REG - Logistics Dev Grp - Final Results
06/04/2022 07:00
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RNS Number : 3943H Logistics Development Group PLC 06 April 2022
6 April 2022
Logistics Development Group plc
("LDG" or the "Company")
Final Results for year ended 30 November 2021
Logistics Development Group plc, the AIM listed investing company, announces
its audited final results for the year ended 30 November 2021.
Full Year 2021 Results Summary
· It was an exciting year for the Company, which culminated in the
successful disposal of Marcelos' investment in GreenWhiteStar Acquisitions
Limited ("GWSA") and its subsidiaries Eddie Stobart, The Pallet Network,
iForce, Eddie Stobart Europe and The Logistics People (together the "Eddie
Stobart Businesses") to Culina Group Limited, one of the UK's leading
logistics companies, which is owned by the German Müller family.
· The Company had a cash balance of £131.9m at the end of the
year, following the disposal of the Company's 49% shareholding in GWSA and the
£6.0m PIK Loan note held by the Company which generated a cash inflow of
£125.2m.
· The Company reported strong results for the year ended November
2021, with an underlying EBIT(1) of £84.6m (2020: loss of £11.3m) before
exceptional income of £0.1m (2020: exceptional income of £3.4m) and a profit
before tax of £84.7m (2020: loss before tax of £7.9m).
· The Company now has no financial debt and a cash balance of
£131.9m or approximately £0.19 per ordinary share.
· The proceeds from the disposal will be used twofold. Most of the
funds will be deployed in investments identified by our investment manager,
DBAY. As you might be aware, post period end during a general meeting held on
31 January 2022, shareholders approved a broadening of the investing policy.
This will allow DBAY to invest in opportunities outside the logistics sector,
broadening the opportunity set available to LDG. On 10 March 2022, the Company
announced its first investment under the new investing policy, as amended
after the General Meeting held on 31 January 2022 (the "General Meeting"),
investing £6.3m in Caretech Holdings PLC for approximately 0.88% of
Caretech's issued share capital. On 1 April 2022, the Company announced that
it had acquired further shares in Caretech Holdings Plc for a further
consideration of £6.8m. As a result the Company now owns 1.74% of Caretech's
issued share capital.
· Secondly, since LDG's share price has consistently been trading
at a discount to the Company's cash per share, the Board decided to initiate a
share buyback program to narrow the discount over time. This has also been
approved by shareholders at the General Meeting and the Company has since
commenced the buyback programme which should allow the Company to narrow the
discount to net asset value at which LDG's ordinary shares currently trade.
(1) Underlying EBIT is an alternative performance measure (see Note 3) and is
defined as profit/loss before interest and tax adding back exceptional items.
A copy of the full year results are also available to be viewed on, or
downloaded from, the Company's corporate website at www.ldgplc.com
For enquiries:
Logistics Development Group plc Via FTI Consulting
FTI Consulting +44 (0) 20 3727 1340
Nick Hasell
Alex Le May
Cally Billimore
Strand Hanson Limited +44 (0) 20 7409 3494
(Financial and Nominated Adviser)
James Spinney
James Dance
Abigail Wennington
Investec Bank plc +44 (0) 20 7597 5970
(Broker)
Gary Clarence
Harry Hargreaves
Letter from Chairman
Dear Shareholders
I am pleased to present the annual report and the audited financial statements
for Logistics Development Group plc ("LDG", "the Company") for the year ended
30 November 2021.
It was an exciting year for the Company, which culminated in the successful
disposal of Marcelos's investment in GreenWhiteStar Acquisitions Limited
("GWSA") and its subsidiaries Eddie Stobart, The Pallet Network, iForce, Eddie
Stobart Europe and The Logistics People (together the "Eddie Stobart
Businesses") to Culina Group Limited, one of the UK's leading logistics
companies, which is owned by the German Müller family.
During the 17 months period under the control of DBAY Advisors Limited
("DBAY"), our investment manager, GWSA's profitability was increased from an
EBITDA (pre IFRS 16) of £4.2m in 2019 to £47.8m by the end of the 2020
financial year, while net financial debt had been reduced from £221.7m to
£144.5m. On the back of this outstanding performance, the disposal of our 49%
shareholding in GWSA and the £6.0m PIK Loan note held by LDG generated a cash
inflow of £125.2m, meaning the Company had a cash balance of £131.9m or
approximately £0.19 per share at the year end. LDG's share price was £0.06
at the time when DBAY took control of GWSA, implying a money multiple of
approximately 3x over the 17 month period during which DBAY controlled GWSA
and its subsidiaries.
I believe DBAY have found a good home for the Eddie Stobart Businesses in
Culina Group. Culina's management has a deep understanding of the UK transport
and logistics landscape, as well as the financial resources to allow the Eddie
Stobart Businesses to continue its long-standing successful heritage.
Driven by the disposal of GWSA, your Company reported strong results for the
year ended November 2021, with an underlying EBIT(1) of £84.6m (2020: loss of
£11.3m) before exceptional income of £0.1m (2020: exceptional income of
£3.4m) and a profit before tax of £84.7m (2020: loss before tax of £7.9m).
Including income received from additional deferred consideration from the GWSA
disposal, the Company now has no financial debt and a cash balance of £131.9m
or approximately £0.19 per ordinary share. These results are discussed in
detail in the Business and Financial Review and in the notes to the financial
statements.
The proceeds from the disposal will be used twofold. Most of the funds will be
deployed in investments identified by our investment manager, DBAY. As you
might be aware, post period end during a general meeting held on 31 January
2022, shareholders approved a broadening of the investing policy. This will
allow DBAY to invest in opportunities outside the logistics sector, broadening
the opportunity set available to LDG. On 10 March 2022, the Company announced
its first investment under the new investing policy, as amended after the
General Meeting held on 31 January 2022 (the "General Meeting"), investing
£6.3m in Caretech Holdings PLC for approximately 0.88% of Caretech's issued
share capital. On 1 April 2022, the Company announced that it had acquired
further shares in Caretech Holdings Plc for a further consideration of £6.8m.
As a result the Company now owns 1.74% of Caretech's issued share capital.
Secondly, since LDG's share price has consistently been trading at a discount
to the Company's cash per share, the Board decided to initiate a share buyback
program to narrow the discount over time. This has also been approved by
shareholders at the General Meeting and the Company has since commenced the
buyback programme which should allow the Company to narrow the discount to net
asset value at which LDG's ordinary shares currently trade.
Over the last year, we had the opportunity to welcome two new Directors to the
Board of LDG. Peter Nixon is an experienced chartered accountant and was
appointed to the Board from 9 December 2021, replacing Saki Riffner. David
Facey, also an experienced chartered accountant and CFO of AIM-listed
companies operating within the financial sector, was appointed to the Board
and as chair of the Audit Committee from 1 April 2021.
The Company is now in the fortunate position that it has only made a small
acquisition and as such has a clean canvas to work with and a broader
investing policy. I have every confidence that DBAY as our investment manager
will make good use of the funds to invest in companies which will reward all
shareholders. In the 50 years I have been following stock markets I have never
encountered such an extraordinary set of circumstances which the world now
faces. The tragic events in the Ukraine, which are unfolding before our very
eyes need little embellishment from me, excepting that I would never have
thought I would be part of the pre-war generation! Following on from the well
documented dysfunctional damage that the COVID outbreak has caused to the
world, it has been a very grim start to the 21(st) century, but let us hope
that we can move into sunnier times sometime soon.
Finally, I would like to thank shareholders, old and new, for their continued
support.
Adrian Collins
Chairman
(1) Underlying EBIT is an alternative performance measure (see Note 3) and is
defined as profit/loss before interest and tax adding back exceptional items.
Business and financial review for the year ended 30 November 2021
Review of the year
Transition to AIM Investing Company, appointment of DBAY as investment
manager, and fund-raising
On 31 December 2020, following a successful fund-raising through a
subscription, placing and open offer generating £16.2m (net £14.5m), the
Company's shares were re-admitted to trading on AIM, completing its transition
to an AIM-listed Investing Company. Initially, the investing policy was
focused on the logistics sector and DBAY was appointed as the Company's
investment manager.
DBAY is an asset management firm with offices in London and the Isle of Man.
Its core team has been working together for over 20 years and combines a
diversified set of skills from financial and operational backgrounds, with
deep insight into a number of industry sectors. The team worked together on
their first investment vehicle in 2008, and formed DBAY in 2011. Additional
information on DBAY is set out on page 6 of this report.
New investments during the period
Following the fund-raising, in May 2021, LDG, under the guidance of our
investment manager DBAY, invested £6.0m to acquire an indirect 10.9% equity
interest in an 18% PIK Loan note with indirect exposure to the performance of
GWSA and its subsidiaries. This principal plus accrued interest was repaid
upon the disposal of GWSA on 1 July 2021.
Turnaround and disposal of GWSA
On 30 March 2021, GWSA advised LDG of its audited consolidated results for the
year ended 30 November 2020. After a year under the control of DBAY, GWSA and
the Eddie Stobart Businesses had delivered a strong turnaround, with EBITDA
(excluding the impact of IFRS 16), increasing to £47.8m vs. £4.2m in the
prior year. In addition, the net financial debt of GWSA reduced by £77m to
£145m in the period, deleveraging substantially and putting the Eddie Stobart
Businesses back on a sustainable funding structure.
The turnaround was achieved with DBAY's active operational involvement and
included a significant number of value creation activities.
GWSA's performance confirms our belief that DBAY was best placed to transform
and turnaround the Eddie Stobart Businesses after a difficult period, and we
expect similarly successful value creation initiatives in future investments
DBAY will enter into on behalf of LDG.
The sale of GWSA, including Eddie Stobart Businesses, to Culina Group Limited
was announced and completed on 1 July 2021. From the combination of LDG's 49%
indirect interest in GWSA and the PIK Loan note, the transaction generated a
cash inflow of £125.2m for LDG, leaving the Company debt free and with a cash
balance of approximately £0.19 per share. The implied money multiple over the
17 months holding period is approximately 3x compared to the share price of
£0.06 in December 2019, the time when LDG sold it's 51% controlling stake in
GWSA and the Eddie Stobart Businesses to DBAY.
Changes to the Board
Peter Nixon, an experienced chartered accountant, was appointed to the Board
from 9 December 2021, replacing Saki Riffner. David Facey, also an experienced
chartered accountant and CFO of AIM-listed financial sector companies, was
appointed to the Board and as chair of the Audit Committee from 1 April 2021.
Subsequent events - New investment policy and agreement, share buyback and
cancellation of share premium account
Following the disposal of GWSA, the Board, in conjunction with DBAY, have
reviewed a number of investment opportunities and we have come to the
conclusion that there are more attractive opportunities to create shareholder
value outside of the logistics focused investing policy adopted in December
2020.
Accordingly, after seeking shareholder approval at the General Meeting held on
31 January 2022, shareholders have agreed to a new and wider investing policy.
The revised investing policy provides for investments primarily in undervalued
companies. Further details are set out on page 6 and 7 of the Annual Report
and Accounts.
At the same meeting, the Board received approval from shareholders to
implement a share buyback programme. As the Company's shares have been trading
at a significantly discounted level to the amount of available cash per
Ordinary Share, the Company has obtained shareholder approval to acquire up to
20% of the issued share capital as at the date of the General Meeting. This
should result in the reduction of the observed discount to net asset value per
Ordinary Share and provide an exit opportunity for shareholders who do not
wish to retain their investment in the Company. The Company received approval
from the High Court of England and Wales to proceed with a Capital Reduction
and create distributable reserves on 22 February 2022, which will also create
flexibility to make future distributions.
Financial performance
The results for the current year reflect the group structure as at 30 November
2021. As the Company does not have any majority owned or controlled
subsidiaries at the reporting date, there is no requirement for consolidation
and the audited financial statements in this report reflect the standalone
results of the Company for the current and comparative periods.
The Company still has an exposure to the intermediate holding companies which
held the GWSA investments, and expects further potential cash inflows from the
final purchase price adjustments for up to 24 months post closing of the GWSA
disposal transaction. LDG measures these investments at fair value through the
profit and loss account. The election is taken based on the investment being a
'venture capital' investment under IAS 28 'Investments in Associates and Joint
Ventures'.
At the reporting date the fair value ascribed to the investments is £2.2m
(2020: £35.8m) which reflects the current value at the reporting date in
respect of guaranteed expected future cash flows (2020: valuation basis
reflected the value of the investment in GWSA based on the market
capitalisation of the Company). The Directors have reviewed this valuation
approach and consider it to be appropriate.
Administrative expenses before exceptional items are significantly lower in
the reporting year at £1.1m (2020: £2.2m) as the Company no longer incurs
any share-based payment charges, has lower insurance costs, lower audit fees
and general expenses.
The Company's underlying EBIT(1) in the year was a profit of £84.6m (2020:
loss of £11.3m) before exceptional income of £0.1m (2020: exceptional income
of £3.4m) and statutory profit before tax was £84.7m (2020: loss before tax
of £7.9m). The exceptional income of £0.1m during the year comprised of a
refund of VAT in relation to historic transaction costs relating to the 2019
GWSA disposal. During the prior year, the Company recognised an exceptional
income of £3.4m comprising a refund of transaction costs of £2.8m associated
with the disposal of GWSA and 2019-related audit fees of £0.6m. The costs
were ultimately borne by GWSA.
Net debt
As at the reporting date, the Company has cash and cash equivalents of
£131.9m (2020: £0.7m) principally resulting from the disposal of GWSA, with
the remainder from an equity fund raising in December 2020, where the Company
successfully raised £16.2m in aggregate (pre fundraise costs of £1.5m). The
fund raise enabled the Company to satisfy the requirements for re-admission to
AIM as an Investing Company. Related party borrowings amounted to £Nil (2020:
£1.2m).
Exceptional items
During the year, the Company recognised exceptional income in relation to a
VAT refund of £0.1m associated with the disposal of GWSA.
During the prior year, the Company recognised income in relation to a refund
of transaction costs of £2.8m associated with the disposal of GWSA and
2019-related audit fees of £0.6m. These costs were ultimately borne by GWSA
in accordance with the DBAY transaction arrangements.
Further details of exceptional costs are included in note 5.
Tax
For the years ended 30 November 2021 and 2020, the Company incurred tax
losses. The deferred tax asset of £0.3m (2020: £0.2m) was not recognised as
the Directors do not consider that there is sufficient certainty over its
recovery. The unrecognised asset can be carried forward indefinitely.
Dividends
The Company did not pay an interim dividend (2020: £Nil) and no final
dividend is being recommended (2020: £Nil).
Earnings per share
Underlying basic and diluted earnings per share are both 12.0p (2020:
underlying basic and diluted loss per share were both 3.0p). Statutory basic
and diluted earnings per share are both 12.1p (2020: statutory basic and
diluted loss per share were both 2.1p). See note 3 and 9 to the Financial
Statements.
Information about the Investment Manager
DBAY is an Isle of Man-based asset management firm with offices in London and
Douglas, Isle of Man. Founded in 2011, DBAY is owned by its partners and is
licensed by the Isle of Man Financial Services Authority. The firm follows a
value investing approach and invests in listed equities across Europe, as well
as in private equity style control investments. The core DBAY team, which have
worked together for 20 years, have developed a diversified set of skills from
financial and operational backgrounds, with deep insight into a number of
industry sectors. DBAY comprises a team of 12 investment and operating
professionals. Capital is managed on behalf of institutional investors,
trusts, foundations, family offices and pension funds.
DBAY currently has a controlling interest in companies that have a combined
turnover in excess of £810 million and employ more than 7,000 staff. The DBAY
team previously worked at Laxey Partners, a hedge fund, where they managed an
investment portfolio, and at DouglasBay Capital plc, an AIM listed investment
company. In 2008, under the DBAY team's management, DouglasBay Capital plc
took private and successfully restructured TDG, the logistics company. During
this period (2006 - 2011), the DBAY team generated returns including a gross
money multiple ("MM") of 2.7x and a gross internal rate of return ("IRR") of
36%. In 2015, DBAY raised DBAY Fund II, which is currently performing with a
gross MM of 1.9x and 14% gross IRR on a stand-alone basis as at 30 September
2021 (and an estimated gross MM of 3.2x and 44% gross IRR if the cash returns
to co-investors are included). In 2019, DBAY raised DBAY Fund III, which is
currently valued at a gross MM of 2.0x and 48% gross IRR on a standalone basis
as at 30 September 2021.
Investment Policy and Strategy
The investment objective of the Company is to provide shareholders with
attractive total return achieved through capital appreciation and, when
prudent, shareholder distributions or dividends. The Directors believe that
opportunities exist to create significant value for shareholders through the
acquisition of, and the implementation of substantial operational improvements
in, businesses in the sectors outlined in the Company's Investing Policy.
The new investing policy can be found on the website www.ldgplc
(http://www.ldgplc) .com.
DBAY is tasked with full authority to manage the Company's assets to deliver
the investment strategy set out below in accordance with its investing policy,
reporting to the Board on a regular basis.
The Investing Policy, approved by shareholders on 31 January 2022, states that
the Company will seek to achieve its investment objectives by making
investments within the following parameters:
● Characteristics: investment primarily in undervalued companies,
with a focus on companies that generate or have the potential to generate
significant cash flows, where there is a high degree of revenue visibility and
a strong and distinctive market position;
● Investment Type: investment in equity and equity related products,
in both quoted and unquoted companies, and in the DBAY Investment Funds;
● Sectors: a broader range of sectors, such as business services
including, amongst others, logistics, distribution, technology services,
security and manufacturing, or in funds managed by DBAY which invest in the
aforementioned sectors;
● Geography: there is no geographical restriction but expected to be
primarily within the United Kingdom or the European Union;
● Ownership: will range from a minority position to 100%,
non-operating ownership; and
● Restrictions: a maximum of 50% of the Company's Net Asset Value
("NAV") at the time the relevant investment is made, using the latest
available management accounts of the Company, can be invested in DBAY
Investment Funds. Investments made outside of the DBAY Investment Funds will
be limited to 10% of NAV per investment (on the same basis), unless approved
by the Board.
In addition, DBAY has agreed that it will fund the Company's reasonable
corporate costs going forward.
Investment Management agreement amendments
The original investment management agreement was approved by shareholders on
29 December 2020, in order to effect the revised investment policy several
changes were made to the investment management agreement being:
· DBAY will not receive management or performance fees from LDG in
respect of funds committed to the DBAY Investment Funds by the Company. Fees
will only be charged by the fund, to ensure there will be no double charging;
· DBAY have made a commitment to ensure that any DBAY Investment
Funds in which the Company invests will retain investment policies that are
substantially the same as the new investing policy of the Company;
· DBAY has made a commitment that it will provide the Company with
an amount which is equal to the Company's reasonable corporate expenses in the
given year, provided that such amount shall not exceed the lower of: (i)
£800,000: or (ii) the management fees in respect of investments made and/or
amounts committed by the Company which are received by DBAY in the relevant
year; and
· DBAY will ensure that there is at all times a contingency amount
of at least £2 million on the Company's balance sheet to cover any
exceptional expenses that may arise in the future.
Annual general meeting
The Company intends to hold its Annual General Meeting on 12 May 2022 in
London. Further details will be set out in the Notice of Meeting to be sent to
shareholders in due course and published on our website www.ldgplc.com.
(1) Underlying EBIT is an alternative performance measure (see Note 3) and is
defined as profit/loss before interest and tax adding back exceptional items.
Company Statement of Comprehensive Income
for the year ended 30 November 2021
Year ended Year ended
30 November 2021
30 November 2020
Note £'000 £'000
Gain/(loss) on investments measured at fair value through profit or loss - net 10 85,665 (9,152)
Administrative expenses: before exceptional items (1,100) (2,162)
Administrative expenses: exceptional items 5 90 3,415
Total administrative expenses (1,010) 1,253
Profit/(loss) before tax 84,655 (7,899)
Income tax charge 7 - -
Profit/(loss) and total comprehensive income/(expense) for the year 84,655 (7,899)
Earnings/(loss) per share
Basic 9 12.1p (2.1p)
Diluted 9 12.1p (2.1p)
The accompanying notes form part of the financial statements.
Company Statement of Financial Position
as at 30 November 2021
30 November 2021 30 November 2020
Note £'000 £'000
Assets
Non-current assets
Investments at fair value through profit or loss 10 2,218 35,848
2,218 35,848
Current assets
Other receivables 11 114 28
Cash and cash equivalents 11 131,902 652
132,016 680
Total assets 134,234 36,528
Current liabilities
Amounts owed to related undertakings 11 - (1,235)
Other payables 11 (290) (2,184)
(290) (3,419)
Total liabilities (290) (3,419)
Net assets 133,944 33,109
Equity
Called up share capital 12 7,022 3,793
Share premium account 12 157,476 146,002
Own treasury shares 12 (857) (2,611)
Retained earnings 12 (29,697) (114,075)
Total shareholders' funds 133,944 33,109
The accompanying notes form part of the financial statements.
The Company Financial Statements on pages 27 to 44 were approved by the Board
of Directors on 5 April 2022 and were signed on its behalf by:
Adrian Collins
Director
Company number 08922456
Company Statement of Changes in Equity
for the year ended 30 November 2021
Share capital Share premium Merger reserve Share options reserves Own treasury shares Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 December 2019 3,793 146,002 7,950 4,218 (2,700) (117,269) 41,994
Loss for the year - - - - - (7,899) (7,899)
Share based payment charges - - - 491 - - 491
Transfer of shares from the trust - - - - 89 (89) -
Transfers - - (7,950) (4,709) - 12,659 -
Fund raise costs (note 12) - - - - - (1,477) (1,477)
Balance at 30 November 2020 3,793 146,002 - - (2,611) (114,075) 33,109
Profit for the year - - - - - 84,655 84,655
Issue of share capital 3,229 12,951 - - - - 16,180
Transfers - fund raise costs 2020 (note 12) - (1,477) - - - 1,477 -
Transfers (note 12) - - - - 1,754 (1,754) -
Balance at 30 November 2021 7,022 157,476 - - (857) (29,697) 133,944
The accompanying notes form part of the financial statements.
Company Cash Flow Statement
for the year ended 30 November 2021
Year ended Year ended
30 November 2021
30 November 2020
Note £'000 £'000
Cash flows from operating activities
Profit/(loss) for the year 84,655 (7,899)
Adjustments for:
Equity settled share-based payment expenses 12 - 491
(Gain)/loss on investments measured at fair value through profit or loss - net 10 (85,665) 9,152
Changes in:
Increase in Other receivables 11 (86) 53,492
Decrease in Other payables 11 (1,652) (54,838)
Net cash (outflow)/inflow from operating activities (2,748) 398
Cash flows from investing activities
Dividends received 10 125,295 -
Purchase of investment 10 (6,000) -
Net cash inflow/(outflow) from investing activities 119,295 -
Cash flows from financing activities
Issuing share capital and share premium 12 16,180 -
Share issue costs paid 12 (1,477) (108)
Net cash inflow/(outflow) from financing activities 14,703 (108)
Net increase in cash and cash equivalents 131,250 290
Cash and cash equivalents at the start of the financial year 652 362
Cash and cash equivalents at the end of the financial year 131,902 652
The accompanying notes form part of the financial statements.
Notes to the Company Financial Statements
for the year ended 30 November 2021
1. Basis of accounting
Logistics Development Group plc (the "Company") is a public company limited by
shares and incorporated and domiciled in England, United Kingdom. Its
registered address is 4th Floor, 3 More London Riverside, London, SE1 2AQ.
Basis of preparation
The Financial Statements were prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act
2006 ("IFRS").
The Financial Statements are presented in pounds sterling, rounded to the
nearest thousand, unless otherwise stated.
As at 30 November 2021, the Company has no subsidiaries and, as such, no
consolidated financial statements have been presented. The Financial
Statements therefore present Company only information for the current and
comparative periods.
The Financial Statements were prepared under the historical cost convention,
except for financial assets recognised at fair value through profit or loss,
which have been measured at fair value. The Company is not registered for VAT
and therefore all expenses are recorded inclusive of VAT.
Significant holdings in undertakings other than subsidiary undertakings
As at 30 November 2021 the Company had a significant holding in Marcelos
Limited ("Marcelos"), incorporated in the Isle of Man. Marcelos has 100 £1
ordinary shares in issue, of which the Company held 49 shares. Its registered
address is First Names House, Victoria Road, Douglas, Isle of Man IM2 4DF.
Going concern
The Directors have a reasonable expectation that the Company has sufficient
resources to continue in operation for the foreseeable future, a period of at
least 12 months from the date of this report. The Directors have prepared a
cash flow forecast for a period of 3 years which indicates that available
funds significantly exceed anticipated expenditure. Consequently, the
Directors of the Company continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
2. Significant accounting policies
(a) Investments in associates - associates are all entities over which the
Company has significant influence but not control or joint control.
Investments in associates are initially recognised at fair value and
subsequently measured at fair value through profit or loss.
(b) Fair value measurement - the fair value measurement of the Company's
investments utilises market observable inputs and data as far as possible.
Inputs used in determining fair value measurements are categorised into
different levels based on how observable the inputs used in the valuation
technique utilised are (the 'fair value hierarchy'):
- Level 1: Quoted prices in active markets for identical items (unadjusted);
- Level 2: Observable direct or indirect inputs other than Level 1 inputs;
- Level 3: Unobservable inputs (i.e. not derived from market data and may
include using multiples of trading results or information from recent
transactions).
The classification of an item into the above levels is based on the lowest
level of the inputs used that has a significant effect on the fair value
measurement of the item. Transfers of items between levels are recognised in
the period they occur.
(c) Financial instruments
- Financial assets - other receivables and amounts owed to related
undertakings. Such assets are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition,
such assets are measured at amortised cost using the effective interest
method, less any impairment losses.
- Cash and cash equivalents - in the Statement of Financial Position, cash
includes cash and cash equivalents excluding bank overdrafts. No expected
credit loss provision is held against cash and cash equivalents as the
expected credit loss is negligible.
- Financial liabilities - other payables and amounts owed to related
undertakings. Such liabilities are initially recognised on the date that the
Company becomes party to contractual provisions of the instrument. The Company
derecognises a financial liability when its contractual obligations are
discharged, cancelled or expire. Such financial liabilities are recognised
initially at fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at
amortised cost using the effective interest method.
- Share capital - Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares are recognised as a
deduction from equity, net of any tax effects.
(d) Exceptional items - items that are material in size or nature and
non-recurring are presented as exceptional items in the Statement of
Comprehensive Income. The Directors are of the opinion that the separate
recording of exceptional items provides helpful information about the
Company's underlying business performance. Events which may give rise to the
classification of items as exceptional include restructuring of business units
and the associated legal and employee costs, costs associated with business
acquisitions, impairments and other significant gains or losses.
(e) Alternative performance measures (APMs) - APMs, such as underlying
results, are used in the day-to-day management of the Company, and represent
statutory measures adjusted for items which, in the Directors' view, could
influence the understanding of comparability and performance of the Company
year on year. These items include non-recurring exceptional items and other
material unusual items.
(f) Tax - tax expense comprises current and deferred tax. Current tax and
deferred tax are recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or in other comprehensive
income. Deferred tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
(g) Operating segments - the Company has a single operating segment on a
continuing basis, namely investment in a portfolio of assets.
(h) Fund raise costs - transaction costs incurred in anticipation of an
issuance of equity instruments are recorded as a deduction from the retained
earnings reserve in accordance with IAS 32 and the Companies Act 2006.
(i) Own shares reserve - transfer of shares from the trust to employees is
treated as a realised loss and recognised as a deduction from the retained
earnings reserve.
New and amended standards adopted by the Company
There are no IFRS standards or IFRIC interpretations that are mandatory for
the year ended 30 November 2021 that have a material impact on the financial
statements of the Company.
Critical judgements in applying the Company's accounting policies
In applying the Company's accounting policies, the Directors have made the
following judgements that have the most significant effect on the amounts
recognised in the financial statements (apart from those involving
estimations, which are dealt with below) and have been identified as being
particularly complex or involve subjective assessments.
(i) Measurement of the investments - during the prior year, the Company
elected to measure its investment in Marcelos, the intermediate holding
company of the GWSA Group, at fair value through profit and loss. The election
is taken on the basis of the investment being a 'venture capital' investment
under IAS 28 'Investments in Associates and Joint Ventures'.
The strategy of the Company as an Investing Company is to generate value
though holding investments for the short to medium term. Therefore, the
Directors believe that the fair value method of accounting for the investments
is in line with the strategy of the Company.
Had the election not been made, the investment in Marcelos would have been
subject to equity accounting that involves recognition of the investment at
cost and subsequent measurement at cost plus a share of profits and losses of
the GWSA Group, less dividends received.
(ii) Fair value of the investments - the Directors have recorded the
investment in Marcelos at fair value. The fair value at the period end was
calculated on the basis of the net assets of Marcelos, and represents the
guaranteed expected future cashflows relevant to the Company. The fair value
at the prior period end was calculated on the basis of the market
capitalisation of the Company, which was considered to be the most suitable
valuation methodology as at 30 November 2020. The Directors reviewed other
valuation metrics such as peer group trading multiples. Based on these metrics
the valuation was justifiable, albeit at the lower end of the range of
possible values. The Directors believed that this valuation approach
represented the price of the Company that would be received in an orderly
transaction between market participants.
Key sources of estimation in applying the Company's accounting
policies
The Directors believe that there are no key assumptions concerning the future,
and other key sources of estimation uncertainty at the balance sheet date that
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
3. Alternative performance measures reconciliations
Alternative performance measures (APMs), such as underlying results, are used
in the day-to-day management of the Company, and represent statutory measures
adjusted for items which, in the Directors' view, could influence the
understanding of comparability and performance of the Company year on year.
The reconciliation of APMs to the reported results is detailed below:
2021 2020
£'000 £'000
Profit/(Loss) before tax 84,655 (7,899)
Exceptional income 90 3,415
Underlying EBIT 84,565 (11,314)
2021 2020
(in (in
thousands) thousands)
Weighted average number of Ordinary Shares - Basic 702,206 379,347
Weighted average number of Ordinary Shares - Diluted 702,206 379,347
Underlying Basic earnings/(loss) per share for total operations 12.0p (3.0p)
Underlying Diluted earnings/(loss) per share for total operations 12.0p (3.0p)
4. Employees and Directors
Staff costs and the average number of persons (including Directors) employed
by the Company during the year are detailed below:
2021 2020
£'000 £'000
Staff and Director costs for the Company during the year
Wages and salaries 250 292
Social security costs 19 26
269 318
Average monthly number of employees and Directors
Employees and Directors 4 4
A summary of Directors' remuneration (key management personnel) is detailed
below:
2021 2020
£'000 £'000
Emoluments, bonus and benefits in kind 194 245
Total Directors' remuneration 194 245
Remuneration of the highest paid Director is detailed below:
2021 2020
£'000 £'000
Emoluments, bonus and benefits in kind 93 64
5. Exceptional items
During the year, the Company recognised exceptional income in relation to a
VAT refund of £90,000 associated with the disposal of GWSA.
During the prior year, the Company recognised exceptional income in relation
to reimbursed transaction costs of £2,845,000 associated with the disposal of
GWSA and 2019-related audit fees of £570,000. The costs were incurred by the
Company in 2019 and ultimately borne by GWSA upon completion of the
transaction in accordance with deal arrangements.
6. Audit fees
During the year, the Company obtained the following services from the
Company's auditors, the costs of which (inclusive of VAT as the Company is not
registered for VAT) are detailed below:
2021 2020
£'000 £'000
Fees payable for the audit of the Company's annual financial statements 119 114
Audit-related assurance services - 96
Other assurance services (fund raise expenses) - 554
Total fees payable to Company's auditors 119 764
7. Income tax charge
The Company did not recognise current and deferred income tax charge or credit
(2020: nil). In 2021, the deferred tax asset of £412,050 (2020: £219,000)
was not recognised as the Directors do not consider that there is sufficient
certainty over its recovery. The underlying tax losses can be carried forward
indefinitely.
The income tax charge for the year included in the statement of comprehensive
income can be reconciled to loss before tax multiplied by the standard rate of
tax as follows:
2021 2020
£'000 £'000
Profit/(loss) before tax 84,655 (7,899)
Expected tax charge/(credit) based on a corporation tax rate of 19% (2020: 16,084 (1,501)
19%)
Effect of expenses not deductible in determining taxable profit 98 1,282
Effect of income not taxable in determining taxable profit (16,276) -
Unused tax losses for which no deferred tax asset has been recognised 94 219
Effect of a change in future corporation tax rate on the deferred tax asset - -
Income tax charge - -
The current effective UK corporation tax rate for the financial year is 19%.
The UK corporation tax rate will remain at 19% until 31 March 2022. On 3 March
2021, it was announced that the main rate of corporation tax will increase to
25% from 1 April 2023. As a result, the deferred tax asset has been calculated
using the 25% rate.
8. Dividends
At the date of approving these Financial Statements, no final dividend has
been approved or recommended by the Directors (2020: £Nil).
9. Earnings per share
Basic earnings per share amounts are calculated by dividing profit/(loss) for
the period attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the 12 months to
the period end.
Diluted earnings per share amounts are calculated by dividing the
profit/(loss) attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would be issued on
conversion of all the potentially dilutive instruments into ordinary shares.
The Company has no dilutive instruments to be included in the calculation.
2021 2020
£'000 £'000
Profit/(loss) attributed to equity shareholders 84,655 (7,899)
2021 2020
(in (in
thousands) thousands)
Weighted average number of Ordinary Shares - Basic 702,206 379,347
Weighted average number of Ordinary Shares - Diluted 702,206 379,347
Basic earnings/(loss) per share for total operations 12.1p (2.1p)
Diluted earnings/(loss) per share for total operations 12.1p (2.1p)
10. Investments at fair value through profit or loss
GreenWhiteStar Alpha Persei Marcelos Total investments
Acquisitions Limited Limited
Limited
£'000 £'000 £'000 £'000
1 December 2019 45,000 - - 45,000
Disposals during the year (45,000) - - (45,000)
Additions during the year - - 45,000 45,000
Change in fair value - - (9,152) (9,152)
30 November 2020 - - 35,848 35,848
Additions during the year - 6,000 - 6,000
Change in fair value - 287 85,378 85,665
Dividends - (6,287) (119,008) (125,295)
30 November 2021 - - 2,218 2,218
During the year, the Company acquired for £6.0 million a 10.9% equity
interest in Alpha Persei Limited which held an 18% PIK Loan note with indirect
exposure to the performance of GWSA.
During the year, the Company announced the disposal of its interest in GWSA
Group, held through its investments in Marcelos and Marcelos' wholly owned
subsidiary Alpha Cassiopeiae Limited.
The disposal resulted in the Company receiving a dividend of £6,287,000 from
Alpha Persei Limited and a dividend of £119,008,000 from Marcelos. These
dividends were considered to be a return of capital and have been offset
against the carrying value of the investment.
As at 30 November 2021, the Company's investment in Marcelos was revalued to
£2,218,000 as a result of a dividend proposed to be paid to the Company from
Marcelos during the next financial year.
11. Financial assets and liabilities
2021 2020
£'000 £'000
Financial assets at fair value through the profit or loss
Investments in associate (see note 10) 2,218 35,848
Financial assets at amortised cost
Other receivables 114 28
Total financial assets 2,332 35,876
Financial liabilities at amortised cost
Amounts owed to related undertakings (see note 13) - (1,235)
Other payables (290) (2,184)
Total financial liabilities (290) (3,419)
Cash and cash equivalents 131,902 652
Net funds 131,902 652
All financial assets and liabilities mature within one year. The fair value of
those assets and liabilities approximates their book value.
Other receivables represent prepayments. Other payables include accruals of
£216,000 (2020: £2,122,000 with £1,369,000 relating to the accrued fund
raise costs).
The Company's overall risk management programme focuses on reducing financial
risk as far as possible and therefore seeks to minimise potential adverse
effects on the Company's financial performance. The policies and strategies
for managing specific financial risks are summarised as follows:
Liquidity risk
The Company finances its operations by equity. The Company undertakes
short-term cash forecasting to monitor its expected cash flows against its
cash availability. The Company also undertakes longer-term cash forecasting to
monitor its expected funding requirements in order to meet its current
business plan.
Credit risk
The Company's principal exposure to credit risk is in the amounts owed by
related undertakings. There are no related undertakings in the current year.
Capital management
Capital comprises share capital of £7.0m (2020: £3.8m) and share premium of
£157.5m (2020: £146.0m).
12. Capital and reserves
No of Called up share Share
shares capital premium account
'000 £'000 £'000
Ordinary shares of 1p each in issue at 30 November 2020 379,347 3,793 146,002
Ordinary shares of 1p each in issue at 30 November 2021 702,206 7,022 157,477
All of the ordinary shares in issue referred to in the table above were
authorised and are fully paid.
During the prior year, costs in relation to the fund raise of £1.5m in
December 2020 were deducted from the retained earnings reserve. During the
year, these costs were reclassified from retained earnings to be offset
against share premium.
Own treasury shares
Included in the total number of ordinary shares outstanding above are 535,440
(2020: 1,634,304) ordinary shares held by the Company's employee benefit
trust. The ordinary shares held by the trustee of the Company's employee
benefit trust pursuant to the SIP are treated as Own shares in the Company's
Balance Sheet in accordance with IAS 32. During the year, 1,098,864 (2020:
55,696) shares were transferred to employees of the GWSA Group.
13. Related party transactions
During the year, the Company settled the amount due to related party GWSA as
at the prior year end, for the value £1,235,000. The Company did not enter
into any other related party transactions.
During the prior year, from the date of the disposal of the investment in its
subsidiary, GWSA, the Company entered into commercial transactions with GWSA
as follows:
Amounts owed to related parties
£'000
9 December 2019 -
Purchases from related parties 385
Reimbursement from related parties 850
30 November 2020 1,235
14. Capital commitments
At 30 November 2021, the Company had no commitments (2020: £Nil).
15. Contingent liabilities
At 30 November 2021, the Company had no contingent liabilities (2020: £Nil).
16. Subsequent events
On 14 January 2022, the Company received a dividend from Marcelos Limited of
£2,218,000.
Following shareholders' approval by a special resolution on 31 January 2022,
the Court approved a reduction of the Company's share premium on 22 February
2022 of £157,477,000 to distributable reserves. The distributable reserve
will allow the Company to proceed with an on-market purchase of up to 20% of
the Company's issued share capital.
On 10 March 2022, the Company announced that it had acquired 1,000,000
ordinary shares in Caretech Holdings PLC at £6.335 per share, for a total
consideration of £6.3m. This was its first investment since becoming an
Investing Company and is consistent with its investing policy as amended after
the General Meeting held on 31 January 2022.
On 1 April 2022, the Company announced that it had acquired a further 974,130
shares in Caretech Holdings Plc at an average price of £6.95 per share, for a
total consideration of £6,769,069.
GLOSSARY
Term Definition
Accounts The financial statements of the Company
Admission The admission of the issued ordinary shares in the Company admitted to trading
on AIM that became effective on 31 December 2020
AGM Annual general meeting of the Company
AIM Alternative Investment Market of the London Stock Exchange
AIM Rules The AIM Rules for Companies published by the London Stock Exchange from time
to time (including, without limitation, any guidance notes or statements of
practice) which govern the rules and responsibilities of companies whose
shares are admitted to trading on AIM
AIM Investing Company An Investing Company as defined by the AIM rules.
APMs Alternative Performance Measures
Board The Board of Directors of the Company
CAGR Compound annual growth rate
CGU Cash Generating Unit
Company Logistics Development Group plc, a public limited company incorporated in
England and Wales with registered number 08922456
DBAY DBAY Advisors Limited and/or any fund(s) or entity(ies) managed or controlled
by DBAY Advisors Limited as appropriate in the relevant context
DBAY Transaction On 9 December 2019 DouglasBay Capital III Fund LP, a fund managed by DBAY
Advisors Limited completed the acquisition of an indirect 51% equity stake in
GreenWhiteStar Acquisitions Limited.
Directors The Directors of the Company as at the date of this document, as identified on
page 10
EBITDA Earnings before interest, tax, depreciation and amortisation
Eddie Stobart Businesses Eddie Stobart, The Pallet Network, iForce, Eddie Stobart Europe and The
Logistics People
EPS Earnings per share
FY20 Financial Year ended 30 November 2020
FY21 Financial Year ended 30 November 2021
GWSA GreenWhiteStar Acquisitions Limited, the operational holding company of the
Eddie Stobart trading entities; Eddie Stobart Limited, iForce Limited, The
Pallet Network Limited and The Logistic People Limited.
GWSA Group GreenWhiteStar Acquisitions Limited and all of its subsidiaries from time to
time
HY20 Six month period ended 31 May 2020
HY21 Six month period ended 31 May 2021
IAS International Accounting Standards
IFRS International Financial Reporting Standards
Investment Management Agreement An investment management agreement entered into between the Company and DBAY,
pursuant to which DBAY has been appointed as the Company's investment manager
Investing Policy The Company's investing policy more particularly set out on pages 6 and 7
LTIP The Long Term Incentive Plan
Marcelos Marcelos Limited, a company incorporated on the Isle of Man (company no.
016829v), whose registered office is at First Names House, Victoria Road,
Douglas, Isle of Man, IM2 4DF
Ordinary Shares/Shares Ordinary shares of £0.01 each in the capital of the Company
PIK Loan note Loan of £55m used to effect the DBAY transaction, which carries interest at
18% compounding quarterly, maturing in November 2025.
PWC PricewaterhouseCoopers LLP - the Company's auditors
QCA Quoted Companies Alliance
QCA Governance Code QCA Corporate Governance Code for Small and Mid-Size Quoted Companies
published by the QCA
SIP Share Incentive Plan
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