The director presents the strategic report for the year ended 31 December 2022.
Business Review
The main activities of the group are provisioning global supply chain management services and international freight services by sea, air, and land to manufacturers, retailers and other customer around the world. Activities are rendered through various group entities that are specialized in providing the respective services. By combining services from various group entities the group is able to satisfy the demand of customer for integrated and highly specialized logistics solutions.
The strategy of the group is to constantly extend and improve its service offering – also by making acquisitions or setting up joint ventures. By constantly extending and improving the service offering the group is aiming to provide first class service and flexible solutions for complex problems of customer to build long term business relationships and partnerships.
Post the start of the COVID pandemic shipping via ocean containers became exceptionally challenging and this led to a massive increase in sea freight pricing, increasing cost and revenue by a multiple of 10 between 2020 and beginning of 2022. During 2022 the trend reversed and although freight rates, in particular on routes between Asia and UK / Europe, remained high in the first half of the year they have fallen substantially since then reaching lows by the end of the year that have not been seen on these trades for many years. Since the Asia to UK / Europe is one of the core businesses of the group, this has resulted in a significant drop in revenue during 2022 compared to 2021.
Container freight rates on other markets – namely UK / Europe to US remained more stable during 2022 and only saw a major downturn at the beginning of 2023.
Even in this challenging market environment the group was able to demonstrate its positions as one of the largest private owned UK based Supply Chain management and International Logistics groups: While turnover has decreased to £931,179,000 for the 12 month period to December 2022 from £1,700,622,000 for the 18 months to December 2021, the group was able to increase its gross profit margin to 34.3% in 2022 (2021: 26.4%). Profit before tax has decreased to £101,898,000 for the 12 months period to December 2022 from £340,587,000 for the 18 months period to December 2021.
Based on the good performance the group was able to further increase its net asset position to £484,928,000 (2021: £395,610,000). The strong capitalisation allows the group to operate without any third party financing whilst at the same time being able to organically grow from a strong balance sheet position. The group also looks for opportunities to invest in or to acquire other businesses to grow and / or to extend its product offering.
The COVID Crisis had led to supply chain disruptions for many industries and created the demand for flexible and reliable solutions. The group is aiming to deliver these to its customers by not only focussing on transportation and logistics services but fully integrated supply chain management solutions – becoming a valued partner rather than just a supplier for its customer. To achieve this the group can provide additional services and create additional value for the customer – with services ranging from customs consultancy over training for staff to software development. By bundling these services the group will continue extending its portfolio of one-stop shop solutions.
The group continues to extend its network of strategic partners around the world. By building these long-term relationships with partners the group can ensure a high level of operational excellence and standardized quality of services for its customers.
Based on the above the group in 2022 has attracted additional business from Commercial and Government clients with significant volumes due to the market struggling to provide comparable solutions and has achieved good customer loyalty (with many customers being partners for many years). All services across sea, air, road, rail, warehousing, and distribution have seen a significant increase in volumes in 2022 as the Group’s comprehensive supply chain solutions are unique.
Overall, the speed the business has been able to adjust to the changing demands created by the pandemic and subsequent global supply chain disruptions and capacity issues has made the group’s services even more attractive to customers. By having proven that the group can provide solutions and minimize the impact of supply chain challenges for its customer the directors consider that the group is in a good position to strengthen its position in the market.
Extending the portfolio of supply chain related services, focusing on customer satisfaction to achieve an even higher customer loyalty and to win additional business (both in terms of quantity and regional coverage) are the key strategic aims for 2024 and beyond.
The steep drop-in sea freight rates in 2022 for the Asia to UK / Europe trade continued during the start of 2023 – stabilising at a very low level. Also, at the beginning of 2023 freight rates on the UK / Europe to US trade started to drop. At the end of 2023, the Huthi started attacking vessels on their passage through the Red Sea and heading towards Suez Canal. This finally led to a situation where most of the main shipping lines decided to “play safe” and to re-route their vessels around the Cape of Good Hope, Africa’s most southeastern point which does significantly increase the transit time for goods and again led to a situation where freight rates and lead times increased significantly, and customers had to start of thinking how to protect their supply chains.
While it is still to be seen how long this situation will persist the group finds itself in a good position to offer solutions to its customers – utilising the knowledge and network created in previous years.
Looking at the overall market situation, interest rates in the UK / Europe and many other countries of the world increased; as well inflation rates remaining high most of the time in 2023 and only started dropping around the end of 2023. This together with political uncertainties (like the Ukraine Crisis, the Hamas attacks on Israel at the end of 2023 and the Red Sea situation) does have a negative impact on demand and led to a decrease in cargo volumes.
Despite the drop in volumes but based on being able to provide specialized solutions to its customers the group still expects a strong performance in the future.
Principal risks and uncertainties
The directors have considered the principal risks and uncertainties the group is facing and which continue to be actively monitored.
Foreign currency risk
The group has both customers and supplier payments respectively being made in currencies other than GBP. Where appropriate the group controls its foreign currency risk by trying to first align collection and paying currency (e.g. freight revenue collected in USD and sea freight paid in USD). Beyond this the group aims to agree on transactions in GBP where possible. On a group level the overall situation for all group companies is reviewed on a regular basis and corrective measures are taken, if required.
Credit risks
Various customers of the group have credit terms. To avoid any bad debt, the group has a credit worthiness and credit limit check process. When a customer passes the check, credit can be granted and a credit limit is agreed. Credit worthiness and credit limits are reviewed on a regular basis. Accounts receivable overdue are monitored on a regular basis and reports are also provided to the directors.
Liquidity Risk / Finance Risk
The liquidity of the individual group companies and on group level is monitored by the Group Treasury Function on a regular basis. Given the financial strength of the group the risk is considered low.
The group does not have any material long term financing in place with third parties which does mean that changes in interest rates on the market would not have any material impact on the group.
Trading risks
Markets have become very volatile. On the one hand rates and volumes have fluctuated, on the other hand costs have increased above inflation (including e.g. utility bills, fuel / energy prices and wages).
The group has taken actions to limit or reduce its trading risks. The group takes care that it serves multiple industry sectors (foodstuff, automotive, healthcare etc.) and that the customer base is a mix of small, medium and large customers without creating too much dependencies from a single customer or industry sectors. By offering full supply chain solutions the company achieves a customer loyalty above average, reducing the risk of a loss of customer.
The group offers a wide range of services. Such diversification does help to further reduce the trading risk.
The group also ensures that its costs are covered and that contracts are adjusted, when needed. The COVID Crisis had shown that freight rates can become very volatile and go up and down very quickly. The Group has considered this in its contracts with customers.
Russia – Ukraine Crisis
The group does not and did not have any major business related to Russia and / or the Ukraine. However, the Russia / Ukraine conflict does have an indirect impact on the business. The most obvious is the increase in energy prices that led to an increase in freight rates. This has been covered as part of the “trading risk” described above.
Another aspect of the Russia – Ukraine Crisis is the shock it generated for the global economy – for example with food prices going up and consumers being reluctant to buy respectively shifting their buying power to more “essential” goods. This has led to a general reduction in volumes in the market and a shift of cargo flows.
While the general drop in volumes can have an impact on the business of the group, the group is confident that the shift in cargo flows does also constitute an opportunity to provide dedicated solutions to its customers (and to build new customer relationships). The directors will continue to monitor the situation and will take corrective measures, if required.
Red Sea – Huthi Attacks
The Red Sea situation is impacting various aspects and it is difficult to predict the overall effect this will have on the economy long term. The group has major cargo streams that went through the Red Sea and are now re-routed around Africa – obviously at much higher freight rates.
Short term this situation has created a demand for solutions to secure the supply chains since there is an interruption of some weeks between cargo arriving on the last vessel taking the “normal” route and the arrival of the first vessel taking the longer route. With its experience and network the group can offer solutions to its customers to limit the impact during the transition period.
The group’s key performance indicators are turnover, gross margin and profit before tax, details of which are set out above in the strategy and business model of the group. These indicators and performance are monitored both against budget / forecast and past performance to identify and analyse trends.
The group’s main objective is to provide best of class service to its customers in a highly competitive market. In particular with some big customers, certain KPIs are agreed and reviewed on a regular basis (like quality of service or punctuality).
On a global basis the group monitors new / lost customers, customer satisfaction, customer loyalty and analyses customer feedback on demand for new service offerings. Also, performance of suppliers is monitored (e.g. reliability).
Besides the above, specific KPIs exist for certain areas of the business (e.g. warehousing pick accuracy).
The group considers its staff as one of its key assets and strengths. In this context the group monitors staff turnover, reasons for departures and encourages staff to participate in trainings. Operating in an international environment and embracing diversity in the workplace are considered key factors for success.
The directors consider that being one of the largest private owned UK based Supply Chain management and International Logistics groups the group comes with social responsibility. The group has implemented a group charity committee to identify projects that are supported by the group.
International trade causes emissions. The group considers itself to be in a good position to develop tailor made solutions for customer to reduce emissions. Emissions caused by operations of group entities are monitored and measures to reduce emissions are taken where possible.
Prior Year Adjustments
There are prior year adjustments made to the financial statements outlined in detail in note 36 and the key components are as follows:
The group recognised a provision in relation to claims against group companies in respect of services rendered. The Directors have made a re-assessment of the individual cases and based on the re-assessment the Directors have revised their best estimate of the amount required to settle the potential liability. The Directors have also made a re-assessment on the uncertainty and timing of accruals and re-classified the expected liability as a provision rather than an accrual.
Based on the requirements of FRS 102 Section 23 revenue recognition of the group’s liner shipping activity was changed from voyage end to accounting to percentage of completion recognition. Based on a change in the actual use of the group’s property some property that was previously held as investment property has been reclassified as property, plant and equipment.
Section 172 (1) of the Companies Act 2006 requires every director of a group to act in a manner they consider, in good faith, that will be most likely to promote the success of the group for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
The likely consequences of any decision in the long term
The interests of the group's employees
The need to foster the group's business relationships with suppliers, customers, and others
The impact of the group's operations on the community and the environment
The desirability of the group maintaining a reputation for high standards of business conduct, and
The need to act fairly as between members of the group.
It is important for the business to engage with its various stakeholders in a manner that gives us a better understanding of their interest and concerns in a manner that promotes strong sustainable successful business.
The group recognises the importance of retention and development of talented employees to the ongoing success of the business. Employees are encouraged to develop their skills and we have regular training available to all levels of staff.
We consider our supplier relationships as critical to our overall success. We continue to build strong relationships with both existing and new suppliers allowing us to react quickly to the constantly changing market and to supply market leading solutions to our customers.
We aim to build long term relationships with our customers by providing them with solutions that ensure the smooth running of their supply chain, our scope of services across sea, air, road, rail, warehousing, distribution, customs, and technology offer a unique and comprehensive supply chain solution.
The directors and various senior management boards have acted to maximise profit and cash flow in order to create shareholder value.
The group is committed to minimising its effect on the environment through the efficient use of resources, the reduction of waste and carbon emissions, recycling, and transport planning.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2022.
Information regarding business review, future developments and risk management can be found in the strategic report on pages 1 to 5.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
No ordinary dividends were paid. The director does not recommend payment of a further dividend.
The group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The group's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the group's contractual and other legal obligations.
Trade creditors of the group at the year end were equivalent to 46 (2021: 41) day's purchases, based on the average daily amount invoiced by suppliers during the year.
The group's policy is to consult and discuss with employees, through unions, 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.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Since the balance sheet date, the group has acquired interests in 2 businesses for consideration of approximately £5,000,000 and land for a consideration of £18,000,000.
Moore Kingston Smith LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
In line with the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 our energy use and greenhouse gas (GHG) emissions are set out below.
This data relates to UK emissions for the 12-month period from 1 January 2022 to 31 December 2022.
This disclosure includes emissions in relation to Uniserve Limited, Metro Shipping and 50% of DG International Group Limited (a joint venture) being the significant components of the group.
Comparative information was not prepared.
The boundaries of this report are based on operational control. We report our emissions with reference to the latest Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). In accordance with the 2018 Regulations, the energy use and associated greenhouse gas emissions are for those within the UK only that come under the operational control boundary. The 2022 UK Government GHG Conversion Factors for Company Reporting published by the UK Department for Environment Food & Rural Affairs (DEFRA) are used to convert energy use in our operations to emissions of CO2e. Carbon emission factors for purchased electricity calculated according to the ‘location-based grid average’ method. This reflects the average emission of the grid where the energy consumption occurs. Data sources include billing, invoices and the organisations internal systems. For transport data where actual usage data (e.g. litres) was unavailable conversions were made using average fuel consumption factors to estimate the usage based on miles travelled.
We have chosen to report our gross emissions against £m turnover.
The following energy efficiency actions have been undertaken in FYE 2022:
Driver Eco performance monitored and linked to target and bonus systems. Ongoing driver training – utilise cruise control, telematics drive assessment and coaching via Samsara.
Replace vehicles on a 3-5 year basis – consider fuel efficiency in purchase decisions and all fleet are Euro VI.
We are transitioning to energy efficient LED lighting at point of replacement across our sites.
All new builds have a building management system to track energy performance
We have installed a network of electric vehicle charging points across 11 of our 18 group sites.
We are transitioning our company car fleet to electric vehicles.
We operate Electric Manual Handling equipment at FMDC over LPG alternatives.
For more information, please see our ESG Report. https://uniserve.co.uk/sustainability
We have audited the financial statements of GB Europe Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the Group Profit And Loss Account, the Group Statement 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 significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 group and parent 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 director's 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 director 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 director is 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 Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Director's 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 their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Director's Report.
We have nothing to report in respect of the following matters in relation to which 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 Director's Responsibilities Statement, the director is 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 director determines 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 director is responsible for assessing the group's and 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 director either intends to liquidate the group or parent company or to cease operations, or has 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.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
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. 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.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent 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, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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.
The notes on pages 22 to 49 form part of these financial statements.
The notes on pages 22 to 49 form part of these financial statements.
The notes on pages 22 to 49 form part of these financial statements.
The notes on pages 22 to 49 form part of these financial statements.
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 £86,000 (2021: £21,858,000 profit)
The notes on pages 22 to 49 form part of these financial statements.
The notes on pages 22 to 49 form part of these financial statements.
The notes on pages 22 to 49 form part of these financial statements.
GB Europe Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 8 Lloyd's Avenue, London, England, EC3N 3EL.
The group consists of GB Europe Holdings Limited and all of its subsidiaries.
The prior accounting period for the group and company covers the period from 1 July 2020 to 31 December 2021. The reason for this was for group and commercial reporting requirements. For this reason, the comparative amounts presented in the financial statements are not entirely comparable.
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 group and company. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company GB Europe Holdings 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 2022. 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue 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 revenue is recognised.
Revenue from freight forwarding services
The provision for freight forwarding services include land, sea and air freight. Revenue is earned when goods arrive for imports and when they deport for exports. In both cases, revenue is recognised when the services are rendered, which coincide with the date of arrival or departure of shipments.
Revenue from warehousing
Revenue from warehousing is recognised over the period of time that the goods are held at Uniserve sites.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) 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 cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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 unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, 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, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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 unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. 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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
In the application of the group’s accounting policies, the director is 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.
Management has made a judgement on the appropriate container depreciation policy and has decided to apply deprecation rates of 50%, 30% and 20% over 3 years to reflect the consumption of the asset. The need for an impairment was investigated but it was concluded that no impairment is required.
Claims provisions represent claims against the company in respect of services and goods provided. The amount provided represents management’s best estimate of the amount required to settle the obligation at the reporting date. The group has not disclosed all of the information required by paragraphs 21.14 to 21.15 of FRS 102 on the grounds that it could be expected to seriously prejudice the position of the entity.
Provisions are measured at the present value of the expenditure 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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The Company makes an estimate of the recoverable value of group loans. When assessing the impairment of group loans management considers whether there is objective evidence of impairment including:
economic or legal reasons relating to the debtors financial difficult; and
observable data indicating that there has been a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those asset.
The whole of the turnover is attributable to the group's principle activities.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
During the year no retirement benefits were accruing to director (2021: £nil) in respect of defined contribution pension schemes.
The highest paid director received remuneration of £332,000 (2021: £502,000).
The value of the Group's contributions paid to a defined contribution pension scheme in respect of highest paid director amounted to £nil (2021: £nil).
During the year, compensation for key management personnel was £7,349,000 (2021: £1,802,000).
The actual charge for the year can be reconciled to the expected charge 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 2022 are as follows:
* Held indirectly via Uniserve Holdings Limited
** Held indirectly via Seafast Holdings Limited
*** Held indirectly via Metro Global Holdings Limited
**** Held indirectly via Grand Events Holdings Limited
^ Held indirectly via Wilgo Freight Holdings Limited
^^ Held indirectly via James Kemball Limited
^^^ Held indirectly via CPI Media Holdings Limited
^^^^ Held indirectly via Supply Chain Academy Limited
^^^^^ Held indirectly via Uniserve (UK) Limited
Details of associates at 31 December 2022 are as follows:
Claims Provisions
The provision represents claims against the company in respect of services and goods supplies. It includes the anticipated cost of settling these claims plus the associated legal cost of defending any action.
Dilapidation provisions
The provision relates to a number of leases with different terms and hence the provisions are expected to be utilised at differing terms between 1 and 15 years.
Voyages provisions
The group makes an onerous contract provision for loss making voyages, this being voyages where the total expected costs exceed the total expected revenue.
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 for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £1,054,000 (2021: £1,145,000). Contributions totaling £nil (2021: £31,000) were payable to the fund at the balance sheet date and are included in creditors.
On 10 June 2022 the group acquired a 50 percent interest in the issued share capital of OTX Logistics B.V. and has the ability to control board decisions.
Consideration of £4,799,000 was paid in cash for the acquisition. At that time, OTX Logistics B.V. net assets were £8,550,000, giving rise to goodwill on acquisition of £524,000.
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:
Amounts contracted for but not provided in the financial statements:
Since the balance sheet date, the group has acquired interests in 2 businesses for consideration of approximately £5,000,000 and land for a consideration of £18,000,000.
The company has taken advantage of the exemption conferred by section 33.1A of FRS102 to not disclose transactions with entities that are 100% owned by GB Global Holdco Pte Limited, the ultimate parent company.
Included in debtors and creditors are:
A loan of £5,675,000 (2021: £5,501,000) to Uniserve Holdings Group Employee Benefit Trust, accumulated interest charged in respect of this loan amounts to £2,737,000 (2021: £2,563,000). During the year interest of £174,000 (2021: £261,000) was charged in respect of this loan.
A loan of £4,332,000 (2021: £4,236,000) to Uniserve Funded Unapproved Retirement Benefit Scheme, accumulated interest charged in respect of this loan amounts to £1,898,000 (2021: £1,802,000). During the year interest of £96,000 (2021: £144,000) was charged in respect of this loan.
A balance owed to Uniserve (Ireland) Limited of £8,437,000 (2021: £60,000 due from). During the year the group purchased services amounting to £nil (2021: £nil) from this company and made sales of £nil (2021: £nil) to this company. Mr I R Liddell is a director and shareholder of Uniserve (Ireland) Limited.
A balance of £76,000 due from Mr I R Liddell (2021: £398,000 due to). This balance is owed to the group and is comprised of the following amounts; due to Uniserve Holdings Limited £76,000 (2021: £398,000 due from).
A balance of £87,000 (2021: £89,000) is due to Uniocean Lines Limited. Of this amount £1,000 (2021: £1,000) is owed to Uniserve Holdings Limited. Mr I R Liddell is a director and shareholder of Uniocean Lines Limited.
A balance of £102,000(2021: £2,000 due from) due to Birmingham Business Park Properties LLP, owed to Uniserve Holdings Limited. Uniserve Holdings Limited made purchases of £nil (2021: £nil) from the LLP. Birmingham Business Park Properties is a related party due to the common shareholder of Mr I R Liddell.
The amounts advanced to director are interest-free and are repayable on demand.
The immediate and ultimate parent company is GB Global Holdco. Pte. Ltd., a company incorporated in Singapore.
The ultimate controlling party is Mr I R Liddell by virtue of his shareholding in the ultimate parent company.
The prior year figures were originally prepared using the voyage end accounting basis, such that revenue and costs in relation to voyages were recognised on completion of that voyage.
In order to comply with the requirements of FRS102 section 23, the figures have been restated in order to account for these items on the percentage completion basis.
Alongside the adjustments to revenue of £5,846,433 and direct costs of £5,664,258, a provision for losses on incomplete voyages at 31 December 2021 of £2,375,619 was also made.
Further to this, a bunker inventory asset of £2,171,308 was also recognised on the balance sheet.
A provision for £5,240,000 relating to a potential legal claim has been reversed as it did not meet the relevant recognition criteria under FRS102, Section 21.
A deferred tax asset of £995,600 in relation to this provision has also been reversed, as it does not meet the recognition criteria of an asset as required by FRS102 Section 2.
Due to errors in the assumptions used of the likely costs of repair works, dilapidations provisions of £2,753,969 were overstated by £1,489,969 and have been restated to £1,264,000.
Due to the uncertainty as to the timing of the payment of these balances they did not meet the criteria for recognition within creditors and so have been reclassified as provisions.
Land held by Ocean Gateway LLP and Ocean Gateway 2 LLP was previously held as investment property. The land is used within the group and therefore this has been transferred to tangible fixed assets and revalued back to the original cost base.
£17,040,000 of investment properties have been reclassified to property, plant and equipment. The carrying value was overstated and has been reduced back to cost of £11,420,000.
The prior year figures have been restated to reflect a purchase ledger debit balance of £120,093 that was not previously reclassified to debtors.
The directors have determined that a prior period restatement of balances is required in relation to claims against the company in respects of services and goods provided. The directors have performed a reassessment of the recognition and measurement of the provision at the prior period reporting date which has resulted in revision to their best estimate of the amount require to settle the obligation at the reporting date.
Provisions held within the accounts have been reduced by £50,974,000 made up of:
Reduction of £56,217,000 being reversed through cost of sales
Increase of £5,243,000 included within administrative expenses
The adjustment to provisions creates an additional tax charge in the accounts of £9,685,000. Increasing corporation tax payable by the same amount.