Final Results

RNS Number : 0438O

Xpediator PLC

15 May 2018

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

XPEDIATOR PLC

("Xpediator" or "the Company" or "the Group")

Final Results for the 12 months to 31 December 2017

And

Directorate Change

Xpediator, (AIM: XPD) a leading provider of freight management services across the UK and Europe, is pleased to announce its full year results for the 12 months to 31 December 2017.

Highlights

Financial

· Group revenues increased by 60% to £116.3 million (2016: £72.8 million)

· EBITDA increased by 81% to £3.9 million (2016 £2.1 million)

· Profit before tax increased by 65% to £2.4 million (2016: £1.5 million).

· Adjusted profit after tax¹ £3.3million (2016: £1.7million)

· Basic earnings per share of 1.64p (2016: 0.70p).

· Adjusted basic earnings per share of 3.27p (2016: 1.52p) excluding exceptional items¹

· Final proposed dividend of 0.64 pence per share (2016: nil)

· Successful fund raises totalling £7.8 million of new capital

Notes:

¹ Adjusted earnings are profit after tax excluding the costs associated with the acquisitions, costs associated with admission to AIM, and the amortisation on the intangible assets created due to the acquisitions and the non-cash interest charges relating to the acquisitions.

²Exceptional items are the costs associated with the acquisitions and the costs associated with admission to AIM.

Operational

• Admitted to AIM in August 2017

• Strong organic growth across all three divisions

• Completed three earnings enhancing acquisitions

• Notable client wins in Romania and UK

• EshopWedrop developing well

• Continued growth of Pallex Romania facilitating contract logistics expansion

2018 and beyond

• Strong pipeline of complementary acquisition targets in the UK and Europe

• Continued high demand for road transportation

• CFO Richard Myson to step down in October 2018 for personal reasons

• Positive Q1 trading performance

• ecommerce and fulfilment growth areas for 2018

Stephen Blyth, Chief Executive Officer of Xpediator, said: "2017 was a very successful year for the business as shown by our 60% increase in revenues which was primarily driven by organic growth across all three divisions. The combination of operating between mature western economies and fast growing CEE markets together with the ever increasing demand for ecommerce and fulfilment is creating a very positive market for our transportation services. We are therefore well placed to deliver a successful outcome for 2018."

Enquiries

Xpediator plc	Tel: +44 (0)330 043 2395
Stephen Blyth, Chief Executive Officer	Email: info@xpediator.com
Richard Myson, Chief Financial Officer

SP Angel Corporate Finance LLP (Nominated Advisor & Joint Broker)	Tel: +44 (0)20 3470 0470
Jeff Keating
Caroline Rowe

Cantor Fitzgerald Europe (Joint Broker)	Tel: +44 (0)20 7894 7000
David Foreman, Michael Boot (Corporate Finance)
Caspar Shand Kydd, Alex Pollen (Sales)

Novella Communications (Financial Public Relations)	Tel: +44 (0)20 3151 7008
Tim Robertson
Toby Andrews

About Xpediator:

Xpediator is a well-established international provider of freight management services. Established in 1988 by CEO Stephen Blyth today the Group's International network of offices provides road, sea and air freight services, together with logistics and warehousing in the UK and Romania. The business offers integrated freight management within the supply chain logistics and fulfilment sector, through their three main areas: freight forwarding, logistics & warehousing and transport services. With headquarters in Braintree, Essex and country offices in nine CEE countries across 31 sites, the Group currently employs over 700 people and was successfully admitted to London's AIM market in August 2017.

For more information, please visit: www.xpediator.com.

Alternatively, do follow us on Twitter at @Xpediator or find us on LinkedIn at Xpediator Plc.

Chairman's Statement

I am pleased to present the consolidated financial statements of Xpediator for the year ended 31 December 2017. This is the first publication of the Company's annual trading results following our successful admission to AIM on the London Stock Exchange, in August 2017.

2017 was a particularly successful year for the business as shown by revenues increasing by 60% to £116 million. Importantly, this increase came primarily from organic growth across the business with £10 million contributed from three acquisitions completed during the year.

As a result, the Company is well placed to continue to grow organically, as well as benefit from full contributions from the acquisitions made in 2017.

The Group operates through three divisions - Freight Forwarding, Transport Services and Logistics & Warehousing - all three divisions have performed well during the year, increasing both revenues and profits.

We have a strong management team who have been together for many years and hold significant equity interests in the Company. The team is led by Stephen Blyth, CEO, who founded the business in 1988, and whose leadership has been fundamental to the Group's success.

On 11 August 2017, Xpediator was successfully admitted to the AIM market of the London Stock Exchange, raising £5 million before expenses. The rationale for listing on the stock market was to support the Company's ambition to grow the business taking advantage of the high demand for road transportation and to support the Group's strategy to act as a consolidator in a very fragmented market place.

The Group's acquisition strategy is based on identifying potential targets with similar activities that can enhance our existing offering to customers, create cross-selling opportunities and in particular add to our burgeoning e-commerce activities. Transactions have been funded through a mix of cash and new shares and include a significant performance related element. Each acquisition to date has been earnings enhancing from completion.

During the year under review, the Company completed three significant acquisitions. In March 2017, Xpediator acquired EMT, a specialist fashion processor and domestic distributor, for an initial consideration of £5.1 million and an expected earn-out consideration deferred of £2.4 million. This is a highly complementary fit with the Company's existing retail and warehouse operations.

Utilising the funds from the IPO, together with a further successful placing in November 2017 raising £2.8 million, Xpediator made two more earnings accretive acquisitions. In October 2017, the Company acquired Benfleet Forwarding for an initial consideration of £6.6 million and an expected earn-out consideration deferred of £0.6 million. This is a complementary UK based international freight forwarder. In November 2017, Regional Express was acquired for an initial £1.2 million and an expected earn out consideration of £0.5 million. This is a UK based freight forwarder, international courier and recognised service provider for Amazon sellers in the UK, US and Europe.

The Group's e-commerce business, EshopWedrop had a successful 12 months beginning with the acquisition of UK buy in January 2017 for an initial £0.1 million and an expected earn out consideration deferred of £0.3 million. This is a Lithuanian based crossborder online delivery service platform. Expanding the EshopWedrop network is a key focus in 2018.

As the Group expands, there are increasing challenges for our evolving business. We recognise the importance of investing in the business, particularly in the areas of systems and IT, and we continue to invest in people with the recruitment of skilled personnel at all levels.

The Group now has over 700 employees across 11 countries. I would like to thank all our employees for their commitment and contribution to the Group and welcome our recent recruits who joined during the year. We are also committed to the introduction this year of appropriate performance plans to reward our staff, which are expected to be in the form of options and cash.

Group Results

Group revenues increased by 60% to £116.3 million for the year ended 31 December 2017 (2016: £72.8 million). Group adjusted EBIT, to exclude costs associated with the listing, the acquisitions and the amortisation relating to the intangible assets of the acquired entities, increased by 75% to £4.3 million (2016: £2.5 million).

EBIT increased by 81% to £3.9m (2016 £2.1 million).

Adjusted earnings, increased by 94% to £3.3 million (2016: £1.7 million).

Basic earnings per share were 1.64p (2016: 0.70p).

Net assets amounted to £14.8 million (2016: £3.6 million).

Awards

Continuing the Company's successful track record of winning industry awards, in 2017 the Company was awarded the BIFA Award for "European Logistics, the "Service Excellence Award" from the Chartered Institute of Logistics & Transport and named as "Freight Carrier of the Year" at the FTA Logistics Awards - in addition to being shortlisted as finalists at the Global Freight Awards.

Shares and Fundraisings

During the year, we issued 20,833,333 new shares at 24p per share to raise £5 million in conjunction with the admission to AIM. In November 2017, we issued 7,000,000 new shares at 40p per share raising £2.8 million. A further 9,219,858 new shares were issued as part of the acquisition of Benfleet and 377,953 new shares as part of the acquisition of Regional Express.

Following the fundraisings and acquisitions part financed by shares, the Company has 117,431,144 shares in issue and we welcome our new shareholders.

Board and Governance

I joined the board as Chairman in January 2017, and as part of the Company's admission to AIM, the board was expanded through the addition of Geoff Gillo as a non- executive director, with significant sector and managerial expertise.

The executive directors on the board are Stephen Blyth, CEO, and Richard Myson, CFO. We are looking to expand the board with the addition of further independent non-executive directors, whose expertise can add value to the Group as a whole, in addition to our commitment of maintaining high corporate governance standards

Dividend

The board is pleased to recommend a final dividend of 0.64p per share. The proposed dividend, if approved by shareholders, will be paid on 3rd August 2018, to shareholders on the register at the close of business on 6th July 2018.

Board Changes

Richard Myson has decided to retire from the Group for personal reasons and will step down as a Director on 31 October 2018. The process of seeking a successor for Richard has commenced. I would particularly like to thank Richard for his significant contribution to the growth of the Group over the last 14 years and wish him well for the future.

Outlook

The markets in which we operate are in growth mode. Demand for road transportation is increasing across Europe, supported by economic stability together with a burgeoning e-commerce sector. Xpediator is well placed to capitalise on this positive market environment and has invested behind the existing business and in complementary acquisitions to capture an increasing share of the freight management market in Europe and further afield.

We look forward to a further year of progress in 2018.

Alex Borrelli

Non Executive Chairman

CEO Statement

2017 has been a transformative year for Xpediator and it has been a pleasure to be a part of the business's growth. We achieved many of our objectives in terms of the stock market listing and expanding the scale of the business but most importantly we are well placed to continue to grow.

Demand for transportation services in our core markets of the UK and Eastern Europe is strong and is being further enhanced by the significant increase in e-commerce activities. These trends match the services we provide and this makes Xpediator well placed to take advantage of these opportunities.

We have clear expansion plans for all three divisions and a pipeline of potential acquisitions, which we anticipate will further support the growth of the business.

Freight Forwarding

· Revenue £93.3 million (2016: £58.9 million)

· Operating Profit before exceptionals £2.4 million(2016: £1.6 million)

The Group's largest division and trading as Delamode International logistics enjoyed a successful 12 months. The strategic decision to focus on selling full loads as opposed to part loads, has continued to benefit this division with revenue income increasing significantly over the period. Growth has come from continued demand across this division's 10,000 strong customer base and a key challenge has been the ability to source capacity through a wide database of suppliers. Geographically, the Baltic markets showed the strongest improvement year on year and this was driven by new client wins and a general increase in demand. Post-acquisition activity of Benfleet and Regional Express has been included in the Freight forwarding division in 2017, this contributed £5.5m of turnover for Benfleet and £1.5m for Regional Express. EshopWedrop was established in 2015 in Lithuania and has since expanded into Latvia, Estonia and Romania. The Group's EshopWedrop service made its first country franchise awards in Cyprus and Albania.

The service is a B2C offering that overlays existing B2B groupage service lines run by the Group's freight forwarding division, Delamode. The service enables consumers in these countries to make online purchases in the UK, Poland, Italy, France, Germany and the USA and have goods delivered to consolidation points at a local cost. Many e-commerce retailers deliver within country for free. The goods are delivered internationally and the overall cost is highly competitive and little more than a domestic delivery cost. The concept is to franchise the service across the world to courier companies or entities capable of last mile delivery.

Transport Services

· Revenue £4.6 million (2016: £3.5 million)

· Operating Profit before exceptionals £2.0 million (2016: £1.8 million)

· Gross Billings £120 million

Transport Services which trades under the Affinity brand and provides bundled fuel and toll cards had an excellent period benefitting from the general increase in activity across the CEE region. The focus for this division is to expand the customer base of 1,700 Eastern European hauliers operating approximately 12,000 trucks by offering extra services such as roadside assistance, GPS and ferry bookings thereby acting as a "one stop" solution. In addition, the Company is developing a financing solution for customers to lease trucks and purchase insurance all under the Affinity brand.

Logistics and Warehousing

· Revenue £18.4 million (2016: £10.3 million )

· Operating Profit before exceptionals £0.9 million (2016: £0.0)

Logistics and Warehousing is focused on the UK and Romania . Also in Romania the Company operates the Pallex franchise. The ability to deliver consignments within 24 hours will be a key advantage to growing the contract logistics and warehousing in Romania. 2017 was a successful period for this division seeing a significant increase in turnover arising from increased Pallex activity and also the successful awards of several new customers both in the UK and Romania.

In March 2017, the Company opened a new facility in Bucharest to accommodate the increase in the warehouse activity and client base in Romania and a further site was approved late in 2017.

Approval has been given for a new cross dock in Sibiu for Pallex and Delamode storage, which is expected to be operational in Q1 2019. This will significantly enhance service and profit levels.

Given the nature of the EMT activity, this has been included in the Logistics and Warehousing division, the post-acquisition turnover contributed £2.9m.

Financial Review

The Group generated revenues for the year to 31 December 2017 of £116.3 million representing a 60% increase (2016: £72.8 million), driven in particular by a strong performance in the Baltics region and increased demand for Pallex in Romania, as well as key customer wins in the UK and acquisitions.

Operating profit increased by 70% to £3.1 million (2016: £1.8 million) including £0.9m of exceptional costs in relation to the acquisitions successfully completed in 2017 and the costs relating to the listing process. Excluding the exceptional costs, the operating margin of the business was in line with 2016 levels.

Adjusted EBIT, excluding listing costs, acquisitions costs and amortisation relating to acquired entities increased by 75% to £4.3 million (2016: £2.5 million).

Reported profit before tax increased by 60% to £2.4 million (2016: £1.5 million), leading to the Company recording EPS of 1.64p (2016: 0.70p), the calculation on the EPS reflects the increase in the number of share in issue from 80 million in 2016 to 117 million, following the equity placings in 2017.

Adjusted earnings for the period increased by 94% to £3.3 million (2016: 1.7 million).

In August 2017, as part of the admission to AIM, the Company successfully raised £5 million, before costs. Then in November 2017 the Company returned to the market and raised a further £2.8 million in an oversubscribed placing.

The additional costs of becoming a listed entity should remain relatively fixed, as we seek to grow the scale of activity in the Group through a combination of M&A activity and strong organic growth.

As at 31 December 2017, the Company demonstrated a strong balance sheet with net cash of £1.5 million at year end, with £7.4m of cash at the bank offset by £5.9m of bank loans (2016: net cash of £0.0 million).

The Company generated cash from operating activities of £2.8 million in the year, (2016: £4.7 million) this includes the payment of costs relating to the listing and for acquisitions of £0.9 million.

The Company has minimal capital expenditure requirements and has to date, achieved strong cash generation. In 2017, operating cash flow was 72% of EBITDA.

Working capital increased by £1.0 million during 2017 to £0.5 million, which when compared to revenue growth of 60%, reflects an improvement in working capital profile at year end.

M&A

Xpediator is well placed to act as a consolidator of freight management businesses that are earnings accretive and can flourish as part of a wider Group.

The three acquisitions made in 2017 have expanded the Group's operating capabilities in the UK and widened the range of activities beyond the core CEE markets into Southern Europe and China, sea freight capability,

UK port offices for potential post Brexit customs work and, through Regional Express, international ecommerce capability. All three acquisitions have integrated well and are contributing positively to the overall business.

Future Developments and Outlook

The Company achieved significant goals in 2017 and remains confident of continuing its future growth and development in 2018. The core business is well positioned and is benefiting from a positive market environment with high demand for road transportation services. Alongside this, the capabilities and opportunities across the Group have been enhanced with the acquisitions completed in 2017 adding new air, sea and port services and introducing new clients, in particular, Amazon, all of which are combining to improve the future prospects of the business.

Trading in 2018 has begun positively with revenues for Q1 ahead of the prior year and we have improved profit margin. This performance means the Group has started well and is well placed to deliver a good performance for the year.

There continues to be many opportunities for organic growth and M&A activity. Acquisitions will strategically enhance the Group's ability to offer a one stop solution to an ever increasing customer base.

Stephen Blyth

Chief Executive Officer

Consolidated Income Statement for the year ended 31 December 2017

Notes Gross Billing 8 CONTINUING OPERATIONS Revenue 4 Cost of sales GROSS PROFIT Other operating income 5 Administrative expenses 6		2017	2016
		£'000	£'000
		232,070	169,165
		116,297	72,758
		(88,186)	(55,559)
		28,111	17,199
		658	556
		(25,680)	(15,941)
Exceptional items included in Administrative expenses above OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS	30	(912) 4,001	(654) 2,468
OPERATING PROFIT Finance costs Finance income	6 9 9	3,089 (665) 12	1,814 (366) 24
PROFIT BEFORE INCOME TAX		2,436	1,472
Income tax	10	(651)	(233)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS		1,785	1,239
LOSS FOR THE YEAR FROM DISCONTINUED OPERATIONS	11	-	(179)
PROFIT FOR THE YEAR		1,785	1,060
Profit attributable to:
Owners of the parent		1,540	563
Non-controlling interests		245	497
		1,785	1,060
Earnings per share attributable to the ordinary equity holders of the parent:
Basic earnings pence per share	12	1.64	0.70
Diluted earnings pence per share	12	1.63	0.70
Basic earnings pence per share from continuing operations	12	1.64	0.93
Diluted earnings pence per share from continuing operations	12	1.63	0.93
Adjusted basic earnings pence per share*	12	3.27	1.52
Adjusted diluted basic earnings pence per share*	12	3.26	1.52

*Adjusted Earnings per share as per footnote 3 on page 1

Consolidated Statement of Comprehensive Income for the 12 months ended 31 December 2017

	2017 £'000	2016 £'000
PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations	1,785 112	1,060 654
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	1,897	1,714
Total comprehensive income attributable to:
Owners of the parent	1,634	1,153
Non-controlling interests	263	561
	1,897	1,714

Consolidated Statement of Financial Position as at 31 December 2017

Notes		2017 £'000	2016 £'000
ASSETS
NON-CURRENT ASSET
Intangible assets	14	15,168	2,892
Property, plant and equipment	15	1,600	1,186
Investments	18	1	16
Trade and other receivables	20	149	222
Deferred tax	10	196	106
		17,114	4,422
CURRENT ASSETS
Inventories	19	50	44
Trade and other receivables	20	51,806	28,597
Cash and cash equivalents	21	7,385	5,351
		59,241	33,992
TOTAL ASSETS		76,355	38,414

Consolidated Statement of Financial Position (Continued) as at 31 December 2017

Notes		2017 £'000	2016 £'000
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	25	5,922	4,050
Share Premium	26	5,792	-
Equity Reserve	26	69	-
Translation Reserve	26	546	452
Merger Reserve	26	(1,509)	(3,750)
Retained earnings	26	3,535	2,466
Issued share capital and reserves attributable
to the owners of the parent		14,355	3,218
Non-controlling interests		413	345
TOTAL EQUITY		14,768	3,563
LIABILITIES
NON-CURRENT LIABILITIES
Deferred Consideration	22	1,666	-
Interest bearing loans and borrowings	23	3,309	3,878
Deferred Tax liability	10	1,209	332
		6,184	4,210
CURRENT LIABILITIES
Overdrafts	21	45	-
Trade and other payables	22	50,973	29,167
Deferred Consideration	22	1,840	-
Interest bearing loans and borrowings	23	2,545	1,474
		55,403	30,641
TOTAL LIABILITIES		61,587	34,851
TOTAL EQUITY AND LIABILITIES		76,355	38,414

Consolidated Statement of Changes in Equity for the year ended 31 December 2017

Notes

Share Capital

Share Equity Translation Premium Reserve Reserve

Merger Retained Reserve Earnings

Total

NCI

Total Equity

Carried Forward

at 31 December 2016

4,050

- - 452

(3,750) 2,466

3,218

345

3,563

Contributions by and distributions to owners

non controlling interests 17 -

(121)

(88)

(209)

Dividends paid 13 -

(350)

(107)

(457)

Share based consideration

on Acquisitions 25 480

2,241

2,721

Share Options not yet

exercised 27 -

Issue of Share Capital 25 1,392

5,792

7,184

Total contributions by and

distributions to owners 5,922

5,792

452

(1,509)

1,995

12,721

150

12,871

Comprehensive income for the year

Profit for the year -

1,540

245

1,785

Exchange differences on translation of

foreign operations -

112

Total comprehensive

income for the year -

1,540

1,634

263

1,897

Balance as at

31 December 2017 5,922

5,792

546

(1,509)

3,535

14,355

413

14,768

Consolidated Statement of Changes in Equity (Continued) for the year ended 31 December 2017

	Share	Share	Equity Translation	Merger	Retained		Total
Notes	Capital	Premium	Reserve Reserve	Reserve	Earnings	Total	NCI Equity

Balance at 1 January 2016 - - - (479) 237 8,162 7,920 299 8,219

Contributions by and distributions to owners

Acquisition of

non controlling interests	17	-	- - -	-	(462)	(462)	(192)	(654)
Distribution to Owners		-	- - 341	-	(2,463)	(2,122)	(58)	(2,180)
Capital Contribution	11	-	- - -	-	43	43	-	43
Dividends Paid	13	-	- - -	-	(3,377)	(3,377)	(265)	(3,642)
Share Swap Agreement with Delamode Group
Holdings Limited	25	4,000	- - -	(3,987)	-	13	-	13
Incorporation of Xpediator PLC	25	50	- - -	-	-	50	-	50
Total Contributions by and distribution to owners		4,050	- - (138)	(3,750)	1,903	2,065	(216)	1,849
Profit for the year		-	- - -	-	563	563	497	1,060
Exchange differences on translation of foreign operations		-	- - 590	-	-	590	64	654
Carried Forward at 31 December 2016		4,050	- - 452	(3,750)	2,466	3,218	345	3,563

Consolidated Statement of Cash Flows for the year ended 31 December 2017

Notes		2017 £'000	2016 £'000
Continuing Operations Cash flows from operating activities Cash generated from operations Interest paid Tax paid	1	2,785 (370) (762)	4,656 (366) (656)
Net cash from operating activities		1,653	3,634
Cash flows from investing activities
Purchase of tangible fixed assets		(771)	(593)
Acquisition of Subsidiaries, net of cash acquired		(5,835)	(1,873)
Disposal of available for sale assets.		-	439
Purchase of intangible fixed assets		(47)	(50)
Sale of tangible fixed assets and investment property		72	144
Sale of investments		30	-
Interest received		12	24
Net cash from investing activities		(6,539)	(1,909)
Cash flows from financing activities
New loans in year		1,198	319
Loan repayments in year		(696)	(2,569)
Share issue (net of share issue costs)		7,184	50
Transactions with non-controlling interests		(209)	(654)
Dividends paid		(350)	(3,377)
Non-Controlling interest dividends paid		(107)	(265)
Net cash from financing activities		7,020	(6,496)
Increase in cash and cash equivalents from continuing operations		2,134	(4,771)
Increase/(Decrease) in cash and cash equivalents from
discontinued operations		-	-
Cash and cash equivalents at beginning of year	2	5,351	9,819
Effect of foreign exchange rate movements		(145)	303
Cash and cash equivalents at end of year 2		7,340	5,351