Final Results

RNS Number : 3240X

Xpediator PLC

29 April 2019

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.

29 April 2019

XPEDIATOR PLC

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

Final Results for the 12 months to 31 December 2018

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 2018.

2018 Highlights

Strong growth combined with good cash generation

· Revenues increased 54.1% to £179.2 million

· Like for like revenues increased by 21.8%¹

· Delivered a 130.5% increase in reported profit before tax to £5.6 million

· 81.2% increase in adjusted profit before tax to £7.2 million²

· Improved cash generation with a strong focus on working capital

· Maintained financial headroom with positive net cash £3.2 million

· Earnings per share increased by 115.2% to 3.53p

· Final dividend proposed of 0.84 pence per share leading to a total dividend for 2018 of 1.26 pence per share, a 27.3% increase per share

Positive mix of organic and acquisition led growth

· Provided transport services to over 14,000 customers in 2018.

· Completed two complementary acquisitions adding key UK gateway facilities in Felixstowe, Heathrow and Southampton

· Freight forwarding revenues increased by 46.7% to £136.9 million with the Baltics and Balkans key areas of strength despite challenging prior year comparators

· Pall-Ex franchise in Romania also performed strongly again handling in excess of 50,000 pallets per month (2017: 40,000)

· Affinity division grew revenues by 38.6% to £6.4 million now providing DKV fuel card and associated services to over 14,000 vehicles (2017: 12,000)

· Expanded senior management with three key appointments

In 2019

· Continuing demand for transport services and solutions fuelled by the consumer expectation for goods to be delivered directly to the home or place of work

· Further key management appointments made in Q1 2019

· Exciting pipeline of complementary acquisition targets which would add to the Group's geographic presence and product capabilities

· Focus on investing in Group infrastructure, especially IT investment to support the enlarged business together with the next phases of anticipated growth

· Positive start to Q1 with new initiatives on our Amazon partnership and improved trading at Benfleet Forwarding

Notes:

¹ Like-for-like sales defined as year on year revenue growth less revenue from acquisitions completed in 2018 and part year impact of acquisitions completed in 2017.

²Adjusted profit before tax excludes the exceptional items relating to acquisition costs, £0.32m (2017: £0.24m,) listing costs £nil (2017: £0.67m) non-cash interest charge, £0.23m (2017: £0.30m),the amortisation on the intangible assets relating to the acquired entities, £1.03m (2017: £0.33m) and includes net credit to Benfleet trading £0.77m being the net of an impairment charge of £1.85m and the credit on consideration and deferred consideration repaid of £2.62m.

Stephen Blyth, Chief Executive Officer of Xpediator, said "The business is performing extremely well, growing both organically and through acquisition. Good cash generation during the year reflected a strong focus on working capital and increased financial disciplines. The Group has a solid financial base with the financial headroom to support the Group's future ambitions. In 2019 we are on track to exceed £200m of sales, a near threefold increase since 2016."

Enquiries

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

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

This announcement has been released by Stephen Blyth, Chief Executive Officer, on behalf of the Company.

Chairman's Statement

I am delighted to be reporting these results which show the Group's significant expansion in 2018 with revenue increasing by 54.1% to £179.2 million and reported profit before tax increasing by 130.5% to £5.6 million. Adjusted profit before tax to exclude costs associated with the acquisitions, the amortisation relating to the intangible assets of the acquired entities and non-cash interest charges has increased by 81.2% to £7.2¹ million. This rate of growth continues the momentum from the previous year as Xpediator establishes its network of freight management companies across the UK and Europe with a particular expertise in the fast growing Central and Eastern European ("CEE") regions.

Achieved through a healthy mix of acquisition and organic growth, the Board is focused on keeping its strategy of maximising value creation across the network through:

· Operating as a broker with a low-cost base sourcing capacity from hauliers as it is required;

· Using the Group's scale to achieve competitive pricing from hauliers to transport clients' goods;

· Serving over 14,000 customers with no one customer representing more than 2% of Group revenue;

· Having revenues spread over multiple geographies (39.2% UK and 60.8% Central and Eastern Europe); and

· Providing additional services which fit naturally with the transportation of goods such as fuel cards, warehousing, logistics support and a pallet network, whilst minimising risk exposure.

Globally the trend for goods to be brought directly to the place of work or home is driving a substantial increase in demand for transport and modern transportation solutions. We believe this trend will continue and that demand for transport and logistics services is likely to increase further.

Recognising the market opportunity, the Group is seeking to exploit the growth in the sector by building a pan European network with a particular strength across the CEE regions. Two years ago, the Group employed 574 people with annual revenue of £72.8 million. Today, the Group employs 902 people with annual revenue expected to exceed £200 million in the current year.

In 2018, the Group completed its third and fourth acquisitions since listing on the AIM market in August 2017. The two businesses, Import Services Limited and Anglia Forwarding, contributed an additional 18.6% in revenue, added over 400 new customers including greater Amazon activity and significantly expanded the Group's UK gateway capabilities with facilities in Felixstowe, Heathrow and Southampton.

To help manage the expansion of the Group, in January 2019, Simon Youd joined as Head of M&A and Integration from Woodland Group Limited, an international logistics company. The Group is attracting and investing in new senior personnel to the business to ensure we have the skills and leadership to manage the enlarged business.

The Group continues to have a good pipeline of acquisition opportunities which meet the acquisition criteria of enhancing the Group's geographical capabilities (especially in the fast-growing CEE region) and/or extending the Group's international presence in air and sea transportation.

The Group's Brexit team has been working closely with leading transport associations and port authorities to plan ahead. The Group already holds Authorised Economic Operator status which will be critical in being able to support both exporters and importers post Brexit under most forecasted scenarios.

Ultimately, the Group's customers will need to understand and find solutions to continue delivering their goods to their end-market and Xpediator is well placed to support them.

Dividend

The Board is pleased to recommend a final dividend of 0.84 pence per share. The proposed dividend, if approved by shareholders, will be paid in July 2019, to shareholders on the register at the close of business on 14 June 2019.

Board and management changes

On 3 September 2018, Stuart Howard joined the Group as Group CFO. Previously Chief Executive of Dollar UK, the alternative financial services provider, Stuart brings significant listed and Board level experience. Stuart replaced Richard Myson who remains actively involved with the Group as Head of Internal Audit (appointed 1 April 2019).

In addition, on 1 July 2018 Robert Riddleston joined the Board of Xpediator, as a Non-Executive Director, having spent 45 years with Barclays as a senior corporate banker.

Outlook

The Group is strategically well placed to continue to pursue a policy of strategic M&A activity to enhance earnings and operational capabilities, particularly in air and sea transportation services. Alongside this, we also expect to continue to deliver attractive organic growth rates from within the existing business. As the business expands into what is a growth market, the Group will continue to benefit from the increasing economies of scale, a broadening portfolio of services and a widening client base.

We remain confident of achieving a further year of growth across our activities.

¹Adjusted profit before tax excludes the exceptional items relating to acquisition costs, £0.32m (2017: £0.24m,) listing costs £nil (2017: £0.67m) non-cash interest charge, £0.23m (2017: £0.30m),the amortisation on the intangible assets relating to the acquired entities, £1.03m (2017: £0.33m) and includes net credit to Benfleet trading £0.77m being the net of an impairment charge of £1.85m and the credit on consideration and deferred consideration repaid of £2.62m.

Alex Borrelli

Non-Executive Chairman

CEO Statement

Introduction

Demand for freight management in the UK and CEE countries was strong during the year. Changing consumer trends and economic growth in our core markets, in particular from the CEE region are driving demand and helping us to develop a more comprehensive European network of freight management companies.

The financial results achieved in 2018 evidence the progress we have made across all our markets. Of the £179.2 million of revenues generated in 2018, £109.0 million was generated in Europe (2017: £84.2 million) and £70.2 million in the UK (2017: £32.1 million). We remain weighted towards the CEE region where our experience and infrastructure enable us to win contracts against the larger competitors in our market.

The business is performing well, growing both organically and through acquisition. Good cash generation during the year reflected a strong focus on working capital and increased financial disciplines. The Group has a solid financial base with the financial headroom to support the Group's future ambitions.

The businesses acquired have been successfully integrated and the process is ongoing to obtain further synergies. We are poised and ready for further acquisitions and we have strengthened the operational, M&A, finance and IT teams to facilitate more activity.

Divisional Review

Freight Forwarding

£136.9m (2017: £93.3 million)
Revenue

£3.0m (2017: £2.4 million)
Operating profit before exceptional items

Freight forwarding services are largely provided under the Delamode brand. The division specialises in connecting CEE countries and the UK. In the period under review freight forwarding revenues increased by £43.6 million of which £34.9 million was organic / full year impact of acquisitions and £8.7 million contributed by acquisitions completed during the year.

Freight forwarding revenues across the Baltics and Balkans have continued to grow significantly against challenging prior year comparators with Delamode Baltics revenue up by £11.1 million and Delamode Bulgaria up by £4.2 million year on year.

Like for like revenue was up by £19.5 million, 20.8%, on 2017 driven by new client wins and the expansion of service offerings into new markets. This included the development of consolidation services to Italy from Lithuania as well as increased sea freight activity in Bulgaria.

The Group completed the acquisition of Anglia Forwarding Group Limited ("Anglia") in June 2018, which contributed £8.7m of turnover and operational capabilities at Felixstowe and Heathrow adding significantly to the Group's air and sea activity together with good cross-selling opportunities to exploit across the Group. Anglia has been successfully integrated and is managed as another freight forwarding business unit with unified processes and procedures as well as standardised financial controls and reporting.

To maximise revenue opportunities, a senior sales Director took over management responsibility to implement both a sales structure within Anglia and cross sell services between the divisions. As a result, the UK freight forwarding companies, Anglia, Benfleet Forwarding Limited (Benfleet) and Delamode are now all cross selling each other's services, an area that the management team intend to further develop.

2018 figures also have a full year trading for Benfleet Forwarding Limited (Benfleet) and Regional Express which were acquired in 2017.

As previously reported, Benfleet's activities were impacted by changes in customs clearance processes which resulted in a reduction in trading and an impairment to goodwill of £1.8 million at the half year results. During the second half of 2018, Benfleet recommenced servicing the clients affected through the Group's European network, albeit at lower but growing volumes in the first quarter 2019, although encouraging new developments that could restore levels back to those in previous years.

Regional Express Limited continues to expand its relationship with Amazon and to support increased volumes for the business, a new lease was taken on a warehouse close to the Port of Southampton in Q1 2019 and a Regional Express operation is planned to be established in Germany.

Warehousing & Logistics

£35.9m (2017: £18.4 million)
Revenue

£3.0m (2017: £0.9 million)
Operating profit before exceptional items

The Logistics division's activities remain largely focused in Romania and the UK.

The Group's Pall-Ex franchise in Romania performed strongly against challenging prior year comparators, offering a pallet delivery service to any part of the country within 24 hours and handling in excess of 50,000 pallets on average per month in 2018 (2017: 40,000 average pallets per month).

The development of the new cross dock facility in Sibiu for Pall Ex and Delamode storage is progressing well and is on target to be operational in Q2 2019. This will significantly enhance service and profit levels.

Warehousing revenue increased by £17.5 million in 2018 to £35.9 million compared to £18.4 million in 2017. This includes £12.8m of post-acquisition revenue for Import Services Limited. Like for like revenue increased by £4.2m as a result of a rise in customer activity in the UK and the new warehouse in Romania which opened in the second half of 2017.

There is a strong pipeline of demand for warehouse space in Romania and combined with the new cross dock facility in Sibiu, this division is well placed to benefit in 2019.

Transport Services

£6.4m (2017: £4.6 million)
Revenue

£2.3m (2017: £2.0 million)
Operating profit before exceptional items

£139.1m (2017: £119.8 million)
Gross Billings

Transport services, trading principally under the Affinity brand, provides bundled fuel and toll cards, financial and support services for hauliers in southern Europe. Affinity is an agent of DKV in Romania, one of the world's largest fuel card providers and provides the DKV fuel card across the Balkans to a database of approximately 1,900 Eastern European hauliers and over 14,000 trucks.

In addition, Affinity provides a "one stop shop" of transport services including roadside assistance and ferry bookings. Affinity's commercial model fits well within the Group as many of the hauliers who are customers of Affinity also supply haulage services to Delamode, a key factor that enables the Group to have a good understanding of its customers and suppliers, which underpins the strategy to provide further financial services such as insurance and leasing.

Affinity generated record revenues during the period with gross billings up by 16.1% year on year all through organic growth.

Romania is still the largest region for the division representing 87.2% of total activity (2017: 89.5%). As part of this, Affinity benefited from the increase in the bulk fuel prices which saw the cost per litre across Europe increase by 8%. Together with improved procurement on ferry crossings this enabled Affinity to grow ferry crossings sales by 30% year on year.

Good progress is being made towards greater expansion of this division's services outside of Romania and into other East European countries. Also, the Group is in discussions with potential financial partners to work together to launch leasing and insurance products tailored specifically for Affinity's existing customer base.

Acquisitions

Our strategy is to act as a consolidator of the highly fragmented freight management market. In the last two years the Group has completed six transactions which have added over 1,200 new customers together with significantly expanding the Group's air and sea freight capabilities.

We remain focused on expanding the Group through acquisition and we have a pipeline of opportunities that are in varying stages of negotiation. Some of which include small transport fleets which, in light of the driver shortages occurring in some high demand markets, will help ensure delivery certainty. Acquisition targets are selected on the basis they will enhance the Group's existing market presence, add further service capabilities particularly in air and sea and benefit significantly from being a part of the wider Xpediator Group.

Outlook

The Group is targeting continued growth in 2019. We expect to benefit organically from the ongoing positive trends driving increased demand for transportation and transportation services globally. We also expect to benefit from further contributions from the businesses we have acquired.

From a risk perspective, the natural growth of the business has meant we are not dependent on any one market and we have a good diversification between the UK and mainland Europe. The Group does not have a large single customer risk, with no one customer responsible for more than 2% of sales and nor is there significant exposure to the segments of UK retail that have come under pressure in the last 12 months.

Instead the business is planning for the next stages of growth. During 2018 and in the early part of 2019, we have made a number of important operational, M&A, IT and Board level appointments which have substantially strengthened our team and our ability to manage the next phase of expansion. This additional expertise is enabling us to drive change across the business particularly in terms of group-wide IT initiatives ultimately aimed at increased automation, address key opportunities such as expanding warehouse revenues in Romania and the UK and maximise the potential of the businesses being brought into the Group by acquisition.

We look forward to completing another successful year.

Stephen Blyth

Chief Executive Officer

CFO Statement

Financial Review

Revenue

Group revenue increased in 2018 by £62.9 million (54.1%) to £179.2 million. Like for like growth increased by £25.4 million whilst revenue from acquisitions contributed the remaining £37.5million.

The Freight Forwarding division delivered £136.9 million (46.7% increase v 2017) through a mix of like for like growth as well as the acquisition of Anglia and full year revenues from Benfleet and Regional Express which were acquired during 2017. Our Warehousing and Logistics division delivered revenue of £35.9 million (95.5% increase v 2017) including £12.8m from the acquisition of Import Services Limited. The Transport Services division delivered £6.4 million (38.6% increase v 2017).

Group profit before tax

Group profit before tax increased in 2018 by 130.5% to £5.6 million (2017: £2.4 million). Each of the three operating divisions increased on the prior year:

· Freight Forwarding: £3.0 million (2017: £2.4 million)

· Warehousing and Logistics £3.0 million (2017: £0.9 million)

· Transport Services: £2.3 million (2017: £2.0 million)

The profit before tax from the operating divisions was partially offset by central overheads.

Adjusted profit before tax

Reconciliation between profit before tax and adjusted profit before tax

	2018	2017

	£m	£m
Profit before tax	5.616	2.436

Exceptional items (note 30)	0.318	0.912
Unwind and addback of discount on deferred consideration ¹	0.232	0.295
Amortisation on intangibles (note 13)	1.033	0.330

Adjusted Profit before tax ²	7.199	3.973

¹ Unwind of discount of deferred consideration = £0.277m plus addback of the release on discount of deferred consideration = £0.045m (see note 9)

² Adjusted profit before tax excludes the exceptional items relating to acquisition costs, £0.32m (2017: £0.24m,) listing costs £nil (2017: £0.67m) non-cash interest charge, £0.23m (2017: £0.30m),the amortisation on the intangible assets relating to the acquired entities, £1.03m (2017: £0.33m) and includes net credit to Benfleet trading £0.77m being the net of an impairment charge of £1.85m and the credit on consideration and deferred consideration repaid of £2.62m.

Earnings per Share	2018	2017

Basic earnings pence per share (profit after tax)	3.53	1.64
Adjusted earnings pence per share (Adj profit before tax)	4.80	3.27

The total number of ordinary shares at 31 December 2018 was 133.7 million following the issue of 16.3 million during the year which gave rise to a weighted average number of shares of 125.2 million (128.8 million diluted). Profit after tax attributable to the owners of the parent company of £4.4 million provides a basic earnings per share of 3.53p (3.43p diluted) which is a 115.2% (110.4% diluted) increase on 2017. Adjusted profit before tax results in a basic earnings per share of 4.80p (4.66p diluted) which is an increase of 46.8% (42.9% diluted) on 2017. (See note 11 of the financial statements)

Operating Profit

Group operating profit before exceptional items increased by 62.3% (£2.54 million) year on year fuelled by a mix of organic growth and acquisitions. Organic growth accounted for 17.0% (£0.4 million) of the increase on 2017 with the remainder achieved through the newly acquired businesses.

The Freight Forwarding division operating profit increased by £0.5 million from 2017 to 2018. Of this, organic growth accounted for £0.3 million and the acquisitions of Anglia and Regional Express contributed a further £0.7 million. This increase of £1.0 million year on year was partially offset with the reduced performance in Benfleet of £0.5 million loss in 2018 which included the net impact of an impairment charge of £1.8 million and reimbursement of consideration and release of deferred consideration from the former owners of Benfleet of £2.6 million.

The Logistics division operating profit increased by £2.1 million from 2017 to 2018. Organic growth increased 28.6% (£0.3m) year on year whilst Import Services Limited contributed £12.8 million of sales and £1.7 million of operating profit in the second half of 2018 following the acquisition on 14 July 2018. In addition, EMT contributed a further £0.1 million increase to operating profit in the year.

The Transport Services division under the Affinity brand saw operating profit increase by 17.4% (£0.3 million) from 2017 to 2018. This was achieved through like for like growth with revenues increasing by £1.8 million year on year.

Dividend and retained earnings

Dividend coverage ratio	2018	2017

Net income / dividend	2.61:1	1.40:1
Dividend per share	1.26p	0.99p

Dividend Policy

The Group's policy is to pay a progressive dividend each year. The Group is well positioned to continue delivering shareholder value. The Directors recommend the payment of a final dividend of 0.84 pence per share for the year ended 31 December 2018. With the interim dividend of 0.42 pence per share paid on 26 October 2018 this gives a total dividend for the year of 1.26 pence, an increase of 27.3% over 2017. Proposed dividends totalling £1.7 million are covered 2.61 times by net profit (before non-underlying items and deferred tax). Dividends are charged against retained earnings in the year in which they are paid.

Financial Resources

Asset Cover	2018	2017	Increase / (Decrease) %

Total Assets	£98.8m	£76.4m	29.3
Net Assets	£29.1m	£14.8m	96.8
Current Ratio	1.14	1.07	6.5

Cash

The role of the Group's finance function is to ensure we have the funding to meet foreseeable needs, to maintain reasonable headroom for future contingencies and to manage financing risk. The Board regularly monitors expected financing needs for at least the following 12 months. These are intended to be met for the coming year from existing cash balances, loan facilities and operating cash flows. The Group has sufficient financial resources and a broad spread of business activities. The Directors therefore believe that it is well placed to manage its business risks.

Cash	2018 £m	2017 £m

Net cash from operating activities	3.7	1.7
Net cash outflow from investing activities	(7.0)	(6.5)
Net cash inflow from financing activities	5.4	7.0
Effect of foreign exchange movements	0.2	(0.1)
Cash and cash equivalents at end of year	9.6	7.3

Cash generated from operations increased by 84.4% from 2017 to £5.1 million reflecting the increased turnover generated from both organic growth as well as acquisitions. Net cash from operating activities defined as cash from operations less interest and tax paid increased by 125.8% to £3.7 million.

Cash outflows from investing activities were marginally higher (7.0%) during 2018 reflecting acquisition of two subsidiaries in the year (£6.1m v £5.8m 2017) as well as cash paid on deferred consideration (£0.3 million).

Cash from financing activities decreased by 23.3% from 2017 due mainly to lower proceeds from share issues (£0.6 million lower) and higher dividend paid (£1.0 million higher) reflecting the £0.8 million final dividend paid for 2017 and the interim dividend paid of £0.6 million for 2018 which compared to the £0.4 million paid in 2017.

This overall resulted in an increase of £2.3 million in cash and cash equivalents from 2017 with £9.6 million balance at the end of the year 2018 (31.4% increase v 2017).

In addition, net cash less bank loans improved year on year, primarily driven by the improvement in net cash. Interest bearing loans falling due after more than one year reduced by £0.7 million whilst loans falling due within one year increased by £1.2 million, mainly due to increasing utilisation of the CID¹ facility we have in place.

¹ CID - Confidential Invoicing Discount facility. Funding is secured on the value of invoices raised.

Working Capital

Trade Receivables and Payables	2018	2017

Trade and other receivables	£60.3m	£51.8m
Trade and other payables	£56.1m	£51.0m

Gross billing Days Sales Outstanding *(based on gross billing)	70.4	81.5
Days Payable Outstanding days * (based on cost of sales)	75.6	91.3

Both trade receivables and payables increased in the year reflecting the increased sales activity undertaken by the Group. Trade receivables increased by 16.4% to £60.3 million and trade payables increased by 10.0% to £56.1 million. Whilst the total balances both increased both debtor days² and creditor days³ showed improving positions reflecting the continued focus on managing the Group's working capital effectively. Debtor days decreased by 13.6% and creditor days decreased by 17.2% year on year.

Administrative Costs Review

Following another year of acquisitions, average staff numbers have increased from 687 to 902 and the number of entities from 26 to 30. This has impacted on total administrative costs of the group which have grown from £25.7m to £36.4m (41.9%). The largest element of this increase has been staff costs which have increased by 39.0% from 2017 largely due to the acquisitions of Anglia Forwarding and Import Services Limited.

Operating Costs (Key Items)	2018 £	2017 £	Increase / (Decrease) %

Staff costs	18.6m	13.4m	39.0
Bad debts	1.1m	0.6m	75.8
Rental payable under leases	5.9m	2.3m	160.6
Insurance	0.7m	0.4m	92.6
Plant & machinery hire	0.7m	0.3m	191.2
Other administration costs	9.4m	8.9m	5.6

² Debtor days defined as trade receivables / gross billings * 365

³ Creditor days defined as trade payables / cost of sales * 365

Finance Costs

Finance costs have reduced from £0.7 million to £0.5 million year on year due principally to a reduction in bank loan interest as well as an increase in interest receivable from Deposit accounts and Benfleet vendor income. A further benefit arose from the release of discount on deferred consideration.

Acquisitions 2018

On 4 June 2018, the Group acquired 100% of the issued share capital of Anglia Forwarding, an international freight forwarding and courier business.

The principal reason for this acquisition was to enable the Group to consolidate and enhance their UK freight forwarding distribution services and to allow cross-selling opportunities, especially within the customs clearance areas.

The total consideration payable comprised cash on completion of £1.5 million and cash equal to £0.43 million based on the net working capital adjustment on completion earn-out payments payable over two years.

Goodwill arising on the acquisition amounted to £0.66 million resulting from:

Total Consideration	£2.81m

Intangible Assets	£0.94m
Other Assets	£3.89m
Liabilities	(£2.67m)

Goodwill	£0.66m

On 14 July 2018, the Group acquired 100% of the issued share capital of Import Services Limited an international port-centric logistics company.

The total consideration payable comprised cash on completion of £6.0 million, share based consideration of £3.0 million, cash at completion equal to £5.77 million, a net working capital adjustment of £0.57 million and two earn-out payments payable over two years.

Goodwill arising on the acquisition amounted to £4.96 million resulting from:

Total Consideration	£16.93m

Intangible Assets	£5.96m
Other Assets	£12.55m
Liabilities	(£6.54m)

Goodwill	£4.96m

See note 33 of the financial statements.

Called up Share Capital

16.3 million ordinary shares (2017: 37.4 million) were issued in the year relating primarily to the acquisition of Import Services Limited and the deferred consideration of Easy Managed Transport Limited and Regional Express Limited. Called up share capital at 31 December 2018 was £6.69m (2017: £5.87m). See note 25 of the financial statements.

Impairment

The Group carries out its impairment tests annually in November as part of the budget process and all newly acquired entities are also reviewed for impairment at the balance sheet date.

In October 2017, the Group acquired the entire issued share capital of Benfleet Forwarding Limited. As a result of EU concerns over UK under-collection of duty on Chinese imports, HMRC changed the customs clearance processes being applied in the period. Consequently, Benfleet's Far Eastern customers began experiencing delays and incurring additional costs which resulted in those customers suspending sending containers to the UK. This impacted both the revenues and the profitability of Benfleet during the year.

As a result of this reduced profitability, the Group has carried out an impairment review on Benfleet. Based on the Board's expectations and projected future cash flows, the Group determined an impairment of £1.8 million should be made against the goodwill capitalised upon the acquisition of Benfleet. The impairment charge has been recognised in administration expenses through the lncome Statement.

Given the projected reduced profitability of Benfleet, the Group also determined and has agreed with the original vendors of Benfleet that potential deferred consideration totalling £0.6 million, which was the fair value recognised as at 31 December 2017, will no longer be payable. This liability has therefore been written back. Further, the vendors of Benfleet have agreed to reimburse Xpediator a total of £2.1 million from the original initial consideration paid, to be received by the earlier of the share price reaching 93 pence or December 2020. Both the release of the deferred consideration of £0.6 million and the recognition of the receivable from the vendors of Benfleet with a fair value of £2.0 million have been recognised within administrative expenses in the lncome Statement. The overall net impact of impairment charge, release of previously recognised deferred consideration payable and recognition of receivable from vendors of £0.6 million has been recognised as a credit to the lncome Statement.

No other impairment losses have been recognised during the year.

Changes in Accounting Policy

IFRS 15 Revenue from Contracts with Customers

The Group has applied IFRS 15 for the first time in the current year. IFRS 15 superseded IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations.

The major business streams of the Group are as follows:

· Freight Forwarding: freight forwarding revenue is recognised over the period of time.

· Logistic services: revenue from logistic and warehousing services are recognised over time.

· Transport solutions: revenue from transport solutions is related to Affinity, Ferry and trucking services which are recognised at a point in time.

Under IFRS 15, the Group recognises revenue when, (or as), a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation, is transferred to the customer. A performance obligation represents a good and service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

For the Group the change to IFRS 15 has resulted in reduced revenue of £7.2 million with no material impact to profit for 2018. (see note 3.1.1 of the accounts)

IFRS 9 Financial Instruments

The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9 for the first time in 2018. As a result of the change in accounting standard there has been no significant impact for the Group (see note 3.1.2 of the accounts).

IFRS 16 Leases

IFRS 16 'Leases' has an effective date for annual periods beginning on or after 1 January 2019. This standard has not been adopted early by Group in 2018 but will instead impact the accounts in 2019.

The Group's activities as a lessor are not material and hence the Group does not expect any significant impact on the financial statements, however, some additional disclosures will be required.

(See note 3.2.1 and 32 of the accounts.)

FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2018

		2018	2017
	Notes	£'000	£'000
Gross Billing	8	312,497	232,070
CONTINUING OPERATIONS
Revenue	4	179,174	116,297
Cost of sales		(137,490)	(88,186)
GROSS PROFIT		41,684	28,111
Other operating income	5	935	658
Impairment Losses on receivables	6	(1,053)	(599)
Administrative expenses	6	(35,390)	(25,081)
Exceptional items included in Administrative expenses above	30	(318)	(912)
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS		6,494	4,001
OPERATING PROFIT	6	6,176	3,089
Share of Loss of Equity Accounted Associate	17	(78)	-
Finance costs	9	(582)	(665)
Finance income	9	100	12
PROFIT BEFORE INCOME TAX		5,616	2,436
Income tax	10	(885)	(651)
PROFIT FOR THE YEAR		4,731	1,785
Profit attributable to:
Owners of the parent		4,421	1,540
Non-controlling interests		310	245
		4,731	1,785
Earnings per share attributable to the ordinary equity holders of the parent:
Basic earnings pence per share	11	3.53	1.64
Diluted earnings pence per share	11	3.43	1.63
Adjusted basic earnings pence per share	11	4.80	3.27
Adjusted diluted basic earnings pence per share	11	4.66	3.26

The notes form part of these financial statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

	2018	2017
	£'000	£'000
PROFIT FOR THE YEAR	4,731	1,785
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations	199	112
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	4,930	1,897
Total comprehensive income attributable to:
Owners of the parent	4,612	1,634
Non-controlling interests	318	263
	4,930	1,897

The notes form part of these financial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

		2018	2017
	Notes	£'000	£'000
ASSETS
NON-CURRENT ASSET
Intangible assets	13	24,908	15,168
Property, plant and equipment	14	2,355	1,600
Investments - Unlisted	17	1	1
Investments in Equity Associated Investments	17	60	-
Trade and other receivables	19	1,194	149
Deferred tax	10	225	196
		28,743	17,114
CURRENT ASSETS
Inventories	18	58	50
Trade and other receivables	19	60,310	51,806
Cash and cash equivalents	20	9,647	7,385
		70,015	59,241
TOTAL ASSETS		98,758	76,355

		2018	2017
	Notes	£'000	£'000
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	25	6,736	5,922
Share Premium	26	11,868	5,792
Equity Reserve	26	38	69
Translation Reserve	26	737	546
Merger Reserve	26	2,323	(1,509)
Retained earnings	26	6,773	3,535
Issued share capital and reserves attributable to the owners of the parent		28,475	14,355
Non-controlling interests		586	413
TOTAL EQUITY		29,061	14,768
LIABILITIES
NON-CURRENT LIABILITIES
Deferred Consideration	21	2,089	1,666
Provisions	23	1,523	-
Interest bearing loans and borrowings	22	2,648	3,309
Deferred Tax liability	10	2,204	1,209
		8,464	6,184
CURRENT LIABILITIES
Overdrafts	20	-	45
Trade and other payables	21	56,072	50,973
Deferred Consideration	21	1,409	1,840
Interest bearing loans and borrowings	22	3,752	2,545
		61,233	55,403
TOTAL LIABILITIES		69,697	61,587
TOTAL EQUITY AND LIABILITIES		98,758	76,355

The financial statements were approved by the Board of Directors on 26 April 2019 and were signed by:

Stephen Blyth	Stuart Howard
CEO	CFO

The notes form part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

		Share	Share	Equity	Translation	Merger	Retained			Total
	Notes	Capital	Premium	Reserve	Reserve	Reserve	Earnings	Total	NCI	Equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Carried Forward 31 December 2017		5,922	5,792	69	546	(1,509)	3,535	14,355	413	14,768
Contributions by and distribution to owners
Dividends Paid	12	-	-	-	-	-	(1,323)	(1,323)	(145)	(1,468)
Share Based Consideration
on Acquisition	25	278	-	-	-	3,832	-	4,110	-	4,110
Share Option Charge	27	-	-	109	-	-	-	109	-	109
Share Options Exercised	27	36	-	(140)	-	-	140	36	-	36
Issue of Share Capital	25	500	6,076	-	-	-	-	6,576	-	6,576
Total Contribution by and distribution to owners		6,736	11,868	38	546	2,323	2,352	23,863	268	24,131
Profit for the year		-	-	-	-	-	4,421	4,421	310	4,731
Exchange differences
on translation of
foreign operations		-	-	-	191	-	-	191	8	199
Total Comprehensive Income for the year		-	-	-	191	-	4,421	4,612	318	4,930
Balance at 31 December 2018		6,736	11,868	38	737	2,323	6,773	28,475	586	29,061

		Share	Share	Equity	Translation	Merger	Retained			Total
	Notes	Capital	Premium	Reserve	Reserve	Reserve	Earnings	Total	NCI	Equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Carried Forward at 31 December 2016		4,050	-	-	452	(3,750)	2,466	3,218	345	3,563
Contributions by and distributions to owners
Acquisition of non
controlling interests	16	-	-	-	-	-	(121)	(121)	(88)	(209)
Dividends paid	12	-	-	-	-	-	(350)	(350)	(107)	(457)
Share based consideration on acquisitions	25	480	-	-	-	2,241	-	2,721	-	2,721
Share Options not yet exercised	27	-	-	69	-	-	-	69	-	69
Issue of Share Capital	25	1,392	5,792	-	-	-	-	7,184	-	7,184
Total contributions by and distributions to owners		5,922	5,792	69	452	(1,509)	1,995	12,721	150	12,871
Comprehensive income for the year
Profit for the year		-	-	-	-	-	1,540	1,540	245	1,785
Exchange differences on translation of foreign operations		-	-	-	94	-	-	94	18	112
Total comprehensive income for the year		-	-	-	94	-	1,540	1,634	263	1,897
Balance as at 31 December 2017		5,922	5,792	69	546	(1,509)	3,535	14,355	413	14,768

The notes form part of these financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2018

		2018	2017
	Notes	£'000	£'000
Continuing Operations
Cash flows from operating activities
Cash generated from operations	1	5,135	2,785
Interest paid		(305)	(370)
Tax paid		(1,097)	(762)
Net cash from operating activities		3,733	1,653
Cash flows from investing activities
Purchase of tangible fixed assets	14	(554)	(771)
Acquisition of Subsidiaries, net of cash acquired	13	(6,069)	(5,835)
Purchase of intangible fixed assets	13	(171)	(47)
Sale of tangible fixed assets and investment property	14	-	72
Cash paid on Deferred Consideration of Acquisition		(315)	-
Sale of investments	13	83	30
Interest received	9	29	12
Net cash outflow from investing activities		(6,997)	(6,539)
Cash flows from financing activities
New loans in year	22	908	1,198
Loan repayments in year	22	(362)	(696)
Share issue (net of share issue costs)	25	6,613	7,184
Transactions with non-controlling interests	16	(310)	(209)
Dividends paid	12	(1,323)	(350)
Non-Controlling interest dividends paid	16	(145)	(107)
Net cash inflow from financing activities		5,381	7,020
Increase in cash and cash equivalents		2,117	2,134
Cash and cash equivalents at beginning of year	2	7,340	5,351
Effect of foreign exchange rate movements		190	(145)
Cash and cash equivalents at end of year	2	9,647	7,340

The notes form part of these financial statements

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2018

1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

	2018	2017
	£'000	£'000
Profit before income tax before ordinary activities before results of associate	5,694	2,436
Loss of Equity Accounted Associate	(78)	-
Depreciation charges	712	368
Amortisation charges	1,105	437
Loss on disposal of fixed assets	13	8
Profit on disposal of Investments	-	(15)
Finance costs	582	665
Finance income	(100)	(12)
Share Based Payments Charge	109	69
Impairment of intangible assets	1,845	-
Deferred consideration write back and vendor income	(2,592)	-
	7,290	3,956
(Increase) in inventories	(8)	(6)
(Increase) in trade and other receivables	(6,957)	(17,208)
Increase in trade and other payables	3,287	16,043
Increase in Provisions	1,523	-
Cash generated from operations	5,135	2,785

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

	2018	2017
	£'000	£'000
Cash and cash equivalents
Bank accounts	9,647	7,385
Bank Overdrafts	-	(45)
	9,647	7,340

3. ACCOUNTING POLICIES

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU issued by the International Accounting Standards Board, under the historical cost convention. Accounting policies have been consistently applied from 2017 except for the introduction of the new standards IFRS 9 and 15. The financial statements were approved by the Board on 26 April 2019.

The presentation currency used for the preparation of the financial statements is Sterling, which is the currency of choice of the principal investors of the Group.

The preparation of financial statements in conformity with IFRSs requires the use of certain accounting estimates. It also requires the directors to exercise their judgement in the process of applying the Group's accounting policies (see Note 3.3 - Critical accounting estimates and judgements).

The amounts are rounded to the nearest thousand, unless otherwise stated.

The financial statements for the year ended 31 December 2018 and the year ended 31 December 2017 does not constitute the company's statutory accounts for those years. Statutory accounts for the year ended 31 December 2017 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2018 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors' reports on the accounts for the years ended 31 December 2018 and 31 December 2017 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The Annual Report and Financial Statements for the year ended 31 December 2018 will be posted to shareholders in May 2019.

Description of the Business

Xpediator PLC is a public limited Company, incorporated in England and Wales, United Kingdom. The registered office is 700 Avenue West, Skyline 120 Great Notley, Braintree, Essex, CM77 7AA and the Company registration number is 10397171.

Going Concern

The directors have concluded that it is appropriate that the financial statements have been prepared on a going concern basis because at 31 December 2018, the Group had cash or cash equivalent totalling £9,647,000. The Group also has funding facilities in place which it does not envisage will be withdrawn thus there are sufficient funds available to meet its liabilities as they fall due for a period of not less than 12 months from the date of approval of the financial statements. The directors believe that based on the current budgets and forecast cash flows, there is sufficient resources to meet its liabilities as they fall due.

The financial statements have therefore been prepared on a going concern basis.

Basis of Consolidation

The Group financial statements consolidate the financial statements of Xpediator PLC and its subsidiaries drawn up to 31 December each year. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The Company has control over a subsidiary if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The financial statements of subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. Intra-Group balances and transactions, including unrealised profits arising from intra-Group transactions, have been eliminated. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Non-controlling interests represent the equity in subsidiaries that is not attributable, directly or indirectly, to Xpediator PLC.

Subsequent to the merger accounting noted below the consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Merger accounting

On 25 May 2017 Xpediator Plc entered into a share swap agreement with the ultimate beneficiaries of Delamode Group Holdings Limited, whereby 4,000,000 new ordinary shares of £1.00 each were issued to the ultimate beneficiaries of Delamode Group Holdings Limited in exchange for their shares in Delamode Group Holdings Limited in the same proportion as their shareholding in Delamode Group Holdings Limited. The merger method of accounting is used to Consolidate the results of Xpediator PLC.

On 8 June 2018, the Company issued 1,727,694 new ordinary shares of £0.05 each as part of the deferred consideration of Easy Managed Transport. The merger method of accounting is used to consolidate the results of Xpediator plc. The premium on the fair value in excess of the nominal value of shares issued in consideration of business combinations is credited to the merger reserve.

On 13 July 2018, the Company issued 3,740,648 new ordinary shares of £0.05 each as part of the acquisition of Import Services Limited. The merger method of accounting is used to consolidate the results of Xpediator plc. The premium on the fair value in excess of the nominal value of shares issued in consideration of business combinations is credited to the merger reserve.

On 31 December 2018, the Company issued 84,951 new ordinary shares of £0.05 each as part of the deferred consideration of Regional Express Limited. The merger method of accounting is used to consolidate the results of Xpediator plc. The premium on the fair value in excess of the nominal value of shares issued in consideration of business combinations is credited to the merger reserve.

Revenue

The Group generates revenue in the UK and Europe.

The Group operates a number of diverse businesses and accordingly applies a variety of methods for revenue recognition, based on the principles set out in IFRS 15. The revenue and profits recognised in any reporting period are based on the delivery of performance obligations and an assessment of when control is transferred to the customer. In determining the amount of revenue and profits to record, and associated balance sheet items (such as trade receivables, accrued income and deferred income), management is required to review performance obligations within individual contracts. This may involve some judgemental areas (for example within the Logistics & Warehousing Business), where revenue is recorded in advance of invoicing the customer.

Revenue is recognised either when the performance obligation in the contract has been performed (so 'point in time' recognition) or 'over time' as control of the performance obligation is transferred to the customer. For all contracts, the Group determines if the arrangement with a customer creates enforceable rights and obligations, which is in line with our contractual commitments and industry standard best practice (for example Convention Relative au Contrat de Transport International de Marchansies par la Route or CMR).

For each performance obligation to be recognised over time, the Group applies a revenue recognition method that faithfully depicts the Group's performance in transferring control of the goods or services to the customer. This decision requires assessment of the real nature of the goods or services that the Group has promised to transfer to the customer. The Group has assessed the period of time principles as follows:

· Customers receive the benefits of the good being moved from the origin to the destination, as another supplier would not need to re-perform the service performed to date (ie the goods have been moved partway).

· The customer becomes committed to pay the Group the moment that the goods are despatched and collected.

· The customer accepts that they are liable to pay for the transaction in full although it is the Group's responsibility to ensure that the shipment is in transit before invoicing.

· The customer can usually be invoiced on despatch/export and has an obligation to pay for services despite any problems that may arise in transit.

· The Group would hold any third party liable for any issues that happen in transit that is beyond its reasonable control.

The Group recognises that it acts as both an agent and a principal. The Group is a principal if it responsible for the specified good or service before that good or service is transferred to a customer. The Group is an agent if it is not responsible for arranging for the provision of the specified good or service by another party. In this case, the Group does not control the specified good or service provided by another party before that good or service is transferred to the customer. When the Group acts as an agent, it recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party. The Affinity business (see Affinity section of revenue recognition policy) primarily operates as an agent, and largely recognises only the commission earned as revenue. In addition, the Group has reviewed its policy over Import VAT and Duty (see section 3.1.1) and concluded that they are an agent for VAT & Duty, and this is no longer recorded as revenue. This has resulted in a decrease in revenue in the year of £7,355,000, when compared to prior years accounting treatment (see note 3.1.1).

Freight forwarding

Under IFRS 15, freight forwarding revenue is recognised over the period of time based on the principles identified above. Therefore, revenue will consist of freight delivered during the period as well as a proportion of revenue for service delivered that are in process as at the end of the reporting period, which is calculated on a time proportioned basis. The impact of adopting IFRS15 is disclosed in note 3.1.1. (No adjustments have been made to the prior year comparatives and any difference in opening reserves are deemed to be immaterial).

Logistics & Warehousing

Logistics & Warehousing revenue is accounted for over a period of time. Invoicing varies by contract but is typically in line with work performed. Due to the different contractual arrangements in place, each customer is assessed to determine the amount of work carried out, which has not been invoiced at the date of the Group's reporting period. This revenue recognised is directly linked to the amount of work carried out to deliver that service and measured relative to cost. As a result, judgement is required when determining the appropriate timing and amount of revenue that can be recognised.

Affinity

Revenue is recognised at a point in time only after the performance obligation has been actually been delivered. Affinity and trucking services revenue largely acts as an agent based on the assessment above, so only commission is recorded as revenue. This largely relates to provision of DKV fuel cards, which enables the customer to purchase fuel, tolls and other services.

In addition, the Affinity business operates as a reseller ferry crossings, where revenue is recorded at a point in time as its based on the performance obligation being delivered. Revenue for this part of the business is recorded as a principal due to the assessments identified above.

Gross Billings (Affinity)

Recoverable disbursements incurred on behalf of our Affinity Division customers based in Romania and the West Balkans include fuel costs, toll charges and breakdown assistance. The gross billings figure is included within the Groups trade payables and receivables but are excluded from Consolidated Income Statement revenue. The Gross Billing Revenue number is a non-statutory measure but is included to make a more meaningful calculation of Days Sales Outstanding and Days Payable Outstanding, so it is important to understand the level of billings going through the sales and purchase ledgers.

Franchise Income

Income relating to franchise fees are not recorded as revenues by the Group but are shown as other income. This revenue arises from the sales of services to the franchisees. This income is recognised over a point in time based on when the services have been transferred to the franchisee in accordance with the terms and conditions of the relevant agreements.

Franchise fees comprise of revenue for the initial allocation of the franchise to the respective member, IT support, marketing and the use of the intellectual property.

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3: Business Combinations are recognised at their fair values at the acquisition date, except for non-current assets that are classified as held for sale in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.

If the cost of the acquisition is less than the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities, the difference is recognised directly in the statement of comprehensive income.

Associates

Management has applied judgement in determining that International Cargo Centre Limited (ICC) is an associate of the Group. The Group has significant influence by virtue of holding a 40% equity interest which presumes significant influence per IAS 28, together with having one of three directors on the board, while taking into account that the remaining 60% interest is held by one other party.

Non-controlling interests

The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests.

Goodwill

Goodwill arising on the acquisition of a business represents any excess of the fair value of the consideration over the fair value of the identifiable assets and liabilities acquired. The identifiable assets and liabilities acquired are incorporated into the consolidated financial statements at their fair value to the Group.

Goodwill is not amortised but tested for impairment annually. Any impairment is recognised immediately in the Consolidated Statement of Comprehensive Income and is not subsequently reversed. On disposal of a business, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Impairment of non-financial assets (excluding inventories and deferred tax assets)

Impairment tests on goodwill with indefinite useful economic lives are undertaken annually in November as part of the Group's budgeting process, except in the year of acquisition when they are tested at the year-end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest Group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill. Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Foreign currencies

The financial statements of the Group are presented in its reporting currency of Sterling. The functional currency of each Group entity is the currency of the primary economic environment in which the entity operates.

Transactions in foreign currencies during the period have been converted at the rates of exchange ruling on the date of the transaction. Assets and liabilities denominated in foreign currencies have been translated at the rates of exchange ruling on the balance sheet date. Any gains or losses arising from these conversions are credited or charged to the Consolidated Income Statement.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the translation reserve.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.

Financial assets

The Group classifies its financial assets into the categories discussed below, depending on the purpose for which the asset was acquired. The Group only has financial assets classified as held at amortised cost.

Amortised Costs

These assets arise principally from the provision of goods and services to customers (eg trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a historical provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administration costs in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those for which credit risk has increased significantly, lifetime expected credit losses are recognised, unless further information becomes available contrary to the increased credit risk. For those that are determined to be permanently credit impaired, lifetime expected credit losses are recognised.

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Cash and cash equivalents includes cash in hand, deposits held with banks, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position, unless there is a right of set-off between bank accounts across the Group. In this instance, the net cash position will be shown.

The Group has recognised £1,969,000 (2017 - £nil) of income relating from the Vendors of Benfleet Forwarding Limited. This has been assessed for credit losses and classified as financial assets held at amortised cost in line with the Group's applicable accounting policies.

Capital management

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash flows from operations.

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, invoice discounting and long term loan finance.

Financial liabilities

The Group classifies its financial liabilities into two categories:

Other financial liabilities

The Group's other financial liabilities include bank loans, confidential invoice discounting facility, trade and other payables and accruals. Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Fair value through profit and loss

This category only comprises of the element of deferred consideration on business combinations, which is contingent on the performance of the acquired businesses. The expected consideration payable is assessed at each balance sheet date with the movement in the expected liability being recorded in the income statement.

Share capital

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The company's ordinary shares are classified as equity instruments.

Leased assets

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the consolidated income statement over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated income statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

Externally acquired intangible assets

Externally acquired intangible assets, other than Goodwill, are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).

The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Intangible asset	Useful economic life	Valuation method
Licences and trademarks	3-25 years	Multiple of historic profits
Customer Related	6-10 Years	Excess Earning Model
Technology Based	5 Years	Replacement Cost

Taxation

The charge for current tax is based on the taxable income for the period. The taxable result for the period differs from the result as reported in the statement of comprehensive income because it excludes items which are not assessable or disallowed and it further excludes items that are taxable and deductible in other years. It is calculated using tax rates that have been enacted or substantially enacted by the statement of financial position date.

Deferred income tax is provided using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes.

Deferred tax assets are recognised only to the extent that future taxable profit will be available such that realisation of the related tax benefits is probable. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/ (assets) are settled/(recovered).

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Freehold land is not depreciated. Depreciation on assets under construction does not commence until they are complete and available for use. Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Freehold buildings	2%-10% per annum straight line
Fixtures and fittings	20-33% per annum straight line/10% - 25% on reducing balance,
Computer equipment	33% per annum straight line/20% - 50% on reducing balance
Motor vehicles	25-33% per annum straight line/20% - 25% on reducing balance

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Investments

Unlisted investments are stated at cost less impairment losses.

Dividends

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when declared by the directors. In the case of final dividends, this is when approved by the shareholders at the annual general meeting.

Holiday Pay Accrual

All employees accrue holiday pay during the calendar year, the board encourages all employees to use their full entitlement throughout the year, however in the unlikely case that an employee has untaken holiday pay this is accrued for at the daily salary costs, including costs of employment, such as social security.

Staff Pensions

The Group does not operate a pension scheme for its employees however it does make payments to defined contribution pension schemes on behalf of employees in the UK in accordance with auto enrolment legislation. The payments made are recognised as an expense in the period to which they relate.

Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to the equity-settled employee benefits reserve.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

Provisions

The Group has recognised provisions for liabilities of the uncertain timing or amount for leasehold dilapidations. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date, discounted at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability. The provision takes into account the potential that the properties in question may be sublet for some or all of the remaining lease term.

3.1 NEW AND AMENDED ACCOUNTING STANDARDS EFFECTIVE DURING THE YEAR

The Group has applied the following standards and amendments for the first time during the annual reporting period commencing 1 January 2018:

IFRS 9 : Financial Instruments

IFRS 15 : Revenue on Contracts with Customers

The Group has had to change its accounting policies following the adoption of IFRS 9 and IFRS 15. The Group has not made any retrospective adjustments for this accounting policies as any difference is considered to be immaterial to the results.

3.1.1 IFRS 15 'Revenue from Contracts with Customers'

Background

In May 2014, IFRS 15 'Revenue from Contracts with Customers' was issued. It was subsequently amended in September 2015 and April 2016. It is effective for periods beginning on or after 1 January 2018.

The Group has applied IFRS 15 for the first time in the current year. IFRS 15 superseded IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations.

Assessment of Revenue

The Group has assessed the principles of the revenue recognition, ie at point in time or over a period of time as follows:-

· The customer has ownership of the goods the moment they purchase them from the manufacturer, although the Group would have responsibility to see the delivery to completion.

· The customer becomes committed to pay the Group the moment that the goods are despatched and collected.

· The customer accepts that they are liable to pay for the transaction in full although it is the Group's responsibility to ensure that the shipment is in transit before invoicing.

· The customer can usually be invoiced on despatch/export and has an obligation to pay for services despite any problems that may arise in transit.

· The Group would hold any third party liable for any issues that happen in transit that is beyond its reasonable control.

· For the Affinity business, this primarily acts as an agent, so only the commission would be recorded as revenue.

The major business streams of the Group are as follows :

Freight Forwarding: Revenue from the provision of Freight Forwarding services is recognised over time upon the performance obligation is satisfied. Please see the accounting policy section for more details.

Logistic & Warehousing : revenue from logistic and warehousing services is recognised over time. Please see the accounting policy section for more details.

Transport solutions: revenue from transport solutions is related to Affinity, Ferry and trucking services which are recognised at a point in time. Please see the accounting policy section for more details.

Key changes in accounting policies resulting from application of IFRS 15

IFRS 15 introduces a 5-step approach when recognising revenue:

· Step 1: Identify the contract(s) with a customer;

· Step 2: Identify the performance obligations in the contract;

· Step 3: Determine the transaction price;

· Step 4: Allocate the transaction price to the performance obligations in the contract;

· Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation.

The Group has determined this 5 step approach by assessing individual contractual terms with the respective customer, which details the performance obligations and the agreed price between parties. This will determine whether revenue is recognised at a point in time or over a period of time. The Group has identified in the section above, how each business unit recognises its revenue.

As a result of the change in standard, the Group now recognises revenue for Freight Forwarding over a period of time, rather than at a point in time. In addition, Import VAT & Duty is now recognised as an agent rather than a principal (see section below on Principal versus Agent).

Impacts and Changes of accounting policies of application on IFRS 15 "Revenue from contracts with customers"

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

· the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;

· the Group's performance creates and enhances an asset that the customer controls as the Group performs; or

· the Group's performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

Revenue of the Group is recognised over time by method which reflect the progress towards complete satisfaction of a performance obligation.

A contract asset represents the Group's right to consideration in exchange for goods or services that the Group has transferred to a customer that is not yet unconditional, which are in line with industry accepted contractual terms and conditions (for example CMR). It is assessed for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group's unconditional right to consideration, i.e. only the passage of time is required before payment of that consideration is due.

A contract liability represents the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

As a result of these changes, the Group now recognises Revenue for Freight Forwarding and Logistics and Warehousing over a period of time, whereas in the prior year, Revenue was recognised at a point of time. This has resulted in an increase to revenue of £182,000 compared to the prior year.

Principal versus agent

When another party is involved in providing goods or services to a customer, the Group determines whether the nature of its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group is a principal) or to arrange for those goods or services to be provided by the other party (i.e. the Group is an agent).

The Group is a principal if it responsible for the specified good or service before that good or service is transferred to a customer.

The Group is an agent if its performance obligation is responsible for the provision of the specified good or service by another party. In this case, the Group does not control the specified good or service provided by another party before that good or service is transferred to the customer. When the Group acts as an agent, it recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party.

The Group operates as both a principal and an agent. For the Freight Forwarding and the Logistics & warehousing business units, the Group has identified that they are primarily the principal as it primarily controls the specified goods or services before this is transferred to the customer, as the economic risk lies with the Group.

For the Affinity business unit, the Group has identified that they are primarily an agent, and in doing so, the Group recognises only the commission element within the financial statements.

Certain Import VAT & Duty was previously recorded as revenue, as in the prior year, there was risk and reward of not being paid for this service. However, the Group has reassessed the procedures and concluded that they act as an agent so no longer record this as revenue. The prior year comparatives have not been restated as the profit impact is considered immaterial.

Summary of effects arising from initial application of IFRS 15.

The table below shows the following impact of adopting IFRS 15 on the Group's position. The 2017 comparatives have been provided for guidance, but these have not been adjusted through the Prior Year Comparatives.

	2018	2017
	£'000	£'000
Import VAT & Duty	7,355	2,460
Other IFRS 15 Adjustment	(182)	(271)
Total Impact	7,173	2,189

As a result of the implementation of IFRS 15, this has reduced revenue by £7,173,000 (2017 - £2,189,000) for the Group. :

As Import VAT & Duty attracts no margin, the impact on the prior year comparatives is immaterial and have therefore not been restated.

The other IFRS 15 adjustment, relates to a change in principle between what the Group has assessed as revenue over a point in time versus at a period in time, following application of IFRS 15. As a result, there is an additional £182,000 (2017- £271,000) of revenue that has been accounted for in 2018. The margin impact for 2017 is deemed to be not material, so the prior year comparatives have not been adjusted.

The Group consider that the current segmental split of revenue to be appropriately disaggregated in line with IFRS 15. Refer to notes 4 and 8 of the Group financial statements for further details.

3.1.2 IFRS 9: Financial Instruments

Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments

The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9. i.e. applied the classification and measurement requirements (including impairment) retrospectively to instruments that have not be derecognised as at 1 January 2018, (date of initial application) and has not applied the requirements to instruments that have already been derecognised as at 1 January 2018. The difference between carrying amounts as at 31 December 2017 and the carrying amounts as at 1 January 2018 are deemed immaterial to the Group.

Key changes in accounting policies resulting from application of IFRS 9

Classification and measurement of financial assets

Trade receivables arising from contracts with customers are initially measured in accordance with IFRS 15. All recognised financial assets that are within the scope of IFRS 9 are subsequently measured at amortised cost or fair value.

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

· the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

· the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments

Impairment under ECL model

The Group recognises a loss allowance for ECL on financial assets which are subject to impairment under IFRS 9 including trade receivables, contract assets, other receivables, loan receivable, amounts due from an intermediate holding company, immediate holding company, associates and fellow subsidiaries, pledged bank deposits and bank balances. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL ("12m ECL") represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessment are done based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions. The Group always recognises lifetime ECL for trade receivables. The ECL on these assets are assessed individually for debtors with significant balances and collectively using a provision matrix with appropriate groupings. For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

Significant increase in credit risk

Please refer to the accounting policies note Financial Assets/Amortised Costs for the new policy on credit risk.

Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. Generally, the ECL is estimated as the difference between all contractual cashflows that are due to the Group in accordance with the contract and all the cashflows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition. Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortised cost of the financial asset. The Group recognises an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of trade receivables where the corresponding adjustment is recognised through a loss allowance account. As at 1 January 2018, Management of the Group reviewed and assessed the Group's existing financial assets for impairment using reasonable and supportable information that is available without undue cost or effort in accordance with the requirements of IFRS 9. Any changes as a result of IFRS 9 are immaterial to the Group's results.

Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments

Summary of effects arising from initial application of IFRS 9

(a) Impairment under ECL model

The Group applies the IFRS 9 simplified approach to measure ECL which uses a lifetime ECL for trade receivables. To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics. Loss allowances for other financial assets at amortised cost mainly comprise of other receivables, loan receivable, amounts due from related parties, pledged bank deposits and bank balances, are measured on 12-month ECL basis and there had been no significant increase in credit risk since initial recognition. The Group has reviewed it's provisions in line with IFRS 9, and any difference is deemed immaterial to prior provisioning policies. In addition, the Group has reviewed the opening position as at 1 January 2018 and deemed the application of IFRS 9 to be immaterial.

(b) Solely Payment of Principal and Interest

The Group has reviewed all it's over financial assets and confirm that this meet the criteria of the Solely Payments of Principal and Interest (SPPI) test under IFRS 9.

3.2 CHANGES IN ACCOUNTING POLICIES

The following new standards, interpretations and amendments, which are not yet effective and have not been adopted early in these financial statements, will or may have an effect on the Group's future financial statements:

3.2.1 IFRS 16

IFRS 16 'Leases' has an effective date for annual periods beginning on or after 1 January 2019. IFRS 16 results in lessees accounting for most leases within the scope of the Standard in a manner similar to the way in which finance leases are currently accounted for under IAS 17 'Leases'. Lessees will recognise a right of use asset and a corresponding financial liability on the balance sheet. The asset will be amortised over the length of the lease, and the financial liability measured at amortised cost. Lessor accounting remains substantially the same as under IAS 17. The Group will apply the Standard from its mandatory adoption date and will not restate comparative amounts for the first year prior to adoption. Right-of-use assets will be measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses). The Group will take exemptions in the standard for any low value or short term assets (12 months or less).

The Group has set up a project team which has reviewed the Group's leasing arrangements over the last year in the light of the new lease accounting rules under IFRS 16. The standard will affect primarily the accounting for the Group's Operating Leases.

As at the reporting date, the Group has non-cancellable Operating Leases of £33.6m Of these commitments, approximately £0.3m relate to short-term leases and low value leases which will be recognised on a straight-line basis as expense in the profit or loss.

For the remaining lease commitments, the Group expects to recognise right-of-use assets of approx. £32.6m and other lease liabilities of £0.7m. Liabilities will also increase by a similar amount.

The Group expects net profit after tax will decrease by approximately £0.4m for 2019 as a result of implementing the new rules. Adjusted Earnings Before tax will also decrease by the same amount.

The Group's activities as a lessor are not material and hence the Group does not expect any significant impact on the financial statements. However, some additional disclosures will be required from next year.

Details of our existing operating lease commitments are set out in note 28.

3.2.2 Other Standards

There are no other standards other than IFRS 16 that are expected to have a material impact on the Group's accounts.

3.3 Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

3.3.1 Principal estimates

· Fair value measurement of intangible assets acquired in business combination;

A number of assets and liabilities included in the Group's financial statements require measurement at, and/ or disclosure of, fair value. As there are no easily identifiable valuation methods for intangible assets such as customer relationships and technology assets, estimation is required in assessing the fair value when accounting for a business combination. The Group has recognised Goodwill and associated intangibles before amortisation of £25,743,000 (2017 - £13,240,000). This is disclosed in note 13.

· Estimated impairment of goodwill

The Group frequently tests whether goodwill has suffered any impairment. These calculations require the use of estimates, both in arriving at the expected future profitability of the entity and the application of a suitable discount rate in order to calculate the present value of these flows. As the impairment of goodwill is based on a future forecast, the Group has used a level of judgement around key assumptions of future cashflows greater than 12 months. An impairment charge of £1,845,000 arose on the Benfleet Forwarding Limited CGU during the course of 2018 year, resulting in the CGU being written down to it recoverable amount. Details of the impairment and Sensitivity of cashflows are disclosed in note 13.

· Trade receivables

In accordance with IFRS 9, the Group assesses whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument both due within one year and more than one year as at the reporting date with the risk of a default occurring on the trade receivable as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. The Group has trade receivables less provision for credit losses at the year-end of £50,659,000 (2017 - £45,035,000).

· Deferred Tax

Deferred tax assets have been recognised in relation to trading losses generated in the entities, these have been restricted to those instances where it is probable that taxable profit will be available against which the difference. The Group has recognised a deferred tax asset of £225,000 (2017 - £196,000) and a deferred tax liability of £2,204,000 (2017 - £1,209,000).

· Deferred Contingent Consideration

The Group believes that any deferred consideration payable to sellers who continue to be employed is not part of their remuneration package and forms part of the cost of investment. Amounts payable are irrespective of continued employment with the acquired Company or elsewhere within the Group. The classification is further determined based on a number of factors including the breakdown of the acquisition consideration and the level of remuneration payable to selling shareholder. The Group has deferred consideration of £3,498,000 (2017 - £3,506,000), part of which is due both within or more than one year.

4. REVENUE ANALYSIS BY COUNTRY

	2018	2017
	£'000	£'000
United Kingdom	70,210	32,147
Lithuania	47,759	36,167
Romania	31,397	25,739
Bulgaria	17,553	13,538
Serbia	6,813	4,971
Other	5,442	3,735
Total Income	179,174	116,297

The table below shows revenue by timing of transfer of goods and services :

4A) REVENUE FROM CONTRACTS WITH CUSTOMERS

	2018	2017
	£'000	£'000
Over a period of time	172,824	111,715
At a point in time	6,350	4,582
Total Income	179,174	116,297

4B) Contract Assets

	2018	2017
	£'000	£'000
At 1 January	1,273	667
Cumulative Catch-up	182	271
Excess of revenue recognised during the period	613	335
At 31 December	2,068	1,273

Contract assets are included within trade and other receivables on the face of the Statement of Financial Position.

By the nature of the Group's invoicing procedures, then the Group does not have any contract liabilities.

4C) Non Current Assets by Country

	2018	2017
	£'000	£'000
United Kingdom	23,448	12,948
Romania	3,462	3,531
Lithuania	68	91
Serbia	111	97
Bulgaria	88	54
Malta	51	5
Other	35	43
Total Non Current Assets	27,263	16,769

5. OTHER OPERATING INCOME

Other operating income arises mainly from sundry services executed by the Group, not being freight forwarding, warehousing or affinity services. Since this is not considered to be part of the main revenue generating activities, the

Group presents this income separately from revenue.

	2018	2017
	£'000	£'000
Recharges to Franchise members	658	437
Recovery of fines/penalties	51	138
Rental income	225	74
Other	1	9
Total	935	658

6. OPERATING PROFIT

	2018	2017
	£'000	£'000
Operating profit is stated after charging/(crediting)
Hire of plant and machinery	731	251
Rental payable under operating lease	5,877	2,255
Depreciation - owned assets	606	351
Depreciation - assets on hire purchase contracts	106	17
Amortisation of Intangible Assets¹	1,105	437
Impairment of Goodwill - Benfleet	1,845	-
Deferred Consideration write back and vendor income	(2,592)	-
Auditors' remuneration - audit	361	256
Auditors' remuneration - non audit	64	34
Loss on disposal of property, plant and equipment	13	8
Insurance	699	363
Property/Municipal Taxes	1,090	438
Legal Costs	247	308
Exceptional Items	318	912
Bad Debt Costs	1,053	599
Foreign exchange losses	15	107
Staff expenses	18,563	13,358
Other administration expenses	6,342	5,986
Total	36,443	25,680

1 Amortisation charges on the Group's intangible assets are recognised in the administrative expenses line item in the Consolidated Income Statement.

An analysis of audit and non audit remuneration is shown below

	2018	2017
	£'000	£'000
Audit and Audit Related Services
The audit of the Company and Group Financial Statements	126	106
The audit of the financial statements of Subsidiaries of the Group	187	121
Other assurance services	48	29
Total audit and audit related services	361	256

	2018	2017
	£'000	£'000
Non-audit services
Other Assurance Services	19	14
Services related to corporate finance transactions	34	20
Taxation Advice	11	-
Total non-audit related services	64	34

The amounts included in the above table relate to fees payable to BDO LLP and its associates.

7. EMPLOYEE BENEFIT EXPENSES

	2018	2017
	£'000	£'000
Employee benefit expenses (including directors) comprise:
Wages and salaries	15,930	11,075
Short-term non-monetary benefits	126	117
Share Based Payments	108	69
Defined contribution pension cost	173	158
Social security contributions and similar taxes	2,226	1,939
	18,563	13,358

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the Company.

	2018	2017
	£'000	£'000
Salary	1,046	782
Short-term non-monetary benefits	25	16
Share Based Payments	109	69
Defined contribution pension cost	8	1
	1,188	868

Directors remuneration

	2018	2017
	£'000	£'000
Salary	642	367
Other remuneration	18	12
Share Based Payments	26	10
Total	686	389

Other remuneration comprises of private family medical cover, and insurance benefits.

Total remuneration regarding the highest paid Director is as follows:

	2018	2017
	£'000	£'000
Total aggregate remuneration	331	191

The average number of employees (including directors) during the year was as follows:

	2018	2017
Freight Forwarding	403	313
Logistics	354	304
Other	145	70
Total	902	687

8. SEGMENTAL ANALYSIS

Types of services from which each reportable segment derives its revenues

In 2018 the Group had three main divisions: Transport Services, referred to as Affinity, Freight Forwarding, and Logistics & Warehousing. All revenue is derived from the provision of services.

· Freight Forwarding - This division is the core business and relates to the movement of freight goods across Europe. This division accounts for the largest proportion of the Group's business, generating 76% of its external revenues. (2017:80%)

· Affinity - This division is the Transport Service's arm of the Group. It focuses on the reselling of DKV fuel cards, leasing, ferry crossings and other associated transport related services. This division accounts for 4% of the Group's business in terms of revenue (2017:4%)

· Logistics & Warehousing - This division is involved in the warehousing and domestic distribution; it generates 20% of the Group's external revenues in 2018 (2017:16%).

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team comprising the Divisional COOs, the Chief Executive Officer and the Chief Financial Officer.

Measurement of operating segment profit or loss

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS.

Inter-segment sales are priced at market rates and at arm's length basis, along the same lines as sales to external customers. This policy was applied consistently throughout the current and prior period.

	Freight	Logistics &
	Forwarding	Warehousing	Affinity	Unallocated	Total
	2018	2018	2018	2018	2018
	£'000	£'000	£'000	£'000	£'000
Gross Billings	136,898	36,514	139,085	-	312,497
Less recoverable disbursements	-	-	(132,735)	-	(132,735)
Total revenue	136,898	36,514	6,350	-	179,762
Inter-segmental revenue	-	(588)	-	-	(588)
Total revenue from external customers	136,898	35,926	6,350	-	179,174
Depreciation & amortisation	(714)	(1,023)	(47)	(33)	(1,817)
Segment Profit (excluding exceptional items)	2,971	3,011	2,291	(1,779)	6,494
Share of Loss of Equity Accounted
Associate					(78)
Net Finance costs					(482)
Exceptional items					(318)
Profit before income tax					5,616

	Freight	Logistics &
	Forwarding	Warehousing	Affinity	Unallocated	Total
	2017	2017	2017	2017	2017
	£'000	£'000	£'000	£'000	£'000
Gross Billings	93,339	18,898	119,833	-	232,070
Less recoverable disbursements	-	-	(115,251)	-	(115,251)
Total revenue	93,339	18,898	4,582	-	116,819
Inter-segmental revenue	-	(522)	-	-	(522)
Total revenue from external customers	93,339	18,376	4,582	-	116,297
Depreciation & amortisation	(235)	(530)	(38)	(2)	(805)
Segment Profit (excluding exceptional items)	2,434	932	1,952	(1,317)	4,001
Net Finance costs					(653)
Exceptional items					(912)
Profit before income tax					2,436

9. NET FINANCE COSTS

	2018	2017
	£'000	£'000
Finance income:
Deposit account interest	29	12
Release of discount on Deferred Consideration	45	-
Interest Receivable on Benfleet Vendor Income	26	-
Total Finance Income	100	12
Finance costs:
Unwind of discount on Deferred Consideration	277	295
Bank loan interest	299	363
Finance lease interest	6	7
	582	665
Net finance costs	482	653

10. INCOME TAX

Analysis of tax expense

	2018	2017
	£'000	£'000
Current tax:
Tax on profits for the year	1,124	825
Adjustments in respect of prior periods	(28)	(17)
Total current tax payable	1,096	808
Deferred tax credit	(211)	(157)
Total tax expense in consolidated statement of profit or loss	885	651

The reconciling items for the difference between the actual tax charge for the year and the standard rate of corporation tax in UK (the ultimate parent company's tax residency) applied to profits for the year are as follows:

	2018	2017
	£'000	£'000
Profit before tax	5,616	2,436
UK Tax Charge at 19% (2017 - 19.25%)	77	85
Overseas Tax Charge	692	200
Expenses not deductible for tax purposes	338	404
Income not taxable	-	(15)
Movement in unrecognised deferred tax	(118)	109
Deferred tax asset not previously recognised	(29)	(82)
Adjustment in respect of prior periods	(28)	(17)
Other	(47)	(33)
Total tax expense	885	651

Deferred Tax

Assets - Arising from Trading losses	2018 £'000	2017 £'000
Balance as at 1 January	196	106
Movement in the year as a result of trading	29	90
Balance as at 31 December	225	196

	2018	2017
Liabilities	£'000	£'000
Balance as at 1 January	(1,209)	(332)
Recognised on the acquisition of Subsidiaries (note 33)	(1,172)	(958)
Release to P&L	182	67
Movement in Foreign Exchange	(5)	14
Balance as at 31 December	(2,204)	(1,209)

The deferred tax asset relates to losses carried forward at the rate of tax in the relevant jurisdiction.

The Group has potential deferred tax assets for trading losses totalling £932,000 (2017: £813,000) arising from certain subsidiaries across the Group. These assets have not been recognised due to insufficient certainty that the suitable profits will be generated in the foreseeable future.

The deferred tax liabilities relates to liabilities arising as part of the Group's acquisitions.

11. EARNINGS PER SHARE

	2018	2017
	'000	'000
Basic Weighted average number of shares	125,167	94,004
Potentially dilutive share options	1,650	324
Deferred Consideration on Acquisitions	1,952	-
Diluted Weighted average number of shares	128,796	94,328
	£'000	£'000
Profit for the year attributable to owners of the Group	4,421	1,540
Earnings pence per share - basic	3.53	1.64
Earnings pence per share - diluted	3.43	1.63
Profit for the year attributable to owners of the Group	4,421	1,540
Exceptional items (note 30)	318	912
Amortisation of intangible assets arising from acquisitions (note 13)	1,033	330
Unwind of discount in deferred consideration (note 9)	277	295
Add back of discount on deferred consideration (note 9)	(45)	-
Profit for the year attributable to owners of the Group excluding exceptional items	6,004	3,077
Earnings pence per share - basic excluding exceptional items	4.80	3.27
Earnings pence per share - diluted excluding exceptional items	4.66	3.26

12. DIVIDENDS

	2018	2017
	£'000	£'000
Final dividend of 0.84p (2017:0.64p) per Ordinary Share	750	-
Interim dividend of 0.42p (2017:0.35p) per Ordinary shares	573	350

The directors are recommending a final dividend of 0.84p per Ordinary shares (2017: 0.64p) per share totalling £1,123,000 (2017: £750,000) to be paid in August 2019 for the year. This dividend has not been accrued in the consolidated statement of Financial Position.

13. INTANGIBLE ASSETS

Group

			Customer	Technology
	Licences	Goodwill	Related	Related	Total
COST	£'000	£'000	£'000	£'000	£'000
At 1 January 2018	2,675	7,551	5,689	-	15,915
Additions	171	-	-	-	171
Acquired through Business Combination	-	5,625	6,387	510	12,522
Transfer Between Categories	19	-	(19)	-	-
Disposals	(7)	-	-	-	(7)
Exchange Differences	13	-	-	-	13
At 31 December 2018	2,871	13,176	12,057	510	28,614
AMORTISATION
At 1 January 2018	417	-	330	-	747
Charge for the Year	72	-	985	48	1,105
Impairment	-	1,845	-	-	1,845
Disposals	(7)	-	-	-	(7)
Exchange Differences	16	-	-	-	16
At 31 December 2018	498	1,845	1,315	48	3,706
NET BOOK VALUE
At 31 December 2018	2,373	11,331	10,742	462	24,908
At 1 January 2018	2,258	7,551	5,359	-	15,168
			Customer	Technology
	Licences	Goodwill	Related	Related	Total
COST	£'000	£'000	£'000	£'000	£'000
At 1 January 2017	2,453	682	-	-	3,135
Additions	30	-	17	-	47
Acquired through Business Combination	-	6,829	5,670	-	12,499
Disposals	(6)	-	-	-	(6)
Exchange Differences	198	40	2	-	240
At 31 December 2017	2,675	7,551	5,689	-	15,915
AMORTISATION
At 1 January 2017	243	-	-	-	243
Charge for the year	107	-	330	-	437
Disposals	(6)	-	-	-	(6)
Exchange differences	73	-	-	-	73
At 31 December 2017	417	-	330	-	747
NET BOOK VALUE
At 31 December 2017	2,258	7,551	5,359	-	15,168
At 1 January 2017	2,210	682	-	-	2,892

The goodwill included in the above note, relates to acquisition of Pallet Express Srl in January 2016, UK Buy in January 2017, Easy Managed Transport in March 2017, Benfleet Forwarding Limited in October 2017, Regional Express Limited in November 2017, Anglia Forwarding Group Limited in June 2018 and Import Services Limited in July 2018.

Annual test for impairment

The Group carries out its impairment tests annually in November as part of the budget process and all newly acquired entities are also reviewed for impairment at the balance sheet date.

Upon acquisition the goodwill and other intangibles are calculated at CGU level, these are then measured based on forecast cash flow projections, the first year of which is based on the CGU's current annual financial budget which has been approved by the board. The cash flow projections for years two to five have been derived based on growth rates that are considered to be in line with the market expectations.

The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.

In determining the future free cash flow, the main drivers have been revenue and EBIT margins, with margins remaining at expected levels.

The directors have reviewed the future profit and cash flow forecasts for the next five years and applying a discount rate of between 13.2%-16.2% to the cash flow projections when determining the net present value of these cash flows, it believes there is sufficient headroom in the value of the business to not have to impair the goodwill, with the exception of Benfleet Forwarding Limited.

Key assumptions used in the impairment calculations are as follows:

Entity	Impairment WACC %	Short term Revenue Growth Rate %	Long Term Revenue Growth Rates
Pallet Express Srl	13.2	6.5 to 17.8	3.0
Easy Managed Transport	15.2	1.2 to 9.7	2.0
Benfleet Forwarding	16.2	-5.1 to 8.0	2.5
Regional Express Limited	15.2	2.0	2.0
Ukbuy / Gerviva Fair	14.2	1.0	1.0
Anglia Group Forwarding Limited	13.3	3.3 to 5.0	2.5
Import Services Limited	13.3	3.5 to 15.4	5.0

Sensitivity to changes in key assumptions

Impairment testing is dependent on managements estimates ad judgements, particularly as they relate to the forecasting of future cashflows, the discount rates selected and expected long-term growth rates.

The Group has conducted sensitivity analysis on the impairment test of each of the CGU's classified within Continuing Operations. There is significant headroom on the carrying value of each CGU except for Benfleet Forwarding Limited (Benfleet) and Easy Managed Transport Limited (EMT). Given the headroom in the other CGU's, it would require a significant change in assumptions to an impairment charge and the level of change is considered unlikely. The Benfleet CGU has a carrying value of £1,562,000 and EMT has a carrying value of £2,258,000 and based on the following assumptions, the effect of a reasonably possible change in the assumptions is disclosed in the table below:

	Plan		Impact on
Benfleet	scenario	Change	Impairment £'000
Long term growth	4.73%	+/- 1%	499	(414)
Post tax discount rate	16.2%	+/- 1%	518	(430)
EBIT (£000s)	3,669	-10%		(1,300)
Average EBIT Margin	2.73%	+/- 1%	1,852	(1,852)

	Plan		Impact on
EMT	scenario	Change	Impairment £'000
Factor
Long term growth	1.67%	+/- 1%	612	(512)
Post tax discount rate	15.2%	+/- 1%	604	(505)
EBIT (£000s)	5,142	-10%		(1,687)
Average EBIT Margin	17.55%	+/- 1%	363	(363)

Benfleet Forwarding Limited

In October 2017, the Group acquired the entire issued share capital of Benfleet Forwarding Limited (part of the freight forward business unit). As a result of EU concerns over UK under-collection of duty on Chinese imports, HMRC changed the customs clearance processes being applied in the period. Consequently, Benfleet's Far Eastern customers began experiencing delays and incurring additional costs which resulted in those customers suspending sending containers to the UK. This impacted both the revenues and the profitability of Benfleet during the year. The Group therefore obtained legal and taxation advice on the situation and procedures undertaken, and the business re‑commenced in the second half of the year, albeit at significantly lower levels to that previously performed in 2017.

As a result of this reduced profitability, the Group has carried out an impairment review on Benfleet. Based on the

Board's expectations and projected future cash flows, the Group determined an impairment of £1,845,000 should be made against the goodwill capitalised upon the acquisition of Benfleet. The impairment charge has been recognised in administration expenses through the lncome Statement.

Benfleet have agreed to reimburse Xpediator a total of £2,100,000 from the original initial consideration paid, to be received by the earlier of the share price reaching 93 pence or December 2020. Both the release of the deferred consideration of £624,000 and the recognition of the receivable from the vendors of Benfleet with a fair value of

£1,995,000 have been recognised within administrative expenses in the lncome Statement. The overall net impact of impairment charge, release of previously recognised deferred consideration payable and recognition of receivable from vendors of £624,000 has been recognised as a credit to the lncome Statement. No other impairment losses have been recognised during the year.

The WACC of the Group has been calculated at a rate of between 13.22%-17.22% with each CGU being adjusted to take into consideration a specific Company premium risk factor.

The Goodwill by CGU is shown below:

	Value
Subsidiary Acquired	£'000
Pallex Express SRL	722
Easy Managed Transport Limited	2,258
Benfleet Forwarding Limited	1,562
Regional Express Limited	937
UK Buy	227
Anglia Forwarding Group Limited	662
Import Services Limited	4,963
Total	11,331

14. PROPERTY, PLANT AND EQUIPMENT

	Freehold	Fixtures	Motor	Computer
	property	and fittings	vehicles	equipment	Totals
Group	£'000	£'000	£'000	£'000	£'000
COST
At 1 January 2018	142	972	840	1,593	3,547
Additions	-	232	79	243	554
Additions acquired with subsidiary	61	708	43	103	915
Disposals	-	(24)	(72)	(28)	(124)
Exchange differences	1	7	5	8	21
At 31 December 2018	204	1,895	895	1,919	4,913
DEPRECIATION
At 1 January 2018	3	628	499	817	1,947
Charge for year	19	156	131	406	712
Eliminated on disposal	-	(15)	(66)	(30)	(111)
Exchange differences	-	2	3	5	10
At 31 December 2018	22	771	567	1,198	2,558
NET BOOK VALUE
At 31 December 2018	182	1,124	328	721	2,355
At 1 January 2018	139	344	341	776	1,600
	Freehold	Fixtures	Motor	Computer
	property	and fittings	vehicles	equipment	Totals
Group	£'000	£'000	£'000	£'000	£'000
COST
At 1 January 2017	122	921	759	1,058	2,860
Additions	2	165	224	380	771
Additions acquired with Subsidiary	15	30	19	9	73
Disposals	-	(2)	(176)	(19)	(197)
Exchange differences	3	12	14	11	40
Transfer Between Categories	-	(154)	-	154	-
At 31 December 2017	142	972	840	1,593	3,547
DEPRECIATION
At 1 January 2017	-	508	504	662	1,674
Charge for year	3	117	89	159	368
Eliminated on disposal	-	(2)	(103)	(12)	(117)
Exchange differences	-	5	9	8	22
At 31 December 2017	3	628	499	817	1,947
NET BOOK VALUE
At 31 December 2017	139	344	341	776	1,600
At 1 January 2017	122	413	255	396	1,186

The net book value of assets held under finance leases is £140,000 (2017: £86,000) and the depreciation charged in the year for these assets was £106,000 (2017:£17,000).

15. SUBSIDIARIES

The subsidiaries of Xpediator PLC, all of which have been included in these combined financial statements, are as follows:

			Proportion of	Proportion of
			ownership	ownership
	Registered	Country of	interest	interest
Name	Office	incorporation	2018	2017
Delamode Holdings Ltd	1	United Kingdom	100%	100%
Delamode Distribution UK Ltd	1	United Kingdom	51%	51%
Delamode PLC	1	United Kingdom	100%	100%
Delamode Property Ltd	1	United Kingdom	100%	100%
EshopWeDrop Limited	1	United Kingdom	100%	100%
Xpediator Services Limited	1	United Kingdom	100%	100%
Easy Managed Transport Limited	1	United Kingdom	100%	100%
Benfleet Forwarding Limited	1	United Kingdom	100%	100%
Regional Express Limited	1	United Kingdom	100%	100%
Import Services Limited	1	United Kingdom	100%	-
Anglia Forwarding Group Limited	1	United Kingdom	100%	-
Anglia Forwarding Limited	1	United Kingdom	100%	-
Traker International Limited	1	United Kingdom	100%	-
Affinity Transport Solutions Srl	2	Romania	100%	100%
Delamode Moldova Srl	3	Moldova	100%	100%
Delamode Bulgaria EOOD	4	Bulgaria	90%	90%
Delamode Balkans DOO	5	Serbia	100%	100%
Affinity Balkans DOO	6	Montenegro	100%	100%
Delamode Macedonia	7	Macedonia	100%	100%
Delamode Baltics UAB	8	Lithuania	80%	80%
Delamode Estonia OÜ	9	Estonia	80%	80%
Delamode Romania Srl	2	Romania	100%	100%
Affinity Leasing IFN	2	Romania	99.95%	99.95%
EshopweDrop Holdings	10	Malta	100%	100%
EshopweDrop Baltics	8	Lithuania	100%	100%
Delamode Group Limited	10	Malta	100%	100%
Delamode Group Holdings Limited	10	Malta	100%	100%
Pallet Express Srl	11	Romania	100%	100%
Eshop Romania	2	Romania	100%	100%
Pallex Hungary	12	Hungary	100%	100%

Delamode Group Holdings Limited, Easy Managed Transport Limited, Benfleet Forwarding Limited, Regional Express Limited, Import Services Limited and Anglia Group Forwarding Limited are the only Subsidiaries held directly by Xpediator PLC.

1 700 Avenue West, Skyline 120, Braintree, Essex, CM77 7AA, United Kingdom

2 Bd. Timisoara, nr 111-115 Sector 6, Bucharest, 061327, Romania

3 Bd. Moscova 21/5 of. 1011 MD-2068, Chisinau, Republic of Moldova

4 361 Tsarigradsko Shose Boulevard, 1582, Sofia, Bulgara

5 Bulevar, Mihajla Pupina, 115v, 11070, Belgrade, Serbia

6 Dzordza, Vasingtona 51/43, Podgorica, 81000, Montenegro

7 Stefan Jakimov Dedov 14/1 1, 1000 Skopje, Macedonia

8 Eiguliu G, 2 03150, Vilnius, Lithuania

9 Parnu mnt. 139/C-1 11317, Tallinn, Estonia

10 Europa Business Centre, Level 3 - Suite 701, Dun Karn Street Birkirkara BKR 9034, Malta

11 Stefan cel Mare street, no. 193, Sibiu, 550321, Romania

12 1141 Budapest Szuglo utcs 82, Hungary

16. NON-CONTROLLING INTERESTS

Non-Controlling interests held in the Group are as follows:

	2018	2017
Delamode Baltics UAB	20.0%	20.0%
Delamode Estonia OÜ	20.0%	20.0%
Delamode Bulgaria EOOD	10.0%	10.0%
Delamode Service Financare IFN	0.05%	0.05%
Delamode Distribution UK Limited	49.0%	49.0%

On 4 January 2017, the Group acquired 10.0% of the non-controlling interest in Delamode Baltics and its subsidiary Delamode Estonia OU for £209,000.

The summarised financial information in relation to Delamode Bulgaria and Delamode Baltics before intra-Group eliminations, is presented below together with amounts attributable to NCI:

	Delamode	Delamode
	Bulgaria	Baltics UAB
	£'000	£'000
Share Capital	1	6
Reserves	117	251
Total NCI b/f 2017	118	257
Non-Controlling Interest in Results for the Year	78	198
Non-Controlling Interest in Dividends for the Year	(55)	(72)
Non-Controlling Interest in Translation adjustment on Opening reserves	1	4
Non-Controlling Interest in Translation adjustment on Results for the Year	1	3
Total NCI c/f 2018	143	390

	Delamode Bulgaria		Delamode Baltics UAB
	2018	2017	2018	2017
	£'000	£'000	£'000	£'000
Revenue	18,223	13,991	47,875	36,795
Cost of sales	(15,925)	(12,233)	(42,018)	(32,770)
Gross profit	2,298	1,758	5,857	4,025
Administrative expenses	(1,443)	(967)	(4,798)	(3,252)
Other income	17	-	115	27
Operating profit	872	791	1,174	800
Finance costs	(1)	(1)	(10)	(9)
Profit before tax	871	790	1,164	791
Tax Expense	(88)	(79)	(172)	(122)
Profit after tax	783	711	992	669
Profit after tax attributable to non-controlling interests	78	71	198	134
	Delamode Bulgaria		Delamode Baltics UAB
	2018	2017	2018	2017
For the period to 31 December 2018	£'000	£'000	£'000	£'000
Assets:
Non-Current Trade and receivables	9	-	122	103
Property plant and equipment	88	53	60	84
Inventories	3	8	-	-
Trade and other debtors	3,640	2,996	8,567	7,823
Cash and cash equivalents	498	588	250	23
	4,238	3,645	8,999	8,033
Liabilities:
Trade and other payables	2,762	2,446	7,051	6,748
Loans and other borrowings	46	23	-	-
	2,808	2,469	7,051	6,748
Total Net Assets	1,430	1,176	1,948	1,285
Accumulated non-controlling interests	143	118	390	257

The NCI of all the other shareholders, that are not 100% owned by the Group are considered to be immaterial.

17. INVESTMENTS

	Other	Associate	Total
	Investment	Investment	Investment
COST	£'000	£'000	£'000
At 1 January 2018	1	-	1
Additions	-	60	60
At 31 December 2018	1	60	61
NET BOOK VALUE
At 31 December 2018	1	60	61
	Other	Associate	Total
	Investment	Investment	Investment
COST	£'000	£'000	£'000
At 1 January 2017	16	-	16
Disposals	(15)	-	(15)
At 31 December 2017	1	-	1
NET BOOK VALUE
At 31 December 2017	1	-	1

Investments represent investments in shares in unlisted companies.

Associate Investments

As part of the acquisition of Anglia Group Forwarding Limited (4 June 2018), the Group immediately disposed of 60% of the share capital of International Cargo Centre (ICC). As the Group now owns 40% of the voting shares and does not have control over Board decisions, then the Group has accounted for this as an associate.

The Group received consideration of £83,000 from the sale and made a profit on disposal of £nil.

The Group's share of the results, assets and liabilities of its share in ICC is as follows:

	2018	2017
	£'000	£'000
Revenue	188	-
Loss after tax	(78)	-
Non-current Assets	18	-
Current Assets	108	-
Total Assets	126	-
Current Liabilities	(167)	-
Share of Net Liabilities	(41)	-

The registered office of ICC is Blackwater Close, Fairview Industrial Park, Rainham, Essex, RM13 8UA.

Other Investments

The Group disposed of its unlisted investment in CWT Globelink on 4 August 2017 for cash consideration of £30,000.

18. INVENTORIES

	2018	2017
Group	£'000	£'000
Raw materials	58	50

19. TRADE AND OTHER RECEIVABLES

	2018	2017
Group	£'000	£'000
Current:
Trade Receivables	53,555	46,533
Less: provision for impairment of trade receivables	(2,896)	(1,498)
	50,659	45,035
Current Financial Assets	2,302	2,295
Prepayments and contract assets	2,570	2,401
Other receivables	4,779	2,075
Total	60,310	51,806
Non Current
Trade and other receivables	1,194	149

Trade receivables at 31 December 2016 were £26,746,000.

Current Financial Assets relate to the security deposits held by DKV on behalf of the Group which are refundable on termination of the agreement which can be served giving three month's notice hence they are classed as current assets.

Included with trade debtors is a balance due from Simplu Romania of £251,000 (2017 - £263,000). This debt is guaranteed by the Directors of Delamode Holdings BV (which include Stephen Blyth and Shaun Godfrey), who are a related party to the Xpediator Group.

Included within other receivables due within one year is an amount due of £840,000 (2017 - £nil) from the Vendors of Benfleet Forward Limited. In addition, there is a further £1,155,000 (2017 - £nil) included in trade and other receivables due in more than one year.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.

The expected loss rates are based on the Group's historical credit losses experienced. The historical loss rates are then adjusted for known legal and specific economic factors, including the credit worthiness and ability of the customer to settle the receivable.

The movements in the impairment allowance for trade receivables are as follows:

	2018	2017
Group	£'000	£'000
At 1 January	1,498	1,028
Increase during the year	1,311	777
Acquired from Acquisitions	623	-
Impairment losses reversed	(258)	(178)
Receivable written off during the year as uncollectible	(278)	(129)
At 31 December	2,896	1,498

At 31 December 2018, the lifetime expected loss provision for trade receivables and contract assets is as follows:

		More than	More than	More than
		30 Days	60 Days	90 Days
	Current	Past Due	Past Due	Past Due	Total
	£'000	£'000	£'000	£'000	£'000
Expected loss Rate	0.3%	3.1%	15.3%	58.6%
Gross Carrying Amount	45,934	4,018	1,590	4,081	55,623
Loss Provision	138	124	243	2,391	2,896

20. CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Cash and cash equivalents are stated net of bank overdrafts in the cash flow statement.

	2018	2017
Group	£'000	£'000
Bank accounts	9,647	7,385
Bank Overdrafts	-	(45)
	9,647	7,340

21. TRADE AND OTHER PAYABLES

	2018	2017
Group	£'000	£'000
Current:
Trade and other payables	47,154	42,110
Amounts owed to related parties	137	336
Social security and other taxes	2,222	1,650
Other creditors	4,610	5,514
Deferred Consideration	1,409	1,840
Accruals	1,949	1,363
Total Trade and other payables	57,481	52,813
Non Current
Deferred Consideration	2,089	1,666

The deferred consideration of £1,409,000 (2017 - £1,840,000) due within one year relates to the deferred consideration on the acquisitions of Easy Managed Transport Limited, Regional Express Limited, UK Buy and Anglia Forwarding Group Limited. Of this balance, £563,000 (2017 - £1,078,000) is contingent on performance related criteria.

The deferred consideration of £2,089,000 (2017 - £1,666,000) due in more than one year relates to the deferred consideration on the acquisitions of Anglia Forwarding Group Limited and Import Services Limited. Of this balance, £2,089,000 (2017 - £952,000) is contingent on performance related criteria.

22. LOANS AND BORROWINGS

	2018	2017
Group	£'000	£'000
Current:
Finance leases	102	43
Loans	626	289
Invoice discounting facility	3,024	2,213
	3,752	2,545
Non-current:
Finance Leases
Finance Leases 1-2 years	56	64
Finance Leases 2-5 Years	27	24
Loans - 1-2 years	315	651
Loans - 2-5 years	1,053	1,006
Loans due after 5 years repayable by instalments	1,197	1,564
	2,648	3,309

The Lloyds bank loan due after 5 years is due to be repaid by November 2026. Interest is being charged at a fixed rate of 6.4% and a variable rate of 1.1% above the Bank of England base rate.

The bank loan is guaranteed by the personal assets of some of the Directors and Key Management of the Group.

Included within the loans due within one year is an amount of £327,000 (2017 - £nil) due to Delamode Holdings BV, a related party of some of the Directors and Key Management of the Group.

Included within amounts due one to two years is an amount of £nil (2017 £327,000) due to Delamode Holdings BV.

The book value and fair value of loans and borrowings are as follows:

		2018	2017
Non-Current		£'000	£'000
Finance leases and Bank borrowings
‒	Secured	2,648	2,874
‒	Unsecured	-	435
		2,648	3,309
Current
Finance lease and Bank borrowings:
‒	Secured	3,425	2,502
‒	Unsecured	327	43
		3,752	2,545
Total loans and borrowings		6,400	5,854
Sterling		5,978	5,396
Other		422	458
		6,400	5,854

The Finance lease loans are secured against the assets on which the finance relates. Bank borrowings and overdrafts are secured by a fixed and floating charge over the Group's assets.

The movements in the finance leases and borrowings are as follows:

	2018	2017
Group	£'000	£'000
At 1 January	5,854	5,352
New finance lease and borrowings in the year	908	1,198
Finance leases and borrowings repaid during the year	(362)	(696)
At 31 December	6,400	5,854

23. PROVISIONS

Other provisions relate to an assessment of dilapidation of leasehold properties. In each instance, management have undertaken surveys to understand the work required to bring the leasehold properties back to their original condition.

All of these provisions are due to be settled in more than one year.

	2018	2017
	£'000	£'000
Balance at 1 January	-	-
Additions During the Year	1,523	-
Balance at 31 December	1,523	-

24. FINANCIAL INSTRUMENTS - RISK MANAGEMENT

The Group is exposed through its operations to the following financial risks:

· Credit risk

· Fair value or cash flow interest rate risk

· Foreign exchange risk

· Other market price risk, and

· Liquidity risk.

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

· Trade receivables

· Cash and cash equivalents

· Trade and other payables

· Bank overdrafts

· Floating-rate bank loans

· Fixed rate bank loans

· Bank loan

Financial instruments by category

Financial Assets at Amortised Costs
			2018	2017
			£'000	£'000
Cash and cash equivalents			9,647	7,385
Trade and other receivables			58,934	50,678
Total Financial Assets at amortised costs			68,581	58,063

Financial Liabilities	Fair value through profit and loss		Loans and other payables
	2018	2017	2018	2017
	£'000	£'000	£'000	£'000
Trade and other payables	-	-	53,850	49,323
Loans and Invoice	-	-	6,400	5,854
Discounting
Bank overdraft	-	-	-	45
Deferred consideration	846	1,476	2,652	2,030
Total Financial Liabilities	846	1,476	62,902	57,252

Financial instruments not measured at fair value

These include cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables approximates their fair value.

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk) credit risk and liquidity risk. The financial risks relate to the following financial instruments: cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings. The accounting policies with respect to these financial instruments are described above.

Risk management is carried out by the directors under policies approved at the AGM. The directors identify and evaluates financials risks in close co-operation with the Group's operating units. The directors provide principles for overall risk management.

The reports on the risk management are produced periodically to the key management personnel of the Group.

(a) Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, the most suitable bank in the local territory is selected.

A significant amount of cash is held with the following institutions:

	2018*	2018	2017
Cash at bank	Rating	£'000	£'000
Barclays Bank	A	1,117	2,656
Lloyds Bank	BBB+	1,773	182
Raiffeisenbank	BBB+	2,471	1,418
RBS	BBB-	1,135	319
HSBC	A	353	261
Bank of Transylvania	BB	28	232
Unicredit Bulbank	BBB	267	216
Hipotekarna Bank	NA	512	-
Other		793	571
Total		8,449	5,855

* Based on Standard & Poor Rating

	2018	2018	2017
Short term deposits	Rating	£'000	£'000
Lloyds Bank	BBB+	1,198	1,485
		2018	2017
Reconciliation of cash in bank and deposits to balance sheet		£'000	£'000
Cash at bank		8,449	5,855
Short term deposits		1,198	1,485
		9,647	7,340

(b) Market risk

(i) Price risk

Certain aspects of the commercial terms relating to the Affinity division are, directly linked to the commodity costs of fuel purchased by their clients at roadside fuelling stations across Europe. As such there is a risk arising from price changes relating to the fuel prices offered at the respective fuelling stations. In order to manage this risk the Group partially hedges the way it charges its commissions.

The table below shows the sensitivity analysis to possible changes in fuel prices to which the Group is exposed at the end of each year, with all other variables remaining constant. This arises due to the commercial arrangements the Affinity division has with its clients, whereby it will generate income in the form of commissions based on the value of fuel purchased by its clients.

	2018	2017
Petrol price risk effect on net profit sensitivity analysis:	£'000	£'000
Price increased by 10%	154	130
Price decreased by 10%	(154)	(130)

The Group is exposed to the market risk with respect to its operating income which is subject to changes in performance, exchange fluctuations and other market influences both economic and political. The directors manage this risk by reviewing on a regular basis market fluctuations arising on the Group's activities.

(ii) Cash flow and fair value interest rate risk

As the Group has no significant interest-bearing assets, its income and operating cash flows are substantially independent of changes in market interest rates.

The risk associated with interest-bearing debts is mitigated by utilising a mix of fixed and variable interest rate loans. The Group's cash flow and fair value interest rate risk is periodically monitored by the directors. The cash flow and fair value risk policy is approved by the directors.

Receivables and trade and other payables are interest free and have settlement dates within one year.

A sensitivity analysis is normally based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and change in some of the assumptions may be correlated - for example, change in exchange rates and change in market values.

(iii) Foreign exchange risk

Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the presentational currency of the Group. Foreign exchange risk also arises when individual companies enter into transactions denominated in a currency other than their functional currency. Certain assets of the Group comprise amounts denominated in foreign currencies. Similarly, the Group has financial liabilities denominated in foreign currency. In general, the Group seeks to maintain the financial assets and financial liabilities in each of the foreign currencies at a reasonably comparable level, thereby providing a natural hedge against foreign exchange risk.

				MLD	BGN	RSD	HUF	MKD
	GBP	Euro	RON	LEU	LEV	Dinar	Forints	Denar	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2018
Financial assets	24,868	31,799	6,409	102	3,892	1,297	18	196	68,581
Financial Liabilities	22,468	28,478	7,559	47	2,721	1,426	-	203	62,902
At 31 December 2017
Financial assets	15,580	28,185	9,218	131	3,413	1,337	18	181	58,063
Financial liabilities	18,386	28,678	6,054	33	2,363	1,461	39	238	57,252

An analysis of the Group's exposure to foreign exchange risk, illustrating the impact on the net financial assets of a 10% movement in each of the key currencies to which the Group is exposed, is shown below

	2018	2017
Foreign currency risk sensitivity analysis:	£'000	£'000
Euro
Strengthened by 10%	332	49
Weakened by 10%	(332)	(49)
Romanian Lei
Strengthened by 10%	(115)	316
Weakened by 10%	115	(316)
Moldavian Leu
Strengthened by 10%	6	10
Weakened by 10%	(6)	(10)
Serbian Dinar
Strengthened by 10%	(13)	(12)
Weakened by 10%	13	12
Bulgarian Lev
Strengthened by 10%	117	105
Weakened by 10%	(117)	(105)
Macedonian Denar
Strengthened by 10%	(1)	6
Weakened by 10%	1	(6)

Prudent liquidity risk management implies maintaining sufficient cash flow for operations. The Group manages its' risk to shortage of funds by monitoring forecast and actual cash flows.

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, invoice discounting and long term loan finance.

		Between	Between
	Up to	1 and 2	2 and 5	Over
	12 months	years	Years	5 years
At 31 December 2018	£'000	£'000	£'000	£'000
Trade and other payables	53,850	-	-	-
Loans & Invoice Discounting	3,752	371	1,080	1,197
Deferred consideration	1,409	2,089	-	-
Total	59,011	2,460	1,080	1,197
		Between	Between
	Up to	1 and 2	2 and 5	Over
	12 months	years	Years	5 years
At 31 December 2017	£'000	£'000	£'000	£'000
Trade and other payables	49,323	-	-	-
Loans & Invoice Discounting	2,545	715	1,030	1,564
Overdraft	45	-	-	-
Deferred Consideration	1,840	1,666	-	-
Total	53,753	2,381	1,030	1,564

25. CALLED UP SHARE CAPITAL

	2018	2018	2017	2017
Ordinary Shares of £0.05 each	Number	£000s	Number	£000s
At the beginning of the year	117,431,144	5,872	80,000,000	4,000
Issued During the Year	16,282,460	814	37,431,144	1,872
At the end of the year	133,713,604	6,686	117,431,144	5,872
50,000 deferred shares of £1.00 each	50,000	50	50,000	50
At the end of the year	133,763,604	6,736	117,481,144	5,922

On 8 June 2018, the Company issued 1,727,694 Ordinary Shares of £0.05 each in the Company as part of the agreed deferred consideration for the acquisition of Easy Managed Transport Limited. The total value of this transaction was £1,074,625, which was settled by the issuance of the new shares.

On 11 July 2018, the Group raised a further £7,000,000 before expenses by issuing an additional 10,000,000 Ordinary Shares of £0.05 each in the Company. Costs of £424,000 have been taken to the share premium reserve. Following this fund raising, the Group acquired lmport Services limited a contract logistics and warehousing business based in Southampton, UK. A further 3,740,648 (which equated to consideration of £3,000,000) Ordinary Shares of £0.05 each were issued as part of this transaction.

On 10 September 2018, 729,167 Ordinary Shares were issued to Dana Antohi as she exercised her options. The exercise price of this option was £0.05.

On 31 December 2018, the Company issued 84,951 Ordinary Shares of £0.05 each in the Company as part of the agreed deferred consideration for the acquisition of Regional Express Limited. The total value of this transaction was £35,000 which was settled by the issuance of the new shares.

Shares Issued During 2017

On 25 May 2017, the Company entered into a share swap agreement whereby the ultimate beneficiaries of Delamode Group Holding Limited swapped their shares in Delamode Group Holding Limited for shares in Xpediator Plc. This created 4,000,000 Ordinary Shares of £1.00 being issued to the shareholders of the Company.

On the 7 August 2017 these shares were converted into 80,000,000 Ordinary Shares of £0.05 each.

On the 11 August 2017, the Company issued 20,833,333 of £0.05 Ordinary Shares following the listing on the Alternative Investment Market. The Company raised Gross Proceeds of £5,000,000 to assist with further acquisitions. Costs of £421,000 have been taken to the share premium reserve.

On 25 October 2017, the Company issued 9,219,858 of £0.05 Ordinary Shares (market value of £2,600,000) shares to the shareholders' of Benfleet Forwarding Limited as part of the consideration for the acquisition of the Company.

On 3 November 2017, the Company issued 377,953 of £0.05 Ordinary Shares (market value of £120,000) to the shareholders' of Regional Express Limited as part of the consideration for the acquisition of the Company.

On the 30 November 2017, the Company issued a further 7,000,000 £0.05 shares following an addition round of funding. The Company raised gross proceeds of £2,800,000 to assist with further acquisitions and working capital requirements. Costs of £195,000 have been taken to the share premium reserve.

The deferred shares are non-voting shares and have no rights to any distribution or dividend payments.

26. RESERVE DESCRIPTION AND PURPOSE

Retained earnings: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

Translation reserve: represents the difference arising on the translation of the net assets and results of subsidiaries into the presentation currency.

Merger Reserves: represents the difference between the nominal value of consideration paid for shares acquired in entities under common control and the nominal value of those shares. This arises as a result of the business combination falling outside the scope of IFRS 3 and merger accounting being applied in place of acquisition accounting. In addition, the premium on the fair value in excess of the nominal value of shares issued in consideration of business combinations is credited to the merger reserve.

Share premium is the amount subscribed for share capital in excess of nominal value.

Equity reserve represents the cost of the share options granted that have not yet been exercised.

27. SHARE-BASED PAYMENTS

The Company has granted Directors' and key management share option plans. These are unapproved schemes so they do not satisfy the requirements of schedule 4, ITEPA. A summary of the options plans is shown below. All options will vest between 1 to less than 4 years.

Name	Share Option No	Option Price £	Vesting Period	Expiry Date
Alex Borrelli	416,667	0.24	May 2019	May 2019¹
Geoff Gillo	208,333	0.24	May 2019	May 2019¹
SP Angel	55,250	0.24	July 2022	August 2022
Stephen Blyth - Tranche 1	214,286	0.70	November 2018	December 2021
Stephen Blyth - Tranche 2	214,286	0.70	May 2019	December 2021²
Stephen Blyth - Tranche 3	214,286	0.70	May 2020	December 2021³
Stephen Blyth - Tranche 4	214,285	0.70	May 2021	December 2021⁴
Stuart Howard - Tranche 1	160,714	0.70	November 2018	December 2021
Stuart Howard - Tranche 2	160,714	0.70	May 2019	December 2021²
Stuart Howard - Tranche 3	160,714	0.70	May 2020	December 2021³
Stuart Howard - Tranche 4	160,715	0.70	May 2021	December 2021⁴

1. The expiry date is 10 days after the approval of the Group's consolidated audited accounts for the year ending 31 December 2018.

2. Options can be exercised immediately following the Company's AGM in 2019.

3. Options can be exercised immediately following the Company's AGM in 2020.

4. Options can be exercised immediately following the Company's AGM in 2021.

On 26 November 2018, the Company granted options over 857,143 Ordinary Shares (Stephen Blyth) and 642,857 Ordinary shares (Stuart Howard). These are split into four tranches. Tranche 1 (375,000 Ordinary Shares) are exercisable from November 2018 and have an expiry date of 31 December 2021. The options may only be exercised in whole and not part. There are no other vesting conditions.

Tranche 2 (375,000 Ordinary Shares) are exercisable from May 2019 and have an expiry date of 31 December 2021. The options may only be exercised in whole and not part. The Options are conditional on earnings per share of the Company increasing 10 per cent (or more) for the year ending 31 December 2018 compared with the prior year.

Tranche 3 (375,000 Ordinary Shares) are exercisable from May 2020 and have an expiry date of 31 December 2021. The options may only be exercised in whole and not part. The Options are conditional on earnings per share of the Company increasing 10 per cent (or more) for the year ending 31 December 2019 compared with the prior year.

Tranche 4 (375,000 Ordinary Shares) are exercisable from May 2021 and have an expiry date of 31 December 2021. The options may only be exercised in whole and not part. The Options are conditional on earnings per share of the Company increasing 10 per cent (or more) for the year ending 31 December 2020 compared with the prior year.

The exercise price of all the Share Options is £0.70.

On 10 September 2018 729,167 Ordinary Shares were issued to Dana Antohi as she exercised her options. The exercise price of this option was £0.05. The share price at the time of issue of these shares was £0.66.

On 11 August 2017, the Company has granted share options to the non-executive directors over 416,667 Ordinary Shares (Alex Borrelli) and 208,333 Ordinary Shares (Geoff Gillo). The options may only be exercised in whole and not part and exercise of the options are conditional on the earnings per share of the Company in each of the two years ending 31 December 2017 and 31 December 2018 increasing by 10 per cent. or more on the previous year. For Alex Borrelli, the options are also conditional on him being a director of the Company on the date that the consolidated audited accounts of the Company for the year ending 31 December 2018 are published and for Geoff Gillo, on him being a non-executive director of the Company on such date. The exercise price of the options is the Placing Price. (£0.24)

The Company has also granted to SP Angel warrants to subscribe for 55,250 Ordinary Shares at the Placing Price, £0.24, exercisable at any time during the period of five years from Admission.

Options will normally lapse on cessation of employment. However, exercise is permitted for a limited period following cessation of employment for specified reasons, such as redundancy, retirement, ill-health, and, in other circumstances, at the discretion of the Remuneration Committee.

The movements in share options are as follows:

	2018	2017
	No	No
At 1 January	1,409,417	-
Share Options Granted during the year	1,500,000	1,409,417
Share Options Exercised During the Year	(729,167)	-
At 31 December	2,180,250	1,409,417
Weighted Average Share Price of Options	£0.35	£0.24
Weighted Average Grant Fair Value	£0.04	£0.05
Weighted Average Contractual Life	14 Months	11 Months
Exercise Price	£0.24 to	£0.05 to
	£0.70	£0.24

The weighted average grant fair value during the year was 2018 £0.04 (2017 - £0.125) per option. The outstanding options have a weighted average contractual life of 14 months, and exercise price between £0.24 and £0.70.

Options were valued using the Black-Scholes option pricing model. No performance conditions were included in the fair value calculations. Expected dividends are not incorporated into the fair value calculations. The fair value per option granted and the assumptions used in the calculations are as follows;

	2018	2017
Risk Free Investment	1.55%	1.97%
Expected Life	31 Months	18 months
Expected Volatility	50.72%	43.63%

Weighted Average Share Price

For 2018 options granted, a volatility of 50.72% (2017 - 43.63%) has been used reflecting the historical based on share transactions since listing. The maximum vesting period was used as a basis to determine the expected life of the option. The risk-free rate was based on the Government Gilts rates in effect at the time of the grant.

The Group recognised total expenses of £109,000 (2017 - £69,000) relating to equity-settled share-based payments.

28. LEASES

The Group utilises finance leases and hire purchase agreements to acquire property, plant and equipment. Future minimum amounts repayable are shown below:

	2018	2017
	£'000	£'000
Hire purchase contracts
Gross obligations repayable:
Within one year	106	48
Between one and five years	87	92
	193	140
Finance charges repayable:
Within one year	4	5
Between one and five years	4	4
	8	9
Net obligations repayable:
Within one year	102	43
Between one and five years	83	88
	185	131
Net obligations included within:
Current liabilities	102	43
Non-current Liabilities	83	88
	185	131

Operating leases - lessee

In addition to finance leases the Group has various operating leases which are shown below. The ownership of the operating leases will not pass to the lessee at the end of the agreement.

Operating lease commitments represents rental payable for certain of its office properties and assets such as motor vehicles, office equipment and forklift trucks.

The total future value of minimum lease payments is due as follows:

	2018	2017
	£'000	£'000
Non-cancellable operating leases - Non-Property
Within one year	664	285
Between one and five years	1,217	559
In more than five years	8	7
	1,889	851
Non-cancellable operating leases - Property Payable
Within one year	5,796	1,956
Between one and five years	20,625	6,446
In more than five years	5,313	2,855
	31,734	11,257

	2018	2017
	£'000	£'000
Minimum lease payments Receivable
Not later than one year	106	37
Later than one year and not later than five years	61	43
Later than five years	-	-
	167	80

The Group have reviewed the operating lease commitment disclosure to promote comparability and consistency with the measurement of lease liabilities under IFRS16, which will be adopted in the following financial period.

29. RELATED PARTY TRANSACTIONS

Delamode Holding BV, is indirectly owned by Shaun Godfrey, Sandu Grigore, and Cogels Investments Limited all of whom are shareholders of Xpediator PLC.

Delamode International Kft, Delamode Hungary, Kft and Delamode Consulting Srl are all subsidiaries of Delamode Holding BV.

Delamode Properitati Srl, a Company owned by Delamode Holding BV, is the landlord of one of the Group's leasehold properties in Romania. Rent payable under the current lease is at market rates. Shaun Godfrey, Sandu Grigore and Cogels Investment Limited are shareholders of Xpediator PLC.

Shaun Godfrey is key management personel of Xpediator PLC and Stephen Blyth is a Director of both Xpediator PLC and COGELs Investment Limited.

During the year Group companies entered into the following transactions with related parties who are not members of the Group.

		Sales		Purchases	Amounts owed by		Amounts owed to
	2018	2017	2018	2017	2018	2017	2018	2017
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Related Party
Delamode Holding BV	-	55	-	-	55	55	446	646
Delamode Propretati, Srl	3	3	-	315	7	9	2	2
Delamode Hungary Kft	-	-	-	-	50	21	16	15
Companies in which directors or their immediate family have a significant controlling interest
Affinity Group Limited	-	2	-	-	45	43	-	-
COGELs Investment Ltd	-	-	-	-	237	235	-	-
Borelli Capital Limited	-	-	13	-	-	-	-	-
Directors
Shaun Godfrey	-	14	-	14	1		-	14
Richard Myson	-	1	-	-	-	-	1	1
Sandu Grigore	-	-	-	-	-	-	-	-
Stephen Blyth	13	-	-	-	-	-	-	-

The maximum amount owed to the Group by the directors at any time during the year was as follows;

	2018	2017
	£'000	£'000
Affinity Group Limited	45	45
COGELs Investment Ltd	237	243
Shaun Godfrey	14	31
Richard Myson	-	1
Sandu Grigore	-	2
Stephen Blyth	13	-
Borelli Capital Limited	13	-

Details of directors' remuneration and the remuneration of Key Management Personnel are given in note 7.

At 31 December 2018, the bonuses payable to Stephen Blyth of £75,000 (2017 - £nil) and Stuart Howard of £37,500 (2017 - £nil) were accrued within these financial statements, and are due to be paid in April 2019.

All related party transactions were made at an arm's length basis.

Delamode (SW) Limited

On the 1 June 2018, Delamode Holdings Limited entered into a franchise agreement with Delamode (SW) Limited (SW), with Shaun Godfrey acting as a Director for both Companies and part of key management of Xpediator PLC. The Group provides certain administrative functions on behalf of DSW and charges a fee at an agreed rate and under the franchise agreement is entitled to a share of the profits in SW. Included within the Group's Consolidated Income Statement is a management fee for the administrative functions and profit share of from DSW of £20,000.

At the year-end, the Group is owed is £89,000 from DSW. All transactions were made at an arm's length basis.

30. EXCEPTIONAL ITEMS

The Group has incurred costs of £318,000 (2017 - £240,000) relating to the acquisitions of Anglia Group Forwarding Limited and Import Services Limited. These costs relate to external accountancy, legal support, professional fees and stamp duty payable to local tax authorities.

As a result of the Group's decision to seek admission to the Alternative Investment Market in the UK, it incurred costs for legal and consultancy fees relating this process of £nil (2017 - £672,000). These costs relate to external accountancy, legal support and corporate advisors and are non-recurring.

31. SUBSEQUENT EVENTS

There are no subsequent events that impact the Group's Financial Statements.

32. NATURE OF LEASES

The Group leases a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation or and in others to be reset periodically to market rental rates. In some jurisdictions property leases the periodic rent is fixed over the lease term.

The group also leases certain items of plant and equipment. In some contracts for services with distributors, those contracts contain a lease of vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.

The percentages in the table below reflect the current proportions of lease payments that are either fixed or variable.

The sensitivity reflects the impact on the carrying amount of lease liabilities and right-of-use assets if there was an uplift of 5% on the balance sheet date to lease payments that are variable.

	Lease	Fixed	Variable
	Contract	Payments	Payments	Sensitivity
	Number	%	%	£'000
Property Leases with payments linked to inflation	3	-	4%	655
Property Leases with Fixed Payments	23	33%	-	-
Leases of Plant & Equipment	17	25%	-	-
Vehicle Leases	26	38%	-	-
	69	96%	4%	655

33. BUSINESS COMBINATIONS

Anglia Forwarding Group Limited

On 4 June 2018, the Group acquired 100% of the issued share capital of Anglia Forwarding Group Limited (Anglia), an international freight forwarding and courier business.

The total consideration payable comprised cash on completion of £1,500,000 and a final Cash sum equal to £431,000 based on the net working capital adjustment on completion earn-out payments payable over two years. The deferred consideration is calculated as follows, both of which are subject to a maximum aggregate payment of £2,000,000:

· 50% of 5 times Anglia's operating profit before tax less target profit of £750,000 in respect of the First Earn-Out Year, with an amount not greater than £1,000,000.

· 50% of 5 times the Company's operating profit before tax less target profit of £750,000 in respect of the Second Earn-Out Year, with an amount not greater than £1,000,000.

Fair Value assessment

As part of the fair value assessment of the Intangible assets of Anglia, it was identified that the only intangible asset category to apply, is the customer related intangible assets. The fair value calculation of customer related intangible asset was determined by using the income approach based on the expected future cash flows. This was then discounted to determine the present value.

The weighted average cost of capital used in determining the present value, was 12.0%, which reflected the business and market risks factors.

The outcome of the fair value calculation was to derive a customer related intangible asset with a value of £938,000.

Economic useful life

Based on these factors, it was concluded that the useful economic life for customer relationships in relation to Anglia would be up to 10 years.

Deferred tax

As a result of the creation of the customer related intangible asset, there is a deferred tax liability, which was calculated as the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was used as to determine this. This resulted in a deferred tax liability of £159,000.

Deferred Consideration

The deferred consideration consists of the

· payment relating to the earn out period and;

· amount by which the Completion Net Asset exceeds Target Net Assets

In determining the present value of the earn out payment, the first payment which is due in May 2019 was calculated using a cost of capital of 12.0%.

Using the forecasted results for the respective periods the present value of the deferred consideration relating to the earn out was calculated to be £797,000.

Acquisition costs of £72,000 have been expensed to the income statement and are shown as part of the exceptional expenses.

Goodwill

When determining the goodwill arising on the acquisition the following calculations were used.

Purchase Consideration	£'000
Initial Consideration	1,500
Net Cash on Completion	431
Sale Proceeds from International Cargo Centre	85
P.V. of Deferred Consideration	797
Total Consideration for Equity	2,813
Allocation of Assets and Liabilities Acquired
Intangible Assets
Customer-related Intangible Assets	938
Other Assets
Trade Receivables	2,455
Other Receivables	710
Cash	431
Fixed Assets	177
Non-Current Assets	113
Liabilities
Trade Payables	(2,108)
Other Payables	(406)
Deferred Tax Liability for Intangible Assets	(159)
Goodwill	662

The goodwill recognised will not be deductible for tax purposes.

Since the acquisition, Anglia has contributed £8,676,000 to Group revenue and £360,000 to Group Profit. Had Anglia been part of the Group for the full year, it would have contributed full year revenue £13,964,000 and full year profit before tax of £508,000.

International Cargo Centre (ICC)

As part of the acquisition of Anglia, the Group disposed of 60% of the share capital of ICC on 4 June 2018. As the Group now owns 40% of the voting shares and does not have control over Board decisions, then the Group will account for this as an associate.

Anglia Forwarding Group received consideration of £83,000 from the sale and made a profit on disposal of £nil.

Import Services Limited

On 13 July 2018, the Group acquired 100% of the issued share capital of Import Services Limited (ISL) an international port-centric logistics Company. As ISL is based in Southampton, the Company is close to Britain's second largest deep-sea terminal and the first port of call for inbound container ships from the Far East and the USA into Northern Europe.

The principal reason for this acquisition was to enable the Group to enhance their warehousing and distribution services and to allow good cross-selling opportunities. The total consideration payable comprised cash on completion of £6,000,000, share based consideration of £3,000,000, Cash at completion equal to £5,773,000, a net working capital adjustment of £572,000 and two earn-out payments payable over two years. The deferred consideration is calculated as follows, both of which are subject to a maximum aggregate payment of £3,000,000:

· An amount equal to the amount by which the aggregate value of the Xpediator Shares is less than £4,500,000 on 30th April 2020. The maximum Additional Consideration shall not be greater than £1,500,000.

· If the Earnings Before Tax (EBT) is greater than the Target EBT (£1,462,500), £1,500,000 shall be payable. If EBT is less than the target EBT, the Earn Out payment shall be reduced by an amount by which EBT is less than the Target EBT multiplied by 3. If the aggregate value of the Xpediator Shares is equal or greater than £6,000,000 for a period of 90 consecutive days between the Completion Date and 30 April 2020, the additional Consideration and Earn Out Payment shall be deemed paid, and no payment will be made to the seller.

Fair Value assessment

As part of the fair value assessment of the Intangible assets of ISL, a Customer related and technology based intangible asset were identified. The fair value calculation of customer related intangible asset was determined by using the income approach based on the expected future cash flows. This was then discounted to determine the present value. The technology asset has been valued using the replacement cost approach. The valuation attempts to capture the effort required to develop similar technology at the valuation date. The weighted average cost of capital used in determining the present value, was 13.0%, which reflected the business and market risks factors. The outcome of the fair value calculation was to derive a customer related intangible asset with a value of £5,449,000 and a technology based asset of £510,000.

Economic useful life

When determining the economic useful life of the customer relationships the historical length of relationships with existing customers and those reported by listed companies in the sector was considered as well as an annual attrition rate of 7.0%. Based on these factors, it was concluded that the useful economic life for customer relationships in relation to ISL would be up to 12 years. For the technology based asset, a useful economic life of 5 years has been used, based on the pace of technological change in the sector.

Deferred tax

As a result of the creation of these intangible assets, there is a deferred tax liability, which was calculated as the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was used as to determine this. This resulted in a deferred tax liability of £1,013,000.

Deferred Consideration

The deferred consideration consists of the

· payment relating to the earn out period and;

· amount by which the Completion Net Asset exceeds Target Net Assets and is dependent on the future share price of the Xpediator shares.

In determining the present value of the earn out payment, the first payment which is due in May 2020 was calculated using a cost of capital of 13.0%.

Using the forecasted results for the respective periods the present value of the deferred consideration relating to the earn out was calculated to be £1,583,000.

Acquisition costs of £246,000 have been expensed to the income statement and are shown as part of the exceptional expenses.

Goodwill

When determining the goodwill arising on the acquisition the following calculations were used.

Purchase Consideration	£'000
Initial Consideration - cash paid	6,000
Initial Consideration - Shares	3,000
Initial Consideration - Cash in the business at acquisition	5,773
Net Working Capital Adjustment	572
P.V. of Deferred Consideration	1,583
Total Consideration for Equity	16,928
Allocation of Assets and Liabilities Acquired
Intangible Assets
Customer-related Intangible Assets	5,449
Technology-related Intangible Assets	510
Other Assets
Inventories	13
Trade Receivables	2,584
Other Receivables	7,619
Cash	1,605
Fixed Assets	727
Liabilities
Trade Payables	(1,874)
Other Creditors	(2,061)
Finance Lease Creditors due within one year	(100)
Finance Lease Creditors due more than one year	(41)
Provisions	(1,453)
Deferred Tax Liability for Intangible Assets	(1,013)
Goodwill	4,963

The goodwill recognised will not be deductible for tax purposes.

Since the acquisition, ISL has contributed £12,754,000 to Group revenue and £1,749,000 to Group Profit.

Had ISL been part of the Group for the full year, it would have contributed full year revenue £22,273,000 and full year profit before tax of £2,545,000.

Benfleet Forwarding Limited

In October 2017, the Group acquired the entire issued share capital of Benfleet Forwarding Limited (Benfleet). As a result of EU concerns over UK under-collection of duty on Chinese imports, HMRC changed the customs clearance processes being applied in the period. Consequently, Benfleet's Far Eastern customers began experiencing delays and incurring additional costs which resulted in those customers suspending sending containers to the UK. This impacted both the revenues and the profitability of Benfleet during the year. The Group therefore obtained legal and taxation advice on the situation and procedures undertaken, and the business re-commenced in the second half of the year, albeit at significantly lower levels to that previously performed in 2017.

As a result of this reduced profitability, the Group has carried out an impairment review on Benfleet. Based on the Board's expectations and projected future cash flows, the Group determined an impairment of £1,845,000 should be made against the goodwill capitalised upon the acquisition of Benfleet.

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

FR DGGDSBUDBGCI

Companies

Xpediator (XPD)

Thursday, 21st November 2024

COMPANIES COVERED:

HLMA JD. ITH

JD Sports tanks after management tighten profit guidance towards the lower end of expectations, Halma finds support from strong earnings and capital return commitment cheers shareholders in Ithica Energy.

Full Archive

UK 100

Latest directors dealings

8 minutes ago Eneraqua Technologies
10 minutes ago Mountview Estates
19 minutes ago Thungela Resources Limited NPV (DI)
1 hour ago Johnson Matthey
3 hours ago ASOS

All directors dealings today