TIDMESL
RNS Number : 2619Z
Eddie Stobart Logistics PLC
30 August 2018
Eddie Stobart Logistics plc
("Eddie Stobart" or the "Group")
Interim Results for the six months ended 31 May 2018
Eddie Stobart, a leading UK supply chain, transport and
logistics group, delivering innovative solutions, today announces
its half-year results for the six months ended 31 May 2018.
Underlying Results 2018 2017 Change Statutory Results 2018 2017 Change
-------------------- ---------- ---------- -------- ------------------------ ---------- ---------- --------
Revenue GBP359.3m GBP286.8m 25.3% Revenue GBP359.3m GBP286.8m 25.3%
EBIT(1) GBP18.1m GBP16.9m 7.1%
EBIT %(1) 5.0% 5.9% (0.9%) Operating profit GBP5.1m GBP6.7m (23.9%)
EBITDA(1) GBP22.4m GBP19.9m 12.6%
EBITDA %(1) 6.2% 6.9% (0.7%)
Adjusted profit Profit/(loss) after
after tax(5) GBP14.1m GBP10.5m 34.3% tax GBP1.4m (GBP6.3m) 122.2%
Dividend per share 1.54p 1.40p 10.0%
Adjusted free Net cash from operating
cash(4) GBP0.3m GBP16.9m (98.2%) activities GBP3.1m GBP7.8m (60.3%)
Adjusted earnings
per share(2) 3.9p 3.6p 8.3% Earnings per share 0.4p (2.4p) 116.7%
Net debt GBP114.2m GBP97.7m 16.9%
-------------------- ---------- ---------- -------- ------------------------ ---------- ---------- --------
Group highlights:
-- Strong revenue growth (organic, new and resulting from
acquisitions) in three of our four key sectors, Retail (28%),
Manufacturing Industrial and Bulk (MIB), (13%) and E-Commerce
(118%). Consumer sector revenue decreased by 6% due to the loss in
early 2017, of the Britvic contract, which was regained in full in
May 2018
-- New contract wins in the year to date with annualised value
of GBP158m, including CEMEX UK, Knauf, Homebase and Britvic Soft
Drinks, including since the period end, a significant contract with
PepsiCo.
-- Renewed contracts with a number of existing customers with an annualised value of GBP113m
-- Underlying EBIT(1) increased by 7.1% to GBP18.1m. Underlying
EBIT(1) growth has lagged behind sales growth due to the cost and
complexity of implementing major contract wins. We expect to see
the benefits of these contracts flow though in the second half of
the year
-- Cash flow performance has been impacted in the period by
investment in our warehousing assets and net working capital to
support contract wins
-- Progress in successfully repositioning our network and
warehouse portfolio to accommodate new customer volumes, ensuring
we maximise value for shareholders using our property expertise and
optimise use of capacity
-- Acquired companies continue to trade in line with
expectations. Sales increases were 20% for iForce and 52% for
Speedy Freight
-- On 29 June we acquired The Pallet Network, for GBP52.8m,
representing a major step in our stated strategy of becoming a full
end-to-end logistics service provider; expected to be earnings
enhancing in FY18
-- As with previous years, we now move into the traditionally
stronger second half with costs of new contract wins absorbed in
the first half. The second half has started well and the Board
remain confident of delivering full year in line with
expectations
-- Interim dividend of 1.54 pence per share: +10% versus 2017 (1.40 pence per share)
1Underlying EBIT is defined as profit from operating activities
before exceptional items; amortisation of acquired intangibles;
share of profit from equity accounted investees; employee share
scheme costs funded by previous parent holding group; a gain
arising from a lease agreement; profit impact of severe weather
conditions; investor and management charges and start-up costs
associated with contract wins. Underlying EBITDA is defined as
Underlying EBIT before depreciation of property, plant and
equipment (see Note 4).
(2) Adjusted earnings per share is defined as profit after tax
attributed to the owners of the company before exceptional items
excluding gains on lease agreements; profit impact of severe
weather conditions; start-up costs associated with contract wins;
amortisation of acquired intangibles; employee share scheme costs
funded by previous parent holding group, divided by the weighted
average basic and diluted number of shares in issue at balance date
(see Note 8)
3 Pro-forma adjusted EBITDA is defined as Underlying EBITDA for
the preceding 12 months at the point of measurement with iForce and
Speedy Freight EBITDA added into the calculations as if acquired
and consolidated throughout that period.
4 Adjusted free cash is defined as cash generated from operating
activities less purchase of property, plant and equipment; adding
back proceeds from sale of property, plant and equipment; adding
back/(less) income taxes paid/(credited); and adding back the cash
impact of exceptional items (see Note 4).
5 Adjusted profit/(loss) after tax is defined as profit/(loss)
after tax adding back exceptional items excluding gains on lease
agreements; amortisation of acquired intangibles and employee share
scheme costs funded by previous parent holding group (see Note
4).
Chief Executive Alex Laffey commented:
"We are pleased to have delivered a strong first-half
performance as we continue to implement our strategy of becoming a
leading provider of end-to-end supply chain solutions. This has
been demonstrated year to date, as we have won new contracts with
blue chip customers adding an annualised GBP158m of new
business.
The recent acquisition of The Pallet Network (TPN) further adds
to the range of services we provide to our customers across the
supply chain.
As previously indicated in our January trading update, our
performance, as in previous years, will be weighted towards the
second half of the year with the first half absorbing the costs of
implementing new contract wins and the second half experiencing the
benefits of these new contracts.
The second half period has started well and the Board remains
confident of delivering full-year results in line with market
expectations."
Eddie Stobart Overview
Eddie Stobart is now recognised as one of the UK's leading
providers of end to end supply chain solutions.
Key differentiators of our business are:
-- Flexible, scalable operational network which can be leveraged to support future growth
-- Shared-user consulting-led operating approach, delivering
operational efficiency and offering our customers a flexible
pay-as-you-go model
-- Operations which span the whole supply chain via road, rail,
container movements and contract warehousing offering the full
range of end-to-end logistical services
-- Continued investment in people and industry relevant skills
through our dedicated Training Academy
-- Well positioned across different markets, with a strong
growth focus in E-Commerce and MIB sector
-- Long-term contractual relationships with a diversified blue chip customer base.
-- Attractive financial profile with a consistent record of
delivering growth both organically and through targeted
acquisitions.
Enquiries:
Eddie Stobart Logistics plc (0)1925 605400
Alex Laffey, Chief Executive Officer
Damien Harte, Chief Financial Officer
FTI Consulting (0)20 3727 1340
Nick Hasell / Alex Le May/ Matthew O'Keeffe
Cenkos Securities Plc (0)20 7397 8928
Nicholas Wells / Jeremy Osler / Harry Hargreaves
Berenberg (0)20 3207 7800
Chris Bowman / Toby Flaux / James Brooks
Chief Executive's review
Group results
Group revenues for the period under review increased by 25% to
GBP359.3m (2017: GBP286.8m). Underlying EBIT has increased by 7.1%
to GBP18.1m (2017: GBP16.9m). Profit was GBP1.4m in the period
compared to a loss, resulting primarily from refinancing costs, of
GBP6.3m in the comparable period.
In the first half of the year the Group delivered a strong
overall performance. We successfully implemented major new
contracts including CEMEX UK, Knauf, Homebase and Britvic Soft
Drinks, among others. In addition, since the period end we have
also recently secured a new contract with PepsiCo. Collectively
these contracts equate to additional annualised revenue of
GBP158m.
We have also renewed GBP113m of contracts with existing
customers, all of which benefit from our full-service offer.
Whilst EBIT growth has temporarily lagged behind sales growth,
due to the cost and complexity of implementing the new contract
wins and reorganising the network, we expect to see the benefits of
these contracts flow through in the second half of the year.
Operational performance
Our customers, both existing and new, are regularly reviewing
their service offers to ensure they stay relevant in today's market
place. This provides Eddie Stobart with opportunities to support
and innovate to deliver bespoke solutions in all our sectors,
capitalising on our transport network and c.7m square feet of
warehousing capability across the UK.
Our success is evidenced by our substantial sales growth
(organic, new and resulting from acquisitions) in the period:
-- In our Retail sector we have seen sales increase by 28% to
GBP102.0m (2017: GBP80m), as retailers outsource non-core
activities in favour of our unique pay-as-you-go transport model,
which allows them to focus on their core in-store and online
business
-- In the Consumer sector revenues were down 6%, driven by the
loss of the Britvic Soft Drinks contract in 2017, which has now
been re-secured. Our focus remains on delivering competitively
priced solutions that deliver the high levels of service expected
by our customers. The recently secured PepsiCo contract win
supports the trend we are seeing towards outsourcing
-- Our E-commerce sector has grown by 118% to GBP80.3m (2017:
GBP36.9m) in the first half with many of our customers seeking a
full end-to-end supply chain solution, serviced through our Eddie
Stobart, iForce and Speedy Freight offerings
-- In the MIB sector customers are recognising that outsourcing
will deliver both greater efficiency and more certainty around the
continuous supply of resources. We have again seen strong growth
with sales increased by 13%.
In light of the ongoing industry move towards outsourcing, we
are continually working with our customers to identify more
effective solutions. In addition, we are regularly reviewing our
own network to ensure it is fit for purpose and adds value to both
customers and our business.
In the first half of the year, we successfully reconfigured our
contract logistics and warehousing portfolio to ensure we can
accommodate the growing requirements of both new and existing
customers.
We have completed the redevelopment of our Dagenham site to give
us an additional 180,000sq.ft (which is now fully occupied), opened
a new site in Bardon with capacity of 320,000sq.ft and repurposed
one of our sites at Rugby to accommodate growth for new ecommerce
customers within our iForce business, capitalising on the success
of its Corby multi-user site.
We continue actively to manage our warehousing portfolio to
ensure we are well placed to support future growth as well as
deliver shareholder value.
To accommodate our growth, we continue to review and reposition
our transport operations and resources across optimal locations to
enhance the overall efficiency of the network.
Operationally, customer feedback in terms of service remains
very positive. However, we did encounter significant challenges
with the cold weather and snow at the start of the year. This
resulted in network delays with vehicles stranded which impacted
our overall network efficiency and performance.
Our acquisitions of iForce, Speedy Freight and Logistics People
have all continued to perform in line with expectations.
iForce secured new contracts with a number of customers, such as
Steamer Trading and Made.com, an online furniture and homeware
retailer, as well as recently securing a new contract with The
Works, a discount retailer, with sales growth of 20%.
Speedy Freight also delivered strong revenue growth of 52%
during the period, winning a number of new contracts, as well as
opening six new franchises across the UK and launching its first
franchise outside the UK in the Republic of Ireland.
Within Continental Europe our business is performing well with
our car storage and pre-delivery inspection (PDI) business
operating at full capacity. We continue to seek opportunities to
leverage our wider UK service offering across Continental
Europe.
Leadership and people
The continued commitment of the leadership team and the
engagement and support from all employees has been key to our
sustained success, in both delivering our plans and growth
agenda.
The appointment in June of Sebastien Desreumaux as CEO of iForce
and the arrival of Mark Duggan and his leadership team from The
Pallet Network will strengthen our business and will give the Group
a broader range of skills as we leverage future opportunities.
As the business grows, we continue to strengthen our workforce
by providing training, offering structured career development plans
and recruiting highly experienced individuals with the right
skillsets that can add value to our business.
We have recently partnered with the University of Bolton to
develop a programme focused on integrated logistics skills
development for our employees. In addition, they will also be
supporting us on developing a tailored degree level qualification
for our first intake of graduates who join the business September
2018.
We have also been recognised by the industry at the 2018 Motor
Transport Awards for our commitment to training and in-house staff
development, as well as our commercial offering provided at our
Academies in Warrington and the Midlands.
Technology
We continue to invest in industry-leading technologies and
equipment, exploiting opportunities to innovate within the rapidly
evolving logistics market, enhancing operational efficiency, future
proofing the business and staying ahead of the competition.
Our ongoing programme of targeted digital investments has
continued to progress solidly with enhancements to both our front
and back-office operations. We continue to recognise the benefits
of simplifying and standardising our support operations across the
Group following our recent acquisitions.
We are well-advanced in the development of our unique transport
optimisation solution, which is scheduled to go live mid-2019. This
solution will further enhance the service we deliver to our
customers as well as driving operational efficiencies to our
business.
Acquisitions
In June 2018, we completed the recent acquisition of The Pallet
Network, a leading provider of pallet distribution services across
the UK and Ireland and who are a strong number two in the pallet
sector. This acquisition is a further major step in our stated
strategy of becoming a full service logistics provider.
We have jointly identified a number of synergistic opportunities
that we will progressively roll out in the coming months.
Brexit
There clearly remains lot of uncertainty around the consequences
of Brexit. In Eddie Stobart, most of our operations are in either
the UK or continental Europe with less than 2% of our revenue
generated through crossing the English Channel.
Whilst we await clarification, in terms of the negotiations, we
feel that given the flexible nature of our operating model, we are
well placed to respond in the appropriate manner.
Outlook
The Group has delivered a strong first half performance with
several major new contracts commencing in the period. As previously
indicated, our performance, as in previous years, will be weighted
towards the second half of the year with the first half absorbing
the costs of implementing new contract wins.
Overall, we are pleased with our progress and the Board remains
confident of delivering full-year results in line with market
expectations.
Chief Financial Officer's Review
The statutory revenue and profit for the six months ended 31 May
2018 was:
6 months 6 months Movement
ended ended
31 May 31 May
2018 2017
----------------------------------
(Unaudited) (Unaudited)
----------------------------------
GBP'm GBP'm
---------------------------------- ------------ ------------ ---------
Revenue 359.3 286.8 25.3%
Profit from Operating Activities 5.1 6.7 (23.9%)
Profit/(Loss) for the period 1.4 (6.3) 122.2%
Management believe that a more relevant representation of the
financial results for the period is arrived at by adding back
certain items, which could distort the understanding and
performance of the Group year-on-year. These items include: the
amortisation of acquired intangibles; the share of profits from
equity accounted investees; the impact of the employee SIP funded
by previous shareholders; investor and management charges, a gain
arising from a lease agreement; start-up costs associated with
contract wins; and the profit impact of severe weather conditions
during the earlier part of the period. A full reconciliation can be
found in Note 4.
This revised presentation of the results is set out below.
6 months 6 months
ended ended
31 May 31 May
2018 2017 Movement
-------------------------------
(Unaudited) (Unaudited)
GBP'm GBP'm %
------------------------------- ------------ ------------ ---------
Revenue 359.3 286.8 25.3%
Underlying EBIT(1) 18.1 16.9 7.1%
Underlying EBIT(1) Margin (%) 5.0% 5.9% (0.9%)
Adjusted Free Cash(4) 0.3 16.9 (98.2%)
Revenue
Revenue for the six months to 31 May 2018 was GBP359.3m, a 25.3%
increase on the comparable period in 2017 (GBP286.8m).
Analysing this across our four key customer sectors
6 months 6 months Movement
ended ended
31 May 31 May
2018 2017
----------------------------------
(Unaudited) (Unaudited)
----------------------------------
GBP'm GBP'm %
---------------------------------- ------------ ------------ ---------
Retail 102.0 80.0 27.5%
Consumer 70.1 74.7 (6.2%)
Manufacturing, Industrial & Bulk
(MIB) 91.6 80.9 13.2%
E-Commerce 80.3 36.9 117.6%
Core Sectors 344.0 272.5 26.2%
Non sector specific 15.3 14.3 7.0%
Total 359.3 286.8 25.3%
---------------------------------- ------------ ------------ ---------
In three of our four sectors we achieved levels of sales growth
significantly ahead of the logistics sector generally. Retail and
MIB benefited from new contract wins plus significant rom our
existing customer base. Organic growth was a healthy 10%.
Within E-commerce the Group benefited from a full 6 month period
of iForce results as opposed to a single month in the comparable
period. Excluding the year on year benefit of iForce, underlying
growth in this sector was 30%.
The 6% decline in Consumer reflects the impact of the Britvic
contract, which was lost in 2017 and subsequently regained
partially during the 2018 half year. We have now regained the full
contract, which will favourably impact the second half
performance.
In the year to date we have secured or renewed approximately
GBP271m of new and existing contracts, of which over GBP158m are
new contracts resulting in significant working capital requirements
in the period as the new contract wins were implemented.
Underlying EBIT
Underlying EBIT1 for the period was GBP18.1m, representing a
7.1% increase on the equivalent period in 2017. Underlying EBIT1
margin reduced from 5.9% to 5.0%. This is in the main a timing
issue representing the significant temporary costs in reorganising
the network in response to the significant contract wins. In the
second half of the year we would expect to see these flow through
to profit. In addition we had the period of exceptionally poor
weather which disrupted supply chains nationwide.
Financing costs
Net interest expense before exceptional items for the period was
GBP2.5m (2017: GBP6.9m), a reduction of GBP4.4m compared to the
equivalent period in 2017.
This reflects the reduced interest costs associated with the
improved debt structure put in place at the same time of the
admission of the shares of the Company to trading on AIM in April
2017. The 2017 charge includes approximately five months of the
previous higher cost debt structure replaced as part of these
refinancing arrangements.
Adjusted Profit after Tax(5) and Profit for the period
The resultant Adjusted Profit after Tax(3) was GBP14.1m, a 34%
increase on the adjusted figure for the comparable period (2017:
GBP10.5m). The reported profit for the period was GBP1.4m (2017:
loss for the period of GBP6.3m).
Tax
For the half year to 31 May 2018 we have a tax charge of GBP1.5m
representing an effective tax rate of 53%. This figure is
relatively high due to the non-deductibility of certain exceptional
costs in the period. We anticipate the full year effective tax rate
to be 23%, before exceptional items. In the previous period to 31
May 2017 we had a tax credit of GBP1.3m which represented in the
main the tax deductibility for corporation tax of the majority of
the exceptional items incurred in connection with the IPO and
refinancing exercise.
Adjusted Earnings per share(2) and Reported Basic Earnings per
share
Adjusted Earnings per Share(2) is 3.9p, an 8.3% improvement on
the comparable period (2017: 3.6p). Reported Basic Earnings per
Share were 0.4p (2017: loss of 2.4p)
Cash Flow and funding
Free Cash Flow1 for the period was GBP0.3m, a reduction of
GBP16.6m against the equivalent period in 2017.
There are a number of factors underlying the 2018 cash
performance the majority of which are timing:
-- In 2018 we paid GBP2.1m of corporation tax as opposed to
receiving a net credit of GBP0.6m in the comparable reporting
period. In 2017 we received rebates from the tax authorities
relating to previous years while 2018 represents a more normal
level of tax payments
-- In 2018 net capital expenditure was GBP7.2m, primarily on
operational assets (2017: GBP4.1m). In line with our strategic
objective of growing our warehouse division we invested in
additional prime space which by the second half of the current year
will be fully utilised. This cost represents the investment in
racking and fit out before occupation by our new customers.
-- Net investment in working capital was GBP11.1m in the period,
driven primarily by significant contract wins and increased levels
of overall revenue
Net debt at 31 May 2018 was GBP114.2m (2017: GBP97.7m) which
represented a 2.0 multiple of Pro-forma Adjusted EBITDA(3) and in
line with our long term gearing objective (2017: 1.88 times).
Exceptional items
Total exceptional items for the period were GBP4.4m. Of this
GBP3.9m related to business acquisitions including the professional
costs relating to the TPN acquisition completed in June 2018 and
non-cash charges relating to the deferred consideration on The
Logistics People and Speedy Freight acquisitions completed in 2017.
The remaining GBP0.5m is in relation to a variety of
reorganizational actions within the group.
Dividend
Eddie Stobart has a progressive dividend policy. An interim
dividend of 1.54 pence per share will be paid to shareholders on
the register at the close of business on 7 September 2018, payable
on 19 October 2018. This represents an increase of 10% against the
equivalent interim dividend in 2017 of 1.40 pence per share.
Acquisitions
On 29 June 2018 we acquired the entire issued share capital of
The Pallet Network, a leading provider of pallet distribution
services across UK and Ireland, for total consideration of GBP52.8
million, on a cash and debt free basis.
In connection with the acquisition, we placed, with
institutional investors, of 21,428,572 placing shares of 1 pence
each in the capital of the Company for 140 pence per share, raising
GBP30m before expenses which was used in part to finance the
acquisition and in part for general corporate purposes. The placing
was well supported by new and existing institutional investors.
Of the total consideration of GBP52.8 million, GBP44.1 million
was payable in cash at completion and the remaining GBP8.66 million
will be payable to certain sellers over a period of two years
following completion. The acquisition was funded in part by net
proceeds of the placing and in part through the extension of the
Group's existing debt facilities with our current syndicate of
lending banks.
Due to the proximity of the acquisition with the balance sheet
date, an analysis of the assets and liabilities acquired is yet to
be undertaken and a full fair value assessment will occur in the
second half of the year.
Our acquisitions, namely iForce, Speedy Freight and Logistics
People, are all trading in line with expectations.
Auditors
A structured tender process is currently underway in relation to
our external audit arrangements. We will provide an update to
confirm our preferred audit firm for the group audit for the 2018
financial year when the tender process has been completed.
Eddie Stobart Logistics plc
("Eddie Stobart" or the "Group")
Interim Results for the six months ended 31 May 2018
Interim Consolidated Income Statement
for the six months ended 31 May 2018
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
Note GBP'000 GBP'000 GBP'000
--------------------------------------- ----- ------------ ------------ -------------
Revenue 3 359,256 286,836 623,924
Cost of sales (281,681) (230,747) (485,656)
--------------------------------------- ----- ------------ ------------ -------------
Gross profit 77,575 56,089 138,268
Administrative expenses: before
amortisation of acquired intangibles
and exceptional costs (61,860) (44,128) (96,137)
Amortisation of acquired intangibles (6,207) (4,947) (11,137)
--------------------------------------- ----- ------------ ------------ -------------
Administrative expenses: before
exceptional items (68,067) (49,075) (107,274)
Administrative expenses: exceptional
items 5 (4,401) (274) (4,414)
--------------------------------------- ----- ------------ ------------ -------------
Total administrative expenses (72,468) (49,349) (111,688)
Profit from operating activities 5,107 6,740 26,580
Profit from operating activities:
before exceptional items 4 9,508 7,014 30,994
--------------------------------------- ----- ------------ ------------ -------------
Finance income 2 1 5
Finance expenses: before exceptional
items (2,531) (6,914) (9,650)
Finance expenses: exceptional items 5 - (7,753) (7,753)
--------------------------------------- ----- ------------ ------------ -------------
Total finance expense (2,531) (14,667) (17,403)
--------------------------------------- ----- ------------ ------------ -------------
Net finance expense (2,529) (14,666) (17,398)
Share of profit from equity accounted
investees, net of tax 284 343 733
Profit/(Loss) before tax 2,862 (7,583) 9,915
Tax (expense)/credit 6 (1,507) 1,314 (5,030)
--------------------------------------- ----- ------------ ------------ -------------
Profit/(loss) for the period 1,355 (6,269) 4,885
----- ------------ ------------ -------------
-
Profit attributable to:
Owners of the Company 1,355 (7,135) 3,931
Non-controlling interests - 866 954
--------------------------------------- ----- ------------ ------------ -------------
Profit/(loss) for the period 1,355 (6,269) 4,885
--------------------------------------- ----- ------------ ------------ -------------
Earnings/(loss) per share
Basic - total operations 8 0.4p (2.4p) 1.2p
Diluted - total operations 8 0.4p (2.4p) 1.2p
--------------------------------------- ----- ------------ ------------ -------------
The accompanying notes form part of the interim financial
statements.
Interim Consolidated Statement of Comprehensive Income
for the six months ended 31 May 2018
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
---------------------------------------------------- ------------ ------------ -------------
Profit/(loss) for the period 1,355 (6,269) 4,885
----------------------------------------------------- ------------ ------------ -------------
Items that are or may be reclassified subsequently
to profit or loss:
Foreign currency translation differences
- foreign operations 319 (204) (176)
Foreign currency translation differences
- equity accounted investees 10 22 21
Effective portion of changes in fair value
cash flow hedges - - 1,546
Release of hedging reserve - - -
Tax on items that are or may be reclassified
subsequently to profit or loss - - (340)
----------------------------------------------------- ------------ ------------ -------------
Total items that are or may be reclassified
subsequently to profit or loss 329 (182) 1,051
----------------------------------------------------- ------------ ------------ -------------
Total comprehensive income for the period 1,684 (6,451) 5,936
----------------------------------------------------- ------------ ------------ -------------
Total comprehensive income attributable to:
Owners of the Company 1,684 (7,317) 4,982
Non-controlling interests - 866 954
----------------------------------------------------- ------------ ------------ -------------
Total comprehensive income for the period 1,684 (6,451) 5,936
----------------------------------------------------- ------------ ------------ -------------
The accompanying notes form part of the interim financial
statements.
Interim Consolidated Statement of Changes in Equity
for the eighteen months ended 31 May 2018
Attributable to equity holders of the Company
--------------------------------------------------------------------------------------
Share Non
Share Share Translation Merger Own options Hedge Retained controlling Total
capital premium reserve reserve shares reserves reserve earnings Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- --------- ------------ -------- -------- --------- -------- ---------- --------- ------------ ---------
Balance at 30
November 2016 703 64,647 (332) - - - (1,546) 24,127 87,599 1,831 89,430
---------------- -------- --------- ------------ -------- -------- --------- -------- ---------- --------- ------------ ---------
Profit for six
months ending
31 May 2017 - - - - - - - (7,135) (7,135) 866 (6,269)
Total other
comprehenive
income - - (182) - - - 1,546 - 1,364 - 1,364
Transactions
with owners of
the Company:
Cancellation of
share premium - (64,647) - - - - - 64,647 - - -
Issue of
capital (net
of costs) 2,876 125,187 - - - - - (5,386) 122,677 - 122,677
Balance at 31
May 2017 3,579 125,187 (514) - - - - 76,253 204,505 2,697 207,202
---------------- -------- --------- ------------ -------- -------- --------- -------- ---------- --------- ------------ ---------
Profit for six
months ending
30 November
2017 - - - - - - - 11,066 11,066 88 11,154
Total other
comprehensive
income - - 27 - - - - (340) (313) - (313)
Transactions
with owners of
the Company:
Issue of
capital (net
of costs) - (7,930) - 7,950 - - - 3,322 3,342 - 3,342
Share based
payment
charges - - - - (2,700) 1,079 - 2,700 1,079 - 1,079
Dividend paid - - - - - - - (5,011) (5,011) - (5,011)
3,579 117,257 (487) 7,950 (2,700) 1,079 - 87,990 214,668 2,785 217,453
---------------- -------- --------- ------------ -------- -------- --------- -------- ---------- --------- ------------ ---------
Changes in
ownership
interests
in
subsidiaries:
Adjustment for
minority
interests - - - - - - - (2,280) (2,280) (2,585) (4,865)
Dividends paid - - - - - - - - - (200) (200)
Total changes
in ownership
interests
in
subsidiaries - - - - - - - (2,280) (2,280) (2,785) (5,065)
Balance at 30
November 2017 3,579 117,257 (487) 7,950 (2,700) 1,079 - 85,710 212,388 - 212,388
---------------- -------- --------- ------------ -------- -------- --------- -------- ---------- --------- ------------ ---------
Profit for six
months ending
31 May 2018 - - - - - - - 1,355 1,355 - 1,355
Movement in
translation
reserve - - 329 - - - - - 329 - 329
Share based
payment
charges - - - - - 849 - - 849 - 849
Dividends - - - - - - - (15,735) (15,735) - (15,735)
Balance at 31
May 2018 3,579 117,257 (158) 7,950 (2,700) 1,928 - 71,330 199,186 - 199,186
---------------- -------- --------- ------------ -------- -------- --------- -------- ---------- --------- ------------ ---------
The accompanying notes form part of the interim financial
statements.
Interim Consolidated Statement of Financial Position
as at 31 May 2018
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
Note GBP'000 GBP'000 GBP'000
------------------------------------- ----- ------------ ------------ -------------
Assets
Non-current assets
Property, plant and equipment 9 65,121 45,253 59,979
Goodwill 10 172,354 161,811 172,354
Intangible assets 11 93,674 95,768 99,146
Investments in equity accounted
investees 1,499 1,117 1,276
Deferred tax asset 5,976 804 5,976
------------------------------------- ----- ------------ ------------ -------------
338,624 304,753 338,731
------------------------------------- ----- ------------ ------------ -------------
Current assets
Inventories 2,505 2,530 2,396
Trade and other receivables 174,563 140,080 148,979
Current tax asset - 97 -
Cash and cash equivalents 5,748 17,604 11,936
------------------------------------- ----- ------------ ------------ -------------
182,816 160,311 163,311
------------------------------------- ----- ------------ ------------ -------------
Total assets 521,440 465,064 502,042
------------------------------------- ----- ------------ ------------ -------------
Liabilities
Current liabilities
Loans and borrowings 12 (8,135) (5,993) (7,767)
Trade and other payables (160,821) (121,029) (128,218)
Current tax liability (2,009) - (2,770)
Provisions (2,579) (714) (3,434)
------------------------------------- ----- ------------ ------------ -------------
(173,544) (127,736) (142,189)
------------------------------------- ----- ------------ ------------ -------------
Non-current liabilities
Loans and borrowings 12 (111,808) (109,276) (113,666)
Employee benefits - (42) -
Trade and other payables (21,814) (11,515) (18,822)
Deferred tax liabilities (15,088) (7,644) (14,977)
Provisions - (1,649) -
------------------------------------- ----- ------------ ------------ -------------
(148,710) (130,126) (147,465)
------------------------------------- ----- ------------ ------------ -------------
Total liabilities (322,254) (257,863) (289,654)
------------------------------------- ----- ------------ ------------ -------------
Net assets 199,186 207,202 212,388
------------------------------------- ----- ------------ ------------ -------------
Equity
Share capital 13 3,579 3,579 3,579
Share premium 13 117,257 125,187 117,257
Merger reserve 13 7,950 - 7,950
Translation reserve (158) (514) (487)
Own shares (2,700) - (2,700)
Share option reserve 1,928 - 1,079
Retained earnings 71,330 76,253 85,710
------------------------------------- ----- ------------ ------------ -------------
Total equity attributable to owners
of the Company 199,186 204,505 212,388
Non-controlling interests - 2,697 -
------------------------------------- ----- ------------ ------------ -------------
Total equity 199,186 207,202 212,388
------------------------------------- ----- ------------ ------------ -------------
The accompanying notes form part of the interim financial
statements.
Interim Consolidated Cash Flow Statement
for the six months ended 31 May 2018
6 months 6 months
ended ended
31 May 31 May
2018 2017
Year ended
30 November
(Unaudited) (Unaudited) 2017
Note GBP'000 GBP'000 GBP'000
------------------------------------------- ----- ------------ ------------ -------------
Cash flows from operating activities
Profit for the period from continuing
operations 1,355 (6,269) 4,885
Adjustments for:
Net finance costs 2,529 6,913 9,645
Share of profit of equity-accounted
investees, net of tax (284) (343) (733)
Tax expense 6 1,507 (1,314) 5,030
Depreciation 4,260 3,023 6,797
Amortisation of intangible assets 6,207 4,947 11,137
Gain on sale of property, plant and
equipment (45) (941) (2)
Equity settled share-based payment
expenses 849 96 1,079
Other non-cash exceptional items 4 3,562 2,005 3,685
Foreign exchange 28 150 (238)
Changes in:
Inventories (110) (173) (39)
Trade and other receivables (25,908) 4,532 (14,761)
Trade and other payables 14,873 4,751 5,218
Deferred income/revenue, including
government grant - (2,994) (2,469)
Cash generated from operating activities 4 8,823 14,383 29,234
Net interest paid (3,555) (7,163) (7,678)
Income taxes paid (2,157) 570 (2,667)
Net cash generated from operating
activities 3,111 7,790 18,889
------------------------------------------- ----- ------------ ------------ -------------
Cash flows from investing activities
Proceeds from sales of property,
plant and equipment 276 1,388 3,783
Acquisition of subsidiaries, net
of cash acquired - (36,993) (43,220)
Purchase of property, plant and equipment (7,432) (5,496) (8,865)
Purchase of intangible assets (673) - (770)
Proceeds from sale of of joint ventures 97 - -
Interest received 1 2 5
Dividends received from equity accounted
investees 171 282 416
Net cash used in investing activities (7,560) (40,817) (48,651)
------------------------------------------- ----- ------------ ------------ -------------
Cash flows from financing activities
Proceeds from issue of share capital
(net of costs) - 111,933 118,019
Draw down of new borrowings (net
of costs) - 100,554 98,435
Acquisition of non-controlling interests - - (5,050)
Draw down/(payment) of financing
facility, net of costs 514 (223) (145)
Repayment of bank borrowings - (173,745) (171,232)
Payment of capital element of finance
lease liabilities (2,235) (2,277) (7,466)
Dividends paid to minority interests
during the year - - (200)
Interim dividend paid during the
year - - (5,011)
Net cash generated from / (used in)
financing activities (1,721) 36,242 27,350
------------------------------------------- ----- ------------ ------------ -------------
Net (decrease) / increase in cash
and cash equivalents (6,170) 3,215 (2,412)
Cash and cash equivalents at the
start of the financial year 11,936 14,083 14,083
Effect of exchange rate fluctuations
on cash held (18) 305 265
Cash and cash equivalents at the
end of the financial year 5,748 17,603 11,936
------------------------------------------- ----- ------------ ------------ -------------
The accompanying notes form part of the interim financial
statements.
Notes to the Consolidated Interim Financial Statements
for the six months ended 31 May 2018
1. Accounting Policies of Eddie Stobart Logistics plc
Eddie Stobart Logistics plc (the Company) is a company limited
by share capital, incorporated and domiciled in the United Kingdom.
The address of the Company's registered office is Stretton Green
Distribution Park, Langford Way, Appleton, Warrington, WA4 4TQ. The
Consolidated Interim Financial Statements of the Company for the
six months ended 31 May 2018 and the comparative six months ended
31 May 2017 comprise the Company and its subsidiaries (referred to
as the 'Group') and the Group's interest in associates and jointly
controlled entities. The Group and its subsidiaries provide value
added logistics, distribution and warehousing services for its
clients across a wide range of service sectors and industries.
Statement of compliance
The Consolidated Interim Financial Statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) and the International Financial Reporting Interpretation
Committee ('IFRIC') interpretations endorsed by the EU and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
Basis of preparation
The Group and Company accounting policies set out below have
been applied consistently to all periods in these Consolidated
Interim Financial Statements, and have been applied consistently by
Group entities unless otherwise stated.
Going concern
The Consolidated Interim Financial Statements have been prepared
on a going concern basis. In determining the appropriate basis of
preparation of these financial statements, the Directors are
required to consider whether the Group can continue in operational
existence for the foreseeable future. To assist in this process,
management has completed a budgeting process for the twelve months
ending 31 August 2019, incorporating a detailed income statement,
cash flow analysis and statement of financial position, and a
forecasting exercise for a period of six months beyond this. The
Directors have assessed the funding requirements of the Group and
the Company and compared them to banking facilities available. This
exercise has not identified any issues that would suggest any
significant risk to the Group's continued trading position and the
forecasts demonstrate that the Group is expected to remain within
its existing finance facilities and their associated covenants. The
Directors have therefore adopted the going concern basis in
preparing these Consolidated Interim Financial Statements.
Basis of measurement
The Consolidated Interim Financial Statements have been prepared
on the historical cost basis, except derivative financial
instruments which are measured at fair value.
The Directors have considered the fair values of all debtors and
creditors and have determined that their fair values equate to
their carrying values.
Basis of consolidation
The Consolidated Interim Financial Statements of the Group for
the six months ended 31 May 2018 have been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU.
The Consolidated Interim Financial Statements do not include all
the information and disclosures required in the annual financial
statements, and should be read in conjunction with the annual
financial statements of Eddie Stobart Logistics plc as at 30
November 2017. The financial information set out herein is
unaudited but has been reviewed by the auditors, KPMG LLP, and
their report to the Company is attached.
The comparative financial information set out in these
Consolidated Interim Financial Statements does not constitute the
Group's statutory accounts for the year ended 30 November 2017 but
has been derived from those accounts. Statutory accounts for the
period ended 30 November 2017 have been published and KPMG LLP
reported on those accounts. Their audit report was unqualified and
did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report.
The annual financial statements of the Group are prepared in
accordance with IFRSs as adopted by the EU.
The Consolidated Interim Financial Statements comprise the
interim financial statements of the Group and its subsidiaries as
at 31 May 2018. Control is identified when the Group has rights to
variable returns from its involvement with the investee and has the
ability to affect those returns from its power over the investee.
The Group controls an investee where:
-- Power over the investee exists (the ability to direct the
relevant activities of the investee)
-- Exposure or rights to variable returns via its involvement with the investee exists
-- The Group has the ability to use its power over the investee to affect those returns
1. Principal Accounting Policies (continued)
There is a general presumption that majority voting rights
results in control, however where the Group has less than a
majority of voting rights, or similar rights, the Group considers
all relevant fact and circumstances in assessing whether it has the
power over an investee including:
-- Contractual arrangements with the other vote holders of the investee
-- Rights arising from the other contractual arrangements
-- The Group's voting rights and potential voting rights.
The Group reassess whether or not it controls the investee if
facts and circumstances indicate that there are changes to elements
of control. Consolidation arises when the Group obtains control
over the subsidiary and ceases when the Group loses control over
the subsidiary. Assets, liabilities, income, expenses and cash
flows of an acquired or disposed of subsidiary during the period
are included in the Consolidated Interim Financial Statements from
the date the Group gained control and until the date the Group
ceased control of the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the equity holders of the parent of the Group and
to any non-controlling interests, even if this results in the
non-controlling interests having a deficit balance. When necessary,
adjustments are made to the Financial Statements of subsidiaries to
bring their accounting policies into line with the Group's
accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on
consolidation. A change in the ownership interest of a subsidiary
without loss of control is accounted for as an equity transaction.
Any investment retained is recognised at fair value.
(i) Business combinations - business combinations are accounted
for using the acquisition method as at the acquisition date (when
control is transferred to the Group). The Group measures goodwill
at the acquisition date as:
-- The fair value of the consideration transferred
-- The recognised amount of any non-controlling interests in the acquiree
-- If the business combination is achieved in stages, the fair
value of the pre-existing equity interest in the acquiree; less
-- The net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
Transaction costs, other than those associated with the issue of
debt or equity securities, that the Group incurs in connection with
a business combination are expensed as incurred.
(ii) Non-controlling interests - for each business combination,
the Group measures any non-controlling interest in the acquiree at
their proportionate share of the acquiree's identifiable net
assets, which are generally at fair value.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as transactions with
owners in their capacity as owners. Adjustments to non-controlling
interests are based on a proportionate amount of the net assets of
the subsidiary. No adjustments are made to goodwill and no gain or
loss is recognised in profit or loss.
(iii) Subsidiaries - subsidiaries are entities controlled by the
Group. The financial statements of subsidiaries are included in the
Consolidated Interim Financial Statements from the date that
control commences until the date that control ceases.
(iv) Loss of control of a subsidiary - on a loss of control, the
Group derecognises the assets and liabilities of the subsidiary,
any non-controlling interests and the other components of equity
related to the subsidiary. Any surplus or deficit arising on the
loss of control is recognised in the Statement of Comprehensive
Income.
(v) Investments in associates and jointly controlled entities
(equity-accounted investees) - associates are those entities in
which the Group has significant influence, but not control or joint
control, over the financial and operating policies. Significant
influence is presumed to exist when the Group holds between 20% and
50% of the voting power of another entity. Jointly controlled
entities are those entities over whose activities the Group has
joint control, established by contractual agreement and requiring
unanimous consent for strategic financial and operating decisions.
Investments in associates and jointly controlled entities are
accounted for under the equity method and are recognised initially
at cost. The cost of the investment includes transaction costs.
The Consolidated Interim Financial Statements include the
Group's share of the profit or loss and other comprehensive income
of equity-accounted investees from the date that significant
influence or joint control commences until the date that
significant influence or joint control ceases. When the Group's
share of losses exceeds its interest in an equity-accounted
investee, the carrying amount of the investment, including any
long-term interests that form part thereof, is reduced to zero, and
the recognition of further losses is discontinued except to the
extent that the Group has an obligation or has made payments on
behalf of the investee.
(vi) Transactions eliminated on consolidation - intra-group
balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing
the Consolidated Interim Financial Statements. Unrealised gains
arising from transactions with equity accounted investees are
eliminated against the investment to the extent of the Group's
interest in the investee. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
1. Principal Accounting Policies (continued)
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Company's Board of Directors,
collectively the Group's chief operating decision maker, to assess
performance and allocate capital or resources.
Foreign currency
(i) Foreign currency transactions - transactions in foreign
currencies are translated to the respective functional currencies
of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated at the
exchange rate at that date. The foreign currency gain or loss on
monetary items is the difference between amortised cost at the
beginning of the period, adjusted for effective interest and
payments during the period, and the amortised cost in foreign
currency translated at the exchange rate at the end of the
period.
(ii) Foreign operations - the assets and liabilities of foreign
operations, including goodwill and fair value adjustments arising
on acquisition, are translated at exchange rates at the reporting
date. The income and expenses of foreign operations are translated
at exchange rates at the dates of the transactions. Foreign
currency differences are recognised in other comprehensive income,
and presented in the foreign currency translation reserve
(translation reserve) in equity. When a foreign operation is
disposed of such that control, significant influence or joint
control is lost, the cumulative amount in the translation reserve
related to that foreign operation is reclassified to profit or loss
as part of the gain or loss on disposal.
Financial instruments
(i) Non-derivative financial assets - loans and receivables,
including financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are recognised
initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, loans and receivables are
measured at amortised cost using the effective interest method,
less any impairment losses. Loans and receivables comprise cash and
cash equivalents, and trade and other receivables. Cash and cash
equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date that
are subject to an insignificant risk of changes in their fair
value, and are used by the Group in the management of its
short-term commitments.
(ii) Non-derivative financial liabilities - financial
liabilities are recognised initially on the trade date, which is
the date that the Group becomes a party to the contractual
provisions of the instrument. The Group derecognises a financial
liability when its contractual obligations are discharged,
cancelled or expire. The Group classifies non-derivative financial
liabilities into the other financial liabilities category. Such
financial liabilities are recognised initially at fair value less
any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities
are measured at amortised cost using the effective interest method.
Other financial liabilities comprise loans and borrowings, debt
securities issued, bank overdrafts, and trade and other
payables.
Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the statement of cash
flows.
(iii) Share capital - ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity, net of any tax
effects.
(iv) Derivative financial instruments and hedging - the group
uses interest rate swap derivative financial instruments to hedge
its risks associated with interest rate fluctuations. All
derivative financial instruments are initially recognised and
subsequently remeasured at fair value. Derivatives are carried as
assets when the fair value is positive and as liabilities when the
fair value is negative. The fair value of interest rate swap
contracts is determined by reference to market values for similar
instruments. For those derivatives designated as hedges and for
which hedge accounting is appropriate, the hedging relationship is
documented at its inception. This documentation identifies the
hedging instrument, the hedged item or transaction, the nature of
the risk being hedged and how effectiveness will be measured
throughout its duration. Such hedges are expected at inception to
be highly effective.
Any gains or losses arising from changes in the fair value of
derivatives that do not qualify for hedge accounting are taken to
the Consolidated Income Statement. The treatment of gains and
losses arising from revaluing derivatives designated as hedging
instruments depends on the nature of the hedging relationship,
which in the case of the single financial instrument held by the
Group is a cash flow hedge.
Hedges are classified as cash flow hedges when hedging exposure
to variability in cash flows that is either attributable to a
particular risk associated with a recognised asset or liability or
a highly probable forecast transaction. For cash flow hedges, the
effective portion of the gain or loss on the hedging instrument is
recognised in other comprehensive income, while the ineffective
portion is recognised in the Consolidated Income Statement. Amounts
previously recognised in other comprehensive income are transferred
to the Consolidated Income Statement in the period in which the
hedged item affects profit or loss, such as when a forecast sale
occurs. However, when the forecast transaction results in the
recognition of a non-financial asset or liability, the amounts
previously recognised in other comprehensive income are included in
the initial carrying amount of the asset or liability.
1. Principal Accounting Policies (continued)
If a forecast transaction is no longer expected to occur,
amounts previously recognised in other comprehensive income are
transferred to the Consolidated Income Statement. If the hedging
instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is
revoked, amounts previously recognised in other comprehensive
income remain in equity until the forecast transaction occurs and
are then transferred to the Consolidated Income Statement or
included in the initial carrying amount of a non-financial asset or
liability as above.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less
accumulated depreciation and any accumulated impairment losses.
Cost includes expenditure that is directly attributable to the
acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs
directly attributable to bringing the assets to a working condition
for their intended use including any directly attributable
capitalised borrowing costs and an estimate of any future costs of
dismantling and removing the items and restoring the site on which
they are located.
Items of property, plant and equipment are depreciated from the
date they are available for use or, in respect of self-constructed
assets, from the date that the asset is completed and ready for
use. Depreciation is calculated to write off the cost of items of
property, plant and equipment less their estimated residual values
using the straight-line basis over their estimated useful
lives.
Depreciation is generally recognised within administrative
expenses in profit or loss, unless the amount is included in the
carrying amount of another asset. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it
is reasonably certain that the Group will obtain ownership by the
end of the lease term. Land is not depreciated.
The estimated useful lives for significant items of property,
plant and equipment are as follows:
-- Freehold buildings: 2%-5% per annum straight line
-- Leasehold land and buildings: 1% straight line, or period of lease if shorter
-- Vehicles and trailers: 3-10 years straight line and 25% reducing balance as appropriate
-- Plant and equipment: 3-7 years straight line and between
15%-20% reducing balance as appropriate
-- Fixtures and fittings: 3-5 years straight line and between
20%-33% reducing balance as appropriate
Assets under construction
Assets under construction at operating depots are capitalised as
assets-under-construction. The cost of assets-under-construction
comprises its purchase price and any costs directly attributable to
bringing it into working condition for its intended use.
Assets-under-construction amounts related to development projects
are presented as a separate asset within PP&E.
Assets-under-construction are not depreciated. Once the asset is
complete and available for use, depreciation is commenced.
Intangible assets and goodwill
These comprise software development and implementation costs,
trademarks and brands and are stated at cost less accumulated
amortisation and impairment (see below). Costs incurred in
developing the Group's own brands are expensed as incurred.
Separately acquired brands and customer lists are shown at
historical cost. Software, brands and customer lists acquired in a
business combination are recognised at fair value at the
acquisition date.
These assets are deemed to have a finite useful life and are
carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the cost over
their estimated useful lives.
Goodwill that arises on the acquisition of subsidiaries is
presented within intangible assets. The measurement of goodwill at
initial recognition is explained in the basis of consolidation
policy set out above. Subsequently, goodwill is measured at cost
less accumulated impairment losses.
Acquired computer software licences are capitalised on the basis
of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over the estimated useful
lives.
Costs associated with maintaining computer software programmes
are recognised as an expense as incurred.
Development costs that are directly attributable to the design
and testing of identifiable and unique software products controlled
by the Group are recognised as intangible assets when the following
criteria are met:
-- It is technically feasible to complete the software product
so that it will be available for use
-- management intends to complete the software product and use or sell it
-- There is an ability to use or sell the software product
-- It can be demonstrated how the software product will generate
probable future economic benefits
-- adequate technical, financial and other resources to complete
the development and to use or sell the software product are
available
-- The expenditure attributable to the software product during
its development can be reliably measured.
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred.
Development costs previously recognised as an expense are not
recognised as an asset in a subsequent period.
1. Principal Accounting Policies (continued)
Intangible assets and goodwill (continued)
Computer software development costs recognised as assets are
amortised over the estimated useful lives.
Except for goodwill, intangible assets are amortised on a
straight-line basis in profit or loss over their estimated useful
lives, from the date that they are available for use.
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful life of the
asset.
These are as follows:
-- Software development and licences; 3 years
-- Rights to trademarks, brand names and customer relationship lists; 6 to 15 years
-- Franchise contracts; 10 to 15 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Impairment
(i) Non-derivative financial assets - a financial asset not
classified at fair value through profit or loss, including an
interest in an equity-accounted investee, is assessed at each
reporting date to determine whether there is objective evidence
that it is impaired. A financial asset is impaired if there is
objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset, and that
loss event(s) had an impact on the estimated future cash flows of
that asset that can be estimated reliably.
(ii) Non-financial assets - the carrying amounts of the Group's
non-financial assets, other than inventories and deferred tax
assets, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication
exists, then the asset's recoverable amount is estimated. Goodwill
is tested annually for impairment. An impairment loss is recognised
if the carrying amount of an asset or cash-generating unit (CGU)
exceeds its recoverable amount. The recoverable amount of an asset
or CGU is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or CGU. For
impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or
CGUs.
Subject to an operating segment ceiling test, CGUs to which
goodwill has been allocated are aggregated so that the level at
which impairment testing is performed reflects the lowest level at
which goodwill is monitored for internal reporting purposes.
Goodwill acquired in a business combination is allocated to groups
of CGUs that are expected to benefit from the synergies of the
combination.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other assets in the CGU on a
pro rata basis. An impairment loss in respect of goodwill is not
reversed. For other assets, an impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Financial assets
The Group classifies its financial assets in the following
categories: at fair value through profit or loss and available for
sale. The classification depends on the purpose for which the
financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling
in the short term. Derivatives are also categorised as held for
trading unless they are designated as hedges. Assets in this
category are classified as current assets.
Investments are initially recognised at fair value plus
transaction costs for all financial assets not carried at fair
value through profit or loss. Financial assets carried at fair
value through profit or loss are initially recognised at fair value
and transaction costs are expensed in the income statement.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or have been transferred
and the Group has transferred substantially all risks and rewards
of ownership.
Available-for-sale financial assets and financial assets at fair
value through profit or loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value of
the financial assets at fair value through profit or loss' category
are presented in the income statement within 'other net gains' in
the period in which they arise.
Dividend income from financial assets at fair value through
profit or loss is recognised in the income statement as part of
other income when the Group's right to receive payments is
established.
The Group assesses at each balance sheet date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired.
1. Principal Accounting Policies (continued)
Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. A provision for
impairment of trade receivables is established when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability
that the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments (more than 30 days overdue)
are considered indicators that the trade receivable may be
impaired. The amount of the provision is the difference between the
asset's carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through the use of
an allowance account, and the amount of the loss is recognised in
the income statement within 'administration expenses'. When a trade
receivable is uncollectable, it is written off against the
allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited against 'administration
expenses' in the income statement.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand
deposits, and highly liquid investments readily convertible to
known amounts of cash and subject to insignificant risk of changes
in value.
Inventories
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories is based on the first-in first-out
principle, and includes expenditure incurred in acquiring the
inventories, production or conversion costs, and other costs
incurred in bringing them to their existing location and condition.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
estimated costs necessary to make the sale.
Employee benefits
(i) Short-term employee benefits - short-term employee benefit
obligations are measured on an undiscounted basis and are expensed
as the related service is provided. A liability is recognised for
the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past
service provided by the employee, and the obligation can be
estimated reliably.
(ii) Defined contribution plans - a defined contribution plan is
a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and has no legal or
constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognised as an
employee benefit expense in profit or loss in the periods during
which related services are rendered by employees.
Share-based payments
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value is measured by an independent third party to
review and calculate fair values using the Log-normal Monte-Carlo
stochastic model. The fair values of the employee services received
in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference
to the fair value of the options granted:
-- Including any market performance condition (for example, an entity's share price)
-- Excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period)
-- Including the impact of any non-vesting conditions (for
example, the requirement for employees to save)
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
In addition, in some circumstances employees may provide
services in advance of the grant date and therefore the grant date
fair value is estimated for the purposes of recognising the expense
during the period between service commencement period and grant
date.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company either issues new
shares, or uses Own shares purchased for this purpose. For issued
new shares, the proceeds received net of any directly attributable
transaction costs are credited to share capital nominal value) and
share premium.
The social security contributions payable in connection with the
grant of the share options is considered an integral part of the
grant itself, and the charge will be treated as a cash settled
transaction.
1. Principal Accounting Policies (continued)
Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's Consolidated Interim
Financial Statements in the period in which the dividends are
approved by the Company's shareholders.
Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the
balance sheet date.
Provisions
A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are
determined based on the expected future cash flows. When it has a
material effect, these are discounted at a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the liability. The unwinding of any
discount is recognised as a finance cost. The policies used to
determine specific provisions are:
(i) Lease remediation and site restoration - provisions are
established over the life of leases to cover remedial work
necessary at termination under the terms of those leases. Guidance
for the total cost is made with reference to independent third
party quantity surveyors reports and spread over the terms of the
lease.
(ii) Onerous contracts - a provision for onerous contracts is
recognised when the expected benefits to be derived by the Group
from a contract are lower than the unavoidable cost of meeting its
obligations under the contract. The provision is measured at the
present value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the contract.
Before a provision is established, the Group recognises any
impairment loss on the assets associated with that contract.
(iii) Employee restructuring - a provision for employee
restructuring costs is made once the Group is committed to any
restructuring plans, which require a change to the status of
employees that have a cost implication.
(iv) Insurance claims are assessed on a case by case basis, with
the estimated costs of claims based on the advice of the Group's
external insurance advisers.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable for the sale of goods and services in the
ordinary course of the Group's activities. Revenue is shown net of
value-added tax, returns, rebates and discounts and after
eliminating sales within the Group. The Group recognises revenue
when the amount of revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and when
specific criteria have been met for each of the Group's activities.
The amount of revenue is not considered to be reliably measurable
until all contingencies relating to the sale have been resolved. In
practice this means that revenue is generally recognised as
follows:
(i) Sale of goods
Revenue from the sale of goods is recognised when the Group has
transferred to the buyer the significant risks and rewards of
ownership of the goods. For other goods, it is when despatched, or
packaged and made available for collection.
(ii) Warehouse and distribution service contracts
Revenue is recognised when the service is rendered. Invoicing
varies by contract, but is typically either in line with work
performed or initially on a budgeted volume basis with later
adjustment to reflect actual activity. Where a contract contains
elements of variable consideration, the Group will estimate the
amount or revenue to which it will be entitled under the contract.
Variable consideration can arise as a result of incentives,
performance bonuses, penalties or other similar items.
(iii) Training and other contracts
Revenue is recognised over the life of the contract in
proportion to the costs of providing the services.
(iv) Franchise revenue and franchise contracts
Franchise revenue is recognised gross to reflect franchisor
management of invoicing, collection and credit risk. Revenue in
respect of franchise contracts is recognised at the point in which
a franchise agreement has been signed and fees in respect of the
franchise have been received, at which point they are not
refundable.
(v) Sale of Services - Property
At certain sites where the Company has entered into leases,
arrangements have been entered into with a third party, under which
the Company received fees for property-related advisory services.
Revenue earned from providing property associated services is
recognised in the Consolidated Income Statement at the fair value
of the consideration received or receivable, net of professional
fees, associated costs and VAT.
1. Principal Accounting Policies (continued)
Revenue (continued)
The company continues to be successful in providing property
related services included to third party investors as part of its
core strategy and the growth of its warehousing estate. During the
first 6 months of 2018 it has earned fees of GBP4.2m (6 months
ending 2017: GBP3.2m). Management has made the judgement that the
fees are payments for the provision of property services to a third
party investor that may be recorded as revenue at the time of the
transactions. In forming that judgement, the company has considered
whether the leases it has entered into are operating leases and
whether the future rentals are at market value and, accordingly,
whether the fees received can be attributed to delivered property
services.
(vi) Sale of Services - Consultancy
In line with the stated strategy of consulting led logistics,
the Group offers a range of consultancy services including
property, logistics, IT consulting and integration services. In the
six months to 31 May 2018 these totalled GBP9.1m (2017:
GBP5.5m).
Government grants
Government grants received on capital expenditure are generally
deducted in arriving at the carrying amount of the asset purchased.
Grants for revenue are recognised initially as deferred income at
fair value when there is reasonable assurance that they will be
received and the Group will comply with the conditions associated
with the grant, and are then recognised in profit or loss as other
income on a systematic basis over the useful life of the asset.
Grants that compensate the Group for expenses incurred are
recognised in profit or loss as other income on a systematic basis
in the periods in which the expenses are recognised.
Leases
(i) Leased assets - assets held by the Group under leases which
transfer substantially all of the risks and rewards of ownership
are classified as finance leases. On initial recognition, the
leased asset is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset.
Assets held under other leases are classified as operating leases
and are not recognised in the Group's Consolidated Statement of
Financial Position.
(ii) Lease payments - payments made under operating leases are
recognised in profit or loss on a straight-line basis over the term
of the lease. Where leases contain escalation clauses that
stipulate specific increases to the rental payable, the operating
lease expense is recorded on a straight-line basis. Lease
incentives received are recognised as an integral part of the total
lease expense, over the term of the lease. Minimum lease payments
made under finance leases are apportioned between the finance
expense and the reduction of the outstanding liability. The finance
expense is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining
balance of the liability.
Rental income
Rental income is recognised on a straight-line basis over the
term of the lease. Lease incentives granted are recognised as an
integral part of the total rental income, over the term of the
lease.
Finance income and finance costs
Finance income comprises interest income on funds invested.
Interest income is recognised as it accrues in profit or loss,
using the effective interest method. Finance costs comprise
interest expense on borrowings, unwinding of the discount on
provisions and the net interest cost from accounting for defined
benefit pension schemes. Borrowing costs that are not directly
attributable to the acquisition, construction or production of a
qualifying asset are recognised in profit or loss using the
effective interest method. Foreign currency gains and losses on
financial assets and financial liabilities are reported on a net
basis as either finance income or finance cost depending on whether
foreign currency movements are in a net gain or net loss
position.
Exceptional items
Items that are material in size or nature are presented as
exceptional items in the income statement. The Directors are of the
opinion that the separate recording of exceptional items provides
helpful information about the Group's underlying business
performance. Events which may give rise to the classification of
items as exceptional include restructuring of business units and
the associated legal and employee costs, and other significant
gains or losses. Items of expenditure relating to the acquisition
of business assets and restructuring have been treated as
exceptional costs during the year (see note 5).
Alternative performance measures (APMs)
Underlying results are used in the day-to-day management of the
Group. They represent statutory measures adjusted for items which
in the Directors view could distort the understanding of
performance and comparability year on year. Note 4 provides a
reconciliation between APMs and statutory IFRS measures.
Tax
Tax expense comprises current and deferred tax. Current tax and
deferred tax are recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised
directly in equity or in other comprehensive income.
(i) Current tax - is the expected tax payable or receivable on
the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to
tax payable in respect of previous years. Current tax payable also
includes any tax liability arising from the declaration of
dividends.
1. Principal Accounting Policies (continued)
Tax (continued)
(ii) Deferred tax - is recognised in respect of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- Temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- Temporary differences related to investments in subsidiaries,
associates and jointly controlled entities to the extent that the
Group is able to control the timing of the reversal of the
temporary differences and it is probable that they will not reverse
in the foreseeable future; and
-- Taxable temporary differences arising on the initial recognition of goodwill.
New standards and interpretations
At the date of authorisation of these Consolidated Interim
Financial Statements, the following standards and interpretations,
relevant to the Group, which have not been applied to these
financial statements, were in issue, but not yet effective:
Title Key Issues Effective Date Impact on Eddie
Stobart Logistics
plc
----------------- ------------------------------------- -------------------- --------------------------
IFRS 15 Revenue The new standard is a single Periods beginning Management are currently
from Contracts global revenue standard that on or after evaluating the potential
with Customers contains a single model that 1 January 2018, impact of the new
applies to two approaches, deferred from standard and are
being at point in time and 1 January 2017. not intending to
over time. For complex transactions adopt during FY18.
with multiple components,
variable consideration or
extended periods, application
of the standard can lead to
revenue being accelerated
or deferred in comparison
to current IFRS.
----------------- ------------------------------------- -------------------- --------------------------
IFRS 9 Financial IFRS 9 was introduced in 2014 Periods beginning Management are currently
Instruments as a complete standard including on or after evaluating the potential
the requirements previously 1 January 2018. impact of the new
issued and the additional standard and are
amendments to introduce a not intending to
new expected loss impairment adopt during FY18.
model and limited changes
to the classification and
measurement requirements for
financial assets.
----------------- ------------------------------------- -------------------- --------------------------
IFRS 16 Leases IFRS 16 was issued in January Periods beginning Significant impact
2016 and is effective from on or after on Statement of
1 January 2019, eliminating 1 January 2019, Financial Position
the classification of leases subsequent and Income Statement
as operating leases or finance to EU endorsement. presentation and
leases and setting out a single measurement which
lease accounting model. is currently under
review.
At the date of the authorisation of these financial statements,
the following standards and interpretations which have not been
applied in these financial statements were in issue but are either
not yet effective or have not been adopted by the EU:
-- Amendments to IFRS 2 Classification and Measurement of Share-based payment transactions.
-- Amendments to IAS 7 Disclosure Initiative.
-- Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses.
-- Amendments to IFRS 10 and IAS 28 Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture.
-- Annual Improvements 2014-2016 Cycle.
Other than as mentioned in the above, the Group does not
currently expect that adoption of the other standards and
amendments listed will have a significant effect on the
consolidated results or financial position of the Group.
2. Seasonality of operations
Some of our operations are seasonal, with demand for services
generally trending higher as the financial year progresses. Whilst
this impact is mitigated by operating in different sectors there is
still a significant increase in revenue and profits in the second
half of the year for the Group as a whole. We aim to further reduce
the impact of seasonality by growing in business sectors that have
a complementary profile in respect of seasonal trading.
3. Segmental Information
Eddie Stobart Logistics plc provides contract logistics services
in the UK and Europe. In the year to 30 November 2017 and the six
months to 31 May 2018 the Group managed its operations via distinct
functions (segments) although it is in the process of moving to
managing the business via a sector based view.
Road Transport represents general transport in UK and Ireland,
Ports, Special Operations (consisting of work relating to the FIA
World Formula 1 Championship(TM) , Truckstops and property
services) and Speedy Freight. Contract Logistics and Warehousing
represents contract logistics and warehousing services, including
iForce Group. EU Transport represents transport and vehicle
transportation in Europe. Other represents head office costs,
interest costs and central costs such as HR, IT, Finance, Payroll
and other departments which are not directly allocated to business
units, as well as driver related services including Logistic
People.
All operations are continuing for each segment. As the Group is
in the process of moving toward sector reporting, as discussed
above, the following table illustrates revenue streams on this
basis.
6 months 6 months Year ended
ended ended 30 November
31 May 2018 31 May 2017 2017
------------------------------
(Unaudited) (Unaudited)
Segmental GBP'm GBP'm GBP'm
------------------------------ ------------- ------------- -------------
Revenues
Road Transport 239.8 199.3 414.2
CL & Warehousing 89.1 49.1 139.5
EU Transport 20.2 19.9 38.6
Other divisions, Central and
eliminations 10.2 18.5 31.6
359.3 286.8 623.9
------------------------------ ------------- ------------- -------------
EBITDA
Road Transport 22.3 18.7 48.5
CL & Warehousing 3.6 2.6 9.9
EU Transport 1.2 0.8 1.5
Other divisions, Central and
eliminations (3.6) (2.2) (4.6)
23.5 19.9 55.3
------------------------------ ------------- ------------- -------------
EBITDA Margin
Road Transport 9.3% 9.4% 11.7%
CL & Warehousing 4.0% 5.3% 7.1%
EU Transport 5.9% 4.0% 3.9%
Other divisions, Central and
eliminations (35.3)% (11.9)% (14.6)%
6.5% 6.9% 8.9%
------------------------------ ------------- ------------- -------------
Sector 6 months 6 months Year ended
ended ended 30 November
31 May 2018 31 May 2017 2017
-----------------------------
(Unaudited) (Unaudited)
-----------------------------
GBP'm GBP'm GBP'm
----------------------------- ------------- ------------- -------------
Revenues
Retail 102.0 80.0 168.6
Consumer 70.1 74.7 144.6
Manufacturing, Industrial &
Bulk (MIB) 91.6 80.9 182.0
E-Commerce 80.3 36.9 103.4
Non sector specific 15.3 14.3 25.3
359.3 286.8 623.9
----------------------------- ------------- ------------- -------------
4. Alternative Performance Measures Reconciliation
Alternative performance measures (APMs), such as underlying
results, are used in the day-to-day management of the Group, and
represent statutory measures adjusted for items which, in the
Directors' view, could distort the understanding of comparability
and performance of the Group year on year. These items include
amortisation of acquired intangibles, share of profit from equity
accounted investees, employee share scheme costs which were fully
funded by the previous parent holding group, exceptional costs, a
gain arising on lease agreement, start-up costs associated with
contract wins and the profit impact of severe weather
conditions.
Reconciliation to Underlying Revenue, Underlying EBIT,
Underlying EBITDA, Adjusted Profit after tax and Free Cash Flow
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------ -------------
Reported profit from operating activities
before exceptional items 9,508 7,014 30,994
Amortisation of acquired intangibles 6,207 4,947 11,137
Share of profit from equity accounted
investees 284 343 733
Employee share scheme costs funded
by previous parent holding group 294 - 413
Investor and management charges - - 634
Gain arising on lease agreement (note
5) - 4,616 4,616
Force majeure - severe weather 445 - -
Start up costs associated with contract
wins 1,387 - -
--------------------------------------------- ------------ ------------ -------------
Underlying EBIT (i) 18,125 16,920 48,527
Depreciation 4,260 3,023 6,797
---------------------------------------------- ------------ ------------ -------------
Underlying EBITDA (i) 22,385 19,943 55,324
Profit after tax attributable to owners
of the company 1,355 (7,135) 3,931
Amortisation of acquired intangibles 6,207 4,947 11,137
Employee share scheme costs funded
by previous parent holding group 294 - 413
Force majeure - severe weather 445 - -
Start up costs associated with contract
wins 1,387 - -
Exceptional items (excluding gain arising
on lease agreement) 4,401 12,643 8,482
Adjusted profit after tax 14,089 10,456 23,963
Cash generated from operating activities 8,823 14,383 29,234
Purchase of property, plant and equipment (7,432) (5,496) (8,865)
Proceeds from sale of property plant
and equipment 275 1,388 3,783
Income taxes paid (2,157) 570 (2,667)
Exceptional items (note (a) below) 839 6,022 8,482
---------------------------------------------- ------------ ------------ -------------
Adjusted free cash flow 348 16,868 29,967
---------------------------------------------- ------------ ------------ -------------
(i) Underlying EBIT and Underlying EBITDA are stated before tax but
include the tax effect of share of profit from equity accounted investees.
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------ -------------
Exceptional items (note 5) (4,401) (8,027) (12,167)
Adjusted for:
Gain arising on lease agreement - 4,616 4,616
Residual capitalised bank fees relating
to the previous loan - (6,621) (6,621)
Costs associated with business acquisitions (3,562) - (1,342)
Other non-cash exceptional items - - (338)
Non-cash exceptional items (3,562) (2,005) (3,685)
Cash impact of exceptional items (839) (6,022) (8,482)
---------------------------------------------- ------------ ------------ -------------
5. Exceptional items
6 months
ended 6 months Year ended
31 May ended 30 November
2018 31 May 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
---------------------------------------------- ------------ ------------- -------------
Exceptional items included in administrative
expenses
Costs associated with the IPO of
Eddie Stobart Logistics plc - (3,743) (3,947)
Deferred consideration associated
with business acquisitions (2,707) - -
Costs associated with business acquisitions (1,211) (494) (1,719)
Gain arising on lease agreement - 4,616 4,616
Exit from Irish retail sector - (653) (2,436)
Other (483) - (928)
----------------------------------------------- ------------ ------------- -------------
Total exceptional items included
in administrative expenses (4,401) (274) (4,414)
----------------------------------------------- ------------ ------------- -------------
Residual capitalised bank fees relating
to the previous loan - (6,621) (6,621)
Costs associated with swap closure - (1,132) (1,132)
----------------------------------------------- ------------ ------------- -------------
Total exceptional items included
in finance expenses - (7,753) (7,753)
----------------------------------------------- ------------ ------------- -------------
Total exceptional items before tax (4,401) (8,027) (12,167)
----------------------------------------------- ------------ ------------- -------------
Deferred consideration associated with business acquisitions is
primarily contingent consideration accounted for as remuneration
relating to the acquisitions of Puro Ventures (trading as Speedy
Freight) and The Logistics People. These acquisitions were
completed during 2017. An element of cost in this category relates
to the successful acquisition of The Pallet Group Limited, which
occurred post balance date and is described further in Note 14.
Other exceptional items represent costs associated with a
customer that went into administration.
6. Taxation
Total tax charged in the Income Statement in respect of
continuing operations
6 months 6 months
ended ended Year ended
31 May 31 May 31 November
2018 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ ------------ -------------
Total current income tax charge 1,396 (697) 4,768
Total deferred income tax charge 111 (617) 262
Total charge in the income statement 1,507 (1,314) 5,030
--------------------------------------- ------------ ------------ -------------
7. Dividends
A final dividend of GBP15.7m for the 2017 financial year was
approved by the Board on 29 May 2018. This was paid on 7 June 2018
to shareholders on the register at 11 May 2018. A provision for
dividends payable of GBP15.7m has been made in the financial
statements for the six months ending 31 May 2018.
An interim dividend of 1.54 pence per share (2017: 1.40 pence
per share) will be paid on 19 October 2018 to shareholders whose
name appears on the register at close of business on 7 September
2018. The interim dividend, amounting to GBP5,842,000 has not been
recognised as a liability in this interim financial information. It
will be recognised in the shareholders' equity in the year to 30
November 2018.
8. Earnings per share
Basic earnings per share amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares
outstanding during the period. Diluted earnings per share amounts
are calculated by dividing the profit attributable to ordinary
equity holders of the Company by the weighted average number of
ordinary shares outstanding during the period, plus the weighted
average number of ordinary shares that would be issued on
conversion of all the potentially dilutive instruments into
ordinary shares.
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
'000 '000 '000
------------------------------------------ ------------ ------------ -------------
Profit attributed to equity shareholders 1,355 (7,135) 3,931
------------------------------------------- ------------ ------------ -------------
Weighted average number of Ordinary
Shares - Basic
Issued ordinary shares at the beginning
of the year 357,918 276,668 276,668
Net effect of shares issued and
purchased during the year - 16,071 48,750
357,918 292,739 325,418
------------------------------------------ ------------ ------------ -------------
Weighted average number of Ordinary
Shares - Diluted
Weighted average number of Ordinary
Shares - Basic (as above) 357,918 292,739 325,418
Net effect of shares options in
issue 2,544 382 1,336
------------------------------------------- ------------ ------------ -------------
360,462 293,121 326,754
------------------------------------------ ------------ ------------ -------------
Basic earnings per share for total
operations 0.4p (2.4p) 1.2p
Diluted earnings per share for
total operations 0.4p (2.4p) 1.2p
------------------------------------------- ------------ ------------ -------------
An alternative earnings per share measure is set out below,
being earnings, before amortisation of acquired intangibles and
exceptional items including related tax and exceptional tax items
where applicable, since the Directors consider that this provides
further information on the underlying performance of the Group:
6 months 6 months
ended ended Year ended
31 May 31 May 30 November
2018 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ ------------ -------------
Adjusted earnings per share
Basic 3.9p 3.6p 7.4p
Diluted 3.9p 3.6p 7.3p
Adjusted earnings are determined
as follows
Profit after tax attributed to
owners of the company 1,355 (7,135) 3,931
Amortisation of acquired intangibles 6,207 4,947 11,137
Employee share scheme costs funded
by previous parent holding group 294 - 413
Force majeure - severe weather 445 - -
Start up costs associated with
contract wins 1,387 - -
Exceptional items (excluding gain
arising on lease agreement) 4,401 12,643 8,482
Adjusted profit after tax 14,089 10,456 23,963
--------------------------------------- ------------ ------------ -------------
Underlying Trading refers to Profit from operating activities
before exceptional items. Management believe that Underlying
Trading is a more relevant representation of the financial results
for the period given the significant exceptional IPO and
refinancing related costs incurred during the period. An
alternative measure of earnings per share has been presented on
this basis.
9. Property, Plant and Equipment
Fixtures,
Land and Plant fittings Commercial Assets
buildings and machinery and equipment vehicles under construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----------- --------------- --------------- ----------- -------------------- --------
Net book value at 31
May 2018 33,860 6,340 6,238 14,448 4,235 65,121
Net book value at 30
November 2017 30,374 6,535 6,688 14,929 1,453 59,979
During the six months ended 31 May 2018, the Group developed
leaseholds and acquired plant, machinery, equipment and commercial
vehicle assets with a total cost of GBP9.6m (2017: GBP7.9m).
GBP2.7m (2017: nil) of this relates to land and is therefore not
depreciated. The Group also disposed of assets with a net book
value of GBP0.2m, relating to commercial vehicles. The depreciation
charge for the year across all assets was GBP4.3m.
10. Goodwill
There has been no movement in goodwill since 30 November
2017.
11. Intangible assets
Brand Customer Franchise
Software names relationships Contracts Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- -------- --------------- ----------- --------
Net book value at 31 May
2018 4,237 7,420 76,000 6,017 93,674
Net book value at 30 November
2017 4,242 9,299 79,403 6,202 99,146
During the six months ended 31 May 2018, the Group acquired
intangible assets with a total cost of GBP0.8m (2017: GBP16.9m),
GBP0.7m of which relates to software (2017: GBP4.3m software and
GBP12.6m customer relationships - all acquired as part of business
acquisitions). Amortisation charged in the year across all
intangible assets was GBP6.2m (2017: GBP4.9m).
12. Financial Assets and Liabilities
6 months 6 months Year ended
ended ended 31 November
31 May 2018 31 May 2017 2017
(Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
--------------------------------- ------------- ------------- -------------
Current
Finance lease and hire purchase
obligations 5,535 4,101 4,583
Bank loans 2,600 1,892 3,184
8,135 5,993 7,767
--------------------------------- ------------- ------------- -------------
Non-current
Finance lease and hire purchase
obligations 11,020 9,632 13,233
Bank loans 100,788 99,644 100,433
---------------------------------- ------------- ------------- -------------
111,808 109,276 113,666
--------------------------------- ------------- ------------- -------------
Total loans and borrowings 119,943 115,269 121,433
Cash (5,748) (17,604) (11,936)
Net debt 114,195 97,665 109,497
---------------------------------- ------------- ------------- -------------
12. Financial Assets and Liabilities (continued)
Borrowing facilities
On 13 April 2017, the Group signed a new senior facility
agreement with a new syndicate of lenders, providing a finance
facility of GBP100.0m with associated fees of GBP2.7m. The facility
is secured on the shares of the subsidiaries of the Group, is
subject to a variable rate of interest and subject to certain
conditions is repayable in full in April 2022. During the period
refinancing fees of GBP0.3m (6 months ending 31 May 2017: GBP0.8m)
were amortised through the Consolidated Income Statement.
In the UK, the Group also has access to a revolving finance
facility of up to GBP75.0m (31 May 2017: GBP75.0m) though normally
restricted to GBP65.0m (31 May 2017: GBP65.0m), which is dependent
upon and secured against assets within the Group. The facility is
subject to a variable rate of interest and is in place until 2021.
Following the post balance sheet acquisition of The Pallet Group
Limited, described in Note 14, this facility has been increased to
GBP85.0m, though restricted normally to GBP75.0m.
The Group has finance facilities in Belgium which are secured
against assets in that region and comprise an overdraft of EUR1.5m,
subject to a variable rate of interest and available over 7 years
to 2021, a loan of EUR3.0m, subject to a fixed rate of interest and
repayable in equal quarterly instalments over 7 years to 2021 and a
loan of EUR1.5m at a fixed rate of interest and repayable in equal
quarterly instalments over 5 years to 2021. The facilities are
secured against specific assets in the Group.
13. Share capital
No of shares Share capital Share premium Merger reserve
'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- -------------- -------------- ---------------
Ordinary shares in issue at
31 May 2017 357,918 3,579 125,187 -
IPO adjustment - - 20 -
Merger reserve creation - - (7,950) 7,950
Ordinary shares in issue at
30 November 2017 357,918 3,579 117,257 7,950
Ordinary shares in issue at
31 May 2018 357,918 3,579 117,257 7,950
------------------------------ ------------- -------------- -------------- ---------------
14. Events after the Balance Sheet
The Pallet Network
Post balance sheet date the Group entered into an agreement to
purchase 100% of the shares in The Pallet Network Group
Limited.
The total consideration of GBP52.8m acquired net assets with a
book value of GBP2.0m. A detailed fair value exercise to determine
the expected level of total consideration and the value of
intangible assets and goodwill will be undertaken in the second
half of the year.
The Group funded the acquisition by a combination of debt and
equity. Debt of GBP24.0m was raised from the existing lending
syndicate under exactly the same terms as the existing debt (see
Note 12) and the issue of 21.4m shares, at a price of 140p per
share, raised GBP30m in new equity before expenses.
The Pallet Network Group maintains and manages a UK wide and
linked European distribution network for palletised goods together
with the operations of a national sortation hub.
INDEPENT REVIEW REPORT TO EDDIE STOBART LOGISTICS PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 31 May 2018 which comprises interim consolidated
statement of comprehensive income, interim consolidated statement
of changes in equity, interim consolidated statement of financial
position, interim consolidated cash flow statement and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 31 May 2018 is
not prepared, in all material respects, in accordance with IAS 34
Interim Financial Reporting as adopted by the EU and the AIM
Rules.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 1 the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state
to it in this 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 company for our review work, for this
report, or for the conclusions we have reached.
Nicola Quayle
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
30 August 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAPPEDFPPEEF
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