The directors present the strategic report for the year ended 31 December 2021.
Introduction
The principal activity of the Group during the year continued to be that of freight forwarding agents.
In preparing the financial statements and associated strategic and directors’ reports, the board have fully considered the requirements (‘a’ – ‘f’) as set out in s172 of the Companies Act 2006 in the narrative and disclosures which follow.
The consolidated sales of the group increased by 4.3% or £4m compared to the prior year, the increase has been driven by organic growth.
Gross profit for the year increased by 16% compared to 2020 (or just over £3.3m) driven by the increase in sales mentioned above and an increase in the gross margin ratio from 21.7% (2020) to 24.2% (2021).
Administrative costs have remained stable year on year at £24m. Operating profit for the year was £337k (0.34% of sales).
As per 2020, the year was disrupted by the COVID 19 pandemic in terms of working locations and standard business practices. In addition, the introduction of the post Brexit Customs formalities had a significant impact in 2021. A period of interpretation of the new formalities, development of systems/processes and then stabilisation, to allow the company to adapt to the changing requirements, was experienced at the start of the year. Despite these challenges the company delivered positive and improved financial results in 2021.
The directors are optimistic about the coming year and expect the company to continue to deliver positive results. The group’s performance will allow it to continue support for other Rhenus Group Companies based in the UK.
Key performance indicators
In addition to the financial performance measures above, the directors consider and monitor the following key metrics when assessing business performance:
Shipment volumes by branch – Groupage, LTL, FTL, FCL, LCL
Shipment volumes by branch – National, Import, Export
Timeliness of deliveries by branch – Group Network Deliveries
Gross Margin performance by branch
The directors remain satisfied with the performance of these key metrics.
Stakeholders
The group continues to promote a close and positive working relationship with all of its key stakeholders. Some examples of how these relationships are managed are shown below:
Stakeholder | Action |
Employees: | Employee engagement survey |
| Staff appraisals Various structured training offers |
Suppliers: | Standard payment policy consistently applied terms |
| Strong compliance culture, regular e-learning and training |
Customers: | Regular customer visits and communications |
| Strong compliance culture, regular e-learning and training
|
The core values are outlined below, more details can be found on both the group and company website:
“CUSTOMER-FOCUSED SOLUTIONS - Understanding requirements I Providing solutions I Shaping the future EMPLOYEE ORIENTATION - Being respectful I Valuing competence I Promoting development ENTREPRENEURIAL SPIRIT - Developing ideas I Taking responsibility I Ensuring success CONTINUITY - Acting for the long term I Connecting generations I Remaining independent”
The company, as a logistics provider, is acutely aware of its impact on the environment and seeks to mitigate this wherever possible. Some examples of how this is done are as follows:
Combining collections and deliveries wherever possible, therefore reducing emissions throughout the process chain.
Reducing electricity usage throughout the UK via LED lighting installation
Implementing a Company Car policy aimed at lowering Co2 emissions.
Working with our building consultants to ensure that any properties designed for us meet the highest environmental standards possible within budget
The group employs a full time Quality and Compliance Manager who oversees all quality assurance accreditations and systems to ensure the group continues to offer the highest levels of service and quality upon which the group has developed its reputation.
Current reporting year (Jan 21 – Dec 21), prior reporting year (Jan 20 – Dec 20)
| 2021 | 2020 |
|
Total energy consumption from gas and electricity | 1,057,734 | 1,217,550 | kWh |
Scope 1 – All Direct Emissions from the activities of an organisation or under their control. Including fuel combustion on site such as gas boilers, fleet vehicles and air-conditioning leaks. | 49 | 48 | tCo2e |
Scope 2 – Indirect Emissions from electricity purchased and used by the organisation. Emissions are created during the production of the energy and eventually used by the organisation. | 166 | 260 | tCo2e |
Scope 3 – All Other Indirect Emissions from activities of the organisation, occuring from sources that they do not own or control. These are usually the greatest share of the carbon footprint, covering emissions associated with business travel, procurement (incl Subcontractor Transport), waste and water. | 22,191 | 30,643 | tCo2e |
Total emissions | 22,406 | 30,951 | tCo2e |
Turnover | 100,196,554 | 96,041,879 | £ |
Intensity Ratio | 224 | 322 | kgC02e per mil£ T/O |
During 2021 we have worked on refining and improving the data collection processes and as a result have updated our reporting for 2020.
Energy Efficient Actions
We are committed to responsible energy management and support energy efficiency actions throughout our organisation, where it is cost effective to do so. We will maintain the ISO 14001 certification.
We have taken the following actions to date
Leased FLTs with electric power at the point of replacement
Increased availability of Hybrid and Full Electric Vehicles as part of the grey fleet
Installed EV chargers at a number of company locations
Implemented more energy efficient lighting upgrades to existing buildings
Ongoing participation in the Rhenus Co-Zero programme aiming for zero emissions by 2050
UK wide ‘Green Logistics’ initiative started
Encouraged increased use of online meetings and video conferencing
Local site initiatives including reducing plastic usage, waste separation and car sharing implemented
Future plans include
Continued roll out of electric car chargers at company locations
Assessing solar panel installations
Further expanding electric FLT use
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2021.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The group's policy is to consult and discuss with employees, through staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Rhenus Logistics Limited ('the parent company') and its subsidiaries (the 'group') for the year ended 31 December 2019 which comprise the group statements of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £1,032,331 (2020 - £833,571 profit).
Rhenus Logistics Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Liverpool Road, Eccles, Manchester, Lancashire, United Kingdom, M30 7RF.
The group consists of Rhenus Logistics Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Rhenus Logistics Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Going concern
At the time of approving the financial statements the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Investments in subsidiaries are measured at cost less accumulated impairment.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.
Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Grants of a revenue nature are recognised in the profit and loss account in the same period as the related expenditure. Government grants represent amounts claimed under Coronavirus Job Retention Scheme.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss for the period.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The directors have reviewed the trading balances owing to the group from its customers and made adequate provision in accordance with the ultimate parent group policy for any debts where it is considered probable that the amount will not be recovered.The amounts would otherwise have been recognised in trade debtors.
The company recognises dilapidation provisions on the leasehold properties it occupies. The directors assess the level of provision required on a property by property basis based on past experience within the property portfolio along with professional advice from qualified surveyors where appropriate. These provisions are reviewed annually to ensure that they reflect the current best estimate of the provision required.
An analysis of the group's turnover is as follows:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020 - 3).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2021 are as follows:
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated by the group for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. Included within accruals and deferred income are unpaid amounts with respect to the defined contribution scheme totalling £141,155 (2020: £15,839).
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The prior year company only balance sheet has been restated to recognise the accumulated amortisation that would have been incurred on the value of investments transferred to goodwill in the previous year from the date of acquisition. The effect of this adjustment is to reduce distributable reserves by £1,596,036 and resultant company only net assets by £1,596,036. Reported profit of loss for the prior year remains unchanged.
The company has taken advantage of the exemption in Financial Reporting Standard 102 Section 33 "Related party disclosures" and has not disclosed transactions with group undertakings.
Year end balances with group undertakings have been aggregated and disclosed in notes 13 and 15.
In addition to the above, the group owes the parent company