reviewed the working papers.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Group financial statements
Company financial statements
£1.5m (2017: £1.1m).
£0.23m (2017: £1.0m).
5% of profit before tax and exceptional items.
5% of profit before tax (2017: gross assets).
We have applied the relevant performance
measure of profit before tax and exceptional
items as our benchmark because, in our view,
this is the most relevant metric against which
the performance of the Group is most
commonly measured and is disclosed on the
face of the Consolidated Income Statement.
In our view, users focus on the consolidated
results of the Group rather than the individual
results of the Company. Notwithstanding, we
used a measure consistent with that of the
Group.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality
allocated across components was between £0.23m and £1.43m. Certain components were audited to a local statutory audit materiality that was also
less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.07m (Group audit) (2017:
£0.07m) and £0.07m (Company audit) (2017: £0.07m) as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
ISAs (UK) require us to report to you when:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the
Group’s and Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.
We have nothing to report in respect of the above matters.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Company’s ability to
continue as a going concern. For example, the terms on which the United Kingdom may withdraw from the European Union, are not clear, and it is
difficult to evaluate all of the potential implications on the group’s trade, customers, suppliers and the wider economy.
Eddie Stobart Logistics plc Annual Report Accounts 2018
Eddie Stobart Logistics plc Annual Report Accounts 2018
41
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Independent auditor’s report
to the members of Eddie Stobart Logistics plc continued
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly,
we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain
opinions and matters as described below
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 30 November 2018 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities set out on page 38, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also
responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
42
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Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Philip Storer (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
28 March 2019
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Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Consolidated Income Statement
for the year ended 30 November 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses: before amortisation of acquired intangibles and exceptional items
Amortisation of intangibles
Administrative expenses: before exceptional items
Administrative expenses: exceptional items
Total administrative expenses
Profit from operating activities
Profit from operating activities: before exceptional items
Finance income
Finance expenses: before exceptional items
Finance expenses: exceptional items
Total finance expense
Net finance expense
Share of profit from equity accounted investees, net of tax
Profit before tax
Income Tax expense
Profit for the year from continuing operations
Profit attributable to:
Eddie Stobart Logistics plc
Non-controlling interests
Profit for the year
Earnings per share:
Basic – total operations
Diluted – total operations
The accompanying notes form part of the financial statements.
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
Note
3
843,141
(662,682)
623,924
(485,656)
7,14
5
4
9
9
5
15
7
10
180,459
(129,183)
(13,818)
138,268
(96,137)
(11,137)
(143,001)
(7,774)
(107,274)
(4,414)
(150,775)
(111,688)
29,684
37,458
15
(6,110)
(489)
26,580
30,994
5
(9,650)
(7,753)
(6,599)
(17,403)
(6,584)
524
23,624
(7,379)
(17,398)
733
9,915
(5,030)
16,245
4,885
16,245
-
3,931
954
16,245
4,885
12
12
4.4p
4.4p
1.2p
1.2p
44
Consolidated Statement of Comprehensive Income
for the year ended 30 November 2018
Profit for the year
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences – foreign operations
Foreign currency translation differences – equity-accounted investees
Effective portion of changes in fair value cash flow hedges
Tax on items that are or may be reclassified subsequently to profit or loss
Total items that are or may be reclassified subsequently to profit or loss
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year
The accompanying notes form part of the financial statements.
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
Note
16,245
4,885
15
655
(89)
-
-
566
16,811
16,811
-
16,811
(175)
20
1,546
(340)
1,051
5,936
4,982
954
5,936
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Consolidated Statement of Changes in Equity
for the year ended 30 November 2018
Attributable to equity holders of the Company
Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Hedge
reserve
£’000
Translation
reserve
£’000
Share
options
reserves
£’000
Own
shares
£’000
Retained
earnings
£’000
Non
controlling
interest
£’000
Total
£’000
Total
equity
£’000
703 64,647
-
-
-
-
-
-
-
(1,546)
(332)
-
1,546
-
(155)
-
-
-
- 24,127 87,599
1,831
89,430
-
-
3,931
3,931
(340) 1,051
954
-
4,885
1,051
-
-
-
-
-
–
–
–
–
-
-
-
-
-
-
-
-
-
-
-
-
-
1,079
-
- 64,647
-
(2,700)
-
-
(2,064) 126,019
2,700
1,079
(5,011) (5,011)
-
-
- 126,019
-
1,079
-
(5,011)
(487) 1,079 (2,700) 87,990 214,668
2,785 217,453
–
–
–
–
–
–
–
–
(2,280) (2,280)
–
–
(2,585)
(200)
(4,865)
(200)
– (2,280) (2,280)
(2,785)
(5,065)
(487) 1,079 (2,700) 85,710 212,388
– 212,388
-
566
-
-
-
-
-
-
-
-
1,679
-
-
-
-
-
-
-
16,245 16,245
-
566
- 28,959
(2,507) (2,507)
1,679
-
(21,572) (21,572)
-
-
-
-
-
-
16,245
566
28,959
(2,507)
1,679
(21,572)
79
2,758 (2,700) 77,876 235,758
- 235,758
Balance at 1 December 2016
Profit for year ended 30 November 2017
Total other comprehensive income
Transactions with owners of the Company:
Cancellation of share premium (note 24)
Issue of capital (net of costs) (note 24)
Share based payment charges
Dividends paid
-
(64,647)
2,876 117,257
-
-
-
-
-
7,950
-
-
Changes in ownership interests in
subsidiaries:
Adjustment for minority interests
Dividends paid
Total changes in ownership interests in
subsidiaries
3,579 117,257 7,950
–
–
–
–
–
–
–
–
–
Balance at 30 November 2017
3,579 117,257 7,950
Profit for year ended 30 November 2018
Total other comprehensive income
Issue of capital (net of costs) (note 24)
Foreign currency movement
Share based payment charges
Dividends paid
-
-
-
-
214 28,745
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 November 2018
3,793 146,002 7,950
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Consolidated Statement of Financial Position
as at 30 November 2018
Assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Investments in equity accounted investees
Deferred tax asset
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Loans and borrowings
Trade and other payables
Current tax liability
Provisions
Non-current liabilities
Loans and borrowings
Trade and other payables
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Translation reserve
Own shares
Share option reserve
Retained earnings
Total equity attributable to owners of the Company
Non-controlling interests
Total equity
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
Note
13
14
14
15
23
16
17
18
21
19
22
21
20
23
24
24
24
66,280
189,730
122,482
1,576
5,850
59,979
172,353
99,147
1,276
5,976
385,918
338,731
3,126
231,166
5,234
2,396
148,979
11,936
239,526
163,311
625,444
502,042
(35,908)
(169,558)
(7,038)
(3,454)
(7,767)
(128,218)
(2,770)
(3,434)
(215,958)
(142,189)
(128,989)
(25,265)
(19,474)
(113,666)
(18,822)
(14,977)
(173,728)
(147,465)
(389,686)
(289,654)
235,758
212,388
3,793
146,002
7,950
79
(2,700)
2,758
77,876
235,758
-
3,579
117,257
7,950
(487)
(2,700)
1,079
85,710
212,388
-
235,758
212,388
The Consolidated Group Financial Statements on pages 44 to 82 were approved by the Board of Directors on 28 March 2019 and were signed
on its behalf by
Damien Harte
Chief Financial Officer
Company number 08922456
Eddie Stobart Logistics plc Annual Report Accounts 2018
47
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Consolidated Cash Flow Statement
for the year ended 30 November 2018
Cash flows from operating activities
Profit for the year from continuing operations
Adjustments for:
Net finance costs
Share of profit of equity-accounted investees, net of tax
Tax expense
Depreciation
Amortisation of intangible assets
Gain on sale of property, plant and equipment
Equity settled share-based payment expenses
Other non-cash exceptional items
Foreign exchange
Changes in:
Inventories
Trade and other receivables
Trade and other payables
Deferred income/revenue, including government grant
Cash generated from operating activities
Net interest paid
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Proceeds from sales of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Purchase of property, plant and equipment
Purchase of intangibles
Interest received
Dividends received from equity accounted investees
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital (net of costs)
Draw down of revolving finance facility
Draw down of new borrowings (net of costs)
Acquisition of non-controlling interests
Repayment of financing facility, net of costs
Repayment of bank borrowings
Payment of capital element of finance lease liabilities
Dividends paid to minority interests during the year
Prior year and interim dividends paid during the year
Net cash generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the start of the financial year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the financial year
The accompanying notes form part of the financial statements
48
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
Note
16,245
4,885
9
15
10
13
7,14
4
4
15
21
11
6,095
(524)
7,379
7,582
13,818
(2,779)
2,004
(236)
695
(730)
(63,570)
21,534
-
7,513
(7,154)
(3,704)
9,645
(733)
5,030
6,797
11,137
(2)
1,079
3,685
(238)
(39)
(14,761)
5,218
(2,469)
29,234
(7,678)
(2,667)
(3,345)
18,889
3,570
(22,127)
(14,179)
(3,716)
15
135
3,783
(43,220)
(8,865)
(770)
5
416
(36,302)
(48,651)
28,960
28,889
23,355
-
(21,530)
-
(5,077)
-
(21,572)
118,019
-
98,434
(5,050)
(145)
(171,232)
(7,466)
(200)
(5,011)
33,025
27,349
(6,622)
11,936
(80)
(2,413)
14,083
266
(5,234)
11,936
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Notes to the Consolidated Financial Statements
for the year ended 30 November 2018
1. Principal Accounting Policies
Eddie Stobart Logistics plc (the Company) is a company limited by share capital, incorporated and domiciled in the United Kingdom. The address of the
Company’s registered office is Stretton Green Distribution Park, Langford Way, Appleton, Warrington, Cheshire, England, WA4 4TQ. The Consolidated
Financial Statements of the Company as at and for the year ended 30 November 2018 and the comparative year ended 30 November 2017 comprise
the financial statements of the Company and its subsidiaries (referred to as the ‘Group’) and the Group’s interest in associates and jointly controlled
entities. The Group and its subsidiaries provide value added logistics, distribution and warehousing services for its clients across a wide range of service
sectors and industries.
Statement of compliance
The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the
International Financial Reporting Interpretation Committee (‘IFRIC’) interpretations endorsed by the EU and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Basis of preparation
The Group and Company accounting policies set out below have been applied consistently to all years in these Consolidated Financial Statements,
and have been applied consistently by Group entities unless otherwise stated.
Going concern
The Consolidated Financial Statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of these
financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.
To assist in this process, Directors have completed a budgeting process for the financial year ending 30 November 2019, incorporating a detailed
income statement, cash flow analysis and statement of financial position, and a forecasting exercise for a period of six months beyond this.
The Directors have assessed the funding requirements of the Group and the Company and compared them to banking facilities available. This
exercise has not identified any issues that would suggest any significant risk to the Group’s continued trading position and the forecasts demonstrate
that the Group is expected to remain within its existing finance facilities and their associated covenants. The Directors have therefore adopted the
going concern basis in preparing these Consolidated Financial Statements.
Basis of measurement
The Consolidated Financial Statements have been prepared on the historical cost basis, except derivative financial instruments which are measured
at fair value.
The Directors have considered the fair values of all debtors and creditors and have determined that their fair values equate to their carrying values.
Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the Group and its subsidiaries as at 30 November 2018. Control is
identified when the Group has rights to variable returns from its involvement with the investee and has the ability to affect those returns from its power
over the investee. The Group controls an investee where:
• Power over the investee exists (the ability to direct the relevant activities of the investee)
• Exposure or rights to variable returns via its involvement with the investee exists
• The Group has the ability to use its power over the investee to affect those returns
There is a general presumption that majority voting rights results in control, however where the Group has less than a majority of voting rights, or
similar rights, the Group considers all relevant fact and circumstances in assessing whether it has the power over an investee including:
• Contractual arrangements with the other vote holders of the investee
• Rights arising from the other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group reassesses whether or not it controls the investee if facts and circumstances indicate that there are changes to elements of control.
Consolidation arises when the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Assets,
liabilities, income, expenses and cash flows of a subsidiary which has been acquired or disposed of during the year are included in the Consolidated
Financial Statements from the date the Group gained control and until the date the Group ceased control of the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to any
non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the
Financial Statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
The Financial Statements of subsidiaries used in the preparation of the Consolidated Financial Statements are prepared for the same reporting year
as the Parent Company, except for the iForce Group, which operates a 52 week reporting period ending 26 November 2018. A change in the
ownership interest of a subsidiary without loss of control is accounted for as an equity transaction. Any investment retained is recognised at fair
value.
Eddie Stobart Logistics plc Annual Report Accounts 2018
49
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
1. Principal Accounting Policies continued
Basis of consolidation (continued)
i. Business combinations - business combinations are accounted for using the acquisition method as at the acquisition date (when control is
transferred to the Group). The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business
combination are expensed as incurred.
ii. Non-controlling interests - for each business combination, the Group measures any non-controlling interest in the acquiree at its proportionate
share of the acquiree’s identifiable net assets, which are generally at fair value.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their
capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No
adjustments are made to goodwill and no gain or loss is recognised in profit or loss.
iii. Subsidiaries - subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the Consolidated Financial
Statements from the date that control commences until the date that control ceases.
iv. Loss of control of a subsidiary - on a loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the
Statement of Comprehensive Income.
v. Investments in associates and jointly-controlled entities (equity-accounted investees) - associates are those entities in which the Group has
significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the
Group holds between 20% and 50% of the voting power of another entity. Jointly-controlled entities are those entities over whose activities the
Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.
Investments in associates and jointly-controlled entities are accounted for under the equity method and are recognised initially at cost. The cost of
the investment includes transaction costs.
The Consolidated Financial Statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted
investees from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When
the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, including any long-term
interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an
obligation or has made payments on behalf of the investee.
vi. Transactions eliminated on consolidation - intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity
accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in
the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Company’s Board of Directors, collectively the
Group’s chief operating decision maker, to assess performance and allocate capital or resources.
Foreign currency
i. Foreign currency transactions - transactions in foreign currencies are translated to the respective functional currencies of Group entities at
exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost at the
beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the
exchange rate at the end of the year.
ii. Foreign operations - the assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are
translated at exchange rates at the reporting date. The income and expenses of foreign operations are translated at exchange rates at the dates
of the transactions. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation
reserve (translation reserve) in equity. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the
cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
Financial instruments
i. Non-derivative financial assets - loans and receivables, including financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables
comprise cash and cash equivalents, and trade and other receivables. Cash and cash equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by
the Group in the management of its short-term commitments.
50
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1. Principal Accounting Policies continued
ii. Non-derivative financial liabilities - financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to
the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged,
cancelled or expire. The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are
recognised initially at fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial
liabilities comprise loans and borrowings, debt securities issued, bank overdrafts, and trade and other payables.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash
and cash equivalents for the statement of cash flows.
iii. Share capital - ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as
a deduction from equity, net of any tax effects.
iv. Derivative financial instruments and hedging – the Group uses interest rate swap derivative financial instruments to hedge its risks associated with
interest rate fluctuations. All derivative financial instruments are initially recognised and subsequently remeasured at fair value. Derivatives are
carried as assets when the fair value is positive and as liabilities when the fair value is negative. The fair value of interest rate swap contracts is
determined by reference to market values for similar instruments. For those derivatives designated as hedges and for which hedge accounting is
appropriate, the hedging relationship is documented at its inception. This documentation identifies the hedging instrument, the hedged item or
transaction, the nature of the risk being hedged and how effectiveness will be measured throughout its duration. Such hedges are expected at
inception to be highly effective.
Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the consolidated
income statement. The treatment of gains and losses arising from revaluing derivatives designated as hedging instruments depends on the
nature of the hedging relationship, which in the case of the single financial instrument held by the Group is a cash flow hedge.
Hedges are classified as cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction. For cash flow hedges, the effective portion of the gain or
loss on the hedging instrument is recognised in other comprehensive income, while the ineffective portion is recognised in the consolidated
income statement. Amounts previously recognised in other comprehensive income are transferred to the consolidated income statement in the
period in which the hedged item affects profit or loss, such as when a forecast sale occurs. However, when the forecast transaction results in the
recognition of a non-financial asset or liability, the amounts previously recognised in other comprehensive income are included in the initial
carrying amount of the asset or liability.
If a forecast transaction is no longer expected to occur, amounts previously recognised in other comprehensive income are transferred to the
consolidated income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its
designation as a hedge is revoked, amounts previously recognised in other comprehensive income remain in equity until the forecast transaction
occurs and are then transferred to the consolidated income statement or included in the initial carrying amount of a non-financial asset or liability
as above.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct
labour, any other costs directly attributable to bringing the assets to a working condition for their intended use including any directly attributable
capitalised borrowing costs and an estimate of any future costs of dismantling and removing the items and restoring the site on which they are
located.
Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of self-constructed assets, from the
date that the asset is completed and ready for use. Depreciation is calculated to write off the cost of items of property, plant and equipment less their
estimated residual values using the straight-line basis over their estimated useful lives.
Depreciation is generally recognised within administrative expenses in profit or loss, unless the amount is included in the carrying amount of another
asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives for significant items of property, plant and equipment are as follows:
• Land and buildings: 1%-5% per annum straight line, or period of lease if shorter
• Plant and machinery: 3-7 years straight line and between 15%-20% reducing balance as appropriate
• Fixtures fittings and equipment: 3-7 years straight line and between 15%-33% reducing balance as appropriate
• Commercial vehicles: 3-10 years straight line and 25% reducing balance as appropriate
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
1. Principal Accounting Policies continued
Assets under construction
Assets under construction at operating depots are capitalised as assets-under-construction. The cost of assets-under-construction comprises its
purchase price and any costs directly attributable to bringing it into working condition for its intended use. Assets-under-construction amounts
related to development projects are presented as a separate asset within PP&E. Assets-under-construction are not depreciated. Once the asset is
complete and available for use, depreciation is commenced.
Intangible assets and goodwill
These comprise software development and implementation costs (internally generated intangible assets), trademarks and brands and are stated at
cost less accumulated amortisation and impairment (see below). Costs incurred in developing the Group’s own brands are expensed as incurred
and are included within admin expenses.
Separately acquired brands and customer lists are shown at historical cost. Software, brands and customer lists acquired in a business combination
are recognised at fair value at the acquisition date.
These assets are deemed to have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the
straight-line method to allocate the cost over their estimated useful lives.
Goodwill that arises on the acquisition of subsidiaries is presented within intangible assets. The measurement of goodwill at initial recognition is
explained in the basis of consolidation policy set out above. Subsequently, goodwill is measured at cost less accumulated impairment losses.
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs
are amortised over the estimated useful lives.
Costs associated with maintaining computer software programmes are recognised as an expense as incurred.
it is technically feasible to complete the software product so that it will be available for use;
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are
recognised as intangible assets when the following criteria are met:
•
• management intends to complete the software product and use or sell it;
•
•
• adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
•
the expenditure attributable to the software product during its development can be reliably measured
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
there is an ability to use or sell the software product;
it can be demonstrated how the software product will generate probable future economic benefits;
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over the estimated useful lives.
Except for goodwill, intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they
are available for use.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of the asset.
These are as follows:
• Software development and licences; 3 years
• Rights to trademarks, brand names and customer relationship lists; 6 to 15 years
• Franchise contracts; 10 to 15 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Impairment
i. Non-derivative financial assets - a financial asset not classified at fair value through profit or loss, including an interest in an equity-accounted
investee, is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if
there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss
event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.
ii. Non-financial assets - the carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. Goodwill is tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit
(CGU) exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
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1. Principal Accounting Policies continued
Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment
testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business
combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying
amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An
impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss and available for sale. The classification
depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial
recognition. At 30 November 2018 the Group held no financial assets available for sale.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets.
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial
assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group
has transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising
from changes in the fair value of the financial assets at fair value through profit or loss’ category are presented in the income statement within ‘other
net gains’ in the period in which they arise.
Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the
Group’s right to receive payments is established.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be
able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in
payments (more than 30 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income
statement within ‘administration expenses’. When a trade receivable is uncollectable, it is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts previously written off are credited against ‘administration expenses’ in the income statement.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits, and highly liquid investments readily convertible to known amounts
of cash and subject to insignificant risk of changes in value.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes
expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location
and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
estimated costs necessary to make the sale.
Employee benefits
i. Short-term employee benefits - short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be
estimated reliably.
ii. Defined contribution plans - a defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a
separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are
recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees.
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
1. Principal Accounting Policies continued
Share-based payments
The Group operates a number of equity-settled, share-based compensation plans, under which the Group receives services from employees as
consideration for equity instruments (options) of the Group. The fair value is measured by an independent third party to review and calculate fair
values using the Log-normal Monte-Carlo stochastic model. The fair values of the employee services received in exchange for the grant of the
options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:
•
• excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining
including any market performance condition (for example, an entity’s share price);
an employee of the entity over a specified time period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to save).
•
Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total
expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated
for the purposes of recognising the expense during the period between service commencement period and grant date.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market
vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment
to equity.
When the options are exercised, the Company either issues new shares, or uses own shares purchased for this purpose. For issued new shares,
the proceeds received net of any directly attributable transaction costs are credited to share capital nominal value and share premium.
The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the
charge will be treated as a cash settled transaction.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s Consolidated Financial Statements in the period
in which the dividends are approved by the Company’s shareholders.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and
it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined based on the expected future
cash flows. When it has a material effect, these are discounted at a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the liability. The unwinding of any discount is recognised as a finance cost. The policies used to determine specific
provisions are:
i. Lease remediation and site restoration - provisions are established over the life of leases to cover remedial work necessary at termination under
the terms of those leases. Guidance for the total cost is made with reference to independent third party quantity surveyors reports and spread
over the terms of the lease.
ii. Onerous contracts - a provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are
lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group
recognises any impairment loss on the assets associated with that contract.
iii. Employee restructuring - a provision for employee restructuring costs is made once the Group is committed to any restructuring plans, which
require a change to the status of employees that have a cost implication.
iv. Insurance claims are assessed on a case by case basis, with the estimated costs of claims based on the advice of the Group’s external insurance
advisers.
Revenue
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the
Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group
recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and
when specific criteria have been met for each of the Group’s activities. The amount of revenue is not considered to be reliably measurable until all
contingencies relating to the sale have been resolved. In practice this means that revenue is generally recognised as follows:
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1. Principal Accounting Policies continued
(a) Sale of goods
Revenue from the sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the
goods. For other goods, it is when despatched, or packaged and made available for collection.
(b) Warehouse and distribution service contracts
Revenue is recognised when the service is rendered. Invoicing varies by contract, but is typically either in line with work performed or initially on
a budgeted volume basis with later adjustment to reflect actual activity. Where a contract contains elements of variable consideration, the Group
will estimate the amount or revenue to which it will be entitled under the contract. Variable consideration can arise as a result of incentives,
performance bonuses, penalties or other similar items.
(c) Training and other contracts
Revenue is recognised over the life of the contract in proportion to the costs of providing the services.
(d) Franchise revenue and franchise contracts
Franchise revenue is recognised gross to reflect franchisor management of invoicing, collection and credit risk. Revenue in respect of franchise
contracts is recognised at the point in which a franchise agreement has been signed and fees in respect of the franchise have been received,
at which point they are not refundable.
(e) Sales of services – Property
At certain sites where the Group has entered into leases, arrangements have been entered into with a third party, under which the Company received
fees for property-related advisory services. Revenue earned from providing property associated services is recognised in the Consolidated Income
Statement at the fair value of the consideration received or receivable, net of professional fees, associated costs and VAT.
The Group continues to be successful in providing property-related services including to third party investors as part of its core strategy and the
growth of its warehousing estate. It has earned fees of £19.2m (2017 £10.4m) with a strong pipeline of further projects and work going into 2019. The
Directors have made the judgement that the fees are payments for the provision of property services to a third party investor that may be recorded as
revenue at the time of the transactions.
In forming that judgement, the Group has considered whether the leases it has entered into are operating leases and whether the future rentals are
at market value and, accordingly, whether the fees received can be attributed to delivered property services.
(f) Sale of services – Consultancy
In line with the stated strategy of consulting-led logistics, the Group offers a range of consultancy services including property, logistics, IT consulting
and integration services. In the year to 30 November 2018 revenue from these services totalled £15.0m (2017: £6.7m).
For the purpose of allocating revenues to operating segments (note 3) £12.3m of fees relating to property services and £15.0m of consulting
revenues form part of Transport revenues (2017: £10.4m and £6.7m respectively). Contract and logistics revenue relating to property services is
£5.6m (2017: £nil).
Government grants
Government grants received on capital expenditure are generally deducted in arriving at the carrying amount of the asset purchased. Grants for
revenue are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will
comply with the conditions associated with the grant, and are then recognised in profit or loss as other income on a systematic basis over the useful
life of the asset. Grants that compensate the Group for expenses incurred are recognised in the profit or loss as other income on a systematic basis
in the periods in which the expenses are recognised.
Leases
i. Leased assets - assets held by the Group under leases which transfer substantially all of the risks and rewards of ownership are classified as
finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that
asset. Assets held under other leases are classified as operating leases and are not recognised in the Group’s Consolidated Statement of
Financial Position.
ii. Lease payments - payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Where
leases contain escalation clauses that stipulate specific increases to the rental payable, the operating lease expense is recorded on a straight-line
basis. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments
made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is
allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rental income
Rental income is recognised on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the
total rental income, over the term of the lease.
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
1. Principal Accounting Policies continued
Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in profit or loss, using the effective interest
method. Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and the net interest cost from accounting for
defined benefit pension schemes. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method. Foreign currency gains and losses on financial assets and financial liabilities are reported
on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.
Exceptional items
Items that are material in size or nature are presented as exceptional items in the income statement. The Directors are of the opinion that the
separate recording of exceptional items provides helpful information about the Group’s underlying business performance. Events which may give rise
to the classification of items as exceptional include restructuring of business units and the associated legal and employee costs, costs associated
with business acquisitions, and other significant gains or losses.
In the prior year, items of expenditure relating to the initial public offering (IPO) and the acquisition of business assets, as well as costs associated
with the refinancing and closure of swap arrangements and a gain arising on a lease agreement have been treated as exceptional costs (see note 5).
Alternative performance measures (APMs)
Underlying results are used in the day-to-day management of the Group. They represent statutory measures adjusted for items which in the
Directors’ view could distort the understanding of performance and comparability year on year. Note 4 provides a reconciliation between APMs and
statutory IFRS measures.
Tax
Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to
a business combination, or items recognised directly in equity or in other comprehensive income.
i. Current tax - is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted
at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising
from the declaration of dividends.
ii. Deferred tax - is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries, associates and jointly-controlled entities to the extent that the Group is able to
control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill
•
•
New standards and interpretations
At the date of approval of these Consolidated Financial Statements, the following standards and interpretations, relevant to the Group, which have
not been applied to these financial statements, were in issue, but not yet effective:
Title
Key Issues
Effective Date
Impact on Eddie Stobart Logistics plc
IFRS 15 Revenue from
Contracts with
Customers
IFRS 9 Financial
Instruments
IFRS 16
Leases
The new standard is a single global revenue standard that
contains a single model that applies to two approaches, being
at a point in time and over time. For complex transactions with
multiple components, variable consideration or extended
periods, application of the standard can lead to revenue being
accelerated or deferred in comparison to current IFRS.
IFRS 9 was introduced in 2014 as a complete standard
including the requirements previously issued and the additional
amendments to introduce a new expected loss impairment
model and limited changes to the classification and
measurement requirements for financial assets.
Periods beginning
1 January 2018,
deferred from
1 January 2017.
Periods beginning
1 January 2018.
IFRS 16 was issued in January 2016 and is effective from 1
January 2019, eliminating the classification of leases as
operating leases or finance leases and setting out a single
lease accounting model.
Periods beginning
1 January 2019,
subsequent to EU
endorsement.
The Group is currently in the
process of finalising its IFRS 15
assessment and will report on the
outcome in the interim
presentation of the Group’s
results.
The Group does not currently
expect adoption of the standard
to have a significant impact on its
consolidated results or financial
position.
Significant impact on Statement
of Financial Position (operating
lease commitments of £830m in
2018, will at a future point, be
brought onto the Statement of
Financial Position). Income
Statement presentation will also
be impacted. The measurement
of both is currently under review.
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At the date of approval of these Consolidated Financial Statements, the following standards and interpretations which have not been applied in these
financial statements were in issue but are either not yet effective or have not been adopted by the EU:
• Amendments to IFRS 2 Classification and Measurement of Share-based payment transactions.
• Amendments to IAS 7 Disclosure Initiative.
• Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses.
• Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.
• Annual Improvements 2014–2016 Cycle.
Other than as mentioned in the above, the Group does not currently expect that adoption of the other standards and amendments listed will have
a significant effect on the consolidated results or financial position of the Group.
2. Summary of Significant Accounting Judgements and Fair Value estimates
Significant accounting judgements
In the application of the Group’s accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described above, the Directors have made the following judgements that have
the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below)
and have been identified as being particularly complex or involve subjective assessments.
i. Lease commitments - at the point of entering into a new lease, Directors make best efforts to assess the pricing, size, quality, location and fit for new
warehouse space, to which a commitment is being made. In making this assessment Directors must take a view on market rentals, which is
inherently a critical accounting judgement. If the rental is subsequently deemed to be above market rate then there is a risk that the contract could
prove to be onerous and may also impact the ability to recognise any revenue from property-related services that have been provided.
ii. Assessment of control – for non-wholly owned acquisitions judgement is required in evaluating the facts and circumstances in order to assess
and determine whether and when the business has control. In making this determination, Directors look closely at whether the Group has the
ability to influence the returns generated by the investee through being able to direct its activity and also whether the investee is exposed to
variable rates of return.
iii. Re-financing of borrowing (note 21) – judgement is required when accounting for the re-financing of the Group’s borrowings. An assessment of
the terms and structure of both the original and replacement facility is made to determine the treatment of capitalised borrowing costs. Where the
re-financing is deemed to result in the extinguishment and replacement of the original loan the corresponding costs are released in full to the
income statement.
iv. Determination of Alternative performance measures (note 4) - alternative performance measures, such as underlying results, are used in the
day-to-day management of the Group, and represent statutory measures adjusted for items which, in the Directors’ view, could distort the
understanding of comparability and performance of the Group year on year. These items include amortisation of acquired intangibles, share of
profit from equity accounted investees, employee share scheme costs which were fully funded by the previous parent holding group, exceptional
costs, start-up costs associated with contract wins and the profit impact of severe weather conditions.
v. Assessment of Agent versus Principal in considering whether to recognise revenue gross or net – judgement is required when determining
whether an entity is acting as an agent or principal based on an evaluation of the risks and responsibilities taken by the entity. In the cases of
The Pallet Network Group and Speedy Freight, the operating models have indicators that could support either conclusion. It is the view of
management, that the key determining factors such as the responsibility for the delivery of services and the provision of insurance, lead to the
conclusion that both businesses act as Principals and therefore the revenue should be recognised gross for these entities.
vi. Classification of certain leases - judgement is required in certain leases that contain buyback clauses over the extent of risk that remains at the
end of the lease term and therefore whether the lease is classified as a finance or operating lease. This judgement is made at the outset on
a case by case basis. However, once these judgements have been made, no change to the lease classification is expected.
Eddie Stobart Logistics plc Annual Report Accounts 2018
57
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
2. Summary of Significant Accounting Judgements and Fair Value Estimates continued
Key sources of estimation in applying the Group’s accounting policies
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
i. Useful lives of intangible assets and property, plant and equipment - the useful lives of intangible assets rely on various internal and external
factors which could turn out to be different from the assumptions employed in determining their useful life. The useful lives of property, plant and
equipment is also dependent upon estimates of the period over which an asset is expected to generate profits, which includes an assessment of
the reliability, longevity and cost of maintenance of those assets. Management periodically reviews the major classes of assets to ensure that the
periods over which they are amortised or depreciated as appropriate.
ii. Impairment of goodwill - the Group is required to perform an annual impairment test on goodwill by reference to its value in use or its fair value,
less costs of disposal. This requires an estimate of future business performance, cash flows and discount rates all of which rely on estimates and
judgements of future events and may therefore be subject to change. The carrying value of goodwill as at 30 November 2018 is £189.7m
(note 14).
iii. Taxation - the tax balances are calculated based on an assessment of the tax treatment of income and costs and the availability of tax losses and
group relief. The calculation of deferred tax balances also includes an estimate of future profits and assumptions regarding future tax treatments,
for example in relation to the deductible of the brand intangible. The calculations are prepared in consultation with third party advisers but due to
the estimates and judgements required may still be subject to change.
iv. Contingent consideration and valuation of put and call option – where an investment involves contingent consideration, which is variable
dependent upon the future success of the business, Directors must exercise judgement and form a view of the probable outcome at the
measurement points. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised
in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income unless the contingent consideration is classified
as equity. In such circumstances, changes are recognised within equity. Changes in contingent consideration arising from additional information,
obtained within one year of the acquisition date, about facts or circumstances that existed at the acquisition date are recognised as an
adjustment to goodwill. The first point at which the put and call could be exercised is 31 May 2021, and therefore the risk of material misstatement
is considered to be greater, given that the level of accuracy in forecasts and estimates decreases over longer periods. See other financial liability
in note 20.
v. Property, plant and equipment (note 13) - the fair value of property, plant and equipment recognised as a result of a business combination is the
estimated amount for which property could be exchanged on the acquisition date between a willing buyer and a willing seller in an arm’s length
transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant, equipment, fixtures and
fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated
replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and
economic obsolescence.
vi. Intangible assets (note 14) – the Group has significant investments in definite lived intangible assets and goodwill at 30 November 2018 as
a result of acquisitions of businesses and purchase of such assets. The carrying value of definite intangible assets at 30 November 2018 is
£122.5m (2017: £99.1m). These assets represent the fair value of customer relationships acquired in a business combination, which are
determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets
that are part of creating the related cash flows and brand names held under licence which are valued at their amortised cost. This involves the
preparation of discounted cash flow projections, which require an estimate of both future operating cash flows and an appropriate discount rate.
Such estimates are inherently subjective and can have a material impact on the result of the impairment test.
vii. Trade and other receivables (note 17) - the fair values of trade and other receivables are estimated at the present value of future cash flows,
discounted at the market rate of interest at the measurement date. Short-term receivables with no stated interest rate are measured at the original
invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual
reporting date. Provisions for impairment of receivables are established when there is objective evidence that the Group will not be able to collect
all amounts due.
viii. Fair value estimates in share schemes (note 25) - Judgement is required when calculating the fair value of awards made under the Group’s
share-based payment plans. Note 25 describes the key assumptions and valuation model inputs used in the determination of these values.
In addition estimates are made of the number of awards that will ultimately vest and judgement is required in relation to the probability of meeting
non-market-based performance conditions and the continuing participation of employees in the plans. The complexity of the assessment and the
sensitivity of the assumptions are described in note 25.
58
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3. Operating Segments
Eddie Stobart Logistics plc provides contract logistics services in the UK and Europe. In the year to 30 November 2018 the Group managed its
operations via distinct functions although it is in the process of moving to managing the business via a sector-based view. Road Transport represents
general transport in UK and Ireland, Ports, Special Operations (consisting of work relating to the FIA Formula 1 World ChampionshipTM, Truckstops
and property services) and Speedy Freight. Contract Logistics and Warehousing represents contract logistics and warehousing services, including
iForce Group and The Pallet Network Group. EU Transport represents transport and vehicle transportation in Europe. Other represents head office
costs, interest costs and central costs such as HR, IT, Finance, Payroll and other departments which are not directly allocated to business units,
as well as driver-related services including The Logistic People.
All operations are continuing for each segment.
Analysis of operating segments
Segmental
Revenues
Road Transport
Contract Logistics and Warehousing
EU Transport
Other Divisions
Underlying EBITDA
Road Transport
Contract Logistics and Warehousing
EU Transport
Other Divisions
Underlying EBITDA Margin
Road Transport
Contract Logistics and Warehousing
EU Transport
Other Divisions
Year ended
30 November 2018
£’000
Year ended
30 November 2017
£’000
535,176
246,242
40,981
20,742
843,141
53,855
13,724
2,562
(7,249)
62,892
10.1%
5.6%
6.3%
(34.9)%
7.5%
414,261
139,506
38,603
31,554
623,924
48,506
9,895
1,492
(4,569)
55,324
11.7%
7.1%
3.9%
(14.5)%
8.9%
The revenue from one customer amounted to more than 10% of the Group’s total revenue. The revenue from that customer was £174.2m for the year
ended 30 November 2018 (2017: £145.8m) and this was reported in the Road Transport Operating Segment.
For Board reporting purposes the balance sheet is not disaggregated or produced segmentally for the chief operating decision maker,
a reconciliation of segment underlying EBITDA to reported profit from operating activities before exceptional items is detailed in note 4.
Depreciation for Road Transport is £3.9m (2017: £3.5m), Contract Logistics and Warehousing is £2.7m (2017: £2.4m) and EU Transport is £1.0 (2017:
£0.9m).
By Geographical Segment
United Kingdom
EU
Year ended
30 November 2018
£’000
Year ended
30 November 2017
£’000
802,160
40,981
843,141
585,321
38,603
623,924
Eddie Stobart Logistics plc Annual Report Accounts 2018
59
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
3. Operating Segments continued
The Group also presents and reviews revenues organised by customer sector.
Analysis of revenue by sector
Sector
Revenues
Retail
Consumer
E-commerce
Manufacturing, Industrial & Bulk (MIB)
Non sector specific
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
241,108
182,140
170,977
211,129
37,787
168,571
144,613
103,416
182,032
25,292
843,141
623,924
4. Alternative Performance Measures Reconciliations
Alternative performance measures (APMs)
Alternative performance measures (APMs), such as underlying results, are used in the day-to-day management of the Group, and represent statutory
measures adjusted for items which, in the Directors’ view, could distort the understanding of comparability and performance of the Group year on
year. These items include amortisation of acquired intangibles, share of profit from equity accounted investees, employee share scheme costs which
were fully funded by the previous parent holding group, exceptional costs, start-up costs associated with contract wins and the profit impact of
severe weather conditions.
60
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4. Alternative Performance Measures Reconciliations continued
Reconciliation to underlying EBITDA
Reported profit from operating activities before exceptional items
Amortisation of acquired intangibles
Share of profit from equity accounted investees
Employee share scheme costs funded by previous parent holding group
Management Incentive Plan and Long-Term Incentive Plan
Investor and management charges
Gain arising on lease agreement
Force majeure - severe weather
Start up costs associated with contract wins
Underlying EBIT(i)
Depreciation
Underlying EBITDA(i)
Profit after tax attributable to owners of the company
Amortisation of acquired intangibles
Employee share scheme costs funded by previous parent holding group
Management Incentive Plan and Long-Term Incentive Plan
Force majeure - severe weather
Start up costs associated with contract wins
Exceptional items (excluding gain arising on lease agreement)
Adjusted profit after tax (note 12)
Cash generated from operating activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Income taxes paid
Exceptional items (note (a) below)
Adjusted free cash flow
(i) Underlying EBIT and Underlying EBITDA are stated before tax but include the tax effect of share of profit from equity accounted investees.
Note (a) Reconciliation of cash impact of expectional items.
Exceptional items (note 5)
Adjusted for:
Gain arising on lease agreement
Residual capitalised bank fees relating to the previous loan
Deferred consideration associated with business acquisitions
Costs associated with business acquisitions
Other non-cash exceptional items
Non-cash exceptional items
Cash impact of exceptional items
.
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
37,458
13,818
524
568
1,111
-
-
445
1,387
55,311
7,581
62,892
16,245
13,818
568
1,111
445
1,387
8,263
41,837
7,513
(14,179)
3,570
(3,704)
8,499
30,994
11,137
733
413
-
634
4,616
-
-
48,527
6,797
55,324
3,931
11,137
413
-
-
-
16,783
32,264
29,234
(8,865)
3,783
(2,667)
8,482
1,699
29,967
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
(8,263)
(12,167)
-
-
236
-
-
236
4,616
(6,621)
(942)
(400)
(338)
(3,685)
(8,499)
(8,482)
Eddie Stobart Logistics plc Annual Report Accounts 2018
61
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
5. Exceptional Items
Exceptional items included in administrative expenses
Costs associated with the IPO of Eddie Stobart Logistics plc
Deferred consideration associated with business acquisitions
Costs associated with business acquisitions
Gain arising on lease agreement
Exit from Irish retail sector
Other exceptional items
Total exceptional items included in administrative expenses
Residual capitalised bank fees relating to the previous loan
Costs associated with swap closure
Exit of lending arrangements of The Pallet Network Group
Total exceptional items included in finance expenses
Total exceptional items before tax
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
-
(5,429)
(1,870)
-
-
(475)
(3,947)
(942)
(777)
4,616
(2,436)
(928)
(7,774)
(4,414)
-
-
(489)
(489)
(6,621)
(1,132)
-
(7,753)
(8,263)
(12,167)
Deferred consideration associated with business acquisitions relates to contingent consideration accounted for as remuneration relating to the
acquisitions of Puro Ventures trading as Speedy Freight at £2.6m (2017: £0.9m), The Logistic People at £0.8m (2017: £nil) and The Pallet Network Group
at £2.0m (2017: £nil).
Costs associated with business acquisitions relates primarily to professional fees associated with the acquisition of The Pallet Network Group during the
year. Associated exit fees from the lending arrangements of The Pallet Network Group have been included as an exceptional item of finance expense.
Other exceptional items in the current year relate to significant one-off redundancy costs.
In the prior year, other exceptional items represented costs associated with a customer that went into administration in addition to integration plans, legal
costs, non-recurring costs associated with winning new business in business segments, and other reorganisation and restructuring undertaken by
management as we continued to centralise and integrate acquisitions.
In the prior year the Group undertook an IPO and therefore had significant exceptional costs associated with the listing. A new term loan was arranged in
parallel to the listing, with the result that the residual capitalised bank fees relating to the previous loan were written off to the income statement within
finance costs, in addition to swap closure costs. The Group also exited a significant contract in Ireland during the prior year and the exceptional costs of
£2.4m represent the repatriation of equipment to the UK, termination of equipment lease contracts, storage, decommission and disposal costs of the
assets. In the prior year the gain of £4.6m arising on lease agreement related to a major redevelopment of a strategically important site at Goresbrook
Park, Dagenham.
62
6. Acquisitions
Acquisition of The Pallet Network Group
On 28 June 2018, Eddie Stobart Logistics plc acquired, through its wholly-owned subsidiary ESLL Group Limited, 100% of the share capital of The
Pallet Network Group Limited, a leading pallet distribution service which provides customers with reliable and cost-effective pallet distribution through
a network of hubs and independent hauliers.
The consideration was £30.3m, on a cash and debt free basis, funded by a combination of equity and debt. Debt of £24.0m was raised from the
existing lending syndicate under exactly the same terms as the existing debt and the issue of 21.4m shares, at a price of 140p per share, raised
£30m in new equity before expenses. Further deferred consideration of £8.7m will be payable, in two even instalments 12 and 24 months following
the transaction date. This amount has been recognised on the Consolidated Statement of Financial Position.
The Pallet Network Group was consolidated into the Group as of 28 June 2018 and during the period has contributed revenues of £54.7m and profit
before tax of £3.5m to the consolidated results of the Group. Goodwill arising on the acquisition represents the projected profitability of The Pallet
Network Group. None of this goodwill is expected to be deductible for corporation tax purposes.
Subsequent to acquisition management performed a review of the carrying value of all of the identifiable assets and liabilities of the aggregated
companies within The Pallet Network Group. This review resulted in a number of fair value adjustments primarily arising as a consequence of
a purchase price allocation exercise using a professional independent expert and done in accordance with IFRS 3 and IAS 38.
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Identifiable assets acquired and liabilities assumed
Property, plant and equipment
Cash at bank and in hand
Customer-related intangible assets
Technology-related intangible assets
Marketing-related intangible assets
Trade receivables
Other receivables
Trade payables
Other payables and deferred income
Deferred tax liability arising on intangible assets
Deferred tax liability arising on provision
Debt assumed and discharged
Total net assets acquired
Goodwill
Total consideration
Note
Book value
£’000
Adjustments
2,505
8,216
-
-
-
14,648
3,662
(17,468)
(3,512)
-
-
(21,165)
-
-
30,154
2,089
1,033
-
-
-
(1,871)
(5,643)
318
-
Fair value
recognised on
acquisition
£’000
2,505
8,216
30,154
2,089
1,033
14,648
3,662
(17,468)
(5,383)
(5,643)
318
(21,165)
(13,114)
26,080
12,966
14
Immediately prior to acquisition The Pallet Network Group had £21.2m of outstanding debt due to third parties. This debt was assumed and
discharged by group subsidiary ESLL Group Limited on acquisition.
Transaction costs associated with the acquisition have been recorded in the income statement classified as exceptional costs (note 5).
The following table sets out the amounts included in the consolidated statement of cash flows:
Net cash outflow arising on acquisition:
Cash consideration, net of cash acquired on acquisition
Debt assumed and discharged
Net cash outflow on acquisition of subsidiary
Cash expenses incurred on acquisition
Total cash outflow on acquisition of subsidiary
17,377
30,343
22,127
21,165
43,292
1,426
44,718
Eddie Stobart Logistics plc Annual Report Accounts 2018
63
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
7. Profit Before Tax
The following items have been charged / (credited) in arriving at profit before income tax:
Employee benefits (note 8)
Depreciation of property, plant and equipment (note 13)
Amortisation of intangible assets (note 14)
Profit on disposal of property, plant and equipment
Operating lease rentals payable:
- land and buildings
- plant and equipment
- commercial vehicles
Foreign exchange arising in the year
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
205,907
7,582
13,818
(2,779)
178,044
6,797
11,137
(2)
40,271
4,815
43,937
31,022
4,524
34,712
695
(238)
Auditors’ remuneration
During the year, the Group (including overseas subsidiaries) obtained the following services from the Group’s auditors, the costs of which are
detailed below:
Audit services
Fees payable to the Company's auditors for the audit of the Parent Company and the Consolidated Financial Statements
Fees payable to the Company's auditors for the audit of the Subsidiaries
Fees payable to the Company's previous auditors for the audit of the Parent Company and the Consolidated Financial Statements
Fees payable to the Company's previous auditors for the audit of the Subsidiaries
Non-Audit Services
Tax, share based payment advice and other services payable to the Company's previous auditors
44
347
-
157
92
-
-
42
452
41
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
64
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8. Employees and Directors
Details concerning the remuneration of Directors are highlighted in the table, referenced as audited, on page 34 of the Directors’ Remuneration
report. Staff costs and the average number of persons (including Directors) employed by the Group during the year were:
Staff costs for the Group during the year
Wages and salaries, including payments on termination
Social security
Pension
Average monthly number of employees
Total operational
Total administration
Total management
Total employees
Year ended
30 November
2018
£’000
Period ended
30 November
2017
£’000
183,172
18,584
4,151
158,127
17,087
2,830
205,907
178,044
4,155
1,508
437
6,100
4,050
1,235
408
5,693
Pensions – defined contribution scheme
The Group operates a defined contribution retirement benefit plan for all qualifying employees. The assets of the plan are held separately from those of
the Group under the control of trustees. The only obligation of the Group with respect to the retirement benefit plan is to make specified contributions.
The total expense recognised in the income statement of £4.1m (2017: £2.8m) represents contributions payable at rates specified by the rules of the
plan.
Employee head count
At 30 November 2018 the Group employed 6,636 people in the UK and mainland Europe.
The annual percentage increase in headcount is Operational 10%, Administration 39% and Management 17%. The growth in employees is
attributable to new contract wins, and the recent business acquisitions of The Pallet Network Limited.
Directors’ Remuneration
A summary of Directors’ remuneration is detailed below;
Emoluments, bonus and benefits in kind
Pension costs
Total Directors’ remuneration
Key management compensation (including Executive Directors):
Emoluments, bonus and benefits in kind
Pension costs
Total management compensation
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
970
65
1,035
846
62
908
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
2,586
172
2,758
1,525
144
1,669
Eddie Stobart Logistics plc Annual Report Accounts 2018
65
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
9. Finance Income and Finance Expense
Finance income
Bank interest receivable
Finance expense
Interest payable on bank loans and overdrafts
Interest rate swaps: fair value through P&L
Interest rate swaps: interest charged
Amortisation of bank fees
Interest payable on loan notes
Interest payable on finance leases
Total finance expense
Finance expense: exceptional items
Residual capitalised bank fees relating to the previous loan
Costs associated with swap closure
Exit of lending arrangements of The Pallet Network Group
Total Finance expense: exceptional items
10. Tax Expense
Total tax charged in the Income Statement in respect of continuing operations
Current income tax
UK Corporation tax - continuing operations
Overseas corporation tax
Adjustments in respect of prior periods
Total current income tax charge
Deferred taxation (credit) / charge
Current tax year
Adjustments in respect of prior periods
Effect of rate change on opening balance
Total deferred income tax (credit) / charge
Total charge in the income statement
Income tax on items charged to Comprehensive Income
Deferred tax on effective portion of changes in fair value of cash flow hedges
Total Income tax charged on items charged to equity
66
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
15
5
(5,191)
399
(66)
(574)
(91)
(587)
(6,294)
-
-
(1,000)
(1,716)
(640)
(6,110)
(9,650)
-
-
(489)
(489)
(6,621)
(1,132)
-
(7,753)
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
7,680
571
(163)
8,088
(760)
(21)
72
(709)
7,379
-
-
3,629
344
795
4,768
924
(664)
2
262
5,030
(340)
(340)
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10. Taxation Expense continued
Profit before tax on continuing operations
Profit before tax on continuing and discontinued operations multiplied by the standard rate of corporation tax in the UK of
19.00% (2017: 19.33%)
Effects of:
Post-tax profits of Associates
Expenses / (income) not deductible for tax purposes including profit on disposal
Expenses not deductible – exceptional items
Effect of different tax rates on overseas profits
Impact of change in rate
Non-deductible intangibles
Deferred tax not recognised from prior year
Adjustments in respect of prior periods
Total tax expense – continuing operations
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
23,624
9,915
4,489
1,917
(78)
856
1,404
562
72
706
-
(632)
7,379
(142)
842
397
115
-
735
1,035
131
5,030
A reduction in the UK corporation tax rate from 20% to 19% became effective from 1 April 2017. The rate applied for the year ended 30 November 2018
was 19.00% (2017: 19.33%). Following a review of the expected maturity profile of the deferred tax liability, a rate of 17% has been applied at 30
November 2018 (2017: 17%).
Factors that may affect future tax expenses
The Group has not recognised deferred tax assets in respect of trading losses with a tax value of £nil (2017: £1.0m) in the UK and therefore, to the
extent that these losses may be used against profits arising in future periods, the effective tax rate on these profits may be reduced. Other than
certain items noted in the tax reconciliation above, there are no other significant factors that may affect future tax expenses.
11. Dividends
At the date of approving these Financial Statements, no final dividend has been approved. However, the Directors have recommended a dividend in
respect of the year ended 30 November 2018 of 4.76p per share (2017: 4.40p), payable, subject to the approval of the shareholders at the Annual
General Meeting to be held on 28 May 2019, on 7 June 2019 to shareholders on the register on 10 May 2019. The ex-dividend date is 9 May 2019.
No provision for dividends payable has been made in the financial statements for this financial year. An interim dividend was paid during the year on
7 September 2018 of 1.54p per share (2017: 1.40p).
Final dividend for the year ended 30 November 2017 of 4.4p per share (2016: £nil)
Interim Dividend for the year ended 30 November 2018 of 1.5p per share (2017: 1.4p)
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
15,735
5,837
-
5,011
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
12. 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.
Profit attributed to equity shareholders
Weighted average number of ordinary shares – Basic
Issued ordinary shares at the beginning of the year
Net effect of shares issued and purchased during the year
Weighted average number of ordinary shares – Diluted
Weighted average number of Ordinary Shares - Basic (as above)
Net effect of share options in issue
Basic earnings per share for total operations
Diluted earnings per share for total operations
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
16,245
3,931
357,918
9,041
276,668
50,105
366,959
326,773
366,959
3,040
324,064
3,062
369,999
327,126
4.4p
4.4p
1.2p
1.2p
An alternative earnings per share measure is set out below, being earnings, before amortisation of acquired intangibles and exceptional items
including related tax and exceptional tax items where applicable, since the Directors consider that this provides further information on the underlying
performance of the Group:
Adjusted earnings per share
Basic
Diluted
Adjusted profit after tax (Note 4)
Year ended
30 November
2018
Year ended
30 November
2017
11.4p
11.3p
£'000
41,837
9.8p
9.8p
£'000
32,264
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13. Property, Plant and Equipment
Year ended 30 November 2017
Cost at 1 December 2016
Assets purchased on business acquisition
Effects of movements in foreign exchange
Additions in the year
Disposals
Cost at 30 November 2017
Assets purchased on business acquisition
Effects of movements in foreign exchange
Additions in the year
Additions transferred from assets under construction
Disposals
Reclass adjustments
Land and
buildings
£’000
Plant and
machinery
£’000
Fixtures,
fittings and
equipment
£’000
Commercial
vehicles
£’000
Assets under
construction
£’000
Total
£’000
19,440
8,940
4,598
14,367
-
47,345
1,144
122
12,980
(3,256)
119
25
645
(1,550)
2,463
34
2,798
(304)
4,719
76
4,384
(3,562)
-
-
1,453
-
8,445
257
22,260
(8,672)
30,430
8,179
9,589
19,984
1,453
69,635
2,164
145
6,113
5,249
(764)
(268)
804
33
1,589
97
(61)
134
2,797
24
2,084
-
(286)
(11)
738
73
2,235
-
(6,439)
(602)
-
-
5,253
(5,346)
-
-
6,503
275
17,274
-
(7,550)
(747)
At 30 November 2018
43,069
10,775
14,197
15,989
1,360
85,390
Accumulated depreciation at 1 December 2016
Effects of movements in foreign exchange
Charge for the year
Disposals
Accumulated depreciation at 30 November 2017
Acquisitions
Effects of movements in foreign exchange
Charge for the year
Disposals
Reclass adjustments
At 30 November 2018
Net book value at 30 November 2018
Net book value at 30 November 2017
1,280
83
1,418
(2,725)
56
566
84
2,205
(103)
4
2,812
40,257
30,374
2,031
25
1,072
(1,484)
1,644
661
26
1,250
(43)
19
3,557
7,218
6,535
1,749
21
1,204
(73)
2,901
2,468
21
1,655
(123)
(19)
6,903
7,294
6,688
4,425
49
3,103
(2,522)
5,055
302
56
2,472
(2,052)
5
5,838
-
-
-
-
-
-
-
-
-
-
-
10,151
14,929
1,360
1,453
As at 30 November 2018, the balances held in respect of assets held under finance leases and hire purchase agreements are:
Cost
Aggregate depreciation
Net book value at 30 November 2018
1,687
(210)
1,477
846
(357)
489
1,121
(187)
16,180
(5,435)
934
10,745
As at 30 November 2017, the balances held in respect of assets held under finance leases and hire purchase agreements are:
Cost
Aggregate depreciation
Net book value at 30 November 2017
The value of land not depreciated is £nil (2017: £nil).
1,687
(128)
1,559
1,218
(222)
1,238
(107)
22,585
(7,142)
996
1,131
15,443
-
-
-
-
-
-
9,485
178
6,797
(6,804)
9,656
3,997
187
7,582
(2,321)
9
19,110
66,280
59,979
19,834
(6,189)
13,645
26,728
(7,599)
19,129
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
14. Goodwill and Intangible Assets
Goodwill
30 November 2016
Additions / (write downs) during the year
30 November 2017
Additions during the year
30 November 2018
General
Transport
£’000
125,574
6,859
132,433
-
132,433
Intangible Assets
Cost at 1 December 2016
Additions in the year
Additions in the year arising from acquisition
Foreign currency adjustment
Cost at 1 December 2017
Additions in the year
Additions in the year arising from acquisition
Disposals in the year
At 30 November 2017
Amortisation and impairment at 1 December 2016
Amortisation charge for the year
Amortisation and impairment at 30 November 2017
Amortisation charge for the year
Foreign currency adjustment
At 30 November 2018
Net book value at 30 November 2017
Net book value at 30 November 2018
Ports
£’000
EU Transport
£’000
TLP Holdings
£’000
5,559
(5,559)
-
-
-
1,000
-
1,000
-
iForce
£’000
-
26,287
3,391
-
3,391
26,287
Speedy
Freight
£’000
-
9,242
9,242
TPN
£’000
-
-
-
Total
£’000
135,524
36,829
172,353
-
-
-
17,377
17,377
1,000
3,391
26,287
9,242
17,377
189,730
Software
£’000
Brand names
£’000
Customer
relationships
£’000
Franchise
Contracts
£’000
Total
£’000
-
22,300
86,876
-
109,176
771
4,346
(1)
-
646
-
-
14,324
-
-
6,379
-
771
25,695
(1)
5,116
22,946
101,200
6,379
135,641
3,755
2,089
-
-
1,033
-
-
30,154
-
156
-
(33)
3,911
33,276
(33)
10,960
23,979
131,354
6,502
172,795
-
872
872
1,720
1
2,593
4,244
8,367
9,912
3,734
13,646
3,796
-
15,445
6,354
21,799
7,867
-
17,442
29,666
-
177
177
435
-
612
25,357
11,137
36,494
13,818
1
50,313
9,300
79,401
6,202
99,147
6,537
101,688
5,890
122,482
Details of business combinations made during the year can be found in note 6, along with a description of assets and liabilities acquired and any
impact on goodwill and intangibles.
Software comprises internally-generated software packages, developed by the individual business units in order to support their operations.
These are being amortised between 3 and 5 years.
Brand names comprise the Eddie Stobart trademark and designs, which have been licensed by the Group and are being amortised between
6 and 15 years, being the period of the licence agreement.
Customer relationships represent the existing contractual and expected future relationships with customers of the Group at the point of acquisition
and are being amortised over 15 years.
Franchise contracts have been valued to be in existence for between 10 to 15 years and are amortised in equal instalments over their economic
useful life from the date of inception.
Goodwill is considered to have an indefinite life because there is no foreseeable limit to the period over which it is expected to generate net cash
inflows for the Group. Factors taken into consideration in this judgement are the long period over which the business has been established, the
strength of brand awareness and the longevity of the industries in which the business is involved.
A description of goodwill acquired in the current year is provided in note 6.
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14. Goodwill and Intangible Assets continued
Annual test for impairment
For the purpose of impairment testing, goodwill and other intangibles are allocated to business segments the lowest level at which those assets
are monitored for internal management purposes. The recoverable amount of each CGU is determined from value-in-use calculations.
The value-in-use calculations use pre-tax cash flow projections based on financial budgets approved by management for year one and cash flow
projections for years two to five using growth rates that are considered to be in line with the general trends in which each CGU operates, with the
exception of iForce and Speedy Freight, with both businesses expected to achieve rapid growth over the following two to five years. Terminal cash
flows are based on these five year projections, assumed to grow perpetually at 2.5%. In accordance with IAS 36, the growth rates for beyond the
forecasted five years do not exceed the long-term average growth rate for the industry. The key assumptions forming inputs to the cash flows are
revenues and operating cash flows.
Margins have been assumed to remain broadly at existing levels and management remain confident of delivering on the projections above, despite
Brexit. However, in the event that this plan is not delivered, there is a future risk of impairment. All forecasts have been discounted at a pre-tax
discount rate of 9.0% (2017: 8.8%), with the increase during the year primarily representing the market increases in the cost of debt. No impairment
losses have been recognised in the year.
Sensitivity
The estimated recoverable amounts of all CGUs exceed their respective carrying amounts by a total of approximately £410m (2017: £423m). All of
the CGUs are sensitive to the discount rate and projected margins, however, management believes that no reasonable adjustment to the discount
rate or projected margins would cause the carrying value of the unit to exceed its recoverable amount. Each 10 basis point increase in the discount
rate applied has the impact of reducing the headroom for the Group by c.£8m (2017: c.£13m).
15. Investments in Equity Accounted Investees
Balance at 30 November
Foreign exchange movement
Post-tax share of profits
Dividends received from Group companies
Closing Balance
Represented by
Property, plant and equipment
Current assets
Current liabilities
Non-current liabilities
Share of net assets
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
1,276
(89)
524
(135)
939
20
733
(416)
1,576
1,276
68
2,706
(1,192)
(6)
54
2,378
(1,152)
(4)
1,576
1,276
All joint ventures have a reporting year end of 31 December. The Group has taken advantage of the exemption from producing additional financial
statements for those joint ventures whose financial year end is not co-terminus with the Group’s financial year. IAS 27 allows the use of an alternative
financial year end date for joint ventures on the basis that it would be impractical to align the joint venture year end as it is currently aligned to the
year end of the other parties participating in the joint venture. Under IAS 27 the Group is required to make adjustment to the financial statements for
any significant transactions or events that may arise at the date of signing these statements. No such adjustments are necessary.
During the financial year, the Group received dividends of £135,000 (2017: £416,000).
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
16. Inventories
Fuel and lubricants
Consumable supplies
Total
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
2,410
716
3,126
2,064
332
2,396
Inventories represent the value of fuel, lubricants and consumable supplies as at 30 November 2018. There is no impairment provision in respect of
inventories. Purchases of these goods during the year are charged directly to the Consolidated Income Statement. As such, the difference between the
opening and closing balances, £730,321, was the amount expensed to the Consolidated Income Statement during the year.
17. Trade and Other Receivables
Trade receivables
Less provision for impairment of trade receivables
Trade receivables – net
Other receivables and prepayments
The ageing of trade receivables and associated provision for impairment is detailed below:
Current
Overdue less than 1 month
Overdue 1 - 2 months
Overdue more than 2 months
18. Cash and Cash Equivalents
Cash at bank and in hand
19. Trade and Other Payables (Current)
Trade payables
Tax and social security
Other payables, accruals and deferred income
Other financial liability
72
Year ended
30 November
2019
£’000
Year ended
30 November
2017
£’000
161,030
(778)
160,252
70,914
99,365
(132)
99,233
49,746
231,166
148,979
2018
2017
Trade
receivables
£’000
Provision for
impairment
£’000
Trade
receivables
£’000
Provision for
impairment
£’000
109,044
36,451
7,907
7,628
-
-
-
(778)
67,872
23,583
5,534
2,376
161,030
(778)
99,365
-
-
-
(132)
(132)
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
5,234
11,936
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
109,125
16,795
43,638
-
67,513
11,470
44,724
4,511
169,558
128,218
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20. Trade and Other Payables (Non-current)
Employee benefits
Deferred lease liability
Deferred income
Other financial liability
Other long term payables
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
-
10,159
1,911
12,926
269
144
6,655
1,914
10,109
-
25,265
18,822
The other financial liability includes the fair value of the put and call options in relation to a subsidiary undertaking and deferred consideration in
relation to acquisitions (see note 6), with £1.8m being attributable to The Pallet Network Group (2017: £nil) and £11.8m to Puro Ventures (trading as
Speedy Freight) (2017: £10.1m).
21. Financial Assets and Liabilities
Current
Fixed rate
Finance lease and hire purchase obligations
Bank loans
Variable rate
Revolving finance facility
Bank loans
Non-current
Fixed rate
Finance lease and hire purchase obligations
Bank loans
Variable rate
Bank loans
Total loans and borrowings
Cash
Net debt
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
5,009
-
28,889
2,010
35,908
4,583
590
-
2,594
7,767
4,646
2,714
13,233
2,978
121,629
97,455
128,989
113,666
164,897
121,433
(5,234)
(11,936)
159,663
109,497
Finance facilities
Borrowing facilities
On 21 June 2018, the Group signed an amendment to the existing senior facility agreement to borrow a further £24.0m, under the same terms and
conditions and with the same lending syndicate as the existing arrangement, in order to part fund the acquisition of The Pallet Network Group. The
facility is secured on the shares of subsidiaries of the Group, is subject to a variable rate of interest and subject to certain conditions is repayable in
full in April 2022. Fees of £0.7m were capitalised against this arrangement and will be spread evenly over the remaining term of the loan. This takes
the finance facility up to £124.0m borrowed from the existing syndicate of lenders (2017: £100.0m).
Included in the analysis above are financing fees of £0.6m on the new facility at 30 November 2018 (30 November 2017: £2.7m), which have been
netted against the principal term loan outstanding. During the year fees of £0.6m (2017: £1.0m) were amortised through the Consolidated Income
Statement.
In the UK, the Group also has access to a revolving finance facility of up to £85.0m (2017: £75.0m) though normally restricted to £75.0m (2017:
£65.0m), which is dependent upon and secured against assets within the Group. The facility is subject to a variable rate of interest and is in place
until 2021. As at 30 November 2018 that balance drawn down against the revolving finance facility is £28.9m (2017: £nil).
The Group has finance facilities in Belgium which are secured against assets in that region and comprise an overdraft of €1.5m, subject to a variable
rate of interest and available over 7 years to 2021, a loan of €3.0m, subject to a fixed rate of interest and repayable in equal quarterly instalments over
7 years to 2021 and a loan of €1.5m at a fixed rate of interest and repayable in equal quarterly instalments over 5 years to 2021. The facilities are
secured against specific assets of the Group.
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
21. Financial Assets and Liabilities continued
Maturity Profile of Financial Liabilities
The maturity profiles (including interest payments in respect of finance lease and hire purchase liabilities) of financial liabilities are shown in the table
below:
Maturity profile at 30 November 2018
Financial liabilities
Bank loans and interest
Trade payables
Finance lease and hire purchase obligations
Other financial liability
Maturity profile at 30 November 2017
Financial liabilities
Bank loans and interest
Trade payables
Finance lease and hire purchase obligations
Other financial liability
Due within
1 year
£’000
Between 1
and 5 years
£’000
Due after
5 years
£’000
Total
£’000
2,010
109,125
5,009
-
124,343
-
2,617
12,926
-
-
2,029
-
126,353
109,125
9,655
12,926
116,144
139,886
2,029
258,059
Due within
1 year
£’000
Between 1
and 5 years
£’000
Due after
5 years
£’000
Total
£’000
3,184
67,513
4,583
4,511
100,433
-
11,974
10,109
-
-
1,259
-
103,617
67,513
17,816
14,620
79,791
122,516
1,259
203,566
Foreign exchange differences on retranslation of these assets and liabilities are taken to the Consolidated Income Statement except where those
assets and liabilities are held in entities denominated in foreign currency in which case differences are taken to reserves as described in note 1.
The minimum lease payments under finance leases fall due as follows:
Within one year
Between one and five years
After five years
Future finance charges on finance leases
Present value of finance lease liabilities
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
5,285
2,743
2,149
10,177
(522)
5,008
13,086
1,383
19,477
(1,661)
9,655
17,816
The obligations under finance leases and hire purchase contracts are taken out with various lenders at interest rates prevailing at the inception of the
contracts.
Financial risks and capital management
Through its operations, the Group is exposed to the following financial risks:
• Funding and liquidity risk
• Credit risk from trade receivables
•
• Foreign exchange risk
Interest rate cash flow risk from variable rate bank loans
In the process of managing these financial risks, the Group uses the following financial instruments:
• Cash at bank
• Bank loans
• Trade receivables, including amounts owed by associates and joint ventures
• Trade and other payables, including amounts owed to associates and joint ventures
• Finance leases and hire purchase agreements
The Group’s overall risk management programme focuses on reducing financial risk as far as possible and therefore seeks to minimise potential
adverse effects on the Group’s financial performance. The policies and strategies for managing specific financial risks are summarised as follows:
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21. Financial Assets and Liabilities continued
(i) Funding and liquidity risk
The Group finances its operations by a combination of equity, bank loans, leases, working capital and retained profits. The Group undertakes
short-term cash forecasting to monitor its expected cash flows against its cash availability and finance facilities. The Group also undertakes
longer-term cash forecasting to monitor its expected funding requirements in order to meet its current business plan, in the context of its existing
facilities and to identify any requirement for future funding facilities. The Group monitors its current and forecast financial performance against its
banking covenants to ensure that it remains compliant with their requirements. The Group also maintains an active dialogue with a wide range of
finance providers in order to ensure that it is aware of all possible sources of finance when it is assessing the availability and cost of providing for the
funding requirements in the current business plan.
ii) Credit risk
The Group’s principal exposure to credit risk is in its trade receivables arising from credit sales. A large proportion of the Group’s trade receivables
are covered by insurance, with £88.7m covered at 30 November 2018 (2017: £42.5m). In accordance with this insurance policy, and also carried out
as Group policy in other uninsured credit sales, the Group carries out procedures to assess the credit risk of new customers before entering into new
contracts, sets credit limits accordingly and monitors outstanding receivables balances in accordance with these. The Board places significant
emphasis on credit control and any changes in debtor payment profiles are identified and acted upon. The age profile of outstanding trade
receivables as at 30 November 2018 is shown in note 17, together with associated provisions against recoverability, which gives an indication
of the level of credit risk to which the Group is exposed.
(iii) Interest rate cash flow risk
Some of the Group’s borrowings are issued at variable rates that expose the Group to interest rate cash flow risk. The Group’s exposure to floating
rate interest is modelled in its budgets and forecasts. The Group’s principal strategy is to manage its treasury position to reduce borrowing
requirements and therefore its exposure to interest cost. As such, the current exposure to volatility in interest rates is limited and the Group estimates
that a rise of 0.5% in interest rates would have reduced pre-tax profits by approximately £792,000 for the year ended 30 November 2018 (2017:
£607,000 pre-tax profits).
(iv) Foreign exchange risk
The Company’s functional and presentational currency is Pound Sterling. The Group operates internationally and is exposed to foreign exchange
risk, primarily with respect to the Euro. Due to the significant degree of natural hedging arising from purchases and receipts in Euros, which largely
mitigates the transactional and financial reporting foreign exchange risk, the Board does not currently seek to hedge its exposure to foreign
exchange risk. The Group estimates that a 5% weakening of the Euro from the year end exchange rate would decrease net assets by approximately
£824,000 (2017: £596,000 decrease in net assets).
Capital management
Capital comprises share capital, retained profits and borrowing facilities. The Group’s short- to medium-term strategy continues to be to strengthen
its capital base in order to sustain the future development of the business and therefore the current policy is to reinvest profits rather than
recommend the payment of dividends. The Group also focuses on the management and control of working capital in order to reduce net debt, whilst
allowing for capital investment in assets for the future development of the business. The Group has also secured finance facilities that contain
sufficient headroom to allow for business growth in the event that market volumes significantly increase or incremental turnover is obtained through
organic growth or acquisition.
Fair Value of Financial Assets and Liabilities
The book value and comparable fair value of the Group’s financial assets and liabilities are shown in the table below.
Classification
Financial assets
Cash
Trade receivables
Interest rate swap
Financial liabilities
Trade payables
Bank loans
Finance lease and hire purchase obligations
Other financial liability (note 20)
2018
2017
Valuation
method
Book value
£’000
Fair value
£’000
Book value
£’000
Fair Value
£’000
Level 1
Level 2
Level 2
(5,234)
161,030
399
(5,234)
161,030
399
11,936
99,233
-
11,936
99,233
-
Level 2
Level 2
Level 2
Level 3
109,125
126,353
9,655
12,926
109,125
126,353
9,655
12,926
67,513
103,617
17,816
14,620
67,513
103,617
17,816
14,620
The Group uses the following valuation methods for measuring the fair value of financial instruments
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are based on data from active markets.
Level 3: Other techniques for which all inputs which have a significant effect on the recorded fair value are not based on data from active markets.
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
21. Financial Assets and Liabilities continued
Interest rate swap
On 10 July 2017 the Group entered into an interest rate swap with the Bank of Ireland Global Markets for a value of £60m with a floating rate option of
GBP LIBOR, the effective date of the contract is 25 April 2018 and terminates on 22 April 2022. The contract is repayable in quarterly instalments on
the 25th day of April, July, October and January of each year of the contract. The fixed rate of interest on the swap contract is 0.963% per annum. The
swap is currently in the money, has a fair value of £399k and the movement is taken through the interest line in the income statement.
22. Provisions
Balance at 1 December 2016
Provisions made
Provisions utilised
Movement in foreign currency translation
Total
Balance at 30 November 2017
Provisions made
Provisions released
Provisions utilised
Acquired during the year
Movement in foreign currency translation
Total
Balance at 30 November 2018
Analysis of total provisions:
Current
Non-current
Lease
remediation
£’000
Employee
claims
£’000
999
1,884
(312)
16
1,588
2,587
-
(1,845)
(7)
1,894
21
63
2,650
1,283
540
(976)
-
(436)
847
1,869
-
(1,912)
-
-
(43)
804
2018
£'000
3,454
-
3,454
Total
£’000
2,282
2,424
(1,288)
16
1,152
3,434
1,869
(1,845)
(1,919)
1,894
21
20
3,454
2017
£'000
3,434
-
3,434
Lease remediation
A provision is held across the Group property portfolio for future dilapidation costs and site restoration. During the year, a decision to redirect the
forthcoming HS2 railway line has resulted in a change in the existing requirement for a dilapidations provision at a warehouse that has been exited by
the Group, with £1.2m released to the income statement.
Employee claims
The Group has various ongoing and potential litigation and claims, principally relating to accidents in the workplace. These cases are being
managed through a specialist independent claims management handler and a provision is held to cover the estimated future liability to the Group.
23. Deferred Tax
Deferred tax is calculated in full on temporary differences using the liability method, and predominantly relates to UK balances, using a tax rate of
17% (2017: 17%).
Deferred tax brought forward
Adjustment in respect of prior years
Transfer to the Consolidated Income Statement
Deferred tax on items recognised directly in equity
Acquisition of business
Deferred taxation carried forward
Year ended
30 November
2018
£’000
Year ended
30 November
2017
£’000
(9,001)
21
688
-
(5,332)
(10,526)
663
(925)
(340)
2,127
(13,624)
(9,001)
Deferred tax assets have been recognised in respect of pension deficits, the fair value of financial instruments, accelerated capital allowances and
other temporary differences giving rise to deferred tax assets because it is probable that these assets will be recovered.
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23. Deferred Tax continued
Tax effects of temporary differences due to:
Intangible assets
Revaluations
Deferred tax liability
Losses
Accelerated capital allowances
Other temporary differences
Deferred tax asset
Tax effects of temporary differences due to:
Intangible assets
Accelerated capital allowances
Revaluations
Deferred tax liability
Losses
Hedging instruments
Other temporary differences
Deferred tax asset
At
30 November
2018
£’000
Consolidated
Income Statement
£’000
Direct to
Equity
£’000
Acquired with
Business
Combinations
£’000
Adjustment in
respect of
prior years
£’000
At 30
November
2017
£’000
(19,182)
(292)
(19,474)
4,675
747
428
5,850
(13,624)
At
30 November
2017
£’000
(14,096)
(589)
(292)
(14,977)
5,413
-
563
5,976
(9,001)
554
-
554
(328)
550
(88)
134
688
-
-
-
-
-
-
-
-
(5,657)
-
(5,657)
-
6
319
325
(5,332)
17
-
17
(14,096)
(292)
(14,388)
(410)
780
(366)
4
21
5,413
(589)
563
5,387
(9,001)
Consolidated
Income Statement
£’000
Direct to
Equity
£’000
Acquired with
Business
Combinations
£’000
Adjustment in
respect of
prior years
£’000
At 30
November
2016
£’000
84
(588)
-
(504)
(426)
-
4
(422)
(926)
-
-
-
-
-
(340)
(1)
(341)
(341)
(3,072)
(327)
-
(3,399)
5,716
-
(190)
5,526
2,127
-
-
-
-
(11,108)
326
(292)
(11,074)
26
-
637
663
663
97
340
113
550
(10,524)
Unprovided deferred tax assets, which are unprovided because they may not be recovered, are as follows:
Non-trading losses
Capital losses
Total losses
2018
£’000
1,468
756
2,224
2017
£’000
898
1,546
2,444
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
24. Capital and Reserves
Share capital and share premium
Ordinary shares in issue at 30 November 2016
IPO adjustment
Prior year business acquisition merger reserve
Bonus issue
Cancellation of share premium
Ordinary shares in issue at 30 November 2017
Share issue
Ordinary shares in issue at 30 November 2018
No. of
shares
’000
70,300
76,250
5,000
206,368
-
357,918
21,429
379,347
Share capital
£’000
703
762
50
2,064
-
3,579
214
Shares
premium
(’000)
64,647
117,257
-
-
(64,647)
117,257
28,745
3,793
146,002
Merger
reserves
£’000
-
-
7,950
-
-
7,950
-
7,950
All of the ordinary shares in issue referred to in the table above are fully paid.
Ordinary share capital & share premium & merger reserve
Prior to the IPO in April 2017, the Company performed a share split, with the consequence that Ordinary share capital reduced from £1 par value to
1p par value per share. Also prior to the IPO, share premium was cancelled in order to convert into distributable reserves. A bonus issue of shares
was granted to the current shareholders at the same time.
On 25 April 2017 the Company placed 76.25m Ordinary 1p shares with an attached merger reserve of 159p per share (the total listing price being
160p per share) on AIM.
The Company also issued 5m Ordinary 1p shares, with an attached share premium of 159p per share total value (160p per share) to the
shareholders of iForce Group for their interests in the business.
On 28 June 2018 the Company placed 21.43m Ordinary 1p shares with an attached share premium of 139p per share (140p per share in total),
to provide part of the funding for the acquisition of the TPN Group, as described in Note 6.
Own shares
Included in the total number of ordinary shares outstanding above are 1,690,000 (2017: 1,690,000) Ordinary shares held by the Group’s employee
benefit trust. The Ordinary shares held by the trustee of the Group’s employee benefit trust pursuant to the SIP are treated as Own shares in the
Consolidated and Company’s Balance Sheet in accordance with IAS 32.
Nature and purpose of reserves
i. Translation reserve - represents the gains and losses arising on retranslating the net assets of overseas operations into Sterling. When a foreign
operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to
that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
ii. Own shares reserve – This reserve arose when the Group issued equity share capital under its Share Incentive Plan (SIP) which is held in trust by
the trustee of the Group’s employee benefit trust. If these shares are forfeited throughout the vesting period for leavers or another reason they will
continue to be owned by the trust and therefore will continue to be presented within Own shares in the group financial statements.
iii. Share options reserves – consist of provisions made during the financial year relating to Long-Term Incentive and Management Incentive Plans for
future liabilities relating to management and employee share-based incentive scheme payments, further details are disclosed in note 25.
25. Share-based Payments
As at 30 November 2018, the Company operated the following share award plans:
• Long-Term Incentive Plan;
• Management Incentive Plan; and
• Share Incentive plan.
There were no exercisable options under the above schemes as at 30 November 2018 (2017: £nil).
Long-term incentive plan (LTIP)
The LTIP was approved by the Board on 18 April 2017 enabling the Group to award options on shares to key employees following admission to the
Alternative Investment Market (AIM) on the London Stock Exchange. Awards were granted during the year ended 30 November 2017, giving award
holders the right to exercise nil-out options at the end of the three year period from the date of the award, dependent on;
• The level of growth in earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending 30 November 2017 of £56.8m; and
• achievement of 10% compound growth in the total shareholder return (TSR) over the period from the date of admission to trading on the London
Stock Exchange (25 April 2017) to the third anniversary of admission.
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25. Share-based Payments continued
The fair value of options granted during the year ended 30 November 2018 was determined on a Log-normal Monte-Carlo Stochastic model. Using
an initial price, a simulation of a large number of share paths was undertaken that followed the geometric Brownian motion that calculated a valuation
for each path, which was then averaged to obtain an overall valuation for two key outputs:
•
•
the simulated share price at the vesting date; and
the intrinsic value of the LTIP shares.
IFRS 2 states that there is present obligation to settle in cash if:
•
•
•
the choice of settlement in equity has no commercial substance; or
the Company has a past practice or stated policy of settling in cash; or
the entity generally settles in cash whenever the counterparty requests cash settlement.
For the Group, none of the above apply and there is no assumed obligation to settle in cash, consequently the LTIP award will be treated as equity
settled for this valuation. The LTIP award also gives rise to post-vesting restriction on the shares for a period of 12 months from the date of issue to
participators or the fourth anniversary of the granting of the LTIP, whichever is the earliest.
Under IFRS 2 there is a requirement to consider post-vesting restrictions to be incorporated in calculating the fair value for the LTIP award; as shares
in the Company are traded on the London Stock Exchange, the restriction would have a negligible effect on the price that a knowledgeable and
willing market participant would pay for the shares and as such no adjustment to the fair value of the LTIP shares has been calculated. This valuation
has been calculated and provided by an independent third party who have advised the directors of the fair value and future LTIP obligations as
follows;
Number of shares under options granted – 707,000
Fair value as calculated per option – 90.5 pence
Total value of options – £480,066
The vesting period charge in the financial statements is as follows;
Fair value charge of LTIP scheme
Value of
options
granted
Total
£'000
480
Value of
options
expired
Total
£'000
(240)
Future obligations
Total
£’000
240
Greater than
12 months
£’000
29
2019
£’000
81
2018
£’000
130
Management incentive plan (MIP)
The MIP was approved by the Board on 25 April 2017. The Company entered into arrangements with the two participants A Laffey and D Harte.
A Laffey subscribed for 60,000 A1 ordinary shares in Greenwhitestar Acquisitions Limited, a subsidiary of the Company, at £0.65p per share and
D Harte subscribed for 20,000 A2 ordinary shares at £2.00 per share. The participants have the right to sell all of their MIP shares at the end of the
three year period from the date of the award. The Company also has a corresponding call right at the end of this period. The date on which this right
is exercised is referred to as the Exercise Date.
The Company, at its discretion, may purchase the MIP shares for cash or by issuing ordinary shares in the Company. Where participants receive
ordinary shares in the Company, the MIP participants are restricted from selling 50% of their allotment for a 12 month period from the date of issue
or the fourth anniversary of the MIP share issue whichever is earliest.
Performance conditions
The value of the MIP shares on the Exercise Date aggregate on sale will be 8% of the increase in the Company’s share price above a share price
hurdle multiplied by the number of issued share capital at the date of admission. The share price will be based on the 90 day average price of the
of the Company’s ordinary shares.
The hurdle is set at a premium of 10% above the placing price of a share in the Company on admission and the hurdle will increase on a compound
basis by 10% per annum to the vesting date. Based on the above, the hurdle at the date of admission is equivalent to a market capitalisation of
£762m provided no new share issues take place. If for example the market capitalisation at the end of the MIP was valued at £862m, the increase
in shareholder value above the hurdle of £762m is £100m and it is this figure that is attributable to the 8% MIP value of shares, i.e. £8m.
The fair value of MIP shares valuations was determined on a Log-normal Monte-Carlo Stochastic model, using an initial price, a simulation of a large
number of share paths was undertaken that followed the geometric Brownian motion which calculated a valuation for each path, that was then
averaged to obtain an overall valuation using similar type of companies operating in the same sector as the Company as a benchmark group
to evaluate the comparative market capitalisation performance condition.
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
25. Share-based Payments continued
This simulation was performed over a large number of share paths and the valuation provided three key outputs:
•
•
•
the simulated share price at the Exercise Date;
the 90 day average share price at the Exercise Date; and
the intrinsic value of the MIP shares.
The MIP scheme may be settled in cash or shares at the discretion of the Company and IFRS 2 states that there is present obligation to settle
in cash if;
•
•
•
the choice of settlement in equity has no commercial substance; or
the Company has a past practice or stated policy of settling in cash; or
the entity generally settles in cash whenever the counterparty requests cash settlement.
For the Company, none of the above apply and there is no assumed obligation to settle in cash, consequently the MIP award will be treated as equity
settled for this valuation and the plan also gives rise to post-vesting restriction on the shares for a period of 12 months from the date of issue to
participants or the fourth anniversary of the granting of the MIP shares, whichever is the earliest.
Under IFRS 2 there is a requirement to consider post-vesting restrictions to be incorporated in calculating the fair value for the MIP shares; as shares
in the Company are traded on the AIM market of the London Stock Exchange, the restriction would have a negligible effect on the price that a
knowledgeable and willing market participant would pay for the shares and as such no adjustment to the fair value of the MIP shares has been
calculated. This valuation has been calculated at fair value and the number of shares cannot be sold until the date of crystallisation. This fair valuation
has provided by an independent third party who has advised management of the fair value of future MIP obligations as follows;
Fair value charge of MIP scheme
Fair value of future obligations
Greater than
12 months
£’000
2019
£’000
2018
£’000
413
1,029
1,647
Total
£’000
3,089
Share Incentive Plan (SIP)
The SIP was approved by the Board on 25 April 2017. The SIP is an equity settled share incentive plan approved by HMRC. The purpose of the SIP is
to be a free share issue to staff fully funded by funds from the outgoing parent shareholder. The SIP shares are held in trust by independent third
party trustees for specified employees, but may be forfeited during a three year period that commenced from 30 June 2017 in certain circumstances.
The number of shares held in trust are 1,687,500 Ordinary £0.01p shares at a cost of £1.60 per share with a market value of £2.7m. All of the shares
were fully paid for by the outgoing shareholder and parent. The employees who participated in the SIP are the Company’s Executive Directors and
employees, including the employees of the Company’s subsidiaries, as at 30 June 2017.
The SIP also allows for the extension of the SIP to allow additional employees to participate at the discretion of the Board.
The current and future charge to the Income Statement is detailed below;
Fair value charge of Employee Benefit Trust SIP Scheme
Future obligations
Total
£’000
2,018
Greater than
12 months
£’000
383
2019
£’000
654
2018
£’000
981
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26. Operating Lease Arrangements
At the year end the Group had outstanding commitments under non-cancellable operating leases, which fall due as follows:
Within one year
Between one and five years
Due after five years
2018
2017
Plant and
equipment
£’000
52,239
91,082
12,618
Land and
buildings
£’000
46,986
179,624
447,364
Plant and
equipment
£’000
38,837
62,955
9,736
Land and
buildings
£’000
34,444
120,696
311,987
155,939
673,974
111,528
467,127
27. Related Party Disclosures and Ultimate Parent Undertaking
During the year the Company and or its subsidiaries entered into commercial transactions with related parties as shown in the table below.
2018 Related Party Disclosures
Directors’ loans
IPS at Eddie Stobart Limited
Speedy ROI Limited
Puro Property Partnership Limited
Description of
related party
Sales to
related party
£’000
Purchases
from related
party
£’000
Balance owed
by related
party
£’000
Balance owed
to related
party
£’000
a
b
c
d
-
2,795
190
-
-
-
-
30
475
553
39
-
-
-
-
11
a. In February 2015, two Directors of a subsidiary company were loaned an aggregate amount of £475,000, at 3% plus RBS base rate non-
compound interest, repayable in full as at February 2022.
b. IPS at Eddie Stobart Limited is a joint venture participation. IPS at Eddie Stobart Limited provides logistics and management services.
c. Speedy ROI Limited is a related party by common directorship of Puro Ventures Limited. Sales of £190,000 were made to Speedy ROI Limited
during the year, with £39,000 owed at 30 November 2018.
d. Puro Property Partnership Limited is a related party by common directorship of Puro Ventures Limited. Rent of £2,500 per month was paid to Puro
Property Partnership Limited during the year, with £10,999 being owed at 30 November 2018.
In addition, amounts totalling £15,000 were received by the Company from a Director during the year before being paid out on his behalf to
a third-party. There is no balance due to the Company or any company in the Group at the year end.
2017 Related Party Disclosures
Stobart Group Limited and subsidiaries
AstSigns Limited
Oakfield Manor Estates Limited
WS Transportation Limited
DBAY Advisors Limited
Greenwhitestar Holding Company 1 Limited
Greenwhitestar Holding Company 2 Limited
Directors’ loans
IPS at Eddie Stobart Limited
Description of
related party
Sales to
related party
£’000
Purchases
from related
party
£’000
Balance owed
by related
party
£’000
Balance owed
to related
party
£’000
a
b
b
b
c
d
e
f
g
1,369
31
8
741
-
2,703
-
-
1,535
(1,645)
(150)
-
(1,527)
(576)
(2,845)
-
-
-
-
-
-
-
-
-
-
475
187
-
-
-
-
-
-
-
-
-
On 25 April 2017 Eddie Stobart Logistics plc was listed on the Alternative Investment Market of the London Stock Exchange. As a consequence the
Group has a new Board of Directors and a change in the shareholder base occurred. In view of this change, management have re-evaluated the
nature of existing relationships and noted that some have ceased to be related parties. These changes are outlined specifically below. The period
during which transactions could have been affected by the existence of a related party relationship has been fully disclosed in the interim financial
statements for the period to 31 May 2017 that covered the period from 1 December 2016 to 25 April 2017.
Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Consolidated Financial Statements continued
for the year ended 30 November 2018
27. Related Party Disclosures and Ultimate Parent Undertaking continued
a. Stobart Group Limited and its subsidiary undertakings. Prior to 25 April 2017 Stobart Group Limited owned 49% of the share capital of
Greenwhitestar Holding Company Limited, the Company’s ultimate parent undertaking. During the year, the Group made purchases of property
rents and transport services and provided haulage services to Stobart Group Limited in the normal course of business. As of 25 April 2017 Stobart
Group Limited is no longer a related party as a consequence of its reduced shareholding.
b. W Stobart was a director of the Company until his resignation on 4 April 2017. Related party transactions up to 4 April 2017 have
been disclosed for:
i. purchases relating to its provision of branded products and vehicle advertising from AstSigns Limited;
ii. haulage services provided to Oakfield Manor Estates Limited and WS Transportation Limited: and
iii. purchases of haulage services from WS Transportation Limited.
W Stobart is a director or controlling shareholder of each of these companies.
c. DBAY Advisors Limited, incorporated in the Isle of Man, was prior to 25 April 2017 deemed to be the controlling party of Greenwhitestar Holding
Company 1 Limited and Advisors to the fund manager of DouglasBay Capital Fund II LP, which was beneficially interested in the Company. In the
lead up to the stock market flotation the Group made purchases in respect of management services provided by DBAY Advisors Limited. As of 25
April 2017 onwards, DBAY Advisors Limited are no longer a related party as a consequence of their reduced interest in the Company.
d. Greenwhitestar Holding Company 1 Limited (GWHC1) is the immediate parent company of GWHC2 defined holders and charged management
fees for services rendered up to 25 April 2017. As of 25 April 2017 onwards, GWHC1 is no longer a related party as a consequence of their
reduced interest in the Company.
e. Greenwhitestar Holding Company 2 Limited (GWHC2) was the Company’s immediate parent company until 25 April 2017. As of 25 April 2017
onwards, GWHC2 is no longer a related party as a consequence of their reduced interest in the Company.
f.
In February 2015, two Directors of a subsidiary company were loaned an interest free aggregate amount of £475,000, repayable in full as at
February 2022.
g. IPS at Eddie Stobart Limited is a joint venture participation. IPS at Eddie Stobart Limited provides logistics and management services.
28. Contingent liabilities
There is an unlimited bank cross guarantee arrangement between the Company and certain of its material subsidiary undertakings. The maximum
potential liability at 30 November 2018 was £124.0m (2017: £100.0m).
29. Capital commitments
At 30 November 2018, the Group had no capital commitments (2017: £0.1m).
30. Subsequent events
There were no events after the reporting period that are material for disclosure in the financial statements.
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Company Statement of Financial Position
as at 30 November 2018
Assets
Non-current assets
Investments
Amounts owed by Group undertakings
Current assets
Amounts owed by Group undertakings
Other receivables
Cash
Current liabilities
Amounts owed to Group undertakings
Other creditors
Non-current liabilities
Amounts owed to Group undertakings
Net assets
Equity
Called up share capital
Share premium account
Merger reserve
Prior year treasury shares
Share option reserve
Retained earnings
Total shareholders’ funds
Profit / (Loss) for the year
30 November
2018
£’000
30 November
2017
£’000
Note
4
5
5
6
6
65,300
-
65,300
65,300
122,303
187,603
151,629
72
4
151,705
-
136
25
161
(26,218)
(640)
(2,006)
(47)
(26,858)
(2,053)
-
-
-
-
190,147
185,711
3,793
146,002
7,950
(2,700)
2,758
32,344
3,579
117,257
7,950
(2,700)
1,079
58,546
7
190,147
185,711
(4,630)
(1,664)
This Statement of Financial Position should be read in conjunction with the notes to the Company Statement of Financial Position on pages 85 to 89
and the notes to the Consolidated Financial Statements on pages 49 to 82.
The Company Financial Statements on pages 83 to 89 were approved by the Board of Directors on 28 March 2019 and were signed on its behalf by:
Damien Harte
Chief Financial Officer
Company number 08922456
Eddie Stobart Logistics plc Annual Report Accounts 2018
83
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Company Statement of Changes in Equity
for the year ended 30 November 2018
Balance at 1 December 2016
Loss for the year
Cancellation of share premium
Issue of capital (net of costs)
Share based payment charges
Dividends paid
Share
capital
£’000
703
-
-
2,876
-
-
Share
premium
£’000
64,647
-
(64,647)
117,257
-
-
Merger
reserve
£’000
Share options
reserve
£’000
-
-
-
7,950
-
-
-
-
-
-
1,079
-
(Accumulated
losses) /
Retained
earnings
£’000
(62)
(1,664)
64,647
(2,064)
2,700
(5,011)
Own
shares
£’000
-
-
-
-
(2,700)
-
Total
£’000
65,288
(1,664)
-
126,019
1,079
(5,011)
Balance at 30 November 2017
3,579
117,257
7,950
1,079
(2,700)
58,546
185,711
Loss for the year
Issue of capital (net of costs)
Share based payment charges
Incentive plans
Dividends paid
-
214
-
-
-
-
28,745
-
-
-
-
-
-
-
-
-
-
1,156
523
-
-
-
-
-
-
(4,630)
-
-
-
(21,572)
(4,630)
28,959
1,156
523
(21,572)
Balance at 30 November 2018
3,793
146,002
7,950
2,758
(2,700)
32,344
190,147
The accompanying notes form part of the financial statements.
84
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Notes to the Company Financial Statements
for the year ended 30 November 2018
1. Basis of Accounting
Eddie Stobart Logistics plc is a public limited company incorporated in the United Kingdom. The results of the Company are included in the financial
statements of Eddie Stobart Logistics Plc which are available from Stretton Green Distribution Park, Langford Way, Appleton, Warrington, Cheshire,
England, WA4 4TQ. These financial statements present information about the Company as an individual undertaking and not about its Group. The
separate financial statements of the Company are prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”) and the Companies Act 2006.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial
Reporting Standards as adopted by the EU (“Adopted IFRSs”) but makes adjustments where necessary in order to comply with Companies Act
2006.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial
Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act
2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken:
• Company cash flow statement and related notes
• Disclosure in respect of transactions with wholly-owned subsidiaries
• Disclosures in respect of capital management
• The effects of new but not effective IFRSs
• Disclosure in respect of the compensation of key management personnel
As the Consolidated Financial Statements of the Group include equivalent disclosures, the Company has taken exemptions under FRS 101 available
in respect of the following disclosures:
• Certain disclosures required by IFRS 13 Fair value measurement
• Disclosures required by IFRS 7 Financial instrument disclosures
• Share-based payments – IFRS 2 is being applied to equity instruments
The financial statements are presented in Sterling rounded to the nearest thousand.
Under Section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.
Basis of preparation
The Company accounting policies set out below have been applied consistently to all years in these Financial Statements, other than where new
policies have been adopted. These financial statements have been prepared on a going concern basis, in accordance with The Companies Act 2006
as applicable to companies using FRS 101 and under the historic cost convention.
2. Significant Accounting Policies
The accounting policies adopted by the Company are consistent with those used in the Group’s Consolidated Financial Statements as set out on
pages 49 to 58, except for the following items which are only relevant for the Company as a standalone entity.
Judgements and key sources of estimation
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The key estimates with a significant risk of material adjustment in the next year, are discussed below:
•
•
IAS 36 ‘Impairment of assets’. In testing for impairment of investments in, and amounts due from, subsidiary undertakings, the Directors have
made certain assumptions concerning the future development of its subsidiary businesses that are consistent with their annual budgets and
forecasts into perpetuity. Should these assumptions regarding the discount rate or growth in the profitability be unfounded then it is possible that
investments in, and amounts due from, subsidiary undertakings included in the balance sheet could be impaired.
IFRS 2 ‘Share-based payments’. The Company has issued equity settled share-based payment options to certain employees in exchange for
services rendered by them. The fair value is measured using an option valuation model at the date of grant and is recognised as an employee
expense over the period in which the employees become unconditionally entitled to the options, with a corresponding increase in equity. This
valuation is based on estimates of the number of options that will eventually vest, based on related service and non-market vesting conditions that
are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related
service and non-market performance conditions at the vesting date.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any of the future periods affected.
Eddie Stobart Logistics plc Annual Report Accounts 2018
85
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Company Financial Statements continued
for the year ended 30 November 2018
2. Significant Accounting Policies continued
Investments and amounts owed by Group undertakings
Investments in subsidiaries are stated at cost and reviewed for impairment if there are indications that the carrying value may not be recoverable.
Cash and cash equivalents
In the Statement of Financial Position, cash includes cash and cash equivalents excluding bank overdrafts.
3. Employees and Directors
Directors’ remuneration is shown in the Directors’ Remuneration report from page 34 to 35. The Company has two direct employees (2017: 2).
The Directors do not believe it is practicable to apportion the remuneration of the Directors between services as Directors of the Company and
services as Director Group subsidiaries.
4. Investments in Subsidiary Undertakings
The cost and provisions for impairment of the Company’s investments are shown below:
Cost and net book value
At 30 November
30 November
2018
£’000
30 November
2017
£’000
65,300
65,300
We have looked at the future cash flows of the companies which comprise the investments and believe that these values are recoverable.
Company name
Business activity
Directly
Indirectly
Country of incorporation
Proportion of ordinary share
capital held
Subsidiary undertakings: Registered office
Stretton Green Distribution Park, Langford Way, Appleton, Warrington, WA4 4TQ
Greenwhitestar Acquisitions Limited
Stobart Transport & Distribution Limited
Eddie Stobart Group Limited
AHL Anglia Limited
AIL Anglia Limited
iForce Group Limited
TLP Holdings Limited
Eddie Stobart Limited
Stobart Truckstops Limited
O’Connor Container Transport Limited
O’Connor Container Storage Limited
Westlink Storage & Shipping Company Limited
iForce Auctions Limited
iForce Limited
iForce Trading Limited
Stobart Rail Freight Limited
Autoteq Limited
Acumen Distribution Service Holdings Limited
Autologic Services Limited
Buyforce Limited
iForce Holdings Limited
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Contract logistics
Logistics support
Contract logistics
Contract logistics
Warehouse logistics
Contract logistics
Contract logistics
Contract logistics
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Subsidiary undertakings: Registered office
Puro House, Unit 2 The Pavilions, Cranford Drive, Knutsford Business Park, Knutsford, Cheshire, WA16 8ZR
Puro Ventures Limited *
Contract logistics
47.5%
United Kingdom
Subsidiary undertakings: Registered office
Headlands House 1 Kings Court Kettering Parkway, Kettering, Northamptonshire, NN15 6WJ
The Logistic People Limited
Recruitment services
100%
United Kingdom
Subsidiary undertakings: Registered office
Old Bank Chambers La Grande Rue, St Martin’s, GY4 6RT
ESLL Group Limited (formally Eddie Stobart Logistics Limited)
Holding company
100%
Guernsey
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4. Investments in Subsidiary Undertakings continued
Proportion of ordinary share
capital held
Company name
Business activity
Directly
Indirectly
Country of incorporation
Subsidiary undertakings: Registered office
Bond Drive Extension, Dublin Port, Dublin 3
Eddie Stobart (Ireland) Limited
Eddie Stobart (Ireland) Drivers Services Limited
Subsidiary undertakings: Registered office
Prologics Park, Midpoint Way, Minworth, West Midlands, B76 9EH
Contract logistics
Contract logistics
100%
100%
Ireland
Ireland
The Pallet Network Group Limited
The Pallet Network Limited
Contract logistics
Contract logistics
100%
100%
United Kingdom
United Kingdom
Subsidiary undertakings: Registered office
Unit 3, The Drive, Gatwick Road, Crawley, West Sussex, RH10 9AN
Eezehaul Limited
Contract logistics
100%
United Kingdom
Subsidiary undertakings: Registered office
Hazeldonk 6049, 4836 LA Breda, The Netherlands
Eddie Stobart Europe Holding BV (formally Autologic Benelux B.V.)
Stobart Automotive NL BV (formally Walon BV)
Holding company
Contract logistics
100%
100%
The Netherlands
The Netherlands
Subsidiary undertakings: Registered office
Eikelaarstraat 28, 3600 Genk, Belgium
Eddie Stobart Logistics Europe NV
Stobart Automotive Belgium NV
Stobart Automotive Europe NV
Automotive Plant Releasing Services NV
Subsidiary undertakings: Registered office
Velika & Georgi Chenchevi Street 3, 5400 Sevlievo, Bulgaria
Contract logistics
Contract logistics
Contract logistics
Dormant
100%
100%
100%
100%
Belgium
Belgium
Belgium
Belgium
Eddie Stobart Logistics Bulgaria OEED
Contract logistics
100%
Bulgaria
Subsidiary undertakings: Registered office
U Stavoservisu 692/1b, 108 00 Praha 10, Czech Republic
Stobart Automotive CZ s.r.o.
Contract logistics
100%
Czech Republic
Subsidiary undertakings: Registered office
ul. Krakow Suburb 47/51, 00-071 Warsaw, Poland
Walon Poland SP zo.o.
Dormant
100%
Poland
Subsidiary undertakings: Registered office
Bucuresti Street (DJ 601) no. 51, 077055 Ciorogarla – Ilfov, Romania
Eddie Stobart Logistic Romania SRL
Contract logistics
100%
Romania
Joint Ventures: Registered office
IPS at Eddie Stobart Limited,
C/O Culina Group Limited, Shrewsbury Road, Market Drayton, TF9 3SQ
Contract logistics
50%
United Kingdom
Transport Service & Logistics GMBH
Hauptstraße 96, D-82467 Garmisch-Partenkirchen, Germany
TSK Transport Service & Logistics Gmbh**
Hauptstraße 96, D-82467 Garmisch-Partenkirchen, Germany
Transport Service & Releasing Iberia S.L.
Paseio de la Calderona, 28850 Ciempozuelos, Spain
Contract logistics
Contract logistics
Contract logistics
50%
50%
33%
Germany
Germany
Spain
* The Group has effective control over the operating activities of Puro Ventures Limited, a franchise delivery model business incorporated in the
United Kingdom and therefore consolidates Puro Ventures Limited in its financial statements in accordance with IFRS 10. See Note 6b of the
Group financial statements for more information on Puro Ventures Limited.
** The Company’s 50 per cent interest in TSK continues to be held indirectly and has been registered as being held by AHL Anglia Limited following
the liquidation of a Belgian intermediate holding company.
Eddie Stobart Logistics plc Annual Report Accounts 2018
87
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Notes to the Company Financial Statements continued
for the year ended 30 November 2018
5. Receivables
Amounts falling due within one year:
Amounts owed by Group undertakings
Amounts falling due in more than one year:
Amounts owed by Group undertakings
30 November
2018
£’000
30 November
2017
£’000
151,629
-
-
122,303
The Company has amounts due from Group undertakings which are repayable on demand. Repayment is not anticipated within the year
ending 30 November 2019.
6. Trade and Other Payables (Current)
Current Liabilities
Amounts owed to Group undertakings
Other creditors
The Company has amounts due to Group undertakings which are repayable on demand.
7. Reconciliation of Movement in Shareholders’ funds
Opening shareholders’ funds
New share issue
Share premium on issue (net of share issue costs)
Merger reserve
Share incentive provision
Share based payments
Prior year treasury reserve
Dividends paid
Profit and loss
Total shareholders’ funds
30 November
2018
£’000
30 November
2017
£’000
(26,218)
(640)
(2,006)
(47)
(26,858)
(2,053)
30 November
2018
£’000
30 November
2017
£’000
185,711
214
28,745
-
523
1,156
-
(21,572)
(4,630)
65,288
812
117,257
7,950
1,079
2,700
(2,700)
(5,011)
(1,664)
190,147
185,711
As permitted by Section 408(4) of the Companies Act 2006, the Parent Company’s Income Statement has not been included in these Financial
Statements. The Parent Company’s loss after tax for the financial year was £4,630,000 (2017: £1,664,000 loss).
Ordinary share capital, share premium and merger reserve
Prior to the IPO, the Company performed a share split, with the consequence that ordinary share capital reduced from £1 par value to 1p par value
per share. Also prior to the IPO, share premium was cancelled in order to convert into distributable reserves. A bonus issue of shares was granted to
the current shareholders at the same time.
On 25 April 2017 the Company placed 76.25m Ordinary 1p shares with an attached merger reserve of 159p per share (the total listing price being
160p per share) on AIM.
The Company also issued 5m ordinary 1p shares, with an attached share premium of 159p per share total value (160p per share) to the shareholders
of iForce Group for their interests in the business.
On 28 June 2018 the Company placed 21.43m Ordinary 1p shares with an attached merger reserve of 139p per share (140p per share in total),
to provide part of the funding for the acquisition of the TPN Group.
Own shares
Included in the total number of Ordinary shares outstanding above are 1,690,000 (2017: 1,690,000) Ordinary shares held by the Group’s employee
benefit trust. The Ordinary shares held by the trustee of the Group’s employee benefit trust pursuant to the SIP are treated as Own shares in the
Consolidated and Company’s Balance Sheet in accordance with IAS 32.
88
7. Reconciliation of Movement in Shareholders’ Funds continued
Own share reserve
This reserve arose when the Group issued equity share capital under its Share Incentive Plan (SIP) which is held in trust by the trustee of the Group’s
employee benefit trust. If these shares are forfeited throughout the vesting period for leavers or another reason they will continue to be owned by the
trust and therefore will continue to be presented within Own shares in the Group Financial Statements.
Share option reserves
Consist of provisions made during the financial year relating to Long-Term Incentive and Management Incentive Plans for future liabilities relating to
management and employee share-based incentive scheme payments. Further details are disclosed in note 25.
8. Capital Commitments
At 30 November 2018, the Company had no commitments (2017: £nil).
9. Contingent Liabilities
There is an unlimited bank cross guarantee arrangement between the Company and some of subsidiary undertakings. The maximum potential
liability at 30 November 2018 was £124.0m (2017: £100.0m).
10. Subsequent Events
There were no events after the reporting period that are material for disclosure in the financial statements.
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Eddie Stobart Logistics plc Annual Report Accounts 2018
89
Eddie Stobart Logistics plc Annual Report and Accounts 2018
Term
Accounts
Admission
ALLMI
AAT
ADR
AFR
AGM
AI
AIM
APMs
Board
Brexit
CAGR
CGU
Glossary
Definition
The financial statements of the Group and/or the Company, as appropriate
The admission of the issued ordinary shares to trading on AIM that became effective on 25 April 2017
Association of Lorry Loader Manufacturers and Importers
The Association of Accounting Technicians
The European Agreement concerning the International Carriage of Dangerous Goods by Road
Accident Frequency Rate which is calculated to provide an indication of the number of RIDDORs that occur
for every 100,000 hours worked
Annual General Meeting of the Company
Artificial Intelligence
Alternative Investment Market of the London Stock Exchange
Alternative Performance Measures
Board of Directors of the Company
A reference to the UK’s referendum decision to leave the European Union
Compound Annual Growth Rate
Cash Generating Unit
Company/Parent Company
CPC
CTP
DCPC
DDP
Directors
DVSA
EBITDA
Eddie Stobart Logistics plc a public limited company incorporated in England and Wales with registered
08922456
Certificate of Professional Competence
Career Transition Partnership
Driver Certificate of Professional Competence
Eddie Stobart’s Driver Development Programme
The Directors of the Company as at the date of this document, as identified on pages 28 and 29
The Driver Vehicle and Standards Agency
Earnings Before Interest, Tax, Depreciation and Amortisation
Eddie Stobart Group/Group
The Company and its subsidiaries from time to time
Eddie Stobart
EPS
The Company or the Eddie Stobart Group, as appropriate
Earnings Per Share
Executive Directors
Alex Laffey and Damien Harte
HGV
HSQE
IAS
Heavy Goods Vehicle
Health Safety, Quality and Environment
International Accounting Standards
iForce/iForce Group
iForce Group Limited, a subsidiary of the Company
IFRS
IOSH
IoT
IPaaS
IPO
LGV
LMS
International Financial Reporting Standards
The Institution of Occupational Safety and Health
Internet of Things
Integration Platform as a Service
The Initial Public Offering of ordinary shares resulting in the Admission
Light Goods Vehicle
Learning Management System
Logistic People
Logistic People Limited, a wholly owned subsidiary of TLP
LTIP
MHE
MIB
MIP
The Long Term Incentive Plan described on page 78
Material Handling Equipment
Manufacturing, Industrial and Bulk
Management Incentive Plan described on page 79
Ordinary Shares/Shares
Ordinary shares of £0.01 each in the capital of the Company
Regional Fulfilment Centre
Software as a Service
The Group divides its business up into sectors, comprising of Retail, Consumer, E-commerce,
Manufacturing Industrial and Bulk (MIB) and Other
Quoted Companies Alliance
QCA
QCA Corporate Governance Code QCA Corporate Governance Code for Small and Mid-Size Quoted Companies published by the QCA
RIDDOR
A workplace incident reportable under the Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations 2013
Safe and Fuel Efficient Driving
RFC
SaaS
Sectors
SAFED
SIP
Share Incentive Plan described on page 80
Speedy Freight
Puro Ventures Limited, a subsidiary of the Company that trades as Speedy Freight
SUD
TLP
TPN
UK GAAP
90
Safe Urban Driving
TLP Holdings Limited, a subsidiary of the Company
The Pallet Network Limited
UK Generally Accepted Accounting Principles
Advisors
Registrars for Eddie Stobart Logistics plc
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Nomad and Co-broker
Cenko Securities plc
Tokenhouse Yard
London
EC2R 7AS
Co-broker
Berenberg
60 Threadneedle Street
London
EC2R 8HP
United Kingdom
Public Relations
FTI Consulting
200 Aldergate Street
London
EC1A 4HD
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Eddie Stobart Logistics plc Annual Report Accounts 2018
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Eddie Stobart Logistics plc
Stretton Green Distribution Park,
Langford Way, Appleton,
Warrington, Cheshire,
WA4 4TQ