Xpediator achieves significant uplift in H1 revenue and profits 25 September 2017

Xpediator has reported its unaudited interim results for the six months ended 30 June 2017. The Company reported a significant uplift in revenue and profits for H1, 2017, including a 56.0% increase in revenue to £49.1 million (H1, 2016: £31.5 million) driven by organic growth across all activities, contribution from EMT and increased focus by the Freight Forwarding division on full load deliveries. The Company also reported a 24.0% increase in adjusted operating profit to £1.3 million (H1 2016: £1.1 million). Profit after tax increased to £0.53 million (H1, 2016: £0.16 million).

Turnover increased across all of the main countries of operations. UK turnover increased by 46.0% to £11.5 million, representing approximately 24.0% (H1, 2016: 25.0%) of Group revenues. This was principally due to the inclusion of Easy Managed Transport Limited (EMT) following its acquisition on 10 March 2017. Romania, Lithuania and Bulgaria each grew revenues from between 24.0% and 109.0%, much of this growth due to the successful and ongoing focus and development of the full load activity in the Baltic and East Balkan regions.

The Group has three main business areas, Freight Forwarding; Transport Services; and Logistics & Warehousing. The Group employs over 600 people, with operational headquarters in Braintree, Essex, UK, and country offices in Bulgaria, Lithuania, Estonia, Macedonia, Montenegro, Moldova, Romania and Serbia operating across a total of 22 sites. This network of offices provides regular and direct services linking Eastern Europe, the Balkans and the Baltics with Western Europe, together with logistics and warehousing capabilities in the UK and Romania.

On 11 August 2017, the Company successfully listed on AIM raising net placing proceeds of £4.0 million to support the Group's organic and acquisition led growth strategies.

Freight forwarding revenue reached £39.1 million (H1, 2016: £25.2 million), as operating profit grew to £0.7 million (H1, 2016: £0.6 million). Freight forwarding services, are provided under the Delamode brand. The division specialises in connecting CEE countries and the UK. In the period under review, the freight forwarding division increased revenues by 55.0%. This strong trading performance has been driven primarily by an increased focus on full load movements. Whilst forwarding is a competitive market, Delamode has been operating successfully for more than 30 years and benefits from operating an asset light, broking model and taking advantage of its proprietary database of 3,000+ hauliers to buy in resources at the best possible price to service each contract and thereby maintain or improve upon our target returns. The Group's eCommerce brand, EshopWedrop is progressing in line with management expectations. Management is actively seeking franchisees who are courier companies with the ability to provide final mile delivery and the marketing required to develop the eCommerce operations. Once the Company establishes a more comprehensive franchise network across its main markets, it believes EshopWedrop will represent a compelling offer to major retailers. After five years of investment and organic growth of the Group's Serbia operations, this business unit has performed exceptionally well during the period and is trading significantly ahead of budget for 2017. Given current and expected further growth of this unit, the Group will continue investing in Serbia as well as neighbouring countries to accelerate this growth and capitalise on its early mover advantage.

Transport services, trading under the Affinity brand, provide bundled fuel and toll cards, financial and support services for hauliers in southern Europe. Affinity is an agent of DKV in Romania, one of the world's largest fuel card providers and provides the DKV fuel card across the Balkans to a database of approximately 1,500 Eastern European hauliers and 11,500 trucks. In addition, Affinity provides a ‘one stop shop’ of transport services including roadside assistance and ferry bookings. Affinity's commercial model fits well within the Group as many of the hauliers who are customers of Affinity also supply haulage services to Delamode a key factor that enables the Group to have a good understanding of its customers/suppliers, which underpins the strategy to provide further financial services such as insurance and leasing. Affinity generated record revenues during the period, increasing 39.0% to £2.2 million. The majority of this growth was from increased provision of fuel cards, particularly under our Affinity Lite offering. Operating profit in H1, 2017 reached £1.1 million, up from £0.8 million.

Logistics and Warehousing comprises three areas, distribution hubs in the UK and southern Europe providing over 39,000 m2 of shared user space; pallet distribution services, the Group is the master franchisee of a fast growing pallet distribution network in Romania which trades under the Pall-Ex brand; and the recently acquired EMT business which is based in London and specialises in fashion logistics. Revenue reached £7.7 million (H1, 2016: £4.7 million, as operating profit grew to £0.2 million (from £0.0 million). Pall-Ex contributed strongly during this period and is now moving over 40,000 pallets of freight every month. Post period end, the Group won the franchises to operate in Hungary and Moldova and expects to commence trading as Pall-Ex Hungary in Q4 this year and Moldova in Q2, 2018. The logistics network on the continent is centred around Romania where it can interlink with Pall-Ex. In April 2017, the Company opened its 10th warehouse in Bucharest, a state of the art facility with cross dock capability for Pall-Ex and significant storage for logistics customers. Warehousing activity in the first half of the year was respectable in the UK given a challenging market place but improved second quarter results enabled the division to generate a small profit. Following the acquisition of EMT in March 2017, the textile part of Delamode warehousing has now been integrated to EMT's warehouse in Beckton. This has released capacity in Delamode's Braintree site to accommodate current client growth.

Looking ahead, the Company has a strategy to grow through developing its existing core activities and by acquisition of complementary businesses that also potentially add new geographic territories, enhance the current base of customers and/or add new services. It is in advanced discussions with certain target companies, which if acquired, should provide synergies and cross-selling opportunities as well as being earnings enhancing. The Company is also confident in the growth prospects for its logistics and warehousing division over the next two years as it looks to expand the UK warehousing operations through fulfilment, eCommerce activity and further building out of its retail and fashion services.