Xpediator (AIM: XPD),  has announced FY19 revenue growth of 19% to £212m with the first three months of FY20 trading in-line with management expectations, albeit in different trading patters to those experienced previously. Importantly for shareholders, the Board remains committed to proposing a final dividend for the year ended 31 December 2019, but the amount is yet to be determined. 

Management have reacted swiftly to the COVID-19 crisis in-line with international advice from Governments to protect staff and are conducting a comprehensive review of the business to reduce costs in specific areas where activity levels have fallen or are likely to reduce as a result of the disruption caused by COVID-19. Cost savings are expected to come from furloughing staff, agreeing temporary pay reductions and reducing other overheads. 

Whilst trading patterns have been volatile in the first three months of FY20, the asset-light business model provides both financial flexibility and strength with £6.9 million headroom to manage anticipated changed in working capital requirements this year. 

The Board therefore feels the Company is well placed to manage its financial and commercial commitments during this extraordinary time and can emerge well-positioned for growth when market conditions return to normality. 

Trading Update 

As previously stated in their FY19 trading update, audited final results for the year ended 31 December 2019 are expected to report turnover increasing 19% to £212 million (2018: £179.2 million) with profit before tax slightly above £5.0 million (FY18; £5.6m). 

The Board continues to intend to propose a final dividend for the year ended 31 December 2019, but the amount is yet to be determined given the fundamental uncertainties that currently exist in the market.    

 

Financial Strength 

Xpediator is an asset-light business that does not own a large fleet of trucks and typically act as a broker to its clients sourcing capacity from the market as it is required. 

As at 31 December 2019, the Company had net cash of £6.9 million (unaudited) and has sufficient headroom within the business to manage anticipated working capital requirements. 

 

Outlook 

The Company has reported that activity levels have remained broadly in-line with management expectations since the beginning of FY20, with high demand from some sectors while other areas, predominantly China, slowing.  In response it has sought to allocate resource to match demand across the business. 

While the Board admits making any long-term predictions under these extraordinary circumstances is difficult, but based on recent trends, the Board believes demand for its freight management and warehouse services, both in the UK and Europe, will remain sufficiently robust overall but will be more volatile in any given month.