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Clipper Logistics plc Final Results for the year ended 30 April 2020

24/08/2020 7:00am

UK Regulatory (RNS & others)


Clipper Logistics (LSE:CLG)
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TIDMCLG

RNS Number : 8913W

Clipper Logistics plc

24 August 2020

24 August 2020

Clipper Logistics plc

Final Results for the year ended 30 April 2020

An excellent year leading to record results; strong momentum throughout COVID-19

Clipper Logistics plc ("Clipper", the "Group", or the "Company"), a leading provider of value-added logistics solutions, e-fulfilment and returns management services, is pleased to announce its Full Year Results for the year ended 30 April 2020.

Financial highlights for the year ended 30 April 2020

 
 --   Group revenue increased by 8.8% from GBP460.2m to GBP500.7m. 
 --   Group EBIT(1) up 19.1% to GBP24.1m (2019: GBP20.2m). 
 --   Group profit after tax of GBP16.2m (2019: GBP13.4m). 
 --   Basic earnings per share were 15.9 pence (2019: 13.2 pence), an 
       increase of 20.5%. 
 --   Cash generated from operations(1) of GBP31.9m (2019: 28.3m). 
 --   Strength of performance and cash generation leads the Board to 
       recommend a final dividend of 6.2p per share, making a total dividend 
       per share of 9.7p for the full year (2019: 9.7p). 
 --   Net debt at 30 April 2020 was just over 1xEBITDA, representing 
       very substantial headroom against the net debt covenant of 2.5x. 
 

(1.) This is an alternative performance measure, the definition of which can be found in the Alternative performance measures section of the Operating and Financial review together with a reconciliation to the statutory measure. This is to aid comparability to the prior year, and applies throughout this announcement.

Operational highlights for the year ended 30 april 2020

 
 --   Significant organic growth in the period, particularly driven 
       by high e-fulfilment volumes, leading to milestone revenue of 
       over GBP0.5 bn in the period. 
 --   Sharp bounce back in activity levels following implementation 
       of Government restrictions on non-essential retail due to COVID-19 
       pandemic which temporarily affected high street and e-commerce 
       demand. 
 --   Swift re-deployment of Clipper network, following outbreak of 
       COVID-19, to meet high demand for additional distribution capability 
       from new and existing food retail customers including Tesco, Asda 
       and Morrisons. 
 --   Clipper mandated to establish a new supply chain for NHS Personal 
       Protective Equipment (PPE) products, delivering to NHS Hospital 
       Trusts and other healthcare providers across the UK; solution 
       mobilised within four days. 
 --   Commenced multiple new contracts with high-profile customers such 
       as Amara, Joules, N Brown, the NHS, SLG and the Very Group. 
 --   Expanded existing contracts with multiple customers including 
       PrettyLittleThing.com, Neon Sheep, Levi Strauss, Sports Direct, 
       Vestel and Ginger Ray. 
 --   Organic growth supported by high demand in European market with 
       extended contracts with customers including Westwing and s.Oliver. 
 --   Continued progress for technical services providing electrical 
       product returns to customers, with new contracts secured with 
       Amazon, John Lewis and the Very Group. 
 --   Board further strengthened by appointment of Dino Rocos, a highly 
       experienced supply chain leader, bringing with him over forty 
       years' retail industry experience at the UK's leading omni-channel 
       retailer, John Lewis. 
 

Post year end highlights

 
 --   Appointment of Christine Cross to the Board as Senior Independent 
       Non-Executive Director, bringing considerable retail experience 
       with FTSE100 and FTSE250 businesses. 
 --   Further support provided to NHS through provision of an online 
       portal for fulfilling orders for PPE to GP surgeries, small care 
       homes and home care providers. 
 --   New activities undertaken after Government restrictions began 
       and new contracts that came on stream in Q1 FY21 added a further 
       1.5 million square feet of space to pre-existing 10 million sq. 
       ft. infrastructure. 
 --   Annualised revenue of the probability-weighted pipeline of over 
       GBP50 million, a significant increase on the same period last 
       year. 
 --   Clicklink service expected to see increased demand as the UK Government 
       looks to encourage the use of Click & Collect initiatives to kick-starting 
       activity on the UK's high street whilst reducing congestion. 
 --   Clipper consolidating position at the forefront of industry, creating 
       shared user transport networks to enable multi-use client delivery 
       services to the high street as clients reconsider supply chain 
       needs. 
 --   Commencement of operations on new contract wins with Arcadia and 
       T.M. Lewin. 
 

Outlook

General economic conditions remain uncertain due to the COVID-19 pandemic. However, the Group has experienced a very positive start to the new financial year, with exceptionally high levels of demand for its e-fulfilment and returns management services in particular. Consequently, the Board anticipates that the Group's results for the year ending 30 April 2021 will comfortably exceed market expectations.

Steve Parkin, Executive Chairman of Clipper commented:

"I am delighted to report such a strong set of final results as Clipper reaches a significant milestone, delivering record revenues exceeding GBP0.5 billion. This has been driven by strong organic growth in the period, particularly in e-fulfilment, and value-enhancing acquisitions made in prior years."

"The impact of Government restrictions affected many of our retail clients, however it was testament to our long standing and proactive client relationships and broad service offering that activity levels have swiftly bounced back and have since achieved record levels after the initial disruption. There will, without doubt, be longer term changes to the retail landscape however we are confident that our ability to evolve our solutions to meet client needs will ensure that Clipper benefits from these trends as the shift to online retail accelerates."

"Recent contract wins, together with a strong pipeline of new business activity and the further evolution of our Click and Collect proposition, we believe place the Group in an excellent position to achieve further growth both in the UK and internationally and we look forward to the new financial year with confidence as we continue to deliver shareholder value."

Forward looking statements

This announcement contains forward looking statements. These have been made by the Directors in good faith using information available up to the date on which they approved this report. The Directors can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both business and economic risk factors underlying such forward looking statements, actual results may differ materially from those expressed or implied by these forward looking statements. Except as required by law or regulation, the Directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

Publication of Annual Report and Accounts

Clipper's 2020 Annual Report and Accounts are available on the Company's website: https://www.clippergroup.co.uk/report-accounts/ and will shortly be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Copies of the Annual Report and Accounts will be posted to shareholders who require them in hard copy shortly and a further announcement will be made by the Company at that time.

This announcement is released by Clipper Logistics plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"). It is disclosed in accordance with the Group's obligations under Article 17 of MAR. Upon the publication of this announcement, this information is considered to be in the public domain.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of Clipper Logistics plc by David Hodkin, Chief Financial Officer.

Enquiries

 
 Clipper:                            +44 (0)11 3204 2050 
 Steve Parkin, Executive Chairman 
 Tony Mannix, Chief Executive 
  Officer 
 David Hodkin, Chief Financial 
  Officer 
 
 Buchanan:                           +44 (0) 20 7466 5000 
 David Rydell 
 Stephanie Watson 
 

Chairman's statement

As Chairman of Clipper Logistics plc, I am pleased to present our 2020 financial results.

In the financial year ended 30 April 2020 the Group achieved a milestone, with revenue exceeding GBP0.5 billion. This has arisen through organic growth, particularly in e-fulfilment and returns management. As the retail sector evolves, we continue to identify key emerging trends and drive innovation such that we can continue to support our partners with 'best-in-class' solutions.

On 23 March 2020, the Government announced the 'lockdown' and consequent closure of non-essential retail outlets. This resulted in a diminution in activity in not only high street retail, but also in online demand. However, demand for online fulfilment quickly recovered and rose to unprecedented levels. We recognised those trends and ensured that we had in place sufficient resources to satisfy rapidly increasing demand for e-fulfilment and returns management activity. We further re-deployed our distribution networks to support the demands placed on food retailers by the pandemic to help feed the nation.

Clipper was approached by the NHS Supply Chain for assistance with provision of PPE to hospitals and other care providers in light of the growth of the pandemic. I am immensely proud of the achievements of our teams, in developing a solution within four days, to establish a separate supply chain for the distribution of PPE to nearly 600 hospitals. We further quickly developed, in conjunction with eBay, an online portal to enable care providers, care homes and other organisations to order PPE online, and to provide fulfilment of these orders.

Recent research would indicate that COVID-19 has led to a permanent upward shift in the transition of retail online. Given our already strong pipeline in e-fulfilment, returns management and Click and Collect, Clipper is extremely well positioned to continue to deliver on these trends.

We look into the new financial year with confidence. The Group will continue to focus on our four strategic pillars; to build our market -- leading customer proposition to expand the customer base; develop new, complementary products and services; continue European expansion; and explore acquisition opportunities.

I am delighted that we have commenced significant new contracts with high-profile customers such as Amara, Joules, N Brown, the NHS, SLG and the Very Group.

We have achieved strong organic growth with PrettyLittleThing.com, Neon Sheep, Levi Strauss, Sports Direct, Vestel and Ginger Ray.

Our European business continues to enjoy very strong organic growth with customers including Westwing and s.Oliver.

In addition, our technical services operation is performing well, having secured contracts with Amazon, John Lewis and the Very Group for the management of electrical product returns.

The commercial vehicles business saw a return to normalised levels of profitability, until the government imposed lockdown as a result of the COVID-19 pandemic.

The Group is well positioned to continue to deliver strong returns to our shareholders as the trends toward online retailing continue.

Group results

Group revenue increased by 8.8% to GBP500.7 million for the year ended 30 April 2020 (2019: GBP460.2 million), and Group EBIT (IAS 17 basis)(1) was GBP24.1 million (2019: GBP20.2 million), growth of 19.1%. Group EBIT(1) inclusive of IFRS 16 was GBP32.5 million. Diluted earnings per share were 15.8 pence for the year ended 30 April 2020 (2019: 13.1 pence), an increase of 20.6%. Basic earnings per share were 15.9 pence (2019: 13.2 pence), an increase of 20.5%.

People and Board

Clipper Logistics plc is led by an excellent management team that has been at the core of the business for many years.

The team has a proven track record of identifying key trends within the sectors we serve and developing relevant cost-effective solutions that address those needs. Further, we have a proven ability to identify acquisitions that enhance Group performance and shareholder value. We explored potential acquisitions during the year; however, on the conclusion of our internal due diligence processes, they were not pursued as they did not meet the Group's strategic objectives.

We have recently made new appointments to enhance our Senior Management Team.

I would like to take this opportunity to thank all the employees of the Group for their continued commitment and contribution to the Group's performance, particularly in the light of the challenges presented by COVID-19.

Governance

The executive management team comprises Tony Mannix (Chief Executive Officer), David Hodkin (Chief Financial Officer) and myself, and the Group benefits from the combined experience of Christine Cross (Senior Independent Director), Dino Rocos and Stuart Watson, our Independent Non-Executive Directors.

Christine Cross joined the Board on 3 June 2020 and Dino Rocos on 1 January 2020. Stephen Robertson stood down from the role of Senior Independent Director on 3 June 2020, having completed his second three-year term. Mike Russell stood down from the Board on 28 February 2020, having served on the Board of Clipper and its former parent company prior to IPO for nine years.

I would personally like to thank Stephen and Mike for their commitment and valuable contribution over the years. I also would like to welcome Christine and Dino to the Board.

Dividends

The Board is recommending a final dividend of 6.2 pence per share, making a total dividend in respect of the year ended 30 April 2020 of 9.7 pence (2019: 9.7 pence).

The proposed final dividend, if approved by shareholders, will be paid on 5 October 2020 to shareholders on the register at the close of business on 11 September 2020.

Outlook

The Group continues to be one of the leading providers of value-added logistics and e-fulfilment solutions to the retail sector in the UK, and is rapidly growing its operations in Europe. Recent contract wins, together with a strong pipeline of new business activity and the further evolution of our Click and Collect proposition, we believe place the Group in an excellent position to achieve further growth both in the UK and internationally. Indeed, Clipper's approach of adopting a hands-on, long-term and pro-active relationship with its retail clients allows it to continue to support its clients during these changing retail market conditions.

I look forward to working with all of the Group's stakeholders as we continue to drive the Group forward.

Steve Parkin

Executive Chairman

Operating and Financial Review

Group performance for the year ended 30 April 2020

On 1 May 2019, the Group applied IFRS 16 - a new accounting standard effective for the year ended 30 April 2020. The Group applied the modified retrospective approach with no restatement of prior year comparatives. To aid comparability to the prior year, the discussion of the results is excluding the impact of IFRS 16 ("IAS 17 basis") unless otherwise stated. This is now considered an alternative performance measure.

The Group continued to make good progress in the financial year ended 30 April 2020. Group revenue grew by 8.8% to GBP500.7 million. Group EBIT(1) for the year was GBP24.1 million compared to GBP20.2 million in the prior year, an increase of 19.1%.

Revenue growth was very strong in e-fulfilment & returns management services, where revenue of GBP277.0 million was 18.4% ahead of the previous year. Non e-fulfilment revenues marginally declined by 1.0% to GBP143.8 million, whilst revenue from commercial vehicles remained flat year-on-year.

EBIT(1) in both operating segments grew significantly in the financial year ended 30 April 2020. Value-added logistics services increased by 18.4% to GBP24.9 million and the commercial vehicles segment increased by 72.6% to GBP2.0 million.

Group revenue

 
                                       Year ended  Year ended 
                                           30 Apr      30 Apr 
                                             2020        2019        % 
Revenue                                      GBPm        GBPm   change 
-------------------------------------  ----------  ----------  ------- 
E-fulfilment & returns management 
 services                                   277.0       233.9   +18.4% 
Non e-fulfilment logistics                  143.8       145.3    -1.0% 
-------------------------------------  ----------  ----------  ------- 
Total value-added logistics services        420.8       379.2   +11.0% 
Commercial vehicles                          82.5        82.6    -0.1% 
Inter-segment sales                         (2.6)       (1.6) 
-------------------------------------  ----------  ----------  ------- 
Group revenue                               500.7       460.2    +8.8% 
-------------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

Group revenue increased by 8.8% to GBP500.7 million, with strong growth of 11.0% in value-added logistics services being partly offset by a marginal decline in commercial vehicles.

Group revenue growth of GBP40.5 million was largely attributable to growth in the e-fulfilment & returns management business activity, which grew by 18.4%.

There was no property-related consultancy revenue in the year ended 30 April 2020 (2019: GBP3.1 million).

Group EBIT (1)

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
E-fulfilment & returns management 
 services                                 17.6        13.6   +29.9% 
Non e-fulfilment logistics                14.2        13.0    +9.1% 
Central logistics overheads              (6.9)       (5.5)   +24.7% 
----------------------------------  ----------  ----------  ------- 
Value-added logistics services            24.9        21.1   +18.4% 
Commercial vehicles                        2.0         1.1   +72.6% 
Head office costs                        (2.8)       (2.0)   +42.4% 
----------------------------------  ----------  ----------  ------- 
Group EBIT (IAS 17 basis)(1)              24.1        20.2   +19.1% 
----------------------------------  ----------  ----------  ------- 
IFRS 16 adjustments                        8.4           -        - 
----------------------------------  ----------  ----------  ------- 
Group EBIT (IFRS 16 basis)(1)             32.5        20.2   +60.6% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

Group EBIT(1) grew by 19.1% to GBP24.1 million in the year ended 30 April 2020 (2019: GBP20.2 million). This growth is in part attributed to the revenue growth in the year of 8.8%. In addition there are some material non-underlying factors impacting EBIT(1) in both years. Of the GBP3.9 million increase:

 
 --    GBP3.5 million of favourable contribution resulted from a negative 
        goodwill credit arising on a business combination in the year 
        ended 30 April 2020 (see note 29 to the Group Financial Statements). 
        This has been split equally between e-fulfilment & returns management 
        services and non e-fulfilment logistics with GBP1.75 million in 
        each. There was no similar contribution to EBIT(1) in the prior 
        year; 
 --    for the prior year, EBIT(1) benefited from a GBP3.1 million contribution 
        from property-related consultancy activities. There was no similar 
        contribution to EBIT(1) in the year ended 30 April 2020; and 
 --    in the prior year, there was a credit to the income statement 
        of GBP1.2 million in respect of share based payment accruals built 
        up in previous years. In the year ended 30 April 2020 there is 
        a share based payment charge of GBP0.3 million. This represents 
        a swing of GBP1.5 million. 
 

Excluding these items, underlying EBIT(1) increased by GBP5.0 million (31.4%) in the year ended 30 April 2020 compared to the prior year. The table below normalises the effect of these impacts:

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   24.1        20.2   +19.1% 
Property-related consultancy                 -       (3.1) 
'Negative goodwill'                      (3.5)           - 
Share based payments                       0.3       (1.2) 
----------------------------------  ----------  ----------  ------- 
EBIT(1) (excluding non-underlying 
 factors)                                 20.9        15.9   +31.4% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

EBIT(1) is the primary KPI by which the management team assesses corporate performance. EBIT(1) is assessed against Board approved budgets.

EBIT(1) margin (%) is not considered by the Directors to be a key metric since the high proportion of open book and minimum volume guarantee contracts within the value added logistics segment distorts reported margins. This is due to an element of management fees on certain contracts being relatively fixed in the short term, so that an increase in revenue in periods of increased activity will not necessarily give rise to a proportionate increase in profit, resulting in lower reported margins. Conversely, in periods of reduced activity levels, reported margins would typically increase. Similarly, revenue derived from minimum volume guarantee contracts is fixed at a minimum level, so that a shortfall in activity levels would give rise to a lower cost base and a higher reported margin. In addition, within the commercial vehicles segment, the level of high value, relatively low margin new vehicle sales also distorts reported margins. Accordingly, EBIT(1) is a more relevant measure of financial performance than EBIT(1) margin (%).

Segmental trading overview

Clipper is managed through two distinct operating segments, being value-added logistics services and commercial vehicles. The value-added logistics services segment is further subdivided into two business activities, being e-fulfilment & returns management services and non e-fulfilment logistics.

Value-added logistics services

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
Revenue                                  420.8       379.2   +11.0% 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   24.9        21.1   +18.4% 
EBIT(1) (excluding non-underlying 
 factors)                                 21.6        17.6   +22.7% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

Revenue in the year ended 30 April 2020 within the value-added logistics services operating segment was GBP420.8 million, representing growth on the previous year of 11.0%.

This growth is due to a combination of the full year impact of new contracts won in the prior year, revenue growth in Continental Europe, new contracts won in the year ended 30 April 2020 and growth in existing customers in the UK.

These revenue items had a positive impact on EBIT(1) . EBIT(1) excluding non-underlying factors grew by GBP4.0 million to GBP21.6 million, growth of 22.7% in the year ended 30 April 2020. The trading factors contributing to the growth in this segment are covered in more detail below.

Reported EBIT(1) benefited from:

 
 --    GBP3.5 million of favourable contribution from a 'negative goodwill' 
        credit arising on a business combination in the year ended 30 April 
        2020 (see note 29 to the Group Financial Statements). There was 
        no similar contribution to EBIT(1) in the prior year; and 
 --    a GBP3.1 million contribution to EBIT(1) from property-related 
        consultancy activities in the prior year. There was no similar 
        contribution to EBIT(1) in the year ended 30 April 2020; and 
 --    a share based payment charge in 2020 of GBP0.2 million (2019: credit 
        of GBP0.4 million). 
 

The following table normalises this:

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   24.9        21.1   +18.4% 
Property-related consultancy                 -       (3.1) 
Share based payments                       0.2       (0.4) 
'Negative goodwill'                      (3.5)           - 
----------------------------------  ----------  ----------  ------- 
EBIT(1) (excluding non-underlying 
 factors)                                 21.6        17.6   +22.7% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

E-fulfilment & returns management services

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
Revenue                                  277.0       233.9   +18.4% 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   17.6        13.6   +29.9% 
EBIT(1) (excluding non-underlying 
 factors)                                 15.8        13.6   +16.2% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

E-fulfilment & returns management services include the receipt, warehousing, stock management, picking, packing and despatch of products on behalf of customers to support their online trading activities, as well as a range of ancillary support services including returns management, branded as Boomerang, under which returns of products are managed on behalf of retailers. This business activity also includes Click and Collect activities (through the Clicklink joint venture) and Technical Services.

Revenues from e-fulfilment & returns management services increased by 18.4% from GBP233.9 million for the year ended 30 April 2019 to GBP277.0 million for the year ended 30 April 2020, with EBIT(1) excluding non-underlying factors growing by 16.2% to GBP15.8 million. Reported EBIT(1) was 29.9% higher than in the previous year. Included within reported EBIT(1) was GBP1.8 million of 'negative goodwill' relating to the business combination.

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   17.6        13.6   +29.9% 
'Negative goodwill'                      (1.8)           - 
----------------------------------  ----------  ----------  ------- 
EBIT(1) (excluding non-underlying 
 factors)                                 15.8        13.6   +16.2% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

This growth continues the double digit percentage EBIT(1) growth of prior years, and delivers against our stated objective of being a market leader in the provision of value-added services across the e-fulfilment sector.

Performance in e-fulfilment & returns management services benefited from:

 
 --    the part year impact of operations commenced during the year ended 
        30 April 2020, including: Shop Direct, N Brown, Hope & Ivy, Simba 
        Sleep, the Nutmeg online operation for Morrisons, Amara Living 
        and Joules. The impact of these activities will not be fully realised 
        until the year ending 30 April 2021; 
 --    the full year impact of operations commenced during the year ended 
        30 April 2019, including: boohoo.com subsidiary PrettyLittleThing, 
        Ginger Ray, Levi Strauss, Vestel and Tech Data in the UK; and 
 --    volume growth and extension of services on existing contracts, 
        including with ASOS, Love Crafts, Zara, Inditex and Browns in the 
        UK, in part driven by particularly strong organic growth in the 
        UK e-fulfilment market due to the continuing shift in retail trends 
        towards online trading, and European growth in logistics services 
        for Westwing, Smiffy's and s.Oliver, and technical returns services 
        for Amazon. 
 

Whilst we experienced some organic revenue decline with certain of our customers, overall revenue growth was strong.

Prior to COVID-19, Clicklink, our joint venture with John Lewis, was benefiting from the impact of price increases secured in the previous year and the onboarding of new customers onto the network. The Group was expecting it to generate a positive contribution to EBIT(1) in the year ended 30 April 2020. As a result of Government measures introduced in response to COVID-19 and the lockdown that was implemented through the closure of non-essential retail stores, Clicklink contributed a loss of GBP0.2 million in the year ended 30 April 2020. Since the year end, Clicklink has reduced the losses incurred through re-deployment of staff and resources and has returned to profitability. Recently a three year forecast was completed for Clicklink which demonstrated a significant growth trajectory. Since the year end, we have commenced activities with new customers including Arcadia and T.M. Lewin which we expect to further drive EBIT(1) growth in the year ending 30 April 2021.

Non e-fulfilment logistics

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
Revenue                                  143.8       145.3    -1.0% 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   14.2        13.0    +9.1% 
EBIT(1) (excluding non-underlying 
 factors)                                 12.4         9.9   +25.3% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

Non e-fulfilment logistics operations include receipt of inbound product, warehousing, picking, packing and distribution of products on behalf of customers in traditional bricks and mortar retail. Within this business activity, the Group handles high value products, including tobacco, alcohol and designer clothing, and also undertakes traditional retail support services including processing, storage and distribution of products, particularly fashion, to high street retailers.

Revenue from non e-fulfilment operations marginally declined by 1.0% for the year ended 30 April 2020, from GBP145.3 million to GBP143.8 million. Included in the year ended 30 April 2019 was GBP3.1 million of property-related income; therefore underlying revenue grew by 1.0%.

Reported EBIT(1) grew by 9.1% to GBP14.2 million in the year ended 30 April 2020. EBIT(1) in this business activity benefited from GBP1.8 million of negative goodwill in the year ended 30 April 2020.

Property-related income reduced from GBP3.1 million in the year ended 30 April 2019 to GBPnil in the year ended 30 April 2020. As a result, EBIT(1) excluding non-underlying factors increased by 25.3% to GBP12.4 million in the year ended 30 April 2020.

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                   14.2        13.0    +9.1% 
Property-related consultancy                 -       (3.1) 
'Negative goodwill'                      (1.8)           - 
----------------------------------  ----------  ----------  ------- 
EBIT(1) (excluding non-underlying 
 factors)                                 12.4         9.9   +25.3% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

The following factors contributed positively to the EBIT(1) growth:

 
 --    the full year effect of the activities commenced in the prior year, 
        including new activities for Halfords out of the new Crick warehouse, 
        for Sports Direct out of various UK locations, for Levi Strauss 
        out of Northampton and for Neon Sheep out of Milton Keynes; 
 --    organic volume growth and extensions to service offerings with 
        existing customers, including Asda, Morrisons, Liberty and Halfords. 
        This was partly offset by some organic decline with certain other 
        retail customers driven by high street market conditions and the 
        loss of a significant product range from our M&S activities in 
        Peterborough; and 
 --    part year contributions from new activities commenced in the current 
        year, with SLG and the NHS. Such activities will generate a full 
        year of contribution in the year ending 30 April 2021. 
 

The following factors had an adverse impact on revenue year-on-year:

 
 --    various contracts ceased in the year ending 30 April 2020, including: 
        Bench (due to liquidation); Links of London (due to liquidation); 
        C&A (due to a Brexit-related relocation); M&S Swadlincote activities 
        (due to the activities being taken in-house by M&S); and Go Outdoors 
        and Whistles (contracts which were not renewed on reaching the 
        end of the term). 
 

Whilst EBIT(1) excluding non-underlying factors increased, costs on one specific closed book contract continued to make an adverse contribution to EBIT(1) , as we were unable to recover the fixed costs of the operation through unit rates. This contract is currently being renegotiated to give more favourable terms to Clipper going forward.

Central logistics overheads

 
                                    Year ended  Year ended 
                                        30 Apr      30 Apr 
                                          2020        2019        % 
                                          GBPm        GBPm   change 
----------------------------------  ----------  ----------  ------- 
EBIT(1)                                  (6.9)       (5.5)   +24.7% 
Share based payment charges                0.2       (0.4) 
----------------------------------  ----------  ----------  ------- 
EBIT(1) (excluding non-underlying 
 factors)                                (6.7)       (5.9)   +13.6% 
----------------------------------  ----------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

Central logistics overheads include the costs of the directors of the logistics business, the project delivery and IT support teams, sales and marketing, accounting and finance, and human resources, that cannot be allocated in a meaningful way to business units.

Central logistics overheads increased by GBP1.4 million (24.7%), from GBP5.5 million in the year ended 30 April 2019 to GBP6.9 million in the year ended 30 April 2020.

Included within EBIT(1) for the year ended 30 April 2020 is a share based payment charge of GBP0.2 million. In the previous year there was a share based payment credit of GBP0.4 million representing a swing of GBP0.6m. Adjusting for this, central logistics overheads have increased by GBP0.8 million year on year.

We have continued to invest in the operational support and back office functions of the business to accommodate revenue growth, thereby increasing the overhead base.

Overall share based payment charges

Share based payment charges of GBP0.3 million have been recognised in the income statement for the current year (2019: GBP1.2 million credit) primarily to central logistics overheads and head office costs (as appropriate) in respect of the Sharesave Plan and the Performance Share Plan ("PSP") (see note 25 to the Group Financial Statements and page 60 of the Directors' Remuneration Report contained in the Company's 2020 Annual Report and Accounts (available to download from www.clippergroup.co.uk/report-accounts/ )).

Commercial vehicles

 
          Year ended  Year ended 
              30 Apr      30 Apr 
                2020        2019        % 
                GBPm        GBPm   change 
--------  ----------  ----------  ------- 
Revenue         82.5        82.6    -0.1% 
--------  ----------  ----------  ------- 
EBIT(1)          2.0         1.1   +72.6% 
--------  ----------  ----------  ------- 
 

The commercial vehicles business, Northern Commercials (Mirfield) Limited, operates Iveco and Fiat commercial vehicle dealerships from five dealership locations and has three sub-dealers. Main dealerships are located in Brighouse, Manchester, Northampton, Dunstable and Tonbridge. The business operates across the north of England and into Wales, through the Midlands, and into the South East.

Commercial vehicles revenue for the year ended 30 April 2020 declined just 0.1% to GBP82.5 million despite operating a significantly reduced service operation from 23 March 2020 due to the COVID-19 pandemic.

New vehicle sales increased by GBP1.2 million for the year ended 30 April 2020, having sold 1,399 new vehicles. However, this increase in revenue was more than offset by a reduction in revenue in other parts of the business, namely aftersales and parts sales.

EBIT(1) for the year increased by 72.6% to GBP2.0 million, partially due to improved manufacturer bonuses.

Head office costs

 
                                                  Year ended 
                                      Year ended      30 Apr 
                                     30 Apr 2020        2019        % 
                                            GBPm        GBPm   change 
----------------------------------  ------------  ----------  ------- 
EBIT(1)                                    (2.8)       (2.0)   +42.4% 
----------------------------------  ------------  ----------  ------- 
Share based payments                         0.1       (0.8) 
----------------------------------  ------------  ----------  ------- 
EBIT(1) (excluding non-underlying 
 factors)                                  (2.7)       (2.8)    -3.6% 
----------------------------------  ------------  ----------  ------- 
 

Percentages are calculated on the underlying numbers as presented in the Group Financial Statements, not on the rounded figures in the table above.

Head office costs represent the cost of certain Executive and Non-Executive Directors, plc compliance costs and the costs of the plc head office at Central Square, Leeds.

Head office costs increased by GBP0.8 million (42.4%), from GBP2.0 million in the year ended 30 April 2019 to GBP2.8 million in the year ended 30 April 2020. The year-on-year increase in head office costs is largely due to the GBP0.9 million swing in share based payments (see above) - which contributed a credit of GBP0.8 million in the year ended 30 April 2019 and incurred a charge of GBP0.1 million in the current year.

Overview of profit and loss performance for the year ended 30 April 2020

The revenue and EBIT(1) performance of the Group are as discussed above. The other aspects of the Group income statement are discussed below.

Net finance costs

Net finance costs for the year ended 30 April 2020 on an IAS 17 basis(1) increased by 27.1% to GBP2.7 million (2019: GBP2.1 million), the increase being largely as a result of increased interest costs on hire purchase and finance lease agreements previously recognised under IAS 17 following significant capital expenditure in the year ended 30 April 2019, and to a lesser extent increased interest costs on the commercial vehicles stocking lines.

On an IFRS 16 basis, a financing charge of GBP8.0 million has been recognised for the first time this year in respect of the interest on lease liabilities. Net finance costs were GBP11.1 million for the year ended 30 April 2020 (2019: GBP2.1 million).

Profit Before Tax and Amortisation ("PBTA")

PBTA is defined as profit before income tax, before amortisation of intangible assets arising on consolidation. Whilst not considered a KPI by management, this measure is used by market analysts. PBTA on an IAS 17 basis was GBP21.3 million (GBP20.1 million PBT plus GBP1.2 million amortisation of other intangible assets) for the year ended 30 April 2020, an increase of 17.8% on the year ended 30 April 2019 PBTA of GBP18.1 million (GBP16.9 million PBT plus GBP1.2 million amortisation of other intangible assets).

Taxation

The effective rate of taxation of 19.5% (2019: 20.8%) is higher than the average standard UK rate of corporation tax applicable in the year of 19.0% (2019: 19.0%) principally due to certain expenditure incurred which is disallowable for tax purposes and the higher effective rate of tax to which the German and Polish businesses are subject.

Profit after tax

The profit after tax for the year ended 30 April 2020 was GBP16.2 million (2019: GBP13.4 million), an increase of 20.8%.

Earnings per share

Earnings per share were 15.5 pence for the year ended 30 April 2020 (2019: 13.2 pence) on an IAS 17 basis(1). Adjusted to remove amortisation of intangible assets arising on consolidation, earnings per share were 16.6 pence (2019: 14.2 pence).

On an IFRS 16 basis earnings per share were 15.9 pence.

Current trading and outlook

In the year ending 30 April 2021, we expect revenue to benefit from:

 
 --    the full year effects of the new operations brought on line in 
        the logistics segment. As noted previously, the Group commenced 
        activities on a number of new contracts in the year ended 30 April 
        2020; 
 --    growth with existing customers, either organically - particularly 
        with those in e-commerce who will benefit from market growth - 
        or through new service lines for those customers; 
 --    growth from conversion of some of the opportunities on our new 
        business pipeline, including in mainland Europe. These opportunities 
        will be converted through a focus on retail specialisms and provision 
        of cost-effective, value-added solutions. Some of these new business 
        activities will not reach full year run-rate until the year ending 
        30 April 2022 and beyond; and 
 --    operations which have either recently commenced after the year 
        end or other known new activities which are at various stages of 
        planning. The annualised impact of these activities will not be 
        fully delivered until the year ending 30 April 2022. 
 

The Board is confident that the Group is strongly positioned to grow in the future.

Balance sheet and cash flow

Capital expenditure and fixed assets

We incurred expenditure of GBP22.9 million in the year ended 30 April 2020 (2019: GBP26.4 million) on intangible assets, property, plant and equipment and right-of-use assets. GBP22.1 million of this was incurred in the logistics services segment (2019: GBP25.8 million) and GBP0.8 million (2019: GBP0.6 million) in the commercial vehicles segment.

Approximately GBP6.7 million (2019: GBP7.7 million) of the additions were purchased in cash and GBP5.7 million (2019: GBP18.7 million) were purchased through hire purchase and finance agreements as would be previously recognised under IAS 17.

Noteworthy capital additions in the year were: an additional mezzanine floor at our Northampton shared user facility to support growth, fitout of our Peterborough site to house the Sports Direct operation, a new mezzanine floor in our Peterborough facility, automation kit at our Raven Mill site and fitout for the Amara Living operation at Northampton. Within Europe, we invested in racking, sprinkler systems and a pick tower.

In the year ended 30 April 2020, we disposed of assets with a net book value of GBP0.4 million, on which we generated a profit on disposal of GBP0.1 million.

In the prior year, we disposed of assets with a net book value of GBP0.4 million, on which we generated a profit on disposal of GBP0.1 million.

Clipper's outstanding capital expenditure commitment at 30 April 2020 was GBP3.6 million (2019: GBP8.6 million), reflecting the timing of investments in new and existing customer contracts.

Cash flow

Cash generated from operations was GBP66.8 million (2019: GBP28.3 million).

IFRS 16 resulted in a GBP34.9 million increase in cash flows generated from operating activities with an equal and opposite impact on cash flows generated from financing activities in the year ended 30 April 2020. Therefore excluding the impact of IFRS 16 cash generated from operations was GBP31.9 million.

The business continues to be highly cash generative. Under the UK logistics business model, Clipper is typically paid in the month in which services are delivered on open book and minimum volume guarantee contracts, giving rise to a typically net favourable impact on working capital, whilst in the commercial vehicles business working capital is substantially funded by the manufacturer through stocking facilities for new vehicles and trade credit terms for parts supplied.

In the year ended 30 April 2020, we generated GBP1.3 million of cash inflow from working capital (2019: GBP0.6 million inflow).

There are a number of cash flows disclosed outside of cash flow from operations which occur regularly, although the magnitude of these can change significantly year-on-year.

These cash flows include dividends, drawdown and repayment of bank loans, sales and purchase of fixed assets (including repayments on assets purchased under finance leases), corporation tax payments, interest payments and share issues. Taking each of these in turn:

 
 --    dividends paid in the year ended 30 April 2020 amounted to GBP10.2 
        million, an increase of 13.8% on the prior year (2019: GBP8.9 million), 
        and in line with our stated dividend policy; 
 --    cash flows arising from the drawdown and repayments of bank loans 
        were a GBP1.2 million inflow in the year ended 30 April 2020 (2019: 
        GBP7.3 million), the drawdown being used to fund additions of non-current 
        assets in the year; 
 --    cash purchases of fixed assets amounted to GBP6.7 million in the 
        year ended 30 April 2020 (2019: GBP7.7 million), with a further 
        GBP43.3 million (2019: GBP10.4 million) of cash used to repay leases. 
        The IFRS 16 impact was GBP33.8 million. Finance leasing and hire 
        purchase funding remains an attractive means of funding for Clipper, 
        as the future cash outflows can be funded through future cash inflows 
        on open book contracts. Sales of non-current assets generated GBP0.5 
        million in the year ended 30 April 2020 (2019: GBP0.5 million); 
 --    included within investing activities is GBP2.9 million of cash 
        outflow relating to the business combination (see note 29.1 to 
        the Group Financial Statements); 
 --    corporation tax of GBP3.5 million was paid in the year ended 30 
        April 2020 (2019: GBP4.3 million), the decrease being driven by 
        the deferment of a corporation tax payment on account during the 
        COVID-19 pandemic; 
 --   interest paid increased by GBP1.0 million to GBP3.0 million in 
       the year ended 30 April 2020 (2019: GBP2.0 million), primarily 
       due to increased borrowing levels on HP contracts and stocking 
       lines; and 
 --    cash inflows of GBP0.114 million were generated from shares issued 
        in the year ended 30 April 2020, compared to GBP0.350 million in 
        the prior year. 
 

Whilst the timing and magnitude of dividends, tax payments and interest payments can be predicted with relative certainty, the timing of drawdowns on bank loans and fixed asset-related cash flows is much more dependent on specific one-off projects, and so can quite easily fall into one financial period or the next.

Net debt

In addition to EBIT(1) , net debt(4) is considered a KPI for the Group. The Group had GBP45.1 million of net debt(4) outstanding at 30 April 2020 (2019: GBP45.9 million) (see note 21 to the Group Financial Statements), a decrease of GBP0.8 million. The decrease in net debt(4) was driven primarily by a reduction in HP and finance lease contracts of GBP3.0 million offset by a GBP1.3 million increase in bank loans. It is worth noting that where an open book customer has a strong credit rating, Clipper will often fund the initial capital requirements on the condition that the customer commits to repaying this over the term of the contract, together with finance charges and a management fee. At 30 April 2020, Clipper had GBP35.4 million (2019: GBP34.9 million) of capital contracted to be recovered from open book customers over the remaining term of the customer contracts.

Impact of IFRS 16

IFRS 16 was implemented in the year ended 30 April 2020. On transition, a right-of-use asset of GBP204.2 million was recognised which included a transfer from property, plant and equipment of GBP39.7 million and we recognised lease liabilities of GBP36.6 million in current liabilities and GBP184.1 million in non-current liabilities (see note 30 to the Group Financial Statements). Finance leases recognised in the year ended 30 April 2019 were reclassified from financial liabilities: borrowings to lease liabilities. There was also a deferred tax asset arising on transition of GBP3.9 million.

The 'statutory' measure of EBIT(1) includes the impact of IFRS 16 for the first time in the year ended 30 April 2020; the Group having transitioned to IFRS 16 on 1 May 2019. Those costs which would have been reported as straight-line operating lease rentals in prior periods are now replaced by straight-line depreciation and reducing balance interest components. Consequently, results for the year ended 30 April 2020 on a statutory basis are not directly comparable with those reported for prior periods. Operating lease rentals of GBP34.9 million have been added back and depreciation of GBP32.9 million has been deducted (of which GBP6.4 million relates to leases previously recognised under IAS 17), together improving 'statutory' EBIT(1) by GBP8.4 million. At 30 April 2020, right-of-use assets were GBP186.2 million and lease liabilities were GBP38.4 million in current liabilities and GBP163.9 million in non-current liabilities; of which GBP30.3 million relates to leases previously recognised under IAS 17. IFRS 16 resulted in a GBP34.9 million increase in cash flows generated from operating activities with an equal and opposite impact on cash flows generated from financing activities in the year ended 30 April 2020.

Alternative performance measures ("APMs")

APMs are used by the Board to assess the Group's financial performance, for analysis and for incentive-setting purposes. These measures are not defined by International Financial Reporting Standards ("IFRS") and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry. The Operating and Financial review has used APMs to aid comparability to the prior year.

APMs should be considered in addition to and are not intended to be a substitute for IFRS measurements. The table below reconciles APMs to statutory measures as defined by IFRS.

 
 
                                                                                           Year ended April 
                                   Year ended April 2020                                         2019 
                                            GBPm                                                 GBPm 
                ------------------------------------------------------------  ---------------------------------------- 
                Statutory                               Non-       Excluding                      Non-       Excluding 
                     IFRS        IFRS  IAS 17     underlying  non-underlying  Statutory     underlying  non-underlying 
                       16   16 impact   basis       items(2)           items     IAS 17       items(3)           items 
--------------  ---------  ----------  ------  -------------  --------------  ---------  -------------  -------------- 
Revenue             500.7           -   500.7              -           500.7      460.2          (3.1)           457.1 
EBIT(1)              32.5       (8.4)    24.1          (3.2)            20.9       20.2          (4.3)            15.9 
Net debt(4)         217.1     (172.0)    45.1                                      45.9 
Net finance 
 costs               11.1       (8.4)     2.7                                       2.1 
Cash generated 
 from 
 operations          66.8      (34.9)    31.9                                      28.3 
--------------  ---------  ----------  ------  -------------  --------------  ---------  -------------  -------------- 
Earnings per 
 share (pence)       15.9       (0.4)    15.5                                      13.2 
Diluted 
 earnings per 
 share 
 (pence)             15.8       (0.5)    15.3                                      13.1 
--------------  ---------  ----------  ------  -------------  --------------  ---------  -------------  -------------- 
 
 
 1    EBIT is defined as operating profit, including the Group's share 
       of operating profit in equity-accounted investees and before the 
       amortisation of intangible assets. 
 2       Non-underlying items in the year ended 30 April 2020 were GBP3.5 
          million negative goodwill release relating to the IFRS 3 business 
          combination (see note 29.1 to the Group Financial Statements) and 
          a charge relating to share based payment accruals of GBP0.3 million. 
 3       Non-underlying items in the year ended 30 April 2019 were GBP3.1 
          million contribution from property-related consultancy activities 
          and credit to the income statement of GBP1.2 million in respect 
          of share based payment accruals. 
 4   Net debt is defined as financial liabilities: borrowings less cash 
      and cash equivalents less non-current financial assets and leases 
      previously classified as finance leases and hire purchase agreements 
      under IAS 17. 
 

David Hodkin

Chief Financial Officer

Director's statement on basis of preparation - announcement

Whilst the financial information included in this announcement has been prepared on the basis of the requirements of IFRSs in issue, as adopted by the European Union and effective at 30 April 2020, this statement does not itself contain sufficient information to comply with IFRS.

These financial results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Group Income Statement, Group Statement of Comprehensive Income, Group Statement of Financial Position, Group Statement of Changes in Equity, and Group Statement of Cash Flows, and selected notes for the year ended 30 April 2020 have been extracted from the Group's audited Financial Statements for the year then ended.

The financial information contained within the preliminary announcement for the year ended 30 April 2020 was approved by the Board on 21 August 2020. Statutory accounts for the year ended 30 April 2020 were approved on the same date and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on these Financial Statements. Their report was unqualified and did not contain a statement under s.498 (2) or (3) of the Companies Act 2006.

Responsibility statement of the directors in respect of the Annual Report and the Financial Statements

The following responsibility statement made by the Directors is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from page 69 of the Company's 2020 Annual Report and Accounts. Responsibility is for the full Annual Report and Accounts not the extracted information presented in this announcement.

We confirm that to the best of our knowledge:

 
 --    the Financial Statements, prepared in accordance with the applicable 
        set of accounting standards, give a true and fair view of the assets, 
        liabilities, financial position and profit or loss of the Company 
        and the undertakings included in the consolidation taken as a whole; 
        and 
 --    the Strategic Report and Directors' Report include a fair review 
        of the development and performance of the business and the position 
        of the issuer and the undertakings included in the consolidation 
        taken as a whole, together with a description of the principal 
        risks and uncertainties that they face. 
 

We consider the Annual Report and the Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Group Income Statement

For the year ended 30 April

 
                                                                     2020       2019 
                                                                    Group      Group 
                                                          Note    GBP'000    GBP'000 
--------------------------------------------------------  ----  ---------  --------- 
Revenue                                                      3    500,671    460,171 
Cost of sales                                                   (358,653)  (331,879) 
--------------------------------------------------------  ----  ---------  --------- 
Gross profit                                                      142,018    128,292 
Other net gains or losses                                    6      4,097      (327) 
Administration and other expenses                               (114,686)  (108,481) 
--------------------------------------------------------  ----  ---------  --------- 
Operating profit before share of equity-accounted 
 investees, net of tax                                       4     31,429     19,484 
Share of equity-accounted investees, net of tax             16      (231)      (413) 
Operating profit                                             6     31,198     19,071 
--------------------------------------------------------  ----  ---------  --------- 
EBIT*                                                              32,454     20,213 
Less: amortisation of other intangible assets                4    (1,240)    (1,185) 
     share of tax and finance costs of equity-accounted 
      investees                                              4       (16)         43 
Operating profit                                             6     31,198     19,071 
--------------------------------------------------------  ----  ---------  --------- 
 
Finance costs                                                8   (11,155)    (2,199) 
Finance income                                               9         64         58 
--------------------------------------------------------  ----  ---------  --------- 
Profit before income tax                                           20,107     16,930 
Income tax expense                                          10    (3,915)    (3,524) 
--------------------------------------------------------  ----  ---------  --------- 
Profit for the financial year                                      16,192     13,406 
--------------------------------------------------------  ----  ---------  --------- 
 
Basic earnings per share                                    11      15.9p      13.2p 
Diluted earnings per share                                  11      15.8p      13.1p 
--------------------------------------------------------  ----  ---------  --------- 
 

* EBIT is defined as operating profit, including the Group's share of operating profit in equity-accounted investees and before the amortisation of intangible assets.

Group Statement of Comprehensive Income

For the year ended 30 April

 
                                                                2020      2019 
                                                               Group     Group 
                                                      Note   GBP'000   GBP'000 
---------------------------------------------------  -----  --------  -------- 
Profit for the financial year                                 16,192    13,406 
Other comprehensive income/(expense) for the year, 
 net of tax: 
May be reclassified to the income statement in 
 subsequent periods: 
Exchange differences on retranslation of foreign 
 operations                                                    (504)        31 
----------------------------------------------------------  --------  -------- 
Total comprehensive income for the financial year             15,688    13,437 
----------------------------------------------------------  --------  -------- 
 

Group Statement of Financial Position

At 30 April

 
                                                           2020   2019(1) 
                                                          Group     Group 
                                                 Note   GBP'000   GBP'000 
-----------------------------------------------  ----  --------  -------- 
Assets: 
Non-current assets 
-----------------------------------------------  ----  --------  -------- 
Goodwill                                                 25,951    25,951 
Other intangible assets                                  11,997    11,390 
-----------------------------------------------  ----  --------  -------- 
Intangible assets                                  12    37,948    37,341 
Property, plant and equipment                      14    28,966    61,470 
Right-of-use assets                                15   186,213         - 
Interest in equity-accounted investees             16       634       865 
Non-current financial assets                       28     1,950     1,950 
Deferred tax assets                                10     1,154         - 
-----------------------------------------------  ----  --------  -------- 
Total non-current assets                                256,865   101,626 
-----------------------------------------------  ----  --------  -------- 
Current assets 
Inventories                                        17    27,857    24,049 
Trade and other receivables                        18   102,742    96,347 
Cash and cash equivalents                          19     2,724     3,517 
-----------------------------------------------  ----  --------  -------- 
Total current assets                                    133,323   123,913 
-----------------------------------------------  ----  --------  -------- 
Total assets                                            390,188   225,539 
-----------------------------------------------  ----  --------  -------- 
Equity and liabilities: 
Current liabilities 
Trade and other payables                           20   130,813   125,982 
Financial liabilities: borrowings                  21    19,315    12,285 
Lease liabilities: short term                      22    38,378         - 
Short-term provisions                              23        99       214 
Current income tax liabilities                            1,760       803 
-----------------------------------------------  ----  --------  -------- 
Total current liabilities                               190,365   139,284 
-----------------------------------------------  ----  --------  -------- 
Non-current liabilities 
Financial liabilities: borrowings                  21       126    39,110 
Lease liabilities: long term                       22   163,906         - 
Long-term provisions                               23     6,521     1,610 
Deferred tax liabilities                           10         -     2,320 
-----------------------------------------------  ----  --------  -------- 
Total non-current liabilities                           170,553    43,040 
-----------------------------------------------  ----  --------  -------- 
Total liabilities                                       360,918   182,324 
-----------------------------------------------  ----  --------  -------- 
Equity shareholders' funds 
Share capital                                      24        51        51 
Share premium                                             2,174     2,060 
Currency translation reserve                              (612)     (108) 
Other reserve                                                84        84 
Merger reserve                                            6,006     6,006 
Share based payment reserve                               1,669     1,643 
Retained earnings                                        19,898    33,479 
-----------------------------------------------  ----  --------  -------- 
Total equity attributable to the owners of the 
 Company                                                 29,270    43,215 
-----------------------------------------------  ----  --------  -------- 
Total equity and liabilities                            390,188   225,539 
-----------------------------------------------  ----  --------  -------- 
 

1 The Group has applied IFRS 16 effective 1 May 2019, using the modified retrospective approach, without restating prior year figures. Information on the impact of adopting IFRS 16 is represented in note 30 to the Financial Statements.

Group Statement of Changes in Equity

For the year ended 30 April

 
                                                                Currency 
                                          Share      Share   translation      Other    Carried 
                                        capital    premium       reserve    reserve    forward 
                                          Group      Group         Group      Group      Group 
                                        GBP'000    GBP'000       GBP'000    GBP'000    GBP'000 
-------------------------------------  --------  ---------  ------------  ---------  --------- 
Balance at 1 May 2018                        51      1,710         (139)         84      1,706 
Profit for the year                           -          -             -          -          - 
Other comprehensive income/(expense)          -          -            31          -         31 
Equity settled transactions                   -          -             -          -          - 
Share issue                                   -        350             -          -        350 
Dividends                                     -          -             -          -          - 
-------------------------------------  --------  ---------  ------------  ---------  --------- 
Balance at 30 April 2019                     51      2,060         (108)         84      2,087 
-------------------------------------  --------  ---------  ------------  ---------  --------- 
IFRS 16 transition adjustment                 -          -             -          -          - 
Profit for the year                           -          -             -          -          - 
Other comprehensive income/(expense)          -          -         (504)          -      (504) 
Equity settled transactions                   -          -             -          -          - 
Share issue                                   -        114             -          -        114 
Dividends                                     -          -             -          -          - 
-------------------------------------  --------  ---------  ------------  ---------  --------- 
Balance at 30 April 2020                     51      2,174         (612)         84      1,697 
-------------------------------------  --------  ---------  ------------  ---------  --------- 
 
 
                                                           Share based 
                                        Brought    Merger      payment   Retained 
                                        forward   reserve      reserve   earnings     Total 
                                          Group     Group        Group      Group     Group 
                                        GBP'000   GBP'000      GBP'000    GBP'000   GBP'000 
-------------------------------------  --------  --------  -----------  ---------  -------- 
Balance at 1 May 2018                     1,706     6,006        2,745     28,861    39,318 
Profit for the year                           -         -            -     13,406    13,406 
Other comprehensive income/(expense)         31         -            -          -        31 
Equity settled transactions                   -         -      (1,102)        146     (956) 
Share Issue                                 350         -            -          -       350 
Dividends                                     -         -            -    (8,934)   (8,934) 
-------------------------------------  --------  --------  -----------  ---------  -------- 
Balance at 30 April 2019                  2,087     6,006        1,643     33,479    43,215 
-------------------------------------  --------  --------  -----------  ---------  -------- 
IFRS 16 transition adjustment                 -         -            -   (19,627)  (19,627) 
Profit for the year                           -         -            -     16,192    16,192 
Other comprehensive income/(expense)      (504)         -            -          -     (504) 
Equity settled transactions                   -         -           26         20        46 
Share issue                                 114         -            -          -       114 
Dividends                                     -         -            -   (10,166)  (10,166) 
-------------------------------------  --------  --------  -----------  ---------  -------- 
Balance at 30 April 2020                  1,697     6,006        1,669     19,898    29,270 
-------------------------------------  --------  --------  -----------  ---------  -------- 
 

Group Statement of Cash Flows

For the year ended 30 April

 
                                                                   2020      2019 
                                                                  Group     Group 
                                                         Note   GBP'000   GBP'000 
------------------------------------------------------  -----  --------  -------- 
Profit before tax from operating activities                      20,107    16,930 
Adjustments to reconcile profit before tax to 
 net cash flows: 
- Depreciation and impairment of property, plant 
 and equipment                                              6     3,244     7,426 
- Amortisation and impairment of intangible assets          6     2,114     1,973 
- Depreciation of right-of-use assets                      15    32,946         - 
- Gain on disposal of non-current assets                    6     (468)     (124) 
- Share of equity-accounted investees, net of 
 tax                                                       16       231       413 
- 'Negative goodwill'                                    29.1   (3,499)         - 
- Exchange differences                                            (582)       104 
- Finance costs                                         8 & 9    11,091     2,141 
- Share based payments charge/(credit)                     25       348   (1,178) 
Working capital adjustments: 
- (Increase)/decrease in trade and other receivables 
 and prepayments                                                (8,527)  (22,915) 
- (Increase)/decrease in inventories                            (3,365)     (773) 
- Increase/(decrease) in trade and other payables                13,182    24,298 
------------------------------------------------------  -----  --------  -------- 
Operating activities: 
- Cash generated from operations                                 66,822    28,295 
- Interest received                                                  46        55 
- Interest paid                                                 (2,954)   (2,027) 
- Income tax paid                                               (3,541)   (4,276) 
------------------------------------------------------  -----  --------  -------- 
Net cash flows from operating activities                         60,373    22,047 
------------------------------------------------------  -----  --------  -------- 
Investing activities: 
- Purchase of property, plant and equipment                     (8,141)  (24,320) 
- Purchase of right-of-use assets                               (3,260)         - 
- Proceeds from sale of property, plant and equipment               389       490 
- Proceeds from right-of-use assets                                 106         - 
- Purchase of intangible assets                                   (951)   (2,096) 
- Proceeds from sale of intangible assets                           117         - 
- Acquisition of a business                              29.1   (2,899)         - 
- Acquisition of subsidiary undertakings net of 
 cash acquired                                           29.2         -     (500) 
------------------------------------------------------  -----  --------  -------- 
Net cash flows from investing activities                       (14,639)  (26,426) 
------------------------------------------------------  -----  --------  -------- 
Financing activities: 
- Drawdown of bank loans                                          2,000     8,000 
- Debt issue costs paid                                               -      (20) 
- Shares issued                                            24       114       350 
- Dividends paid                                            7  (10,166)   (8,934) 
- Repayment of bank loans                                         (789)     (747) 
- Financing advanced in relation to right-of-use 
 assets                                                           5,654    18,698 
- Repayment of principal on lease liabilities                  (43,340)  (10,389) 
------------------------------------------------------  -----  --------  -------- 
Net cash flows from financing activities                       (46,527)     6,958 
------------------------------------------------------  -----  --------  -------- 
Net (decrease)/increase in cash and cash equivalents              (793)     2,579 
------------------------------------------------------  -----  --------  -------- 
Cash and cash equivalents at start of year                        3,517       938 
------------------------------------------------------  -----  --------  -------- 
Cash and cash equivalents at end of year                   19     2,724     3,517 
------------------------------------------------------  -----  --------  -------- 
 

Notes to the Group Financial Statements

1. General information

The results comprise those of Clipper Logistics plc and its subsidiaries for the year ended 30 April 2020 and does not constitute the Group's statutory accounts for the years ended 30 April 2020 or 2019, but is derived from those accounts. Both the Company Financial Statements and the Group Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("IFRSs").

Statutory accounts for the years ended 30 April 2020 and 30 April 2019 have been reported on by the auditor. Their reports for both years (i) were unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their audit report and (iii) did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 30 April 2019 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 April 2020, which were approved by the Board on 21 August 2020, will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The Group Financial Statements for the year ended 30 April 2020 were authorised for issue by the Board of Directors on 21 August 2020 and the Group Statement of Financial Position was signed on the Board's behalf by David Hodkin.

Clipper Logistics plc (the "Company") and its subsidiaries (together the "Group") provide value-added logistics and other services predominantly to the retail sector and also operate as distributors of commercial vehicles.

The Company is limited by share capital, incorporated and domiciled in the United Kingdom. The address of its registered office is Clipper Logistics Group, Gelderd Road, Leeds, LS12 6LT.

2. Summary of significant accounting policies

The results for the year have been prepared on a basis consistent with the accounting policies set out in Clipper's Annual Report and Accounts for the year ended 30 April 2019 except as noted below.

As the Group prepares its financial information in accordance with IFRS as adopted by the European Union, the application of new standards and interpretations will be subject to them having been endorsed for use in the EU via the EU Endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the Group's discretion to early adopt standards.

IFRS 16 'Leases' (" IFRS 16 ") was issued in January 2016, replacing IAS 17 'Leases' (" IAS 17 ") and associated interpretations IFRIC 4, SIC 15 and SIC 27. IFRS 16 applies to annual periods beginning on or after 1 January 2019, which for the Group is the year ended 30 April 2020. IFRS 16 primarily changes lease accounting for lessees.

Lease agreements now give rise to the recognition of an asset representing the right to use the leased item and a loan obligation for future lease payables. Lease costs are now recognised in the form of depreciation of the asset and interest on the lease liability replacing rental costs charged on a straight-line basis.

Under the transition rules, the Group has applied IFRS 16 using the modified retrospective approach with the cumulative effect of applying the standard recognised in retained earnings on 1 May 2019 with no restatement of comparative information. Lease liabilities have been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of transition. The Group is taking available exemptions for short-term leases (leases which, at the transition date, have a lease term of less than 12 months) and low value leases (<GBP5,000).

The adoption of IFRS 16 at 1 May 2019 has a material impact on the Group's Financial Statements - see note 30. There is no cash impact of adopting IFRS 16, with the repayment of the principal portion of the lease liability being classified as financing instead of operating cash flows. The covenant requirements for the Group's committed financing facilities are based on 'Frozen GAAP' and therefore are not impacted by the transition to IFRS 16.

3. Revenue

The Group has applied IFRS 15 'Revenue from Contracts with Customers' with effect from 1 May 2018, using the cumulative effect method.

Revenue is disaggregated into two distinct operating segments. This is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8 'Operating Segments', as reported in note 4 to the Financial Statements.

Revenue recognised in the income statement is analysed as follows:

 
                                                 2020      2019 
                                                Group     Group 
                                              GBP'000   GBP'000 
-------------------------------------------  --------  -------- 
E-fulfilment & returns management services    276,979   233,872 
Non e-fulfilment logistics                    143,847   145,286 
-------------------------------------------  --------  -------- 
Value-added logistics services                420,826   379,158 
-------------------------------------------  --------  -------- 
Commercial vehicles                            82,495    82,552 
Inter-segment sales                           (2,650)   (1,539) 
-------------------------------------------  --------  -------- 
Revenue from external customers               500,671   460,171 
-------------------------------------------  --------  -------- 
 

Non e-fulfilment logistics revenue includes GBPnil (2019: GBP3,100,000) in respect of property-related advisory services.

Geographical information - revenue from external customers:

 
                                      2020      2019 
                                     Group     Group 
                                   GBP'000   GBP'000 
--------------------------------  --------  -------- 
United Kingdom                     424,057   389,028 
Germany                             25,128    25,044 
Rest of Europe                      51,486    46,099 
--------------------------------  --------  -------- 
Revenue from external customers    500,671   460,171 
--------------------------------  --------  -------- 
 

Geography is determined by the location of the end customer.

The Group has no customers that in the years ended 30 April 2020 or 30 April 2019 accounted for greater than 10% of the total Group revenue.

The following table provides information about receivables, contract assets and contract liabilities from contracts.

 
 
                                                                       2020       2019 
                                                                      Group      Group 
                                                                    GBP'000    GBP'000 
-----------------------------------------------------------------  --------  --------- 
Receivables, which are included in 'Trade and other receivables'     62,920     57,372 
-----------------------------------------------------------------  --------  --------- 
Contract assets, which are included in 'Trade and other 
 receivables'                                                        13,303     16,111 
Contract liabilities, which are included in 'Trade and 
 other payables'                                                     22,423     24,557 
-----------------------------------------------------------------  --------  --------- 
 

The contract assets primarily relate to the Group's right to consideration for work completed but not billed as at 30 April 2020. The contract assets are transferred to receivables when the rights become unconditional. The contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities of GBP22,423,000 (2019: GBP24,557,000) will be recognised in revenue in the year ending 30 April 2021 when the performance obligations are expected to be satisfied.

4. Segment information

For the Group, the Chief Operating Decision Maker ("CODM") is the main Board of Directors. The CODM monitors the operating results of each business unit separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss, both before and after exceptional or discontinuing items. This measurement basis excludes Group-wide central services and financing costs which are not allocated to operating segments.

For management purposes, the Group is organised into two main reportable segments:

 
 --   value-added logistics services; and 
 --   commercial vehicles, including sales, servicing and repairs. 
 

Within the value-added logistics services segment, the CODM also reviews performance of three separate business activities:

 
 --   e-fulfilment & returns management services; 
 --    non e-fulfilment logistics; and 
 --    central logistics overheads, being the costs of support services 
        specific to the value-added logistics services segment, but which 
        are impractical to allocate between the sub-segment activities. 
 

These three separate business activities comprise one segment, having similar economic characteristics in terms of profitability and costs, customers and operating environment.

Inter-segment transactions are entered into under normal commercial terms and conditions and on an arm's length basis that would also be available to unrelated third parties.

The following tables present profit information for continuing operations regarding the Group's business segments for the two years ended 30 April 2020:

Earnings before interest and tax ("EBIT"):

 
                                                 2020      2019 
                                                Group     Group 
                                              GBP'000   GBP'000 
-------------------------------------------  --------  -------- 
E-fulfilment & returns management services     17,618    13,560 
Non e-fulfilment logistics                     14,238    13,048 
Central logistics overheads                   (6,922)   (5,551) 
-------------------------------------------  --------  -------- 
Value-added logistics services                 24,934    21,057 
Commercial vehicles                             1,963     1,137 
Head office costs                             (2,820)   (1,981) 
-------------------------------------------  --------  -------- 
Group EBIT (excluding impact of IFRS 16)       24,077    20,213 
-------------------------------------------  --------  -------- 
IFRS 16 adjustments                             8,377         - 
-------------------------------------------  --------  -------- 
Group EBIT (including impact of IFRS 16)       32,454    20,213 
-------------------------------------------  --------  -------- 
 

Amortisation of other intangible assets:

 
                                                 2020      2019 
                                                Group     Group 
                                              GBP'000   GBP'000 
-------------------------------------------  --------  -------- 
E-fulfilment & returns management services      (562)     (510) 
Non e-fulfilment logistics                      (678)     (675) 
Central logistics overheads                         -         - 
-------------------------------------------  --------  -------- 
Value-added logistics services                (1,240)   (1,185) 
Commercial vehicles                                 -         - 
Head office costs                                   -         - 
-------------------------------------------  --------  -------- 
Group total                                   (1,240)   (1,185) 
-------------------------------------------  --------  -------- 
 

Share of tax and finance costs of equity-accounted investees:

 
                                  2020      2019 
                                 Group     Group 
                               GBP'000   GBP'000 
----------------------------  --------  -------- 
Net finance costs                 (68)      (50) 
Income tax credit (expense)         52        93 
----------------------------  --------  -------- 
Group total                       (16)        43 
----------------------------  --------  -------- 
 

Operating profit and profit before income tax:

 
                                                              2020      2019 
                                                             Group     Group 
                                                           GBP'000   GBP'000 
--------------------------------------------------------  --------  -------- 
Operating profit: 
E-fulfilment & returns management services                  17,271    13,506 
Non e-fulfilment logistics                                  13,560    12,373 
Central logistics overheads                                (6,922)   (5,551) 
--------------------------------------------------------  --------  -------- 
Value-added logistics services                              23,909    20,328 
Commercial vehicles                                          1,963     1,137 
Head office costs                                          (2,820)   (1,981) 
--------------------------------------------------------  --------  -------- 
Group operating profit before share of equity-accounted 
 investees (IAS 17 basis)                                   23,052    19,484 
IFRS 16 adjustment                                           8,377         - 
--------------------------------------------------------  --------  -------- 
Group operating profit before share of equity-accounted 
 investees (IFRS 16 basis)                                  31,429    19,484 
--------------------------------------------------------  --------  -------- 
Share of equity-accounted investees, net of tax              (231)     (413) 
--------------------------------------------------------  --------  -------- 
Operating profit                                            31,198    19,071 
--------------------------------------------------------  --------  -------- 
Finance costs (IAS 17 basis)                               (2,786)   (2,199) 
Finance income                                                  64        58 
Finance costs arising under IFRS 16                        (8,369)         - 
--------------------------------------------------------  --------  -------- 
Profit before income tax                                    20,107    16,930 
--------------------------------------------------------  --------  -------- 
 

The segment assets and liabilities at the balance sheet date are as follows:

 
                                     Segment       Segment 
                                      assets   liabilities 
At 30 April 2020:                    GBP'000       GBP'000 
----------------------------------  --------  ------------ 
Value-added logistics services       342,930     (294,135) 
Commercial vehicles                   43,380      (45,582) 
----------------------------------  --------  ------------ 
Segment assets/(liabilities)         386,310     (339,717) 
----------------------------------  --------  ------------ 
Unallocated assets/(liabilities): 
- Cash and cash equivalents            2,724             - 
- Other financial liabilities              -      (19,441) 
- Deferred tax                         1,154             - 
- Income tax assets/(liabilities)          -       (1,760) 
----------------------------------  --------  ------------ 
Total assets/(liabilities)           390,188     (360,918) 
----------------------------------  --------  ------------ 
 
 
                                     Segment       Segment 
                                      assets   liabilities 
At 30 April 2019:                    GBP'000       GBP'000 
----------------------------------  --------  ------------ 
Value-added logistics services       182,388      (93,207) 
Commercial vehicles                   39,634      (34,599) 
----------------------------------  --------  ------------ 
Segment assets/(liabilities)         222,022     (127,806) 
----------------------------------  --------  ------------ 
Unallocated assets/(liabilities): 
- Cash and cash equivalents            3,517             - 
- Financial liabilities                    -      (51,395) 
- Deferred tax                             -       (2,320) 
- Income tax assets/(liabilities)          -         (803) 
----------------------------------  --------  ------------ 
Total assets/(liabilities)           225,539     (182,324) 
----------------------------------  --------  ------------ 
 

Capital expenditure, depreciation and amortisation by segment in the year ended 30 April was as follows:

Capital expenditure:

 
                                     2020      2019 
                                    Group     Group 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
Value-added logistics services     22,083    25,802 
Commercial vehicles                   777       614 
-------------------------------  --------  -------- 
Total                              22,860    26,416 
-------------------------------  --------  -------- 
 

Capital expenditure comprises additions to intangible assets (note 12), property, plant and equipment (note 14) and right-of-use assets (note 15).

Depreciation of property, plant and equipment:

 
                                     2020      2019 
                                    Group     Group 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
Value-added logistics services      2,998     6,691 
Commercial vehicles                   246       735 
-------------------------------  --------  -------- 
Total                               3,244     7,426 
-------------------------------  --------  -------- 
 

Amortisation:

 
                                     2020      2019 
                                    Group     Group 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
Value-added logistics services      2,113     1,972 
Commercial vehicles                     1         1 
-------------------------------  --------  -------- 
Total                               2,114     1,973 
-------------------------------  --------  -------- 
 

Depreciation of right-of-use assets:

 
                                     2020      2019 
                                    Group     Group 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
Value-added logistics services     32,099         - 
Commercial vehicles                   847         - 
-------------------------------  --------  -------- 
Total                              32,946         - 
-------------------------------  --------  -------- 
 

Non-current assets held by each geographical area are made up as follows:

 
                               2020      2019 
                              Group     Group 
                            GBP'000   GBP'000 
-------------------------  --------  -------- 
United Kingdom              233,122    92,373 
Germany                      12,868     3,890 
Rest of Europe                9,721     5,363 
Deferred taxation assets      1,154         - 
-------------------------  --------  -------- 
Total                       256,865   101,626 
-------------------------  --------  -------- 
 

5. Staff costs

 
                                                        2020      2019 
                                                       Group     Group 
                                                     GBP'000   GBP'000 
--------------------------------------------------  --------  -------- 
Wages and salaries                                   161,048   125,089 
Social security costs                                 15,280    11,840 
Pension costs for the defined contribution scheme      4,155     2,649 
Share based payments                                     348   (1,178) 
--------------------------------------------------  --------  -------- 
Total                                                180,831   138,400 
--------------------------------------------------  --------  -------- 
 

The average monthly number of employees during the year was made up as follows:

 
                                   2020           2019 
                           Group Number   Group Number 
------------------------  -------------  ------------- 
Warehousing                       5,494          3,828 
Distribution                        502            505 
Service and maintenance             465            252 
Administration                    1,139          1,055 
------------------------  -------------  ------------- 
Total                             7,600          5,640 
------------------------  -------------  ------------- 
 

Key management compensation (including Executive Directors):

 
                                                        2020      2019 
                                                       Group     Group 
                                                     GBP'000   GBP'000 
--------------------------------------------------  --------  -------- 
Wages and salaries                                     2,736     3,102 
Social security costs                                    412       425 
Pension costs for the defined contribution scheme        127       178 
Compensation for loss of office                          249         - 
Share based payments                                     106   (1,291) 
--------------------------------------------------  --------  -------- 
Total                                                  3,630     2,414 
--------------------------------------------------  --------  -------- 
 

Directors' emoluments:

 
                                                             2020      2019 
                                                            Group     Group 
                                                          GBP'000   GBP'000 
-------------------------------------------------------  --------  -------- 
Aggregate emoluments excluding share based payments on 
 unvested awards                                            1,274     1,220 
Value of share options vested during the year                   -         - 
Pension costs for the defined contribution scheme              10        10 
-------------------------------------------------------  --------  -------- 
Total                                                       1,284     1,230 
-------------------------------------------------------  --------  -------- 
 

The number of Directors who were accruing benefits under a Group Pension Scheme is as follows:

 
                                      2020           2019 
                              Group Number   Group Number 
---------------------------  -------------  ------------- 
Defined contribution plans               1              2 
---------------------------  -------------  ------------- 
 

6. Group operating profit

This is stated after charging:

 
                                                                        2020      2019 
                                                                       Group     Group 
                                                                     GBP'000   GBP'000 
------------------------------------------------------------------  --------  -------- 
Depreciation of property, plant and equipment - owned 
 assets                                                                3,244     2,938 
Depreciation of property, plant and equipment - leased 
 assets                                                                    -     4,488 
Amortisation of intangible assets (included within administration 
 and other expenses)                                                   2,114     1,973 
Depreciation of right-of-use assets                                   32,946         - 
------------------------------------------------------------------  --------  -------- 
Total depreciation and amortisation expense (IFRS 16 basis)           38,304     9,399 
------------------------------------------------------------------  --------  -------- 
 
Operating lease rentals: 
------------------------------------------------------------------  --------  -------- 
- Vehicles, plant and equipment                                            -    10,306 
- Audit of the subsidiaries                                                -    25,847 
------------------------------------------------------------------  --------  -------- 
 
 
Auditor's remuneration: 
- Audit of the Group Financial Statements   198  149 
- Audit of the subsidiaries                  99  111 
- Fees to prior year auditors                71    - 
- Non-audit fees                              -    - 
                                                 --- 
Total fees paid to the Group's auditors     368  260 
------------------------------------------  ---  --- 
 

Operating profit is stated after crediting/(charging):

 
                                                        2020      2019 
                                                       Group     Group 
                                                     GBP'000   GBP'000 
--------------------------------------------------  --------  -------- 
Other net gains or net losses: 
- Profit on sale of property, plant and equipment        123       124 
- Profit on disposal of lease liabilities                345         - 
- Dealership contributions                                44        98 
- Rental income                                          335        51 
- 'Negative goodwill' (see note 29)                    3,499         - 
- Net (loss) from other exceptional costs              (249)     (600) 
--------------------------------------------------  --------  -------- 
Total net gains/(losses)                               4,097     (327) 
--------------------------------------------------  --------  -------- 
 

The above exceptional cost in the year ended 30 April 2020 relates to compensation for loss of office to the outgoing deputy CEO. In the prior year, the exceptional costs relate to the staging of a one-off event.

7. Dividends

 
                                                               2020      2019 
                                                              Group     Group 
                                                            GBP'000   GBP'000 
---------------------------------------------------------  --------  -------- 
Final dividend for the prior year of 6.5 pence (2019: 
 5.6 pence) per share                                         6,608     5,685 
Interim dividend for the year of 3.5 pence (2019: 3.2 
 pence) per share                                             3,558     3,249 
---------------------------------------------------------  --------  -------- 
Total dividends paid                                         10,166     8,934 
---------------------------------------------------------  --------  -------- 
Proposed final dividend for the year ended 30 April 2020 
 of 6.2 pence (2019: 6.5 pence) per share                     6,303     6,605 
---------------------------------------------------------  --------  -------- 
 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these Financial Statements. The proposed dividend is payable to all shareholders on the Register of Members on 11 September 2020. The payment of this dividend will not have any tax consequences for the Group.

8. Finance costs

 
                                                                2020      2019 
                                                               Group     Group 
                                                             GBP'000   GBP'000 
----------------------------------------------------------  --------  -------- 
On bank loans and overdrafts                                     744       691 
On hire purchase agreements(1)                                 1,365       953 
Amortisation of debt issue costs                                 138       130 
Commercial vehicle stocking interest                             385       316 
Invoice discounting                                               96        94 
Other interest payable                                            58        15 
----------------------------------------------------------  --------  -------- 
Total interest expense for financial liabilities measured 
 at amortised cost (IAS 17 basis)                              2,786     2,199 
IFRS 16 lease liability interest                               8,038         - 
Discount charges on long-term provisions                         331         - 
----------------------------------------------------------  --------  -------- 
Total interest expense for financial liabilities measured 
 at amortised cost (IFRS 16 basis)                            11,155     2,199 
----------------------------------------------------------  --------  -------- 
 

1 On transition to IFRS 16 on 1 May 2019, hire purchase agreements were reclassified to lease liabilities from financial liabilities: borrowings. Interest on hire purchase agreements has been separated from other IFRS 16 lease liabilities for comparison purposes.

9. Finance income

 
                                                             2020      2019 
                                                            Group     Group 
                                                          GBP'000   GBP'000 
-------------------------------------------------------  --------  -------- 
Bank interest                                                   1         - 
Other interest                                                  4         6 
Amounts receivable from related parties                        59        52 
-------------------------------------------------------  --------  -------- 
Total interest income for financial assets measured at 
 amortised cost                                                64        58 
-------------------------------------------------------  --------  -------- 
 

10. Income tax expense

10.1 Tax charged in the income statement:

 
                                                                   2020      2019 
                                                                  Group     Group 
                                                                GBP'000   GBP'000 
-------------------------------------------------------------  --------  -------- 
Current income tax: 
UK and foreign corporation tax                                    4,346     3,263 
Amounts under/(over) provided in previous years                     151     (724) 
-------------------------------------------------------------  --------  -------- 
Total income tax on continuing operations                         4,497     2,539 
-------------------------------------------------------------  --------  -------- 
Deferred tax: 
Origination and reversal of temporary differences                 (338)       280 
Amounts (over)/under provided in previous years                   (200)       775 
Impact of change in tax laws and rates                             (44)      (70) 
-------------------------------------------------------------  --------  -------- 
Total deferred tax                                                (582)       985 
-------------------------------------------------------------  --------  -------- 
Tax expense in the income statement on continuing operations      3,915     3,524 
-------------------------------------------------------------  --------  -------- 
 

10.2 Tax relating to items charged or credited to other comprehensive income:

There are no tax consequences of any of the items included in other comprehensive income.

10.3 Reconciliation of income tax charge:

The income tax expense in the income statement for the year differs from the standard rate of corporation tax in the UK. The differences are reconciled below:

 
                                                              2020      2019 
                                                             Group     Group 
                                                           GBP'000   GBP'000 
--------------------------------------------------------  --------  -------- 
Profit before taxation from continuing operations           20,107    16,930 
Standard rate of corporation tax in UK                      19.00%    19.00% 
Tax on profit on ordinary activities at standard rate        3,820     3,217 
 
Share of equity-accounted investees, already net of tax         44        78 
Expenses not allowable for tax purposes                        127       235 
Tax under/(over) provided in previous years                   (49)        51 
Difference in tax rates overseas                                17        13 
Deferred tax rate difference                                  (44)      (70) 
--------------------------------------------------------  --------  -------- 
Total tax expense reported in the income statement           3,915     3,524 
--------------------------------------------------------  --------  -------- 
 

10.4 Deferred tax in the statement of financial position:

 
                                                                               (Charged)/ 
                                                  (Charged)/                     credited 
                                                    credited      Foreign        to share                At 30 April 
                            Brought      IFRS 16   to income     currency   based payment                       2020 
                            forward   transition   statement   adjustment         reserve  Acquisitions      GBP'000 
-------------------------  --------  -----------  ----------  -----------  --------------  ------------  ----------- 
Tax effect of temporary 
 differences due to: 
Share based payments            579            -         139            -           (293)             -          425 
IFRS 16 adjustment                -        3,933         461          (4)               -             -        4,390 
Other timing differences        520            -       (148)            4               -            68          444 
-------------------------  --------  -----------  ----------  -----------  --------------  ------------  ----------- 
Deferred tax asset            1,099        3,933         452            -           (293)            68        5,259 
-------------------------  --------  -----------  ----------  -----------  --------------  ------------  ----------- 
Intangible assets           (1,557)            -         117            -               -         (323)      (1,763) 
Accelerated capital 
 allowances                 (1,821)            -         203            -               -         (493)      (2,111) 
Other timing differences       (41)            -       (190)            -               -             -        (231) 
-------------------------  --------  -----------  ----------  -----------  --------------  ------------  ----------- 
Deferred tax liability      (3,419)            -         130            -               -         (816)      (4,105) 
-------------------------  --------  -----------  ----------  -----------  --------------  ------------  ----------- 
Net deferred tax            (2,320)        3,933         582            -           (293)         (748)        1,154 
-------------------------  --------  -----------  ----------  -----------  --------------  ------------  ----------- 
 
 
                                                                             (Charged)/ 
                                                (Charged)/                     credited 
                                                  credited      Foreign        to share                At 30 April 
                                       Brought   to income     currency   based payment                       2019 
                                       forward   statement   adjustment         reserve  Acquisitions      GBP'000 
------------------------------------  --------  ----------  -----------  --------------  ------------  ----------- 
Tax effect of temporary differences 
 due to: 
Share based payments                       581       (216)            -             214             -          579 
Other timing differences                   401         127          (8)               -             -          520 
------------------------------------  --------  ----------  -----------  --------------  ------------  ----------- 
Deferred tax asset                         982        (89)          (8)             214             -        1,099 
------------------------------------  --------  ----------  -----------  --------------  ------------  ----------- 
Intangible assets                      (1,737)         180            -               -             -      (1,557) 
Accelerated capital allowances           (739)     (1,082)            -               -             -      (1,821) 
Other timing differences                  (47)           6            -               -             -         (41) 
------------------------------------  --------  ----------  -----------  --------------  ------------  ----------- 
Deferred tax liability                 (2,523)       (896)            -               -             -      (3,419) 
------------------------------------  --------  ----------  -----------  --------------  ------------  ----------- 
Net deferred tax                       (1,541)       (985)          (8)             214             -      (2,320) 
------------------------------------  --------  ----------  -----------  --------------  ------------  ----------- 
 

Legislation to reduce the UK corporation tax rate from 19% to 17% with effect from 1 April 2020 was enacted at 30 April 2019. Further legislation to cancel this reduction was substantively enacted at 30 April 2020. A rate of 19% (2019: 17%) has been applied in the measurement of the Group's deferred tax assets and liabilities in the year.

11. Earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the 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 following reflects the income and share data used in the earnings per share computation:

 
                                                            2020      2019 
                                                           Group     Group 
                                                         GBP'000   GBP'000 
------------------------------------------------------  --------  -------- 
Profit attributable to ordinary equity holders of the 
 Company (excluding impact of IFRS 16)                    15,723    13,406 
Impact of IFRS 16 on profit                                  469         - 
------------------------------------------------------  --------  -------- 
Profit attributable to ordinary equity holders of the 
 Company (including impact of IFRS 16)                    16,192    13,406 
------------------------------------------------------  --------  -------- 
 
 
                                                              2020     2019 
                                                             Group    Group 
---------------------------------------------------------  -------  ------- 
Basic weighted average number of shares (thousands)        101,656  101,512 
Basic earnings per share (excluding impact of IFRS 16)       15.5p    13.2p 
Basic earnings per share (including impact of IFRS 16)       15.9p        - 
---------------------------------------------------------  -------  ------- 
Diluted weighted average number of shares (thousands)      102,511  102,061 
Diluted earnings per share (excluding impact of IFRS 16)     15.3p    13.1p 
Diluted earnings per share (including impact of IFRS 16)     15.8p        - 
---------------------------------------------------------  -------  ------- 
 

12. Intangible assets

 
                                                 Contracts, 
                                                   customer 
                                              relationships   Computer 
                                   Goodwill    and licences   software     Total 
                                      Group           Group      Group     Group 
                                    GBP'000         GBP'000    GBP'000   GBP'000 
---------------------------------  --------  --------------  ---------  -------- 
Cost: 
At 1 May 2018                        25,951          11,623      4,089    41,663 
Additions                                 -               -      2,096     2,096 
Disposals                                 -               -          -         - 
Foreign currency adjustment               -               -       (12)      (12) 
---------------------------------  --------  --------------  ---------  -------- 
At 30 April 2019                     25,951          11,623      6,173    43,747 
---------------------------------  --------  --------------  ---------  -------- 
Additions                                 -               -        951       951 
Acquisitions (see note 29)          (3,499)           1,882          -   (1,617) 
Credited to the income statement      3,499               -          -     3,499 
Disposals                                 -               -      (120)     (120) 
Foreign currency adjustment               -               -          6         6 
---------------------------------  --------  --------------  ---------  -------- 
At 30 April 2020                     25,951          13,505      7,010    46,466 
---------------------------------  --------  --------------  ---------  -------- 
 
Accumulated amortisation: 
At 1 May 2018                             -           2,252      2,193     4,445 
Charge for the year                       -           1,185        788     1,973 
Disposals                                 -               -          -         - 
Foreign currency adjustment               -               -       (12)      (12) 
---------------------------------  --------  --------------  ---------  -------- 
At 30 April 2019                          -           3,437      2,969     6,406 
---------------------------------  --------  --------------  ---------  -------- 
Charge for the year                       -           1,240        874     2,114 
Disposals                                 -               -        (3)       (3) 
Foreign currency adjustment               -               -          1         1 
---------------------------------  --------  --------------  ---------  -------- 
At 30 April 2020                          -           4,677      3,841     8,518 
---------------------------------  --------  --------------  ---------  -------- 
 
Net book value: 
---------------------------------  --------  --------------  ---------  -------- 
At 1 May 2018                        25,951           9,371      1,896    37,218 
---------------------------------  --------  --------------  ---------  -------- 
At 30 April 2019                     25,951           8,186      3,204    37,341 
---------------------------------  --------  --------------  ---------  -------- 
At 30 April 2020                     25,951           8,828      3,169    37,948 
---------------------------------  --------  --------------  ---------  -------- 
 

The average remaining useful life of contracts and licences at 30 April 2020 is 7.3 years (2019: 7.5 years).

13. Impairment test for goodwill

The carrying amount of goodwill has been allocated to each cash-generating unit as follows:

 
                                     2020      2019 
                                    Group     Group 
                                  GBP'000   GBP'000 
-------------------------------  --------  -------- 
Value-added logistics services     20,025    20,025 
Commercial vehicles                 5,926     5,926 
-------------------------------  --------  -------- 
Total                              25,951    25,951 
-------------------------------  --------  -------- 
 

A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of a CGU is determined based on value-in-use calculations.

The value-in-use calculations have used pre-tax cash flow projections based on the Board approved business plans for the three years ending 30 April 2023.

The business plans for the value-added logistics services segment take into account the annualised impact of contract wins in the year ended 30 April 2020 as well as confirmed new and ceasing contracts. The key judgment is the assumed new contract wins during the business plan period, which has been based on historical experience.

Subsequent cash flows are extrapolated using an estimated long-term growth rate of between 3.0% and 5.0% (2019: 3.0% and 5.0%) to perpetuity (2019: perpetuity). These are in line with what the Group considers the long-term growth rate is for the sectors in which the Group operates. The cash flows have then been discounted using a pre-tax risk adjusted discount rate of between 8.9% and 10.7% (2019: 8.5% and 10.3%). The forecasts of foreign operations are translated at the exchange rate ruling at the end of the year.

The Directors have concluded that no reasonably foreseeable change in the key assumptions would give rise to an impairment.

14. Property, plant and equipment

 
                                                                                   Plant, 
                                                                               machinery, 
                                                   Leasehold                     fixtures 
                                                    property  Motor vehicles   & fittings     Total 
                                                       Group           Group        Group     Group 
                                                     GBP'000         GBP'000      GBP'000   GBP'000 
-------------------------------------------------  ---------  --------------  -----------  -------- 
Cost: 
At 1 May 2018                                          8,042           4,763       63,189    75,994 
Additions                                              3,999             648       19,673    24,320 
Acquisitions                                               -               -            -         - 
Disposals                                              (212)           (753)        (742)   (1,707) 
Foreign currency adjustment                              (4)            (35)         (98)     (137) 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 30 April 2019                                      11,825           4,623       82,022    98,470 
-------------------------------------------------  ---------  --------------  -----------  -------- 
Transfer to right-of-use assets on transition(1)     (6,925)         (1,527)     (44,292)  (52,744) 
Transfer to right-of-use assets(2)                         -           (205)            -     (205) 
Additions                                              6,622             152        1,366     8,140 
Acquisitions (see note 29)                                 -               -        2,899     2,899 
Disposals                                               (20)           (352)        (503)     (875) 
Foreign currency adjustment                                1              17        (237)     (219) 
Transfer from right-of-use assets3                         -               -            -         - 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 30 April 2020                                      11,503           2,708       41,255    55,466 
-------------------------------------------------  ---------  --------------  -----------  -------- 
 
Accumulated depreciation: 
At 1 May 2018                                          2,779           2,635       25,582    30,996 
Charge for the year                                      883             791        5,752     7,426 
Disposals                                              (212)           (602)        (527)   (1,341) 
Foreign currency adjustment                              (2)            (17)         (62)      (81) 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 30 April 2019                                       3,448           2,807       30,745    37,000 
-------------------------------------------------  ---------  --------------  -----------  -------- 
Transfer to right-of-use assets on transition(1)       (240)           (886)     (11,937)  (13,063) 
Transfer to right-of-use assets(2)                         -            (61)            -      (61) 
Charge for the year                                    1,090             239        1,915     3,244 
Disposals                                               (20)           (347)        (243)     (610) 
Foreign currency adjustment                              (1)               8         (17)      (10) 
Transfer from right-of-use assets3                         -               -            -         - 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 30 April 2020                                       4,277           1,760       20,463    26,500 
-------------------------------------------------  ---------  --------------  -----------  -------- 
 
Net book value: 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 1 May 2018                                          5,263           2,128       37,607    44,998 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 30 April 2019                                       8,377           1,816       51,277    61,470 
-------------------------------------------------  ---------  --------------  -----------  -------- 
At 30 April 2020                                       7,226             948       20,792    28,966 
-------------------------------------------------  ---------  --------------  -----------  -------- 
 

1 Assets funded under finance leases or hire purchase agreements recognised under IAS 17 were reclassified on transition to IFRS 16.

2 Assets purchased in the prior year, where financing has been drawndown after transition to IFRS 16.

3 Assets funded under finance leases or hire purchase agreements, which are retained after repaying the finance are transferred to property, plant and equipment.

Additions to plant, machinery, fixtures & fittings include GBP79,000 (2019: GBP2,843,000) in respect of assets in the course of construction.

15. Right-of-use assets

 
                                                   Land and 
                                                  buildings  Vehicles     Other     Total 
                                                      Group     Group     Group     Group 
                                                    GBP'000   GBP'000   GBP'000   GBP'000 
-----------------------------------------------  ----------  --------  --------  -------- 
Cost: 
At 30 April 2019                                          -         -         -         - 
-----------------------------------------------  ----------  --------  --------  -------- 
Opening balance on transition                       151,811     7,158     5,536   164,505 
Reclassification on transition(1)                     6,925     1,527    44,292    52,744 
Transfer from property, plant and equipment(2)            -       205         -       205 
Additions                                             4,426     6,847     2,496    13,769 
Remeasurement of asset                                  388         -         -       388 
Acquisitions (see note 29)                            2,407         -         -     2,407 
Disposals and other movements                       (1,704)     (520)      (44)   (2,268) 
Foreign currency adjustment                           (158)         3        20     (135) 
Transfer to property, plant and equipment(3)              -         -         -         - 
-----------------------------------------------  ----------  --------  --------  -------- 
At 30 April 2020                                    164,095    15,220    52,300   231,615 
-----------------------------------------------  ----------  --------  --------  -------- 
 
Accumulated depreciation: 
At 30 April 2019                                          -         -         -         - 
-----------------------------------------------  ----------  --------  --------  -------- 
Reclassification on transition(1)                       240       886    11,937    13,063 
Transfer from property, plant and equipment(2)            -        61         -        61 
Charge for the year                                  20,960     4,529     7,457    32,946 
Impairment                                                -         -         -         - 
Disposals and other movements                         (222)     (354)      (10)     (586) 
Foreign currency adjustment                            (76)         -       (6)      (82) 
Transfer to property, plant and equipment(3)              -         -         -         - 
-----------------------------------------------  ----------  --------  --------  -------- 
At 30 April 2020                                     20,902     5,122    19,378    45,402 
-----------------------------------------------  ----------  --------  --------  -------- 
 
Net book value: 
-----------------------------------------------  ----------  --------  --------  -------- 
At 30 April 2019                                          -         -         -         - 
-----------------------------------------------  ----------  --------  --------  -------- 
At 30 April 2020                                    143,193    10,098    32,922   186,213 
-----------------------------------------------  ----------  --------  --------  -------- 
 

1 Assets funded under finance leases or hire purchase agreements recognised under IAS 17 were reclassified on transition to IFRS 16.

2 Assets purchased in the prior year, where financing has been drawndown after transition to IFRS 16.

3 Assets funded under finance leases or hire purchase agreements, which are retained after repaying the finance are transferred to property, plant and equipment.

16. Investment in equity-accounted investees

 
                                               2020      2019 
                                              Group     Group 
                                            GBP'000   GBP'000 
-----------------------------------------  --------  -------- 
Brought forward                                 865     1,278 
Share of (loss) after tax for the period      (231)     (413) 
-----------------------------------------  --------  -------- 
Carried forward                                 634       865 
-----------------------------------------  --------  -------- 
 

The Company owns 50% of the issued capital and voting rights of Clicklink Logistics Limited ("Clicklink"), a company incorporated in Great Britain and registered in England and Wales. Clicklink provides services in respect of the sortation, fulfilment and delivery of one-man orders to Click and Collect customer collection points in the United Kingdom. On 1 November 2016 the Company subscribed for 1,000,000 A ordinary shares of GBP1 each in Clicklink, for aggregate consideration of GBP1,950,000. Clicklink commenced trading on 1 November 2016 and has a 31 January financial period end.

Summarised financial information from Clicklink's audited accounts for the year ended 31 January 2020 is set out below:

 
                                               31 January  31 January 
                                                     2020        2019 
                                                  GBP'000     GBP'000 
---------------------------------------------  ----------  ---------- 
Current assets                                      6,122       6,818 
Non-current assets                                  4,093       4,349 
Current liabilities                               (4,690)     (5,611) 
Non-current liabilities                           (4,060)     (4,015) 
---------------------------------------------  ----------  ---------- 
Equity attributable to owners of the Company        1,465       1,541 
---------------------------------------------  ----------  ---------- 
 
 
                                        Year ended   Year ended 
                                        31 January   31 January 
                                              2020         2019 
                                           GBP'000      GBP'000 
-------------------------------------  -----------  ----------- 
Revenue                                     27,315       22,616 
-------------------------------------  -----------  ----------- 
Operating profit/(loss)                         42      (1,381) 
Interest payable and similar charges         (125)         (91) 
Income tax credit/(expense)                      7          286 
-------------------------------------  -----------  ----------- 
(Loss) for the period                         (76)      (1,186) 
-------------------------------------  -----------  ----------- 
 

17. Inventories

 
                                                          2020      2019 
                                                         Group     Group 
                                                       GBP'000   GBP'000 
----------------------------------------------------  --------  -------- 
Component parts and consumable stores                    5,515     5,271 
Commercial vehicles                                      5,601     4,195 
Commercial vehicles on consignment                      16,741    14,583 
----------------------------------------------------  --------  -------- 
Total inventories net of provision for obsolescence     27,857    24,049 
----------------------------------------------------  --------  -------- 
 

See below for the movements in the provision for obsolescence:

 
                          Group 
                        GBP'000 
---------------------  -------- 
At 1 May 2018               112 
Charged for the year         82 
Utilised                   (35) 
---------------------  -------- 
At 30 April 2019            159 
---------------------  -------- 
Charged for the year        215 
Utilised                   (82) 
---------------------  -------- 
At 30 April 2020            292 
---------------------  -------- 
 

The cost of inventories recognised as an expense amounted to GBP87,066,000 (2019: GBP 89,917,000).

Included within commercial vehicles is GBP1,299,000 (2019: GBP1,001,000) relating to assets held under lease liabilities.

18. Trade and other receivables

 
                                                            2020      2019 
                                                           Group     Group 
                                                         GBP'000   GBP'000 
------------------------------------------------------  --------  -------- 
Trade receivables                                         63,383    57,688 
Less: provision for impairment of receivables              (463)     (316) 
------------------------------------------------------  --------  -------- 
Trade receivables - net                                   62,920    57,372 
------------------------------------------------------  --------  -------- 
Other receivables                                          1,749     4,328 
Amounts receivable from related parties (see note 28)      2,069     2,089 
Contract assets                                           13,303    16,111 
Prepayments                                               22,701    16,447 
------------------------------------------------------  --------  -------- 
Total trade and other receivables                        102,742    96,347 
------------------------------------------------------  --------  -------- 
 

The contract asset receivables relate to the Group's rights to consideration for work completed but not billed at the reporting date. They are transferred to receivables when the amounts are invoiced.

See note 27 on credit risk of trade receivables, which explains how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.

See below for the movements in the provision for impairment:

 
                                 Group 
                               GBP'000 
----------------------------  -------- 
At 1 May 2018                      455 
Charged for the year                43 
Foreign currency adjustment          - 
Utilised                         (182) 
----------------------------  -------- 
At 30 April 2019                   316 
----------------------------  -------- 
Charged for the year               477 
Foreign currency adjustment          - 
Utilised                         (330) 
----------------------------  -------- 
At 30 April 2020                   463 
----------------------------  -------- 
 

Concentrations of credit risk with respect to trade receivables are limited due to the Group's customer base being large, unrelated and blue chip. Due to this, management believes there is no further credit risk provision required in excess of normal provision for doubtful receivables. The average credit period taken on sale of goods or services is 38 days (2019: 38 days).

The Group applies the simplified approach permitted by IFRS 9, which requires the application of a lifetime expected loss provision to trade receivables. The provision calculations are based on historic credit losses applied to older balances. The basis of this provision is the historical credit losses over the past 5 years as a percentage of total revenue. This approach is followed for all receivables unless there are specific circumstances which would render the receivable irrecoverable and therefore require a specific provision. A provision is made against trade receivables until such time as the Group believes the amount to be irrecoverable, after which the trade receivable or contract receivables balance is written off. Based on these calculations and managements review, there were no material individual impairments of trade receivables or contract receivables.

The ageing analysis of trade receivables was as follows:

 
                                                 Past due but not impaired 
--------------  --------  -------------  --------------------------------- 
                                Neither 
                               past due 
                   Total   nor impaired  30-60 days  60-90 days  > 90 days 
                 GBP'000        GBP'000     GBP'000     GBP'000    GBP'000 
--------------  --------  -------------  ----------  ----------  --------- 
30 April 2020     62,920         50,068       4,296       1,991      6,565 
30 April 2019     57,372         49,284       4,044       1,215      2,829 
--------------  --------  -------------  ----------  ----------  --------- 
 

19. Cash and cash equivalents

 
                                      2020      2019 
                                     Group     Group 
                                   GBP'000   GBP'000 
--------------------------------  --------  -------- 
Cash and cash equivalents            2,724     3,517 
Bank overdraft                           -         - 
--------------------------------  --------  -------- 
Total cash and cash equivalents      2,724     3,517 
--------------------------------  --------  -------- 
 

20. Trade and other payables

 
                                                       2020      2019 
                                                      Group     Group 
                                                    GBP'000   GBP'000 
-------------------------------------------------  --------  -------- 
Trade payables                                       47,250    40,221 
Consignment inventory payables                       23,579    21,422 
Amounts payable to related parties (see note 28)        355       227 
Other taxes and social security                      21,524    11,148 
Other payables                                        2,868     5,762 
Contract liabilities                                 22,423    24,557 
Accruals                                             12,814    22,645 
-------------------------------------------------  --------  -------- 
Total trade and other payables                      130,813   125,982 
-------------------------------------------------  --------  -------- 
 

The contract liabilities primarily relate to the consideration invoiced to customers in advance of the work being completed.

21. Financial liabilities: borrowings

 
                                                                       2020      2019 
                                                                      Group     Group 
                                                                    GBP'000   GBP'000 
----------------------------------------------------------------  ---------  -------- 
Non-current: 
Bank loans                                                              126    17,307 
Obligations under finance leases or hire purchase agreements(1)           -    21,803 
----------------------------------------------------------------  ---------  -------- 
Total non-current                                                       126    39,110 
----------------------------------------------------------------  ---------  -------- 
Current: 
Bank loans                                                           19,315       785 
Obligations under finance leases or hire purchase agreements(1)           -    11,500 
----------------------------------------------------------------  ---------  -------- 
Total current                                                        19,315    12,285 
----------------------------------------------------------------  ---------  -------- 
Total borrowings                                                     19,441    51,395 
----------------------------------------------------------------  ---------  -------- 
Add: Lease liabilities (see note 22)                                202,284         - 
Less: Cash and cash equivalents                                       2,724     3,517 
     Non-current financial assets (see note 28)                       1,950     1,950 
----------------------------------------------------------------  ---------  -------- 
Net debt (including leases)                                         217,051    45,928 
Less: IAS 17 'operating leases'(2)                                (172,001)         - 
----------------------------------------------------------------  ---------  -------- 
Net debt (excluding leases)                                          45,050    45,928 
----------------------------------------------------------------  ---------  -------- 
 

1 On transition to IFRS 16 on 1 May 2019, finance leases and hire purchase agreements were reclassified as lease liabilities.

2 IAS 17 'operating leases' relate to those leases that were recognised as operating leases in the prior year but are now recognised as lease liabilities under IFRS 16.

The maturity analysis of the bank loans at 30 April is as follows:

 
                                 2020      2019 
                                Group     Group 
                              GBP'000   GBP'000 
---------------------------  --------  -------- 
In one year or less            19,315       785 
Between one and five years        126    17,307 
After five years                    -         - 
---------------------------  --------  -------- 
Total bank loans               19,441    18,092 
---------------------------  --------  -------- 
 

The principal lender has security over all assets of the Group's UK operations. The Group's principal bank facilities were increased in January 2019 and at 30 April 2020 the facility available was GBP45,000,000. In October 2019, there was a re-designation of the facility which now consists of:

 
 --    a Revolving Credit Facility of GBP34,000,000 repayable in January 
        2021; interest rate 1.75% above LIBOR. The amount drawn at 30 April 
        2020 was GBP19,000,000 (2019: GBP17,000,000); 
 --   a committed overdraft of GBP8,000,000. The amount drawn at 30 April 
       2020 was GBPnil (2019: GBPnil); and 
 --   bonds and guarantees of GBP3,000,000. 
 

In August 2020 the Group's principal banking facilities were extended for a further three years.

In addition to the Revolving Credit Facility above, other items included within bank loans at 30 April 2020 are as follows:

 
 --    other bank loans - GBP544,000 repayable in monthly instalments 
        over periods between 2 and 36 months; interest rates fixed at between 
        3.72% and 4.56%; and 
 --    unamortised debt issue costs of GBP103,000 in relation to the principal 
        facilities, which have been deducted from the total outstanding 
        bank loans. 
 

Changes in liabilities from financing activities:

 
                                                                                       Lease 
                                                                   Bank loans    liabilities 
                                                                      GBP'000        GBP'000 
-----------------------------------------------------------------  ----------  ------------- 
At 1 May 2019                                                          18,092         33,303 
-----------------------------------------------------------------  ----------  ------------- 
Changes from financing cash flows 
Drawdown of bank loans                                                  2,000              - 
Repayment of bank loans                                                 (789)              - 
New finance leases in respect of additions to property, 
 plant and equipment                                                        -          5,654 
Payment of principal on lease liabilities                                   -       (43,340) 
-----------------------------------------------------------------  ----------  ------------- 
Total changes from financing cash flows                                 1,211       (37,686) 
-----------------------------------------------------------------  ----------  ------------- 
Changes arising from obtaining or losing control of subsidiaries 
 or other business                                                          -              - 
-----------------------------------------------------------------  ----------  ------------- 
The effect of changes in foreign exchange rates                             -          (329) 
-----------------------------------------------------------------  ----------  ------------- 
Other changes 
Lease liabilities arising on transition to IFRS 16                          -        187,357 
New lease liabilities in respect of right-of-use assets                     -          9,711 
Acquisition                                                                 -          2,183 
Remeasurement of lease liabilities                                          -            388 
Disposal of lease liabilities                                               -        (1,689) 
New lease liabilities in respect of additions to property, 
 plant and equipment                                                        -            564 
New lease liabilities in respect of commercial vehicle 
 inventories                                                                -            444 
Finance costs                                                             138          8,038 
-----------------------------------------------------------------  ----------  ------------- 
Total other changes                                                       138        206,996 
-----------------------------------------------------------------  ----------  ------------- 
At 30 April 2020                                                       19,441        202,284 
-----------------------------------------------------------------  ----------  ------------- 
 

22. Lease liabilities

22.1 Lease liabilities movement

 
                                                 Land and 
                                                buildings  Vehicles     Other     Total 
                                                    Group     Group     Group     Group 
                                                  GBP'000   GBP'000   GBP'000   GBP'000 
---------------------------------------------  ----------  --------  --------  -------- 
At 30 April 2019                                        -         -         -         - 
Opening balance on transition                     174,135     7,395     5,827   187,357 
Reclassification of leases within borrowings            -     1,481    31,822    33,303 
---------------------------------------------  ----------  --------  --------  -------- 
At 1 May 2019                                     174,135     8,876    37,649   220,660 
Additions                                           2,110     7,319     6,944    16,373 
Remeasurement of lease                                388         -         -       388 
Acquisition                                         2,183         -         -     2,183 
Disposals                                         (1,569)      (84)      (36)   (1,689) 
Repayments                                       (27,233)   (4,791)  (11,316)  (43,340) 
Interest                                            7,418       367       253     8,038 
Foreign currency adjustment                         (174)         1     (156)     (329) 
---------------------------------------------  ----------  --------  --------  -------- 
At 30 April 2020                                  157,258    11,688    33,338   202,284 
---------------------------------------------  ----------  --------  --------  -------- 
 

22.2 Lease liabilities outstanding

 
                                                            2020      2019 
                                                           Group     Group 
                                                         GBP'000   GBP'000 
------------------------------------------------------  --------  -------- 
The present value of lease liabilities is as follows: 
Within one year                                           38,378         - 
Later than one year and not later than five years        110,257         - 
Later than five years                                     53,649         - 
------------------------------------------------------  --------  -------- 
Total lease liabilities                                  202,284         - 
------------------------------------------------------  --------  -------- 
 

In prior periods, the Group only recognised lease assets and lease liabilities in relation to leases that were classified as 'finance leases' under IAS 17 'Leases'. For adjustments recognised on adoption of IFRS 16 on 1 May 2019 see note 30.

The expense relating to short term and low value leases was GBP2,572,000. The expense relating to variable lease payments not included in lease liabilities was GBPnil. Income recognised from subleasing was GBPnil.

The total cash outflow for leases, including short term and low value leases, in the year ended 30 April 2020 was GBP45,912,000 (2019: GBP46,543,000).

22.3 Opening lease liabilities reconciliation

A reconciliation of operating lease commitments disclosed at 30 April 2019 to the lease liability recognised on transition to IFRS 16 on 1 May 2019 is as follows:

 
                                                        Land and               Total 
                                                       buildings     Other     Group 
                                                         GBP'000   GBP'000   GBP'000 
----------------------------------------------------  ----------  --------  -------- 
Operating lease commitment disclosed as at 30 April 
 2019 
Within one year                                           24,186     5,776    29,962 
Between one and five years                                83,496     6,339    89,835 
After more than five years                                74,188         -    74,188 
----------------------------------------------------  ----------  --------  -------- 
Total minimum lease payments                             181,870    12,115   193,985 
----------------------------------------------------  ----------  --------  -------- 
Add: expected lease extensions post 30 April 2019          4,000         -     4,000 
Add: finance leases and hire purchase agreements 
 reclassified                                                  -    33,303    33,303 
Add: rent increases                                          315         -       315 
Add: additional leases recognised under IFRS 16                -     1,880     1,880 
Less: short-term/low value leases not capitalised 
 on transition                                                 -     (125)     (125) 
----------------------------------------------------  ----------  --------  -------- 
Revised commitment as at 1 May 2019                      186,185    47,173   233,358 
----------------------------------------------------  ----------  --------  -------- 
Discounted at weighted average incremental rate 
 of borrowing                                            174,135    46,525   220,660 
Of which: 
Current lease liabilities                                 16,876    19,695    36,571 
Non-current lease liabilities                            157,259    26,830   184,089 
----------------------------------------------------  ----------  --------  -------- 
Total lease liabilities as at 1 May 2019                 174,135    46,525   220,660 
----------------------------------------------------  ----------  --------  -------- 
 

23. Provisions

 
                                        Redundancy     Onerous  Uninsured 
                                         provision   contracts     losses  Dilapidations     Total 
                                             Group       Group      Group          Group     Group 
                                           GBP'000     GBP'000    GBP'000        GBP'000   GBP'000 
--------------------------------------  ----------  ----------  ---------  -------------  -------- 
At 1 May 2018                                    -          17          -          1,547     1,564 
Utilised                                         -        (17)      (168)           (84)     (269) 
Charged in year                                  -           -        168            361       529 
--------------------------------------  ----------  ----------  ---------  -------------  -------- 
At 30 April 2019                                 -           -          -          1,824     1,824 
--------------------------------------  ----------  ----------  ---------  -------------  -------- 
Recognition of dilapidation provision 
 on IFRS 16 leases                               -           -          -          4,086     4,086 
Additions to right-of-use asset                  -           -          -            233       233 
Acquisition                                    400           -          -            224       624 
Utilised                                         -           -      (122)          (498)     (620) 
Charged in year                                  -           -        122            367       489 
Foreign exchange adjustment                      -           -          -           (16)      (16) 
--------------------------------------  ----------  ----------  ---------  -------------  -------- 
At 30 April 2020                               400           -          -          6,220     6,620 
--------------------------------------  ----------  ----------  ---------  -------------  -------- 
 

Provisions have been analysed between current and non-current as follows:

 
                  2020      2019 
                 Group     Group 
               GBP'000   GBP'000 
------------  --------  -------- 
Current             99       214 
Non-current      6,521     1,610 
------------  --------  -------- 
Total            6,620     1,824 
------------  --------  -------- 
 

Redundancy provisions

As part of the business combination, a redundancy provision was acquired. See note 29.1.

Onerous contracts

Following a reorganisation of the commercial vehicles business in the year ended 30 April 2013, which included the closure of a facility, the Group was unsuccessful in its efforts to sub-let the closed premises. The Directors therefore made a provision in the year ended 30 April 2014 for the rent that was payable until the expiry of the lease in September 2018.

Uninsured losses

The uninsured losses provision is in respect of the cost of claims (generally for commercial vehicles and employment related) which are either not insured externally or fall below the excess on the Group's insurance policies.

Dilapidations

Prior to adoption of IFRS 16, provisions were established over the life of leases to cover remedial work necessary at termination under the terms of those leases.

On transition to IFRS 16, the balance of expected dilapidation provision for each property was included in the calculation of the right-of-use asset.

24. Share capital

 
                                                               2020      2019 
                                                              Group     Group 
                                                            GBP'000   GBP'000 
---------------------------------------------------------  --------  -------- 
Allotted, called up and fully paid: 
101,662,415 (2019: 101,614,522) ordinary shares of 0.05p 
 each                                                            51        51 
---------------------------------------------------------  --------  -------- 
 

During the year the Company issued 47,893 ordinary shares to satisfy employee share options, for aggregate consideration of GBP114,000. The new shares rank pari passu with all existing ordinary shares in issue. See also note 25 below.

25. Share based payments

The Clipper Performance Share Plan ("PSP") was approved by shareholders on 29 September 2014. The PSP enables selected Directors and employees of the Group to be granted awards in respect of ordinary shares. Share Awards under the PSP will ordinarily be structured as nil cost share options with the vesting of Share Awards being subject to performance conditions measured over a period of at least three years. A summary of the principal terms of the PSP, including vesting conditions, is contained in the Directors' Remuneration Report on pages 50

to 64   contained in the Company's 2020 Annual Report and Accounts (available to download from www.clippergroup.co.uk/report-accounts/). 

The Clipper Sharesave Plan is a share plan for all UK employees in the Group, and offers them the opportunity to acquire an interest in shares in the Company on favourable terms within the long-standing regime allowed by HMRC legislation. All UK staff are invited to participate on the same terms, and employees who choose to participate are granted an option over shares in the Company, with the exercise of that option being funded by the proceeds of a savings contract taken out by the relevant employee, under which the employee saves a set amount each month over a set period. The options granted in the prior year were offered with a three year savings contract, under which the employee could elect to save between GBP5 and GBP500 per month.

Option movements and weighted average exercise prices ("WAEP") during the year were as follows:

 
                                              Sharesave 
Date                        PSP Number  WAEP     Number     WAEP 
--------------------------  ----------  ----  ---------  ------- 
Outstanding 1 May 2018       1,647,665   nil  1,165,834  311.64p 
Granted during the year        671,645   nil  2,007,277  193.34p 
Forfeited during the year    (441,859)   nil  (603,320)  346.10p 
Exercised during the year     (64,964)   nil  (189,035)  185.11p 
--------------------------  ----------  ----  ---------  ------- 
Outstanding 30 April 2019    1,812,487   nil  2,380,756  213.21p 
--------------------------  ----------  ----  ---------  ------- 
Granted during the year              -   nil          -        - 
Forfeited during the year    (412,510)   nil  (421,652)  232.38p 
Exercised during the year            -   nil   (47,893)  239.34p 
--------------------------  ----------  ----  ---------  ------- 
Outstanding 30 April 2020    1,399,977   nil  1,911,211  208.33p 
--------------------------  ----------  ----  ---------  ------- 
 

At 30 April 2020, the range of exercise prices for the various schemes were 193.34p - 379.74p (2019: 193.34p - 379.74p). At 30 April 2020, the weighted average remaining contractual life was 2.3 years (2019: 2.7 years).

At 30 April 2020, PSP options over 507,568 (2019: 507,568) and Sharesave options over 103,131 (2019: 105,776) of the above shares were exercisable.

The cost of the options is recognised over the expected vesting period. The total charge for the year ended 30 April 2020 relating to employee share based payment plans was GBP348,000 (2019: credit of GBP1,178,000). The fair value of share options at 30 April 2020 to be amortised in future years was GBP809,000 (2019: GBP1,538,000).

All share based payments in both years are equity settled.

26. Capital commitments

 
                                         2020      2019 
                                        Group     Group 
                                      GBP'000   GBP'000 
-----------------------------------  --------  -------- 
Authorised and contracted for           1,243     2,002 
Authorised, but not contracted for      2,392     6,567 
-----------------------------------  --------  -------- 
Total capital commitments               3,635     8,569 
-----------------------------------  --------  -------- 
 

27. Financial instruments and financial risk management objectives and policies

In accordance with IFRS 9 ('Financial Instruments') the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet certain requirements. The Group did not identify any such derivatives.

The Group is exposed to a number of different market risks in the normal course of business including credit, interest rate and foreign currency risks.

Credit risk

Credit risk predominantly arises from trade receivables and cash and cash equivalents. The Group has a customer credit policy in place and the exposure to credit risk is monitored on an ongoing basis. External credit ratings are obtained for customers; Group policy is to assess the credit quality of each customer before accepting any terms of trade.

Internal procedures take into account customers' financial positions as well as their reputation within the industry and past payment experience. Cash and cash equivalents and derivative financial instruments are held with AAA or AA rated banks. Financial instruments classified as fair value through profit and loss and available for sale are all publicly traded on the UK London Stock Exchange. Given the high credit quality of counterparties with whom the Group has investments, the Directors do not expect any counterparty to fail to meet its obligations.

At 30 April 2020 there were no significant concentrations of credit risk (2019: GBPnil). The Group's maximum exposure to credit risk, gross of any collateral held, relating to its financial assets is equivalent to their carrying value. All financial assets have a fair value which is equal to their carrying value, as a consequence of their short maturity. The Group did not have any financial instruments that would mitigate the credit exposure arising from the financial assets designated at fair value through profit or loss in either the current or the preceding financial year.

Interest rate risk

The Group adopts a policy of ensuring that there is an appropriate mix of fixed and floating rates in managing its exposure to changes in interest rates on borrowings. Interest rate swaps are entered into, where necessary, to achieve this appropriate mix.

Interest rate sensitivity

The Group's borrowings are largely denominated in Pounds Sterling and the Group is therefore exposed to a change in the relevant interest rate. With all other variables held constant, the impact of a reasonably possible increase in interest rates of 50 basis points (2019: 50 points) on that portion of borrowings affected, would be to reduce the Group's profit before tax by GBP103,000 (2019: GBP189,000).

Foreign currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in currencies other than Pounds Sterling. The currencies giving rise to this risk are primarily the Euro and Polish zloty. The volume of transactions denominated in foreign currencies is not significant to the Group.

The exposure to a short-term fluctuation in exchange rates on the investment in foreign subsidiaries is not expected to have a material impact on the results of the Group.

Capital management

The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to trade profitably in the foreseeable future. The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.

The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates by monitoring its gearing ratio on a regular basis and adjusting the level of dividends paid to ordinary shareholders.

The Group considers its capital to include equity and net debt. Net debt includes short-term and long-term borrowings (including overdrafts and lease obligations) net of cash and cash equivalents.

The Group has not made any changes to its capital management during the year. The Group has no long-term gearing ratio target. Borrowings are taken out to invest in the acquisition of subsidiaries, new sites or distribution centres and are considered as part of that investment appraisal. Key measures monitored by the Group are interest cover and net debt compared to earnings before interest, tax, depreciation and amortisation.

In order to achieve the overall objective, the Group's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings. The Group has satisfied all such financial covenants in both years.

 
                                                        2020      2019 
                                                       Group     Group 
                                                     GBP'000   GBP'000 
--------------------------------------------------  --------  -------- 
EBIT (excluding impact of IFRS 16)                    24,077    20,213 
Finance costs (net) (excluding impact of IFRS 16)      2,722     2,141 
--------------------------------------------------  --------  -------- 
Interest cover                                           8.8       9.4 
--------------------------------------------------  --------  -------- 
 
 
                                                                   2020      2019 
                                                                  Group     Group 
                                                                GBP'000   GBP'000 
-------------------------------------------------------------  --------  -------- 
EBIT (excluding impact of IFRS 16)                               24,077    20,213 
Depreciation and impairment of property, plant and equipment 
 (note 14)                                                        3,244     7,426 
Depreciation and impairment of lease liabilities (note 
 15)                                                             32,946         - 
Amortisation and impairment of computer software (note 
 12)                                                                874       788 
-------------------------------------------------------------  --------  -------- 
Earnings before interest, tax, depreciation and amortisation 
 (EBITDA) (including impact of IFRS 16)                          61,141    28,427 
Less: Depreciation and impairment of 'IAS 17' operating 
 leases                                                          26,557         - 
-------------------------------------------------------------  --------  -------- 
Earnings before interest, tax, depreciation and amortisation 
 (EBITDA) (excluding impact of IFRS 16)                          34,584    28,427 
-------------------------------------------------------------  --------  -------- 
Net debt (note 21)                                               45,050    45,928 
-------------------------------------------------------------  --------  -------- 
Net debt/EBITDA                                                    1.30      1.62 
-------------------------------------------------------------  --------  -------- 
 

Liquidity risk

Management closely monitors available bank and other credit facilities in comparison to the Group's outstanding commitments on a regular basis to ensure that the Group has sufficient funds to meet the obligations of the Group as they fall due.

The Board receives regular cash forecasts which estimate the cash inflows and outflows over the next 24 to 36 months, so that management can ensure that sufficient financing can be arranged as it is required. The Group would normally expect that sufficient cash is generated in the operating cycle to meet the contractual cash flows as disclosed above through effective cash management.

Estimation of fair values

The main methods and assumptions used in estimating the fair values of financial instruments are as follows:

 
 --    interest-bearing loans and borrowings: fair value is calculated 
        based on discounted expected future principal and interest cash 
        flows; and 
 --    trade and other receivables/payables: the notional amount for trade 
        receivables/payables with a remaining life of less than one year 
        are deemed to reflect their fair value. 
 
 
                                       2020         2020         2019         2019 
                                 Book value   Fair value   Book value   Fair value 
                                    GBP'000      GBP'000      GBP'000      GBP'000 
------------------------------  -----------  -----------  -----------  ----------- 
Non-current financial assets          1,950        1,907        1,950        1,950 
 
Current financial assets: 
Cash and cash equivalents             2,724        2,724        3,517        3,517 
Trade and other receivables         102,742      102,742       96,347       96,347 
Liabilities: 
Bank overdraft                            -            -            -            - 
Short-term borrowings              (19,315)     (19,315)     (12,285)     (12,285) 
Lease liabilities: short term      (38,378)     (38,378)            -            - 
Trade and other payables          (130,813)    (130,813)    (125,982)    (125,982) 
Long-term borrowings                  (126)        (120)     (39,110)     (38,830) 
Lease liabilities: long term      (163,906)    (163,411)            -            - 
------------------------------  -----------  -----------  -----------  ----------- 
 

Long-term borrowings are classified as Level 2 (items with significant observable inputs) financial liabilities under IFRS 13. There have been no transfers between Level 1 and Level 2 financial instruments during the year.

28. Related party disclosures

Clicklink Logistics Limited (see note 16) is a supplier of logistics services to the Group. The Group provides certain resources to Clicklink, principally people and vehicles, under the terms of the joint venture agreement. Amounts charged for these resources are included in revenue.

Branton Court Stud LLP, in which Steve Parkin is a partner, receives management, recharge of expenditure and administration services from the Group. During the year GBP588,000 (2019: GBP590,000) was recharged to Branton Court Stud LLP for management time of Directors and other key management personnel in proportion to the time spent on non-Clipper-related activities. In addition, GBP2,000 was charged in relation to vehicle repair services.

Additionally, in the previous financial year, the Group recognised a credit from Branton Court Stud LLP of GBP977,000 in respect of Branton Court's contribution to costs incurred by the Group in respect of a one-off event.

In the year, the Group paid Branton Court Stud LLP GBP70,000 (2019: GBP120,000) received in relation to horse race winnings. These monies were not intended for the Group and were paid to Branton Court on the same day.

Guiseley Association Football Club shares a common director with Clipper Logistics plc.

Harrogate Road Restaurants Limited shares a common director with Clipper Logistics plc.

Hamsard 3476 Limited, a company controlled by Steve Parkin, receives property-related services from the Group.

Knaresborough Real Estate Limited, a company owned by Steve Parkin, is the landlord of one of the Group's leasehold properties.

Roydhouse Properties Limited is the landlord of two of the Company's leasehold properties and has common directors with Clipper Logistics plc.

Southerns Office Interiors Limited supplied office furniture to the Group and was a customer of the commercial vehicles segment. A company owned by Steve Parkin is registered as a person with significant control over Southerns Limited, the ultimate parent of Southerns Office Interiors Limited.

In the prior year, the Group entered into a framework agreement with Styles & Wood Limited, a company which shares common directors. A payment of GBP2.0 million was advanced in relation to the agreed works on 27 June 2018. The agreement was subsequently cancelled and the payment was returned by 20 August 2018. No such transactions occurred in the year ended 30 April 2020.

During the year, GBP138,000 was received from Steve Parkin repaying Clipper for personal expenditure incurred on a company credit card. At 30 April 2020 GBPnil was outstanding.

In the prior year, the Company advanced two petty cash amounts totalling GBP27,000 to David Hodkin in exchange for personal cheques from David Hodkin. In both cases, there was a short period of time elapsing between David's withdrawal of the cash and Clipper's subsequent cashing of the cheque. No such transactions occurred in the year ended 30 April 2020.

28. Related party disclosures

Balances owing to or from these related parties at 30 April were as follows:

 
                                                          2020      2019 
                                                         Group     Group 
                                                       GBP'000   GBP'000 
----------------------------------------------------  --------  -------- 
Non-current financial assets: 
Clicklink Logistics Limited - interest-bearing loan      1,950     1,950 
Trade and other receivables: 
Clicklink Logistics Limited - trading balance            2,066     1,626 
Branton Court Stud LLP                                       2       461 
Knaresborough Investments Limited                            -         - 
Southerns Office Interiors Limited                           1         2 
Trade and other payables: 
Clicklink Logistics Limited                                179       227 
Roydhouse Properties Limited                               176         - 
----------------------------------------------------  --------  -------- 
 

The shareholders in Clicklink Logistics Limited have jointly made available to that company a term loan facility of GBP3,900,000 of which the Company's 50% share is GBP1,950,000. Interest on each loan is calculated at a margin above 12 month LIBOR and is payable annually. All loans drawn under the facility are repayable in November 2022.

Transactions with these related parties in the year ended 30 April were as follows:

 
                                                   2020      2019 
                                                  Group     Group 
                                                GBP'000   GBP'000 
---------------------------------------------  --------  -------- 
Items credited to the income statement: 
Clicklink Logistics Limited - revenue            19,088    20,392 
Clicklink Logistics Limited - finance income         59        52 
Branton Court Stud LLP                              590     2,097 
Hamsard 3476 Limited                                  -     3,100 
Knaresborough Investments Limited                     -       174 
Harrogate Road Restaurants Limited                    -         - 
Southerns Office Interiors Limited                    9         7 
Items charged to the income statement: 
Clicklink Logistics Limited                       2,438     2,750 
Branton Court Stud LLP                                -       129 
Hamsard 3476 Limited                                  -       145 
Knaresborough Investments Limited                     1       176 
Knaresborough Real Estate Limited                   265       360 
Roydhouse Properties Limited                        808       910 
Southerns Office Interiors Limited                    -        17 
Guiseley Association Football Club                    -        25 
---------------------------------------------  --------  -------- 
 

29. Business combinations

29.1 Raven Mill operation

In April 2019, the Company entered into a series of contracts with a customer, which when combined represented a business combination in accordance with IFRS 3 'Business Combinations'. The acquisition consists of premises, assets and a workforce, together carrying out a logistics service business that is now carried out by the Company. The business acquired is an unincorporated entity. Several areas required significant judgment by management, in particular that the transfer of employees under TUPE and the lease of the premises commenced only after the year end, limiting the ability of the Group to control the relevant activities of the acquired business. On balance the Group has concluded that the effective date of the business combination is 1 July 2019 and that this series of transactions should be reflected within the year ended 30 April 2020. This is when management concluded that control has passed to the Group. The Group has carried out a fair value exercise of the business combination, which gives rise to 'negative goodwill' of GBP3,499,000. The 'negative goodwill' is recognised within the Company income statement in the year ended 30 April 2020.

The fair value table for the business combination is shown below.

Purchase consideration and cash flows:

 
                                      GBP'000 
------------------------------------  ------- 
Cash consideration paid in the year     2,899 
Cash consideration receivable         (2,765) 
------------------------------------  ------- 
Total net consideration payable           134 
------------------------------------  ------- 
 

Acquisition:

 
                                              Fair values 
                                                  GBP'000 
--------------------------------------------  ----------- 
Assets: 
Property, plant and equipment                       2,899 
Right-of-use asset                                  2,407 
Customer relationship                               1,882 
Liabilities: 
Lease liabilities                                 (2,183) 
Non-current provisions                              (624) 
Deferred tax liabilities                            (748) 
--------------------------------------------  ----------- 
Total identifiable net assets at fair value         3,633 
'Negative goodwill' arising on acquisition        (3,499) 
--------------------------------------------  ----------- 
Total consideration                                   134 
--------------------------------------------  ----------- 
 

As part of the series of transactions, the customer will pay, in the year ending 30 April 2021, the Company consideration in return for the Company assuming certain potential liabilities. This results in the net consideration payable being less than the fair value of net assets acquired, principally the customer relationship, which gave rise to 'negative goodwill'.

Professional fees and costs in relation to the acquisition amounted to GBP41,000 and have been charged to the income statement.

29.2 RepairTech Limited

In June 2018, the Company paid deferred consideration of GBP500,000 in relation to the acquisition of the entire issued share capital of RepairTech Limited on 15 June 2017.

30. IFRS 16 transition

The impact on the statement of financial position at the date of transition was as follows:

 
                                                    At 30 
                                                    April      IFRS 16  At 1 May 
                                                     2019   adjustment      2019 
                                                    Group        Group     Group 
                                           Note   GBP'000      GBP'000   GBP'000 
-----------------------------------------  ----  --------  -----------  -------- 
 Assets: 
 Non-current assets 
-----------------------------------------  ----  --------  -----------  -------- 
 Goodwill                                          25,951            -    25,951 
 Other intangible assets                           11,390            -    11,390 
-----------------------------------------  ----  --------  -----------  -------- 
 Intangible assets-                                37,341            -    37,341 
 Property, plant and equipment                1    61,470     (39,681)    21,789 
 Right-of-use assets                          2         -      204,186   204,186 
 Investment in subsidiaries                           865                    865 
 Non-current financial assets                       1,950                  1,950 
 Deferred tax assets                          3         -        1,613     1,613 
                                                 --------  -----------  -------- 
 Total non-current assets                         101,626      166,118   267,744 
-----------------------------------------  ----  --------  -----------  -------- 
 Current assets 
 Inventories                                       24,049            -    24,049 
 Trade and other receivables                  4    96,347      (4,915)    91,432 
 Cash and cash equivalents                          3,517            -     3,517 
-----------------------------------------  ----  --------  -----------  -------- 
 Total current assets                             123,913      (4,915)   118,998 
-----------------------------------------  ----  --------  -----------  -------- 
 Total assets                                     225,539      161,203   386,742 
-----------------------------------------  ----  --------  -----------  -------- 
 Equity and liabilities: 
 Current liabilities 
 Trade and other payables                     4   125,982      (8,293)   117,689 
 Financial liabilities: borrowings            5    12,285     (11,500)       785 
 Lease liabilities: Short term                6         -       36,571    36,571 
 Short-term provisions                                214            -       214 
 Current income tax liabilities                       803            -       803 
-----------------------------------------  ----  --------  -----------  -------- 
 Total current liabilities                        139,284       16,778   156,062 
-----------------------------------------  ----  --------  -----------  -------- 
 Non-current liabilities 
 Financial liabilities: borrowings            5    39,110     (21,803)    17,307 
 Lease liabilities: long term                 6         -      184,089   184,089 
 Long-term provisions                         4     1,610        4,086     5,696 
 Deferred tax liabilities                     3     2,320      (2,320)         - 
-----------------------------------------  ----  --------  -----------  -------- 
 Total non-current liabilities                     43,040      164,052   207,092 
-----------------------------------------  ----  --------  -----------  -------- 
 Total liabilities                                182,324      180,830   363,154 
-----------------------------------------  ----  --------  -----------  -------- 
 Equity shareholders' funds 
 Share capital                                         51            -        51 
 Share premium                                      2,060            -     2,060 
 Currency translation reserve                       (108)            -     (108) 
 Other reserve                                         84            -        84 
 Merger reserve                                     6,006            -     6,006 
 Share based payment reserve                        1,643            -     1,643 
 Retained earnings                            7    33,479     (19,627)    13,852 
-----------------------------------------  ----  --------  -----------  -------- 
 Total equity attributable to the owners 
  of the Company                                   43,215     (19,627)    23,588 
-----------------------------------------  ----  --------  -----------  -------- 
 Total equity and liabilities                     225,539      161,203   386,742 
-----------------------------------------  ----  --------  -----------  -------- 
 

1 Assets previously recognised within property, plant and equipment under IAS 17 relating to finance leases were transferred as right-of-use assets at their book value at the date of transition.

2 Right-of-use assets: valued at an amount equal to the carrying amount as if IFRS 16 had been applied since the start of the lease, but applying the incremental rate of borrowing at the 1 May 2019 (date of transition).

3 Deferred tax asset: as per IAS 12, the net liability recognised on transition to IFRS 16 creates a temporary timing difference from that which will be deducted for tax purposes, therefore a deferred tax asset is recognised.

4 Reclassification of balance sheet items: lease incentive accruals, dilapidation provisions and lease prepayments have been reclassified on transition to IFRS 16.

5 Reclassification of lease liabilities: finance lease and hire purchase agreements previously recognised under IAS 17 have been reclassified to lease liabilities from financial liabilities: borrowings.

6 Lease liabilities: measured at the present value of the remaining lease payments, discounted using the Group's weighted average incremental borrowing rate (see critical accounting estimates and judgments on page 87 for more details).

7 Retained earnings adjustment: the Group has calculated the right-of-use asset as though IFRS 16 had been applied since the start of the lease and depreciated, resulting in a charge to retained earnings as the carrying value of right-of-use assets is lower than the finance lease liabilities recognised.

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