The Directors presents their strategic report on Nippon Express (UK) Limited (also referred to as “Company”) and its subsidiary (also referred to as the “Group”) for the year ended 31 December 2024. The company is limited by shares.
In terms of operational activity, the overall UK result remained relatively stable year on year. There is a slight decrease in group turnover to £81.52m (2023: £85.76m), however, there is a slight decrease in gross profit to £38.63m (2023: £39.65m) but overall the operational activity remained fairly consistent. 2024 saw geographical events such as the Red Sea situation, which created supply chain disruptions. Along with our competition, we were not immune to such events, and this would have impacted our results accordingly. That said, we remain agile and flexible and had our customers’ requirements and needs at the heart of our strategy.
The Irish subsidiary’s results show a loss before taxation of €249,790 (2023: €13,269 profit) while shareholders’ funds have decreased to €2,780,518 (2023: €3,080,308).
The main reason for the overall result reporting a loss for 2024 was around the reorganisation of our UK branch structure. We transferred to a new operational site in Heathrow, along with a new head office. This reorganisation created significant costs to move, along with restructuring costs that we had to absorb in the current year.
Additionally, cash remains positive. The decrease compared to 2023 will be based around the reorganisation of our UK branch structure, that incurred exceptional costs surrounding the move and restructuring. We also saw the defined benefit pension surplus move from £2.6M in 2023 to a closing balance of £5.2M in 2024. The valuation was based on the full actuarial valuation of March 2024, updated to the current year end. This would have impacted the movement in current assets on the balance sheet.
The changes were made in 2024 to allow us to move forward as an organisation in 2025, under a new senior leadership team as we look to recover to become a profitable organisation and have the framework in place to facilitate the group’s strategy to grow.
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 economic challenges, 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.
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 Directors believe 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 Directors have 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.
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 two directors, who are based in the UK, and follow Group policies, procedures and governance rules as determined by the Global and European Head-offices.
The Company is 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 Directors have 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 Directors.
General Managers are appointed to cover regions and specialities of commercial activity as well as internal functions like Finance, HR and Compliance.
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.
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 Directors consider that they have 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 Directors have 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 Directors 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.
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
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 13.
A dividend of €nil (£nil) was paid during the year (2023: €1,800,000 (£1,558,100)). As at the date of approval of the financial statements, no final dividends relating to the 2024 results have been declared.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
There were no political donations made in the year (2023: none).
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.
There have been no subsequent events that require disclosure in the financial statements.
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 and financial risk management can be found in the Strategic Report on page 1 and form part of this report by cross-reference.
The Company is required to report on carbon emissions arising from its activities for financial year 2024. 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, 2024, represents the fifth 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 2024, the Parent Company’s operations are within eight sites:
Hayes (HQ) 1 Jan – 30 Nov 2024
Bridgepoint (Uxbridge) 5 July – 31 Dec 2024
WBC Heathrow 25 Sept – 31 Dec 2024
East Midlands
Glasgow
Manchester
Swindon
Newcastle
During 2024 the company moved from the Hayes Head Office and Distribution Centre to two new facilities: World Business Centre – Heathrow (offices) and Bridgepoint (Uxbridge) with offices and distribution facilities.
The moves took place in stages during November 2024.
The dates shown above are the lease end date of 30 November 2024 for Hayes and the lease start dates for Bridgepoint (Uxbridge) as 5 July 2024 and 25 September 2024 for WBC Heathrow.
For SECR purposes the lease dates are relevant as from and to these dates, energy is charged even if unoccupied.
The majority of energy use is diesel/petrol fuel for transport; the remainder is for propane and electricity used in distribution centres and offices. Four sites used natural gas in 2024: Swindon, Manchester, WBC Heathrow and East Midlands.
It has been noted that Co2 emissions were reduced during 2024. This was due to a reduction in internal fleet where the parent sold various vehicles and equipment which directly impacted emissions.
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. Some electricity data is from landlords. At Manchester no electricity or gas invoices were issued for five years. Therefore meter readings and estimations have been used. Gas is used at Manchester where meter readings are used. A site visit was made on 25 February 2025 when meters were read and an estimate of electricity and gas consumption was made for 2024 and is subject to a separate report. In March or April 2025 the landlord is having proper fiscal meters fitted at the Manchester site.
Propane data is from delivery invoices for bottles and bulk delivery.
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.
We have followed the 2019 HM Government environmental reporting guidelines. We have also used the GHG reporting protocol – Corporate Standard and have used the 2024 UK Government's Conversion Factors for the Company Reporting.
The carbon intensity ratio used is total gross emissions in metric tonnes CO2e per £1,000 of company turnover which was £72,191,508 (2023: £75,018,569). The ratio is shown in the table above.
In 2022, as part of Phase 3 ESOS reporting, energy audits were conducted for transport energy use, Swindon, Hayes and Manchester. Since these reports were written, Hayes is no longer occupied so the Hayes reduction measures are no longer relevant to Nippon Express. In November 2024 a Phase 3 Action Plan was submitted to the Environment Agency on measures to be implemented by 2027.
The measures at Swindon were LED lighting/ controls, heating controls and heat recovery. The measures at Manchester were highbay lighting/ controls and control of electric heaters.
In the current Phase 4 ESOS (2023-27) energy audits will be made of some sites which have not previously been audited: Glasgow, Newcastle, East Midlands, WBC Heathrow and Bridgepoint (Uxbridge). These will generate further measures.
In accordance with section 485 of the Company’s Act 2006, a resolution is to be proposed at the Annual General Meeting for reappointment of Deloitte LLP as auditor of the Company.
In our opinion the financial statements of Nippon Express (U.K.) Limited (the “Parent Company”) and its subsidiary (the “group”):
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2024 and of the group’s loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
the group statement of comprehensive Income;
the group and parent company balance sheet;
the group and parent company statement of changes in equity;
the group Statement of cash flows; and
the related notes 1 to 27.
Basis for 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
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.
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:
had a direct effect on the determination of material amounts and disclosures in the financial statements. This included UK Companies Act, pensions legislation, tax legislation; and
do not have a direct effect on the financial statements but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty. These included employment law and UK general data protection regulations.
We discussed among the audit engagement team including relevant internal specialists such as pensions and IT 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 financial period.
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:
reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
enquiring of management and external legal counsel concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and
reading minutes of meetings of those charged with governance.
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:
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.
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:
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.
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.
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 as detailed in note 14.
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:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
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 2024. 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.
At the time of approving the financial statements, the directors have 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 directors have 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 as detailed within the Strategic report. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
Interest income is recognised in the profit and loss on an accruals basis, by reference to the principal outstanding and at the effective interest rate applicable.
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.
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.
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.
The carrying value of investments is reviewed at each reporting date to determine whether there is any indication of impairment. Where such an indication exists, the recoverable amount of the asset is estimated. An impairment loss is recognised where the carrying value of the investment exceeds its recoverable amount.
The recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is determined by estimating the present value of the future cash flows expected to arise from dividends or other returns from the investment, or from disposal. Impairment losses are recognised in the profit and loss and may be reversed in subsequent periods if the reasons for impairment decrease or no longer exist.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in 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 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 is continuing to assess the impact of the Pillar Two income taxes legislation on its future financial performance.
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.
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.
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.
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.
Interest on bank overdrafts and loans
Interest on bank overdrafts and loans is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments through the expected life of the financial liability (or, where appropriate, a shorter period) to the net carrying amount of the financial liability.
Interest expense is recognised in the profit and loss account as it accrues, provided it is probable that settlement will be required and the amount can be measured reliably.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The 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.
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.
The directors have considered the assumptions and methodologies used to determine the defined benefit obligation and have concluded that, although the valuation involves significant judgements, the approach adopted is appropriate for the company’s circumstances.
The principal judgements include:
Discount rate – used to calculate the present value of future benefit obligations.
Inflation and salary growth assumptions – affect the projected benefits payable.
Mortality assumptions – impact the expected duration of pension payments.
The directors consider these judgements critical because changes in these assumptions could materially affect the recognised liability and the cost of providing benefits.
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:
The turnover in the comparative year has been restated to correct an overstatement of revenue. There is no effect on the profit and loss nor equity for the company and the group. See note 27 for further detail.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual credit for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to profit and loss, the following amounts relating to tax have been recognised directly in other comprehensive income:
The main corporation tax rate increased from 19% to 25% with effect from 1 April 2023. The deferred taxation balances have been measured using 25%, which is the enacted rate applicable in the reporting periods when the timing differences reverse.
On 11 July 2023, the UK Finance (No. 2) Act 2023 enacted the Pillar 2 income taxes legislation effective from 1 January 2024. The company is within the scope of Pillar Two legislation. The group is continuing to assess the impact of the Pillar Two income taxes legislation on its future financial performance.
Registered office and correspondence addresses:
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, £778,381 (2023: £862,008) is in respect of a short-term interest free loan repayable on demand.
The amounts owed to group undertakings are interest-free and in respect of trade balances conducted under normal trading conditions.
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.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The timing differences in respect of accelerated capital allowances are expected to reverse over the useful economic lives of the related assets.
The timing differences in respect of the defined benefit pension scheme are expected to reverse as pension contributions are paid and actuarial movements unwind.
Deferred tax assets and liabilities have been offset as they relate to income taxes levied by the same taxation authority on the same taxable entity
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.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The 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 2024, and revealed a funding surplus of £451,000.
The figures below have been based on a full actuarial valuation as at 31 March 2024, updated to the current year end by a qualified independent actuary.
A surplus of £5.2m 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:
Assumed life expectations on retirement at age 65:
The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:
Amounts recognised in profit and loss
Amounts recognised in other comprehensive income
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans which are wholly or partly funded.
Movements in the fair value of plan assets
The actual return on plan assets was £717,000 (2023 - £709,000).
Fair value of plan assets at the reporting period end
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 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:
The following amounts were outstanding at the reporting date:
The following amounts were outstanding at the reporting date:
There have been no subsequent events that require disclosure in the financial statements.
In preparing the financial statements, prior-year adjustments have been made.
In 2023, and earlier periods, amounts collected for import duties and taxes on behalf of customers and paid to HMRC were recognised on a gross basis within turnover and cost of sales. As NEUK are not responsible for payment of these amounts and are merely acting as a collection agent on behalf of their customers, these amounts should have been presented net i.e. NEUK should only have included the amount of its commission for the collection of these amounts within turnover. This has resulted in a reduction to turnover, and corresponding adjustment to cost of sales, of £25,728,082.
In previous periods costs incurred on behalf of and consequently recharged to other group entities were included within cost of sales and turnover respectively. As these recharged amounts do not meet the statutory definition of turnover they should have been presented as other operating income. The related costs have consequently been reclassified from cost of sales to administrative expenses. This has resulted in a reduction to turnover and increase in other operating income of £2,997,762 and a reduction to cost of sales and increase in administrative expenses of £2,997,762.
A deferred tax asset and liability of £868,006 and £411,336 respectively were previously presented in the group balance sheet. A deferred tax asset and liability of £868,006 and £409,178 respectively were previously presented in the Company balance sheet. As the criteria for off-setting these balances in FRS 102 were met, these balances should have been presented net. This has resulted in a restatement to present a net deferred tax liability of £411,336 and £409,178 in the Group and Company balance sheets respectively.