ANNUAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
Xpediator PLC
700 Avenue West
Skyline 120
CM77 7AA
United Kingdom
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Company Registration Number: 10397171
CONTENTS
HIGHLIGHTS
1
FINANCIAL STATEMENTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
CEO’S STATEMENT
RISKS AND UNCERTAINTIES
GOVERNANCE
BOARD OF DIRECTORS
CORPORATE GOVERNANCE
STATEMENT
DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
INDEPENDENT AUDITOR’S
REPORT
3
5
9
11
12
16
17
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CONSOLIDATED INCOME
STATEMENT
CONSOLIDATED STATEMENT
OF OTHER COMPREHENSIVE
INCOME
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT
OF CASH FLOWS
23
24
25
27
29
NOTES TO THE CONSOLIDATED
STATEMENT OF CASH FLOWS 30
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
31
COMPANY STATEMENT OF
FINANCIAL POSITION
COMPANY STATEMENT OF
CHANGES IN EQUITY
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
68
69
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HIGHLIGHTS
FINANCIAL
PERFORMANCE
£116.3m
£1.8m
60% increase in revenues to £116.3 million
(2016: £72.8 million)
Profit after tax increased to £1.8 million
(2016: £1.1 million)
£3.9m
£4.8m
81% increase in EBITDA to £3.9m
(2016: £2.1 million)
72% increase in adjusted EBITDA to £4.8m
(2016: £2.8 million)1
£3.1m
£3.3m
70% increase in reported operating profit
to £3.1 million (2016: £1.8 million)
Adjusted Earnings increased to £3.3 million
(2016: £1.7 million)3
1.64p
Basic EPS of 1.64p (2016: 0.70p) reflecting
the increased number of shares in issue post
equity fundraisings and acquisitions
0.64p
Final dividend recommended of
0.64p per share
OPERATIONAL
ACHIEVEMENTS
LOOKING AHEAD
TO 2018
• Completed listing on AIM of the
London Stock Exchange in
August 2017
• Strong pipeline of complementary
acquisition targets in the UK
and Europe
• Successful fund raises totalling £7.8 million
• Continued high demand for road
of new capital
transportation
• Strong organic growth across all three
• Postive Q1 trading performance
divisions
• Eshopwedrop well placed for further growth
• Completed three earnings enhancing
through franchising
acquisitions
• Notable client wins in Romania and UK
• EshopWedrop developing well
• Continued growth of Pallex Romania
facilitating contract logistics expansion
• Fulfilment a growth area for 2018
NOTES
1
Adjusted EBITDA excludes the costs associated with the acquisitions,
£240,000 and the costs associated with the listing £672,000.
2 Adjusted EBIT excludes the costs associated with the acquisitions, £240,000,
the costs associated with the listing £672,000 and the amortisation on the
intangible assets created, due to the acquisitions, £330,000.
3 Adjusted earnings are equal to the Profit after tax excluding the costs
associated with the acquisitions, £240,000, the costs associated with the
listing £672,000 and the amortisation on the intangible assets created,
due to the acquisitions, £330,000 and the non-cash interest charges
relating to the acquisitions £295,000.
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Alex Borrelli
Chairman
“...all three divisions have
performed well during
the year, increasing both
revenues and profits.”
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CHAIRMAN’S STATEMENT
+60%
Revenues increased
to £116.3 million
(2016: £72.8 million)
70%
Operating profit
increased to £3.1 million
(2016: £1.8 million)
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I am pleased to present the consolidated financial statements of Xpediator
for the year ended 31 December 2017. This is the first publication of the
Company’s annual trading results following our successful admission to AIM
on the London Stock Exchange, in August 2017.
2017 was a particularly successful year for the
business as shown by revenues increasing by 60%
to £116 million. Importantly, this increase came
primarily from organic growth across the business
with £10 million contributed from three acquisitions
completed during the year.
As a result, the Company is well placed to continue
to grow organically, as well as benefit from full
contributions from the acquisitions made in 2017.
SIGNIFICANT PROGRESS MADE IN 2017
The Group operates through three divisions – Freight
Forwarding, Transport Services and Logistics &
Warehousing – all three divisions have performed well
during the year, increasing both revenues and profits.
We have a strong management team who have been
together for many years and hold significant equity
interests in the Company. The team is led by Stephen
Blyth, CEO, who founded the business in 1988, and whose
leadership has been fundamental to the Group’s success.
On 11 August 2017, Xpediator was successfully admitted
to the AIM market of the London Stock Exchange, raising
£5 million before expenses. The rationale for listing
on the stock market was to support the Company’s
ambition to grow the business taking advantage of the
high demand for road transportation and to support
the Group’s strategy to act as a consolidator in a very
fragmented market place.
The Group’s acquisition strategy is based on identifying
potential targets with similar activities that can enhance
our existing offering to customers, create cross-selling
opportunities and in particular add to our burgeoning
e-commerce activities. Transactions have been funded
through a mix of cash and new shares and include a
significant performance related element. Each acquisition
to date has been earnings enhancing from completion.
During the year under review, the Company completed
three significant acquisitions. In March 2017, Xpediator
acquired EMT, a specialist fashion processor and domestic
distributor, for an initial consideration of £5.1 million, and
an expected earn out consideration deferred of £2.4 million.
This a highly complementary fit with the Company’s
existing retail and warehouse operations.
Utilising the funds from the IPO, together with a
further successful Placing in November raising £2.8
million, Xpediator made two further earnings accretive
acquisitions. In October 2017, the Company acquired
Benfleet Forwarding for an initial consideration of £6.6
million and an expected earn out consideration of £0.6
million. This is a complementary UK based international
freight forwarder. In November 2017, Regional Express
was acquired for an initial £1.2 million and an expected
earn out consideration deferred of £0.5 million. This is
a UK based freight forwarder, international courier and
recognised service provider for Amazon sellers in the
UK, US and Europe.
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CHAIRMAN’S STATEMENT CONTINUED
The Group’s e-commerce business, EshopWedrop had
a successful 12 months; beginning with the acquisition of
UKbuy in January 2017, for an initial £0.1 million and an
expected earn out consideration deffered of £0.3 million.
This is an Lithuanian based cross-border online delivery
service platform. Expanding the EshopWedrop network is
a key focus in 2018.
As the Group expands, there are increasing challenges
for our evolving business. We recognise the importance
of investing in the business, particularly in the areas of
systems and IT, and we continue to invest in people with
the recruitment of skilled personnel at all levels.
The Group now has over 700 employees across 11
countries. I would like to thank all our employees for their
commitment and contribution to the Group and welcome
our recent recruits who joined during the year. We are also
committed to the introduction this year of appropriate
performance plans to reward our staff, which are expected
to be in the form of options and cash.
GROUP RESULTS
Group revenues increased by 60% to £116.3 million for
the year ended 31 December 2017 (2016: £72.8 million).
Group adjusted EBIT, to exclude costs associated with
the listing and acquisitions and the amortisation relating
to the intangible assets of the acquired entities, increased
by 75% to £4.3 million (2016: £2.5 million).
EBIT increased by 81% to £3.9 million (2016: £2.1 million).
Adjusted earnings, increased by 94% to £3.3 million
(2016: £1.7 million).
Basic earnings per share were 1.64p (2016: 0.70p)
reflecting the increased number of shares in issue
following the successful fund raisings and shares issued
for the acquisitions.
Net assets amounted to £14.8 million (2016: £3.6 million).
AWARDS
Continuing the Company’s successful track record of
winning industry awards, in 2017 the Company was
awarded the BIFA Award for “European Logistics”, the
“Service Excellence Award” from the Chartered Institute
of Logistics & Transport and named as “Freight Carrier
of the Year” at the FTA Logistics Awards – in addition to
being shortlisted as finalists at the Global Freight Awards.
4
SHARES AND FUNDRAISINGS
During the year, we issued 20,833,333 new shares at
24p per share to raise £5 million in conjunction with the
AIM listing. In November 2017, we issued 7,000,000 new
shares at 40p per share raising £2.8 million. A further
9,219,858 new shares were issued as part of the
acquisition of Benfleet and 377,953 new shares as part
of the acquisition of Regional Express.
Following the fundraisings and acquisitions part financed
by shares, the Company has 117,431,144 shares in issue
and we welcome our new shareholders.
BOARD AND GOVERNANCE
I joined the Board as Chairman in January 2017, and as part
of the Company’s listing on AIM, the Board was expanded
through the addition of Geoff Gillo as a Non- Executive
Director, with significant sector and managerial expertise.
The executive Directors on the Board are Stephen Blyth,
CEO, and Richard Myson, CFO. We are looking to expand
the Board with the addition of further non-executive
directors, where their expertise can add value to the
Group as a whole, in addition to our commitment of
maintaining high corporate governance standards.
DIVIDEND
The Board is pleased to recommend a final dividend of
0.64p per share. The proposed dividend, if approved
by shareholders, will be paid on 3rd August 2018, to
shareholders on the register at the close of business on
6th July 2018.
NOTICE OF CFO RETIREMENT
Richard Myson has decided to retire from the Group for
personal reasons and will step down as a director on 31
October 2018. I would particularly like to thank Richard for
his significant contribution to the growth of the Group over
the last 14 years and wish him well for the future.
OUTLOOK
The markets in which we operate are in growth mode.
Demand for road transportation is increasing across Europe,
supported by economic stability together with a burgeoning
e-commerce sector. Xpediator is well placed to capitalise on
this positive market environment and has invested behind
the existing business and in complementary acquisitions
to capture an increasing share of the freight management
market in Europe and further afield.
We look forward to a further year of progress in 2018.
Alex Borrelli
(Non Executive) Chairman
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CEO’S STATEMENT
2017 has been a transformative
year for Xpediator and it has been
a pleasure to be a part of the
business’s growth. We achieved many
of our objectives in terms of the
stock market listing and expanding
the scale of the business but most
importantly we are well placed to
continue to grow.
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Stephen Blyth
Chief Executive
Officer
+60%
Revenues increased to
£116.3 million
(2016: £72.8 million)
+70%
Operating profit
increased to £3.1 million
(2016: £1.8 million)
Demand for transportation services in our core
markets of the UK and Eastern Europe is strong and
is being further enhanced by the significant increase
in e-commerce activities. These trends match the
services we provide and this makes Xpediator well
placed to take advantage of these opportunities.
We have clear expansion plans for all three divisions
and a pipeline of potential acquisitions, which we
anticipate will further support the growth of the
business.
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CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
DIVISIONAL REVIEW
FREIGHT
FORWARDING
£93.3m
Revenue
£2.4m
Operating Profit
before exceptionals
The Group’s largest division and trading as Delamode
International logistics enjoyed a successful 12 months.
The strategic decision to focus on selling full loads as
opposed to part loads, has continued to benefit this
division with revenue income increasing significantly
over the period. Growth has come from continued
demand across this divisions’ 10,000 strong customer
base and a key challenge has been the ability to
source capacity through a wide database of suppliers.
Geographically, the Baltic markets showed the
strongest improvement year on year and this was
driven by new client wins and a general increase in
demand. Post-acquisition activity of Benfleet and
Regional Express has been included in the Freight
forwarding division in 2017, this contributed £5.5m of
turnover for Benfleet and £1.5m for Regional Express.
TRANSPORT
SERVICES
£4.58m
Revenue
£1.95m
Operating Profit
before exceptionals
£120m
Gross Billings
Transport Services which trades under the Affinity
brand and provides bundled fuel and toll cards had an
excellent period benefitting from the general increase
in activity across the CEE region. The focus for this
division is to expand the customer base of 1,700 Eastern
European hauliers operating approximately 12,000 trucks
by offering extra services such as roadside assistance,
GPS and ferry bookings thereby acting as a “one
stop” solution. In addition, the Company is developing
a financing solution for customers to lease trucks and
purchase insurance all under the Affinity brand.
LOGISTICS AND
WAREHOUSING
EshopWedrop was established in 2015 in Lithuania and
has since expanded into Latvia, Estonia and Romania.
The Group’s EshopWedrop service made its first
country franchise awards in Cyprus and Albania.
£18.4m
Revenue
The service is a B2C offering that overlays existing
B2B groupage service lines run by the Group’s freight
forwarding division, Delamode. The service enables
consumers in these countries to make online purchases
in the UK, Poland, Italy, France, Germany and the USA
and have goods delivered to consolidation points at a
local cost. Many e-commerce retailers deliver within
country for free. The goods are delivered internationally
and the overall cost is highly competitive and little
more than a domestic delivery cost. The concept is
to franchise the service across the world to courier
companies or entities capable of last mile delivery.
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£0.9m
Operating Profit
before exceptionals
Logistics and Warehousing is focused on the UK and
Romania . Also in Romania the Company operates the
Pallex franchise. The ability to deliver consignments
within 24 hours will be a key advantage to growing the
contract logistics and warehousing in Romania. 2017 was
a successful period for this division seeing a significant
increase in turnover arising from increased Pallex
activity and also the successful awards of several new
customers both in the UK and Romania.
In March 2017, the Company opened a new facility
in Bucharest to accommodate the increase in the
warehouse activity and client base in Romania and a
further site was approved late in 2017.
Approval has been given for a new cross dock in Sibiu
for Pallex and Delamode storage, which is expected to
be operational in Q1 2019. This will significantly enhance
service and profit levels.
Given the nature of the EMT activity, this has been
included in the Logistics and Warehousing division, the
post-acquisition turnover contributed £2.9m.
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CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
FINANCIAL REVIEW
The Group generated revenues for the year to
31 December 2017 of £116.3 million representing a 60%
increase (2016: £72.8 million), driven in particular by a
strong performance in the Baltics region and increased
demand for Pallex in Romania, as well as key customer
wins in the UK and acquisitions.
Operating profit increased by 70% to £3.1 million (2016:
£1.8 million) including £0.9m of exceptional costs in
relation to the acquisitions successfully completed
in 2017 and the costs relating to the listing process.
Excluding the exceptional costs, the operating margin of
the business was in line with 2016 levels.
Adjusted EBIT, excluding listing costs, acquisitions costs
and amortisation relating to acquired entities increased
by 75% to £4.3 million (2016: £2.5 million).
Reported profit before tax increased by 60% to £2.4
million (2016: £1.5 million), leading to the Company
recording EPS of 1.64p (2016: 0.70p), the calculation on
the EPS reflects the increase in the number of share in
issue from 80 million in 2016 to 117 million, following the
equity placings in 2017.
Adjusted earnings for the period increased by 94% to
£3.3 million (2016: 1.7 million).
In August 2017, as part of the admission to AIM, the
Company successfully raised £5 million, before costs.
Then in November 2017 the Company returned to
the market and raised a further £2.8 million in an
oversubscribed placing.
The additional costs of becoming a listed entity should
remain relatively fixed, as we seek to grow the scale
of activity in the Group through a combination of M&A
activity and strong organic growth.
As at 31 December 2017, the Company demonstrated a
strong balance sheet with net cash of £1.5 million at year
end, with £7.4m of cash at the bank offset by £5.9m of
bank loans (2016: net cash of £0.0 million).
The Company generated cash from operating activities
of £2.8 million in the year, (2016 : £4.7 million) this
includes the payment of costs relating to the listing and
for acquisitions of £0.9 million.
The Company has minimal capital expenditure
requirements and has to date, achieved strong cash
generation. In 2017, operating cash flow was 72%
of EBITDA.
Working capital increased by £1.0 million during 2017 to
£0.5 million, which when compared to revenue growth of
60%, reflects an improvement in working capital profile
at year end.
M&A
Xpediator is well placed to act as a consolidator of
freight management businesses that are earnings
accretive and can flourish as part of a wider Group.
The three acquisitions made in 2017 have expanded the
Group’s operating capabilities in the UK and widened
the range of activities beyond the core CEE markets
into Southern Europe and China, sea freight capability,
UK port offices for potential post Brexit customs work
and, through Regional Express, international ecommerce
capability. All three acquisitions have integrated well and
are contributing positively to the overall business.
FUTURE DEVELOPMENTS AND
OUTLOOK
The Company achieved significant goals in 2017 and
remains confident of continuing its future growth
and development in 2018. The core business is well
positioned and is benefiting from a positive market
environment with high demand for road transportation
services. Alongside this, the capabilities and
opportunities across the Group have been enhanced
with the acquisitions completed in 2017 adding new
air, sea and port services and introducing new clients,
in particular, Amazon, all of which are combining to
improve the future prospects of the business.
Trading in 2018 has begun positively with revenues for
Q1 ahead of the prior year and we have improved profit
margin. This performance means the Group has started
well and is well placed to deliver a good performance for
the year.
There continues to be many opportunities for organic
growth and M&A activity. Acquisitions will strategically
enhance the group’s ability to offer a one stop solution
to an ever increasing customer base.
Stephen Blyth
Chief Executive Officer
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KEY PERFORMANCE
INDICATORS
A qualitative review of the performance during the year is provided in the Chairman and
CEO’s Statements and the results for the year are presented in the Consolidated Financial
Statements.
The key indicators of performance for the Group are shown below;
REVENUE
(£000’s)
2016
72,758
GROSS PROFIT
(£000’s)
2016
17,199
2017
116,297
2017
28,111
60.0%
GROSS MARGIN
(%)
2016
2017
23.64
24.17
0.5%
ADJUSTED EARNINGS5
(£000’s)
2016
1,714
2017
3,322
94%
NET CASH FROM OPERATING
ACTIVITIES
(£000’s)
2016
2017
3,634
1,653
55%
63.0%
OPERATING PROFIT BEFORE
EXCEPTIONAL ITEMS4
(£000’s)
2016
2,468
2017
4,001
62%
NET CASH LESS BANK LOANS
(£000’s)
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2016
2017
1,500
1,500%
NOTES
4 Exceptional items include the costs associated
with the acquisitions, £240,000 and the costs
associated with the listing £672,000.
5 Adjusted earnings exclude the exceptional
items relating to the listing and acquisitions, the
non cash interest charge £295,000 and the
amortisation on the intangible assets relating to
the acquired entities, £330,000.
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RISKS AND
UNCERTAINTIES
The Board has overall responsibility for
ensuring risk is appropriately managed
across the business.
The Board sets clear strategic objectives
for the business. The risks to the
achievement of those objectives are
identified by corporate and divisional
management.
The audit committee provides further independent review
and robust challenge.
Identified risks are evaluated, both before and after
controls and mitigating actions have been applied, as to
their likelihood of occurring and potential financial and
reputational impact. Risks are treated in accordance with
risk appetite, which has been defined by the Board across
a range of risk categories.
The success of the Group depends on its ability to mitigate
and understand the risks facing the business and take
appropriate action. The Board of directors meets regularly to
evaluate the group’s risk appetite.
The risks are addressed on page 10, principal risks and
uncertainties facing the Group are broadly grouped as
economic and financial risk.
“The success of the
Company depends on
its ability to mitigate and
understand the risks facing the
business.”
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RISKS AND UNCERTAINTIES CONTINUED
Economic risk
Whilst the Group strives to win market share, we
operate in a service industry, which relies on the activity
of our customers for its success. Any downturn or
change in the pattern of world trade can have a marked
effect on the activity of the Group; major costs are
variable and the Group is able to respond and adapt to
meet customers’ needs.
The Group has a wide customer base across a number
of countries with no dominant customers.
Financial risk and management objectives and policies
The Group’s activities expose it to a limited number of
financial risks. The Group aims to manage these risks on
a day to day basis. Further analysis of financial risks is
provided in note 24 to the financial statements.
Liquidity risk
The Group has sufficient liquid resources to meet the
operating needs of the business. Regular cash flow
forecasts are prepared and reviewed by the Board to
monitor and forecast working capital requirements, and
funds may be transferred between Group companies to
assist in managing this risk.
Credit risk
All customers who wish to trade on credit terms are
subject to credit verification procedures, and control of
customer credit limits and the collection of outstanding
debts are carefully controlled. Trade debtors are
reviewed and monitored on a regular basis at board level
each month, and provision is made for doubtful debts
where necessary.
Foreign exchange risk
The Group has exposure to foreign exchange risk. The
currencies that expose the Group are mainly the Euro
and the Romanian Lei. Certain liabilities, principally
finance leases and borrowings, are denominated
in foreign currencies, which are retranslated at the
prevailing exchange rate at the balance sheet date.
The Group results are consolidated into sterling.
Interest rate risk
The interest rate cash flow risk is the risk that the
interest cost will fluctuate over time. Assets financed
through finance leases are leased at fixed interest rates.
Borrowing rates are dependent on Euribor fluctuations.
The Group companies have not entered into any hedging
arrangements in respect of its interest rate exposure.
The long term debt of the Group is denominated in
sterling and is based on a blend of fixed rate and margin
above base, which currently has a blended average rate
of approx. 4% per annum.
CYBER SECURITY
IT systems are used to facilitate operations, business
management and for record keeping. The threat of an
unauthorised or malicious attack is an ongoing risk, which
could impact on the performance of the Group.
Any downtime because of a systems breach or failure
would affect the ability to perform the operations to its
optimal level, and thus may affect customer relationships
and loyalty.
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In order to mitigate any such risk, the IT systems, whether
proprietary or from third parties, are tested for security
from attack. Critical systems are backed up regularly and
or hosted on third party data centres with appropriate
backup redundancy.
Disaster recovery plans are in place to ensure business can
recover from any interruptions with minimal impact – the
main trading websites and internal network is protected by
a firewall with frequently updated anti-virus software.
Post year end, we have recruited a Chief Information
Officer who will implement the continued improvement
programme relating to our cyber security.
Dependence on key suppliers
Over the last 14 years the Group has developed a strong
and successful relationship with DKV. This relationship
is supported by a contract which has been in place
since 2002. Any event which leads to the sudden loss
or deterioration of this relationship could materially
adversely affect the Group’s performance prospects,
results of operations and financial condition.
ACQUISITIONS
The risks are and the actions taken by the board to
mitigate them are shown below;
Risk of overpaying
The group’s strategy on all acquisitions is that the
consideration is based on a multiple of earnings, with
the consideration based on a payment on completion
with a further payment based on the future earnings of
the acquired entity. Based on this structure the Group
mitigates any overpayment as the payment should be
largely linear to the profit generated post acquisition.
Insufficient operational diligence
The Group looks to minimise any risks associated with the
due diligence process by having suitability experienced
people involved in the due diligence process, this includes
both operational and financial individuals.
Limited target Company knowledge
When considering a potential target, the Group look
at entities, which are generally known to the senior
management team. This benefits the Group as there is
already a knowledge base relating to the potential target
and this mitigates some potential risks.
Brexit
With the final details of Brexit still to be agreed, there is
a certain level of uncertainty as to the impact the exit
from the EU will have on the economy and the customs
processes.
If there are any changes to the customs formalities
in which goods traded with the UK require customs
clearance, then the Company is well positioned to
provide these services to its client base and thus
improving profit and margins.
The strategic report was approved by the board on
14 May 2018 and signed on its behalf by,
Stephen Blyth
Chief Executive Officer
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BOARD OF DIRECTORS
Michael Alexander (Alex) Borrelli
Non-executive Chairman
(aged 62)
Stephen William Blyth
Chief Executive Officer
(aged 63)
Alex initially studied medicine and then qualified as a
chartered accountant in 1982. He has subsequently
been active within the investment banking sector and
has acted on a wide variety of corporate transactions
in a senior role for over 20 years, including flotations,
takeovers, mergers and acquisitions for private and
listed companies. He is chairman and chief executive
officer of BMR Group PLC, an AIM listed Company in
the mining sector. He is also currently Non-executive
Chairman of Greatland Gold plc and of Black Sea
Property plc. Alex was appointed Chairman of Xpediator
in January 2017.
Stephen qualified as a chartered accountant in 1981. In
1984 Stephen joined one of his audit clients, Bleckmann
(UK) Limited, a logistics Company, as managing director.
Bleckmann was a subsidiary of Frans Maas, a listed
Dutch logistics and freight forwarding Company,
subsequently acquired by DSV, a listed global transport
and logistics entity in Denmark. Having turned around
the fortunes of Bleckmann and securing new business
from the likes of Gap and Next and introducing new
service lines, Stephen left Bleckmann in 1988 to set up
the Group. In addition to Xpediator, Stephen has been
involved in a number of other businesses across a broad
range of activities.
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Richard Lee Myson
Group Chief Financial Officer
(aged 46)
Geoffrey (Geoff) Michael Gillo
Non-executive Director
(aged 64)
Richard qualified as a chartered management
accountant in 2002 and has over 20 years’ experience
in finance largely in a Logistics and Supply Chain
management environment. Richard has a proven track
record in the finance departments of several large
multinational companies, including Tibbett and Britten
Group Plc, where he was employed before he joined
Delamode in 2004, initially as the UK Finance Director. In
2010 he became the Group Chief Financial Officer and
was appointed as the Chief Executive Officer of Affinity
in April 2012. In February 2016, Richard was appointed
Group Corporate Development Director and was
subsequently re-appointed Group Chief Financial Officer
in October 2016.
Geoff qualified as a chartered accountant with Peat
Marwick Mitchell & Co in 1976. Moving in to logistics with
United Transport Co Ltd (part of BET plc) he qualified
as a chartered member of the Institute of Logistics
and Transport. Following periods in automotive retail
and contract hire, food manufacturing, processing
and retailing he returned to logistics and supply chain
management becoming the European Commercial
and Finance Director of Tibbett & Britten Group
plc. He is a founder director and shareholder of The
Keswick Enterprises Group Ltd and has held and
holds non-executive directorships in a number of
logistics companies, including Non-executive Director
of Delamode between 2004 and 2010. Geoff was
appointed to the Board of Xpediator in January 2017.
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11
CORPORATE GOVERNANCE
STATEMENT
COMPLIANCE STATEMENT
The Board seeks to follow best practice in corporate
governance appropriate to the Company’s size and in
accordance with the regulatory framework that applies to
AIM companies. Although the Quoted Companies Alliance
Corporate Governance Code for Small and Mid-Size
Quoted Companies 2013 (“QCA Code”) is not compulsory
for AIM quoted companies.
The Board intends to comply, so far as practicable and
having regard to the size and nature of the Company’s
business, with the principles and disclosures as set out in
the QCA Code. Given its size and the nature of its current
operations the Company does not seek to adopt the full
UK Corporate Governance Code. The main features of the
Company’s corporate governance arrangements are:
The Board intends to meet regularly and at least six
times per year for formal Board meetings. It will consider
strategy, performance and approve financial statements,
dividends and significant changes in accounting practices
and key commercial matters, such as decisions to be
taken on whether to take forward or to cancel a research
project. There is a formal schedule of matters reserved for
decision by the Board in place.
The Company has an audit committee and remuneration
committee, further details of which are provided below.
The Company does not have a nomination committee, as
the Board does not consider it appropriate to establish one
at this stage of the Company’s development. The Board will
take decisions regarding the appointment of new directors
as a whole and this will follow a thorough assessment of a
potential candidate’s skill and suitability for the role.
BOARD COMPOSITION
The Company is managed by a Board of directors and
they have the necessary skills and experience to effectively
operate and control the business. There are currently four
directors as at the date of this report being; Alex Borrelli,
Geoff Gillo, Stephen Blyth and Richard Myson.
The Board is satisfied that, between the Directors, it has an
effective and appropriate balance of skills and experience,
including in the areas of the stock market regulation, logistics
operations, finance and M&A.
The Board comprises two non-executive directors, including
the Chairman, and two executive directors. The Board
believe the current split of non-executive and executive
directors is appropriate for the requirements of the
Company. The Board considers that the non-executive
directors bring an independent judgement to bear.
12
The Board is satisfied that it has a suitable balance
between independence on the one hand, and knowledge
of the Company on the other, to enable it to discharge
its duties and responsibilities effectively. All directors are
encouraged to use their independent judgement and to
challenge all matters, whether strategic or operational.
As the business develops, the composition of the Board will
remain under review to ensure that it remains appropriate
to the managerial requirements of the Company.
All new Directors appointed since the previous Annual
General Meeting are required to seek election at the next
Annual General Meeting. Directors rotate frequently in
accordance with the Company’s articles of association. This
enables the shareholders to decide on the election of the
Company’s Board.
There are no Directors who are required to seek re-election
at the next Annual General Meeting this year.
BOARD COMMITTEES
The Company has an Audit Committee and a
Remuneration Committee with formally delegated
duties and responsibilities. The composition of these
committees may change over time as the composition
of the Board changes.
Audit Committee
The Audit Committee has responsibility for ensuring
that the financial performance of the Company is
properly reported on and reviewed, and its role includes
monitoring the integrity of the financial statements of
the Company (including annual and interim accounts and
results announcements), reviewing internal control and
risk management systems, reviewing any changes to
accounting policies, reviewing and monitoring the extent
of the non-audit services undertaken by external auditors
and advising on the appointment of external auditors. The
Audit, AIM Rules and MAR Compliance Committee will have
unrestricted access to the Company’s external auditors.
The Audit Committee meets regularly at the appropriate
times in the financial reporting and audit cycle. The Audit
Committee comprises of two members, who are both
non-executive Directors: Alex Borrelli and Geoff Gillo.
Remuneration Committee
The Remuneration Committee has responsibility for
determining, within the agreed terms of reference,
the Company’s policy on the remuneration packages
of the Company’s chief executive, the chairman, the
executive directors, the Company secretary and other
senior executives. The Remuneration Committee also
has responsibility for determining the total individual
remuneration package of the chairman, each executive
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CORPORATE GOVERNANCE STATEMENT CONTINUED
director, the Company secretary and other senior
executives (including bonuses, incentive payments and
share options or other share awards), in each case within
the terms of the Company’s remuneration policy and in
consultation with the Chairman of the Board and/or the
Chief Executive Officer. No Director or manager may be
involved in any discussions as to their own remuneration.
The Remuneration Committee comprises two members,
who are both non-executive Directors, Alex Borrelli and
Geoff Gillo.
MEETINGS AND ATTENDANCE
The directors’ attendance at Board and Committee
meetings during the year is shown below:
Plc
Board
Audit
Committee
Remuneration
Committee
Operational
Board
Meetings held
during the year
Directors’ Attendance
Alex Borrelli
Stephen Blyth
Geoff Gillo
Richard Myson
4
4
4
4
4
2
2
2
1
1
1
11
9
11
4
11
The operating board, which consist of the Company’s
executive directors and the COOs of the operating
divisions meet regularly to discuss matters relating to the
development of the of the Group and ongoing financial
performance.
INTERNAL CONTROLS AND
FINANCIAL RISK MANAGEMENT
The Board is responsible for establishing and maintaining
the Group’s financial and non-financial controls. The
Board recognises that whilst internal controls reduces risk
it cannot eliminate it completely.
The key procedures, which the Directors have established
with a view to providing effective internal controls are set
out below.
The Board sets policies, which it reviews regularly directly
and through the audit committee, assurance that
these policies are appropriate to mitigate key strategic,
financial, operational, compliance and reputational risks.
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CORPORATE GOVERNANCE STATEMENT CONTINUED
Authorisation limits are in place.
The Board ensures that there is an appropriate finance
function for each business unit within the Group with the
appropriately qualified and experienced professionals
dependent on the size and complexity of the respective
business.
Each business unit prepares monthly financial reports,
which are circulated to the Group, which details operating
results, cash flow, balance sheet information, compared to
the budget and latest estimate.
Each business unit has clearly defined segregation of
duties, authorisation limits and other key internal controls
in place, which are suitable for the respective entity,
dependent on the size and nature of the business unit.
Financial planning and monitoring
The Company sets annual budgets, which detail the
operating results, cash flow, balance sheet information.
These are updated at least twice in the year, all of which
are subject to Board approval.
The Board reviews the business performance monthly by
comparing the financial information, against the budget
and latest estimate.
Policies, procedures and authorisation limits
The Company has adequate authorisation limits in place,
which cover the key areas for the business units.
QUALITY AND INTEGRITY OF
PERSONNEL
The competence and integrity of personnel are ensured
through high recruitment standards and subsequent
training. High quality of personnel is seen as an essential
part of the control environment.
IDENTIFICATION OF BUSINESS RISKS
The Board is responsible for identifying the major
business risks faced by the Company and for determining
the appropriate course of action to manage those risks.
GOING CONCERN
The Directors have prepared the financial statements
on a going concern basis, as explained in Note 3 to the
financial statements. As at 31 December 2017, the Group
had cash or cash equivalent totaling £7,340,000. The
Group also has funding facilities in place which it does not
envisage will be withdrawn thus there are sufficient funds
available to meet its liabilities as they fall due for a period
of not less than 12 months from the date of approval of
the financial statements.
DIRECTORS’ REMUNERATION
The Board is responsible for an overall remuneration
package for each of the executive directors and other
senior executives capable of achieving the Company
objectives and approved by the remuneration
committee. Remuneration packages are designed to
attract, retain and motivate directors of the right calibre.
FEES
The fees for non-executive directors are determined
by the Board within the limits stipulated in the Articles
of Association. The non-executive directors are not
involved in any discussions or decisions about their
own remuneration. Details of amounts received by the
Directors during the year ended 31 December 2017 are
set out in note 7 to the financial statements.
CONTRACTS OF SERVICE
The current executive directors have service contracts
with the Company, of whom Stephen Blyth’s can be
terminated with a notice period of nine months by either
party, and Richard Myson’s can be terminated with a
notice period of six months by either party. The Board
considers that this is appropriate.
SHARE OPTIONS
Details regarding share options are set out in notes 27
of the financial statements.
COMMUNICATIONS WITH
SHAREHOLDERS
The Directors consider that the Annual Report is fair,
balanced and understandable.
DIRECTORS
The Directors of the Company who were in office during
the year to the date of signing the financial statements
unless otherwise stated were:
• Alex Borrelli (Non-executive chairman)
• Stephen Blyth (Executive Director)
• Richard Myson (Executive Director)
• Geoff Gillo (Non-executive director)
LONG TERM INCENTIVES
During the year, the Non-Executive directors were
granted share options, which contain a 16 month vesting
period, with the options targeted to EPS growth to align
the Boards focus to that of the investors.
14
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CORPORATE GOVERNANCE STATEMENT CONTINUED
DIRECTORS’ REMUNERATION
The remuneration of Directors for the year ended 31 December 2017 was as follows:
DIRECTOR
Director
Alex Borrelli
Stephen Blyth
Geoff Gillo
Richard Myson
Total
Base Salary
£000
Bonuses
£000
Share Option
£000
Other benefits
£000
2017 Total
£000
2016 Total
£000
50.0
183.3
25.0
108.7
367.0
-
-
-
-
-
7.0
-
3.5
-
10.5
-
8.1
-
3.6
11.7
57.0
191.4
28.5
112.3
389.2
-
13.3
-
92.9
106.2
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The values for 2016 relate to the remuneration of the current directors of Xpediator plc.
DIRECTORS AND THEIR INTERESTS- INTEREST IN ORDINARY SHARES OF 5P
The Directors of the Company held the following interest in the ordinary shares of Xpediator plc:
Director
Alex Borrelli
Stephen Blyth6
Geoff Gillo
Richard Myson
Total
31 December
2017
Number
-
34,840,000
-
4,000,000
38,840,000
31 December
2017
%
-
29.67
-
3.41
31 December
2016
Number
-
34,840,000
-
4,000,000
33.08
38,840,000
31 December
2016
%
-
43.5
-
5
48.5
6 Shares held via COGELS Investment BV, a company wholly owned by the wife and adult children of Stephen Blyth. Given the ownership structure of COGELs,
it is deemed, for the purposes of the City Code, to be acting in concert with Stephen Blyth.
SHARE OPTIONS AND WARRANTS
The Directors of the Company held the following options for Xpediator plc which were issued to them
Director
Alex Borrelli
Stephen Blyth
Geoff Gillo
Richard Myson
Total
Granted in the year
Number
31 December
2017
Number
Exercise price
Pence
416,667
416,667
-
-
208,333
208,333
-
-
625,000
625,000
24.00
-
24.00
-
Vesting Date
Expiry Date7
May 2019
May 2019
-
-
May 2019
May 2019
-
-
7 The expiry date is 10 days after the approval of the Group’s consolidated audited accounts for the year ending 31 December 2018.
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15
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
DIRECTORS’ INDEMNITY PROVISIONS
The principal activities of the Group are freight
management which includes freight forwarding, logistics
and the provision of services to the transport sector
(Affinity Division). The Group has been in the business
of freight management for 30 years. The consolidated
Financial Statements give the Group results for the year
ended 31 December 2017.
The Group and its subsidiaries operate from a network
of 10 locations in Europe, mainly in Central and Eastern
European areas and the UK. The group’s overall financial
objectives are to increase sales, profitability, network
coverage and enhance the asset base supporting
the business. In order to monitor its progress towards
achieving these objectives, the Group has set a number
of key performance indicators, which deal predominately
with sales, profitability, margin and cash flow as per page
8 in the Strategic Report.
RESULTS AND DIVIDENDS
The results for the year are set out on page 23. An
interim dividend of £350,000 has been paid and the
Directors are recommending a final dividend of £750,000
making a total for the year of £1,100,000.
SHARE CAPITAL
The Group purchased and maintained throughout the
financial period Directors’ and Officers’ liability insurance
in respect of itself and its Directors.
POLITICAL DONATIONS
The Group made no political donations in the financial year.
EMPLOYEE INVOLVEMENT
The Group regularly consults with the employees of the
Company to ensure that their opinions are considered when
decisions are made that are likely to affect their interests.
Details of the Group’s activities are regularly communicated
to the employees via a Company employee newsletter, plus
the regular circulation of Company announcements which
include the interim and annual results.
DISABLED PERSONS
It is the Group’s policy to employ the best person
for the role, irrespective of gender, nationality, race,
sexual orientation or disability. As such applications for
employment by disabled individuals are given full and
fair consideration. If an employee becomes disabled, the
Group makes every effort to retrain them in the business
in a suitable role.
Details of the changes in the share capital are set out in
note 25 to the financial statements.
AUDITOR RE-APPOINTMENT
FINANCIAL INSTRUMENTS
As at 31 December 2017 the Company had bank
borrowings from Lloyds bank in the UK totalling £3.2
million and a invoice discounting facility provided by
Barclays bank. The financial risk management objectives
and policies are disclosed in note 24 and summarised on
page 10 in the strategic report.
DIRECTORS
The Directors of the Company during the period and to
the date of this report are as follows:
• Alex Borrelli
• Stephen Blyth
• Geoff Gillo
• Richard Myson
16
BDO LLP have expressed willingness to continue in office.
In accordance with section 489(4) of the Companies
Act 2006 a resolution to re-appoint BDO LLP will be
proposed at the AGM.
SUBSEQUENT EVENTS
In April 2018 the Group incorporated an new entity in
Latvia, which is a wholly owned subsidiary of Delamode
Baltics UAB.
FUTURE DEVELOPMENTS
Planned future developments are disclosed in the
strategic report on page 7.
The Directors’ report was approved by the Board and
signed on its behalf by:
Stephen Blyth
Chief Executive Officer
14 May 2018
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STATEMENT OF DIRECTORS’
RESPONSIBILITIES
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RESPONSIBILITY STATEMENT OF
THE DIRECTORS IN RESPECT OFTHE
ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
To the best of each Director’s knowledge and belief, there
is no information relevant to the preparation of their
report of which the Company’s auditor is unaware.
Each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware
of relevant audit information and to establish that the
Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
WEBSITE PUBLICATION
The Directors are responsible for ensuring the Annual
Report and the Financial Statements are made available
on a website. Financial Statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of Financial Statements, which may vary
from legislation in other jurisdictions.
The maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the on-going integrity of the
Financial Statements contained therein.
This report was approved by the board on 14 May 2018
and signed on its behalf by:
Stephen Blyth
Chief Executive Officer
The directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have elected to prepare the Group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union and the Company financial statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards 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 for that period.
The directors are also required to prepare financial
statements in accordance with the rules of the London
Stock Exchange for companies trading securities on AIM.
In preparing these financial statements, the directors are
required to:
•
•
•
•
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether they have been prepared in
accordance with IFRSs as adopted by the European
Union, subject to any material departures disclosed
and explained in the financial statements;
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements comply with the requirements of
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
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17
INDEPENDENT AUDITOR’S REPORT TO
THE MEMBERS OF XPEDIATOR PLC
OPINION
We have audited the financial statements of Xpediator Plc
(the ‘parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2017 which comprise
the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated
statement of financial position, the consolidated
statement of changes in equity, the consolidated
statement of cash flows, the Company statement of
financial position, the Company statement of changes
in equity and the notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in the preparation of the Group financial statements
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The
financial reporting framework that has been applied in the
preparation of the parent Company financial statements
is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 101
Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
In our opinion:
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
USE OF OUR REPORT
This report is made solely to the parent company’s
members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the parent
company’s members those matters we are required
to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other
than the parent Company and the parent company’s
members as a body, for our audit work, for this report, or
for the opinions we have formed.
CONCLUSIONS RELATING TO GOING
CONCERN
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
•
•
the financial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 31 December 2017 and of the group’s
profit for the year then ended;
•
•
the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by
the European Union;
the parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the “Auditor’s responsibilities for the audit of
the financial statements” section of our report. We are
independent of the Group and the parent Company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities,
18
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 or the
parent 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.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our 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) we
identified, 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 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.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XPEDIATOR PLC CONTINUED
KEY AUDIT MATTER
Revenue recognition
A potential risk to the correct cut-off of revenue arises with
respect to recording revenue for freight forwarding projects
where the deliveries are undertaken across the year end date.
The Group’s accounting policy for revenue recognition is
disclosed in note 3 and the financial statements disclose further
detail concerning the group’s revenues in notes 4 and 8.
UK business combinations
In the current year, the Group acquired three UK
incorporated entities. These are Easy Management
Transport Limited, Benfleet Forwarding Limited, and
Regional Express Limited. Each acquisition was independent
of each other and all were accounted for in accordance with
IFRS 3 Business Combinations.
The consideration for each acquisition included subsequent
deferred contingent consideration based on the future
performance of the acquired companies.
There are three main judgemental areas in the accounting
for the acquisition of each of these companies:
•
•
•
The estimation of the valuation of the deferred
contingent consideration based on the expected future
performance of the companies acquired at the date of
acquisition;
Whether the deferred contingent consideration
represents part of the cost of the acquisition or
remuneration for post-acquisition services provided;
The valuation and useful economic lives of the
separately identifiable intangible assets.
Therefore, the accounting for the acquisitions is considered
to be a Key Audit Matter.
The group’s accounting policy for business combinations is
disclosed in note 3 and the financial statements disclose
further detail concerning the Group’s acquisitions in note 32.
Completeness of liabilities
Due to the volume of suppliers and the timing of the receipt
of supplier invoices, there is a risk that the Group will not
recognise the complete costs associated with each freight-
forwarding job in the appropriate period. As a result, this is
considered to be a key audit matter.
Further detail concerning the group’s trade and other
payables is disclosed in note 22.
HOW WE ADDRESSED THE MATTER IN
OUR AUDIT
Our audit procedures included:
•
Obtaining reports from the operating systems for each
significant freight forwarding subsidiary before and post
year-end, selected a sample of revenues recorded in
the system and agreed to supporting documents to
ensure they were recorded in the correct periods;
Our audit procedures included:
•
•
•
•
Considering and challenging the forecasts used in
the calculation of the expected value of the deferred
contingent consideration by reference to the
performance of the companies prior to and post the
acquisition date;
Considering the criteria for the payment of the
deferred contingent consideration and management’s
assessment that the amounts payable to selling
shareholders are not contingent on continuing
employment and assessed other criteria for the
payment of the deferred contingent consideration;
Agreeing all material amounts used in the calculation
of the cost of acquisition to supporting purchase
documentation. Agreed material balances of assets
acquired and liabilities assumed on acquisition
to completion balance sheets and supporting
management information;
Engaging our internal valuation specialists to assess
the reasonableness of the inputs, assumptions and
methodology used by management and their appointed
external specialist in determining the fair values and
useful economic lives of intangible assets acquired,
contingent considerations and goodwill arising;
•
Reviewing the disclosure in the financial statements to
assess compliance with the requirements of IFRS 3.
Our audit procedures included:
•
•
•
Reconciling the year-end creditor position to either
supplier statements or to direct confirmations received
from the supplier for a sample of suppliers;
Performing a review of after-date payments or after-
date invoices received for unrecorded liabilities at the
year-end date;
Assessing a sample of projects for unusual margins
and where this review highlighted unexpected margins,
we performed further review to satisfy ourselves that
relevant costs have been correctly accrued.
S
T
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M
E
T
A
T
S
L
A
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N
A
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F
I
I
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XPEDIATOR PLC CONTINUED
Our audit procedures included:
•
•
•
•
Selecting a sample of year end trade receivable
balances. We then tested the receipt of cash after the
year end date in settlement of these balances;
Selecting a sample of year end trade receivable
balances and sought direct written confirmation from
the customer of the year end receivable balance;
Reviewing the ageing profile of trade receivables at
the balance sheet date and considered over-due
receivables and the sufficiency of provisions for doubtful
debts;
Discussing overdue balances with management
and considered evidence of recoverability from
corresponding liability balances with the customer or
agreed payment plans in place.
Materiality in respect of the audit of the parent Company
has been set at £225k based on the net assets of the
Company, capped at 65% of Group materiality.
Performance materiality was set at 75% (2016: 75%) of
materiality. In setting the level of performance materiality
we considered a number of factors including the
expected total value of known and likely misstatements
(based on past experience and other factors) and
management’s attitude towards proposed adjustments.
Component materiality
Where financial information from components was
audited separately, component materiality levels
were set for this purpose at lower levels up to a
maximum of 65% of Group materiality. In the audit of
each component, we further applied a performance
materiality level of 75% of the component materiality
level to our testing to ensure that the aggregation
risk of errors exceeding component materiality was
appropriately mitigated.
Agreement with the Audit Committee
We agreed with the Audit Committee that we would
report on all differences individually in excess of £12,500
(2016: £12,500). We also report to the Audit Committee
on financial statement disclosure matters identified when
assessing the overall consistency and presentation of the
consolidated financial statements.
Recoverability of trade receivables
The trade receivables balance is highly material to the
financial statements at £45.0m (2016: 25.7m). This balance
is made up from a large volume of customers across many
geographic regions.
The determination as to whether an individual trade
receivable balance is recoverable involves management
judgement. Certain factors are assessed including the
age of the balance, the credit worthiness of the customer,
recent payment history and whether any amounts are in
dispute.
Due to the significance of the overall balance, the large
volume of customers across a number of geographical
locations, the recoverability of trade receivables is
considered to be a key audit matter.
Further detail concerning the group’s ageing profile and
provision for impaired trade receivables is disclosed in note
20 in the financial statements.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. For planning, we consider materiality
to be the magnitude by which misstatements,
including omissions, could influence the economic
decisions of reasonable users that are taken on the
basis of the financial statements. In order to reduce
to an appropriately low level the probability that
any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Level of materiality applied and rationale
We consider Adjusted Profit Before Tax to be the most
appropriate performance measure for the basis of
materiality in respect of the audit of the Group as this
measure reflects the group’s profitability excluding the
impact of certain non-recurring and business acquisition-
related items. Adjusted Profit Before Tax is calculated
for this purpose as Net Income for the Year Before
Taxes adjusted for listing costs, costs associated with
subsidiary acquisitions and non-cash interest charges
arising on deferred consideration on acquisition of
subsidiaries. Using this benchmark, we set materiality at
£350k (2016: £250k) being 10% of Adjusted Profit Before
Tax (2016: 10% of Adjusted Profit Before Tax).
20
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XPEDIATOR PLC CONTINUED
AN OVERVIEW OF THE SCOPE OF
OUR AUDIT
We tailored the scope of our audit to ensure that enough
work was performed to be able to issue an opinion on
the financial statements as a whole, whilst taking into
consideration the structure of the Group, the accounting
processes and controls, and the industry in which the
Group operates.
During the planning of our Group audit we confirmed
our strategy for the procedures to be performed across
the group’s nine significant components. All audit work
was undertaken by the Group engagement team with
the exception of Delamode Bulgaria EOOD, Delamode
Baltics UAB, and Delamode Romania Srl, Affinity Transport
Solutions, Srl and Pallet Express Srl, where we engaged
with component auditors BDO Bulgaria, BDO Lithuania,
and BDO Romania. Our strategy is summarised as follows:
In relation to the component auditors work on the above
mentioned overseas components, we determined the
level of involvement required by us to determine whether
sufficient appropriate audit evidence had been obtained.
We discussed the planned procedures ahead of the
audit, examined the conduct, results and findings of their
audits and participated in their closing discussions with
component management.
OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other
information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of
assurance conclusion 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
such material inconsistencies or apparent material
misstatements, we are required to determine whether
there is a material misstatement in 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 in this regard.
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Adjusted Profit before tax
Total Revenue
Total Assets
7%
8%
9%
9%
28%
41%
85%
63%
50%
Full scope audit - BDO UK Full scope audit - other BDO member firms BDO UK limited scope review
21
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XPEDIATOR PLC CONTINUED
OPINIONS ON OTHER MATTERS
PRESCRIBED BY THE COMPANIES
ACT 2006
In our opinion, based on the work undertaken in the
course of the audit:
•
•
the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY
EXCEPTION
In the light of the knowledge and understanding of the
Group and the parent Company and its environment
obtained in the course of the audit, we have not
identified material misstatements in the strategic
report or the directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept
by the parent Company, or returns adequate for
our audit have not been received from branches not
visited by us; or
the financial statements are not in agreement with
the accounting records and returns; or
certain disclosures of directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities
statement set out on page 17, the directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view, and for such internal control as
the directors 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 parent
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 parent Company or to cease operations, or have
no realistic alternative but to do so.
AUDITOR’S 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 auditor’s 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 Financial
Reporting Council’s website at: www.frc.org.uk/auditors
responsibilities. This description forms part of our
auditor’s report.
Sophia Michael (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor London
14 May 2018
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
22
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CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2017
Notes
8
2017
£’000
23 2, 070
4
5
6
3 0
6
9
9
10
11
12
1 2
12
12
1 2
1 2
Gross Billing
CONTINUING OPERATIONS
Revenue
Cost of sales
GROSS PROFIT
Other operating income
Administrative expenses
Exceptional items included in Administrative expenses above
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
OPERATING PROFIT
Finance costs
Finance income
PROFIT BEFORE INCOME TAX
Income tax
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
LOSS FOR THE YEAR FROM DISCONTINUED OPERATIONS
PROFIT FOR THE YEAR
Profit attributable to:
Owners of the parent
Non-controlling interests
Earnings per share attributable to the ordinary equity holders of the parent:
Basic earnings pence per share
Diluted earnings pence per share
Basic earnings pence per share from continuing operations
Diluted earnings pence per share from continuing operations
Adjusted basic earnings pence per share*
Adjusted d iluted basic earnings pence per share*
*Earnings per share adjusted as per footnote 3 on page 1
The notes form part of these financial statements
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2016
£’000
169,165
72,758
(55,559)
17,199
556
(15,941)
(654)
2,468
1,814
(366)
24
1,472
116,2 97
(88,186)
28, 111
658
(25,6 80 )
(912)
4,001
3,089
( 665)
12
2,436
(651 )
(233)
1, 785
–
1, 785
1, 540
245
1, 785
1. 6 4
1. 6 3
1.64
1.63
3.27
3.26
1,239
(179)
1,060
563
497
1,060
0.70
0.70
0.93
0.93
1.52
1.52
23
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CONSOLIDATED STATEMENT
OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
2017
£’000
1, 785
112
1, 897
1, 634
2 63
1,89 7
2016
£’000
1,060
654
1,714
1,153
561
1,714
The notes form part of these financial statements
24
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CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
ASSETS
NON-CURRENT ASSET
Intangible assets
Property, plant and equipment
Investments
Trade and other receivables
Deferred tax
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
Notes
2017
£’000
2016
£’000
1 4
1 5
1 8
20
10
19
20
2 1
1 5,168
1,600
1
149
196
17,114
50
51,8 06
7,385
59,2 41
7 6,355
2,892
1,186
16
222
106
4,422
44
28,597
5,351
33,992
38,414
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The notes form part of these financial statements
25
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CONSOLIDATED STATEMENT
OF FINANCIAL POSITION CONTINUED
AS AT 31 DECEMBER 2017
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital
Share Premium
Equity Reserve
Translation Reserve
Merger Reserve
Retained earnings
Issued share capital and reserves attributable
to the owners of the parent
Non-controlling interests
TOTAL EQUITY
LIABILITIES
NON-CURRENT LIABILITIES
Deferred Consideration
Interest bearing loans and borrowings
Deferred Tax liability
CURRENT LIABILITIES
Overdrafts
Trade and other payables
Deferred Consideration
Interest bearing loans and borrowings
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
2017
£’000
2016
£’000
2 5
2 6
2 6
2 6
2 6
2 6
2 2
2 3
10
2 1
2 2
2 2
2 3
5,922
5,792
69
546
( 1,509)
3, 535
14, 355
413
14, 768
1, 666
3,309
1, 20 9
6, 184
45
5 0,973
1, 840
2,545
5 5, 403
6 1 ,587
7 6,355
4,050
–
–
452
(3,750)
2,466
3,218
345
3,563
–
3,878
332
4,210
–
29,167
–
1,474
30,641
34,851
38,414
The financial statements were approved by the Board of Directors on 14 May 2018 and were signed by:
Stephen Blyth
CEO
1 4 May 201 8
Richard Myson
CFO
The notes form part of these financial statements
26
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CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Notes
Share
Capital
Share
Premium Reserve
Equity Translation Merger
Reserve
Reserve
Retained
Earnings
Total
NCI
Total
Equity
Carried Forward
at 31 December 2016
4,050
-
-
452
(3,750) 2,466
3,218
345
3,563
Contributions by and distributions to owners
Acquisition of
non controlling interests
Dividends paid
Share based consideration
on Acquisitions
Share Options not yet
exercised
Issue of Share Capital
Total contributions by and
distributions to owners
17
13
-
-
25
480
27
25
-
1,392
5,792
-
-
–
-
-
-
-
69
-
-
-
-
-
-
-
-
(121)
(121)
(350)
(350)
(88)
(107)
(209)
(457)
2,241
-
-
-
-
-
2,721
69
7,184
-
-
-
2,721
69
7,184
5,922
5,792
69
452
( 1,509)
1,995
12,721
150
12,871
Comprehensive income for the year
Profit for the year
Exchange differences
on translation of
foreign operations
Total comprehensive
income for the year
Balance as at
31 December 2017
-
-
-
-
-
-
-
-
-
-
-
1,540
1,540
245
1,785
94
94
-
-
-
94
18
112
1,540
1,634
263
1,897
5,922
5,792
69
546
( 1,509) 3,535
14,355
413
14,768
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The notes form part of these financial statements
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CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
Share
Premium Reserve
Equity Translation Merger
Reserve
Reserve
Retained
Earnings
Total
-
(479)
237
8,162
7,920
NCI
299
Total
Equity
8,219
Balance at 1 January 2016
Notes
Share
Capital
-
Contributions by and distributions to owners
Acquisition of
non controlling interests
Distribution to Owners
Capital Contribution
Dividends Paid
Share Swap Agreement
with Delamode Group
Holdings Limited
Incorporation of
Xpediator PLC
Total Contributions
by and distribution
to owners
Profit for the year
Exchange differences
on translation of
foreign operations
Carried Forward
at 31 December 2016
17
11
13
-
-
-
-
25
4,000
25
50
4,050
-
-
4,050
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
341
-
-
-
-
-
-
(462)
(462)
(192)
(654)
(2,463)
(2,122)
(58)
(2,180)
43
43
-
43
(3,377)
(3,377)
(265)
(3,642)
-
(3,987)
-
-
-
-
13
50
-
-
13
50
(138)
(3,750)
1,903
2,065
(216)
1,849
-
590
-
-
563
563
497
1,060
-
590
64
654
452
(3,750) 2,466
3,218
345
3,563
The notes form part of these financial statements
28
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CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
Continuing Operations
Cash flows from operating activities
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash flows from investing activities
Purchase of tangible fixed assets
Acquisition of Subsidiar ies, net of cash acquired
Disposal of available for sale assets.
Purchase of intangible fixed assets
Sale of tangible fixed assets and investment property
Sale of investments
Interest received
Net cash from investing activities
Cash flows from financing activities
New loans in year
Loan repayments in year
Share issue (net of share issue costs)
Transactions with non-controlling interests
Dividends paid
Non-Controlling interest dividends paid
Net cash from financing activities
Notes
1
2017
£’000
2016
£’000
2,785
( 370)
( 762)
1,653
( 771 )
( 5,835)
–
( 47)
72
30
12
4,656
(366)
(656)
3,634
(593)
(1,873)
439
(50)
144
–
24
( 6,539)
( 1,909)
1,1 98
( 696)
7, 184
(209)
(3 50)
(107)
7, 020
319
(2,569)
50
(654)
(3,377)
(265)
(6,496 )
Increase in cash and cash equivalents from continuing operations
2, 134
(4,771)
Increase/(Decrease) in cash and cash equivalents from
discontinued operations
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate movements
Cash and cash equivalents at end of year
2
2
–
5,351
( 145)
7,340
–
9,819
303
5,351
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The notes form part of these financial statements
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NOTES TO THE CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
FOR THE YEAR ENDED 31 DECEMBER 2017
1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED
FROM OPERATIONS
Profit before income tax
Depreciation charges
Amortisation charges
Loss on disposal of fixed assets
Profit on disposal of Investments
Finance costs
Finance income
Share Based Payments Charge
(Increase) in inventories
(Increase) in trade and other receivables
Increase in trade and other payables
Cash generated from operations
2017
£’000
2, 436
368
4 37
8
(15)
6 65
(12)
69
3, 956
(6)
( 17,208)
16,043
2,785
2016
£’000
1,472
242
90
7
–
366
(24)
-
2,153
(25)
(3,457)
5,985
4,656
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these
Statement of Financial Position amounts:
Cash and cash equivalents
Bank accounts
Bank Overdrafts
Cash and cash equivalents
Bank accounts
Bank Overdrafts
2017
£’000
7,385
(45)
7,340
2016
£’000
5,351
–
5,351
2016
£’000
5,351
–
5,351
2015
£’000
10,002
(183)
9,819
The notes form part of these financial statements
30
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
3. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by
the EU issued by the International Accounting Standards Board, under the historical cost convention .
The presentation currency used for the preparation of the financial statements is Sterling, which is the currency of choice of
the principal investors of the group.
The preparation of financial statements in conformity with IFRSs requires the use of certain accounting estimates. It also
requires the directors to exercise their judgement in the process of applying the Group’s accounting policies (see Note 3.2 –
Critical accounting estimates and judgements).
Description of the Business
Xpediator PLC is a public limited Company, is incorporated in England and Wales,, United Kingdom. The registered office is
700 Avenue West, Skyline 120 Great Notley, Braintree, Essex, CM77 7AA and the Company registration number is 10397171.
Going Concern
The directors have concluded that it is appropriate that the financial statements have been prepared on a going concern
basis because at 31 December 2017, the Group had cash or cash equivalent totalling £7,340,000. The Group also has funding
facilities in place which it does not envisage will be withdrawn thus there are sufficient funds available to meet its liabilities
as they fall due for a period of not less than 12 months from the date of approval of the financial statements . The directors
believe that based on the current budgets and forecast cash flows, there is sufficient resources to meet its liabilities as they
fall due.
The financial statements have therefore been prepared on a going concern basis.
Basis of Consolidation
The Group financial statements consolidate the financial statements of Xpediator PLC and its subsidiaries drawn up to
31 December each year. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date that such control ceases. The Company has control over a
subsidiary if all three of the following elements are present: power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever
facts and circumstances indicate that there may be a change in any of these elements of control.
The financial statements of subsidiaries are prepared for the same reporting year as the parent Company, using consistent
accounting policies. Intra- Group balances and transactions, including unrealised profits arising from intra- Group transactions,
have been eliminated. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Non-controlling interests represent the equity in subsidiaries that is not attributable, directly or indirectly,
to Xpediator PLC.
Subsequent to the merger accounting noted below t he consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial position, the acquiree’s identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations
are included in the consolidated income statement from the date on which control is obtained. They are deconsolidated from
the date on which control ceases.
Merger accounting
On 25 May 2017 Xpediator Plc entered into a share swap agreement with the ultimate beneficiaries of Delamode Group
Holdings Limited, whereby 4,000,000 new ordinary shares of £1.00 each were issued to the ultimate beneficiaries of
Delamode Group Holdings Limited in exchange for their shares in Delamode Group Holdings Limited in the same proportion
as their shareholding in Delamode Group Holdings Limited. The merger method of accounting is used to consolidate the
results of Xpediator plc and Delamode Group Holdings Limited and subsidiaries.
The comparatives used within the consolidated financial statements reflect the financial performance and position of
Delamode Group Holdings Limited. The impact of the use of merger accounting is to reflect the Group as though it had
always been in existence. Therefore the prior year comparatives reflect those of Delamode Group Holdings Limited.
In the current period, the results reflect those of the whole Group for the whole period. The only change to the reported
balance sheet position is to reflect the share capital of Xpediator plc rather than that of Delamode Group Holdings Limited.
The difference between the nominal value of the shares issued by Xpediator plc in consideration for the share capital of
Delamode Group Holdings Limited is taken to the merger reserve. The net asset position of the Group at 31 December 2016
is increased by £50,000 from the £3,513,000 reported in the financial statements of Delamode Group Holdings Limited.
This reflects the share capital of Xpediator plc prior to the share swap.
31
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
3. ACCOUNTING POLICIES CONTINUED
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business
combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of the acquiree.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3:
Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets that are
classified as held for sale in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations, which
are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.
If the cost of the acquisition is less than the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities
and contingent liabilities, the difference is recognised directly in the statement of comprehensive income.
Revenue Recognition
Revenue from the provision of services is recognised when the Group has completed the agreed upon procedures and
transferred the significant risks and rewards of ownership to the buyer and it is probable that the company will receive the
previously agreed upon payment.
Revenue is recognised at the fair value of the consideration received or receivable net of VAT and other similar sales taxes
and trade discounts . The policies adopted for the recognition of revenue are as follows:
Freight Forwarding
Revenue is recognised when the agreed freight forwarding service is considered delivered and control of the cargo has
passed to the customer or another logistics services provider. The time of recognition varies depending on the service
provided and the terms of transport agreed.
Warehouse
Revenue is recognised when the service is rendered. Invoicing varies by contract, but is typically in line with work performed.
Calculation of accrued and deferred income is therefore necessary at period ends, with client billing arrangements not always
coinciding with the Group’s reporting periods. Judgement is required when determining the appropriate timing and amount of
revenue that can be recognised, due to the different contractual arrangements in place.
Affinity
Revenue generated in the Affinity Division largely relates to the commission that the entity receives for managing the DKV
fuel cards business. Commission revenues as an agent are recognised in the period that the service has been actually
delivered. With regards the purchase of fuel, this is generally when the fuel has been drawn at the pump.
Gross Billings
Recoverable disbursements incurred on behalf of our Affinity Division customers based in Romania and the West Balkans
which include fuel costs, toll charges and breakdown assistance. The gross billings figure is included within the Groups trade
payables and receivables, but are excluded from Consolidated Income Statement revenue. Therefore, in order to make a
more meaningful calculation of Days Sales Outstanding and Days Payable Outstanding, it is important to understand the
level of billings going through the sales and purchase ledgers.
Non-controlling interests
The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the
non-controlling interests in proportion to their relative ownership interests.
Goodwill
Goodwill arising on the acquisition of a business represents any excess of the fair value of the consideration over the fair
value of the identifiable assets and liabilities acquired. The identifiable assets and liabilities acquired are incorporated into the
consolidated financial statements at their fair value to the Group.
Goodwill is not amortised but tested for impairment annually. Any impairment is recognised immediately in the consolidated
statement of comprehensive income and is not subsequently reversed. On disposal of a business, the attributable amount of
goodwill is included in the determination of the profit or loss on disposal.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
3. ACCOUNTING POLICIES CONTINUED
Impairment of non-financial assets (excluding inventories and deferred tax assets)
Impairment tests on goodwill and amounts with indefinite useful economic lives are undertaken annually in November as part
of the Group’s budgeting process, except in the year of acquisition when they are tested at the year- end. Other non-financial
assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount
may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use
and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the
smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units
(‘CGUs’). Goodwill is allocated on initial recognition to each of the Group’s CGUs that are expected to benefit from a business
combination that gives rise to the goodwill. Impairment charges are included in profit or loss, except to the extent they reverse
gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.
Foreign currencies
The financial statements of the group are presented in its reporting currency of Sterling. The functional currency of each
Group entity is the currency of the primary economic environment in which the entity operates.
Transactions in foreign currencies during the period have been converted at the rates of exchange ruling on the date of the
transaction. Assets and liabilities denominated in foreign currencies have been translated at the rates of exchange ruling on the
balance sheet date. Any gains or losses arising from these conversions are credited or charged to the Consolidated Income
Statement.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when
the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those
operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net
assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income
and accumulated in the translation reserve.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating
to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part
of the profit or loss on disposal.
Financial assets
The Company classifies its financial assets into one of the categories discussed below, depending on the purpose for which
the asset was acquired. The Company has not classified any of its financial assets as held to maturity.
Impairment of Financial Assets
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part
of the counterparty or default or significant delay in payment) that the group will be unable to collect all of the amount
due under the terms receivable, the amount of such a provision being the difference between the net carrying amount
and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables,
which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within
administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Loans and Other Receivables
The group’s loans and other receivables comprise trade receivables and other receivables, cash and cash equivalents in the
consolidated statement of financial position.
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate
other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
Cash and cash equivalents
These include cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities
of three months or less, and – for the purpose of the statement of cash flows - bank overdrafts.
Available for sale
Non-derivative financial assets not included in the above categories are classified as available-for-sale and comprise principally the
company’s strategic investments in entities, qualifying as subsidiaries, associates or jointly controlled entities in separate financial
statements of the Company. They are carried at fair value with changes in fair value, other than those arising due to exchange rate
fluctuations and interest calculated using the effective interest rate, recognised in other comprehensive income.
33
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
3. ACCOUNTING POLICIES CONTINUED
Available for sale continued
Where there is a significant or prolonged decline in the fair value of an available for sale financial asset (which constitutes
objective evidence of impairment), the full amount of the impairment, including any amount previously recognised in other
comprehensive income, is recognised in profit or loss.
Purchases and sales of available for sale financial assets are recognised on settlement date with any change in fair value
between trade date and settlement date being recognised in the available-for-sale reserve.
On sale, the cumulative gain or loss recognised in other comprehensive income is reclassified from the available-for-sale
reserve to profit or loss.
Financial liabilities
The Group classifies its financial liabilities into two categories:
Other financial liabilities
The Group’s other financial liabilities include bank loans, trade and other payables and accruals. Bank borrowings are initially
recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing
liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any
interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated
statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs
and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried
at amortised cost using the effective interest method.
Fair value through profit and loss
This category only comprises of the element of deferred consideration on business combinations, which is contingent on the
performance of the acquired businesses. The expected consideration payable is assessed at each balance sheet date with
the movement in the expected liability being recorded in the income statement.
Share capital
Financial instruments issued by the company are classified as equity only to the extent that they do not meet the definition
of a financial liability or financial asset. The company’s ordinary shares are classified as equity instruments.
Leased assets
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group
(a “finance lease”), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the
lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term
of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and
interest. The interest element is charged to the consolidated income statement over the period of the lease and is calculated
so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an “operating
lease”), the total rentals payable under the lease are charged to the consolidated income statement on a straight-line basis
over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the
lease term on a straight-line basis.
Externally acquired intangible assets
Externally acquired intangible assets, other than Goodwill, are initially recognised at cost and subsequently amortised on a
straight-line basis over their useful economic lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques
(see section related to critical estimates and judgements below).
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost
of intangibles acquired in a business combination are as follows:
Intangible asset
Licences and trademarks
Customer Lists
Useful economic life
Valuation method
25 years
8-10 Years
Multiple of historic profits
Excess Earning Model
34
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
3. ACCOUNTING POLICIES CONTINUED
Taxation
The charge for current tax is based on the taxable income for the period. The taxable result for the period differs from
the result as reported in the statement of comprehensive income because it excludes items which are not assessable or
disallowed and it further excludes items that are taxable and deductible in other years. It is calculated using tax rates that
have been enacted or substantially enacted by the statement of financial position date.
Deferred income tax is provided using the liability method, for all temporary differences arising between the tax bases of
assets and liabilities and their carrying values for financial reporting purposes.
Deferred tax assets are recognised only to the extent that future taxable profit will be available such that realisation of
the related tax benefits is probable. The amount of the asset or liability is determined using tax rates that have been
enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/
(assets) are settled/(recovered).
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly
attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
Freehold land is not depreciated. Depreciation on assets under construction does not commence until they are complete
and available for use. Depreciation is provided on all other items of property, plant and equipment so as to write off their
carrying value over their expected useful economic lives. It is provided at the following rates:
Freehold buildings
Fixtures and fittings
Computer equipment
Motor vehicles
Inventories
2% per annum straight line
20% per annum straight line/10% - 25% on reducing balance,
33% per annum straight line/20% - 50% on reducing balance
33% per annum straight line/20% - 25% on reducing balance
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs
of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Capital management
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of
both its financial investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash flows
from operations.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, invoice discounting and long term loan finance.
Investments
Unlisted investments are stated at cost less impairment losses.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this
is when declared by the directors. In the case of final dividends, this is when approved by the shareholders at the annual
general meeting.
Holiday Pay Accrual
All employees accrue holiday pay during the calendar year, the board encourages all employees to use their full entitlement
throughout the year, however in the unlikely case that an employee has untaken holiday pay this is accrued for at the daily
salary costs, including costs of employment, such as social security.
Staff Pensions
The company does not operate a pension scheme for its employees however it does make payments to defined contribution
pension schemes on behalf of employees in the UK in accordance with auto enrolment legislation. The payments made are
recognised as an expense in the period to which they relate.
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35
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
3. ACCOUNTING POLICIES CONTINUED
Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of
the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest. At each reporting
date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to
the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods or services
received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
3.1
Changes in accounting policies
The following new standards, interpretations and amendments, which are not yet effective and have not been
adopted early in these financial statements, will or may have an effect on the Group’s future financial statements:
•
•
•
IFRS 15 Revenue from Contracts with Customers, mandatory effective date 1 January 2018. IFRS 15 is intended
to clarify the principles of revenue recognition and establish a single framework for revenue recognition. This
supersedes IAS 18 Revenue and the core principle is that an entity should recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. Based on an assessment, the Group
believes that the adoption of IFRS 15 will not have a significant impact on its consolidated financial performance.
The Group’s interim financial statements for the period ended 30 June 2018 will be prepared in accordance with
IFRS 15.
IFRS 9 Financial Instruments will, on 1 January 2018, replace IAS 39 Financial Instruments: Recognition and
Measurement in its entirety. IFRS 9 uses a single approach to determine whether a financial asset is measured
at amortised cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on
how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics
of the financial assets. It also introduces an expected credit loss model for the valuation of certain receivables.
Based on an assessment, the Group believes that the adoption of IFRS 9 will not have a significant impact on its
consolidated financial performance. The Group’s interim financial statements for the period ended 30 June 2018
will be prepared in accordance with IFRS 9.
IFRS 16 Leases sets outs the principles for the recognition, measurement, presentation and disclosure of
leases for both the lessee and the lessor. It eliminates the classification of leases as either operating leases or
finance leases and introduces a single lessee accounting model where the lessee is required to recognise assets
and liabilities for all material leases that have a term of greater than a year. The standard has a mandatory
implementation date of 1 January 2019. Management are still estimating the likely impact of the new accounting
standard.
3.2 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and
assumptions.
Principal Estimates
• Fair value measurement of intangible assets acquired in business combination.
•
A number of assets and liabilities included in the Group’s financial statements require measurement at, and/
or disclosure of, fair value. As there are no easily identifiable valuation methods for intangible assets such as
customer relationships and licences, estimation is required in assessing the fair value when accounting for a
business combination.
36
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
3. ACCOUNTING POLICIES CONTINUED
3.2 Critical accounting estimates and judgements continued
•
Estimated impairment of goodwill
The Group frequently tests whether goodwill has suffered any impairment. These calculations require the use
of estimates, both in arriving at the expected future profitability of the entity and the application of a suitable
discount rate in order to calculate the present value of these flows.
•
Trade receivables
The Group recognises trade receivables at fair value which are then subsequently impaired when the Group
recognise that the debt will not be collected or the debt is greater than 90 days overdue which is based on the
judgement of the local management. The amount of the impairment is the difference between the initial fair
value balance and the amount which is expected to be recovered. This loss is recognised in the income statement
within administration expenses.
• Deferred Tax
Deferred tax assets have been recognised in relation to trading losses generated in the entities, these have been
restricted to those instances where it is probable that taxable profit will be available against which the difference
can be utilised. It is however not guaranteed that these losses will be recovere d .
Principal Judgements
•
Share Swap Agreement with Delamode Group Holdings Limited
On 25 May 2017 Xpediator Plc entered into a share swap agreement with the ultimate beneficiaries of
Delamode Group Holdings Limited, whereby 4,000,000 new ordinary shares of £1.00 each were issued to the
ultimate beneficiaries of Delamode Group Holdings Limited in exchange for their shares in Delamode Group
Holdings Limited in the same proportion as their shareholding in Delamode Group Holdings Limited. The merger
method of accounting is used to consolidate the results of Xpediator plc and Delamode Group Holdings Limited
and subsidiaries. The comparatives used within the consolidated financial statements reflect the financial
performance and position of Delamode Group Holdings Limited. The impact of the use of merger accounting is to
reflect the Group as though it had always been in existence. Therefore the prior year comparatives reflect those
of Delamode Group Holdings Limited. In the current period, the results reflect those of the whole Group for the
whole period. The only change to the reported balance sheet position is to reflect the share capital of Xpediator
plc rather than that of Delamode Group Holdings Limited. The difference between the nominal value of the
shares issued by Xpediator plc in consideration for the share capital of Delamode Group Holdings Limited is taken
to the merger reserve. The net asset position of the group at 31 December 2016 is increased by £50,000 from
the £3,513,000 reported in the financial statements of Delamode Group Holdings Limited. This reflects the share
capital of Xpediator plc prior to the share swap.
Deferred Contingent Consideration
The Group believes that any deferred consideration payable to sellers who continue to be employed is not part
of their remuneration package and forms part of the cost of investment. Amounts payable are irrespective
of continued employment with the acquired Company or elsewhere in the Group. The classification is further
determined based on the number of factors including the breakdown of the acquisition consideration and the
level of remuneration payable to selling shareholder.
4. TURNOVER ANALYSIS BY COUNTRY
Lithuania
United Kingdom
Romania
Bulgaria
Serbia
Other
Total Income
2017
£’000
36,167
32,147
25, 739
13,538
4,971
3,735
116,2 97
2016
£’000
18,285
20,027
19,161
10,383
2,291
2,611
72,758
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
4. TURNOVER ANALYSIS BY COUNTRY CONTINUED
Non Current Assets by Country
United Kingdom
Romania
Lithuania
Serbia
Bulgaria
Malta
Other
2017
£’000
12,948
3,531
91
9 7
54
5
43
2016
£’000
601
3, 265
72
24
43
87
2
Total Non Current Assets
1 6,769
4, 094
5. OTHER OPERATING INCOME
Other operating income arises mainly from sundry services executed by the Group, not being freight forwarding, warehousing
or affinity services. Since this is not considered to be part of the main revenue generating activities, the Group presents this
income separately from revenue.
Recharges to Franchise members
Recovery of fines/penalties
Rental income
Other
Total
6. OPERATING PROFIT
Operating profit is stated after charging/(crediting)
Cost of inventories recognised as expense
Hire of plant and machinery
Rental payable under operating lease
Depreciation - owned assets
Depreciation - assets on hire purchase contracts
Amortisation of Intangible Assets
Auditors’ remuneration - audit
Auditors’ remuneration - non audit
Loss on disposal of property, plant and equipment.
Exceptional Items
Bad Debt Costs
Foreign exchange losses/(gains)
Staff Expenses
Other administration expenses
Total
38
2017
£’000
437
138
74
9
658
2017
£’000
53
251
2,255
351
17
437
2 27
63
8
912
599
107
13,358
7,042
25,680
2016
£’000
214
210
93
39
556
2016
£’000
69
80
1,752
212
30
90
214
–
7
654
289
(111)
8,433
4,222
15,941
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
7. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses (including directors) comprise:
Wages and salaries
Short-term non-monetary benefits
Share Based Payments
Defined contribution pension cost
Social security contributions and similar taxes
2017
£’000
2016
£’000
11,075
7,076
117
69
158
1,939
13,358
75
–
39
1,243
8,433
KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the Group, including the directors of the Company.
Salary
Short-term non-monetary benefits
Share Based Payments
Defined contribution pension cost
DIRECTORS REMUNERATION
Salary
Other remuneration
Share Based Payments
Total
Other remuneration comprises of private family medical cover, and insurance benefits.
Total remuneration regarding the highest paid Director is as follows:
Total aggregate remuneration
The average number of employees (including directors) during the year was as follows:
Freight Forwarding
Logistics
Other
Total
2017
£’000
782
16
69
1
868
2017
£’000
367
12
10
389
2017
£’000
191
2017
313
304
70
687
2016
£’000
497
13
–
2
512
2016
£’000
100
6
–
106
2016
£’000
93
2016
287
242
45
574
39
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
8. SEGMENTAL ANALYSIS
Types of services from which each reportable segment derives its revenues
In 2017 the Group had three main divisions: Transport Solutions, referred to as Affinity, Freight Forwarding, and Logistics and
Warehousing. All revenue is derived from the provision of services.
•
Freight Forwarding - This division is the core business and relates to the movement of freight goods across Europe. This
division accounts for the largest proportion of the Group’s business, generating 80% of its external revenues . (2016:81%)
• Affinity - This division is the Transport Solution’s arm of the Group. It focuses on the reselling of DKV fuel cards, leasing,
ferry crossings and other associated transport related services. This division accounts for 4% of the Group’s business in
terms of revenue (2016:5%)
•
Logistics and warehousing - This division is involved in the warehousing and domestic distribution; it generates 16% of the
Group’s external revenues in 2017 (2016:14%).
Factors that management used to identify the Group’s reportable segments
The Group’s reportable segments are strategic business units that offer different products and services. They are managed
separately because each business requires different technology and marketing strategies.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision maker has been identified as the management team comprising the Divisional
CEOs, the Chief Executive Officer and the Finance Director.
No single customer accounted for more than 10% of the Group’s total revenue.
Measurement of operating segment profit or loss .
The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS.
Inter-segment sales are priced at market rates and at arm’s length basis, along the same lines as sales to external
customers. This policy was applied consistently throughout the current and prior period.
Freight Forwarding
2017
£’000
Logistics &
Warehousing
2017
£’000
Affinity
2017
£’000
Unallocated
2017
£’000
93, 339
18,8 98
1 19,833
–
93, 339
–
93, 339
(235 )
2, 434
–
(115,251)
18,8 98
(52 2)
18, 376
(530)
9 32
4, 58 2
–
4, 582
(38)
1,952
–
–
–
–
–
(2)
(1,31 7)
Revenue
Gross Billings
Less recoverable disbursements
Total revenue
Inter-segmental revenue
Total revenue from external customers
Depreciation & amortisation
Segment Profit (excluding exceptional items)
Net Finance costs
Exceptional items
Profit before income tax
Total
2017
£’000
23 2,070
(115,251)
116, 819
(52 2)
116,2 97
(8 05 )
4,001
( 653)
(912)
2, 436
40
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
8. SEGMENTAL ANALYSIS CONTINUED
Revenue
Gross Billings
Less recoverable disbursements
Total revenue
Inter-segmental revenue
Logistics &
Freight Forwarding Warehousing
2016
£’000
2016
£’000
58,869
10,896
–
58,869
–
–
10,896
(570)
Total revenue from external customers
58,869
10,326
Depreciation & amortisation
Segment Profit (excluding exceptional items)
(125)
1,645
(176)
(37)
Net Finance costs
Exceptional items
Profit before income tax
9. NET FINANCE COSTS
Finance income:
Deposit account interest
Finance costs:
Unwind of discount on Deferred Consideration
Bank loan interest
Finance lease interest
Net finance costs
Affinity
2016
£’000
99,386
95,837
3,549
–
3,549
(30)
1,799
Unallocated
2016
£’000
14
–
14
–
14
(1)
(939)
Total
2016
£’000
169,165
95,837
73,328
(570)
72,758
(332)
2,468
(342)
(654)
1,472
2017
£’000
2016
£’000
12
295
363
7
665
653
24
–
362
4
366
342
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
249388_Xpediator_AR_the_BackEnd_pp031-pp043.indd 41
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41
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
10. INCOME TAX
Analysis of tax expense
Current tax:
Tax on profits for the year
Adjustments in respect of prior periods
Total current tax payable
Deferred tax credit
Total tax expense in consolidated statement of profit or loss
2017
£’000
2016
£’000
825
(17)
808
( 157)
6 51
272
-
272
(39)
233
The reconciling items for the difference between the actual tax charge for the year and the standard rate of corporation tax
in UK (the ultimate parent company’s tax residency) applied to profits for the year are as follows:
Profit before tax
Tax using the Company’s domestic effective tax rate of 19.25% (2016:35%)
Expenses not deductible for tax purposes
Income not taxable
Movement in unrecognised deferred tax
Deferred tax asset not previously recognised
Adjustment in respect of prior periods
Other
Different tax rates applied in overseas jurisdictions
Total tax expense
Deferred Tax
Assets –Arising from Trading losses
Balance as at 1st January
Movement in the year as a result of trading
Balance as at 31st December
Liabilities
Balance as at 1st January
Recognised on the acquisition of Subsidiaries (note 32 )
Release to P&L
Movement in Foreign Exchange
Balance as at 31st December
2017
£’000
2, 436
4 69
4 04
(1 5)
1 09
( 82)
(17)
(33)
(1 84)
6 51
2017
£’000
106
90
196
2017
£’000
(332)
( 9 58)
67
1 4
(1, 209)
2016
£’000
1,472
515
427
(1,129)
859
-
–
22
(461)
233
2016
£’000
54
52
106
2016
£’000
–
(301)
13
(44)
(332)
The deferred tax asset relates to losses carried forward at the rate of tax in the relevant jurisdiction.
The Group has potential deferred tax assets for trading losses totalling £ 813,000 (2016: £561,000) arising from certain
subsidiaries across the Group. These assets have not been recognised due to insufficient certainty that the suitable profits
will be generated in the foreseeable future.
The deferred tax liabilities relates to liabilities arising as part of the Group’s acquisitions.
42
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
11. DISCONTINUED ACTIVITIES
In November 2016, the Group completed its disposal of its investment in Delamode Holdings BV and its subsidiaries in return for
cash consideration of €500,000. (£439,000).
The Group had net assets of £Nil (2016 - £2,619,000), and the difference between the consideration received and asset
value resulted in a distribution to owners during the year of £Nil (2016 - £2,180,000).
Delamode Holding BV is the only operation presented as discontinued operation in 2016 and was classified as held for sale in
October 2015.
During the year the discontinued operations generated losses of £Nil prior to disposal, (2016: - £179,000)
The loss attributable to the disposed Group has been disclosed as a loss from discontinued operations and was determined
as follows:
Result of discontinued operations
Revenue
Expenses other than finance costs
Finance Income
Loss for the year
1 2. EARNINGS PER SHARE
Basic Weighted average number of shares
Diluted Weighted average number of shares
Profit for the year attributable to owners of the Company
Earnings pence per share - basic
Earnings pence per share - diluted
Profit for the year attributable to owners of the Company
Exceptional items (note 30)
Amortisation of intangible assets arising from acquisitions (note 14)
Unwind of discount in deferred consideration ( note 9)
Profit for the year attributable to owners of the Company excluding exceptional items
Earnings pence per share - basic excluding exceptional items
Earnings pence per share – diluted excluding exceptional items
Profit for the year attributable to owners of the Company
Losses for the year from discontinued operations
Profit for the year attributable to owners of the Company continuing operations
Basic earnings pence per share continuing operations
Diluted earnings pence per share continuing operations
Losses for the year from discontinued operations
Basic and diluted earnings pence per share discontinued operations
1 3. DIVIDENDS
Interim dividend of 0.347p (2016: £21.62 ) per Ordinary shares
2017
£’000
–
–
–
–
2016
£’000
427
(639)
33
(179)
2017
9 4,004
9 4,328
2016
80,000
80,000
£’000
1, 540
1. 6 4
1. 63
1, 540
912
330
295
3,077
3.27
3.26
1, 540
–
1, 540
1. 6 4
1. 63
–
–
2017
£’000
350
£’000
563
0.70
0.70
563
654
-
-
1,217
1.52
1.52
563
179
742
0.93
0.93
(179)
(0.22)
2016
£’000
3,377
The directors are recommending a final dividend of 0. 64p per Ordinary shares (2016: £ nil) per share totalling £750,000
(2016: £ nil) to be paid in August 2018 for the year. This dividend has not been accrued in the consolidated statement of
Financial Position.
43
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
14 . INTANGIBLE ASSETS
Group
COST
At 1 January 2017
Additions
Acquired through Business Combination
Disposals
Exchange Differences
At 31 December 2017
AMORTISATION
At 1 January 2017
Charge for the Year
Disposals
Exchange Differences
At 31 December 2017
NET BOOK VALUE
At 31 December 2017
At 1 January 2017
COST
At 1 January 2016
Additions
Acquired through Business Combination
Exchange Differences
At 31 December 2016
AMORTISATION
At 1 January 2016
Charge for the year
Exchange differences
At 31 December 2016
NET BOOK VALUE
At 31 December 2016
At 1 January 2016
Licences
£’000
2,453
30
–
(6)
198
2,675
243
107
(6)
73
417
Goodwill
£’000
682
–
6, 829
–
40
Customer
Related
£’000
–
17
Total
£’000
3,135
47
5, 670
12,49 9
–
2
(6)
2 40
7, 551
5, 689
15 , 915
–
–
–
–
–
–
330
–
–
330
243
4 37
(6)
73
7 47
2,258
2,210
7, 551
682
5, 359
–
15, 168
2,892
£’000
£’000
£’000
£’000
138
50
1,981
284
2,453
125
90
28
243
–
–
593
89
682
–
–
–
–
2,210
13
682
-
–
–
–
–
–
–
–
–
–
–
-
138
50
2,574
373
3,135
125
90
28
243
2,892
13
The goodwill included in the above note, relates to acquisition of Pallet Express Srl in January 2016, UK Buy in January 2017,
Easy Managed Transport in March 2017, Benfleet Forwarding Limited in October 2017 and Regional Express Limited in
November 2017.
44
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
14 . INTANGIBLE ASSETS CONTINUED
Annual test for impairment
The Group carries out its impairment tests annually in November as part of the budget process, all newly acquired entities
are also reviewed for impairment at the balance sheet date.
Upon acquisition the goodwill and other intangibles are calculated at CGU level, these are then measured based on
forecasted cash flow projections, the first year of which is based on the CGU’s current annual financial budget which has been
approved by the board. The cash flow projections for years two to five have been derived based on a market growth rates
that are considered to be in line with the market expectations.
The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of
future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.
In determining the future free cash flow, the main drivers have been revenue and EBIT margins, with margins remaining at
current level.
The directors have reviewed the future profit and cash flow forecasts for the next five years and applying a discount rate of
between 15%-16% to the cash flow projections when determining the net present value of these cash flows, it believes there
is sufficient headroom in the value of the business to not have to impair the goodwill.
The WACC of the Group has been calculated at a rate of between 15%-16% with each CGU being adjusted to take into
consideration a specific Company risk factor. No impairment losses have been recognised in the year.
The Goodwill by CGU is shown below :-
Subsidiary Acquired
Pallex Express SRL
Easy Managed Transport Limited
Benfleet Forwarding Limited
Regional Express Limited
UK Buy
Total
15. PROPERTY, PLANT AND EQUIPMENT
Group
COST
At 1 January 2017
Additions
Additions acquired with subsidiary
Disposals
Exchange differences
Transfers between categories
At 31 December 2017
DEPRECIATION
At 1 January 2017
Charge for year
Eliminated on disposal
Exchange differences
At 31 December 2017
NET BOOK VALUE
At 31 December 2017
At 1 January 2017
Freehold
property
£’000
Fixtures
and
fittings
£’000
Motor
vehicles
£’000
Computer
equipment
£’000
122
2
15
–
3
142
–
3
–
–
3
139
122
921
165
30
(2)
12
(154)
972
508
117
(2)
5
628
344
413
759
224
19
(176)
14
1,058
380
9
(19)
11
154
840
1,593
3,547
504
89
(103)
9
499
341
255
662
159
(12)
8
817
776
396
1,674
368
(117)
22
1,947
1,600
1,186
45
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
Value
£’000
722
2,258
3, 407
937
227
7, 551
Totals
£’000
2,860
771
73
(197)
40
–
249388_Xpediator_AR_the_BackEnd_pp044-pp058.indd 45
04/06/2018 16:29
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
15. PROPERTY, PLANT AND EQUIPMENT CONTINUED
Group
COST
At 1 January 2016
Additions
Additions acquired with Subsidiary
Disposals
Exchange differences
At 31 December 2016
DEPRECIATION
At 1 January 2016
Charge for year
Eliminated on disposal
Exchange differences
At 31 December 2016
NET BOOK VALUE
At 31 December 2016
At 1 January 2016
Freehold
property
£’000
Fixtures
and
fittings
£’000
Motor
vehicles
£’000
Computer
equipment
£’000
105
1
–
–
16
122
–
–
–
–
–
122
105
789
173
8
(82)
33
921
478
91
(78)
17
508
413
311
Totals
£’000
2,436
593
29
(337)
139
842
218
12
(55)
41
1,058
2,860
595
75
(34)
26
662
1,541
242
(186)
77
1,674
700
201
9
(200)
49
759
468
76
(74)
34
504
255
232
396
247
1,186
895
The net book value of assets held under finance leases is £86,055, (2016: £135,502) and the depreciation charged in the
year for these assets was £17,279 (2016:£29,585).
46
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
16 . SUBSIDIARIES
The subsidiaries of Xpediator PLC, all of which have been included in these combined financial statements, are as follows:
Name
Delamode Holding Ltd
Delamode Distribution UK Ltd
Delamode PLC
Delamode Property Ltd
EshopWeDrop Limited
Xpediator Services Limited
Easy Managed Transport Limited
Benfleet Forwarding Limited
Regional Express Limited
Affinity Transport Solutions Srl
Delamode Moldova Srl
Delamode Bulgaria EOOD
Delamode Balkans DOO
Affinity Balkans DOO
Delamode Macedonia
Delamode Baltics UAB
Delamode Estonia OÜ
Delamode Romania Srl
Affinity Leasing IFN
EshopweDrop Holdings
EshopweDrop Baltics
Delamode Group Limited
Delamode Group Holdings Limited
Pallet Express Srl
Eshop Romania
Pallex Hungary
Regostered
Office
Country of
incorporation
Proportion of
ownership
interest
2017
Proportion of
ownership
interest
2016
1
1
1
1
1
1
1
1
1
2
3
4
5
6
7
8
9
2
2
10
9
10
10
11
2
12
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Romania
Moldova
Bulgaria
Serbia
Montenegro
Macedonia
Lithuania
Estonia
Romania
Romania
Malta
Lithuania
Malta
Malta
Romania
Romania
Hungary
100%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
80%
80%
100%
100%
51%
100%
100%
100%
100%
–
–
–
100%
100%
90%
100%
100%
100%
70%
70%
100%
99.95%
99.95%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Delamode Group Holdings Limited, Easy Managed Transport Limited, Benfleet Forwarding Limited and Regional Express
Limited are the only Subsidiaries held directly by Xpediator PLC.
1 700 Avenue West, Skyline 120, Braintree, Essex, CM77 7AA, United Kingdom
2 Bd. Timisoara, nr 111-115 Sector 6, Bucharest, 061327, Romania
3 Bd. Moscova 21/5 of. 1011 MD-2068, Chisinau, Republic of Moldova
4 8 Malashevska Street, 1202, Sofia, Bulgaria
5 Bulevar, Mihajla Pupina, 115v, 11070, Belgrade, Serbia
6 Dzordza, Vasingtona 51/43, Podgorica, 81000, Montenegro
7 Naum, Naumovski, Boce 50/2 -17, 1000 Skopje, Macedonia
8 Eiguliu G, 2 03150, Vilnius, Lithuania
9 Parnu mnt. 139/C-1 11317, Tallinn, Estonia
10 37A, Balzan Valley, Balzan, BZN 1408, Malta
1 1 Stefan cel Mare street, no. 193, Sibiu, 550321, Romania
12 1141 Budapest Szuglo utca 82, Hungary
47
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
249388_Xpediator_AR_the_BackEnd_pp044-pp058.indd 47
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
17 . NON–CONTROLLING INTERESTS
Non-Controlling interests held in the group are as follows:
Delamode Baltics UAB
Delamode Estonia OÜ
Delamode Bulgaria EOOD
Delamode Service Financare IFN
Delamode Distribution UK Limited
2017
20.0%
20.0%
10.0%
0.05%
49.0%
2016
30.0%
30.0%
10.0%
0.05%
49.0%
On 4th January 2017, the Group acquired 10.0% of the non-controlling interest in Delamode Baltics and its subsidiary
Delamode Estonia OU for £209,000.
On the 28th December 2016, the Group acquired 24.3% of the non-controlling interest in Delamode Bulgaria EOOD for
£630,446.
On the 28th July 2016, the Group acquired 5.0% of the non-controlling interest in Affinity Transport Solutions Srl for £1,784.
On the 15th January 2016, the Group acquired 50.0% of the non-controlling interest in Eshopwedrop Limited for £22,500.
The summarised financial information in relation to Delamode Bulgaria and Delamode Baltics before intra- Group eliminations,
is presented below together with amounts attributable to NCI:
Share Capital
Reserves
Total NCI b/f 2016
Non-Controlling Interest in Results for the Year
Non-Controlling Interest in Dividends for the Year
Non-Controlling Interest in Translation adjustment on Opening reserves
Non-Controlling Interest in Translation adjustment on Results for the Year
Non-Controlling Interest Acquired reserves
Non-Controlling Interest Acquired in Share Capital
Minority Interest Acquired Reserve
Total NCI c/f 2017
Delamode
Bulgaria
£’000
Delamode
Baltics UAB
£’000
1
75
76
71
(36)
5
2
–
–
–
118
6
270
276
134
(71)
9
2
5
(2)
(96)
257
48
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
17 . NON–CONTROLLING INTERESTS CONTINUED
Delamode Bulgaria
Delamode Baltics UAB
Revenue
Cost of sales
Gross profit
Administrative expenses
Other income
Operating profit
Finance (costs)/income
Profit before tax
Tax Expense
Profit after tax
Profit after tax attributable to
non-controlling interests
For the period to 31 December 2017
Assets:
Non-Current Trade and receivables
Property plant and equipment
Inventories
Trade and other debtors
Cash and cash equivalents
Liabilities:
Trade and other payables
Loans and other borrowings
Total Net Assets
2017
£’000
13,991
(12,233)
1,758
(967)
–
791
(1)
790
(79)
711
71
2016
£’000
10,876
(9,561)
1,315
(640)
5
680
(15)
665
(66)
599
205
2017
£’000
36,795
(32,770)
4,025
2016
£’000
18,966
(16,445)
2,521
(3,252)
(1,892)
27
800
(9)
791
(122)
669
134
2
631
1
632
(97)
535
161
Delamode Bulgaria
Delamode Baltics UAB
2017
£’000
–
53
8
2,996
588
3,645
2,446
23
2,469
1,176
2016
£’000
12
32
–
2,296
410
2,750
1,960
22
1,982
768
2017
£’000
103
84
–
7,823
23
8,033
6,748
–
6,748
1,285
2016
£’000
80
71
–
4,656
591
5,398
4,483
–
4,483
915
Accumulated non-controlling interests
118
77
257
275
The NCI of all the other shareholders, that are not 100% owned by the group are considered to be immaterial
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
249388_Xpediator_AR_the_BackEnd_pp044-pp058.indd 49
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49
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
18 . INVESTMENTS
COST
At 1 January 2017
Disposals
At 31 December 2017
NET BOOK VALUE
At 31 December 2017
COST
At 1 January 2016
Translation adjustment
At 31 December 2016
NET BOOK VALUE
At 31 December 2016
Investment
£’000
16
(15)
1
1
£’000
16
–
16
16
Investments represent investments in shares in unlisted companies.
The Group disposed of its unlisted investment in CWT Globelink on 4th August 2017 for cash consideration of £30,064.
19.
INVENTORIES
Group
Raw materials
20. TRADE AND OTHER RECEIVABLES
Group
Current:
Trade Receivables
Less: provision for impairment of trade receivables
Current Financial Assets
Prepayments
Other receivables
Total
Non Current
Trade and other receivables
2017
£’000
50
2017
£’000
46,533
(1,4 98)
45,0 35
2,295
1,128
3,348
51, 80 6
2016
£’000
44
2016
£’000
26,746
(1,028)
25,718
1,180
390
1,309
28,597
149
222
Current Financial Assets relate to the security deposits held by DKV on behalf of the Group which are refundable on
termination of the agreement which can be served giving three month’s notice hence they are classed as current assets.
Included with trade debtors is a balance due from Simplu Romania of £263,000. This debt is guaranteed by the Directors of
Delamode Holdings BV (which include Stephen Blyth and Shaun Godfrey), who are a related party to the Xpediator Group.
50
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
20. TRADE AND OTHER RECEIVABLES CONTINUED
The movements in the impairment allowance for trade receivables are as follows:
Group
At 1 January
Increase during the year
Impairment losses reversed
Receivable written off during the year as uncollectible
At 31 December
2017
£’000
1,028
7 77
(178)
(129)
1,4 98
2016
£’000
2,616
442
(153)
(1,877)
1,028
As at 31 December 2017 trade receivables of £14,644,000 (201 6: £9,795,000) were past due but not impaired. They relate
to the customers with no default history. The ageing analysis of these receivables is as follows:
Up to 3 months
Over 3 months
2017
£’000
13,833
811
14,644
2016
£’000
9,252
543
9,795
21 . CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts.
Cash and cash equivalents are stated net of bank overdrafts in the cash flow statement
Group
Bank accounts
Bank Overdrafts
22 . TRADE AND OTHER PAYABLES
Group
Current:
Trade and other payables
Social security and other taxes
Other creditors
Deferred Consideration
Accruals and deferred income
Total Trade and other payables
Non Current
Deferred Consideration
2017
£’000
7,385
(45)
7,340
2017
£’000
42, 446
1,650
5, 5 14
1, 840
1, 363
5 2, 813
2016
£’000
5,351
–
5,351
2016
£’000
24,673
573
3,378
–
543
29,167
1, 666
–
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
The deferred consideration of £1, 840,000 (2016 - £nil) due within one year relates to the deferred consideration on the
acquisitions of Easy Managed Transport Limited, Benfleet Forwarding Limited , Regional Express Limited and UK Buy. Of this
balance, £ 1,078,000 is contingent on performance related criteria.
The deferred consideration of £ 1, 666,000 (2016 - £nil) due in more than one year relate s to the deferred consideration on
the acquisitions of Easy Managed Transport Limited, Benfleet Forwarding Limited , Regional Express Limited and UK Buy. Of
this balance, £9 52,000 is contingent on performance related criteria.
51
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
23 . LOANS AND BORROWINGS
Group
Current:
Finance leases
Bank loans
Invoice discounting facility
Non-current:
Finance Leases
Finance Leases 1-2 years
Finance Leases 2-5 Years
Loans - 1-2 years
Loans - 2-5 years
Loans due after 5 years repayable by instalments
2017
£’000
43
2 89
2,213
2,545
64
24
651
1,006
1,564
3,309
2016
£’000
39
358
1,077
1,474
69
–
942
971
1,896
3,878
The bank loan due after 5 years is due to be repaid by November 2026. Interest is being charged at a fixed rate of 6.4% and
a variable rate of 1.1% above the Bank of England base rate
The book value and fair value of loans and borrowings are as follows:
Non-Current
Finance leases and Bank borrowings
- Secured
- Unsecured
Current
Finance lease and Bank borrowings
- Secured
- Unsecured
Total loans and borrowings
Sterling
Other
2017
£’000
2,874
435
3,309
2,502
43
2,545
5,854
5,396
458
5,854
2016
£’000
3,334
544
3,878
1,410
64
1,474
5,352
4,639
713
5,352
The Finance lease loans are secured against the assets on which the finance relates. Bank Borrowings and overdrafts are
secured by a fixed and floating charge over the Group’s assets.
The movements in the finance leases and borrowings are as follows:
Group
At 1 January
New loans in the year
Loans repaid during the year
At 31 December
52
2017
£’000
5,352
1,198
(696)
5,854
2016
£’000
7,340
319
(2,307)
5,352
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
24 . FINANCIAL INSTRUMENTS - RISK MANAGEMENT
The Group is exposed through its operations to the following financial risks:
• Credit risk
• Fair value or cash flow interest rate risk
• Foreign exchange risk
• Other market price risk, and
•
Liquidity risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note
describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in
this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
• Trade receivables
• Cash and cash equivalents
• Trade and other payables
• Bank overdrafts
• Floating-rate bank loans
• Fixed rate bank loans
• Bank loan
Financial instruments by category
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Loans and receivables
2017
£’000
7,385
50, 678
58, 063
2016
£’000
5,351
28,534
33,885
Financial Liabilities
Fair value through profit and loss
Loans and other payables
Trade and other payables
Loans and Borrowings
Bank overdraft
Deferred consideration
Total Financial Liabilities
2017
£’000
–
–
–
1,476
1,476
2016
£’000
–
–
–
-
–
2017
£’000
50,973
5,854
45
2,030
5 8,902
2016
£’000
29,499
5,352
-
-
34,851
Financial instruments not measured at fair value
These include cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and
other payables approximates their fair value.
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate
risk) credit risk and liquidity risk. The financial risks relate to the following financial instruments: debtors, cash and cash equivalents
and trade and other creditors. The accounting policies with respect to these financial instruments are described above.
Risk management is carried out by the directors under policies approved at the AGM. The directors identify and evaluates
financials risks in close co-operation with the company’s operating units. The directors provide principles for overall risk
management.
The reports on the risk management are produced periodically to the key management personnel of the company.
53
S
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E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
24 . FINANCIAL INSTRUMENTS - RISK MANAGEMENT CONTINUED
(a) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally,
to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local
business practices.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and
financial institutions, the most suitable bank in the local territory is selected.
A significant amount of cash is held with the following institutions:
2017*
Rating
A
BBB+
BBB+
BBB-
A
BB
BBB
CCC+
A+
A +
2017
Rating
BBB+
Cash at bank
Barclays Bank
Lloyds Bank
Raiffeisenbank
RBS
HSBC
Bank of Transylvania
Unicredit Bulbank
Alpha Bank
SEB bankas AB
DNB bankas AB
Other
Total
*Based on Standard & Poor Rating
Short term deposits
Lloyds Bank
Reconciliation of cash in bank and deposits to balance sheet
Cash at bank
Short term deposits
(b) Market risk
(i) Price risk
2017
£’000
2,656
182
1, 418
319
261
232
216
67
7
–
497
5,855
2017
£’000
1,485
2017
£’000
5,855
1,485
7,340
2016
£’000
–
516
1,802
–
–
179
251
48
291
290
489
3,866
2016
£’000
1,485
2016
£’000
3,866
1,485
5,351
Certain aspects of the commercial terms relating to the Affinity division are, directly linked to the commodity costs
of fuel purchased by their clients at roadside fuelling stations across Europe. As such there is a risk arising from
price changes relating to the fuel prices offered at the respective fuelling stations. In order to manage this risk the
Company partially hedges the way it charges its commissions.
The table below shows the sensitivity analysis to possible changes in fuel prices to which the Group is exposed at the
end of each year, with all other variables remaining constant. This arises due to the commercial arrangements the
Affinity division has with its clients, whereby it will generate income in the form of commissions based on the value of
fuel purchased by its clients.
Petrol price risk effect on net profit sensitivity analysis:
Price increased by 10%
Price decreased by 10%
2017
£’000
130
(130)
2016
£’000
95
(95)
The Group is exposed to the market risk with respect to its operating income which is subject to changes in
performance, exchange fluctuations and other market influences both economic and political. The directors manage
this risk by reviewing on a regular basis market fluctuations arising on the Group’s activities.
54
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
24 . FINANCIAL INSTRUMENTS - RISK MANAGEMENT CONTINUED
(ii) Cash flow and fair value interest rate risk
As the Company has no significant interest-bearing assets, its income and operating cash flows are substantially
independent of changes in market interest rates.
The risk associated with interest-bearing debts is mitigated by utilising a mix of fixed and variable interest rate loans.
The Group’s cash flow and fair value interest rate risk is periodically monitored by the directors. The cash flow and
fair value risk policy is approved by the directors.
Receivables and trade and other payables are interest free and have settlement dates within one year.
A sensitivity analysis is normally based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and change in some of the assumptions may be correlated – for example,
change in exchange rates and change in market values.
(iii) Foreign exchange risk
Foreign exchange risk arises because the Group has operations located in various parts of the world whose
functional currency is not the same as the presentational currency of the Group. Foreign exchange risk also arises
when individual companies enter into transactions denominated in a currency other than their functional currency.
Certain assets of the Group comprise amounts denominated in foreign currencies. Similarly, the company has
financial liabilities denominated in foreign currency. In general, the company seeks to maintain the financial assets
and financial liabilities in each of the foreign currencies at a reasonably comparable level, thereby providing a
natural hedge against foreign exchange risk.
GBP
£’000
Euro
£’000
RON
£’000
MLD
LEU
£’000
BGN
LEV
£’000
RSD
Dinar
£’000
HUF
Forints
£’000
MKD
Denar
£’000
Total
£’000
At 31 December 2017
Financial assets
15, 580
28,185
9,218
Financial Liabilities
20,036
28,678
6,054
131
33
3,413
2,363
1,337
1,461
At 31 December 2016
Financial assets
6,520
19,846
3,548
Financial liabilities
9,159
19,751
2,423
369
254
2,636
810
1,955
1,200
18
39
4
25
181 58, 0 63
238
5 8,902
102 33,835
84 34,851
An analysis of the Group’s exposure to foreign exchange risk, illustrating the impact on the net financial assets of a
10% movement in each of the key currencies to which the Group is exposed, is shown below
Foreign currency risk sensitivity analysis:
2017
£’000
2016
£’000
Euro
Strengthened by 10%
Weakened by 10%
Romanian Lei
Strengthened by 10%
Weakened by 10%
Moldavian Leu
Strengthened by 10%
Weakened by 10%
Serbian Dinar
Strengthened by 10%
Weakened by 10%
Bulgarian Lev
Strengthened by 10%
Weakened by 10%
Macedonian Denar
Strengthened by 10%
Weakened by 10%
4 9
(4 9)
316
( 316)
10
(10)
(12)
12
105
(105)
6
( 6)
10
(10)
113
(113)
12
(12)
(39)
39
68
(68)
2
(2)
55
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T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
24 . FINANCIAL INSTRUMENTS - RISK MANAGEMENT CONTINUED
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash flow for operations. The Group manages its’ risk to
shortage of funds by monitoring forecast and actual cash flows.
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity
of both its financial investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash
flows from operations.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts, invoice discounting and long term loan finance.
At 31 December 2017
Trade and other payables
Loans and borrowings
Deferred Consideration
Total
At 31 December 2016
Trade and other payables
Loans and borrowings
Total
Up to 12
months
£’000
50, 9 73
2,545
569
54,087
Up to 12
months
£’000
29,167
1,614
30,781
Between
1 and 2
years
£’000
–
715
738
1,453
Between
1 and 2
years
£’000
–
1,130
1,130
Between
2 and 5
years
£’000
–
1,030
-
1,030
Between
2 and 5
years
£’000
–
1,247
1,247
25 . CALLED UP SHARE CAPITAL
Ordinary Shares of 5p each
At the beginning of the year
Issued During the Year
At the end of the year
50,000 deferred shares of £1.00 each
At the end of the year
2017
Number
80,000,000
37,431,144
117,431,144
50,000
117,481,144
2017
£000s
4,000
1,872
5,872
2016
Number
80,000,000
–
80,000,000
50
50,000
5,922
80,050,000
Over
5 years
£’000
–
1,564
-
1,564
Over
5 years
£’000
–
2,087
2,087
2016
£000s
4,000
–
4,000
50
4,050
The share capital at the 31 December 2016 represents the shares issued as consideration for Delamode Group Holdings
Limited which under merger accounting is treated as if they had always been in issue.
On 25 May 2017, the Company entered into a share swap agreement whereby the ultimate beneficiaries of Delamode Group
Holding Limited swapped their shares in Delamode Group Holding Limited for shares in Xpediator Plc. This created 4,000,000
ordinary shares of £1.00 being issued to the shareholders of the Company.
On the 7 August 2017 these shares were converted into 80,000,000 ordinary shares of 5 pence each.
On the 11th August 2017, the company issued 20,833,333 of 5 pence shares following the listing on the Alternative Investment
Market. The Company raised Gross Proceeds of £5,000,000 to assist with further acquisitions. Costs of £421,000 have been
taken to the share premium reserve.
On 25th October 2017, the Company issued 9,219,858 of 5 pence shares (market value of £2,600,000) shares to the
shareholders’ of Benfleet Forwarding Limited as part of the consideration for the acquisition of the Company.
On 3rd November 2017, the Company issued 377,953 of 5 pence shares (market value of £120,000) to the shareholders’ of
Regional Express Limited as part of the consideration for the acquisition of the Company.
On the 30th November 2017, the Company issued a further 7,000,000 5 pence shares following an addition round of funding.
The Company raised gross proceeds of £2,800,000 to assist with further acquisitions and working capital requirements.
Costs of £195,000 have been taken to the share premium reserve.
The deferred shares are non-voting shares and have no rights to any distribution or dividend payments.
56
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
26 . RESERVE DESCRIPTION AND PURPOSE
Retained earnings: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
Translation reserve: represents the difference arising on the translation of the net assets and results of subsidiaries into the
presentation currency.
Merger Reserves: represents the difference between the nominal value of consideration paid for shares acquired in entities
under common control and the nominal value of those shares. This arises as a result of the business combination falling
outside the scope of IFRS 3 and merger accounting being applied in place of acquisition accounting. In addition, the premium
on the fair value in excess of the nominal value of shares issued in consideration of business combinations is credited to the
merger reserve.
Share premium is the amount subscribed for share capital in excess of nominal value.
Equity reserve represents the cost of the share options granted that have not yet been exercised.
27 . SHARE-BASED PAYMENTS
The Company has granted Directors’ and key management share option plans. These are unapproved schemes so they
do not satisfy the requirements of schedule 4, ITEPA. A summary of the options plans is shown below. All options will vest
between 1 to less than 5 years.
Name
Alex Borrelli
Geoff Gillo
Dana Antohi
SP Angel
Share Option
No
Option Price
£
Vesting Period
Expiry Date
416,667
208,333
729,167
55,250
0.24
0.24
0.05
0. 24
May 2019
May 2019
May 2019*
May 2019*
July 2018
August 2018
July 2022
August 2022
*The expiry date is 10 days after approval of the Group’s consolidated audited accounts for the year ending 31 December
2018.
All share options have been granted in the current year.
The Company has granted share options to the non-executive directors over 416,667 Ordinary Shares (Alex Borrelli)
and 208,333 Ordinary Shares (Geoff Gillo). The options may only be exercised in whole and not part and exercise of the
options are conditional on the earnings per share of the Company in each of the two years ending 31 December 2017 and
31 December 2018 increasing by 10 per cent. or more on the previous year. For Alex Borrelli, the options are also conditional
on him being a director of the Company on the date that the consolidated audited accounts of the Company for the year
ending 31 December 2018 are published and for Geoff Gillo, on him being a non-executive director of the Company on such
date. The exercise price of the options is the Placing Price (£0.24).
The Company has granted options to Dana Antohi over 729,167 Ordinary Shares. The options are exercisable for a period of
30 days commencing on the first anniversary of the date of grant of the options, following which, if not exercised, the options
will lapse. The options may only be exercised over all the options and not part. The exercise price of the options is £0.05.
The Company has also granted to SP Angel warrants to subscribe for 55,250 Ordinary Shares at the Placing Price, £0.24 .
E xercisable at any time during the period of five years from Admission.
Options will normally lapse on cessation of employment. However, exercise is permitted for a limited period following
cessation of employment for specified reasons, such as redundancy, retirement, ill-health, and , in other circumstances, at the
discretion of the Remuneration Committee.
The weighted average grant fair value during the year was £0.125 per option. The outstanding options have a weighted
average contractual life of 11 months, and exercise price between £0.05 and £0.24 .
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
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57
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
27 . SHARE-BASED PAYMENTS CONTINUED
Options were valued using the Black-Scholes option pricing model. No performance conditions were included in the fair value
calculations. The fair value per option granted and the assumptions used in the calculations are as follows:-
Risk Free Investment
Expected Life
Expected Volatility
2017
1.97%
18 months
43.63%
2016
–
–
–
Weighted Average Share Price
For 2017 options granted, a volatility of 43.63% has been used reflecting the historical based on share transactions since
listing. The maximum vesting period was used as a basis to determine the expected life of the option. The risk-free rate was
based on the Government Gilts rates in effect at the time of the grant.
The Group recognised total expenses of £68,857 (2016 - £nil) relating to equity-settled share-based payments in 2017.
58
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
28 . LEA SE S
The Group utilises finance leases and hire purchase agreements to acquire property, plant and equipment. Future minimum
amounts repayable are shown below:
2017
£’000
2016
£’000
Hire purchase contracts
Gross obligations repayable:
Within one year
Between one and five years
Finance charges repayable:
Within one year
Between one and five years
Net obligations repayable:
Within one year
Between one and five years
Net obligations included within:
Current liabilities
Non-current Liabilities
48
92
140
5
4
9
43
88
131
43
88
131
41
73
114
2
4
6
39
69
108
39
69
108
Operating leases - lessee
In addition to finance leases the Group has various operating leases which are shown below. The ownership of the operating
leases will not pass to the lessee at the end of the agreement.
The total future value of minimum lease payments is due as follows:
2017
£’000
2016
£’000
Non-cancellable operating leases - Non Rent
Payable
Within one year
Between one and five years
In more than five years
Non-cancellable operating leases - Rent
Payable
Within one year
Between one and five years
In more than five years
Minimum lease payments
Receivable
Not later than one year
Later than one year and not later than five years
Later than five years
285
559
7
851
1,956
6,446
2,855
11,257
2017
£’000
37
43
–
80
124
257
-
381
811
2,628
2,512
5,951
2016
£’000
37
41
–
78
59
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
29 . RELATED PARTY TRANSACTIONS
Delamode Holding BV, is indirectly owned by Shaun Godfrey, Sandu Grigore, and Cogels Investment BV, all of whom are
shareholders of Xpediator PLC.
Delamode International Kft, Delamode Hungary, Kft and Delamode Consulting Srl are all subsidiaries of Delamode Holding BV.
Delamode Properitati Srl, a company owned by Delamode Holding BV, is the landlord of one of the Group’s leasehold
properties in Romania. Rent payable under the current lease is at market rates. Shaun Godfrey, Richard Myson and Cogels
Investment BV are shareholders of Xpediator PLC.
On the 16th January 2016 the Group acquired 100% of the share capital of Pallet Express Srl for £2,058,000 these shares
were owned by the current shareholders of the Group in the same proportion of their current group shareholding, the details
of this acquisition is disclosed in note 3 2.
During the year Group companies entered into the following transactions with related parties who are not members of the
Group.
Sales
Purchases
Amounts owed by
Amounts owed to
2017
£’000
2016
£’000
2017
£’000
2016
£’000
2017
£’000
2016
£’000
2017
£’000
2016
£’000
Related Party
Delamode Holding BV
Delamode Propretati, Srl
Delamode Hungary Kft
Delamode Consulting
55
3
-
-
-
2
-
-
-
315
-
-
8
397
-
-
55
9
21
-
-
8
21
-
Companies in which directors or their immediate family have a significant controlling interest
Affinity Group Limited
COGELs Investment BV
Directors
Shaun Godfrey
Richard Myson
Sandu Grigore
2
-
-
1
-
4
-
-
-
-
-
-
14
-
-
-
-
-
-
-
45
235
43
243
-
-
-
31
-
2
The maximum amount owed to the Group by the directors at any time during 2017 was as follows;
Affinity Group Limited
COGELs Investment BV
Shaun Godfrey
Richard Myson
Sandu Grigore
Stephen Blyth
2017
£’000
45
243
31
1
2
-
646
330
2
15
-
-
-
14
1
-
85
15
29
7
60
58
1
-
2016
£’000
43
243
127
1
23
1,185
Details of directors’ remuneration and the remuneration of Key Management Personnel are given in note 7 .
All related party transactions were made at an arm’s length basis.
60
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
30. EXCEPTIONAL ITEMS
As a result of the group’s decision to seek admission to the Alternative Investment Market in the UK, it incurred costs for legal
and consultancy fees relating to this process in the year totalled £67 2,000. (2016: £654,000). These costs relate to external
accountancy, legal support and corporate advisors and are non-recurring.
In addition, the Group has incurred non-recurring costs of £240 ,000 (2016 - £nil) relating to the acquisitions of Easy
Managed Transport Limited, Benfleet Forwarding Limited and Regional Express Limited. These costs relate to external
accountancy, legal support, professional fees and stamp duty payable to local tax authorities.
31. SUBSEQUENT EVENTS
In April 2018 the Group incorporated an new entity in Latvia, which is a wholly owned subsidiary of Delamode Baltics UAB.
32 . BUSINESS COMBINATIONS
Easy Managed Transport
On 10 March 2017 the Group acquired 100% of the voting equity of Easy Managed Transport Limited (EMT), a company
whose principal activity is the provision of domestic distribution for garment consignment in the UK.
The principal reason for this acquisition was to enable the Group to consolidate and enhance their distribution services for
their fashion related clients.
The total consideration paid for the entity is split into the following components:
• Cash on completion
• Plus Earn-Out payments payable over two years,
The deferred earn out consideration is calculated as follows, both of which are subject to a maximum and minimum
payment:-
• 50% of the Company’s operating profit before tax multiplied by 2.5 in respect of the First Earn-Out Year
• 50% of the Company’s operating profit before tax multiplied by 2.5 in respect of the Second Earn-Out year
Fair Value assessment
As part of the fair value assessment of the Intangible assets of EMT, it was identified that the only intangible asset category
to apply, is the customer related intangible assets. The fair value calculation of customer related intangible asset was
determined by using the income approach based on the expected future cash flows. This was then discounted to determine
the present value.
The weighted average cost of capital used in determining the present value, was 21.0%, which reflected the business and
market risks factors.
The outcome of the fair value calculation was to derive a customer related intangible asset with a value of £2,872,000.
Economic useful life
When determining the economic useful life of the customer relationships the historical length of relationships with existing
customers and those reported by listed companies in the sector was considered as well as an annual attrition rate of 10.0%.
Based on these factors, it was concluded that the useful economic life for customer relationships in relation to EMT would be
up to 10 years.
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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61
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
32 . BUSINESS COMBINATIONS CONTINUED
Deferred tax
As a result of the creation of the customer related intangible asset, there is a deferred tax liability, which was calculated as
the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was
used as to determine this. This resulted in a deferred tax liability of £488, 000.
Deferred Consideration
The deferred consideration consists of the
• payment relating to the earn out period and;
• amount by which the Completion Net Asset exceeds Target Net Assets
In determining the present value of the earn out payment, the first payment which is due in July 2018 was calculated using
a cost of capital equal to the long term debt of 6.8% and the second earn out payment, due to be paid in July 2019, was
calculated by using the WACC of 21.0%.
Using the forecasted results for the respective periods the initial present value of the deferred consideration relating to the
earn out was calculated to be £2,1 88, 000.
In relation to determining the present value of the amount by which the completion net asset exceeds the target, a cost
of capital equal to the long term debt % of 6.8% was used given that this payment is due to be paid with the first earn out
payment in July 2018.
The present value of the excess net asset equated to £19 8,000 .
Acquisition costs of £96,000 have been expensed to the income statement and are shown as part of the exceptional
expenses.
Goodwill
When determining the goodwill arising on the acquisition the following provisional fair values were assessed .
Purchase Consideration
Initial Consideration – Cash
P.V. of Net Assets Adjustment - to be settled in cash
P.V. of Deferred Consideration - to be settled in ordinary shares
Total Consideration for Equity
Allocation of Assets and Liabilities Acquired
Intangible Assets
Customer-related Intangible Assets
Other Assets
Fixed Assets
Current Assets (excluding Cash)
Cash
Liabilities
Assumed Liabilities
Deferred Tax Liability for Intangible Assets
Goodwill
The goodwill recognised will not be deductible for tax purposes.
Since the acquisition date, EMT has contributed £2,903,000 to group revenues and £579,000 to group profit.
£’000
5,128
198
2,188
7,514
2,872
23
645
2, 850
(646)
(488)
2,258
62
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
32 . BUSINESS COMBINATIONS CONTINUED
Benfleet Forwarding Limited
On 26 October 2017 the Group acquired 100% of the voting equity of Benfleet Forwarding Limited (Benfleet), a company
whose specializes in the movement of flooring, machinery, household goods and garments.
The principal reason for this acquisition was to enable the Group to consolidate and enhance their distribution services and
to operate in these new markets.
The total consideration paid for the entity is split into the following components:
• Cash on completion
• Shares issued on completion
• Plus Earn-Out payments payable over two years,
The deferred consideration earn out is calculated as follows, both of which are subject to a maximum and minimum
payment:-
• 50% of the Company’s operating profit before tax multiplied by 2.5 in respect of the First Earn-Out Year
• 50% of the Company’s operating profit before tax multiplied by 2.5 in respect of the Second Earn-Out year
Fair Value assessment
As part of the fair value assessment of the Intangible assets of Benfleet forwarding, it was identified that the only intangible
asset category to apply, is the customer related intangible assets. The fair value calculation of customer related intangible
asset was determined by using the income approach based on the expected future cash flows. This was then discounted to
determine the present value.
The weighted average cost of capital used in determining the present value, was 19.0%, which reflected the business and
market risks factors.
The outcome of the fair value calculation was to derive a customer related intangible asset with a value of £ 1,838,000.
Economic useful life
When determining the economic useful life of the customer relationships the historical length of relationships with existing
customers and those reported by listed companies in the sector was considered as well as an annual attrition rate of 10.0%.
Based on these factors, it was concluded that the useful economic life for customer relationships in relation to Benfleet
Forwarding would be up to 6 years.
Deferred tax
As a result of the creation of the customer related intangible asset, there is a deferred tax liability, which was calculated as
the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was
used as to determine this. This resulted in a deferred tax liability of £ 312,000.
Deferred Consideration
The deferred consideration consists of the
• payment relating to the earn out period and;
• amount by which the Completion Net Asset exceeds Target Net Assets
In determining the present value of the earn out payment, the first payment which is due in May 2018 was calculated using
a cost of capital equal to the long term debt of 6.8% and the second earn out payment, due to be paid in May 2019, was
calculated by using the WAC of 17.0%.
Using the forecasted results for the respective periods the present value of the initial deferred consideration relating to the
earn out was calculated to be £ 624,000.
Acquisition costs of £109,000 have been expensed to the income statement and are shown as part of the exceptional
expenses.
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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63
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
32 . BUSINESS COMBINATIONS CONTINUED
Goodwill
When determining the goodwill arising on the acquisition the following
Purchase Consideration
Initial Consideration - cash
Initial Consideration – shares
P.V. of Deferred Consideration - to be settled in cash
Total Consideration for Equity
Allocation of Assets and Liabilities Acquired
Intangible Assets
Customer-related Intangible Assets
Other Assets
Fixed Assets
Current Assets (excluding cash)
Cash
Liabilities
Assumed Liabilities
Deferred Tax Liability for Intangible Assets
Goodwill
£’000
3,950
2,600
6 24
7, 174
1,838
5
4, 691
1, 565
(4,020)
( 3 12)
3, 407
The goodwill recognised will not be deductible for tax purposes.
Since the acquisition date, Benfleet has contributed £5,513,000 to Group revenues and £402,000 to Group profit.
Regional Express Limited
On 3 November 2017 the Group acquired 100% of the voting equity of Regional Express Limited, a Company whose
specializes in the road, sea and air freight services as well as organizing Amazon sellers VAT registration, customs clearances
and transport of goods from the USA and the Far East .
The principal reason for this acquisition was to enable the Group to consolidate and enhance their distribution services and
to operate in these new markets.
The total consideration paid for the entity is split into the following components:
• Cash deferred on completion
• Shares issued on completion
• Plus Earn-Out payments payable over two years,
The deferred Earn Out consideration is calculated as follows, both of which are subject to a maximum and minimum
payment:-
• 50% of the Company’s operating profit before tax multiplied by 2.5 in respect of the First Earn-Out Year
• 50% of the Company’s operating profit before tax multiplied by 2.5 in respect of the Second Earn-Out year
Fair Value assessment
As part of the fair value assessment of the Intangible assets of Regional Express Limited it was identified that the only
intangible asset category to apply, is the customer related intangible assets. The fair value calculation of customer related
intangible asset was determined by using the income approach based on the expected future cash flows. This was then
discounted to determine the present value.
The weighted average cost of capital used in determining the present value, was 17.0%, which reflected the business and
market risks factors.
The outcome of the fair value calculation was to derive a customer related intangible asset with a value of £737,000.
64
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
32. BUSINESS COMBINATIONS CONTINUED
Economic useful life
When determining the economic useful life of the customer relationships the historical length of relationships with existing
customers and those reported by listed companies in the sector was considered as well as an annual attrition rate of 10.0%.
Based on these factors, it was concluded that the useful economic life for customer relationships in relation to Regional
Express Limited would be up to 8 years.
Deferred tax
As a result of the creation of the customer related intangible asset, there is a deferred tax liability, which was calculated as
the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was
used as to determine this. This resulted in a deferred tax liability of £125,00 0.
Deferred Consideration
The deferred consideration consists of the
• payment relating to the earn out period and;
• amount by which the Completion Net Asset exceeds Target Net Assets
In determining the present value of the earn out payment, the first payment which is due in November 2018 was calculated
using a cost of capital equal to the long term debt of 6.8% and the second earn out payment, due to be paid in November
2019, was calculated by using the WACC of 17.0%.
Using the forecasted results for the respective periods the present value of the initial deferred consideration relating to the
earn out was calculated to be £ 368,000 .
Acquisition costs of £35,000 have been expensed to the income statement and are shown as part of the exceptional
expenses.
Goodwill
When determining the goodwill arising on the acquisition the following calculations were used.
Purchase Consideration
Initial Consideration – cash
Initial Consideration – Shares
Net Cash Adjustment
P.V. of Deferred Consideration - to be settled in cash and shares
Total Consideration for Equity
Allocation of Assets and Liabilities Acquired
Intangible Assets
Customer-related Intangible Assets
Other Assets
Fixed Assets
Current Assets (Excluding Cash)
Cash
Liabilities
Assumed Liabilities
Deferred Tax Liability for Intangible Assets
Goodwill
£’000
1, 080
120
123
368
1,691
737
52
593
319
(822 )
(125)
937
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
The goodwill recognised will not be deductible for tax purposes.
Since the acquisition date, Regional Express has contributed £1,541,000 to Group revenues and £62,000 to Group profit.
65
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
32 . BUSINESS COMBINATIONS CONTINUED
UK Buy
On 6th January 2017, the Group agreed to purchase the intellectual property of UK Buy, which traded under the name of
Gerviva UAB, an entity incorporated in Lithuania. Providing B2C distribution for clients in the Baltic region.
UKbuy allows Lithuanian clients to purchase goods from UK e-retailers and arranges for delivery to their chosen address
in Lithuania.
They were a direct competitor to Eshopwedrop, “Eshop” in Lithuania and provided an identical service to those clients. Since
its commencement the entity had grown to level which saw it deliver approximately 3,000 parcels per week, significantly
higher than that of Eshop.
As such in order to develop the business the Group decided it would acquire the intellectual property and intangible assets
of the business and absorb the activity into the Eshop operations.
As the transaction involved the purchase of a substantial part of the business, then this has been accounted for as a
Business Combination under the definition of IFRS 3 “Business Combinations”.
Goodwill
When determining the goodwill arising on the acquisition the following calculations were used.
Purchase Consideration
Initial Consideration – cash
P.V. of Deferred Consideration – to be settled in cash
Total Consideration for Equity
Allocation of Assets and Liabilities Acquired
Intangible Assets
Customer-related Intangible Assets
Liabilities
Deferred Tax Liability for Intangible Assets
Goodwill
£’000
91
326
417
223
(33)
227
The goodwill recognised will not be deductible for tax purposes.
The maximum consideration payable for the business is £41 7,000, of which £91 ,000 has been paid at the balance sheet date.
66
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
32 . BUSINESS COMBINATIONS CONTINUED
Pallet Express Srl
On 18 January 2016 the Group acquired 100% of the voting equity instruments of Pallet Express, a Company whose principal
activity is the provision of a franchise network for domestic distribution in Romania.
The consideration paid for this acquisition was £2,058,000.
The principal reason for this acquisition was to enable the Group to consolidate and enhance their supply chain network in
the CEE region.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Intangible Assets - Systems
Intangible Assets - Licences
Property, plant and equipment
Other
Inventories
Trade Receivables
Cash
Trade Payables
Loans
Others
Deferred tax liability
Total net assets
£’000
–
1,981
29
16
5
255
185
(255)
(445)
(5)
(301)
1,465
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
On acquisition of Pallet Express Srl the software was not considered to be appropriate for the business and as such the
entire carrying value of this asset has been impaired.
The company also held the Master Franchise license with Pallex Holding UK which had a carrying value of £103,000. This
has been adjusted to reflect the fair value of this asset and as such the asset has been restated with a book value of
£1,981,000.
Fair value of consideration paid in cash
Net asset acquired
Exchange differences
Goodwill recognised
The goodwill recognized will not be deductible for tax purposes.
Since the acquisition date, Pallex has contributed £4,302,000 (2016 -£2,658,000) to Group revenues and £507,000
(2016 -£449,000) to Group profit.
2,058
(1,465)
129
722
67
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COMPANY STATEMENT OF
FINANCIAL POSITION
AS AT YEAR ENDED 31 DECEMBER 2017
ASSETS
NON-CURRENT ASSET
Property, plant and equipment
Investments
Trade and other receivables
Deferred tax
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital
Share Premium
Equity Reserve
Merger Reserve
Retained earnings
LIABILITIES
NON-CURRENT LIABILITIES
Deferred Consideration Due After One Year
CURRENT LIABILITIES
Trade Creditors and Other Payables
Total Liabilities
TOTAL EQUITY AND LIABILITIES
The Company made a profit in the year of £ 765,000 (2016 - £nil).
Notes
2017
£’000
2016
£’000
3
4
5
5
8
9
9
9
9
7
6
3
38, 5 62
111
5 1
38, 727
288
962
1,250
39, 977
5,922
5,792
19
20,083
415
32, 231
1,503
6,246
7,74 6
39, 977
–
–
–
–
–
50
–
50
50
50
–
–
–
–
50
–
–
–
50
Richard Myson
CFO
Stephen Blyth
CEO
14 May 2018
68
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COMPANY STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Notes
Share
Capital
£’000s
Share
Premium
£’000s
Equity
Reserve
£’000s
Merger
Reserve
£’000s
Retained
Earnings
£’000s
Total
£’000s
Equity as at
1st December 2016
Issue of Share Capital
Equity as at
31st December 2016
Contributions by and
distribution to owners
Dividends Paid
Issue of New Ordinary
Shares
Share Swap with
Delamode Group Holdings
Share Based Payment
Charge
Share Based Consideration
on Acquisition s
Total contribution by and
distributions to owners
Profit for the year
Equity as at
31 December 2017
8
9
8
–
50
50
–
–
–
–
–
1,392
5,792
4,000
–
480
5,922
–
–
–
–
5,792
–
5,922
5,792
–
–
–
–
–
–
19
–
19
–
19
–
–
–
–
–
17,842
–
2,241
20,083
–
–
–
–
-
50
50
(350)
(350)
–
–
–
–
(350)
765
7,184
21,842
19
2,721
31,466
765
20,083
415
32, 231
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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69
NOTES TO THE COMPANY FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with Financial Reporting Standard 101 “Reduced Disclosure
Framework” and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as
permitted by FRS 101 “Reduced Disclosure Framework”:
•
•
•
•
•
•
•
•
•
•
•
•
the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment;
the requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64(o)(ii), B64(p),
B64(q)(ii), B66 and B67 of IFRS 3 Business Combinations;
the requirements of paragraph 33(c) of IFRS 5 Non Current Assets Held for Sale and Discontinued Operations;
the requirements of IFRS 7 Financial Instruments: Disclosures;
the requirements of paragraphs 91 to 99 of IFRS 13 Fair Value Measurement;
the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in
respect of:
• paragraph 79(a)(iv) of IAS 1;
• paragraph 73(e) of IAS 16 Property, Plant and Equipment;
• paragraph 118(e) of IAS 38 Intangible Assets;
the requirements of paragraphs 10(d), 10)(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation of
Financial Statements;
the requirements of paragraphs 134 to 136 of IAS 1 Presentation of Financial Statements;
the requirements of IAS 7 Statement of Cash Flows;
the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
the requirements of paragraphs 17 and 18A of IAS 24 Related Party Disclosures;
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or
more members of a Group;
•
the requirements of paragraphs 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairments of Assets.
Merger accounting
On 25 May 2017 Xpediator PLC entered into a share swap agreement with the ultimate beneficiaries of Delamode Group
Holdings Limited, whereby 4,000,000 new ordinary shares of £1.00 each were issued to the ultimate beneficiaries of the
Delamode Group Holdings Limited in exchange for their shares in Delamode Group Holdings Limited in the same proportion
as their shareholding in Delamode Group Holdings Limited.
Going concern
The directors have concluded that it is appropriate that the financial statements have been prepared on a going concern
basis given the cash balances as at 31 December 2017, and funding facilities in place across the group, which it does not
envisage will be withdrawn thus there are sufficient funds available to meet its liabilities as they fall due for a period of not
less than 12 months from the date of approval of the financial statements.. The financial statements have therefore been
prepared on a going concern basis.
The directors believe that based on the current budgets and forecast cash flows, there is sufficient resources to meet its
liabilities as they fall due.
70
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NOTES TO THE COMPANY FINANCIAL
STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
1. ACCOUNTING POLICIES CONTINUED
Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held
under a finance lease, over the lease term, whichever is the shorter.
Computer Equipment
–
25% on reducing balance
Fixed assets are stated at cost less depreciation and provision for impairment. Cost includes interest on the funding of major
assets until the construction of the asset is complete.
Taxation
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules,
using tax rates enacted or substantially enacted by the balance sheet date.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet
date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction.
Exchange differences are taken into account in arriving at the operating result.
Employee benefit costs
The Company operates a defined contribution pension scheme. Contributions payable to the company’s pension scheme
are charged to the income statement in the period to which they relate.
Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost. If payment of the
receivable is postponed under an extended payment deadline fair value is measured on the basis of the discounted value
of the expected revenues. Interest gains are recognised using the effective interest method. When a trade receivable is
uncollectible, it is written off against the allowance account for trade receivables.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances and deposits held at call with maturities of less than 3 months.
Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. Cash and cash equivalents are stated
at face value.
Non-current liabilities
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost, being the amount received taking account of any premium or discount, less transaction costs. Any difference
between the proceeds (net of transaction costs) and the redemption value is recognised as interest in the income
statement over the period of the borrowings using the effective interest method.
Investments
Fixed Asset investments are stated at cost less provisions for diminution in value.
Financial Instruments
The Company does not hold or issue derivative financial instruments for trading purposes.
Share-based Payments
The Company Operates equity-settled share-based options plans. The fair value of the employee services received in
exchange for the participation in the plan is recognised as an expense in the profit and loss account. The corresponding
credit has been recognised in the profit and loss account reserve.
The fair value of the employee is based on the fair value of the equity instrument granted. This expense is spread over the
vesting period of the instrument.
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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71
NOTES TO THE COMPANY FINANCIAL
STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
2. STAFF COSTS
Compensation consists of 2 executive Directors, 2 non-executive Directors and 1 other employee.
Employee benefit expenses (including directors) comprise:
Salaries
Short-term non-monetary benefits
Share Based Payments
Social security contributions and similar taxes
3. FIXED ASSETS
COST
At 1 January 2017
Additions
At 31 December 2017
DEPRECIATION
At 1 January 2017 & At 31 December 2017
Net Book Value at 31 December 2017
NET BOOK VALUE
At 31 December 2017
4. FIXED ASSET INVESTMENTS
At 1st January 2017
Additions During the Year
At 31st December 2017
The fixed asset investments additions are as follows:-
Delamode Group Holdings Limited
Easy Managed Transport Limited
Benfleet Forwarding Limited
Regional Express Limited
Total
2017
£’000
165
1
19
17
2 02
2016
£’000
–
–
–
–
–
Computer
Equipment
£’000
–
3
3
Computer
Equipment
£’000
-
3
3
Subsidiary
Undertakings
£’000s
–
38, 562
38, 562
£’000
21,842
7, 650
7, 337
1, 733
38, 562
Details on the registered office of the above companies is provided in note 16 to the Group accounts.
72
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NOTES TO THE COMPANY FINANCIAL
STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
5. DEBTORS
Current:
Trade Debtors
Amounts owed by Group
Undertakings Prepayments
Other Debtors
Total Trade and other payables
Non Current
Trade and other receivables
6. CREDITORS : AMOUNTS FALLING DUE WITHIN ONE YEAR
Current:
Trade Creditors
Amounts owed by Group Undertakings
Other Taxes and Social Security
Accruals and Deferred Income
Deferred Consideration
Other Creditor
Total Trade and other payables
2017
£’000
2016
£’000
55
144
22
67
288
111
2017
£’000
135
4,297
18
1 02
1,6 77
14
-
6,24 3
50
–
–
–
50
–
2016
£’000
-
-
-
-
–
-
-
-
The deferred consideration of £1,6 77,000 (2016 - £nil) due within one year relates to the deferred consideration on the
acquisitions of Easy Managed Transport Limited, Benfleet Forwarding Limited and Regional Express Limited. Of this balance,
£ 945,000 is contingent on performance related criteria.
7. CREDITORS : AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Deferred Consideration on Acquisitions
2017
£’000
1, 503
2016
£’000
-
The deferred consideration of £1,503,000 (2016 - £nil) due in more than one year relates to the deferred consideration
on the acquisitions of Easy Managed Transport Limited, Benfleet Forwarding Limited and Regional Express Limited. Of this
balance, £ 789,000 is contingent on performance related criteria.
8. SHARE CAPITAL
See Consolidated accounts note 25 for share capital section.
S
T
N
E
M
E
T
A
T
S
L
A
C
N
A
N
F
I
I
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73
NOTES TO THE COMPANY FINANCIAL
STATEMENTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2017
9. RESERVES
Retained earnings: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
Merger Reserves: represents the difference between the net asset value of Delamode Group Holdings Limited and the
nominal value of the shares issued by Xpediator PLC in consideration for the acquisition of Delamode Group Holdings
Limited. In addition the premium on the fair value in excess of the nominal value of shares issued in consideration for
business combinations is credited to the merger reserve.
Share premium is the amount subscribed for share capital in excess of nominal value,
Equity reserve represents the cost of the share options granted that have not yet been exercised.
1 0. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the disclosure of related party transactions with wholly owned fellow Group
Companies. Related party transactions with key management personnel (including Directors) are shown in note 2 9 of the
consolidated financial statements.
1 1. SHARED-BASED PAYMENTS
Share-based payments arrangements for employees are set out in the Directors Report (Remuneration note).
Details of the share options in existence are shown in note 2 7 of the Consolidated Financial Statements.
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CONTENTS
HIGHLIGHTS
1
FINANCIAL STATEMENTS
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
CEO’S STATEMENT
RISKS AND UNCERTAINTIES
GOVERNANCE
BOARD OF DIRECTORS
CORPORATE GOVERNANCE
STATEMENT
DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
INDEPENDENT AUDITOR’S
REPORT
3
5
9
11
12
16
17
18
CONSOLIDATED INCOME
STATEMENT
CONSOLIDATED STATEMENT
OF OTHER COMPREHENSIVE
INCOME
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT
OF CASH FLOWS
23
24
25
27
29
NOTES TO THE CONSOLIDATED
STATEMENT OF CASH FLOWS 30
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
31
COMPANY STATEMENT OF
FINANCIAL POSITION
COMPANY STATEMENT OF
CHANGES IN EQUITY
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
68
69
70
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Designed and Printed by Perivan
ANNUAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
Xpediator PLC
700 Avenue West
Skyline 120
CM77 7AA
United Kingdom
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Company Registration Number: 10397171