Full Year Results

Clipper Logistics plc

Final Results for the year ended 30 April 2014, incorporating an interim management statement to 28 August 2014

Clipper Logistics plc ("Clipper", "the Group", or "the Company"), a leading provider of value-added logistics solutions and e-fulfilment to the retail sector is pleased to announce its Full Year Results for the year ended 30 April 2014.

Financial Highlights

· Group revenue increased by 25.2% to £201.2 million

· Statutory Group profit for the period £2.8 million (2013: £3.8 million), after deduction of discontinuing costs of £2.3 million (2013: £2.1 million) and exceptional costs of £2.5 million (2013: £0.4 million)

· Group Adjusted EBIT* increased by 10.0% to £9.6 million

· Adjusted EBIT from e-fulfilment logistics operations up 49.4% to £3.7 million

· Non e-fulfilment logistics Adjusted EBIT up 15.8% to £9.2 million

· Investment in additional central logistics overheads of £1.8 m to further support growth into 2015

· Commercial vehicles Adjusted EBIT up 25.4% to £1.8 million due to business integration and depot rationalisation

· Adjusted earnings per share** increased to 6.6p (2013: 5.7p)

· A new £30m bank debt facility was put in place at IPO to facilitate targeted acquisition strategy

*Group Adjusted EBIT is defined as operating profit excluding non-recurring items.

** Adjusted earnings per share is based on profit attributable to ordinary equity holders adjusted by adding back discontinuing and exceptional costs and adjusting for the tax thereon.

Operational Highlights for the Year to 30 April 2014

· Significant new contracts with customers including SuperGroup, ASOS and Antler

· Strong growth in retail e-commerce market, driving revenues with existing customers as well as providing opportunities for new contract wins

· New "Boomerang" brand introduced to focus on value-added returns management services

· Acquisition of R. Geist Spedition GmbH & Co. KG completed in October 2013 to enhance operations in Germany, providing a platform to benefit from growth in European online retailing and support UK customers' ambitions to expand into Europe

· Integration of Northern Commercials (Mirfield) Ltd and Stormont Truck and Van Ltd in August 2013 realised cost reductions and created a platform for market share and profit growth

Post Year End Highlights and interim management statement for the period to 28 August 2014

· Clipper Logistics plc admitted to the premium segment of the London Stock Exchange on 4 June 2014

· Strong operational and financial performance of FY14 has continued into the current year, in line with management expectations

· Contract signed with Tesco

· Continuing growth in e-commerce sector, including returns management

· Strong new business pipeline ensures organic growth within Logistics will continue into the 2015 financial year 

Steve Parkin, Executive Chairman of Clipper commented:

"The Group has the enviable position of being one of the leading providers of value-added logistics and e-fulfilment solutions to the retail sector in the UK. The strong performance delivered in the financial year to 30 April 2014 has continued into the current financial year. The business is advancing in line with its strategy and is poised for further growth, both in the UK and internationally. We are proud to have achieved a successful listing on the Premium Segment of the London Stock Exchange and look forward to creating further shareholder value in the next phase of the business's development."

Chairman's Statement

I am pleased to write as Chairman of Clipper Logistics plc following the successful Initial Public Offering on the London Stock Exchange in June 2014. The demand for the listing was high and we are delighted to have attracted blue chip institutional and retail investors as shareholders. The business is growing through our ability to demonstrate real value-add services for our large client base and we are confident of maintaining this level of momentum.

The Group has seen a strong performance throughout the year under review with a number of high profile new contracts being signed including major brands such as SuperGroup, Tesco and ASOS.

Our desire to constantly identify new methods and technology that ease the operational burdens of our clients is the driving force behind the business. The Group's unrivalled understanding of the e-fulfillment and returns market, along with the ever-evolving needs of customers in these areas will ensure we retain and expand our market share. Clipper Logistics is rightfully excited about the years to come and is proud of the quality of service it continues to provide.

Results

Group revenues increased by 25.2% to £201.2 million for the year to 30 April 2014 and, Group Adjusted EBIT* increasing by 10.0% to £9.6 million, in line with the profit estimate included in the IPO Prospectus.

Continued strong cash generation enabled the Group to pay a dividend of £6.3 million during the year. We anticipate paying circa 40-60% of after tax profits as dividends going forward, given the strong cash profile of the business.

People and Board

Clipper Logistics is led by an excellent management team that has been at the core of the business for many years. Having guided the Group through periods of significant change in the UK retail industry, the management team's proven ability to continue to steer the business along its path of organic growth through customer focus, technical innovation and growing brand awareness is well established.

I would like to take this opportunity to thank all the employees of the Group for their commitment and contribution to the Group's performance.

Governance

Following its IPO, the Group is proud of its commitment to high levels of corporate governance as a listed company. Alongside the executive management team of Tony Mannix (CEO), David Hodkin (CFO) and Sean Fahey (CIO) the Company benefits from the combined experience of its Non-Executive Directors: Paul Hampden Smith (Senior Independent Non-Executive Director), Stephen Robertson, Ron Series and Mike Russell.

Look ahead

The Group is in an enviable position; being amongst the leading providers of value-added and e-fulfilment solutions to the retail sector in the UK, the business is growing in line with its strategy and is poised for further growth in the medium term, both in the UK and internationally.

I look forward to working with all of the Group's stakeholders as we continue to deliver on the next phase of the business's development.

*Group Adjusted EBIT is defined as operating profit excluding non-recurring items.

1. Operational and Financial Review

Overview of Results

The Group made excellent progress in the financial year to 30 April 2014. Group revenues increased by 25.2% to £201.2 million, with strong growth in all business areas including e-fulfilment logistics, non e-fulfilment logistics and commercial vehicles, as demonstrated by the following table:

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

Logistics Division

The Group benefited from the full-year impact of contract wins secured in the previous financial year including, amongst others, Wilkinsons, American Golf, Claire's Accessories, Hobbycraft and Morrisons Nutmeg as well as the part-year impact of contracts won during the year to 30 April 2014, including ASOS, SuperGroup, Antler and a range of other new contract wins. The full year benefit of these contracts will be realised in the year to 30 April 2015, together with the part-year benefits of contracts currently in the pipeline and due to go live during the remainder of calendar year 2014 and early calendar year 2015.

Organic growth was also achieved on existing contracts, including Tesco, Asda, The John Lewis Partnership, New Look, Sainsbury's, and Morrisons transport.

Revenue growth in commercial vehicles was largely driven by an increase in the volume of new vehicle sales, with sales of 2,447 units, compared to 1,782 in the year to 30 April 2013, as well as a modest increase in after-sales revenues.

Group Adjusted EBIT

The Group also grew Adjusted EBIT strongly in all segments, and invested in additional project delivery and senior management resource in order to deliver significant organic growth into the future:

Group Adjusted EBIT is defined as Group operating profit excluding discontinuing and exceptional costs.

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

Group Adjusted EBIT increased by 10.0% to £9.6 million in the year to 30 April 2014, and the Group is well placed to achieve further EBIT growth in the coming financial year due to the full year benefits of recent contract wins, coupled with a very strong new business pipeline.

Adjusted EBIT is the core metric by which the management team assesses corporate performance, as the high proportion of open book and minimum volume guarantee contracts within the UK logistics division distorts reported margins.

This is due to an element of management fees on certain contracts being 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.

Accordingly, Adjusted EBIT is a more relevant measure of financial performance.

E-fulfilment operations 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. The Company has recently introduced a new brand, 'Boomerang', under which returns of products sold online are managed on behalf of retailers.

Non e-fulfilment operations include receipt, warehousing, stock management, picking and distribution of products on behalf of customers. Within this sector the Group handles high value products, including tobacco, alcohol and high value clothing, and also undertakes traditional retail support services including processing, storage and distribution of products, particularly fashion, to high street retailers.

Central logistics costs 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 and segments. We invested significantly in such resources during the year, particularly in operational support, and solution design and implementation, in view of the very high levels of organic growth being experienced by the business. Whilst some additional infrastructure will inevitably be required as the business continues to grow, the investment in central logistics overheads will be of more modest proportions.

The commercial vehicle business, Northern Commercials (Mirfield) Limited, operates Iveco and Fiat commercial vehicle dealerships from six locations, together with three sub-dealerships. It sells new and used vehicles, provides servicing and repair facilities, and sells parts. Vehicles sold and serviced range from small light commercial vans, through to articulated tractor units.

Head office costs represent the cost of the Executive Chairman, Chief Financial Officer, Non-Executive Directors and plc compliance costs.

The profit after tax for the year to 30 April 2014 was £2.8 million (2013: £3.8 million). This is stated after charging £2.3 million (2013: £2.1 million) of discontinuing costs, and £2.5 million (2013: £0.4 million) of exceptional costs. As such, adjusted profit after tax for the year to 30 April 2014 (which excludes the discontinuing costs, exceptional costs and the tax associated with those costs, and which the Board believes is therefore a more meaningful measure of the performance of the Group ) was £6.5 million (2013: £5.7 million).

The discontinuing costs relate to remuneration of a retiring Director, consultancy and professional fees in respect of potential investment opportunity appraisals, the costs of operating the Chairman's private office, and certain advertising, sponsorship and entertaining expenditure which will not be borne by the Group post-Admission ("Admission" being defined as 4 June 2014, the date on which Clipper Logistics plc was admitted to the premium segment of the London Stock Exchange).

Of the exceptional costs of £2.5 million charged to profit and loss in the year to 30 April 2014, £2.0 million related to the costs of the IPO. The balance related to depot closure costs (£363,000), redundancy costs on reorganisation (£162,000), and aborted contract exit costs (£10,000).

Net interest charges

Net interest charges for the year to 30 April 2014 were £851,000, a reduction of £151,000 from the £1,002,000 incurred in the previous year, reflecting the cash generative nature of the Group's operations.

Taxation

The effective rate of taxation of 27.9% (2013: 27.5%) is higher than the standard rate of corporation tax of 22.84% (2013: 23.92%) principally due to the relatively high proportion of expenditure disallowable for tax purposes. As the discontinuing head office costs include some disallowable items such as customer entertaining and sponsorship, the effective rate of tax is expected to reduce in the year ended 30 April 2015.

Earnings per share

As set out in note 22 to the Financial Statements, during the year to 30 April 2014 there was a group reorganisation involving both an issue and a subdivision of shares.

In addition, there was a large amount of non-recurring costs. Consequently, the basic measure of earnings per share is significantly distorted by these factors. Adjusting earnings to exclude discontinuing and exceptional costs and the tax effect thereon, gives adjusted earnings of £6,540,000 for the year to 30 April 2014 (2013: £5,690,000).

Adjusted earnings per share were 6.6 pence for the year to 30 April 2014 (2013: 5.7 pence). On an unadjusted basis, earnings per share were 2.8 pence (2013: 3.8 pence).

Capital expenditure

Of total capital expenditure of £5.1 million (2013: £5.6 million), £3.1 million (2013: £4.2 million) related to new logistics contracts or increases in capacity; £1.8 million (2013: £1.4 million) was to replace or maintain existing assets and £0.2 million (2013: £nil) related to business combinations (see note 28).

Cash flow

The Group reorganisation undertaken as part of the preparation for the IPO outlined above, has caused somedistortion in reported cashflows, due to the continued existence of balances due to and from the Group's former parent company, Clipper Group Holdings Ltd. From the new financial year onwards, such distortions will not continue. Net cash flow from operating activities was £11.6 million (2013: £8.1 million). Prior to the reorganisation of the Group, dividends totalling £6.3 million (2013: £2.8 million) were paid to the former parent company.

The Group's business model gives rise to high levels of cash generation. In the UK logistics business, Clipper is typically paid in the month in which services are delivered on open and minimum volume guarantee contracts, giving rise to a typically negative investment in 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.

Net debt

As shown in note 20 to the Financial Statements, the Group's net debt at 30 April 2014, on a statutory basis, was £3.9 million (2013: £2.7 million). At the same time, the net balance owing to the former parent company was £14.2 million (2013: £2.3 million).

On 2 May 2014, bank and hedging facility agreements which had been entered into by the former parent company were novated to the Company. Subsequent to this, the Group's banking facilities were restructured, effective from the date of Admission. If the novation and restructuring of the former Group's bank facilities had occurred at 30 April 2014, and balances with the former parent company settled, the Group's net debt would have changed as in the table below.

2. Logistics Division

Market overview, size growth of market and market trends

Traditional bricks and mortar retail still constitutes the majority of retail sales in the UK. However, the growth of online retailing and the desire for major retail brands to have as many different touch points with their customers as possible means that multichannel retailing will be a dynamic driver of change for both the retail and logistics markets in the near future. An increasing number of distribution channels are now required to meet the demands of the consumer, including shopping at stores, home delivery, click and collect as well as the return of purchased items. The fact that the penetration of internet-based sales in the UK economy is one of the highest in the world leads the Directors to believe that the UK is at the forefront of the logistics challenges being posed to retailers by the growth in online retail.

The retail sector is undergoing structural changes, and as a market leader in the provision of services to support retailers' online and returns management, the Group is strategically well placed to capitalise on the very significant growth expected in this sector of the market.

According to market research, the UK's e-commerce market has grown from £0.8 billion in 2000 to £78 billion in 2012 (£62.4 billion excluding travel) and is set to reach £107 billion in 2014 (17% annual increase) with double-digit growth forecast until around 2017.

The online retail market continued to see steady growth in February 2014, recording a 14.3% year on year increase.

Online sales in the UK are predicted to grow to £125 billion in 2022, by which point one third of sales in the UK are forecast to be conducted online.

Returns management is an increasingly important area for retailers. It is estimated that 25 to 40 per cent of all clothing and footwear purchases in the UK are returned. Retailers are becoming increasingly concerned to ensure that returns management is handled effectively so that their brands are not damaged by customers using social media. In addition, rectification during the returns management process can add value and enhance margin for the retailer.

Structural growth in online, multichannel retailing

The UK has one of the highest rates of internet and smartphone penetration in Western Europe and this level of penetration is expected to increase further in coming years. The proportion of online sales as a percentage of total retail sales in the UK is already one of the highest in the world.

This trend is fundamentally altering the logistical requirements of retailers, who must meet the challenges of multichannel retailing (whereby customers place orders across a variety of sales channels, for example retail stores, online stores, mobile stores and telephone sales), which demands complex warehousing, order processing and stock management systems in order to deliver a high quality service to consumers. Further, non-food retailers are expected to invest approximately £5 billion in making the transition from multichannel to "omni-channel" retailing over the next five years.

Omni-channel represents the latest evolution of multichannel retailing, whereby retailers offer consumers flexibility not only on the method of order placement (as is the case with multichannel) but also in respect of the choice of delivery destination - for example, the consumer might place an order online and choose to have the order delivered to that retailer's high street store, or at a 'click and collect' site in a third party location, rather than their home address.

This development adds even greater complexities to the logistical requirements of retailers.

Returns management demands of retailers increasingly complex

Returns management is an increasingly important area for retailers. It is estimated that 25% to 40% of all clothing and footwear purchases in the UK are returned. Historically, customers would return the product to the store where the purchase was made, but as online retail has developed, customers are demanding choice in their method of return, for example posting the product back to the retailer, or taking it intoa high street store or a collection point.

Retailers are becoming increasingly concerned to ensure that returns management is handled effectively so that their brands are not damaged by customers using social media. In addition, rectification during the returns management process can add value and enhance margin for the retailer.

This represents a stock management and processing challenge for retailers, since traditional warehouses have been designed to receive and process large quantities of identical product, rather than to receive individual units of product. Equally, such returned units will inevitably require some degree of inspection, rectification, cleaning or repair before going back into available stock, or may even be deemed unfit for prime sale. Returns can in addition lead to significant levels of working capital tied up in stock.

Retailers therefore need to rework the product into a saleable state very quickly to reduce working capital investment and maintain margins. The Group has a strong track record of managing this process for customers, including managing the returns operation for ASOS, the UK's leading online fashion retailer.

Further, the power of social media and consumer review websites enhances the importance of returns management as the returns experience represents the final touch point between a retailer and the consumer - a badly handled customer experience in respect of the returns process may be quickly communicated by that customer to a large number of people, particularly via social media, which has the potential to harm a retailer's future sales prospects. The above structural, continuing market changes have enabled the Group to make very significant advances in its revenues and earnings.

Revenues from e-fulfilment activities, including returns management, increased by 55.5% from £29.6 million for the year to 30 April 2013 to £46.0 million for the year to 30 April 2014. We are particularly pleased with this performance, as our strategy has been to become a market leader in the e-commerce sector, and to be a thought leader in the provision of value-added services across the sector.

To address the latest challenges imposed on retailers by returns management as outlined above, Clipper has successfully introduced the "Boomerang" brand and concept during the year, and we are particularly pleased to welcome ASOS as the first new customer using these services.

Non e-fulfilment logistics is central to our future strategy too

The Group will continue to develop and deliver truly value-added services to address the needs of retailers in more traditional areas of logistics services, including receipt of inbound product, storage, store-readiness of product, and distribution to retail destinations.

The Group will continue to innovate to deliver best in class solutions for its customers.

The recently opened port-centric facility at our Wynyard site, with Asda George as its core client supported by a ten-year contractual commitment, has gained traction with other clients such as Antler.

Revenue from non e-fulfilment operations grew by 29.3% for the year ended 30 April 2014, from £69.3 million to £89.6 million, with EBIT increasing by 15.8%, from £7.9 million to £9.2 million. Future growth in more traditional, value-added logistics services remains central to our future strategy too, and we were pleased to welcome SuperGroup, Hobbycraft, and Antler, amongst others, to Clipper during the year.

Retail consolidation centres

Clipper is a market leader in retail consolidation centres, which allow multiple deliveries to be made to retail outlets from a single, localised centre, providing benefits in:

· retail space availability, as the need for on-site stock rooms is obviated

· a wider range of stock being available to the end customer

· reduced emissions, of increasing importance in city centres in particular

Multi-user operations

The Group encourages the use of multi-user sites, where a multiplicity of customers are served from a single location. This facilitates the sharing of specialised resources, and assists in optimising and balancing demand on people and facilities, in turn allowing the Group to provide cost-effective solutions.

Acquisition of R. Geist Spedition GmbH & Co.KG

Clipper Logistics GmbH acquired the whole of the issued share capital of R. Geist Spedition GmbH ("Geist") in October 2013. This follows the acquisition in December 2008 of the trade and assets of the Beständig group of companies out of administration, by the Group's former parent company.

The German entities were subsequently reorganised such that all trading activities were undertaken by Clipper Geist Logistics GmbH & Co. KG from 1 March 2014. On 16 April 2014, the Company acquired from Clipper Group Holdings Ltd, at book value, its entire investment in other members of the Group, which included 75% of Clipper Geist Logistics GmbH & Co. KG.

On 30 April 2014 the Company acquired the remaining 25% of Clipper Geist Logistics GmbH & Co. KG in exchange for the issue of 800,000 ordinary shares. The acquisition of Geist provides the Group with a platform from which it can:

· service the needs of German-based retailers who wish to move online;

· support the European expansion plans of UK-based retailers;

· continue to evolve its service offering to existing and prospective customers

We are in active discussions with a number of UK retailers about their international logistics requirements, as well as with existing German-based customers about their evolving needs, particularly in relation to online activity, and returns management.

Investment in key personnel

The Group differentiates itself by providing consultancy-led, value-added services to its actual and prospective client base. We have established ourselves as a thought leader within the logistics sector, and this is evidenced both by our customers' buy-in to our innovative approach, and by independent brand health reviews conducted by an independent market research consultancy.

The Group is central to the achievement by its customers of their own objectives and goals. Accordingly, we invest in recruiting, training and developing people who are specialists in their relevant fields. These include information technology, solution design, facilities specification, implementation and management, ecommerce and returns management, and project management and implementation resource.

During the 2014 financial year, due to the very significant organic growth being experienced by the business driven by its strategic positioning, we invested in additional resources both to deliver the short term business wins, but also to provide an infrastructure capable of continuing to deliver significant growth going forwards.

Accordingly, central logistics costs increased from £2.4 million to £4.2 million as a result of this investment. Whilst further resources will be required as the business continues to grow, the investment in 2014 provided a significantly enhanced infrastructure capable of delivering the short to medium term requirements of the business.

3. Commercial vehicle division

The commercial vehicles business delivered a significantly improved Adjusted EBIT of £1.8 million (2013: £1.4 million), an increase of 25.4% on the previous year.

Stormont Truck and Van Ltd was integrated into Northern Commercials in August 2013. This consolidation achieved cost reductions in central and administrative functions, but has also provided a focused platform for market share growth in all areas of the country in which we operate.

Northern Commercials operates from six dealership locations, and has three sub-dealers. Dealerships are located in Brighouse, Manchester, Northampton, Dunstable, Tonbridge and Brighton. Thus, the business operates across the north of England and Wales (with sub-dealers supporting this geographic territory), through the midlands, and into the south-east.

The business sold 2,447 new vehicles in the year, and 416 used vehicles. Key customers include Asda, Ryder, Dawsons, Allied Bakeries, Clancy Dochra, the Variety Club, and a host of other household names.

The business achieved a number of important key performance measures in the year:

· Assistance non-stop: Northern Commercials achieved the best response time of all Iveco dealers in the UK, averaging 40.2 minutes to arrive to provide assistance to breakdowns

· vehicles off-road: Northern Commercials was the number one dealer, with an average of 0.7 days off-road for repairs, compared to an Iveco target of 1.8 days

· MOT pass rate: 98.9% of vehicles achieved an initial pass

· parts service: 97% of parts required by customers were delivered within 24 hours

4. Current trading and outlook

The Group secured a number of significant contract wins in the year to 30 April 2014, the full year benefit of which will be realised in the year to 30 April 2015. These wins included high profile brands, for example SuperGroup and ASOS.

As we look ahead to the 2015 financial year, we have a very strong new business pipeline. We continue to win new contracts within both e-fulfilment logistics and non e-fulfilment logistics, both in the UK and Europe, through our focus on our retail specialisms and provision of cost-effective, value-added solutions. We look forward to updating shareholders on these new contracts when they are formalised.

Since the year end we have signed a five year contract extension with Tesco, to provide additional services to support their on-line clothing strategy. In Germany, we have signed a five year contract extension with s.Oliver.

Our returns management service, marketed under the "Boomerang" brand, continues to gain traction with retailers in both the UK and Europe, and we are confident that this represents a major area of growth going forward.

The commercial vehicles business is expected to continue to deliver steady growth in profitability in the year to 30 April 2015.

The Board is confident in the Group's prospects for the full year ahead. Current trading is in line with our strategic plan, and we are confident of achieving another period of excellent financial performance in the year to 30 April 2015.

Director's Statement of ResponsibilityWe confirm to the best of our knowledge that the accounts, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profits of the group; and the Chairman's report and the operating and financial review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that the Group faces.

Director's Statement on the Basis of Preparation - Preliminary AnnouncementThe preliminary announcement has been prepared in accordance with applicable International Financial Reporting Standards as adopted by the EU and applied in accordance with the Companies Act 2006. The accounting policies adopted are included in this preliminary announcement.

These financial results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Group Income Statement and 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 2014 have been extracted from the Group's audited financial statements for the year then ended.

We have included the comparatives for the previous financial year, but have not included additional comparatives for 30 April 2012, 30 April 2011 or 1 May 2010. These additional comparatives were included in the audited financial statements to meet the requirements of IFRS1. The audited financial information contained within the preliminary announcement for the year ended 30 April 2014 was approved by the Board on 28 August 2014. Statutory accounts for the year ended 30 April 2014 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. As described in Note 29, this is the first accounting period for which Group financial statements have been prepared. Consequently no such financial statements in respect of prior periods have either been delivered to the Registrar of Companies or been reported on by the auditors.  

Group Income Statement and Statement of Comprehensive Income

For the year ended 30 April

*Earnings per share adjusted for discontinuing and exceptional costs as described in note 7.

Group Statement of Financial Position

At 30 April

Group Statement of Changes in Equity

Group Statement of Cash Flows

For the year ended 30 April

Notes to the Group Financial Statements

1. General information

The Group Financial Statements for the year ended 30 April 2014 were authorised for issue by the Board of Directors on 28 August 2014 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 to predominantly 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, Gelderd Road, Leeds, LS12 6LT.

The Group's Financial Statements have been prepared in accordance with note 2.1 Basis of preparation, and note 2.3 Basis of combination. The principal accounting policies adopted by the Group are set out in note 2.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated Financial Statements are set out below. These policies have been consistently applied to both years presented, unless otherwise stated.

2.1 Basis of preparation

Clipper Logistics plc ('the Company'), a public limited company incorporated and domiciled in the United Kingdom, acts as parent undertaking for the Clipper group of companies. The Company has independent operations in its own right and as at 30 April 2014 it was a wholly owned subsidiary of Clipper Group Holdings Ltd. In April 2014 the Group undertook a restructuring. On 16 April 2014 the Company acquired fellow subsidiaries from Clipper Group Holdings Ltd which comprised 100% of the issued share capital of Northern Commercials (Mirfield) Ltd and Genesis Specialised Product Packing Ltd and 75% of the capital of Clipper Geist Logistics GmbH & Co. KG (collectively 'the Clipper Group'). On 30 April 2014 the Group acquired the remaining 25% of share capital for Clipper Geist Logistics GmbH & Co. KG. There were no remaining non-controlling interests from this date. On 4 June 2014 Clipper Logistics plc was admitted to the premium segment of the London Stock Exchange and Clipper Group Holdings Ltd was no longer the parent company.

The Group's Financial Statements have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union (IFRS) regulations as they apply to the Financial Statements of the Group for the year ended 30 April 2014 and also in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. These Financial Statements for the year ended 30 April 2014 are the first the Group has prepared in accordance with IFRS. Refer to Note 29 for information on how the Group adopted IFRS, including permitted exemptions that have been taken from the general requirement to apply IFRSs retrospectively.

The preparation of the financial information under IFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates

The accounting policies which follow set out those policies which apply in preparing the Financial Statements for the year ended 30 April 2014.

The Group's Financial Statements have been prepared on a historical cost basis. The Financial Statements are presented in Pounds Sterling and all values are rounded to the nearest thousand (£000) unless otherwise indicated.

2.2 Going concern

The Financial Statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the Financial Statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

Further information in relation to the Group's business activities, together with the factors likely to affect its future development, performance and position is set out in the Strategic Review section of the Annual Report.

Note 26 to the Financial Statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives and its exposure to foreign exchange, credit and interest rate risk. Further details of the Group's net debt at 30 April 2014 are included in note 20 of the Financial Statements.

The Group Statement of Financial Position shows total current assets of £52,717,000 and total current liabilities of £71,330,000. Net current liabilities at 30 April 2014 were therefore £18,613,000. On 2 May 2014 the bank facilities granted by Santander UK plc to Clipper Group Holdings Ltd were novated to the Company. On 4 June 2014 these facilities were restructured and extended. Following the restructuring, in addition to a five year term loan of £12,500,000 amortising quarterly, the Group has access to a five year, non-amortising, revolving credit facility of £12,504,000. On a pro-forma basis, if this restructuring had been in place on 30 April 2014, the Group's net current liabilities would have been £7,613,000 and the undrawn revolving credit facility would have been £11,504,000. The Directors have assessed the future funding requirements of the Group and the Company and compared them to the bank facilities which are now available. The assessment included a detailed review of financial and cash flow forecasts for at least the 12 month period from the date of signing the Annual Report. The Directors considered a range of potential scenarios within the key markets the Group serves and how these might impact on the Group's cash flow. The Directors also considered what mitigating actions the Group could take to limit any adverse consequences.

The Group's forecasts and projections show that the Group should be able to operate without the need for any increase in borrowing facilities.

Having undertaken this work, the Directors are of the opinion that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Financial Statements.

2.3 Basis of combination

(a) Group reorganisation

The restructuring noted above is a combination of entities under common control. IFRS 3 states that it does not apply to a combination of entities or businesses under common control. All of the entities that make up Clipper Group have remained under common control, in each of the years disclosed. Accordingly, the consolidated financial information of the Clipper Group has been prepared to reflect the combination of the restructured Clipper Group as if it had occurred from

1 May 2010.

The financial information of the Clipper Group for the year ended 30 April 2014 and the comparative information has been prepared on a basis that combines the results and assets and liabilities of all entities within the Clipper Group. The Clipper Group has not in the past constituted a separate legal group.

(b) Merger

As described above, the group reorganisation is a combination of entities under common control; and consolidated using a pooling of interests basis. This treats the restructured group as if it was formed in May 2010 and a merger reserve has been included to reflect this, with a balance of £18,168,000 at this date. In the year ended 30 April 2014 a charge of £12,162,000 was made to the reserve to reflect the acquisition of the fellow subsidiaries from Clipper Group Holdings Limited as part of the group reorganisation.

(c) Consolidations

Subsidiaries are consolidated from the date of acquisition being the date on which the Group obtains control, and are consolidated until the date such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of its voting rights. The financial statements of subsidiaries used in the preparation of the consolidated Financial Statements are prepared on the same reporting year as the parent company and are based on consistent accounting policies. All intra Group balances and transactions, including unrealised profits from them, are eliminated in full.

A change in the ownership interest of a subsidiary without loss of control is accounted for as an equity transaction.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the parent company and is presented within equity in the consolidated statement of financial position separately from equity attributable to owners of the parent company.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group other than those included in the restructuring referred to above. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of comprehensive income.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Company's Board of Directors, collectively the Group's chief operating decision maker, to assess performance and allocate capital or resources.

2.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The combined Financial Statements are presented in Pounds Sterling, which is the Company's functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.

2.6 Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

· Leasehold property over the length of the lease;

· Plant and machinery 5% - 50% per annum; and

· Motor vehicles 12.5% - 25% per annum.

Residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within 'other net gains' in the Statement of Comprehensive Income.

2.7 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is "negative goodwill" and is recognised in the Statement of Comprehensive Income immediately.

Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Goodwill on acquisitions of associates is included in 'investments in associates' and is tested for impairment as part of the overall balance. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

(b) Computer software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives (three to five years).

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Costs include the software development employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding three years).

2.8 Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs.

When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

An impairment loss is recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised as income immediately.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a minimum period of two years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the second year.

2.9 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

(b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the Statement of Comprehensive Income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.

Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the Statement of Comprehensive Income within 'other net gains' in the period in which they arise.

Dividend income from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income as part of other income when the Group's right to receive payments is established.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a Group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the Statement of Comprehensive Income.

Impairment testing of trade receivables is described in note 2.12.

2.10 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition. Cost is determined using the first-in, first-out ("FIFO") method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.11 Vehicles on consignment

Vehicles held on consignment from manufacturers are included in the statement of financial position where it is considered that the Group enjoys the benefits and carries the risks of ownership.

2.12 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable may be impaired.

The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Statement of Comprehensive Income within 'administrative expenses'.

When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against 'administrative expenses' in the Statement of Comprehensive Income.

2.13 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position. Cash and cash equivalents are stated net of bank overdrafts in the cash flow statement.

2.14 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.15 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Statement of Comprehensive Income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

2.16 Income tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements.

However, the deferred income tax is not accounted for, if it arises from initial recognition of goodwill or an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profits or losses.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset, only if a legally enforceable right exists to set off current tax assets against current tax liabilities, the deferred income taxes relate to the same taxation authority and that authority permits the Group to make a single net payment.

2.17 Employee benefits

(a) Pension obligations

Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies. The Group has only defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.

For defined contribution plans, the Group pays contributions to privately administered pension insurance plans on a contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.

(b) Profit-sharing and bonus plans

The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Company's shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(c) Share based payments

IFRS 2 requires the recognition of equity settled share based payments at fair value at the date of the grant and the recognition of liabilities for cash settled share based payments at the current fair value at each balance sheet date. All equity settled share based payments are ultimately recognised as an expense in the profit and loss account with a corresponding credit to 'other reserves'.

If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period based on the best available estimate of the number of shares expected to vest. Estimates are revised subsequently if there is any indication that the number of shares expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital and where appropriate, share premium.

2.18 Provisions

Provisions for items such as dilapidations and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

2.19 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group's activities. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. In practice this means that revenue is generally recognised as follows:

· Value-added logistics services - revenue is recognised when the service is rendered

· Distribution of commercial vehicles - revenue is recognised when goods and/or services are supplied or, for services under repair contracts, over the period of the contract.

2.20 Grants

Grants received in relation to the purchase of non-current assets are released to the Statement of Comprehensive Income in proportion to the depreciation or amortisation charge in respect of those assets.

2.21 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease.

Assets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease, with a corresponding liability being recognised for the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate of interest on the remaining balance of the liability. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the estimated useful life of the asset and the lease term; where the lease contains an option to purchase which is expected to be exercised, the asset is depreciated over the useful life of the asset. The accounting policy adopted for finance leases is also applied to hire purchase agreements.

2.22 Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's Financial Statements in the period in which the dividends are approved by the Company's shareholders.

2.23 Exceptional items

Items that are both material and non-recurring are presented as exceptional items within their relevant consolidated Statement of Comprehensive Income category. The separate reporting of exceptional items helps provide a clearer indication of the Group's underlying business performance.

Items which may give rise to classification as exceptional include, but are not limited to, restructuring of the business or depot network, asset impairments and litigation settlements.

2.24 Financial risk management

The Group carries out treasury hedging activities to manage exposures to interest rate movements on its core borrowings using interest rate swaps and forward contracts.

The Group only uses derivatives for hedging purposes and they are recognised at fair value and are re-measured to fair value at each balance sheet date. Where an interest rate swap qualifies as an effective hedge under IAS 39, movements in fair value are shown as an adjustment to the net interest charge being hedged.

Movements in fair value of derivatives that do not qualify as an effective hedge under IAS 39 are shown in 'other net gains' within the Statement of Comprehensive Income. The Group identifies, evaluates and hedges financial risks centrally under policies approved by the Board covering specific areas, such as interest rate risk, foreign exchange risk and credit risk.

2.25 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Estimated impairment of goodwill

The Group annually tests whether goodwill has suffered any impairment, in accordance with the accounting policy stated above. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates, both in arriving at the expected future cash flows and the application of a suitable discount rate in order to calculate the present value of these flows.

(b) Income taxes

Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

2.26. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.27. Adoption of new and revised reporting standards

The Group has applied all accounting standards and interpretations issued by the IASB and IFRIC except for the following standards and interpretations which were in issue but not yet effective:

· IAS 32 (revised) - 'Offsetting financial assets and financial liabilities - Amendments to IAS 32 effective for annual periods commencing on or after 1 January 2014';

· IFRS 7 - 'Financial Instruments: Disclosures (Amendment) - initial application of IFRS 9 effective for annual periods commencing on or after 1 January 2014';

· IFRS 9 - 'Financial instruments: Classification and measurement effective for annual periods commencing on or after 1 January 2018';

· IFRS 10 - 'Consolidated Financial Statements, effective for annual periods commencing on or after 1 January 2014';

· IFRS 11 - 'Joint Arrangements effective for annual periods commencing on or after 1 January 2014';

· IFRS 12 - 'Disclosure of Interests in other entities effective for annual periods commencing on or after 1 January 2014';

· IFRS 15 - Revenue from Contracts with Customers, was issued by the IASB on 28 May 2014 and is effective for annual periods commencing on or after 1 January 2017;

· IAS 27 - 'Separate Financial Statements effective for annual periods on or after 1 January 2014';

· IAS 28 - 'Investments in Associates and Joint Ventures effective for annual periods on or after 1 January 2014';

· IAS 36 - 'Recoverable Amount Disclosures for Non-Financial Assets - Amendments to IAS 36 effective for annual periods on or after 1 January 2014';

· IAS 39 - 'Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39 effective for annual periods on or after 1 January 2014';

· IFRIC 21 - 'Levies effective for annual periods on or after 1 January 2014';

· IAS 19 - 'Defined Benefit Plans: Employee Contributions - Amendments to IAS 19 effective for annual periods on or after 1 July 2014';

· AIP IFRS 2 - 'Share-based Payment - Definitions of vesting conditions effective for annual periods on or after 1 July 2014';

· AIP IFRS 3 - 'Business Combinations - Accounting for contingent consideration in a business combination effective for annual periods on or after 1 July 2014';

· AIP IFRS 8 - 'Operating Segments - Aggregation of operating segments effective for annual periods on or after 1 July 2014';

· AIP IFRS 8 - 'Operating Segments - Reconciliation of the total of the reportable segments' assets to the entity's assets effective for annual periods on or after 1 July 2014';

· AIP IFRS 13 - 'Fair Value Measurement - Short-term receivables and payables effective for annual periods on or after 1 July 2014';

· AIP IAS 16 - 'Property, Plant and Equipment and IAS 38 Intangible Assets - Revaluation method - proportionate restatement of accumulated depreciation/amortisation effective for annual periods on or after 1 July 2014';

· AIP IAS 24 - 'Related Party Disclosures - Key management personnel effective for annual periods on or after 1 July 2014';

· AIP IFRS 1 - 'First-time Adoption of International Financial Reporting Standards - Meaning of 'effective IFRSs' effective for annual periods on or after 1 July 2014';

· AIP IFRS 3 - 'Business Combinations - Scope exceptions for joint ventures effective for annual periods on or after

· 1 July 2014';

· AIP IFRS 13 - 'Fair Value Measurement - Scope of paragraph 52 (portfolio exception) effective for annual periods on or after 1 July 2014';

· AIP IAS 40 - 'Investment Property - Interrelationship between IFRS 3 and IAS 40 (ancillary services) effective for annual periods on or after 1 July 2014'; and

· IFRS 14 - 'Regulatory Deferral Accounts effective for annual periods on or after 1 January 2016'.

The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations.

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.

The Directors do not anticipate that the adoption of the remaining standards and interpretations will have a material impact on the Group's historical financial information in the period of initial application.

3. Revenue

Revenue recognised in the income statement is analysed as follows:

Geographical information - revenues from external customers:

Geography is determined by the location of the end customer

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 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

· Distribution of 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 logistics services

· Non E-fulfilment logistics services

· 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

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 2014:

1Professional fees and other costs paid in relation to the Initial Public Offering.

2Head office costs include a number of items which will not be borne by the Group post-Admission. These consist of certain advertising, sponsorship and corporate entertaining expenses, remuneration of a retiring Director, consultancy and professional fees in respect of potential investment opportunity appraisals and the costs of operating the Chairman's private office.

The Group has one customer that in the year ended 30 April 2013 accounted for greater than 10% of the total Group revenue. The revenue from this customer all arose within the value-added logistics services segment as follows:

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

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

Capital expenditure comprises additions to property, plant and equipment (note 13) and intangible assets (note 14).

4. Segment information (continued)

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

5. Staff costs

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

Key management compensation (including Executive Directors):

5. Staff costs (continued)

Directors' emoluments:

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

Emoluments in respect of the highest paid Director:

6. Group operating profit

This is stated after charging/(crediting):

7. 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.

The following reflects the income and share data used in the basic earnings per share computation:

The weighted average number of shares has been calculated assuming all shares were converted from £1 to 0.05p shares as from 1 May 2012 in accordance with IAS 33.28.

Adjusted earnings per share

As set out in note 22, during the year to 30 April 2014 there was a group reorganisation involving both an issue and a subdivision of shares.

In addition, there was a large amount of non-recurring costs. Consequently, the basic measure of earnings per share is significantly distorted by these factors.

Adjusting earnings to exclude discontinuing and exceptional costs and the tax effect thereon, gives adjusted earnings of

£6,540,000 for the year to 30 April 2014 (2013: £5,690,000).

Adjusted earnings per share:

8. Dividends and other distributions

9. Finance income

10. Finance costs

11. Income tax expense

a) Tax charged in the income statement:

b) Tax relating to items charged or credited to other comprehensive income:

c) Reconciliation of income tax charge

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

d) Deferred tax in the income statement:

The UK corporation tax rate reduced from 24% to 23% with effect from 1 April 2013, and from 23% to 21% with effect from 1 April 2014. A further reduction to 20% is effective from 1 April 2015. Accordingly, these rates have been applied in the measurement of the Group's deferred tax assets and liabilities as at 30 April 2014.

e) Deferred tax in the statement of financial position

12. Share based payments

The Enterprise Management Incentive Plan ("EMI Plan") was introduced by Clipper Group Holdings Ltd in January 2004. Under the EMI Plan the former parent company directors could grant options over shares in the former parent company to employees of any group company.

Options were granted with a fixed exercise price equal to the nominal value of the shares under option at the date of grant.

The contractual life of an option is 10 years. Awards under the EMI Plan are generally reserved for employees at senior management level and above and at 30 April 2014 two (2013: three) such awards had been made to employees of the Group. There are no reload features.

The Unapproved Share Option Scheme ("Unapproved Scheme") was introduced by Clipper Group Holdings Ltd in June 2011. Under the Unapproved Scheme the former parent company directors could grant options over shares in the former parent company to employees of any group company.

Options were granted with a fixed exercise price equal to the nominal value of the shares under option at the date of grant. The contractual life of an option is 15 years. Awards under the Unapproved Scheme are generally reserved for employees at senior management level and above and at 30 April 2014 four (2013: three) such awards had been made.

These options would be equity settled.

Options granted under the EMI Plan or Unapproved Scheme would only become exercisable on the sale or flotation of the former parent company, and were subject to specific performance criteria for each award, generally applicable to the senior manager's employing company. Exercise of an option is subject to continued employment.

The fair value of the options granted were valued using the methodology of an HM Revenue & Customs approved valuation of existing shares in 2010, applied to current financial information at the time of grant. The fair value assumes that all performance criteria are met. The expected life is the average expected period to exercise. Volatility and dividend yield have not been included in the calculation as there is no ready market in the former parent company's shares. The weighted average exercise price of options in issue is £1.00.

12. Share based payments (continued)

A reconciliation of option movements over the year is as follows: