REG - Xpediator PLC - Half-year Report <Origin Href="QuoteRef">XPD.L</Origin> - Part 1

XpediatorAnnouncement

25/09/2017 07:06

RNS Number : 6323R
Xpediator PLC
25 September 2017
The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
XPEDIATOR PLC
("Xpediator" or "the Company" or "the Group")
INTERIM RESULTS
FOR THE SIX MONTHS TO 30 JUNE 2017
Xpediator Plc (AIM: XPD) a leading provider of freight management services across the UK and Europe, is pleased to announce its unaudited interim results for the six months ended 30 June 2017.
Significant uplift in revenue and profits for H1 2017
 56% increase in revenue to 49.1 million (H1 2016: 31.5 million) driven by organic growth across all activities, contribution from EMT and increased focus by the Freight Forwarding division on full load deliveries
 24% increase in adjusted operating profit to 1.3 million (H1 2016: 1.1 million)*
 Profit after tax increased to 0.53 million (H1 2016: 0.16 million)
 Adjusted earnings per share increased to 0.90p (H1 2016: 0.46p)*
 Interim dividend of 0.347p per share totalling 350k
* Adjustment for one-off costs incurred, being Group restructuring and IPO costs totalling 331,000 for the six month period to June 2017 and 458,000 for the same period in 2016. The 2016 full year figures include a cost of 654,000 relating to these non-trading expenses.
Good growth across all three divisions
Freight Forwarding
 Reflecting the switch to full load focus, revenues from Freight Forwarding increased by 55% 
 Marked organic growth in trading across the Balkan regions
 B2C e-commerce brand EshopWedrop developing well, set for further expansion via franchise
Transport Services
 Generated from the core DKV fuel card product, revenues from this division increased by 39% 
 Growth was driven by increased demand for fuel cards, particularly under the Affinity Lite offering
Logistics & Warehousing
 Strong performance from Pall-Ex and EMT helped increase revenues by 64%
 Strong volumes from Pall-Ex Romania achieving in excess of 40,000 pallets of freight per month and next Pall-Ex franchise expected to commence in Q4
 Opened 10th Romanian warehouse facility in Bucharest in April,
 Successful integration of EMT, acquired in March 2017, has enabled the transfer of all international fashion transport to be consolidated into EMT's Beckton facility and an increase Group capacity
Positive outlook for 2017 H2 and beyond
 Trading has continued positively in the second half
 Negotiations and due diligence with principal acquisition targets progressing well
Alex Borrelli, Chairman, commented: 
"We are pleased to have successfully raised a net 4 million pursuant to the Group's AIM listing in August and we welcome our new shareholders. The business is progressing well, like-for-like revenues have increased substantially and all divisions continue to prosper with strong organic growth.
"We have a strategy to grow through developing our existing core activities and by acquisition of complementary businesses that also potentially add new geographic territories, enhance our current base of customers and/or add new services. We are in advanced discussions with certain target companies, as noted in the Company's Admission Document, which if acquired should provide synergies and cross-selling opportunities as well as being earnings enhancing.
"Following the positive start to the year, the Board is pleased to announce its interim dividend in line with our progressive dividend policy and we remain confident in the outlook for our full year results for 2017."
Enquiries 
Xpediator Plc
+44 (0) 3300432395
Stephen Blyth, Chief Executive Officer
SP Angel Corporate Finance LLP (Nomad and Joint Broker)
+44 (0) 20 3470 0470
Jeff Keating
Caroline Rowe
Cantor Fitzgerald Europe (Joint Broker)
+44 (0) 20 7894 7000
David Foreman, 
Callum Butterfield (Corporate Finance)
Mark Westcott, Alex Pollen (Sales) 
Novella
+44 (0) 20 3151 7008
Tim Robertson
Toby Andrews
For more information visit:www.xpediator.com
XPEDIATOR PLC 
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2017
CEO Statement
Introduction
I am pleased to present Xpediator's maiden results as a public company for the six months to 30 June 2017. We have made good progress in the first half of the year with all our key divisions showing positive revenue and profit growth.
Xpediator is an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a particular focus on, and expertise in, Central and Eastern European ("CEE") countries.
The Group has three main business areas: Freight Forwarding; Transport Services; and Logistics & Warehousing. The Group employs over 600 people, with operational headquarters in Braintree, Essex, and country offices in Bulgaria, Lithuania, Estonia, Macedonia, Montenegro, Moldova, Romania and Serbia operating across a total of 22 sites. This network of offices provides regular and direct services linking Eastern Europe, the Balkans and the Baltics with Western Europe, together with logistics and warehousing capabilities in the UK and Romania.
On 11 August 2017, the Company successfully listed on AIM raising net placing proceeds of 4 million to support the Group's organic and acquisition led growth strategies.
Financial Review
The Group generated revenues of 49.1m during the six months ended 30 June 2017 (H1 2016: 31.5m), adjusted operating profit of 1.34m (H1 2016: 1.08m) and unadjusted profit after tax of 0.53 million (H1 2016: 0.16 million). This represents an increase of 24% in operating profit before exceptional items and an increase in turnover of 56% when compared to 2016.
EPS has increased to 0.50 pence from a loss of 0.12 pence and adjusted EPS before exceptional items in the period has increased to 0.90p (H1 2016: 0.46p). Adjustment was made for non-recurring Group restructuring and IPO costs totalling 331,000 for the six months ended 30 June 2017 and 458,000 for the same period in 2016.
The Group's overheads increased during the period, principally due to costs associated with the AIM listing.
The finance function has been expanded, including the appointment of a Group Financial Controller in the UK and the creation of internal audit and M&A resource. Other Plc related costs, such as non-executive director fees are also now being incurred. This will see the overhead costs increase slightly in the second half of the year to reflect the full six month period of these costs.
The successful listing of the business is expected to enable the completion of two M&A targets, which the Board believes will significantly increase the activity of the Group and substantially enhance the earnings per share. 
Reflecting confidence in the future, the Board has announced the payment of an interim dividend of 0.347p per share. The dividend will be payable to shareholders on the register on 6 October 2017 with the ex div date being 5 October 2017 and the dividend being paid on 27 October 2017.
Operational Review
Freight Forwarding Revenue H1 2017: 39.1m H1 2016: 25.2m
  Operating profit H1 2017: 0.7m H1 2016: 0.6m
Freight forwarding services, are provided under the Delamode brand. The division specialises in connecting CEE countries and the UK. In the period under review, the freight forwarding division increased revenues by 55%.
This strong trading performance has been driven primarily by an increased focus on full load movements. Whilst forwarding is a competitive market, Delamode has been operating successfully for more than 30 years and benefits from operating an asset light, broking model and taking advantage of its proprietary database of 3,000+ hauliers to buy in resources at the best possible price to service each contract and thereby maintain or improve upon our target returns.
The Group's e-commerce brand, EshopWedrop is progressing in line with management expectations. Management is actively seeking franchisees who are courier companies with the ability to provide final mile delivery and the marketing required to develop our ecommerce operations. Once we have established a more comprehensive franchise network across our main markets, we believe EshopWedrop will represent a compelling offer to major retailers.
After five years of investment and organic growth of the Group's Serbia operations, this business unit has performed exceptionally well during the period and is trading significantly ahead of budget for 2017. Given current and expected further growth of this unit, the Group will continue investing in Serbia as well as neighbouring countries to accelerate this growth and capitalise on its early mover advantage.
Transport Services Revenue H1 2017: 2.2m H1 2016: 1.6m
  Operating profit H1 2017: 1.1m H1 2016: 0.8m
Transport services, trading under the Affinity brand, provide 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 1,500 Eastern European hauliers and 11,500 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/suppliers, which underpins the strategy to provide further financial services such as insurance and leasing.
Affinity generated record revenues during the period, increasing 39% to 2.2 million. The majority of this growth was from increased provision of fuel cards, particularly under our Affinity Lite offering.
Logistics & Warehousing Revenue H1 2017: 7.7m H1 2016: 4.7m
 Operating profit H1 2017: 0.2m H1 2016: 0.0m
Logistics and Warehousing comprises:
 distribution hubs in the UK and southern Europe providing over 39,000 sqm of shared user space;
 pallet distribution services, the Group is the master franchisee of a fast growing pallet distribution network in Romania which trades under the Pall-Ex brand; and
 the recently acquired EMT business which is based in London and specialises in fashion logistics.
Pall-Ex contributed strongly during this period and is now moving over 40,000 pallets of freight every month. Post period end, the Group won the franchises to operate in Hungary and Moldova and expects to commence trading as Pall-Ex Hungary in Q4 this year and Moldova in the second quarter of 2018.
Our logistics network on the continent is centred around Romania where it can interlink with Pall-Ex. In April 2017, we opened our 10th warehouse in Bucharest, a state of the art facility with cross dock capability for Pall-Ex and significant storage for logistics customers.
Warehousing activity in the first half of the year was respectable in the UK given a challenging market place but improved second quarter results enabled the division to generate a small profit. Following the acquisition of EMT in March 2017, the textile part of Delamode warehousing has now been integrated to EMT's warehouse in Beckton. This has released capacity in Delamode's Braintree site to accommodate current client growth. We are confident in the growth prospects for this division over the next two years as we look to expand the UK warehousing operations through fulfilment, e-commerce activity and further building out of our retail and fashion services.
Outlook
We operate in a growing sector driven by economic growth especially across the CEE region and wider global trends such as e-commerce which is increasing the frequency of goods to be delivered. These trends are enhancing our organic growth strategies across all our divisions which are yielding positive results and we are confident these will continue in the second half of 2017 and beyond.
We also look forward to reporting on further progress on our M&A strategy, noting that current discussions and due diligence are progressing well in respect of target businesses (as previously outlined in Xpediator's admission document).
Stephen Blyth
CEO
22 September 2017
XPEDIATOR PLC 
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2017
Financial Update
The six month period to 30 June 2017 was an exciting time for the Group, during which it successfully prepared for its admission to AIM.
Restructure
As part of this preparation, the Group restructured its share capital and performed a share swap, which resulted in the ultimate beneficiaries of Delamode Group Holding Limited swapping their shares for shares in Xpediator Plc.
As part of this process Xpediator Plc issued 4,000,000 ordinary shares of 1.00 each to the shareholders of Delamode Group Holdings Limited in the same proportion as their shareholding in Delamode Group Holdings Limited on 25 May 2017. The merger method of accounting has been used to consolidate the results of Xpediator Plc and Delamode Group Holdings Limited and subsidiaries. Therefore the comparatives used within the consolidated interim financial statements are those of Delamode Group Holdings Limited. In the current period however, the results are those of the Group including Xpediator Plc.
Revenue
The underlying revenue for the six months to 30 June 2017 was 49.1 million, an increase of 56% on the comparable period (2016: 31.5 million).
Turnover increased across all of our main countries of operations. UK turnover increased by 46% to 11.5 million, representing approximately 24% (H1 2016: 25%) of Group revenues. This was principally due to the inclusion of Easy Managed Transport Limited ("EMT") following its acquisition on 10 March 2017. Romania, Lithuania and Bulgaria each grew revenues from between 24% and 109%, much of this growth due to the successful and ongoing focus and development of the full load activity in the Baltic and East Balkan regions.
Operating profit
The reported operating profit for the period was 1,007,000, (H1 2016: 619,000), an increase of over 63% year on year which is in line with management expectations. The operating margin for the period was 2.1% slightly up on the same period last year (H1 2016: 2.0%).
The adjusted operating profit for the period, excluding the costs associated with the listing, returned a result of 1,338,000, (H1 2016: 1,077,000) up on 2016 by 24%. This generated an operating margin of 2.7% for the period, down on the 2016 levels of 3.4%. The increase in the full load activity, which yields a lower margin reflecting the required levels of risk and resources, has reduced the operating margins.
The growth of the business has led to a significant number of deliveries over the period end. Revenue is recognised on final delivery, resulting in deferred revenue of 926,000 (H1 2016: 535,000) and deferred operating profit of 116,000 (H1 2016: 65,100), which will be recognised in the second half of 2017. Such deferrals will be significantly smaller at the year-end date due to the reduced volume of trade occurring in the last week of the calendar year.
The ongoing volatility of the Sterling currency has resulted in a negative impact on the results of the Group with both Delamode Plc and Affinity Transport Solutions incurring significant currency losses in the period to 30 June 2017 of 148,000 (H1 2016: 197,000).
The Group is currently enhancing its treasury function to reduce the ongoing risks of currency losses.
Financing costs
The trading net interest expense for the six month period was 208,000, (H1 2016: 111,000). The reported net interest expense totalled 296,000, which included a charge of 86,000 relating to the "unwinding" of the difference between the expected present value of the deferred consideration and the expected future value relating to the acquisition of EMT. This is a non-cash interest charge and is non-trading related.
During the period the Group entered into a short term loan of 2.5 million to assist with financing the acquisition of EMT and this loan has been fully repaid post the balance sheet date.
Tax
The tax charge for the period to June 2017 was, 182,000 compared to 280,000 for the same period in 2016. This equates to an effective tax rate of 26% compared to 55% for the period to 30 June 2016.
The effective rate is significantly impacted due to the exceptional costs arising from the restructuring in 2016 and the listing costs and non-cash finance charge in 2017. Excluding these items, the Group had an effective tax rate of 16% during the period, (H1 2016: 29%).
Balance Sheet
The Group had net assets of 3.86 million as at 30 June 2017, (31 December 2016 3.56 million)
The Group's cash position has increased to 6.9 million as at 30 June 2017 (31 December 2016: 5.4 million). However, net current assets were negative 0.9 million as at 30 June 2017 (31 December 2016: positive 3.4 million). This reduction however was principally due to the timing of the acquisition of EMT, which was part funded by bank borrowing 2.5 million. Accordingly, Group total borrowings increased to 8.7 million as at 30 June 2017 (31 December 2016 5.4 million).
This 2.5 million loan has since been repaid after the period end. In addition, part of the deferred consideration relating to the acquisition of EMT of 1.3 million, is included in current liabilities.
Dividends
The directors are declaring an interim dividend of 0.347 pence (H1 2016: nil) per share totalling 350,000 (H1 2016: nil) to be paid in October 2017. This dividend has not been accrued in the consolidated Statement of Financial Position.
Acquisitions
On 10 March 2017, the Group acquired 100% of the issued share capital of EMT for 5.1 million plus deferred consideration based on a two year earn out period. The initial consideration included a payment of 2.6 million for the cash in the business. The deferred consideration is subject to the performance of the business, payable in new Xpediator shares and is subject to a maximum payment equivalent to 2.85 million and a minimum payment of 1.66 million.
EMT has been consolidated into the financial results of the Group from the date of acquisition, and has been accounted for under acquisition accounting principles.
Richard Myson
CFO
22 September 2017
XPEDIATOR PLC 
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2017
Consolidated income statement
Unaudited
Unaudited
Audited
6 months to
6 months to
Year to
30 June 
2017
30 June 
2016
31 December 2016
Note
000
000
000
Revenue 6
1
49,063
31,514
72,758
Cost of sales
(37,389)
(23,413)
(55,559)
Gross profit
11,674
8,101
17,199
Other operating income 
365
458
556
Administrative expenses 
(11,032)
(7,940)
(15,941)
Operating profit
1,007
619 
1,814
EBIT
Exceptional items included in Administration 
Expen
expenses above
10
331
458
654
Operating profit before exceptional items
1,338
1,077
2,468
Finance income
2
19
24
Finance costs
(210)
(130)
(366)
Non cash finance costs
10
(88)
-
-
Profit before tax
711
508
1,472
Income tax
(182)
(280)
(233)
Profit for the period from continuing operations
529
228
1,239
Loss for the period from discontinued operations
-
(71)
(179)
Profit for period
529
157
1,060
Profit / (loss) attributable to:
Owners of the parent
424
(93)
563
Non-controlling interests
105
250
497
Profit for period
529
157
1,060
Basic and diluted earnings/ (loss) per share (pence)
3
0.50
(0.12)
0.70
Basic and diluted earnings per share from continuing operations (pence)
3
0.50
(0.03)
0.93
Basic and diluted earnings/(loss) per share from discontinued operations (pence)
3
-
(0.09)
(0.22)
Adjusted basic and diluted earnings per share* (pence)
3
0.90
0.46
1.52
* Earnings per share adjusted for exceptional costs as described in note 10
Consolidated Statement of Comprehensive Income
Unaudited
Unaudited
Audited
6 months to
6 months to
Year to
30 June 
2017
30 June 
2016
31 December 2016
000
000
000
Profit for the period
529
157
1,060
Other comprehensive income
Items that will not be reclassified to profit and loss
Exchange differences on translation of foreign operations
85
542
654
Total comprehensive income for the period
614
699
1,714
 
Total comprehensive income attributable to:
Owners of the parent
501
429
1,153
Non-controlling interests
113
270 
561
Total comprehensive income for the period
614
699
1,714
Unaudited
Unaudited
Audited
Consolidated statement of 
financial position
30 June 
2017
30 June 
2016
31 December 2016
Note
000
000
000
Non-current assets
Intangible assets
5
7,997
2,661
2,892
Property, plant and equipment 
6
1,368
901
1,186
Investments
15
15
16
Trade and other receivables
181
238
222
Deferred tax
202
53
106
Total non-current assets
9,763
3,868
4,422
Current assets
Inventories
34
33
44
Trade and other receivables
39,731
31,306
28,597
Held for Sale - distribution to owners
-
2,888
-
Cash and cash equivalents
6,927
5,217
5,351
Total current assets
46,692
39,444
33,992
Total assets
56,455
43,312
38,414
Equity
Called up Share capital
7
4,050
4,000
4,050
Translation reserve
529
43
452
Merger reserve
(3,750)
(3,750)
(3,750)
Retained earnings
2,769
4,672
2,466
Total equity 
3,598
4,965
3,218
Non-controlling interests
8
266
324
345
Total Equity
3,864
5,289
3,563
Non Current liabilities
Trade and other payables
1,103
-
-
Interest bearing loans and borrowings
9
3,084
3,383
3,878
Deferred tax
804
316
332
4,991
3,699
4,210
Current liabilities
Trade and other payables
41,943
32,074
29,167
Interest bearing loans and borrowings
9
5,657
1,508
1,474
Held for sale - distribution to owners
-
742
-
47,600
34,324
30,641
Total Liabilities
52,591
38,023
34,851
Total Equity and Liabilities
56,455
43,312
38,414
 
Consolidated statement of cash flows
Unaudited
Unaudited
Audited
6 months to
6 months to
Year to
30 June 
2017
30 June 
2016
31 December 2016
000
000
000
Profit before tax
711
508
1,472
Adjustment for:
Depreciation
159
109
242
Amortisation
145
62
90
Finance costs
298
130
366
Finance income
(2)
(19)
(24)
Loss on Disposal of Fixed assets
29
81
7
1,340
871
2,153
Changes in working capital:
Decrease / (increase) in stock
10
(14)
(25)
Increase in trade and other receivables
(11,179)
(6,165)
(3,457)
Increase in trade and other payables
11,710
9,290
5,985
Net cash generated from operating activities
1,881
3,982
4,656
Continuing Operations
Cash flows from operating activities
Interest paid
(212)
(128)
(366)
Tax paid
(309)
(222)
(656)
Net cash from operating activities
1,360
3,632
3,634
Cash flows from investing activities
Purchase of tangible fixed assets
(338)
(116)
(593)
Acquisition of Subsidiary, net of cash acquired
(2,500)
(1,873)
(1,873)
Disposal of available for sale assets
-
-
439
Purchase of intangible fixed assets
(38)
(5)
(50)
Sale of tangible fixed assets and investment property
-
-
144
Transactions with non-controlling interests
(193)
(23)
(654)
Interest received
2
19
24
Net outflow from investing activities
(3,067)
(1,998)
(2,563)
Cash flows from financing activities
New loans
4,183
1,099
319
Loan repayments
(794)
(3,808)
(2,569)
Issue of ordinary shares for cash
-
-
50
Dividend paid
-
(3,377)
(3,377)
Non-Controlling interest dividends paid
(104)
(242)
(265)
Net cash inflow from financing activities
3,285
(6,328)
(5,842)
Consolidated statement of cash flows
Unaudited
Unaudited
Audited
6 months to
6 months to
Year to
30 June 
2017
30 June 
2016
31 December 2016
000
000
000
Increase in cash and cash equivalents from continuing operations
1,578
(4,694)
(4,771)
Cash and cash equivalents at beginning of period
5,351
9,819
9,819
Effect of foreign exchange rate movements
(2)
92
303
Cash and cash equivalents at end of period
6,927
5,217
5,351
Consolidated Statement of Changes in Equity
For the six months to 30 June 2017 (unaudited)
Share 
Capital
'000
Retained earnings
'000
Translation Reserve
000s
Merger 
Reserve
'000
Total 
'000
Non-controlling interests '000
Total Equity
'000
Balance at 31 December 2016
4,050
2,466
452
(3,750)
3,218
345
3,563
Acquisition of NCI
-
(121)
-
-
(121)
(88)
(209)
Dividends
-
-
-
-
-
(104)
(104)
Total contributions by and distributions to owners
-
(121)
-
-
(121)
(192)
(313)
Comprehensive income
Profit for the period
-
424
-
-
424
105
529
Exchange differences on foreign operations
-
-
77
-
77
8
85
Total comprehensive income for the period
 -
424
77
-
456
113
569
Balance at 30 June 2017
4,050
2,769
529
(3,750)
3,598
266
3,864
For the six months to 30 June 2016 (unaudited)
Share 
Capital
'000
Retained earnings
'000
Translation Reserve
000s
Merger 
Reserve
'000
Total 
'000
Non-controlling interests '000
Total Equity
'000
Balance at 31 December 2015
4,000
8,162
(479)
(3,750)
7,933
299
8,232
Acquisition of NCI
-
(19)
-
-
(19)
 (3)
(22)
Dividends
-
(3,378)
-
-
(3,378)
(242)
(3,620)
Total contributions by and distributions to owners
-
(3,397)
-
-
(3,397)
(245)
(3,642)
Comprehensive income
Profit /(loss) for the period
-
(93)
-
-
(93)
250
157
Exchange differences on foreign operations
-
522
-
522
20
542
Total comprehensive income for the period
-
(93)
522
-
429
270
699
Balance at 30 June 2016
4,000
4,672
43
(3,750)
4,965
324
5,289
For the year ended 31 December 2016 (audited)
Share 
Capital
'000
Retained earnings
'000
Translation Reserve
000s
Merger 
Reserve
'000
Total 
'000
Non-controlling interests '000
Total Equity
'000
Balance at 1 January 2016
 4,000
8,162
(479)
(3,750)
7,933
299
8,232
Acquisition of NCI
-
(462)
-
-
(462)
(192)
(654)
Dividends
-
(3,377)
-
-
(3,377)
(265)
(3,642)
Distributions to owners
-
(2,463)
341
-
(2,122)
(58)
(2,180)
Issue of Share Capital
50
-
-
-
50
-
50
Capital Contribution
-
43
-
-
43
-
43
Total contributions and distribution to owners
50
(6,259)
341
-
(5,868)
(515)
(6,383)
Comprehensive income
Profit for the year
-
563
-
-
563
497
1,060
Exchange differences on foreign operations
-
-
590
-
590
64
654
Total comprehensive income for the period
-
563
590
-
1,153
561
1,714
Balance at 31 December 2016
4,050
2,466
452
(3,750)
3,218
345
3,563
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD TO 30 JUNE 2017
General information
The financial information included in this interim statement of results does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The unaudited accounts for the six month period ended 30 June 2017 have been prepared on a consistent basis and using the same accounting policies as those adopted in the financial statements for Delamode Group Holdings Limited for the year ended 31 December 2016. The statutory accounts of the Delamode Group Holdings Limited for the year ended 31 December 2016 are available on the Xpediator Plc website, www.xpediator.com . The auditors reported on those accounts: their report was unqualified and did not draw attention to any matters by way of emphasis.
Basis of preparation
Xpediator Plc (the 'Company') is a company incorporated in England. The consolidated interim financial statements of the Company for the six month period ended 30 June 2017 comprise the Company and its subsidiaries (together referred to as the 'Group'). The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. They are unaudited but have been reviewed by the Company's auditor and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016.
Merger accounting
On 25 May 2017 Xpediator Plc entered into a share swap agreement with the ultimate beneficiaries of Delamode Group Holdings Limited, whereby 4,000,000 new ordinary shares of 1.00 each were issued to the ultimate beneficiaries of the Delamode Group Holdings Limited in exchange for their shares in Delamode Group Holdings Limited in the same proportion as their shareholding in Delamode Group Holdings Limited. The merger method of accounting is used to consolidate the results of Xpediator plc and Delamode Group Holdings Limited and subsidiaries.
The comparatives used within the consolidated interim financial statements reflect the financial performance and position of Delamode Group Holdings Limited. The impact of the use of merger accounting is to reflect the group as though it had always been in existence. Therefore the prior year comparatives reflect those of Delamode Group Holdings Limited. In the current period, the results reflect those of the whole group for the whole period. The only change to the reported balance sheet position is to reflect the share capital of Xpediator plc rather than that of Delamode Group Holdings Limited. The difference between the nominal value of the shares issued by Xpediator plc in consideration for the share capital of Delamode Group Holdings Limited is taken to the merger reserve. The net asset position of the group at 31 December 2016 is increased by 50,000 from the 3,513,000 reported in the financial statements of Delamode Group Holdings Limited. This reflects the share capital of Xpediator plc prior to the share swap.
Accounting policies
The accounting policies adopted in the preparation of the consolidated financial statements are the same as those set out in the annual financial statements of Delamode Group Holdings Limited for the year ended 31 December 2016. The financial statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments that are measured at revalued amounts or fair values at the end of each reporting period.
The Group is currently assessing the impact that IFRS 15 Revenue from Contracts with Customers, IFRS 16 Leases, and IFRS 9 Financial Instruments, and other recent guidance and interpretations may have on the consolidated financial statements.
Going concern
The directors have concluded that it is appropriate that the financial statements have been prepared on a going concern basis given the cash balances as at 30 June 2017, and funding facilities in place across the group, which it does not envisage will be withdrawn thus there are sufficient funds available to meet its liabilities as they fall due. The financial statements have therefore been prepared on a going concern basis.
The directors believe that based on the current budgets and forecast cash flows, there is sufficient resources to meet its liabilities as they fall due.
1) Turnover analysis by country
Unaudited
Unaudited
Audited
6 months to
6 months to
Year to
30 June 
 2017
30 June 
2016
31 December 2016
 000
000
000
United Kingdom
11,534
7,895
20,027 
Romania
11,594
9,348
19,161
Lithuania
15,529
7,431
18,285
Bulgaria
6,372
4,549
10,383
Other
4,034
2,291
4,902
Total Income
49,063
31,514
72,758
2) Segmental Analysis
Types of services from which each reportable segment derives its revenues
During the period the Group had three main divisions: Transport Solutions, referred to as Affinity, Freight Forwarding, and Logistics. All revenue is derived from the provision of services.
 Freight Forwarding - This division is the core business and relates to the movement of freight goods across Europe. This division accounts for the largest proportion of the Group's business, generating 80% of its external revenues contributed in 2017, (H1 2016:81%)
 Affinity - This division is the Transport Solution's arm of the Delamode Group. It focuses on the reselling of DKV fuel cards, leasing, ferry crossings and other associated transport related services. This division accounts for 5% of the Group's business in terms of revenue (H1 2016 : 5%)
 Logistics - This division is involved in the warehousing and domestic distribution; it generates 15% of the Group's external revenues in 2017 (H1 2016: 14%).
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team comprising the Divisional CEOs, the Chief Executive Officer and the Chief Financial Officer.
No single customer accounted for more than 10% of the Group's total revenue.
Measurement of operating segment profit or loss, assets and liabilities
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 on an arm's length basis, along the same lines as sales to external customers. This policy was applied consistently throughout the current and prior period.
Segmental Analysis for the period to 30 June 2017
Freight Forwarding
Logistics
Affinity
Unallocated
Total
2017
2017
2017
2017
2017
Revenue
'000
'000
'000
'000
'000
Total revenue
39,105
7,945
2,247
-
49,297
Inter-segmental revenue
-
(234)
-
-
(234)
Total revenue from external customers
39,105
7,711
2,247
-
49,063
Depreciation & amortisation
54
227
18
5
304
Segment Profit (excluding exceptional items)
688
221
1,080
(652)
1,337
Net Finance costs
(295)
Exceptional items
(331)
Profit before income tax
711
Segmental Analysis for the period to 30 June 2016
Freight Forwarding
Logistics
Affinity
Unallocated
Total
2016
2016
2016
2016
2016
Revenue
'000
'000
'000
'000
'000
Total revenue
25,200
4,981
1,613
-
31,794
Inter-segmental revenue
-
(280)
-
-
 (280)
Total revenue from external customers
25,200
4,701
1,613
-
31,514
Depreciation & amortisation
53
104
13
1
171
Segment Profit (excluding exceptional items)
595
4
746
(268)
1,077
Net Finance costs
(111)
Exceptional items
 (458)
Profit before income tax
508
Segmental Analysis for the year to 31 December 2016
Freight Forwarding
Logistics
Affinity
Unallocated
Total
2016
2016
2016
2016
2016
Revenue
'000
'000
'000
'000
'000
Total revenue
58,869
10,896
3,549
14
73,328
Inter-segmental revenue
-
(570)
-
-
 (570)
Total revenue from external customers
58,869
10,326
3,549
14
72,758
Depreciation & amortisation
125
176
30
1
332
Segment Profit (excluding exceptional items)
1,645
(37)
1,799
(939)
2,468
Net Finance costs
(342)
Exceptional items
 (654)
Profit before income tax
1,472
3) Earnings per share
Unaudited
Unaudited
6 months to
6 months to
Year to
30 June 
2017
30 June 
2016
31 December 2016
000
000
000
Weighted average number of shares (basic & diluted) **
84,295,565
80,000,000
80,000,000
Profit / (Loss) for the period attributable to equity holders of the company
424
(93)
563
Profit / (Loss) for the period attributable to equity holders of the company excluding exceptional items
755
365
1,217
Profit / (Loss) for the period for discontinued operations
-
(71)
(179)
Earnings per share - basic and diluted (pence)
0.50
(0.12)
0.70
Earnings per share from continuing operations - basic and diluted (pence)
0.50
(0.03)
0.93
Basic and diluted earnings/(loss) per share discontinued operations (pence)
-
(0.09)
(0.22)
Earnings per share - basic and diluted (pence) (excluding exceptional items)*
0.90
0.46
1.52
*Earnings per share adjusted for exceptional costs (see note 10)
** The weighted average number of shares is increased by the number of shares to be issued in relation to the deferred consideration payable on the acquisition of EMT.
4) Dividends
The directors are declaring an Interim dividend of 0.347 pence (2016: nil) per share totalling 350,000 (2016: nil) to be paid in October 2017. This dividend has not been accrued in the consolidated statement of Financial Position.
5) Intangible Asset
For the period from 1 January 2017 to 30 June 2017 (unaudited)
Customer related 
Licences
Goodwill
Total
Cost
'000
'000
'000
'000
At 1January2017
-
2,453
682
3,135
Additions
-
38
-
38
Acquired through business combinations
2,872
-
2,258
5,130
Exchange differences
-
139
16
155
At 30June2017
2,872
2,630
2,956
8,458
Amortisation
At 1January2017
-
243
-
243
Amortisation for the period
88
57
-
145
Exchange differences
-
73
-
73
At 30June2017
88
373
-
461
Net Book Value at 30 June 2017
2,784
2,257
2,956
7,997
For the period from 1 January 2016 to 30 June 2016 (unaudited)
Licences
Goodwill
Total
Cost
'000
'000
'000
At 1January2016
138
-
138
Additions
5
-
5
Acquired through business combinations
1,981
593
2,574
Exchange differences
108
30
138
At 30June2016
2,233
623
2,856
Amortisation
At 1January2016
125
-
125
Amortisation for the period
62
-
62
Exchange differences
7
-
7
At 30June2016
194
-
194
Net Book Value at 30 June 2016
2,038
623
2,661
For the period from 1 January 2016 to 31 December 2016 (audited)
Licences
Goodwill
Total
Cost
'000
'000
'000
At 1January2016
138
-
138
Additions
50
-
50
Acquired through business combinations
1,981
593
2,574
Exchange differences
284
89
373
At 31 December 2016
2,453
682
3,135
Amortisation
At 1January2016
125
-
125
Amortisation for the year
90
-
90
Exchange differences
28
-
28
At 31December2016
243
-
243
Net Book Value at 31 December 2016
2,210
682
2,892
 
The goodwill included in the above note, relates to the acquisition of Pallet Express Srl in January 2016 and EMT in March 2017. This represents the total value of intangible assets with an indefinite useful life allocated to each respective cash generating unit.
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. 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.
The directors have reviewed the future profit and cash flow forecasts for the next three years and applying a discount rate of 10% 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 not to have to impair the goodwill.
6) Property, plant and equipment
For the period from 1 January 2017 to 30 June 2017 (unaudited)
Freehold Property
Fixtures, fittings and equipment
Motor Equipment
Computer Equipment
Total
000
000
000
000
000
Cost 
At 1 January 2017
122
921
759
1,058
2,860
Additions
-
93
74
171
338
Additions acquired with Subsidiary
18
1
4
-
23
Disposals
-
(2)
(67)
(9)
(78)
Exchange differences
3
7
6
7
23
At 30 June 2017
143
1,020
776
1,227
3,166
Depreciation
At 1 January 2017
-
508
504
662
1,674
Charge for the period
-
58
36
()
65
159
Eliminated on disposal
-
(1)
(42)
(3)
(46)
Exchange differences
-
3
4
4
11
At 30 June 2017
-
568
502
728
1,798
Net book value 30 June 2017
143
452
274
499
1,368
For the period from 1 January 2016 to 30 June 2016 (unaudited)
Freehold Property
Fixtures, fittings and equipment
Motor Equipment
Computer Equipment
Total
000
000
000
000
000
Cost 
At 1 January 2016
105
789
700
842
2,436
Additions
1
31
75
9
116
Addition with Subsidiary
-
8
9
12
29
Disposals
(66)
(94)
(46)
(206)
Exchange differences
6
13
31
29
79
At 30 June 2016
112
775
721
846
2,454
Depreciation
At 1 January 2016
-
478
468
595
1,541
Charge for the period
-
41
36
32
109
Eliminated on disposal
-
(62)
(33)
(28)
(123)
Exchange differences
-
-
15
11
26
At 30 June 2016
-
457
486
610
1,553
Net book value 30 June 2016
112
318
235
236
901
For the period from 1 January 2016 to 31 December 2016 (audited)
Freehold Property
Fixtures, fittings and equipment
Motor Equipment
Computer Equipment
Total
000
000
000
000
000
Cost
At 1 January 2016
105
789
700
842
2,436
Additions
1
173
201
218
593
Addition with Subsidiary
-
8
9
12
29
Disposals
-
(82)
(200)
(55)
(337)
Exchange differences
16
33
49
41
139
At 31 December 2016
122
921
759
1,058
2,860
Depreciation
At 1 January 2016
-
478
468
595
1,541
Charge for the period
-
91
76
75
242
Eliminated on disposal
-
(78)
(74)
(34)
(186)
Exchange differences
-
17
34
26
77
At 31 December 2016
-
508
504
662
1,674
Net book value
At 31 December 2016
122
413
255
396
1,186
7) Share Capital
Unaudited
Unaudited
30 June 
2017
30 June 
2016
31 December 2016
000
000
000
Allotted, issued and fully paid
4,000,000 ordinary shares of 1.00 each 
4,000,000
4,000,000
4,000,000
50,000 deferred shares of 1.00 each
50,000
-
50,000
 
The share capital at the 30 June 2016 and 31 December 2016 represents the shares issued as consideration for Delamode Group Holdings Limited which under merger accounting is treated as if they had always been in issue.
On 25 May 2017, the Company entered into a share swap agreement whereby the ultimate beneficiaries of Delamode Group Holding Limited swapped their shares in Delamode Group Holding Limited for shares in Xpediator Plc. This created 4,000,000 ordinary shares of 1.00 being issued to the shareholders of the Company. On the 7 August 2017 these shares were converted into 80,000,000 ordinary shares of 5 pence each.
The deferred shares are non-voting shares and have no rights to any distribution or dividend payments.
8) Non-Controlling Interests
Non-Controlling interests held in the group are as follows:
 Unaudited Unaudited Audited  30 June  30 June 31 December
 2017  2016  2016
  Delamode Baltics UAB  20.0%  30.0%  30.0%
  Delamode Estonia O  20.0%  30.0%  30.0%
  Delamode Bulgaria EOOD  10.0%  34.3%   10.0%
 Delamode Service Financare IFN  0.05%   0.05%  0.05%
 Delamode Distribution UK Limited  49.0%   49.0%  49.0%
Affinity Transport Solutions Srl  0.0%   5.0%  0.0%
On 28 December 2016, the Group acquired 24.3% of the non-controlling interest in Delamode Bulgaria EOOD for 630,000.
On 15 January 2016, the Group acquired 50.0% of the non-controlling interest in EshopWedrop Limited for 22,500.
On 28 July 2016, the Group acquired 5.0% of the non-controlling interest in Affinity Transport Solutions Srl for 2,000
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.
9) Loans
Unaudited
Unaudited
Audited
30 June 
2017
30 June 
2016
31 December 2016
000
000
000
Current;
Finance Leases
35
23
39
Other Loans
5,622
1,485
1,435
5,657
1,508
1,474
Non - Current;
Finance Leases 1-2 year
62
71
69
Other Loans;
Loans 1- 2 years
296
681
942
Loans 2- 5 years
971
971
971
Loans due after five years repayable by instalments
1,755
1,660
1,896
3,084
3,383
3,878
The Finance lease loans are secured against the assets to which the finance relates. Bank loans and overdrafts are secured by a fixed and floating charge over the Group's assets.
10) Exceptional Costs
Pursuant to the Group's AIM listing, costs were incurred in respect of legal and consultancy fees in the period of 331,000. (H1 2016: 458,000). These costs were non-recurring.
A charge of 86,000 has been included in the finance costs for the period to June 2017 resulting from the acquisition of EMT. This reflects the "unwinding" of the difference between the expected present value of the deferred consideration and the expected fair value.
11) Post balance sheet events
On 11 August 2017 the Group was admitted to trading on the AIM Market on the London Stock Exchange and raised 5.0 million before expenses, from new investors. Immediately prior to the listing, the Company converted 4,000,000 ordinary shares of 1.00 each, into 80,000,000 ordinary shares of 5 pence each.
Upon listing, the Company issued 20,833,333 new ordinary shares of 5 pence each to new investors pursuant to the 5 million equity placing performed.
12) Business combinations
Pallet Express Srl
On 18 January 2016 the Group acquired 100% of the voting equity instruments of Pallet Express, a
Company whose principal activity is the provision of a franchise network for domestic distribution in Romania.
The consideration paid for this acquisition was 2,058,000. The principal reason for this acquisition was to enable the Group to consolidate and enhance their supply chain network in the CEE region.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:  
Book value '000
Adjustment '000
Fair Value '000
Intangible Assets - Systems
 109 
(109)
 - 
Intangible Assets - Licences
 103 
 1,878 
 1,981 
Property, plant and equipment
 29 
 - 
 29 
Other
 16 
 - 
 16 
Inventories
 5 
 - 
 5 
Trade Receivables
 248 
 7 
 255 
Cash
 185
 - 
 185 
Trade Payables
(255)
 - 
(255)
Loans
(445)
 - 
(445)
Others
(5)
 - 
(5)
Deferred tax liability 
 - 
 (301)
 (301)
Total net assets
 (10)
 1,475 
 1,465 
On acquisition of Pallet Express Srl the software was not considered to be appropriate for the business and as such the entire carrying value of this asset has been impaired.
The company also held the Master Franchise license with Pallex Holding UK which had a carrying value of 103,000. This has been adjusted to reflect the fair value of this asset and as such the asset has been restated with a book value of 1,981,000.
Fair value of consideration paid in cash 2,058
Net asset acquired    (1,465)
Goodwill recognised   593
The goodwill recognised will not be deductible for tax purposes
Easy Managed Transport Limited
On 10 March 2017 the Group acquired 100% of the voting equity instruments of EMT, a company whose principal activity is the provision of domestic distribution for garment consignments in the UK
The principal reason for this acquisition was to enable the Group to consolidate and enhance their distribution services for their fashion related clients.
The total consideration paid for the entity is split into the following components:
 Cash on completion
 Plus Earn-Out payments payable over two years.
The deferred consideration is calculated as follows, both of which are subject to a maximum and minimum payment:-
 50% of the Company's operating profit before tax multiplied by 2.5 in respect of the First Earn-Out Year
 50% of the Company's operating profit before tax multiplied by 2.5 in respect of the Second Earn-Out year
Fair Value assessment
As part of the fair value assessment of the Intangible assets of EMT, it was identified that the only intangible asset category to apply, is the customer related intangible assets. The fair value calculation of customer related intangible asset was determined by using the income approach based on the expected future cash flows. This was then discounted to determine the present value.
The weighted average cost of capital used in determining the present value, was 21.0%, which reflected the business and market risks factors.
The outcome of the fair value calculation was to derive a customer related intangible asset with a value of 2,872,000.
Economic useful life
When determining the economic useful life of the customer relationships the historical length of relationships with existing customers and those reported by listed companies in the sector was considered as well as an annual attrition rate of 10.0%.
Based on these factors, it was concluded that the useful economic life for customer relationships in relation to EMT would be up to 10 years.
Deferred tax
As a result of the creation of the customer related intangible asset, there is a deferred tax liability, which was calculated as the sum of the fair values of the intangible assets multiplied by the tax rate. An average long-term tax rate of 17.0% was used as to determine this. This resulted in a deferred tax liability of 488,240.
Deferred Consideration
The deferred consideration consists of the
 payment relating to the earn out period and;
 amount by which the Completion Net Asset exceeds Target Net Assets
In determining the present value of the earn out payment, the first payment which is due in July 2018 was calculated using a cost of capital equal to the long term debt of 6.8% and the second earn out payment, due to be paid in July 2019, was calculated by using the WACC of 21.0%.
Using the forecasted results for the respective periods the present value of the deferred consideration relating to the earn out was calculated to be 2,188,190.
In relation to determining the present value of the amount by which the completion net asset exceeds the target, a cost of capital equal to the long term debt % of 6.8% was used given that this payment is due to be paid with the first earn out payment in July 2018.
The present value of the excess net asset equated to 197,855.
Goodwill
When determining the goodwill arising on the acquisition the following calculations were used.
Purchase Consideration '000
Initial Consideration
2,500
Net Cash Adjustment
2,628
P.V. of Net Assets Adjustment
198
P.V. of Deferred Consideration
2,188
Total Consideration for Equity
7,514
Allocation of Assets and Liabilities Acquired
Intangible Assets 
Customer-related Intangible Assets
2,872
Other Assets
Current Assets
3,495
Fixed Assets
23
Liabilities
Assumed Liabilities
(646)
Deferred Tax Liability for Intangible Assets
(488)
Goodwill 
2,258
The goodwill recognised will not be deductible for tax purposes
INDEPENDENT REVIEW REPORT TO XPEDIATOR PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes.
We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
BDO LLP
Chartered Accountants
London
United Kingdom
22 September 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

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