scruttonbland.co.uk
AND LOGISTICS TRANSPORT
Autumn Edition
The Impact Of E-commerce On Supply Chains
Addressing The Road Ahead
Changes To The Current Rules On Leasing
Contents
3 Welcome To The Autumn Edition Of Our Transport And Logistics Newsletter
10 Spotlight: Solstor Group -
Recent Investment And Growth
13 Changes To The Current Rules On Leasing
4 Addressing The Road Ahead
6 The Impact Of E-Commerce On Supply Chains
14 Are Your Systems Keeping Up To Date With The Evolving Transport & Logistics Industry?
8 Ruth Waring - Supply Chain Supper Club Speaker
16 Meet The Team
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Welcome To Our Autumn Edition Of Our Transport And Logistics Newsletter
There’s a distinct autumnal feeling in the air as I write, a feeling made chillier by the prospect of Labour’s forthcoming Budget.
O ur Prime Minister has told us that his fiscal event will be “painful”, and that has certainly been the main topic of conversation with clients whilst we have been collating this edition of our Transport and Logistics newsletter. The internet is awash with Budget predictions, so I will not waste your time with speculation here. What I will say is that any business pain can always be eased with those fundamental of management qualities: communication and careful planning.
information about the new warehouse qualification and why she started Women in Logistics UK. The Supply Chain Supper Club event provides pertinent subject matter and a great group of business owners and directors from the industry in attendance. If you are interested in coming along to future events, please let us know. Despite the warnings of pain ahead, deals in the industry are still happening and ambitious businesses with switched-on management are looking at acquisition strategies as a means of managing risk and maximising value. On page 10 we hear from Graham Doe of Solstor who talks about the history of his group and what they are all about, their plans for growth, and their exciting recent investment in the region. Leasing is a huge topic for the industry and on page 13 my fellow partner John Perry from our audit team covers some important updates to the accounting standards in this area. This has the potential to change the shape of your balance sheet, so it is worth a read (and a discussion with your bank manager and shareholders) so they are prepared for what is to come.
We also focus on technology with two articles from my colleagues in our digital team, Simon Pinion and Ryan Pearcy. These look at the ever-evolving world of systems, and then delve into the impact of e-commerce on UK logistics. I hope you enjoy this edition. Our Transport and Logistics team works with businesses and organisations to support their management teams in identifying opportunities, issues and risks and delivering targeted, cost effective solutions and advice. Please don’t hesitate to get in touch if you have a specific matter that you’d like to discuss or would like to find out more about how we can help your organisation.
I hope that you will find some pain-relief in the pages that follow!
On page 4, I expand some of my thoughts on the macro environment the sector has faced in recent years, the immediate outlook the analysts tell us we are facing, and some thoughts about how to get ahead of the competition (and the analyst’s benchmarks). Talking, and sharing experiences with peers in the industry is an easy way to “sharpen the management saw”. On page 8 Ruth Waring, who spoke at our last Supply Chain Supper Club Event, which we co-host, shares
Luke Morris Corporate Finance Partner
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One of the great privileges of working in business transactions day-in, day-out, is that you develop an antenna for how a particular industry or sector is doing. Addressing The Road Ahead
A s you would imagine, this “nose” becomes honed with anecdotal stuff: the volume of emails in the inbox, the passing conversations with clients and others in the professional community, the approaches from potential investors and their investment criteria, the number of new client or new project enquiries coming in, the nature of such projects… For all kinds of historical and geographical reasons, transport, logistics and supply-chain is a hugely important sector for Scrutton Bland. So, it is only right that we occasionally take pause to try and make sense of these empirical experiences, not least as they impact our own business and strategy. Luke Morris, Corporate Finance Partner explores this in more detail. I have been looking at some recent UK industry data and reports published by analysts at IBISWorld. IBISWorld collates data from published sources for an industry (history) and the considered risk and macro-economic factors to analyse where that industry may be heading (future). But with such a cornucopia of data available, where to start? I have gone back to received wisdom. The origin of the phrase, “turnover is vanity, profit is sanity, cash is reality” is lost to the winds of time. But it pragmatically suggests that a sane place to start is with profit.
The last decade or so has been characterised by eroding profit margin in freight road transport – now apparently stabilising at around 10%. But it has not been a steady decline: the more striking visual image is the volatility rollercoaster showing how this profit margin has eroded. (By the way, if you think 10% looks like a decent margin compared to your own operation, keep in mind that 12% of the analysed market share belongs to DHL, Wincanton, XPO and Stobart, so this inevitably skews the overall average…).
So, what can you do? Much of this cannot easily be handled proactively. It is the speed of reactivity that is key. If you are in the industry then I have no doubt that you are already watching this, and watching your contracts, like a hawk. Customer Demand Wider economic conditions and changing customer demand have also inevitably played a role in volatility. It’s axiomatic that business confidence and industrial production are highly dependent on the economic climate. A climate which has faced the headwinds of Brexit, of the Government’s response to COVID-19 and (I argue) the corollary of severe inflation. This has damaged industrial production and reduced freight road transport spend. It is the main cause of the red-line roller coaster above. I have been saying for some time that we are not yet, in my opinion, out of the woods with inflation. High living costs are now baked in and continue to tighten consumers’ budgets. So, what can you do here? This one is trickier. Economists have wrestled with the UK’s “productivity puzzle” for as long as I have been following the numbers. And that is before the “black swan” events of the past few years. (Black swans that are feeling as common as white swans!).
So, what has influenced this volatility? Two main factors I think: fuel price and customer demand.
Fuel Fuel price fluctuations raise volatility. We know that prices have surged since Russia-Ukraine, that costs are passed on to customers, and that impacts demand and revenue levels. According to the Office for National Statistics (ONS), motor fuel prices dropped by 9.2% in the year to January 2024. However, prices remain highly volatile, being the largest upward contributor to the CPI in April 2024. Below is what the analysts think: and you can see that historic price per litre reflects profitability above. But will future volatility disappear as the analysts appear to believe? I am not so sure.
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Many theories around the productivity puzzle abound, but seemingly no silver bullets identified as to “why” and “what can be done about it”. It has been a feature of the UK economy since I have been tracking the data. That said, I read an interesting article this week commenting on the quality of UK business management and I wonder if that offers some kind of explanation. A recent ONS study has indicated a marked improvement in the average quality of UK management. Don’t ask me quite how this is measured. However, the study, published in May, found that the average quality of management improved from 0.49 to 0.55 between 2020 and 2023. This is on a scale of 0 - 1.0, with 1.0 representing the “full implementation” of structured management practices. It seems firms have become better at managing staff performance and promotion and, in particular, more effective in dealing with underperformance.
The ONS does not offer reasons for the improvement. My hunch is that as the post- pandemic jobs boom fizzled out, the balance of power in the jobs market shifted from workers to companies. With the labour market cooling, and the UK in recession in the second half of 2023, companies seem to have tightened up on performance management. Management quality has a huge effect on productivity, natch. (This helps explain the surge in a company’s share price when a new, highly rated CEO is appointed – and the depressant effect of the loss of a well-regarded CEO.) Research by Professors Bloom, Van Reenen and Sadun found that management practices explain 55% of the difference in levels of productivity in the UK and the US. In the UK, management scores vary enormously across different types of business. The ONS finds that larger businesses do better than smaller ones in terms of management quality. Foreign-owned companies appear to outperform
UK-owned businesses. Family-owned or managed businesses tend to underperform on management... So, the form of ownership apparently has a huge effect on productivity. Previous ONS research found that in the same sector and region and with companies of the same size, foreign-owned businesses were 74% more productive than UK-owned businesses. Are you a UK owned UK business with a foreign owned UK business competitor? Does this ring true, anecdotally, to you? Furthermore, a working paper published by the UK’s The Productivity Institute earlier this year found that private equity ownership tends to raise productivity noting that, “active investors, such as Private Equity (PE) and venture capital, provide important boosts to managerial skill sets and effective governance”. This is interesting to me, as we see PE dipping its toe into the sector. Some important messages come out of all of this. First, and obviously, management quality is a crucial driver of productivity. Second, operating in the same environment some types of businesses – larger, foreign or PE-owned businesses – seem to outperform in terms of management and productivity. Third, businesses can move quickly to sharpen management practices, as apparently happened in 2023. Unlike so many of the solutions touted for Britain’s productivity problem, management practices can be improved quickly, at relatively low cost and by the owners and senior management of the business. Perhaps there is no need to wait until the UK sorts out its infrastructure, vocational training or any of the myriad of other factors that have been blamed for Britain’s low productivity growth, and have hurt the sector in particular? The fact that foreign-owned firms get this right or that active investors can drive improved management quality, shows that this is a “portable” advantage. The rise in the UK’s ranking in the ONS survey last year demonstrates that change can happen quickly. With a fairly anaemic macro-environment forecast for the coming years for the sector, sharpening management quality seems like a good place to start. We are working actively with clients on these sorts of projects, so let us know if you would like to discuss. Reach out to Luke or a member of the team by calling 0330 058 6559 or emailing hello@scruttonbland.co.uk
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The Impact Of E-Commerce On Supply Chains
How online shopping is transforming the transport and logistics industry.
T he rapid growth of e-commerce has revolutionised the way people shop and consume goods. According to a report by the United Nations Conference on Trade and Development (UNCTAD), global e-commerce sales approached $25 trillion in 2021, representing a quarter of the global gross domestic product (GDP) that year. The COVID-19 pandemic undoubtedly accelerated this trend as more consumers shifted to online platforms to buy essential and non-essential items. However, this massive increase in online trade has also created new challenges and opportunities for the transport and logistics industry. As e-commerce customers expect their orders to be delivered quickly and efficiently, the demand for faster and more reliable transport has surged. This requires high visibility and coordination across the entire supply chain, from the point of origin to the point of consumption. In this article, Simon Pinion, Business Advisory Partner, will explore how e-commerce is impacting the supply chain and what the implications are for the future of logistics.
The need for speed and efficiency One of the key drivers of e-commerce growth is the convenience and flexibility it offers consumers. Online shoppers can browse and compare products from various sellers and choose the delivery option that suits their needs and preferences. According to a survey by Statista, 49% of online shoppers in the UK said that free delivery was the most crucial factor when choosing an online retailer. In comparison, 28% said that fast delivery was the most important. This means that transport and logistics providers must meet the high expectations of e-commerce customers, who want their orders delivered as soon as possible, sometimes within hours or even minutes. This puts pressure on the supply chain to operate at optimal speed and efficiency, reducing the lead time and the cost of transportation. To achieve this, transport and logistics providers need real-time inventory visibility, the location and the status of the shipments, and the demand and supply fluctuations. This enables them to optimise the routing, loading, delivery and returns of the goods and to respond to any disruptions or delays in the supply chain.
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The need for sophisticated supply chain management software To cope with the e-commerce supply chain’s complexity and dynamism, transport and logistics providers need to leverage the power of technology and data. This is especially true for retailers who operate across multiple channels, such as online, offline, and mobile. These retailers need to seamlessly integrate their inventory, order, and delivery systems to ensure that their customers have a consistent and satisfying shopping experience across all touchpoints. Therefore, the need for sophisticated supply chain management software is paramount. Such software can help transport and logistics providers automate and streamline their processes, enhance their visibility and control, and improve their decision-making and planning. For instance, software like SAP Integrated Business Planning and Oracle Logistics for larger entities or CartonCloud for smaller businesses using Xero can help forecast demand and supply patterns, allocate resources and capacity, track and trace shipments, manage inventory and the warehouse, and analyse performance and customer feedback.
The need for collaboration and innovation Another implication of the e-commerce boom is the need for collaboration and innovation in the transport and logistics industry. As the supply chain becomes more fragmented and diverse, involving multiple stakeholders, such as manufacturers, suppliers, distributors, retailers, carriers, and customers, coordination and communication are essential. This can help reduce friction and inefficiencies in the supply chain and create value and synergy for all parties. Therefore, fostering a culture of collaboration and innovation, both internally and externally is important. Internally, they need to break the silos and the barriers between different departments and functions and to encourage the sharing of information and ideas. Externally, they must establish and maintain strong relationships with suppliers and partners and leverage their capabilities and expertise. For instance, they can use platforms and networks that facilitate the exchange of data and the integration of systems, or they can adopt new business models and practices that enhance the flexibility and scalability of the supply chain.
The future of logistics in the digital age As technology and data become more advanced and accessible, the supply chain will become more intelligent and responsive, and customer expectations will become more demanding and diverse. One of the key trends that will shape the future of logistics is the use of Artificial Intelligence (AI) and big data. These technologies can help transport and logistics providers to analyse and process large amounts of data, generate insights and predictions, and automate and optimise their operations. For instance, AI and big data can help to enhance demand and supply forecasting, improve routing and scheduling, detect and prevent risks and anomalies, and personalise customer service and delivery options. To succeed in this competitive and dynamic environment, transport and logistics providers must embrace the change and the disruption and leverage the technology and data to create value and differentiation for their customers and themselves. Please reach out to Simon or a member of our team to see how we can support you by calling 0330 058 6559 or by emailing hello@scruttonbland.co.uk
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Supply Chain Supper Club
H ow did I end up in Logistics? Unusually I did not “fall into” holiday rep for a coach company organising day trips for people. I realised I loved the buzz so I got a job with Exel Logistics Fashionflow (now DHL) working on the M&S contract as part of their Graduate Training Scheme. I worked in France for a year implementing an IT system, which was very unusual in 1990, training the French warehouse staff how to use PCs for the first time. When I moved back to the UK I became a Traffic Manager in charge of 50 HGV drivers collecting from M&S suppliers. logistics, but actively chose it as a career. When I was at University, I had a summer job working as a
One of the Supper Club speakers in 2024 was Ruth Waring FCILT who spoke about the new Warehouse Manger’s CPC qualification. In this article, Ruth talks about her own career, the reason why she started Women in Logistics UK and why the new warehouse qualification is a must.
After Exel I moved to Gefco UK, working in Peugeot’s automotive supply chain, and spent 7 varied years in parts distribution and European Road Freight. Then I moved to publishing working for Pearson Education for two years, moving books all over the world. In 2002 I realised my ambition to become a self-employed consultant. Working with Jo Godsmark, my business partner, we built up Labyrinth Logistics Consulting and developed a compliance app over the next 18 years; we sold both to Big Change in 2019. I subsequently worked for a long-term client, Acumen, for three years as Compliance Director. Now once again I am a self-employed logistics consultant. My job is incredibly varied but includes doing compliance audits and delivering H&S training, as well as helping companies with their ISO Management Systems; I cover the Quality, H&S and Environmental standards. I also do Operator Licensing audits and write and deliver logistics training courses.
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So I established Women in Logistics UK (WIL) with Clare Bottle in 2008. This group has delivered so many amazing benefits, for me and also the thousands of women – and men – whose lives it has touched. The group’s strapline is “Connect, Engage, Inspire” and we truly achieve all three. WIL UK organises a number of events every year, including a national conference which this year attracted 170 people with 50 more online. We also organise netwalking events all over the country where women and men can meet up and chat informally on a Saturday during a relaxed walk and a pub lunch. We want to ensure that women gain confidence to network effectively, and we always have lots of fun. WIL UK also strives to be welcoming to all, and to be educational; we have a number of logistics visits scheduled in 2024 including a visit to a Ministry of Defence (MOD) warehouse facility, and recently we visited the DHL carbon neutral e-fulfilment site in Coventry. I also ran a significant networking and educational event at IWLEX recently, for Women in Warehousing and Logistics. We had inspirational speakers, plus energetic speed mentoring; I also spoke about Banishing Mum Guilt. You can watch the unusual video we made to demonstrate why logistics mums should definitely NOT be feeling guilty. The whole half- day session was incredibly well received and, as we ate pizza listening to a Queen Tribute at the end of the event, everyone agreed it was the most female-friendly exhibition they had ever experienced. Next year’s IWLEX event is 3rd and 4th June 2025. If you’d like to find out more about any of the above subjects, or get involved with Women in Logistics, please find me and request to connect on Linkedin. You can also find out more at www.rwconsulting.uk As a business, working with and collaborating with the transport and logistics sector is really important for us, which is why we partner up with Lanpro and Leathes Prior Solicitors to host The Supply Chain Supper Club twice a year. Usually hosted in Spring and Autumn, we bring together contacts throughout East Anglia, who are passionate about the sector, for a chance to network and hear from some great speakers.
I am incredibly proud to have co-written the UKWA’s Warehouse Manager’s Certificate of Professional Competence (CPC) qualification. I also got the qualification certified at Level 3 (A level equivalent) standard by the CILT (UK). Finally – and most importantly – I deliver the course content to students alongside Gwynne Richards FCILT. The course covers not only all the technical aspects of warehousing but also the critical elements of Health & Safety and managing people. Those who have attended the initial cohorts have been amazed by how much they have learnt even though they may have been in the job for 10 years. So many logistics roles are learned on the job, with bad habits and work rounds picked up from colleagues. This course goes back to the basics and explains how things can be done the right way, and crucially how to save your organisation and customers a lot of time, money and energy. There is a formal exam at the end of the course – two papers – akin to the Transport Manager’s CPC.
I love the logistics industry, particularly the variety and the fast-paced environment, and the fact that you can make decisions quickly and get stuff done. I have met some amazing people from forklift truck (FLT) drivers to Managing Directors and I love the fact that “all life is here” which you don’t get in all professions. However, it is still quite old-fashioned in some ways, attitudes to people who don’t fit the traditional mould can still be jarring. The toughest barrier for me at the start was that there were not many younger people or women. I felt isolated and this gave me the original idea of setting up a group for women.
If you are interested in attending one of our upcoming events, please register your interest by emailing events@scruttonbland.co.uk
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Spotlight: Solstor Group - Recent Investment And Growth
Graham Doe Managing Director
Solstor is a European Road Transport business who pride themselves on the family feel and personal touch they offer. With sites based in England, France, Belgium, Italy, Spain and Poland they have a network that covers all of Europe. We recently spoke to Graham Doe, Managing Director of Solstor to find out more about what the business is up to:
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Q: How did you get into the Transport and Logistics industry Graham? It started in my education years enjoying geography, maths and economics which took me onto Aston University with a degree in Transport Management. During my degree I did an industrial placement with Turners (Soham) Ltd. at Newmarket. I spent a great year there learning all about the road transport sector. Moving food from farms and importers to supermarket distribution centres gave me a real insight into the fast moving transport industry. After my placement year I returned to university, completed the degree and Turners offered me a position. Learning a great deal from the owner I headed up the Temperature Controlled transport division, with 400 vehicles operating throughout the UK, for 15 years. During my time there I instigated a joint venture between Turners and Solstor. Finding that Solstor had the international dynamic to it I wanted to expand my Transport and Logistics experience and joined them as Managing Director. Q: Can you provide an overview of Solstor today? Solstor started transporting fruit from Europe to the UK and the operation quickly grew. We are now involved in transporting many products, including chilled and frozen food and more recently moving into dry food, drinks, packaging, manufactured goods and anything that requires a secure and time critical delivery. For our customers a fast, efficient and on-time delivery is really important especially as food products need to be as fresh as possible and many non-food products are delivered within a just in time supply chain. We have a team of long serving staff who provide a regional and local touch from a wide range of countries within the European network. Q: What is the history of Solstor and how does it differ from other transport service businesses? We remain a family-owned business and the principal trading company owned by the family was a fruit importing business established more than 60 years ago. Through experience and having a real passion in providing the customer with a quality service, the family set up their own in-house transport business 40 years ago and it has grown to what Solstor represents now. We differ from others because of our regional connections to our customers. Our team hold great local knowledge, expertise and cultural understanding. We provide an excellent quality of service to our customers, through a mix of our own resources and with the support of many long-standing supply partners.
Q: What do you see as the biggest challenges for the industry, and what sort of things are Solstor doing to address these? We are not a 9 to 5 industry, we are transporting goods 24 hours per day, 365 days per year and with the challenges of finding sufficient labour talent throughout Europe we focus heavily on retaining our team which are so important to us. This focus extends to the drivers working with us and our planning team work hard to route the trucks home as often as feasibly possible, so the drivers do not have to spend too much time away, which helps us attract and retain good people. The wellbeing of the environment is another challenge which we all face and obviously transport is a significant carbon emitter. The fluidity of operation throughout Europe makes both the move to rail or water and the use of alternative fuel technology very challenging at the moment for the mix of customers we have and the products we deliver. We take decisions each day with our environmental responsibility in mind and we have a clear focus on continually reducing road miles through improved European networking and we work closely with our customers to identify further opportunities to reduce our footprint. Linked to the environment is the increasing volatility of the weather which can impact the work we do. We have had situations recently where, due to floods, fresh produce has been completely wiped out for growers resulting in alternative products needing to be sourced elsewhere. This alternative sourcing can be in another country so by having a network which spans all of Europe we can really support our customers with their plans to replace the failed crops. Finally, Brexit and ongoing changes with custom requirements remain a challenge for international transport operators. Legislation has added time and complexity to the process which is also difficult for our customers and adds costs in. We have a great Customs Team who work with our partners and clients to navigate the changes and ensure that custom rules and regulations are met.
Q: There’s a lot in the press about the sector and the shipments coming into ports, but how fierce is competition in the sector at the moment? Inevitably supply chain cost is a challenge with increasing labour and equipment costs and volatility in fuel costs. Our customers are looking to reduce their costs and we are always looking at ways that we can become more efficient to stay competitive whilst ensuring that this does not impact the quality service we are able to offer to our clients and partners. It is a challenging time, but our job is to provide our customers the most cost-efficient service without compromising our high quality standards. It’s a tough market, but we are committed to serving the sector and are proud of the reputation and feedback we receive from our clients time and time again. Q: How has demand changed since Brexit? UK Export collapsed after Brexit and our volumes fell by over 50%. Customers that supplied smaller volumes into Europe stopped as it was no longer viable. We took a step back and thought about how we could overcome this and created a suite of services to help our customers trade again. Solstor have an in house customs team where we offer a complete service to our clients in the UK and Europe on a direct representation basis. We also offer the full service of Health and Veterinary requirements to our clients for both import and export. We have a wealth of knowledge in process where we act as advisors for our clients to make the most cost effective solution for their freight needs. We have also restructured lanes from and to Ireland with direct services which cut out the need for Customs services. Post Brexit we have moved from a Transport business to a Transport and customs business to a Transport, Customs and Vet service business which has helped bring us even closer to our customers. We are seen as an essential link to their business by taking away all that complexity of exporting into Europe. We are on the same journey now with imports, with our evolving transport, customs and vet solutions in countries throughout Europe.
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Q: What new technology do you anticipate being particularly beneficial to the business? Everyone is talking about AI, and where our customers will benefit most from of AI will be more accurate streamlining of orders and delivery data through AI driven processes. With more than 700 different transport partners over Europe it would be great to have a model like Amazon delivery at home to give to customers. The Solstor service is complex with seasonality of flows, multi temperature requirements and coverage across Europe, but this does not stop us working towards giving our customers the ultimate service offering. Advancements in the truck manufacturing sector are also continuing to develop and we have taken delivery of new trucks with new technology that creates a nicer environment for our drivers. And the trucks themselves have become more and more fuel efficient which supports our continuous improvement for people, the environment and cost. Q: How easily have you been able to adapt to rising environmental regulation in recent years? As a business we are keen to keep an eye on the environmental impact we are having on the world. We have trialled electric and alternative fuel trucks in our network, but this did not prove to be suitable due to the lack of infrastructure for trucks at the moment. To minimise our carbon footprint, we spend time to plan the most efficient journeys so that we drive less miles, we do this by working with our customers and placing more products on a single truck. We will then link our trucks movements together by focusing on the empty distance between one point to another and our team work hard on reducing the empty occasions. We are a business which is predominantly road freight, but we also look at rail or sea freight if it can fit our customer requirements taking into account the length and cost of journey.
Q: Can you tell us about Solstor’s network and partnerships? Partnerships are so important to the business, whether it is a transport company adding to our geographical coverage in Europe, a warehouse increasing the consolidation of load opportunities or a truck partner that provides new, more efficient, trucks. Our service offering to our customers draws from the extensive network of own and partner resources and pulls the right combination every time to provide our customer partners the right quality service at the right price. It is the discussions we have every day with all our partners that help us to continually improve our network and service offering. Our customers are encouraged to share their challenges and together we enhance and optimise the transport flows for our customers. Q: You recently expanded your operations into East Anglia, and we were delighted to play a part in that process. How has that gone for you so far and how do you see Solstor further expanding its presence and reach in the region, but also more widely? The expansion into East Anglia has gone very well. As we grow we want to broaden our operations, grow the trade lanes covered and, as a result of our latest acquisition of McNamara Freight, we are now transporting new products, extended our reach of partners and broadened our customer base resulting in more great people joining our business. It has ticked all the boxes and expanded the range of services we can offer. We have centralised some of the back office functions such as finance and HR, our sales team have the new range of services to promote and we have welcomed the operations team into the Solstor Group. I am personally very excited about being in East Anglia as it brings me back to my roots. I grew up in Lowestoft and my first job was in Suffolk so it’s really exciting to be looking to expand in this area.
This acquisition is a superb stepping stone as we are aware of other great businesses in the area that we would love to work alongside. We are looking to make further acquisitions to help grow our presence and service offering in the area as well. Further afield from East Anglia, we are looking to widen our expansion into the UK manufacturing hotspots and have a presence in those areas. On an international level, we have offices in five countries and looking for that to become seven or eight in the next few years. It really is an exciting time to be part of Solstar! Q: Do you have any words of wisdom for people considering a career in the Transport and Logistics industry? It is a sector which offers great people skills, so if you like working with people it is the sector for you. During lockdown we were classed as key workers providing an essential service which gave a real sense of achievement to our people. I would say there really is something for everyone within the sector due to the breadth of what it offers, from drivers, operations planning, to sales, IT, HR, marketing, data analytic and finance. So if you are thinking about joining a business in the Transport and Logistics sector – I’d definitely recommend it! Q: Finally, how can potential clients get in touch with Solstar? As a business, we want to make it as easy as possible for people to contact us. So we have made it possible via our website www.solstar.com, by emailing: sales@solstar.com, calling our team on 01322 923923 or sending us a message directly on Linkedin. Our team would be happy to hear from you and to discuss how we can help support you.
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Changes To the Current Rules On Leasing
In March 2024, the Financial Reporting Council (FRC) concluded its second periodic review of the Financial Reporting Standard (FRS 102) and issued amendments to FRS 102. Whilst the revisions will apply to financial periods beginning on or after 1 January 2026, early adoption is permitted. There is time to prepare, however, the impact could be significant for many businesses and an initial assessment of the implications should be done sooner rather than later.
T hese changes move the accounting to a basis more aligned to international accounting standards. John Perry, Audit Partner explores one of the key accounting areas that will see change in operating leases. The new approach follows that of IFRS 16; Leases, and more leases will be recognised on balance sheet as the distinction between operating and finance leases has been removed. The standard brings in a liability reflecting the obligation to make payments over the lease term and an associated right of use asset. The lease liability is discounted to reflect the time value of money with the rate of discount being based on the interest rate implicit in the lease. If this cannot be determined, the lessee can choose to apply their incremental borrowing rate or their obtainable borrowing rate. The income statement will see charges relating to the depreciation of the right of use asset and the interest element of payments.
There are exemptions available, but these are limited to short term leases (12 months or less) and leases of low value assets. The standard includes examples of underlying assets that would not be low value, this includes cars and buildings. As profits and net debt could be impacted by the new requirements, an early assessment of the implications is key to allow proper planning and communication on matters such as:
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Covenants and the impact of changes to profits and net debt on the current headroom Systems to ensure these can deal with the incoming changes, if nothing else it is likely that the existing chart of accounts would need to be updated and reviewed. Finance team readiness and the need for appropriate training to ensure that the new requirements are fully understood, not just the accounting but also the financial statement disclosure requirements. The implementation date may feel like it is some way off, however, the impacts need to be understood to enable appropriate implementation plans to be put in place and to ensure that the expectations of stakeholders are appropriately managed.
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The timing and amount of corporation tax payments.
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Dividend policy and managing the expectations of shareholders given changes to the timing of revenue recognition could impact distributable reserves. Remuneration strategies and whether revisions may be required to arrangements linked to financial performance (performance related pay, bonuses or share options).
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If you would like to discuss how these changes may affect you, and what you need to do to prepare, do get in touch today to find out more. Email John Perry at hello@scruttonbland.co.uk or call 0330 058 6559.
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Corporate transactions and what the impact could be on earn out agreements.
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Are Your Systems Keeping Up To Date With The Evolving Transport & Logistics Industry?
The compounding effect of Covid, fluctuating energy prices, Net Zero ambitions and who can forget Brexit, have had, and continue to have a huge impact on the Transport and Logistics industry. Being able to make fast business decisions based on reliable data is more critical than ever if you don’t want to fall behind in a competitive marketplace.
U nfortunately, businesses in this sector are traditionally plagued with outdated systems and manual processes that make internal operations inefficient, discourage those that want to operate in the new world of flexible working and generate useful insights far too late for effective strategic decisions. The advent of cloud technology enables these issues to be resolved, but with thousands of choices it’s not simple to find the right path forward, which normally leads to no decision being made. Ryan Pearcy, SB Digital Associate Partner, discusses the possibilities and their impact. Please be aware that there is not a one- size-fits-all approach and it is best to consult with an expert before making any decisions.
Combined or Separate Many transport businesses have sector specific software that combines the operational and financial elements. This tends to work well for the operational side, but the accounting element is often an afterthought and requires manual operations, with limitations on any insights that can be achieved. The challenge with separate systems is getting data from one to the other in a reliable way that is compliant with HMRC’s Making Tax Digital “Digital Links” requirements. By adopting a “Modern Enterprise Resource Planning (ERP)” approach, which is the combination of separate cloud-native software connected via secure APIs, a business can achieve the best of both worlds by utilising sector specific operational functionality and advanced accounting systems that enable automation. This plug and play approach also enables the business to adapt, adding or switching out best of breed systems as they grow and evolve. Finance systems such as Xero have become the core of these Modern ERPs, enabling the business to scale quickly as they transition through phases of growth. They are also cost effective, enabling a business to grow to a reasonable size before having to consider switching to another system.
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Wary of Integrations When selecting systems, a key area to be wary of is the term “integrate”. Software providers have identified the need to connect to other systems to enable the Modern ERP approach, but how well a system integrates can vary hugely. A system may say it integrates when it utilises an export template, which still requires manual intervention and is prone to error, or it may have a deep two-way integration that elevates both platforms. The latter is what is needed to get the most out of a Modern ERP and it is critical that this is explored and tested before rolling out any system. Getting Information In Modern finance tools utilise AI to extract information from invoices to automatically pull them into finance systems for review. This is the single biggest efficiency gain in a business and removes the process delay, bringing the possibility of real time data for the business. There are hundreds of options in this space, including Dext, AutoEntry and Ezzybills. Selecting the best tool will depend on the operational and accounting tools you use, the nature of your team and the processes you want to replace.
Reporting and Forecasting Accounting tools can generate basic reports that most businesses will need, but you can now go far beyond this by utilising tools that enable KPI reporting, forecasting, cashflow management and scenario planning. These overlay the financial tools, pulling data in real time and delivering insights as you need them, rather than in arrears. Fathom, Futrli and Syft are examples of tools in this space. They enable collaboration with your advisors so that decisions on fleet renewals, financing, expanding into geographical areas and even preparing for sale can all be done as and when they are needed. They also enable challenging budgets to be set with key stakeholders in the business, enabling them to see the statistics they need to focus attention on and push them to deliver more for the business.
Dashboards Utilising cloud systems with APIs enables key information to be extracted by advanced reporting tools. The most critical area for this is in live dashboard reporting. Many businesses are customising dashboards for key roles as well as putting them on screens in the office to focus the mind of the team. Tools such as PowerBI and Tableau have led the way, but the right tool will depend on whether they have connectors to the systems you use. These are just a few examples of systems to consider as the Transport and Logistics sector evolves. These solutions, if implemented in the right way, will save considerable amounts of time and money and allow business owners and allow employees to focus on more productive tasks. We always advise speaking to an expert to ensure that you select the right system for your needs, get this implemented correctly and have someone to reach out to for support if things change. The SB Digital team can assist with all of this so please reach out to Ryan if you have any queries by calling 0330 058 6559 or by emailing hello@scruttonbland.co.uk
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Meet The Team We have a long-standing association with the transport and logistics sector, and our specialists have a thorough understanding of the opportunities and challenges it currently faces.
We seek to build long term and trusted relationships with our clients, and to fully understand their businesses in order to provide bespoke and targeted advice.
Get in touch with a member of the team to see how they can help you.
Steven Burgess Audit Partner steven.burgess @scruttonbland.co.uk 01473 945870
Donna Cullum Audit Manager donna.cullum @scruttonbland.co.uk 01473 945855 Joy Shaw Senior Tax Adviser joy.shaw @scruttonbland.co.uk 01473 945837 Sam Willis Audit Associate sam.willis @scruttonbland.co.uk 01473 945736 James Tucker Business Advisory Partner james.tucker @scruttonbland.co.uk 01473 945761
Paula Mason VAT Manager paula.mason @scruttonbland.co.uk 01473 945823 John Perry Audit Partner john.perry @scruttonbland.co.uk 01473 945872
Ben Cussons Business Advisory Partner ben.cussons @scruttonbland.co.uk 01379 773532 Luke Morris Corporate Finance Partner luke.morris @scruttonbland.co.uk 01473 945731
Simon Pinion Business Advisory Partner simon.pinion @scruttonbland.co.uk 01206 417202 Ryan Pearcy SB Digital Associate Partner ryan.pearcy @scruttonbland.co.uk 01206 417218
Chris George Tax Advisory Partner chris.george @scruttonbland.co.uk 01473 945836
In 2024, Scrutton Bland became part of Sumer – a collaboration of the best regional accountancy practices with a shared vision to champion local small to medium-sized enterprises. By bringing together the best in business services, Sumer retains the value that community-based practices offer and combines this with the scale, breadth of expertise and technologies that only a national organisation can muster.
To find out more about Sumer, visit our website: www.sumer.co.uk
0330 058 6559 scruttonbland.co.uk
@scruttonbland
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