The directors have pleasure in presenting their strategic report for the year ended 31 December 2023. The directors aim to present a balanced and comprehensive review of the development and performance of the groups and company’s business during the year and its position at the year end. The review is consistent with the size and nature of the business and is written in the context of the risks and uncertainties that the group and company faces.
EFM Global Holdings Ltd is the holding company of a group of companies whose principal activities are those of logistics consultancy, project freight management, planning, forwarding and storage. The business specialises in complex and high value projects. The group has seven offices in four geographical regions being Europe, North America, the Middle East and Australia; the group however, operates globally with a network of approved partners.
The results of the group for the year are shown in the Consolidated Profit and Loss Account on page 8.
Revenues in 2023 were £36.8m down from to £44.4m in 2022. Margins increased from 28.8% in 2022 to 29.4% in 2023.
The main growth during 2023 was in Exhibitions (Up by 41%), Other Special Projects, was down by 66%, and Film Media & Broadcasting down by 47%. Film location work experienced reduced activity due to the Hollywood writers’ strike.
The group had its first full year of operations in Belgium and Saudi Arabia which now includes the groups largest storage facility in Riyadh and bought further Minority Shareholdings in the USA to give 100% ownership of EFM USA Inc.
The group operates in an environment that has a number of operational and financial risks. The key business risks affecting the group are considered to be competition from other businesses within the industry, employee retention and foreign currency risks.
The Group Board, supported by appropriate professional advisors, is well placed to keep abreast of the various operational & financial risks. In particular:
The Regional Directors report to the Board on competitor activity on an ongoing basis and operational strategy is adapted accordingly at regular meetings of the Operating Boards, with action being taken to counter the activities of significant competitors as required.
Retention of key employees remains a priority of the business with emphasis being placed on consultation and communication with employees. The directors regularly monitor industry salary information to ensure that key staff are employed on attractive terms and conditions.
The group's principal foreign currency exposure arises from trading with overseas companies and in the foreign currency re-translation of group assets and liabilities denominated in non-Sterling currencies, which leaves the group exposed to currency exchange fluctuations at the balance sheet date.
The group actively hedges against adverse currency fluctuations by maintaining US Dollar, Australian Dollar, Dirham and Euro bank accounts. The directors do not presently consider the risk of foreign exchange movements to be significant. However, the value of the group's net assets, when measured in its reporting currency of Sterling, will increase or decrease dependent on the exchange rates prevailing between Sterling, US Dollars, Australian Dollars, Dirhams and Euros.
The outlook for the group remains positive with growth forecast in our main verticals and a hardening of global freight rates from the 2023 lows.
The Directors continue with the growth strategy with a vision to develop sales across EFM’s main sectors and across all its locations, making the Group more robust, and reducing reliance on individual clients, sectors, or geographies. With expected growth in EFM’s core sectors, the addition of new clients and vertical growth will provide greater resilience. EFM’s prospects for 2023 and beyond are exciting.
During 2024 we will streamline the corporate structures in the USA and UAE bringing cost savings to future years.
The Group will continue to review its geographical and vertical footprint and will make further investments in organic or acquisitive growth that are consistent with its strategic plans.
| 2023 | 2022 |
| £m | £m |
Turnover | 36.8 | 44.4 |
Gross profit margin | 29% | 29% |
Profit/(loss) before tax | 0.01 | 3.71 |
Salaries as a percentage of gross profit | 62% | 53% |
At the year end, the group had net current assets of £3.1m (2022: £4.5m), including net cash balances of £3.3m (2022: £7.3m). The groups total net assets were £3.1m (2022: £3.9m) at the year end.
In preparing the financial statements the Directors are required to assess the Company's ability to continue to trade as a going concern for the foreseeable future. In undertaking this assessment, the Directors have given due consideration to the Company's available cash funds and the potential for it to continue to earn significant profits. At the Balance sheet date, the group has net current assets of £3.1m (2022: £4.5m) of which £3.3m (2022: £7.3m) is represented by cash at bank.
The Directors have reviewed the groups forecasts and cash flow projections. The forecasts show the group continuing to increase its profits and cash reserves.
The financial statements do not include the adjustments that would result if the group were unable to continue as a going concern.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
These financial statements consolidate the accounts of EFM Global Holdings Limited and all of its subsidiary undertakings. The results of subsidiaries acquired or disposed of during the year are included or excluded from the effective date of acquisition or disposal.
The results for the year are set out on page 8.
A dividend of £500,000 (2022: £180,000) was paid during the year ending 31 December 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of EFM Global Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 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 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 their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' 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 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 parent 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In planning and designing our audit tests, we identify and assess the risks of material misstatements within the financial statements, whether due to fraud or error. Our assessment of these risks includes consideration of the nature of the industry and sector, the control environment and the business performance along with the results of our enquiries of management, about their own identification and assessment of the risks of irregularities. We are also required to perform specific procedures to respond to the risk of management override.
As a result of this assessment, we considered the opportunities and incentives that may exist within the company and group for fraud and identified that the greatest area of risk was in relation to completeness of income, management override, the understatement of trade creditors and recoverability of debtors.
We have obtained an understanding of the legal and regulatory frameworks that the company and group operates in from discussions with the directors and our knowledge of the company and group and its industry sector. We have focused on the provisions of those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and local tax legislation.
We performed the following audit procedures after consideration of the above risks which included the following:
reviewing sales during the period and post year end sales;
reviewing the nominal ledger for the period for purchases during the period and post year end purchases;
testing that sales invoices have been fully and properly included within turnover in the financial statements, and review of sales recorded after the balance sheet date for possible income that has been incorrectly excluded from the period;
review of customer invoices and after date receipts;
enquiry of management of actual and potential litigation and claims;
reviewing minutes of meetings of those charged with governance;
reviewing correspondence with HMRC and the company’s legal advisors;
reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
The engagement partner has assessed that all engagement team members were made aware of the relevant laws and regulations and potential fraud risks and were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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. The 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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
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 profit for the year was £204,899 (2022: £436,744).
EFM Global Holdings Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Ibex House, Baker Street, Weybridge, Surrey, KT13 8AH.
The group consists of EFM Global Holdings Ltd 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 financial statements incorporate those of EFM Global Holdings Ltd and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). If subsidiaries are acquired during the year these are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 December 2023. 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.
The Company has taken advantage of the exemption under FRS 102, section 1.12, in not preparing a cashflow statement for the parent company.
In preparing the financial statements the Directors are required to assess the group's ability to continue to trade as a going concern for the foreseeable future. In undertaking this assessment, the Directors have given due consideration to the group's available cash funds. At the Balance sheet date, the group has net current assets of £3.1m (2022: £4.5m) of which £3.3m (2022: £7.3m) relates to cash at bank.
The Directors have reviewed the groups forecasts and cash flow projections. The forecasts show the group will return to a profitable position in 2024.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
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.
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 and company's balance sheet when the group or company 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.
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.
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.
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.
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.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
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.
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.
Management applies judgement in evaluating the recoverability of debtors. This judgement is based on the ageing profile of debtors and historical experience. To the extent that the directors believe debtors not to be recoverable they have been provided for in the financial statements.
The parent company considers whether investments held in subsidiaries are impaired each year. Where indicators of impairment are identified the carrying value of the investment is compared to the underlying net assets of the subsidiary and expected future performance and provisions are recognised where required.
The group considers goodwill to have a finite useful life and therefore applies an amortisation rate evenly over its useful life of between 5 and 10 years.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 2).
The effective tax rate for the 3 months up to 31 March 2023 was 19.00%. From 1 April 2023, the corporation tax rate changed from 19.00% to 25.00%, which covered the remainder of the period, being 9 months.
Therefore the effective corporation tax charge based on 3 months at 19.00%, and 9 months at 25.00% will be 23.52% for the financial reporting period.
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 December 2023 are as follows:
A further 15% of the shares in EFM USA Inc, were purchased during the year.
The group loans due to the parent company are repayable on demand, giving 6 months notice, and have interest accruing at 3% per annum.
The group loan due from the parent company is repayable on demand, giving 6 months notice, and has interest accruing at 1% over the Bank of England base rate.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The finance leases are secured on the underlying assets.
The above is a bank loan held by a subsidiary of the Group of £850,000 (2022: £1,150,000) and is secured by a fixed charge over the subsidiary's assets and goodwill, and a floating charge over all property that is not covered by the fixed charge.
The bank loan, and any other liabilities due in relation to the loan provider have also been guaranteed for £1,650,000 by the parent company.
This loan has interest accruing at 2.19% over base rate.
The dilapidation provision has been included to account for the estimated costs associated with restoring the premises to the condition required in accordance with the lease agreement. The lease has been extended, therefore the costs are due to be incurred in 2027.
The other provisions are estimated gratuity and annual leave costs.
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.
As at the end of the year there was a liability of £8,172 (2022: £8,399) due to be paid in respect of contributions.
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 remuneration of key management personnel is as follows.
Dividends totalling £500,000 (2022 - £180,000) were paid in the year in respect of shares held by the company's directors.
This loan to a director is repayable on demand.