TIDMWIN
RNS Number : 8629S
Wincanton PLC
09 November 2023
For immediate release 09 November 2023
LEI: 213800Z5WTW8QK0HWQ82
WINCANTON plc
Half Year results for the six months to 30 September 2023
(unaudited)
Trading in line with market expectations
Dividend maintained and share buyback programme announced
Wincanton plc ("Wincanton" or "the Group"), a leading supply
chain partner for UK business, today announces its half year
results for the six months ended 30 September 2023.
Key financial measures
H1 23/24 H1 22/23 Change
-------------------------------------- ------------- --------------- --------
Revenue (GBPm) 694.7 753.6 (7.8%)
Underlying EBITDA (GBPm) (1) 48.4 57.4 (15.7%)
Underlying profit before tax (GBPm)
(1) 22.6 28.0 (19.3%)
Underlying basic EPS (1) 13.7p 18.8p (27.1%)
Dividend per share - interim (pence) 4.4p 4.4p 0.0%
Free cash flow (GBPm) (1) 24.5 17.7
Net (Debt)/Cash (GBPm) (1) 15.6 (2.2)
Statutory results
-------------------------------------- ------------- --------------- --------
Profit before tax (GBPm) 19.1 25.8 (26.0%)
Basic EPS 11.5p 17.4p (33.9%)
Financial highlights
-- Revenue of GBP694.7m and underlying profit of GBP22.6m, in line with expectations
o 7.8% revenue reduction from prior year reflecting the Group's
strategic shift out of closed book transport contracts and towards
digitally enabled 4PL solutions
o Excluding closed book transport contracts, revenue is down
3.7%
-- Strong free cash flow generation of GBP24.5m with disciplined
cash management resulting in an improved H1 net cash position of
GBP15.6m
-- Interim dividend of 4.4p at the same level as prior year
-- Milestone agreement reached with the Defined Benefit Pension
Scheme Trustees for the March 2023 triennial valuation; last
contribution to scheme made in July 2023, unlocking significant
free cash flow
-- New capital allocation framework developed, including launch
of GBP10m share buyback programme
Operational highlights
-- Continued automation transformation with launch of robotic
cross dock solution for leading UK retailer
-- Strategic reorganisation of transport delivered at pace with
focussed investment on digitally enabled 4PL services
-- Significant growth in open book managed transport services
with implementation of Sainsbury's contract, alongside previous
wins with New Look and Primark
-- Further new business secured with Segen, Jet2 and The Conran
Shop and key renewal with customers such as LVMH Group-owned
Sephora and Williams Sonoma
-- Total sales pipeline of GBP1.5bn reflecting the scale of
organic opportunity in the logistics market
James Wroath, Chief Executive Officer of Wincanton
commented:
"We have delivered a resilient performance during the first half
of the year despite a macro-economic backdrop characterised by
persistent inflationary pressure, elevated interest rates and
weakened consumer confidence. The Group made the decision to exit
closed book transport contracts and proactively changed the focus
of our business and I am pleased with the progress we have made on
those strategic objectives.
"We continue to invest in supply chain automation, transport
optimisation and operational excellence. As reflected in our new
capital allocation framework and the confidence of the Board, we
are maintaining our dividend year on year and returning value to
our shareholders through a share buyback programme.
"Our people are the bedrock of our business and I would like to
thank our 20,000+ colleagues, who continue to provide exceptional
service to our customers and deliver supply chain value every
day."
Outlook
We expect retail volume pressure to persist in the near-term,
reflecting the challenging macro-economic backdrop. Despite this,
the Group's diversified sectors, commercial discipline, and
customer relationships ensure that Wincanton is well positioned to
deliver on its strategic ambitions. Strong cash generation and the
result of the 2023 pension triennial valuation will help accelerate
the Group's investment in sustainable and margin accretive growth
and enhance shareholder returns.
The Board remains confident in the Group's strategy and expects
to deliver revenue and profit in line with market expectations for
FY24.
For further enquiries please contact:
Wincanton plc
James Wroath, Chief Executive Officer Tel: 01249 710 000
Tom Hinton, Chief Financial Officer
Ezra Bigland, Investor Relations
Headland
Susanna Voyle Tel: 020 3805 4822
Henry Wallers
A presentation for analysts and investors will be held at the
offices of Deutsche Numis, 45 Gresham St, London, EC2V 7BF today 9
November 2023, commencing at 9am GMT. The presentation will be
followed by a Q&A with James Wroath and Tom Hinton.
The live presentation can be viewed in the link below and will
be available following the event later today: Issuer services |
London Stock Exchange | Wincanton Half Year results 23/24
Notes
(1) The section on Alternative Performance Measures (APMs) below
and Note 3 to the consolidated half year financial statements
provide further information on underlying measures, including
definitions and a reconciliation of APMs to statutory measures.
Half year review for the six months to 30 September 2023
Summary
The Group delivered a robust performance in a challenging
external environment in terms of both its financial and operational
performance.
We continue our strategic shift away from closed book transport
contracts with open book warehouse and transport contracts
representing 80% of total revenue, which hedges against
macro-economic headwinds. These large-scale, labour-intensive
operations also provide significant opportunity for investment in
robotics and automation. The closed book transport contracts now
represent 11% of total revenue (H1 22/23: 15%).
Revenue of GBP694.7m (H1 22/23: GBP753.6m) was 7.8% behind last
year, with continued growth in eFulfilment offset by volume
downsides and contract losses in other sectors. New business from
customers including Segen, a solar energy and storage distributor,
and New Look in General Merchandise, British Salt in Public &
Industrial and an Ikea expansion in eFulfilment have all
contributed to partially offset volume declines. Finally, our
Grocery & Consumer sector benefitted from increased Sainsbury's
capacity largely offsetting the Morrisons contract loss.
Underlying profit before tax decreased by 19.3% to GBP22.6m, as
expected, (H1 22/23: GBP28.0m) and the Group's underlying profit
before tax margin was 3.3% (H1 22/23: 3.7%). The Group's
performance is in line with market expectations which takes into
account the HMRC contract loss, volume downsides seen in the
transport network and a shift in our mix towards lower risk open
book contracts.
Closing net cash at the end of H1 was GBP15.6m (H1 22/23: net
debt (GBP2.2m)) demonstrating strong cash conversion. There is
significant liquidity headroom enabling further growth and
strategic investments, alongside providing protection to potential
uncertainties from the macro-economic environment.
Resilient operational delivery
The Group delivered a resilient performance, despite a
macro-economic environment that includes persistent inflationary
pressure and tightening of consumer spending, particularly relevant
in our General Merchandise and Grocery & Consumer sectors.
eFulfilment revenue growth has been strong, up 11.7% year on
year, providing momentum into the second half of FY24 and into
FY25. New business growth including our expanded partnership with
Ikea, The White Company and Wickes home delivery have more than
offset volume declines seen in two-person home delivery and
high-volume eFulfilment.
The performance of the Public & Industrial sector benefitted
from contracts such as EDF, British Salt and BAE Systems helping to
partially offset the HMRC contract loss and a tough prior year
comparator which benefitted from high Covid-19 test volumes.
In our foundation sectors we have continued to experience volume
headwinds, reflecting the wider divergence of value and volume
experienced across the retail sector. The Group's weighting towards
open book contracting has helped hedge against inflation and
reduced consumer activity. General Merchandise benefitted from new
business wins with Segen and New Look and the renewal of the
Halfords contract. In Grocery & Consumer, the expansion of the
Sainsbury's relationship partially offsets volume declines and
contract losses.
The Group continues to invest in automation and robotics,
building on the investment made in prior years. The pilot with a
leading UK retailer for an automated cross dock operation is
expected to deliver both efficiency and resilience within the
retail supply chain operations that will be repeatable with
customers of similar size and scale.
People
The Board is delighted to welcome John Pattullo OBE, who joins
as a Non-Executive Director. John will also be appointed as a
member of the Group's Audit and Nomination Committees. John has a
wealth of experience spanning logistics and consumer goods having
previously held senior positions at Procter & Gamble, Exel/DHL
and Ceva Logistics where he served as CEO between 2007 and 2012.
John is currently Senior Independent Director of Redde Northgate
plc, the FTSE 250 supplier of integrated mobility solutions, a
position he has held since 2019. He was previously Chair of V Group
until December 2020 and has served as Senior Independent Director
and Remuneration Committee Chair of Electrocomponents plc (now RS
Group plc), Chair of NHS Blood and Transplant, Chair of Marken
Logistics and Chair of In Kind Direct, a Prince's charity.
The Board would like to thank outgoing Senior Independent
Director, Stewart Oades, for his hard work, commitment and
outstanding contribution to the Group over the last nine years.
Stewart championed employee engagement and Wincanton has benefitted
from his wealth of industry knowledge and experience throughout his
time with the Group.
2023 Triennial Valuation
The Group and the Trustees of the Defined Benefit Pension Scheme
reached an agreement on the terms of the 2023 triennial valuation.
We were pleased to report that as of 31 March 2023 the scheme had
an actuarial surplus of GBP3.9m compared to an actuarial deficit of
GBP154m at 31 March 2020. This significant improvement was driven
by the Group's sustained contributions to the scheme alongside the
strong performance of the scheme's underlying assets.
Reflecting the scheme's performance, the Trustees agreed that
Group contributions to the scheme would cease from September 2023
and conditions of shareholder returns removed. Scheme members can
take comfort from the health of the scheme, along with additional
security offered in the unlikely event of extreme adverse
performance of the scheme or a significant increase in Group
leverage.
Over the past 5 years, 35% of the Group's Free Cash Flow has
been dedicated to reducing the scheme's deficit. The elimination of
the deficit and corresponding cessation of contributions provides
significant capital investment optionality for the Group.
Capital Allocation
The Board has approved a new Capital Allocation Framework which
articulates the Group's priorities for capital investment and
funding model. The framework sets out five key capital
priorities:
- Business as usual capital expenditure, supporting our market-leading operating capabilities
- Maintaining the ordinary dividend according to the Group's dividend policy
- Investing in organic growth
- Investing in capability enhancing acquisitions
- Enhancing shareholder returns by returning excess capital via
share buybacks and/or special dividends
Dividend
The Board is declaring an interim dividend of 4.4p per Ordinary
Share in line with prior year (H1 22/23: 4.4p per share). The
Group's policy is for the interim dividend to be approximately one
third of the expected full year dividends and will be payable on 15
December 2023.
Share buyback
The Board also announces its intention to commence a GBP10m
share buyback. The share buyback forms an integral part of the
revised capital allocation framework and capitalises on our net
cash position at the half year.
Key priorities and outlook
The Group is mindful of the macro-economic environment
experienced to date. With open book contracts, making up 80% of the
portfolio, we have a clear mechanism of passing on inflationary
increases. We will continue with the operational efficiencies for
both open and closed book contracts to mitigate these costs as much
as possible, with continued investment in automation and robotics
supporting in driving this efficiency.
The Group remains on track to deliver full year profits
consistent with market expectations. The pipeline for our strategic
markets continues to grow. The Board is particularly encouraged by
the sales pipeline, future growth opportunities and the business'
ability to pass inflationary cost pressures to its customers
through its contractual structures.
Trading
H1 23/24 H1 22/23
Sector revenue GBPm GBP m Change
---------------------------------------- -------- -------- -------
eFulfilment 137.3 122.9 11.7%
Grocery & Consumer 243.9 260.1 (6.2%)
General Merchandise 186.5 221.4 (15.8%)
Public & Industrial 127.0 149.2 (14.9%)
Total revenue 694.7 753.6 (7.8%)
----------------------------------------- -------- -------- -------
Underlying EBITDA 48.4 57.4 (15.7%)
Underlying profit before tax 22.6 28.0 (19.3%)
Underlying profit before tax margin (%) 3.3% 3.7% (40)bps
----------------------------------------- -------- -------- -------
eFulfilment delivered a 11.7%* increase in revenue, driven by
new business growth including The White Company, Wickes and the
expansion of our partnership with Ikea. This growth was offset by a
reduction in ecommerce volumes particularly in the two-person home
delivery network and Cygnia.
General Merchandise and Grocery & Consumer were down 15.8%*
and 6.2%* respectively following economic and volume headwinds in
the retail sector. There were new business wins including Segen, a
solar energy and storage distributor, as well as New Look Retail,
and an expansion of our Sainsbury's and Argos network helped in
part to offset the contract loss of Wilko in September 2022.
In the Public & Industrial sector, the loss of the HMRC
contract, DEFRA upside in prior year volumes and construction
sector declines coupled with Covid-19 testing volume reductions
resulted in a 14.9%* decrease in revenue. There were new business
wins including EDF, British Salt and BAE Systems that partly offset
this.
The diversified customer portfolio, increasing mix of open and
closed book contracts (80%/20%) and the varied mix of markets
continues to provide mitigation against the ongoing economic
challenges. The underlying profit before tax has decreased by 19.3%
to GBP22.6m (H1 FY22/23: GBP28.0m).
*Excluding closed book transport contracts, the year-on-year
growth for the sectors is eFulfilment 13.7%, Grocery & Consumer
1.7%, General Merchandise (14.9%) and Public & Industrial
(9.4%).
Net financing costs
H1 23/24 H1 22/23 GBPm
GBPm
-------------------------------------------------- -------- --------------
Interest Income 0.3 -
Interest on the net defined benefit pension asset 3.0 1.7
Bank interest payable on loans (3.1) (2.6)
Unwinding of discount on provisions (0.3) (0.3)
Interest on lease liabilities (3.9) (3.0)
--------------------------------------------------- -------- --------------
Net financing costs (4.0) (4.2)
--------------------------------------------------- -------- --------------
Net finance costs have decreased to GBP4.0m (H1 22/23: GBP4.2m),
GBP0.2m lower than the prior period.
The non-cash interest income on the defined benefit pension
asset in the period of GBP3.0m (H1 22/23: GBP1.7m) was higher than
the prior period due to the interest rate being benchmarked against
corporate bond curves, which have increased year on year.
Bank interest payable on loans of GBP3.1m (H1 22/23: GBP2.6m)
was higher than prior period, primarily due to increase in interest
rates in comparison to prior year.
Financing charges of GBP3.9m in respect of the interest on lease
liabilities was driven by additional property leases supporting the
Group's growth (H1 22/23: GBP3.0m).
Taxation
H1 23/24 H1 22/23
GBPm GBPm
---------------------------------------- ----------- -------------
Underlying profit before tax 22.6 28.0
----------------------------------------- ----------- -------------
Underlying tax 5.7 4.8
Tax on non-underlying items (0.8) (0.5)
----------------------------------------- ----------- -------------
Tax as reported 4.9 4.3
----------------------------------------- ----------- -------------
Effective tax rate on underlying profit
before tax (%) 25.2% 17.1%
----------------------------------------- ----------- -------------
Underlying tax of GBP5.7m (H1 22/23: GBP4.8m) represents an
underlying effective tax rate (ETR) of 25.2% (H1 22/23: 17.1%) on
underlying profit before tax. The underlying ETR applied at the
half year is an estimate of the expected full year rate and sits
just above the standard rate of UK corporation tax (25.0%) due to
disallowable expenses, mainly interest paid on loans to overseas
subsidiaries.
Corporation tax refund of GBP3.7m was received from HMRC in the
period in respect to the overpaid tax for the year ended 31 March
2023 (H1 22/23: GBP4.7m payments of which GBP3.8m related to prior
periods). In the current financial year, payments on account are
based on the latest view of taxable profits for the full year. Due
to an overpayment in prior periods that has not been refunded and
group losses available, no payments have been made towards the 2024
tax liability in this period. The Group has brought forward tax
losses of GBP54m that it expects to utilise in 2024 and future
periods, reducing current and future tax payments.
Profit after tax and EPS
Profit after tax for the period was GBP14.2m (H1 22/23:
GBP21.5m) which translates to a basic EPS of 11.5p (H1 22/23:
17.4p). Underlying EPS, which excludes the impact of non-underlying
items, decreased to 13.7p (H1 22/23: 18.8p). The calculation of
these EPS measures is set out in Note 6 to the consolidated half
year financial statements.
Financial position
The summary financial position of the Group is set out
below:
30 September 2022
30 September 2023 (Restated)(1) 31 March 2023
GBPm GBPm GBPm
------------------------------------------------------------- ----------------- ----------------- -------------
Non-current assets (excl. pension assets) 317.2 317.8 310.4
Net current liabilities (excl. net cash/debt) (171.2) (160.9) (161.4)
Non-current liabilities (excl. net debt/ pension liabilities and
borrowings) (216.4) (208.8) (217.8)
Net (debt)/cash (excl. lease liabilities) 15.6 (2.2) 13.2
Net pension asset (excl. deferred tax) 85.2 124.5 114.7
----------------------------------------------------------------- ----------------- ----------------- -------------
Net assets 30.4 70.4 59.1
----------------------------------------------------------------- ----------------- ----------------- -------------
1 Certain comparatives have been restated due to prior year
adjustment as explained in Note 1 'Accounting policies'.
The largest driver of the decrease in net assets of GBP28.7m
since 31 March 2023 to GBP30.4m is due to a GBP29.5m decrease in
the pension net asset position owing to external market
factors.
Non-current assets and non-current liabilities which include
right-of-use assets and corresponding lease liabilities have
increased due to the addition of properties and leased vehicles in
the period offset in part due to the impacts of depreciation of the
assets and lease payments respectively.
Net current liabilities have increased GBP2.4m compared to year
end due to the GBP4.6m income tax receivable as at year end
unwinding during H1 and subsequent GBP4.0m payable due at half
year, coupled with a net working capital increase of GBP2.7m due to
higher trade payables and transfer of provisions from non-current
liabilities as they became due.
Net debt and cash flows
Net cash at 30 September 2023 was GBP15.6m (H1 22/23: net debt
of GBP2.2m, 31 March 2023: net cash of GBP13.2m), reflecting a net
cash inflow of GBP17.8m over the intervening 12 months and net cash
inflow of GBP2.4m since 31 March 2023.
The Group's change in net cash flows is summarised in the
following table:
30 September 2023 30 September 2022 31 March
GBPm GBPm 2023
GBPm
---------------------------------------------- ------------------ ------------------ ---------
Underlying EBITDA 48.4 57.4 121.9
Working capital 0.8 (1.9) 4.1
Tax 3.7 (4.7) (8.8)
Net interest (6.7) (5.4) (11.9)
Other items 3.0 0.5 0.3
Repayment of obligations under leases (19.4) (18.9) (42.5)
Capital expenditure net of disposal proceeds (4.6) (7.6) (14.5)
Non-underlying items (0.7) (1.7) -
----------------------------------------------- ------------------ ------------------ ---------
Free cash flow 24.5 17.7 48.6
Pension payments (11.3) (10.0) (20.1)
Dividends (10.8) (9.9) (15.3)
Own shares acquired - (3.7) (3.7)
----------------------------------------------- ------------------ ------------------ ---------
Movement in net debt/cash 2.4 (5.9) 9.5
----------------------------------------------- ------------------ ------------------ ---------
The Group's net cash increased by GBP2.4m (H1 22/23: GBP5.9m net
debt increase) with a free cash inflow of GBP24.5m (H1 22/23:
GBP17.7m).
Working capital movement in the period resulted in an inflow of
GBP0.8m (H1 22/23: outflow of GBP1.9m) driven by an effective cash
management strategy. This is an improvement on prior year working
capital outflow which had stronger volumes in that period resulting
in the short-term outflow.
The Group received a corporation tax refund of GBP3.7m from HMRC
in respect to overpaid tax for the year ended 31 March 2023 (H1
22/23: GBP4.7m payments of which GBP3.8m related to prior periods).
In the current financial year, payments on account are based on the
latest view of taxable profits for the full year.
Net interest has increased to GBP6.7m (H1 22/23: GBP5.4m)
predominantly due to higher interest paid on lease liabilities.
Additionally, interest paid on borrowings has increased in line
with external bank interest rates.
Other items of GBP3.0m is comprised of non-cash items relating
to net movements in provisions, profit on the disposal of assets
and the provision for the settlement of a claim from a contract
that ceased in 2018.
Net capital expenditure was GBP4.6m (H1 22/23: GBP7.6m) for
expenditure on property, plant, and equipment. This principally
consisted of further investment in The WEB, our automated facility
in Rockingham. H1 22/23 included autonomous mobile robots
investment at Cygnia and fitting out Harlow warehouses for the
two-person home delivery network.
Non-underlying items of GBP0.7m (H1 22/23: GBP1.7m) primarily
relates to the phase 2 implementation costs for the new upgrade of
finance and HR systems in the period.
Defined recovery contributions paid to the Group's defined
benefit pension scheme in the period was GBP11.3m (H1 22/23:
GBP10.0m), which is net of administration costs of GBP0.4m paid
directly by the Group.
The interim cash dividend payment in the second half of the year
is expected to be c.GBP5.4m and will be paid on 15 December
2023.
The Group did not acquire any of its own shares in the period,
compared to the prior period where we acquired 1 million of its own
shares for a total payment of GBP3.7m to provide shares for the
Employee Benefit Trust in respect of its long-term incentive plan
commitments.
Financing and covenants
The Group's committed facilities at the period end were GBP175m
(H1 22/23: GBP175.0m). The headroom in the committed facilities is
GBP170m at H1 23/24 (H1 22/23: GBP172.8m). The Group also has a
Receivables Purchase Facility (RPF) with Santander UK plc and
operating overdrafts which provide day to day flexibility and
amount to a further GBP50m and GBP5m respectively in uncommitted
facilities. At H1 23/24, utilisation of the Group's non-recourse
RPF was GBP10.3m (H1 22/23: GBP8.4m)
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
Covenant Ratio At 30 September 2023
-------------------- -------- ------------------------
Leverage ratio <3.0:1 0.7
Interest cover >3.5:1 14.5
Fixed charge cover >1.4:1 3.7
-------------------- -------- ------------------------
Pensions
The Group has a number of pension arrangements in the UK and
Ireland including defined benefit arrangements which are described
below.
The Group has reported an IAS 19 net asset of GBP85.2m (GBP63.9m
net of deferred tax) at H1 23/24 with comparatives set out in the
following table:
30 September 30 September 31 March
GBPm 2023 2022 2023
------------------ --------------------- ---------------------- --------------------
Assets 803.8 880.8 891.1
Liabilities (718.6) (756.3) (776.4)
------------------ --------------------- ---------------------- --------------------
Pension net asset 85.2 124.5 114.7
------------------ --------------------- ---------------------- --------------------
Discount rate (%) 5.50 5.15 4.75
------------------ --------------------- ---------------------- --------------------
The decrease in the pension net asset is driven by a narrowing
of credit spreads in the period. Credit spreads have narrowed 0.3%
per annum due to corporate bond yields not rising as much as gilt
yields, so the assets have decreased further than the liabilities.
In the period employer contributions of GBP11.3m (H1 22/23
GBP10.0m) have been paid.
In the period the Group has agreed the key terms of the
triennial pension valuation as at 31 March 2023 which shows a
technical provisions surplus of GBP3.9m (compared with a deficit of
GBP154m at 31 March 2020). This means from 30 September 2023 no
deficit contributions will be required ahead of the next triennial
valuation in 2026. The technical provisions surplus as at 30
September 2023 is estimated to be GBP9.1m. Previously,
contributions for the year ending 31 March 2024 would have been
GBP23.6m and GBP25m per annum from April 2024 to March 2027,
growing in line with the Retail Prices Index.
Risks
The key risks and uncertainties facing Wincanton in the second
half of the current financial year are largely as outlined on pages
63 to 65 of the Annual Report for the year ended 31 March 2023. One
material improvement in risk profile relates to the defined benefit
pension scheme, where the conclusion of the triennial revaluation
has resulted in no further pension contributions being made into
the Scheme for the foreseeable future. The removal of this
requirement has released substantial capital which can be used to
re-invest in the business and a capital allocation model has been
developed to guide how that capital should be deployed. The
remaining principal risks and uncertainties remain as outlined at
the year-end.
Going Concern
The consolidated half year financial statements have been
prepared on a going concern basis. Having considered the ability of
the Group to operate within its existing facilities and meet its
debt covenants, the Directors have a reasonable expectation that
the Group have adequate resources to continue in operational
existence for the foreseeable future.
In determining whether the financial statements can be prepared
on a going concern basis, the Directors considered the Group's
business activities, together with the factors likely to affect its
future development, performance, and position. The review also
included the financial position of the Group, its cash flows, and
adherence to its banking covenants.
The Board considered the following key uncertainties in
considering the Group's future:
-- a deterioration in trading performance together with
unplanned working capital outflows
-- a major customer going into administration
-- a decline in current market conditions, including the impact
of further increases in inflation and increased competition,
resulting in lower Group revenues and profits
The Board has also considered a base case and a severe but
plausible downside case. In both scenarios, the Group has adequate
headroom in existing bank facilities to meet its liabilities as
they fall due, and it complies with the financial covenants under
its committed borrowing facilities throughout the forecast
period.
The Directors have considered the impact of climate related
matters on the Group's going concern assessment, and do not expect
this to have a significant impact on the going concern assessment
throughout the forecast period to 31 March 2025.
Further details are provided in the Basis of Preparation section
of Note 1 Accounting Policies in the consolidated half year
financial statements.
Alternative Performance Measures
The Alternative Performance Measures (APMs) or underlying
results reported in this announcement represent statutory measures
adjusted for items which management consider could distort the
understanding of performance and comparability year on year.
APMs are used by the Board to assess the Group's performance and
are applied consistently from one period to the next. They
therefore provide additional useful information for shareholders on
the underlying performance and position of the Group but should not
be viewed in isolation. Additionally, underlying profit before tax
is used in determining annual bonus payments and underlying EPS is
used as a key performance indicator for most awards under the
Long-Term Incentive Plan (LTIP) share incentive scheme. These
measures are not defined by IFRS and are not intended to be a
substitute for IFRS measures. Wincanton's underlying measures may
not be comparable to similarly titled measures used by other
companies.
The Group presents underlying EBITDA, operating profit, profit
before tax and EPS which are calculated as the statutory measures
stated before non-underlying items. These are items which the
Directors consider separate disclosure would assist both in a
better understanding of the financial performance achieved and in
making projections of future results. A balanced approach to both
gains and losses is applied, to be both consistent and clear in the
accounting and disclosure of such items.
Further details of underlying results and the definition of
non-underlying items can be found in Note 3 to the consolidated
half year financial statements.
EBITDA refers to earnings (operating profit) before interest,
tax, depreciation of property, plant and equipment and right-of-use
assets and amortisation of finite-lived intangible assets. This
measure also excludes the impact of impairment of non-current
assets.
Other APMs used are net debt/cash and free cash flow, which
relate to liquidity. Net debt/cash is the sum of cash and bank
balances, bank loans and overdrafts and other financial liabilities
excluding lease liabilities. Note 11 to the consolidated half year
financial statements provides a breakdown of net debt/cash for the
current and prior periods. Free cash flow is defined as the
movement in net debt/cash before acquisitions, pension payments,
dividends and purchase of own shares.
The table below reconciles the APMs to the statutory reported
measures.
H1 23/24 H1 22/23
----------------------------
Non-underlying Non-underlying
GBPm Underlying items Statutory Underlying items Statutory
Revenue 694.7 - 694.7 753.6 - 753.6
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
EBITDA 48.4 (2.5) 45.9 57.4 (1.7) 55.7
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
EBITDA margin (%) 7.0% - 6.6% 7.6% - 7.4%
Depreciation,
amortisation, and
impairments (21.8) (1.0) (22.8) (25.2) (0.5) (25.7)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Operating profit 26.6 (3.5) 23.1 32.2 (2.2) 30.0
Net financing
costs (4.0) - (4.0) (4.2) - (4.2)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Profit before tax 22.6 (3.5) 19.1 28.0 (2.2) 25.8
Income tax (5.7) 0.8 (4.9) (4.8) 0.5 (4.3)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Profit after tax 16.9 (2.7) 14.2 23.2 (1.7) 21.5
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Earnings per share
(p) (2) 13.7 11.5 18.8 17.4
Dividend per share
(p) 4.40 4.40
Net cash/(debt)
excluding lease
liabilities 15.6 - 15.6 (2.2) - (2.2)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
(2) Note 6 to the consolidated half year financial statements
provides further detail of underlying earnings per share.
In the period to 30 September 2023 net non-underlying items of
GBP3.5m ( H1 22/23: GBP2.2m) were expensed. These include a claim
relating to a customer contract that ceased in 2018, which was
settled in October 2023, phase two implementation costs of a new
enterprise-wide finance and HR system and amortisation of acquired
intangible assets.
Statement of Directors' responsibilities
The Board confirms to the best of its knowledge:
-- that the consolidated half year financial statements for the
six months to 30 September 2023 have been prepared in accordance
with UK-adopted IAS 34 Interim Financial Reporting; and
-- that the Half Year Report includes a fair review of the
information required by sections 4.2.7R and 4.2.8R of the
Disclosure Guidance and Transparency Rules, being an indication of
important events that have occurred during the period and their
impact on the consolidated half year financial statements; a
description of the principal risks and uncertainties for the
remainder of the current financial year; and the disclosure
requirements in respect of material related party transactions.
The above Statement of Directors' responsibilities was approved
by the Board on 8 November 2023.
T Hinton
Director
Consolidated income statement
for the six months to 30 September 2023 (unaudited)
Six months to Six months to
30 September 2023 30 September 2022
----------------------------------- -----------------------------------
Underlying Non-underlying Total Underlying Non-underlying Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ---------- -------------- ------- ---------- -------------- -------
Revenue 2 694.7 - 694.7 753.6 - 753.6
Net operating costs (668.1) (3.5) (671.6) (721.4) (2.2) (723.6)
------------------------------------------ ---------- -------------- ------- ---------- -------------- -------
Operating profit/(loss) 3 26.6 (3.5) 23.1 32.2 (2.2) 30.0
Financing income 4 3.3 - 3.3 1.7 - 1.7
Financing costs 4 (7.3) - (7.3) (5.9) - (5.9)
-------------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit/(loss) before tax 22.6 (3.5) 19.1 28.0 (2.2) 25.8
Income tax (expense)/credit 5 (5.7) 0.8 (4.9) (4.8) 0.5 (4.3)
-------------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit/(loss) attributable to equity
shareholders of Wincanton plc 16.9 (2.7) 14.2 23.2 (1.7) 21.5
------------------------------------------ ---------- -------------- ------- ---------- -------------- -------
Earnings per share
- basic 6 13.7p 11.5p 18.8p 17.4p
- diluted 6 13.7p 11.5p 18.7p 17.3p
-------------------------------------- ---------- -------------- ------- ---------- -------------- -------
Consolidated statement of comprehensive income
for the six months to 30 September 2023 (unaudited)
Six months to Six months to
30 September 30 September
2023 2022
GBPm GBPm
--------------------------------------------------------------------------------- ---------------- --------------
Profit for the period 14.2 21.5
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income statement
Remeasurements of defined benefit asset (43.2) (1.2)
Deferred tax on remeasurements of defined benefit asset 10.8 (0.4)
---------------------------------------------------------------------------------- ---------------- --------------
(32.4) (1.6)
--------------------------------------------------------------------------------- ---------------- --------------
Items which are or may subsequently be reclassified to the income statement
Foreign exchange gain/(loss) on investments in foreign subsidiaries net of hedged
items (0.1) 0.3
(0.1) 0.3
--------------------------------------------------------------------------------- ---------------- --------------
Total other comprehensive loss for the period, net of income tax (32.5) (1.3)
---------------------------------------------------------------------------------- ---------------- --------------
Total comprehensive income/(loss) attributable to equity shareholders of
Wincanton plc (18.3) 20.2
---------------------------------------------------------------------------------- ---------------- --------------
Consolidated balance sheet
at 30 September 2023 (unaudited)
30 Sept 30 Sept 31 March
2023 2022 (Restated)(1) 2023
Note GBPm GBPm GBPm
---------------------------------------------- -------- -------------------- ---------
Non-current assets
Goodwill and intangible assets 8 104.9 109.8 105.4
Property, plant, equipment and vehicles 9 27.7 29.3 28.8
Right-of-use assets 10 184.6 181.1 176.2
Employee benefits 13 87.0 126.1 116.6
----------------------------------------- --- -------- -------------------- ---------
Total non-current assets 404.2 446.3 427.0
----------------------------------------- --- -------- -------------------- ---------
Current assets
Inventories 2.2 2.3 1.8
Trade and other receivables 174.4 232.5 170.6
Income tax receivable 0.1 - 4.6
Cash at bank and in hand 11 20.6 27.8 13.2
----------------------------------------- --- -------- -------------------- ---------
Total current assets 197.3 262.6 190.2
Total assets 601.5 708.9 617.2
----------------------------------------- --- -------- -------------------- ---------
Current liabilities
Income tax payable - (0.9) -
Lease liabilities 10 (35.7) (38.7) (37.5)
Trade and other payables (294.7) (346.6) (289.6)
Provisions 12 (17.5) (10.4) (11.3)
----------------------------------------- --- -------- -------------------- ---------
Total current liabilities (347.9) (396.6) (338.4)
Net current liabilities (150.6) (134.0) (148.2)
----------------------------------------- --- -------- -------------------- ---------
Total assets less current liabilities 253.6 312.3 278.8
----------------------------------------- --- -------- -------------------- ---------
Non-current liabilities
Borrowings 11 (5.0) (30.0) -
Lease liabilities 10 (177.9) (157.4) (168.9)
Employee benefits 13 (1.8) (1.6) (1.9)
Provisions 12 (28.4) (33.8) (32.0)
Deferred tax liabilities (10.1) (19.1) (16.9)
Total non-current liabilities (223.2) (241.9) (219.7)
----------------------------------------- --- -------- -------------------- ---------
Net assets 30.4 70.4 59.1
----------------------------------------- --- -------- -------------------- ---------
Equity
Issued share capital 12.5 12.5 12.5
Share premium 12.9 12.9 12.9
Merger reserve 3.5 3.5 3.5
Translation reserve (0.4) (0.2) (0.3)
Own shares (5.5) (5.5) (5.6)
Retained profits 7.4 47.2 36.1
----------------------------------------- --- -------- -------------------- ---------
Total equity 30.4 70.4 59.1
----------------------------------------- --- -------- -------------------- ---------
1 Certain comparatives have been restated due to prior year
adjustment as explained in Note 1 'Accounting policies'.
Consolidated statement of changes in equity
at 30 September 2023 (unaudited)
Issued
share Share Merger Translation Total
capital premium reserve reserve Own shares Profit and loss equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 1 April 2023 12.5 12.9 3.5 (0.3) (5.6) 36.1 59.1
Profit for the period - - - - - 14.2 14.2
Other comprehensive
expense - - - (0.1) - (32.4) (32.5)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Total comprehensive
expense - - - (0.1) - (18.2) (18.3)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Share based payment
transactions income - - - - 0.1 0.2 0.3
Tax on share based
payments - - - - - 0.1 0.1
Dividends paid to
shareholders - - - - - (10.8) (10.8)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 30 September
2023 12.5 12.9 3.5 (0.4) (5.5) 7.4 30.4
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 1 April 2022 12.5 12.9 3.5 (0.5) (2.2) 37.4 63.6
Profit for the period - - - - - 21.5 21.5
Other comprehensive
income/(expense) - - - 0.3 - (1.6) (1.3)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Total comprehensive
income - - - 0.3 - 19.9 20.2
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Share based payment
transactions - - - - (3.7) - (3.7)
Tax on share based
payments - - - - 0.4 (0.2) 0.2
Dividends paid to
shareholders - - - - - (9.9) (9.9)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 30 September
2022 12.5 12.9 3.5 (0.2) (5.5) 47.2 70.4
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 1 April 2022 12.5 12.9 3.5 (0.5) (2.2) 37.4 63.6
Profit for the year - - - - - 33.2 33.2
Other comprehensive
income/(expense) - - - 0.2 - (18.2) (18.0)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Total comprehensive
income - - - 0.2 - 15.0 15.2
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Share based payment
transactions expense - - - - (3.4) (0.7) (4.1)
Tax on share based
payments - - - - - (0.3) (0.3)
Dividends paid to
shareholders - - - - - (15.3) (15.3)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 31 March 2023 12.5 12.9 3.5 (0.3) (5.6) 36.1 59.1
========================== ========= ========= ========= ============ =========== ================ ========
Consolidated statement of cash flows
for the six months to 30 September 2023 (unaudited)
Year
Six Six ended
months months 31 March
to 30 to 30
Sept Sept 2023
2023 2022 (Restated)(1)
GBPm GBPm GBPm
---------------------------------------------- --------- -------- ---------------
Operating activities
Profit before tax 19.1 25.8 38.2
Adjustments for:
- depreciation and amortisation 22.4 25.7 52.2
- research and development expenditure
credit - - (0.2)
- net financing costs 4.0 4.2 8.7
- impairment 0.4 - 19.1
- loss on disposal of property, plant
and equipment 1.3 - 1.9
- (profit)/loss on derecognition of
lease liabilities 0.3 (0.6) 2.4
- gain on disposal of businesses - (0.2) (0.4)
- share based payment transactions 0.3 - (0.4)
---------------------------------------------- --------- -------- ---------------
47.8 54.9 121.5
--------------------------------------------- --------- -------- ---------------
(Increase)/decrease in trade and other
receivables (3.9) (25.2) 37.2
(Increase)/decrease in inventories (0.4) 0.3 0.8
Increase/(decrease) in trade and other
payables 5.1 23.0 (33.5)
Increase/(decrease) in provisions 2.3 0.6 (0.6)
Increase in employee benefits before
pension deficit payment 0.6 0.5 0.9
Income taxes received/(paid) 3.7 (4.7) (8.8)
---------------------------------------------- --------- -------- ---------------
Cash generated before pension deficit
payments 55.2 49.4 117.5
Pension deficit payments (11.3) (10.0) (20.1)
---------------------------------------------- --------- -------- ---------------
Cash flows from operating activities 43.9 39.4 97.4
---------------------------------------------- --------- -------- ---------------
Investing activities
Proceeds from sale of property, plant
and equipment 0.6 0.6 2.0
Net cash inflow from disposal of businesses - 0.2 -
Additions of property, plant and equipment (4.3) (7.9) (14.7)
Additions of computer software (0.9) (0.3) (1.8)
---------------------------------------------- --------- -------- ---------------
Cash flows from investing activities (4.6) (7.4) (14.5)
---------------------------------------------- --------- -------- ---------------
Financing activities
Increase/(decrease) in borrowings 5.0 5.0 (25.0)
Own shares acquired - (3.7) (3.7)
Capital repayment of lease obligations (19.4) (18.9) (42.5)
Equity dividends paid (10.8) (9.9) (15.3)
Interest paid on lease liabilities (3.9) (3.0) (6.2)
Interest paid on borrowings (2.8) (2.4) (5.7)
Cash flows from financing activities (31.9) (32.9) (98.4)
---------------------------------------------- --------- -------- ---------------
Net increase/(decrease) in cash and
cash equivalents 7.4 (0.9) (15.5)
Cash and cash equivalents at beginning
of the period 13.2 28.7 28.7
Cash and cash equivalents at end of
the period 20.6 27.8 13.2
---------------------------------------------- --------- -------- ---------------
Represented by:
- Cash at bank and in hand 19.6 25.0 10.4
- Restricted cash, being deposits
held by the Group's
captive insurer 1.0 2.8 2.8
---------------------------------------------- --------- -------- ---------------
20.6 27.8 13.2
--------------------------------------------- --------- -------- ---------------
1 Certain comparatives have been restated due to prior year
adjustment as explained in Note 1 'Accounting policies'.
Notes to the consolidated half year financial statements
for the six months to 30 September 2023 (unaudited)
1 Accounting policies
General information
Wincanton plc (the 'Company') is a company incorporated in the
United Kingdom and domiciled and registered in England and Wales.
The consolidated half year financial statements of the Company for
the six months to 30 September 2023 comprise the Company and its
subsidiaries (together referred to as the 'Group').
These consolidated half year financial statements do not include
all the information required for full annual financial statements
and should be read in conjunction with the consolidated financial
statements for the year ended 31 March 2023. The comparative
figures for the year ended 31 March 2023 have been extracted from
those accounts but do not comprise the full statutory accounts for
that financial year. Except for the 31 March 2023 comparatives, the
financial information set out herein is unaudited but has been
reviewed by the auditors and their report to the Company is set out
below.
The consolidated financial statements for the year ended 31
March 2023 have been reported on by the Group's auditor, delivered
to the Registrar of Companies, and are available upon request from
the Company's registered office at Methuen Park, Chippenham,
Wiltshire, SN14 0WT or at www.wincanton.co.uk. The report of the
auditor was unqualified and did not contain a statement under
Section 498(2) or (3) of the Companies Act 2006.
The Half Year Report, which includes the consolidated half year
financial statements, was approved by the Board on 8 November
2023.
Basis of preparation
The consolidated half year financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting and
also in accordance with the measurement and recognition principles
of UK-adopted international accounting standards. As required by
the Disclosure Guidance and Transparency Rules of the UK's
Financial Conduct Authority, the consolidated half year financial
statements have been prepared on the basis of the accounting
policies adopted by the Group and applied and disclosed in its
consolidated financial statements for the year ended 31 March 2023,
except as described below.
Critical accounting estimates and judgements
The preparation of these consolidated half year financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. In preparing these
consolidated half year financial statements, the nature of the
significant judgements made by management in applying the Group's
accounting policies and the nature of the key areas of estimation
were the same as those that applied to the consolidated financial
statements for the year ended 31 March 2023. The estimates and
judgements that are specific to the preparation of the half year
financial statements that were considered by the Group are the
consideration of the appropriateness of the recognition and
carrying value of the Group's assets (including the determination
of an appropriate discount rate for the purposes of impairment
reviews), provisions and the measurement of the defined benefit
pension scheme obligation.
Adoption of amended standards
Amendments to accounting standards issued by the IASB and
adopted in the period ended 30 September 2023 did not have a
material impact on the results or financial position of the
Group.
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 March 2024 reporting periods and have not been
early adopted by the Group. These standards, amendments and
interpretations are not expected to have a material impact on the
results or financial position of the Group in future reporting
periods.
Prior year restatement
IFRS 16 prior period adjustment
A prior year error had been identified in the 2023 Annual Report
and Accounts in relation to right of use assets and associated
lease liabilities that should have been recognised in earlier
reporting periods from certain non-property assets in periods prior
to the year ended 31 March 2023 but which were not identified by
management in the respective period. This error also impacts the
Group's consolidated half year financial statements for the six
months to 30 September 2022 and accordingly these comparative
figures in the current consolidated half year financial statements
have been restated.
The impact for the consolidated half year financial statements
ended 30 September 2022 is to increase right-of-use assets by
GBP2.4m and increase lease liabilities by GBP2.4m, with the latter
split as an increase of GBP0.9m in current lease liabilities and an
increase of GBP1.5m in non-current lease liabilities. There is no
material impact on the Income Statement for the six month period
ended 30 September 2022. Earnings per share for the six month
period ended 30 September 2022 are unaffected as a result of this
correction
Cash flow statement disclosure prior period adjustment
The lease repayments in the consolidated statement of cash flow
for the year ended 31 March 2023 has been restated to separately
disclose the capital repayment of lease obligations and Interest
paid on lease liabilities in the financing activities to be in
accordance with IFRS 16. This results in the previously disclosed
GBP48.7m being bifurcated into capital repayment of lease
obligations of GBP42.5m and interest paid on lease liabilities of
GBP6.2m. There is no other impact from this restatement on any
other primary statements.
Going concern
The Directors have concluded that it is reasonable to adopt a
going concern basis in preparing the consolidated half year
financial statements. In adopting the going concern basis, the
Directors have considered Wincanton's business activities, together
with factors likely to affect its future development and
performance, as well as Wincanton's principal risks and
uncertainties.
The adoption of the going concern basis is based on an
expectation that the Group will have adequate resources to continue
in operational existence for at least twelve months from the
signing of the consolidated half year financial statements. For the
purpose of this going concern assessment, the Directors have
considered an 18-month period from the balance sheet date, aligned
with the business forecasting outlook period, to 31 March 2025. The
Group has reported a profit before tax of GBP19.1m for the six
months ended 30 September 2023 (30 September 2022: GBP25.8m), has
net current liabilities of GBP150.6m (30 September 2022: GBP134.0m,
31 March 2023: GBP148.2m) and net assets of GBP30.4m (30 September
2022: GBP70.4m, 31 March 2023: GBP59.1m).
The Group's committed facilities at 30 September 2023 comprise a
syndicated Revolving Credit Facility (RCF) of GBP175.0m, which
matures in March 2027. The headroom in the committed facilities is
GBP170.0m (30 September 2022: GBP172.8m) and a net cash position of
GBP15.6m at 30 September 2023 (30 September 2022: net debt position
GBP2.2m). The RCF requires the Group to comply with the following
three financial covenants at 30 September and 31 March each
financial year and the Group operates comfortably within these
covenants with significant headroom:
30 Sept 30 Sept 31 March
Covenant Ratio 2023 2022 2023
-------------------- -------- -------- -------- ---------
Leverage ratio <3.0:1 0.7 1.0 0.5
Interest cover >3.5:1 14.5 22.7 17.1
Fixed charge cover >1.4:1 3.7 2.7 2.6
-------------------- -------- -------- -------- ---------
In arriving at the conclusion on going concern, the Directors
have given due consideration to whether the funding and liquidity
resources above are sufficient to accommodate the principal risks
and uncertainties faced by the Group.
The Directors have reviewed the financial forecasts across a
range of scenarios including an inflationary environment. In all
scenarios, the Group has sufficient liquidity and adequate headroom
in the committed facilities set out above to meet its liabilities
as they fall due throughout the forecast period and the Group
complies with the financial covenants under the RCF at 30 September
and 31 March throughout the forecast period. The Group has also
carried out reverse stress tests against the downside case to
determine the performance levels that would result in a breach of
covenants and the Directors do not consider such a scenario to be
plausible.
Since performing their assessment, there have been no subsequent
changes in facts and circumstances relevant to the Directors'
assessment of going concern.
2 Revenue
Customer contracts are disaggregated by sector with revenue
generally being recognised over time. Further detail is given in
the table below:
Six months to Six months to
30 Sept 2023 30 Sept 2022
Sector revenue GBPm GBPm
-------------------- ------------- -------------
eFulfilment 137.3 122.9
Grocery & Consumer 243.9 260.1
General Merchandise 186.5 221.4
Public & Industrial 127.0 149.2
Total revenue 694.7 753.6
--------------------- ------------- -------------
Revenue from open book contracts totalled GBP555.7m (30
September 2022: GBP541.8m) and from closed book contracts GBP139.0m
(30 September 2022: GBP211.8m).
Revenue of GBP143.9m (30 September 2022: GBP159.9m) and
GBP113.0m (30 September 2022: GBP80.5m) arose from sales to the
Group's two largest customers, being groups of companies under
common control. No other single customer or group of customers
under common control contributed 10% or more to the Group's revenue
in either the current or prior period.
3 Alternative performance measures (APMs)
The alternative performance measures (APMs) or underlying
results reported in these consolidated half year financial
statements represent statutory measures adjusted for items which
management consider could distort the understanding of performance
and comparability year on year.
The Group identifies items as non-underlying based on the
following principles:
-- items that are significant in nature. The event or
transaction is clearly unrelated to, or only incidentally related
to, the trading activities of the Group or the event or transaction
would not reasonably be expected to recur in the foreseeable
future; and/or
-- items that are significant in size. The event is considered
significant in size and therefore distorts the underlying
results.
Items reported as non-underlying are as follows:
Six months to 30 Sept 2023 Six months to 30 Sept 2022
Note GBPm GBPm
---------------------------------------------------- ------ --------------------------- ---------------------------
Cloud computing configuration and customisation
costs a (0.6) (1.9)
Amortisation of acquired intangibles b (1.0) (0.5)
M&A related transaction costs c (0.1) -
Settlement of litigation d (1.8) -
Gain on disposal of businesses e - 0.2
Total expense (3.5) (2.2)
------------------------------------------------------------ --------------------------- ---------------------------
a) Cloud computing configuration and customisation costs
The Group has undertaken a major systems implementation for new
cloud computing software. During the half year further
implementation costs were incurred. Consistent with previous
presentation, these costs are recorded as a non-underlying
item.
b) Amortisation of acquired intangibles
As part of the acquisition of Cygnia in September 2021, the
Group has recorded finite lived intangible assets identified as
part of the purchase price allocation in accordance with IFRS 3
business combinations. The amortisation of these assets is
presented in non-underlying consistent with the presentation of
other acquisition related costs.
c) M&A related transaction costs
Costs relating to aborted merger and acquisition activities in
the period.
d) Settlement of litigation
During the half the Group received a claim relating to a
customer contract that ceased in 2018, which was settled in October
2023. Claims relating to historic contracts are irregular and are
not reasonably expected to recur. Due to the nature of these costs
they have been presented as non-underlying.
e) Gain on disposal of businesses
The Group disposed of its Containers business in 2020 and
adjustments to contingent consideration related to the disposal
have been recognised and reported in non-underlying consistent with
prior periods.
4 Net financing costs
Six months to
30 Sept 2023 Six months to 30 Sept 2022
GBPm GBPm
--------------------------------------------------- -------------- ---------------------------
Recognised in the income statement
Interest income 0.3 -
Interest on the net defined benefit pension asset 3.0 1.7
--------------------------------------------------- -------------- ---------------------------
Total interest income 3.3 1.7
--------------------------------------------------- -------------- ---------------------------
Interest expense (3.1) (2.6)
Interest on lease liabilities (3.9) (3.0)
Unwinding of discount on provisions (0.3) (0.3)
Total interest expense (7.3) (5.9)
--------------------------------------------------- -------------- ---------------------------
Net financing costs (4.0) (4.2)
--------------------------------------------------- -------------- ---------------------------
5 Income tax expense
Six months to Six months to
30 Sept 2023 30 Sept 2022
Recognised in the income statement GBPm GBPm
--------------------------------------------------------------------------- ------------- -------------
Current year tax expense 1.0 2.5
Current year deferred tax expense 3.9 1.8
Total income tax expense 4.9 4.3
--------------------------------------------------------------------------- ------------- -------------
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the income statement:
Remeasurements of defined benefit pension asset (10.8) 0.4
--------------------------------------------------------------------------- ------------- -------------
Recognised directly in equity
Current tax on share based payment transactions (0.2) (0.2)
Deferred tax on share based payment transactions 0.1 -
--------------------------------------------------------------------------- ------------- -------------
In accordance with IAS 34 Interim Financial Reporting the tax
expense recognised in the income statement for the half year is
calculated on the basis of the estimated underlying effective full
year tax rate of 25.2% (30 September 2022: 17.1%).
The main UK corporation tax rate increased to 25% (30 September
2022: 19%).
The closing UK deferred tax asset is calculated using a tax rate
of 25%.
6 Earnings per share
The basic earnings per share of 11.5p (30 September 2022: 17.4p)
is calculated based on the profit attributable to the equity
shareholders of Wincanton plc of GBP14.2m (30 September 2022:
GBP21.5m) and the weighted average shares of 123.0m (30 September
2022: 123.5m) which have been in issue throughout the period.
The diluted earnings per share of 11.5p (30 September 2022:
17.3p) is calculated based on there being 0.5m (30 September 2022:
0.8m) additional shares deemed to be issued at GBPnil consideration
under the Company's share option schemes.
The weighted average number of ordinary shares for both basic
and diluted earnings per share is calculated as follows:
Six months to Six months to
30 Sept 30 Sept
2023 2022
Millions Millions
--------------------------------------------------------------------- -------------- --------------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the period 123.9 123.9
Net effect of shares issued and purchased during the period (0.9) (0.4)
--------------------------------------------------------------------- -------------- --------------
123.0 123.5
--------------------------------------------------------------------- -------------- --------------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares at the end of the period 123.0 123.5
Potential ordinary shares 0.5 0.8
--------------------------------------------------------------------- -------------- --------------
123.5 124.3
--------------------------------------------------------------------- -------------- --------------
An alternative earnings per share measure of underlying EPS is
also provided, being earnings before non-underlying items and
related tax where applicable. The underlying basic earnings per
share of 13.7p (30 September 2022: 18.8p) is calculated based on
the underlying profit attributable to the equity shareholders of
Wincanton plc of GBP16.9m (30 September 2022: GBP23.2m) and diluted
underlying EPS is 13.7p (30 September 2022: 18.7p). The weighted
average number of shares used in these calculations are as
described above.
At 30 September 2023, 1,492,005 (31 March 2023: 1,554,873)
ordinary shares were held by the Employee Benefit Trust in respect
of the Group's various equity compensation schemes. No shares (30
September 2022: 1,000,000) were purchased by the Employee Benefit
Trust in the period.
7 Dividends
During the period a final dividend of 8.8p per share was paid,
relating to the year ended 31 March 2023 (2022: 8.0p per
share).
The Board has declared an interim dividend of 4.4p per share for
the period ended 30 September 2023 (30 September 2022: 4.4p per
share) which will be paid on 15 December 2023 to shareholders on
the register on 17 November 2023, an estimated total payment of
GBP5.4m.
8 Goodwill and intangible assets
Additions and disposals
During the half year to 30 September 2023 the Group acquired
intangible assets with a cost of GBP0.9m (30 September 2022:
GBP0.3m). No disposal was made in the period (30 September 2022:
GBP0.1m).
9 Property, plant, equipment and vehicles
Additions and disposals
During the half year to 30 September 2023 the Group acquired
tangible fixed assets with a cost of GBP4.3m (30 September 2022:
GBP7.9m). Assets with a carrying amount of GBP1.9m were disposed of
during the half year to 30 September 2023 (30 September 2022:
GBP0.5m).
Capital commitments
At 30 September 2023 the Group had entered into contracts to
purchase property, plant and equipment for GBP0.1m (30 September
2022: GBP1.0m); delivery is expected in the second half of the year
to 31 March 2024.
10 Leases
Right of use assets
During the period to 30 September 2023, the Group recognised
right-of-use assets with a value of GBP27.0m (30 September 2022:
GBP12.1m). Right-of-use assets with a carrying amount of GBP0.6m
were disposed of during the period to 30 September 2023 (30
September 2022: GBP2.0m).
Lease liabilities
During the period to 30 September 2023, the Group recognised
lease liabilities with a value of GBP27.0m (30 September 2022:
GBP12.1m). Lease liabilities of GBP0.3m were derecognised during
the period to 30 September 2023 (30 September 2022: GBP2.6m).
11 Analysis of changes in net debt
1 April 30 Sept
2023 Cash flow Non-cash movements 2023
GBPm GBPm GBPm GBPm
---------------------------------------------- --------------- ---------- ------------------- --------------------
Bank loans - (5.0) - (5.0)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Financial liabilities arising from financing
activities - (5.0) - (5.0)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Cash and bank balances 13.2 7.4 - 20.6
---------------------------------------------- --------------- ---------- ------------------- --------------------
Net cash excluding lease liabilities 13.2 2.4 - 15.6
---------------------------------------------- --------------- ---------- ------------------- --------------------
Lease liabilities (206.4) 23.3 (30.5) (213.6)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Net debt including lease liabilities (193.2) 25.7 (30.5) (198.0)
---------------------------------------------- --------------- ---------- ------------------- --------------------
1 April
2022 Non-cash movements 30 Sept
(Restated)(1) Cash flow (Restated)(1) 2022 (Restated)(1)
GBPm GBPm GBPm GBPm
---------------------------------------------- --------------- ---------- ------------------- --------------------
Bank loans (25.0) (5.0) - (30.0)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Financial liabilities arising from financing
activities (25.0) (5.0) - (30.0)
Cash and bank balances 28.7 (0.9) - 27.8
Net cash/(debt) excluding lease liabilities 3.7 (5.9) - (2.2)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Lease liabilities (206.7) 21.9 (11.3) (196.1)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Net debt including lease liabilities (203.0) 16.0 (11.3) (198.3)
---------------------------------------------- --------------- ---------- ------------------- --------------------
1 April
2022 31 Mar
(Restated)(1) Cash flow Non-cash movements 2023
GBPm GBPm GBPm GBPm
---------------------------------------------- --------------- ---------- ------------------- --------------------
Bank loans and overdrafts (25.0) 25.0 - -
---------------------------------------------- --------------- ---------- ------------------- --------------------
Financial liabilities arising from financing
activities (25.0) 25.0 - -
---------------------------------------------- --------------- ---------- ------------------- --------------------
Cash and bank balances 28.7 (15.5) - 13.2
---------------------------------------------- --------------- ---------- ------------------- --------------------
Net cash excluding lease liabilities 3.7 9.5 - 13.2
---------------------------------------------- --------------- ---------- ------------------- --------------------
Lease liabilities (206.7) 48.7 (48.4) (206.4)
---------------------------------------------- --------------- ---------- ------------------- --------------------
Net debt including lease liabilities (203.0) 58.2 (48.4) (193.2)
---------------------------------------------- --------------- ---------- ------------------- --------------------
1 Certain comparatives have been restated due to prior year
adjustment as explained in Note 1 'Accounting policies'.
Cash and bank balances include restricted cash, being deposits
held by the Group's insurance subsidiary of GBP1.0m (31 March 2023:
GBP2.8m).
12 Provisions
Other
Insurance Property provisions Total
GBPm GBPm GBPm GBPm
---------------------------- ------------ ----------- ------------ --------
At 1 April 2023 22.6 14.7 6.0 43.3
Provisions made during the
period 6.2 1.5 2.4 10.1
Provisions used during the
period (4.7) - (0.4) (5.1)
Provisions released during
the period (2.7) - - (2.7)
Unwinding of discount 0.2 0.1 - 0.3
At 30 September 2023 21.6 16.3 8.0 45.9
---------------------------- ------------ ----------- ------------ --------
Current 5.8 5.9 5.8 17.5
Non-current 15.8 10.4 2.2 28.4
---------------------------- ------------ ----------- ------------ --------
21.6 16.3 8.0 45.9
---------------------------- ------------ ----------- ------------ --------
The Group owns 100% of the share capital of an insurance company
which insures certain risks of the Group. The insurance provisions
in the above table are held in respect of outstanding insurance
claims, the majority of which are expected to be paid within one to
seven years. Provisions are released when the obligation no longer
exists or there is a reduction in management's estimate of the
liability. The discount unwinding arises primarily on the
employers' liability policy which is discounted over a period of
seven years at a rate based on the Group's assessment of a risk
free rate.
The property provisions are determined on a site by site basis
and comprise primarily provisions for dilapidations. Dilapidation
provisions comprise dilapidation estimates made in the normal
course of business. Provisions are released when the obligation no
longer exists or there is a reduction in the estimate. They are
expected to be utilised at the end of the lease term.
Other provisions include the estimated costs of warranties and
indemnities provided on disposal of businesses together with
provision for claims and settlements.
13 Employee benefits
The Group operates a funded pension scheme with a net surplus of
GBP85.2m at 30 September 2023 (31 March 2023: GBP114.7m). The
movement in the pension asset and liability position was driven by
external market factors increasing the discount rate offset by a
reduction in credit spreads.
The values of scheme assets and liabilities are shown below.
30 September 30 September 31 March
2023 2022 2023
GBPm GBPm GBPm
--------------------------- ------------- ------------- ---------
Assets 803.8 880.8 891.1
Liabilities (718.6) (756.3) (776.4)
--------------------------- ------------- ------------- ---------
Net defined benefit asset 85.2 124.5 114.7
Presented as:
Non-current asset 87.0 126.1 116.6
Non-current liability (1.8) (1.6) (1.9)
85.2 124.5 114.7
--------------------------- ------------- ------------- ---------
The principal actuarial assumptions for the Scheme and for the
UK unfunded arrangement at the balance sheet date were as
follows:
30 Sept 31 March
2023 30 Sept 2022 2023
% % %
--------------------------------------------- --------- ------------ ---------
Discount rate 5.50 5.15 4.75
Price inflation rate - RPI 3.25 3.55 3.25
Price inflation rate - CPI 2.50 2.95 2.50
Rate of increase of pensions in deferment(1) 2.50-3.25 2.50-2.95 2.50-2.50
Rate of increase of pensions in payment(1) 1.90-3.15 2.10-3.40 1.90-3.15
--------------------------------------------- --------- ------------ ---------
(1) A range of assumed rates exists due to the application of
annual caps and floors to certain elements of service.
Sensitivity to changes in assumptions
The sensitivity of the present value of the Scheme's liabilities
and, due to hedging, the fair value of its assets, to changes in
key actuarial assumptions are set out in the following table.
Increase/ (decrease) in surplus
Change in assumption GBPm
--------------------------- -------------------- -------------------------------
Discount rate + 1.00% 9.0
Credit spread + 0.25% 16.0
Price inflation rate - RPI - 0.25% 1.0
Mortality rate + 1 year (21.0)
--------------------------- -------------------- -------------------------------
The illustrations consider the results of only a single
assumption changing with the others assumed unchanged and includes
the impact of the interest rate and inflation rate hedging. In
reality, it is more likely that more than one assumption would
change and potentially the results would offset each other.
14 Contingent liability
From time to time, the Group is notified of legal claims in
respect of work carried out and the potential exposure can be
material. Where management believes the Group is in a strong
position to defend these claims and the likelihood of outflow of
economic benefit is not probable, no provision is made.
In FY22, the Group received notification of a potential claim
from a former customer. At this time, the Group considers that it
is not probable that any claim will result in an outflow of
economic benefit. The Group is actively seeking further information
to substantiate the allegations made. Given the early stage of the
legal and commercial process, it is not practicable to make an
estimate of the potential financial impact. In parallel, the Group
continues to work with its insurance providers to confirm coverage
if required.
15 Related parties
Related party relationships exist with the Group's subsidiaries,
key management personnel, pension schemes and employee benefit
trust. A full explanation of the Group's related party
relationships is provided on page 158 of the Annual Report and
Accounts 2023.
There are no material transactions with related parties or
changes in the related party transactions described in the last
annual report that have had, or are expected to have, a material
effect on the financial performance or position of the Group in the
six month period ended 30 September 2023.
INDEPENT REVIEW REPORT TO WINCANTON PLC
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises the primary
financial statements and the related explanatory notes.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
T he directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions relating to going concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London, UK
8 November 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Shareholders' enquiries
All administrative enquiries relating to shareholdings should,
in the first instance, be directed to the Registrar at the
following address:
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone: +44 (0) 371 384 2272
Email: customer@equiniti.com
Website: www.shareview.co.uk
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