Company registration number 01534130 (England and Wales)
NIPPON EXPRESS (UK) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
NIPPON EXPRESS (UK) LIMITED
COMPANY INFORMATION
Director
T Tamura
Company number
01534130
Registered office
World Business Centre 2
Newall Road
Heathrow
TW6 2SF
Auditor
Deloitte LLP
2 New Street Square
London
EC4A 3BZ
Bankers
Bank of Tokyo-Mitsubishi UFJ Limited
Barclays Bank Plc
BNP Paribas
Mizuho Corporate Bank Limited
Solicitors
Fieldfisher LLP
Jackson Parton LLP
IBB Law LLP
Dentons UK and Middle East LLP
NIPPON EXPRESS (UK) LIMITED
CONTENTS
Page
Strategic report
1 - 4
Director's report
5 - 8
Independent auditor's report
9 - 11
Group statement of comprehensive income
12
Group balance sheet
13
Company balance sheet
14
Group statement of changes in equity
15
Company statement of changes in equity
16
Group statement of cash flows
17
Notes to the financial statements
18 - 39
NIPPON EXPRESS (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The Director presents his strategic report on Nippon Express (U.K.) Limited (also referred to as “Company”) and its subsidiary (also referred to as the “Group”) for the year ended 31 December 2023.

Review of the business and key performance indicators

The Group’s profit before tax decreased from £6,845,110 in 2022 to £354,584 in 2023, while shareholders’ funds have decreased to £23,494,993 (2022: £25,271,909). Operating profit decreased from £6,901,403 in 2022 to £231,064 in 2023.

 

Group turnover of £111.49m (2022: £154.17m) was achieved for the year, a decrease of 27.68% from 2022. This has resulted in a gross profit margin of 35.56% (2022: 27.48%) for the Group.

 

The Irish subsidiary’s results show a profit before taxation of €13,269 (2022: €1,566,600) while shareholders’ funds have increased to €3,080,308 (2022: €3,068,698).

 

During the year, the parent fulfilled air imports weighing 5,231 metric tonnes (2022: 7,631).

 

Through 2022 and 2023 the UK economy has seen high rates of inflation across the whole economy, with in particular, energy and employment costs rising quickly. These increased costs have had an impact on the supply chain and logistics sector. With activity across the logistics sector returning to a more normal level, following the disruption of the peak COVID-19 years, logistics costs have risen while shipping rates have been falling, overall supply costs have risen whereas demand is falling. This has therefore led to lower profits compared to the prior year.

 

The Group continues to develop its sales team to gain new customers and obtain repeat business from existing customers.

Principal risks and uncertainties

The principal risks and uncertainties facing the Company and the Group relate to economic risks as well as the current cost of living crisis.

 

Economic risk

The cost of living crisis, together with global challenges related to the recovery from the COVID-19 pandemic and the events in Ukraine, Israel and Gaza, that in themselves have contributed to the cost of living issue, continue to impact the economy with the cost of energy, warehouse space and payroll costs all peaking through 2022 and 2023. The Group and Company have endeavoured to face these challenges by working closely with partner organisations on both the revenue and supply side of the business.

 

The industry continues to face challenges including the availability of skilled labour, for example HGV drivers through to issues with lorry fleets arising from Ultra Low Emission Zones in London and elsewhere in the UK, as well as increasing fuel costs and the need to be energy efficient.

 

To counter some of these issues the Group plans to use new technology to convert diesel lorries to hydrogen, using spare capacity from the roll out of solar panels on the roofs of our warehouses, that are sited across the UK and Ireland, to generate our own hydrogen. Most of our in-house freight is between these sites so the Group is confident it can reduce emission and costs.

 

Climate risk

The increasing frequency and severity of extreme weather events due to climate change pose significant challenges for the freight forwarding industry. These challenges include operational disruptions such as storms, floods, and other weather-related incidents can damage infrastructure, delay shipments, and disrupt supply chains. The higher risk of losses from extreme weather can lead to increased insurance premiums, fuel costs, and repair expenses.

 

In order to mitigate these risks, the Group intend to explore alternative shipping routes and modes of transport to reduce reliance on vulnerable areas and utilise advanced weather forecasting tools and historical data to identify potential risks and develop contingency plans.

NIPPON EXPRESS (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

Financial risk management

Liquidity risk

The Group has no borrowings and maintains strong liquidity levels, with those strong liquidity levels predicted to remain and grow over time, assuming predictions and budgets are met. Within stress tested cash flow models, cash is still expected to be strong for over 12 months even with test assumptions that see revenues significantly declining and costs going up.

 

Management are confident that both scenarios can be managed and that the liquidity risk to the business is low.

 

Credit risk

The cost of living crisis and challenging global economy along with the residual effects of COVID-19 have brought increased credit risk due to a concern that customers might default.

 

The Group has a strong focus on recovery of debt aided by terms which allows it to hold stock until debts are paid, and the need for customers to ensure their supply chains continue to operate. Although there were some bad debts, they were small losses which did not impact cash flow or profitability in a material way.

 

Currency risk

The Group operates in a number of currencies, mainly Sterling, US Dollars and Euros. The variety of currencies billed leads to a position of natural hedging with limited exposures to any individual currency.

 

The wider Group above the Parent Company, also manages an international currency netting process with intragroup payments made to the netting pool.

 

Going concern

The financial statements have been prepared on a going concern basis as the Director believes that the Group has adequate resources to continue in operational existence for a period of at least 12 months from the date of approval of the financial statements. The Director has based the assessment of going concern on cash flow forecasts which have been stress tested while consideration has been made in respect of risks and uncertainties outlined above. Thus the Group continues to adopt the going concern basis of accounting in preparing the annual financial statements.

Section 172(1) statement/Statement of stakeholder interests

Nippon Express (UK) Limited operates within the Group headed by Nippon Express Inc. The Company’s immediate holding company is Nippon Express (Europe) Gmbh.

 

The Company has one director, who is based in the UK, and he follows Group policies, procedures and governance rules as determined by the Global and European Head-offices.

 

The Company is subject to an annual audit of its Financial Statements but is also regularly visited by the Group’s internal audit team as a part of a global internal audit plan as sanctioned by the global Head-office.

 

The Director has regular Board meetings with other employees invited as guests to attend and reflect upon the key points being discussed. All key discussions and actions are minuted and these actions are reviewed at a future date. Aside from Board meetings there are also regular monthly meetings attended by the General Managers that report to the Director.

 

General Managers are appointed to cover regions and specialities of commercial activity as well as internal functions like Finance, HR and Compliance.

NIPPON EXPRESS (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The compliance team work regularly with suppliers wanting to test our ISO9001 status, as well as other security audits that might be carried out by organisations such as the Civil Aviation Authority and the Health and Safety Executive. We are also accredited with ISO27001 information security management systems.

 

The Director considers that he has acted in the way that would be most likely to promote the success of the Group for the benefit of its members as a whole in the decisions taken during the year and, in doing so, have had regard to the stakeholders and matters set out in s172(1) (a-f) of the Companies Act 2006. In performing their duties under section 172, the Director has had regard to the matters set out in section 172(1) as follows:

 

The likely consequences of any decision in the long term

As a part of the managerial process the Director and General Managers will take great care in making any decisions that might have a strategic impact on the business.

 

As a provider of transport and logistical services, the business was classed as an essential service and we continued to plan our operations such that we can remain operational in the event of any serious challenges, as was demonstrated during the COVID-19 pandemic. We also plan to ensure that the emissions of the business are kept to a minimum as this will likely be a criteria of measurement in the future.

 

We are in the process of reviewing our social and corporate responsibility position, with steps to include reviewing all partner organisations to ensure their standards and compliance are to a high level.

The interests of the Group's employees

The Company views its employees as valued members of a large community. We are committed to ensuring the health, safety and welfare of our employees and any interested parties; as well as managing our carbon footprint and maintaining compliance. To achieve this, training is delivered to all new joiners across areas of H&S, Environmental Awareness, Corporate Compliance, Security and Information Management. Periodic refresher training is delivered throughout the duration of employment to ensure our employees are always fully equipped with the knowledge they need to conduct their duties in a legal, ethical and compliant way.

 

The employees have an employee assistance programme to fall back on for any reason that might be troubling them, both home and work related.

 

The Company expects its staff to operate at high levels and to be engaged with the business but also looks to train, develop and enthuse its team members, with the goal of creating a high-performance team and culture.

 

The Company expects its employees to respect the Nippon Express brand and respect their co-workers. It expects professional behaviour and aims to create an environment free from all forms of racism and discrimination.

 

The need to foster the Group's business relationships with suppliers, customers and others

The freight forwarding business is fundamentally a business where we connect parties to a contract to work together. From shareholders through to customers, employees and suppliers, we create a chain to bring products from one part of the world where they are built or made to the territory of the consumer.

 

We respect our customers and in line with the Company’s ethos of “We find the way” we challenge ourselves to find better, faster, safer and more efficient routes to bring products to market, whether it be by sea, air, rail or freight. In all instances we work with our partners to provide the best and most secure services, connecting the customer to our staff to our supplier.

 

We aim to pay all suppliers on time and value the support they give to us irrespective of the size of the supplier’s business and value of their goods or services.

NIPPON EXPRESS (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

The impact of the Group's operations on the community and the environment

The movement of goods inevitably leads to emission, and the use of fossil fuels whether goods are moved by container vessels, trucks, vans or aeroplanes.

 

As far as is possible, we implement policies and processes to reduce our emissions with this topic a regular source of debate for General Managers in an effort to reduce our carbon footprint.

 

We have continued to engage with energy consultants to try and determine how we reduce our footprint and target being a neutral emitter of pollutants.

 

We have installed LED lighting into most of our work space, significantly reducing carbon emissions in respect of lighting. We are also still planning to work with our landlords and energy grids, to install solar panels on warehouse roof space to generate our own electricity which will reduce or replace our reliance on fossil fuels in powering our facilities and equipment.

 

Following the adoption of our solar strategy to reduce our carbon footprint in our warehouses, we continued to explore the opportunity to use any spare capacity to produce hydrogen, at which point and subject to technology currently being developed, we would aim to convert our fleet of lorries to run on hydrogen. This would significantly reduce our use of diesel fuel.

 

We estimate these projects could have a payback as short as 4 to 6 years, albeit the cost of implementation is increasing. Setting the costs aside we view these projects as a key element for a responsible corporate.

 

The desirability of the Group maintaining a reputation for high standards of business conduct

The Company and Group have a proud heritage of being there for customers when support and action is needed. In a business sector with few barriers to entry maintaining a reputation for being able to meet customer needs becomes critical and, “Finding the Way”, becomes the core challenge to maintain our brand and the values that it stands for.

 

The need to act fairly as between members of the Group and its stakeholders

All stakeholders are valued, and maintaining the values within our team is a core and strategic goal for the business.

 

Working together and valuing the contribution of others within our team is a vital step in creating harmonious processes and systems that will enable the business to meet it challenges and go above and beyond for our customers.

Approved and signed by the director

T Tamura
Director
29 November 2024
NIPPON EXPRESS (UK) LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

The director presents his annual report and financial statements for the year ended 31 December 2023.

Principal activities

The Group's principal activity during the year was the provision of freight forwarding services.

Results and dividends

The results for the year are set out on page 12.

A dividend of €1,800,000 (£1,558,100) was paid during the year (2022: €1,800,0001,584,071)). As at the date of approval of the financial statements, no final dividends relating to the 2023 results have been declared (2022: €1,800,000 (£1,558,100)).

Director

The director who held office during the year and up to the date of signature of the financial statements was as follows:

T Tamura
Political donations

There were no political donations made in the year (2022: none).

Disabled employees

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Engagement with employees

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.

The Group recognises the importance of good communications in relationships with its staff. The ultimate parent undertaking produces regular communications on the performance and development of activities of the worldwide Nippon Express Group, which seeks to achieve common awareness on the part of all employees of the financial and economic circumstances affecting the Group’s performance. These are available to all employees.

Post reporting date events

There have been no subsequent events that require disclosure in the financial statements.

Future developments

The Company will continue to invest in sales resources and to improve operating procedures, with a particular focus on reducing the carbon footprint of the Company as explained within the Strategic Report.

Further details of future developments can be found in the Strategic Report on page 1 and form part of this report by cross-reference.

NIPPON EXPRESS (UK) LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Auditor

The auditor Deloitte LLP is deemed to be reappointed under section 487(2) of the Companies Act 2006.

Energy and carbon report

The Company is required to report on carbon emissions arising from its activities for financial year 2023. This is to comply with The Companies (Director’s Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 which implement government policy on Streamlined Energy and Carbon Reporting (SECR). These legal obligations came into force on the 1st April 2019, and after any financial year starting after this date. This Financial Year, 2023, represents the fourth compulsory year of reporting for Nippon Express (UK) Limited.

 

The Company is reporting on operations within the Financial Control Boundary and as such aligns with our annual reporting.

 

For financial year 2023, the Parent Company’s operations are within seven sites:

 

 

The majority of energy use is diesel/petrol fuel for transport; the remainder is for propane and electricity used in distribution centres and offices. Three sites used natural gas in 2023: Swindon, Manchester and the new East Midlands site.

The lease on the East Midlands site expired on 31 March 2023 and a new site was acquired on 8 November 2022. The staff moved in on 18 February 2023. During 2023 the new site was unoccupied between 1 January and 18 February 2023 and occupied from 18 February - 31 December 2023. The old site was occupied between 1 January and 18 February 2023 and unoccupied from 18 February to 31 March 2023 when the lease expired.

At Swindon no natural gas was used in 2022. But on 25 January 2023 a lease was taken on unit B1 adjacent to B2. Unit B1 has purpose-built office accommodation but has a small gas boiler. From 25 January – 31 December 2023 the Swindon site used small amounts of natural gas.

Data Quality

The electricity data for most sites is derived from half hourly readings where AMR is installed, all readings are actual readings. For Swindon landlord invoices are used some of which show kWh actual data from sub-meters. The rest show financial data. At Manchester electricity and gas data was based on actual invoices.

Propane data is from delivery invoices.

Transport data is derived from fuel cards where data contains litres of fuel purchased and therefore reliable in terms of the total fuel purchased. Grey fleet consumption is estimated from mileage claims by employees.

2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
5,601,437
5,452,483
NIPPON EXPRESS (UK) LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
69.09
72.95
- Fuel consumed for owned transport
886.79
838.25
955.88
911.20
Scope 2 - indirect emissions
- Electricity purchased
307.39
305.50
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the group
20.41
11.91
Total gross emissions
1,283.68
1,228.61
Intensity ratio
Intensity Ratio: total tonnes CO2e per £1,000 turnover
0.01278
0.00682
Quantification and reporting methodology

We have followed the 2019 HM Government environmental reporting guidelines. We have also used the GHG reporting protocol – Corporate Standard and have used the 2023 UK Government's Conversion Factors for the Company Reporting.

Intensity measurement

The carbon intensity ratio used is total gross emissions in metric tonnes CO2e per £1,000 of company turnover which was £100,423,695 (2022: £135,099,323). The ratio is shown in the table above.

Measures taken to improve energy efficiency

Phase 3 ESOS Energy Audits were conducted in 2022/2023 for Transport energy use, Swindon, Hayes and Manchester sites, with costed energy efficiency recommendations in each report.

There is a plan to move from the Hayes site to a new facility at Uxbridge in 2024 so it is unlikely any measures in the Hayes ESOS report will be implemented. Solar PV is under consideration at some sites.

NIPPON EXPRESS (UK) LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Statement of director's responsibilities

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland". Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period.

 

In preparing these financial statements, the director is required to:

 

 

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Approved and signed by the director
T Tamura
Director
29 November 2024
NIPPON EXPRESS (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NIPPON EXPRESS (UK) LIMITED
- 9 -
Opinion

In our opinion the financial statements of Nippon Express (U.K.) Limited (the “Parent Company”) and its subsidiary (the “Group”):

 

We have audited the financial statements which comprise:

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 the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (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 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.

NIPPON EXPRESS (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NIPPON EXPRESS (UK) LIMITED
- 10 -

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.

Responsibilities of director

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 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 director either intends to liquidate the group or the parent company or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, 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.

 

We considered the nature of the group’s industry and its control environment, and reviewed the group’s documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management and the directors about their own identification and assessment of the risks of irregularities, including those that are specific to the group’s business sector.

 

We obtained an understanding of the legal and regulatory framework that the group operates in, and identified the key laws and regulations that:

 

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

As a result of performing the above, we identified the greatest potential for fraud in the risk of revenue not being recognised in the correct financial period. Our specific procedures performed to address this risk included testing, on a sample basis, third party evidence to determine whether revenue had been recognised in the correct accounting period.

NIPPON EXPRESS (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NIPPON EXPRESS (UK) LIMITED
- 11 -

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

Report on other legal and regulatory requirements

 

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

 

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.

 

Matters on which we are required to report by exception

Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:

 

We have nothing to report in respect of these matters.

 

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.

Andrew Lowes (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
29 November 2024
NIPPON EXPRESS (UK) LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
Turnover
3
111,488,291
154,171,086
Cost of sales
(71,842,277)
(111,810,754)
Gross profit
39,646,014
42,360,332
Distribution costs
(23,209,076)
(22,523,309)
Administrative expenses
(16,205,874)
(12,935,620)
Operating profit
4
231,064
6,901,403
Interest receivable and similar income
9
123,603
67
Interest payable and similar expenses
8
(83)
(56,360)
Profit before taxation
354,584
6,845,110
Tax on profit
10
103,808
(1,117,901)
Profit for the financial year
458,392
5,727,209
Other comprehensive income
Actuarial (loss)/gain on defined benefit pension schemes
(504,000)
4,737,740
Currency translation (loss)/gain arising in the year
(67,958)
112,008
Tax relating to other comprehensive income
(105,250)
(1,362,750)
Total comprehensive income for the year
(218,816)
9,214,207
Profit for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
NIPPON EXPRESS (UK) LIMITED
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 13 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
7,634,212
1,773,929
Current assets
Debtors
16
18,526,975
30,465,733
Cash at bank and in hand
12,045,398
16,799,944
Defined benefit pension surplus
20
2,612,000
2,191,000
33,184,373
49,456,677
Creditors: amounts falling due within one year
17
(12,973,783)
(22,969,262)
Net current assets
20,210,590
26,487,415
Total assets less current liabilities
27,844,802
28,261,344
Provisions for liabilities
Provisions
18
3,481,803
2,441,685
Deferred tax liability
19
868,006
547,750
(4,349,809)
(2,989,435)
Net assets
23,494,993
25,271,909
Capital and reserves
Called up share capital
21
2,850,000
2,850,000
Currency translation reserve
661,873
729,831
Profit and loss reserves
19,983,120
21,692,078
Total equity
23,494,993
25,271,909
The financial statements were approved and signed by the director and authorised for issue on 29 November 2024
29 November 2024
T Tamura
Director
Company registration number 01534130 (England and Wales)
NIPPON EXPRESS (UK) LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 14 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,235,803
655,176
Investments
14
22,951
22,951
3,258,754
678,127
Current assets
Debtors
16
17,417,771
27,616,735
Cash at bank and in hand
11,321,368
14,774,095
Defined benefit pension surplus
20
2,612,000
2,191,000
31,351,139
44,581,830
Creditors: amounts falling due within one year
17
(10,148,048)
(19,820,027)
Net current assets
21,203,091
24,761,803
Total assets less current liabilities
24,461,845
25,439,930
Provisions for liabilities
Provisions
18
2,729,943
2,308,906
Deferred tax liability
19
868,006
547,750
(3,597,949)
(2,856,656)
Net assets
20,863,896
22,583,274
Capital and reserves
Called up share capital
21
2,850,000
2,850,000
Profit and loss reserves
18,013,896
19,733,274
Total equity
20,863,896
22,583,274
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 £447,972 (2022 - £4,559,456 profit).
The financial statements were approved and signed by the director and authorised for issue on 29 November 2024
29 November 2024
T Tamura
Director
Company registration number 01534130 (England and Wales)
NIPPON EXPRESS (UK) LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
Share capital
Currency translation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
2,850,000
617,823
14,173,950
17,641,773
Year ended 31 December 2022:
Profit for the year
-
-
5,727,209
5,727,209
Other comprehensive income:
Actuarial gains on defined benefit plans
-
-
4,737,740
4,737,740
Currency translation differences
-
112,008
-
0
112,008
Tax relating to other comprehensive income
-
-
0
(1,362,750)
(1,362,750)
Total comprehensive income
-
112,008
9,102,199
9,214,207
Dividends
11
-
-
(1,584,071)
(1,584,071)
Balance at 31 December 2022
2,850,000
729,831
21,692,078
25,271,909
Year ended 31 December 2023:
Profit for the year
-
-
458,392
458,392
Other comprehensive income:
Actuarial gains on defined benefit plans
-
-
(504,000)
(504,000)
Currency translation differences
-
(67,958)
-
0
(67,958)
Tax relating to other comprehensive income
-
-
0
(105,250)
(105,250)
Total comprehensive income
-
(67,958)
(150,858)
(218,816)
Dividends
11
-
-
(1,558,100)
(1,558,100)
Balance at 31 December 2023
2,850,000
661,873
19,983,120
23,494,993
NIPPON EXPRESS (UK) LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
2,850,000
13,382,899
16,232,899
Year ended 31 December 2022:
Profit for the year
-
4,559,456
4,559,456
Other comprehensive income:
Actuarial gains on defined benefit plans
-
4,737,740
4,737,740
Tax relating to other comprehensive income
-
(1,362,750)
(1,362,750)
Total comprehensive income
-
7,934,446
7,934,446
Dividends
11
-
(1,584,071)
(1,584,071)
Balance at 31 December 2022
2,850,000
19,733,274
22,583,274
Year ended 31 December 2023:
Profit for the year
-
447,972
447,972
Other comprehensive income:
Actuarial gains on defined benefit plans
-
(504,000)
(504,000)
Tax relating to other comprehensive income
-
(105,250)
(105,250)
Total comprehensive income
-
(161,278)
(161,278)
Dividends
11
-
(1,558,100)
(1,558,100)
Balance at 31 December 2023
2,850,000
18,013,896
20,863,896
NIPPON EXPRESS (UK) LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
4,577,349
9,896,599
Income taxes paid
(976,886)
(2,444,933)
Net cash inflow from operating activities
3,600,463
7,451,666
Investing activities
Purchase of tangible fixed assets
(6,799,734)
(1,411,635)
Proceeds from disposal of tangible fixed assets
37,020
2,249
Interest received
10,603
67
Net cash used in investing activities
(6,752,111)
(1,409,319)
Financing activities
Interest paid
(83)
(360)
Dividends paid to equity shareholders
(1,558,100)
(1,584,071)
Net cash used in financing activities
(1,558,183)
(1,584,431)
Net (decrease)/increase in cash and cash equivalents
(4,709,831)
4,457,916
Cash and cash equivalents at beginning of year
16,799,944
12,230,906
Effect of foreign exchange rates
(44,715)
111,122
Cash and cash equivalents at end of year
12,045,398
16,799,944
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
1
Accounting policies
Company information

Nippon Express (UK) Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is World Business Centre 2, Newall Road, Heathrow, TW6 2SF.

 

The group consists of Nippon Express (UK) Limited and its subsidiary.

1.1
Accounting convention

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 company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

1.2
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Nippon Express (UK) Limited together with an entity controlled by the parent company (its subsidiary).

 

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.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
1.3
Going concern

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 and a period of at least 12 months from the date of approval of the financial statements. The director has based the assessment of gong concern on cash flow forecasts which have been stress tested while consideration has been made in respect of risks and uncertainties as detailed within the Strategic report. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

1.4
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for 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.

 

Revenue from the provision of freight forwarding services provided is generally recognised upon dispatch from the UK in respect of export services, on delivery to the customer in respect of domestic services, and upon customs clearance or delivery to customers in respect of import services.

1.5
Intangible fixed assets

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Software
5 years
1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values on a straight line basis over their useful lives on the following bases:

Leasehold improvements
over the period of the lease
Plant and equipment
4 to 5 years
Motor vehicles
4 to 5 years

Assets in the course of construction are not depreciated. These assets are in respect of various installations of fixtures and fittings for the warehouse in Ireland. All work is in progress and the warehouse is not operational as of the reporting date.

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 profit and loss.

Climate change-related factors may indicate that an asset could become physically unavailable or commercially obsolete earlier than previously expected. Furthermore, the expected timing of the replacement of existing assets may be accelerated.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.7
Fixed asset investments

In the parent company financial statements, investments in subsidiaries 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.

1.8
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible 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.

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.

1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.10
Financial instruments

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.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
Basic financial assets

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.

Impairment of financial assets

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.

Derecognition of financial assets

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.

Classification of financial liabilities

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

Basic financial liabilities, including creditors and loans from fellow group companies 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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.11
Equity instruments

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.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
1.12
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit and loss 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

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 profit and loss, except when it relates to items charged or credited directly to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income. 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 Organisation for Economic Cooperation and Development ("OECD") reached agreement with various countries to implement a minimum 15% rate on certain multinational enterprises, commonly referred to as "Pillar 2". The Group's parent Nippon Express (Europe) Gmbh continues to evaluate the impact of the various proposed and enacted legislative changes in the jurisdictions that the Group operates in. It does not expect the Pillar 2 rules to have a material impact on the Group’s financial statements in the next 12 months.

 

The Group applies the exemption to recognising and disclosing information about deferred tax assets and liabilities related to Pillar 2 income taxes (in accordance with the amendments to IAS 12 issued in May 2023) as equivalent Pillar 2 disclosures have been included in the consolidated financial statements of the ultimate parent company.

1.13
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.14
Employee benefits

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.

 

Demographic assumptions and investment performance can vary significantly under different climate change scenarios. The pension trustees consider all material financial risks, including the exposure of pensions assets to climate change risk.

1.15
Retirement benefits

The Company operates both a defined contribution scheme and a defined benefit scheme. The defined benefit scheme was closed to new members on 31 March 2003.

 

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.

 

The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.

The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.

 

Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.

The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.

 

Where there is an increase in the asset/decrease in the liability, the subsequent gain is recognised within other comprehensive income and is shown as a separate item on the face of the balance sheet.

1.16
Leases

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.

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.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -
1.17
Foreign exchange

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.

 

The financial statements of the foreign subsidiary are translated into sterling at the closing rates of exchange and the difference arising from the translation of the opening net investment in the subsidiary at the closing rates is recognised in other comprehensive income.

2
Judgements and key sources of estimation uncertainty

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.

Key sources of estimation uncertainty

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.

Pension benefits

The cost of the defined benefit pension scheme is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long term nature of these plans, such estimates are subject to significant uncertainty. Management obtains the advice of professional advisers to ensure the assumptions are reasonable. Further details are given in note 20.

Critical judgement

The recognition of a pension surplus related to the defined benefit pension scheme is considered a critical judgement due to the technical and complex nature of such schemes. If the surplus were to be incorrect, the amounts would be material.

3
Turnover

Turnover represents the total amount invoiced for services rendered, excluding customs duty and value added tax paid on behalf of customers. Analyses of turnover by class of business and geographical location are as follows:

2023
2022
£
£
Turnover analysed by class of business
Freight forwarding
111,488,291
154,171,086
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover
(Continued)
- 25 -
2023
2022
£
£
Turnover analysed by geographical market
Europe
31,462,817
31,527,220
Rest of the World
80,025,474
122,643,866
111,488,291
154,171,086
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange losses/(gains)
251,340
(627,428)
Depreciation of owned tangible fixed assets
916,208
508,026
Profit on disposal of tangible fixed assets
(37,020)
(2,250)
Operating lease charges
7,559,975
5,039,727
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
125,000
151,600
Audit of the financial statements of the company's subsidiaries
26,154
24,400
151,154
176,000
For other services
Taxation compliance services
22,798
28,727
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Office and management
168
154
157
144
Distribution
95
77
93
75
Total
263
231
250
219
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Employees
(Continued)
- 26 -

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
12,230,559
10,958,912
11,597,384
10,433,284
Social security costs
1,087,986
1,055,020
1,016,829
995,642
Pension costs
481,603
448,665
434,858
421,325
13,800,148
12,462,597
13,049,071
11,850,251
7
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
240,083
239,473
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
236,080
234,797
Company pension contributions to defined contribution schemes
4,004
4,676
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
83
360
Net interest on the net defined benefit liability
-
0
56,000
Total finance costs
83
56,360
9
Interest receivable and similar income
2023
2022
£
£
Interest on the net defined benefit asset
113,000
-
0
Interest income
10,603
67
Total income
123,603
67
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
10
Tax on profit
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,442
1,099,589
Deferred tax
Origination and reversal of timing differences
(105,250)
18,312
Total tax (credit)/charge
(103,808)
1,117,901

The actual (credit)/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:

2023
2022
£
£
Group profit before taxation
354,584
6,845,110
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
83,327
1,300,571
Tax effect of expenses that are not deductible in determining taxable profit
15,125
97,187
Tax effect of income not taxable in determining taxable profit
-
0
(114)
Unutilised tax losses carried forward
392,270
-
0
Adjustments in respect of prior years
-
0
1,912
Permanent capital allowances in excess of depreciation
(297,115)
(67,551)
Other non-reversing timing differences
(78)
887
Effect of overseas tax rates
(1,267)
(87,109)
Deferred tax
(105,250)
18,312
Tax effect of payments to pension
(190,820)
(146,194)
Taxation (credit)/charge
(103,808)
1,117,901

In addition to the amount charged to profit and loss, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Actuarial differences recognised as other comprehensive income
105,250
1,362,750
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Tax on profit
(Continued)
- 28 -

The main corporation tax rate increased from 19% to 25% with effect from 1 April 2023. The 23.52% rate used above reflects a blended rate between this new rate and the previous rate of 19.0%. The deferred taxation balances have been measured using 25%, which is the enacted rate applicable in the reporting periods when the timing differences reverse

The Group applies the exemption to recognising and disclosing information about deferred tax assets and liabilities related to Pillar 2 income taxes (in accordance with the amendments to IAS 12 issued in May 2023) as equivalent Pillar 2 disclosures have been included in the consolidated financial statements of the ultimate parent company.

11
Dividends
2023
2022
2023
2022
Recognised as distributions to equity holders:
Per share
Per share
Total
Total
£
£
£
£
Ordinary shares
Final dividend
0.55
0.56
1,558,100
1,584,071
12
Tangible fixed assets
Group
Leasehold improvements
Assets under construction
Plant and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
3,978,002
1,108,712
2,638,830
3,364,053
11,089,597
Additions
3,172,220
987,928
1,780,398
859,188
6,799,734
Disposals
(54,942)
-
0
(56,883)
(432,447)
(544,272)
Transfers
968,660
(968,660)
-
0
-
0
-
0
Exchange adjustments
-
0
(23,034)
(1,869)
-
0
(24,903)
At 31 December 2023
8,063,940
1,104,946
4,360,476
3,790,794
17,320,156
Depreciation
At 1 January 2023
3,837,409
-
0
2,535,942
2,942,317
9,315,668
Depreciation charged in the year
302,913
-
0
297,494
315,801
916,208
Eliminated in respect of disposals
(54,942)
-
0
(56,883)
(432,447)
(544,272)
Exchange adjustments
-
0
-
0
(1,660)
-
0
(1,660)
At 31 December 2023
4,085,380
-
0
2,774,893
2,825,671
9,685,944
Carrying amount
At 31 December 2023
3,978,560
1,104,946
1,585,583
965,123
7,634,212
At 31 December 2022
140,593
1,108,712
102,888
421,736
1,773,929
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Tangible fixed assets
(Continued)
- 29 -
Company
Leasehold improvements
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
3,978,002
2,551,050
3,361,893
9,890,945
Additions
985,519
1,533,447
859,188
3,378,154
Disposals
(54,942)
(32,030)
(432,447)
(519,419)
At 31 December 2023
4,908,579
4,052,467
3,788,634
12,749,680
Depreciation
At 1 January 2023
3,837,409
2,458,211
2,940,149
9,235,769
Depreciation charged in the year
217,654
264,072
315,801
797,527
Eliminated in respect of disposals
(54,942)
(32,030)
(432,447)
(519,419)
At 31 December 2023
4,000,121
2,690,253
2,823,503
9,513,877
Carrying amount
At 31 December 2023
908,458
1,362,214
965,131
3,235,803
At 31 December 2022
140,593
92,839
421,744
655,176
13
Intangible fixed assets
Group
Software
£
Cost
At 1 January 2023
10,991
Disposals
(10,763)
Exchange adjustments
(228)
At 31 December 2023
-
0
Amortisation and impairment
At 1 January 2023
10,991
Disposals
(10,763)
Exchange adjustments
(228)
At 31 December 2023
-
0
Carrying amount
At 31 December 2023
-
0
At 31 December 2022
-
0
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiary
15
-
0
-
0
22,951
22,951
Movements in fixed asset investments
Company
Shares in subsidiary
£
Cost or valuation
At 1 January 2023 and 31 December 2023
22,951
Carrying amount
At 31 December 2023
22,951
At 31 December 2022
22,951
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
15
Subsidiary
Details of the company's subsidiary at 31 December 2023 are as follows:
Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Nippon Express (Ireland) Limited
Republic of Ireland
Freight forwarder
Ordinary
100.00

Registered office addresses:

Unit 6, Plato Business Park, Damastown, Mulhuddart, Dublin 15, D15FW40
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
8,616,418
16,114,075
7,593,286
15,527,658
Corporation tax recoverable
628,135
-
0
594,862
-
0
Amounts owed by group undertakings
5,472,447
7,504,117
5,928,638
5,437,082
Other debtors
1,259,751
1,402,994
1,147,171
1,274,015
Prepayments and accrued income
2,138,888
5,353,540
1,744,636
5,289,058
18,115,639
30,374,726
17,008,593
27,527,813
Deferred tax asset (note 19)
411,336
91,007
409,178
88,922
18,526,975
30,465,733
17,417,771
27,616,735

The Group amounts owed by group undertakings are in respect of trade balances conducted under normal trading conditions. Of the Company amounts owed by group undertakings, £862,008 is in respect of a short-term interest free loan repayable on demand.

17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade creditors
3,822,708
4,718,825
3,046,176
4,029,549
Amounts owed to group undertakings
1,054,641
4,795,947
1,001,490
4,403,136
Corporation tax payable
-
0
347,236
-
0
174,246
Other taxation and social security
418,151
515,003
386,462
473,644
Deferred income
624,827
1,881,004
624,827
1,881,004
Other creditors
98,206
85,841
98,206
85,841
Accruals
6,955,250
10,625,406
4,990,887
8,772,607
12,973,783
22,969,262
10,148,048
19,820,027
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
17
Creditors: amounts falling due within one year
(Continued)
- 32 -

The amounts owed to group undertakings are in respect of trade balances conducted under normal trading conditions.

18
Provisions for liabilities
Group
Company
2023
2022
2023
2022
£
£
£
£
3,481,803
2,441,685
2,729,943
2,308,906
Movements on provisions:
Group
£
At 1 January 2023
2,441,685
Additional provisions in the year
1,088,607
Reversal of provision
(130,016)
Exchange difference
81,527
At 31 December 2023
3,481,803
Company
£
At 1 January 2023
2,308,906
Additional provisions in the year
421,037
At 31 December 2023
2,729,943

Provisions relate to dilapidation costs and costs of removal of fixed assets from leased premises. Where the effect of the time value of money is material, the provision has been discounted to reflect the present value of the liability.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
19
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
215,006
-
2,158
91,007
Tax losses
-
-
409,178
-
Retirement benefit obligations
653,000
547,750
-
-
868,006
547,750
411,336
91,007
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Company
£
£
£
£
Accelerated capital allowances
215,006
-
-
88,922
Tax losses
-
-
409,178
-
Retirement benefit obligations
653,000
547,750
-
-
868,006
547,750
409,178
88,922
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 January 2023
456,743
458,828
Credit to profit or loss
(105,250)
(105,250)
Charge to other comprehensive income
105,250
105,250
Other
(73)
-
Liability at 31 December 2023
456,670
458,828
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
41,871
22,913
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
20
Retirement benefit schemes
(Continued)
- 34 -

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.

Defined benefit scheme - group and company

The Company currently operates a defined benefit pension scheme for all qualifying employees. The defined benefit pension scheme was open to all qualifying permanent full-time and part-time employees of Nippon Express (U.K.) Limited up to 31 March 2003, and from that date the defined benefit scheme was closed to new entrants. The defined benefit scheme was closed on 1 October 2009 to future accrual. A new defined contribution scheme has replaced all the defined benefit arrangements for current and future employees.

An actuarial valuation of the defined benefit scheme was carried out as at 31 March 2021, and revealed a funding shortfall of £859,000.

To eliminate the shortfall the trustee and the Company agreed additional contributions of £290,000 per annum over a seven year period from 1 April 2022. The Company does not deem the obligation to meet this a principal risk or uncertainty.

The figures below have been based on a full actuarial valuation as at 31 March 2021, updated to the current year end by a qualified independent actuary.

A surplus of £2.6m has been recognised at the reporting date and results can change dramatically year on year depending on market conditions. A surplus is recognised as a defined benefit plan asset only to the extent that the Company is able to recover the surplus either through reduced contributions in the future or through refunds from the plan. The liabilities are linked to yields on AA-rated corporate bonds, while assets are measured at their bid value and a large proportion of the assets of the Scheme is invested in equities and diversified growth funds. Changing markets in conjunction with discount rate volatility will lead to volatility in the funded status of the pension plan and thus to volatility in the net pension asset on the Company’s balance sheet and in the Statement of Comprehensive Income.

The assets of the scheme have been taken at market value and the liabilities have been calculated using the following principal actuarial assumptions:

2023
2022
Key assumptions
%
%
Discount rate
4.4
4.8
Expected rate of increase of pensions in payment*
0.0/2.8
0.0/3.0
Inflation
3.0
3.2
Revaluation rates for deferred pensioners
2.8
3.0
* The percentages for pension increases are in respect of service prior to 6 April 1997/from 6 April
1997
Mortality assumptions
2023
2022

Assumed life expectations on retirement at age 65:

Years
Years
Retiring today
- Males
21.1
20.6
- Females
23.2
22.9
NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
20
Retirement benefit schemes
(Continued)
- 35 -

The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:

Group and company
2023
2022
£
£
Present value of defined benefit obligations
13,819,000
12,419,000
Fair value of plan assets
(16,431,000)
(14,610,000)
Surplus in scheme
(2,612,000)
(2,191,000)
Total asset recognised
(2,612,000)
(2,191,000)
Group and company
2023
2022

Amounts recognised in profit and loss

£
£
Net interest on net defined benefit liability/asset
(113,000)
56,000
Group and company
2023
2022

Amounts recognised in other comprehensive income

£
£
Actual return on scheme assets
(1,479,000)
1,457,000
Add/(less): calculated interest element
709,000
286,000
Return on scheme assets excluding interest income
(770,000)
1,743,000
Actuarial changes related to obligations
1,274,000
(6,481,000)
Total income
504,000
(4,738,000)
Group and company
2023

Movements in the present value of defined benefit obligations

£
Liabilities at 1 January 2023
12,419,000
Benefits paid
(470,000)
Actuarial gains
1,274,000
Interest cost
596,000
At 31 December 2023
13,819,000

The defined benefit obligations arise from plans which are wholly or partly funded.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
20
Retirement benefit schemes
(Continued)
- 36 -
Group and company
2023

Movements in the fair value of plan assets

£
Fair value of assets at 1 January 2023
14,610,000
Interest income
709,000
Return on plan assets (excluding amounts included in net interest)
770,000
Benefits paid
(470,000)
Contributions by the employer
812,000
At 31 December 2023
16,431,000

The actual return on plan assets was £709,000 (2022 - £286,000).

Group and company
2023
2022

Fair value of plan assets at the reporting period end

£
£
Equity instruments
7,644,000
7,662,000
Debt instruments
1,818,000
1,555,000
Property
660,000
671,000
Diversified funds
5,577,000
4,413,000
Cash
732,000
309,000
16,431,000
14,610,000
21
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Authorised
Ordinary shares of £1 each
3,000,000
3,000,000
3,000,000
3,000,000
Issued and fully paid
Ordinary shares of £1 each
2,850,000
2,850,000
2,850,000
2,850,000

The Ordinary shares are irredeemable and have full rights in the Company with regard to voting, dividends and capital distribution. The shares rank pari passu in all respects.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 37 -
22
Operating lease commitments

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:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
2,184,783
1,943,906
1,310,658
1,369,241
Between two and five years
6,403,238
6,819,160
3,268,468
4,780,076
In over five years
5,449,438
6,288,149
1,226,720
1,648,100
14,037,459
15,051,215
5,805,846
7,797,417
23
Events after the reporting date

There have been no subsequent events that require disclosure in the financial statements.

24
Related party transactions
Transactions with related parties

The company has taken advantage of the exemption granted under FRS 102.33.1A not to disclose related party transactions with Nippon Express Holdings Inc Group companies which are 100% owned within the Group.

 

During the year the group entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Group and Company
Associates of the ultimate parent undertaking Nippon Express Holdings Inc
(15,047)
40,298
125,937
638,016
Subsidiary of the ultimate parent undertaking Nippon Express Holdings Inc and not 100% owned by Nippon Express Holdings Inc
612,677
2,035,527
3,132,396
6,305,951

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
24
Related party transactions
(Continued)
- 38 -

The following amounts were outstanding at the reporting date:

Amounts due to related parties
2023
2022
£
£
Group and Company
Associates of the ultimate parent undertaking Nippon Express Holdings Inc
44,126
40,735
Subsidiary of the ultimate parent undertaking Nippon Express Holdings Inc and not 100% owned by Nippon Express Holdings Inc
233,168
955,422

The following amounts were outstanding at the reporting date:

Amounts due from related parties
2023
2022
Balance
Balance
£
£
Group and Company
Associates of the ultimate parent undertaking Nippon Express Holdings Inc
-
21,969
Subsidiary of the ultimate parent undertaking Nippon Express Holdings Inc and not 100% owned by Nippon Express Holdings Inc
489,144
1,437,649
25
Controlling party

The Company’s immediate holding company is Nippon Express (Europe) Gmbh, a company incorporated in Germany.

The Company’s ultimate parent undertaking and controlling party was Nippon Express Holdings Inc, a company incorporated in Japan and which was the smallest and largest of such group undertakings of which the Company is a member and for which group financial statements are prepared. Copies of its financial statements are available from Kanda-Izumicho 2, Chiyoda-ku, Tokyo, Japan.

NIPPON EXPRESS (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 39 -
26
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
458,392
5,727,209
Adjustments for:
Taxation (credited)/charged
(103,808)
1,117,901
Interest payable
83
56,360
Investment income
(123,603)
(67)
Gain on disposal of tangible fixed assets
(37,020)
(2,250)
Depreciation and impairment of tangible fixed assets
916,208
508,026
Pension scheme non-cash movement
(812,000)
(769,260)
Increase in provisions
1,040,118
114,086
Movements in working capital:
Decrease in debtors
12,887,222
389,027
(Decrease)/increase in creditors
(8,392,066)
1,778,651
(Decrease)/increase in deferred income
(1,256,177)
976,916
Cash generated from operations
4,577,349
9,896,599
27
Analysis of changes in net funds - group
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
£
£
£
£
Cash at bank and in hand
16,799,944
(4,709,831)
(44,715)
12,045,398
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