TIDMUKM
RNS Number : 4605T
UK Mail Group PLC
20 November 2013
20(th) November 2013
UK MAIL GROUP plc
INTERIM RESULTS
For the 6 months ended 30 September 2013
Highlights
-- Group revenues up 7.9%; group operating profit up 63.2%
o Parcels: revenues up 21.4%; operating profit up 91.3%
o Mail: revenues down 0.3%; operating profit up 10.9%
-- Group profit before tax up 63.0% to GBP11.9m (2012: GBP7.3m)
-- Strong balance sheet, net cash at period end of GBP19.5m (2012: GBP15.7m)
-- Interim dividend increased by 10.93% to 7.1p per share (2012: 6.4p)
-- Strong levels of customer retention and new client wins
-- Further growth in market share as competitive and market landscape evolves
-- New products and service offerings, including imail and
ipostparcels, continue to make good progress
-- Plans progressing for relocation of Birmingham hub and increased automation
Guy Buswell, Chief Executive Officer of UK Mail, said:-
"This has been a period of very strong growth, driven
particularly by strong increases in our parcels volumes. Trading to
date in the second half has been in line with our expectations and
we remain confident of a positive outcome for the full year.
"This strong performance reflects the excellent progress made
over the past three years. We have created a robust operational
platform, strong competitive market positions, and we are a much
more consumer-focused business.
"We are now entering the next phase of strategic investment.
With significant steps forward planned over the next two years in
our capacity, customer-facing technology, I.T. infrastructure and
automation, these investments will create the platform for the next
chapter of growth for the Group over the coming years."
For further information, please contact:
UK Mail Group plc
Guy Buswell, Chief Executive Officer 0121 335 1111
Steven Glew, Group Finance Director 0175 370 6070
MHP Communications
John Olsen
James White
Giles Robinson
Gina Bell 0203 128 8139
Introduction
This has been a period of very strong growth for UK Mail. Good
levels of trading continued throughout the first half of the year,
driven particularly by strong increases in Parcels volumes.
Reported Group revenues for the first half increased by 7.9%
compared to the same period in the previous year. Adjusting for
there being three extra working days compared to the same period in
the previous year, underlying Group revenues increased by 5.3%.
Group profit before tax increased by 63.0% on the previous year to
GBP11.9m. We estimate that each extra working day equates to some
GBP0.5m of contribution. Adjusting for this factor the underlying
increase in profit before tax was some 42.5%.
Our Parcels business (43% of group revenues) grew revenues by
21.4% compared to the same period in the previous year. Adjusting
for the extra working days the revenue increase was 18.6%. This
revenue growth was supported by average daily volume growth of 25%,
driven largely by an increase in home deliveries related to on-line
shopping. Despite the pricing environment in Parcels remaining
challenging, and the mix effect, the operating margin improved to
10.6% (2012: 6.7%), leading to strong growth of 91.3% in operating
profit to GBP11.1m (2012: GBP5.8m). On an adjusted basis, taking
account of the additional working days, operating profit grew by
some 67%. We continue to focus on innovation and on operational
efficiency to help drive further margin improvements.
Revenues in our Mail business (48% of group revenues) reduced by
0.3%. The reduction in revenue was caused by a mix change, with
mail volumes actually increasing slightly in the half year,
compared to a market that saw an overall volume decline of some 5%.
This volume growth was driven by strong customer retention and new
customer wins. Operating profit increased by 10.9% to GBP6.3m
(2012: GBP5.7m) and the operating margin increased to 5.5% (2012:
4.9%). On an adjusted basis, taking account of the impact of the
additional working days, operating profit grew by some 8.2%. Our
Mail business remains well positioned in its market with a healthy
pipeline of new business opportunities. We again saw good progress
from imail and related new product innovations.
In our Courier business (3% of group revenues) revenues declined
slightly by 4.4%. Strong operational management reduced operating
costs, helping to increase the operating margin to 17.8% for the
period (2012: 13.5%), and leading to 25.9% growth in operating
profit to GBP1.4m (2012: GBP1.1m).
In our Pallets business (6% of group revenues) revenues declined
by 1.6% and operating profit declined by 26.1% to GBP0.6m (2012:
GBP0.8m).
Over the past three years, excellent progress has been made in
developing the business to its current position, with a clear focus
on network efficiency and product innovation. The result is a
robust operational platform and strong competitive positions in our
chosen markets. The new products that we have introduced have
gained valuable traction, and we have become a significantly more
consumer-focused business. The benefits can be seen in the strong
results achieved for the first half.
We are now entering the next phase of strategic investment, with
significant steps forward planned in our capacity, customer-facing
technology, IT infrastructure and automation. Combined, these will
create the platform for the next chapter of growth over the coming
years.
We continue to make progress with our previously announced plans
to relocate our Birmingham hub and to introduce further automation
into our parcels operations.
Our financial position remains strong, with net funds at the
period end of GBP19.5m (2012: GBP15.7m).
The Board has declared an Interim Dividend of 7.1p; an increase
of 10.9% (2012: 6.4p).
Results
The results can be summarised as follows:
Six months ending 30(th) September
2013 2012 Inc/(Dec)
GBPm GBPm %
Group revenue 243.4 225.7 7.9%
========== ========== ===============
Operating profit 11.8 7.2 63.2%
Net finance income 0.1 0.1 36.4%
---------- ---------- ---------------
Profit before tax 11.9 7.3 63.0%
Taxation (2.6) (1.8) 44.0%
---------- ---------- ---------------
Profit after taxation 9.3 5.5 69.3%
========== ========== ===============
Basic earnings per share 17.0p 10.1p 69.0%
Revenue and operating profit are analysed as follows:
Revenue Operating Profit
Inc/ Inc/
2013 2012 (Dec) (Dec)
2013 2012
GBPm GBPm % GBPm GBPm %
Mail 115.6 115.9 (0.3)% 6.3 5.7 10.9%
Parcels 105.8 87.2 21.4% 11.1 5.8 91.3%
Courier 7.9 8.3 (4.4)% 1.4 1.1 25.9%
Pallets 14.1 14.3 (1.6)% 0.6 0.8 (26.1)%
------- ------- ------------ ------ ------ ----------
Total 243.4 225.7 7.9% 19.4 13.4 45.1%
======= ======= ============
Central costs (7.6) (6.2) 23.8%
------ ------ ----------
Operating Profit 11.8 7.2 63.2%
====== ====== ==========
Parcels
Revenues in Parcels, which comprises the Group's
business-to-business (B2B), business-to-consumer (B2C) and
international parcel delivery service, were up 21.4% for the period
to GBP105.8m (2012: GBP87.2m). On an adjusted basis, taking account
of the three extra working days compared to the same period last
year, Parcels revenues increased by some 18.6%.
We have achieved strong volume growth in both the B2B and B2C
market segments throughout the period, with Parcels average daily
volumes increasing by some 25% compared to the same period last
year. This performance is driven by good customer retention and a
number of good customer wins. We continue to see an on-going volume
mix change towards the lower margin B2C segment.
The strong volume growth allows us to spread our fixed costs
across the increased volumes and so improve our operating margins.
As a result, despite the continued competitive pricing environment,
we have improved our Parcels operating margin to 10.6% for the
period (2012: 6.7%). On a comparable basis (allowing for the three
additional working days) the operating margin would have been some
9.5%.
The good growth in revenue combined with the operating margin
increase has led to a strong growth in the Parcels operating profit
of 91.3% to GBP11.1m (2012: GBP5.8m). On an adjusted basis, taking
account of the additional working days, Parcels operating profit
grew by some 67%.
We are making further progress with developing our specialised
Retail Logistics product, which provides services tailored to the
specific needs of retailers, with a special capability to handle
hanging garments. We opened our specialist distribution centre in
July 2013, and automated sortation capabilities for hanging
garments will be introduced in the second half. We have also
introduced improved software which allows us to seamlessly combine
our Parcels and Courier networks to provide a flexible product to
customers.
Our ipostparcels product allows any customer, whether an
individual or a small business, to arrange parcel collection and
delivery directly with UK Mail through an easy-to-use website. This
product has been successfully established in the market and is
achieving rapid growth, now handling some 12,000 items per week. In
the period we introduced an international service to this product,
and we will continue to develop and market this product which we
see as a good source of future profitable growth.
The overall UK parcels market is growing rapidly but remains
highly competitive. We continue to be successful in winning new
customers as a result of our high service levels, low-cost network,
our strong brand in the market, and dislocation elsewhere in the
market. To allow us to handle these increasing volumes we continue
to expand our capacity, with three sites in our fifty-strong
network having been expanded during the period and a further eight
earmarked for expansion in the next 12 months.
Our strategy in Parcels is to position ourselves as a high
quality operator, differentiated by our provision of the
value-added services that customers increasingly demand. We have
already made important progress with our driver scanners, and new
software and systems will be implemented in the coming months to
provide customers with industry leading service and functionality.
This will include the capability to provide a next day delivery
service that offers clear one-hour delivery and collection windows
which can easily be re-arranged, and the use of I.T. to provide
added functionality and information including text alerts and a web
presence through which recipients can readily manage their
delivery. We also expect to launch a service within the next six
months which will allow customers to deliver and collect parcels
from locker boxes and parcel shops. As a result, we will be even
more clearly differentiated as a "best in class" parcels
operator.
Automation/New Hub
We are continuing to progress our plans to introduce further
automated sortation into our Parcels operations. The expectation
remains that this will cost some GBP20m which we will incur over
the course of this and the next financial year. We have spent
GBP0.5m in the first half of this year with a further GBP4.5m
planned for the second half with the balance to be spent in the
next financial year.
We are targeting a double digit net return on the investment we
make. We expect the automated sortation to go live in early 2015
with the full run rate of benefits being achieved from September
2015.
The timing of our plans for automation is linked to the
relocation of our Birmingham hub which is required due to the HS2
rail link. Following Parliamentary approval of the Paving Bill for
HS2, we expect to complete our contract with HS2 and for it to
become unconditional in December 2013. Subject to receipt of
planning consent, we would expect construction to start in early
2014 and to be completed by the autumn of 2014.
We expect that our capital contribution to the building of the
new hub will be some GBP10m which covers the enhancement of the
site and building beyond the scale of the current facility. Of this
amount some GBP5m will be incurred in the second half of this
financial year with the balance in the next financial year.
The expenditure on the new hub together with the automation
expenditure, will be covered from existing cash resources and new
bank facilities.
Mail
Mail revenues declined by 0.3% to GBP115.6m (2012: GBP115.9m).
On an adjusted basis, taking account of the three extra days
compared to the same period last year, Mail revenues declined by
some 2.6%. This decline however was largely caused by a mix change
towards Customer Direct Access (CDA) mail, which carries a lower
revenue per item.
Our mail volumes actually increased slightly compared to the
prior year, which compares to the expected overall UK mail market
decline in volumes of some 5% per annum. This growth in market
share has been achieved through generating additional mail volumes
from existing customers, and a number of new customer wins.
Mail operating profits increased by 10.9% to GBP6.3m (2012:
GBP5.7m), and the operating margin increased to 5.5% (2012: 4.9%).
On a comparable basis (allowing for the three additional working
days) the operating margin would have been some 5.1%.
To increase the efficiency of our operations and to provide
additional facilities to our customers we have invested in two new,
state of the art, mail sortation machines, at a capital cost of
some GBP0.8m which reflects our confidence in the future prospects
of our mail business.
UK Mail remains a market leader with an operational template
that is ideally suited to adapt to the demands of an evolving mail
market, and we have continued to focus on growing our business by
gaining additional volumes from new and existing customers.
An important factor in this volume growth is product innovation.
imail, our web-to-print postal service, continues to grow strongly.
We have invested to increase our capacity and to provide additional
services, such as high speed insertion, and we are now developing
this product further to support its market leadership, including
the addition of data services. imail monthly volumes are now some
two million items, average daily volumes are more than 60% higher
than a year ago, and we are identifying new areas where the product
can be applied.
In the coming months we will also be developing our plans for
the rapidly growing Packets market, where we see a good opportunity
to further increase our market share.
Courier
Revenues in our Courier business, which provides same-day
delivery services, decreased slightly by 4.4% to GBP7.9m (2012:
GBP8.3m). We are continuing to focus on national contracts that can
leverage our network and blue chip customer base. Operating margins
increased to 17.8% (2012: 13.5%) helping to increase operating
profit by 25.9% to GBP1.4m (2012: GBP1.1m). The increase in
operating margin reflects the actions management have taken to
improve effectiveness and reduce overheads in the business.
We have now developed a highly efficient nationwide courier
network with a proven ability to support national contracts, which
adds to our ability to offer a fully integrated proposition and
supports product development across the Group.
Pallets
Revenues in our Pallets business, which provides a nationwide
palletised goods delivery service, decreased by 1.6% to GBP14.1m
(2012: GBP14.3m). Operating profit for the period declined by 26.1%
to GBP0.6m (2012: GBP0.8m).
The Pallets business is based on a national network of members.
In the last financial year we experienced temporary gaps in the
network which reduced input volumes and gave rise to additional
delivery costs. Those gaps are resolved although it will take time
for the new members to achieve the sales volumes that would be
expected from established members. This means that operating
profits in the current financial year will be held back from
previous achieved levels.
Changes we have made to our Pallets business have resulted in a
more sustainable business model for the future and we remain
convinced that it can be successful in a market with good long term
growth prospects.
Central costs
Central costs increased by 23.8% to GBP7.6m (2012: GBP6.2m).
This increase is largely due to increased I.T. costs, reflecting
our increased investment in this key area.
Finance costs
We have benefitted from the good cash balances maintained in the
period. As a result we generated interest income of GBP0.1m (2012:
GBP0.1m).
Cash Flow and Balance Sheet
The Group has a strong balance sheet with net funds at the end
of the period of GBP19.5m (2012: GBP15.7m).
Net cash inflow from operating activities totalled GBP4.7m
(2012: GBP8.3m). Net cash outflow for the period was GBP8.2m (2012:
GBP3.4m) which included GBP9.3m of cash consumed in working capital
(2012: GBP1.0m). The normal first half trend for our business is of
a working capital outflow, this outflow is larger than normal
reflecting increased trade levels and some increases in the trading
terms our customers require.
Capital expenditure for the period, including assets acquired
under finance leases, was GBP6.7m (2012: GBP4.7m). The capital
expenditure for the period includes GBP2.6m on network and
automation equipment and GBP3.3m on IT, as we continue to develop
our systems infrastructure.
The Group paid GBP6.8m (2012: GBP6.4m) of dividends during the
period being the 12.4p final dividend approved at the AGM on 10
July 2013 (2012: 11.8p).
Earnings per share
Basic earnings per share increased 69% to 17.0p (2012:
10.1p).
Dividend
The Board has declared an increased Interim Dividend of 7.1p; an
increase of 10.9% (2012: 6.4p), to be paid on 17 January 2014 to
shareholders registered on 6 December 2013.
CURRENT TRADING & OUTLOOK
Trading in the initial weeks of the second half has been in line
with our expectations.
We continue to expect that the rate of year-on-year Parcels
volume growth moderates in the second half compared to that
achieved in the first, as we annualise the higher growth achieved
in the second half of last year. As we move into the peak period
running up to Christmas, we will be highly disciplined in balancing
our volumes with our capacity and our infrastructure, such that our
very high service levels are maintained. In Mail, we expect our
market share to continue to grow. We therefore remain confident of
good progress for the remainder of 2013 and a positive outcome for
the full year.
UK Mail is already a well invested business with very strong
competitive positions in our chosen markets, and those markets
continue to provide us with attractive further opportunities.
Having seen the clear benefits of the strategic progress of recent
years, we are now entering a new phase of investment for future
growth, to ensure that we are able to capitalise fully on those
opportunities in the years ahead.
We therefore remain confident of our ability to generate
sustainable profitable growth, and increased shareholder value,
over the medium term and beyond.
Guy Buswell
Chief Executive Officer
ADDITIONAL DISCLOSURES
Principal risks and uncertainties facing the business
UK Mail's business and share price may be affected by a number
of risks, not all of which are within our control. The process UK
Mail has in place for identifying, assessing and managing risks is
set out in the Corporate Governance Report on page 26 of the 2013
Annual Report and Accounts. The specific principal risks and
uncertainties that may affect the Group's performance, together
with relevant mitigating factors as identified by the Group's risk
management process were discussed on page 16 of the Group's 2013
Annual Report and Accounts. These included risks relating to HS2,
IT systems, business continuity, legislation and regulation,
competition and fuel factors, in addition to financial risks
including credit risk. It is considered that these still remain the
most likely areas of potential risk and uncertainty, with the
position unchanged from that set out in the 2013 Annual Report and
Accounts.
Cautionary statement
This interim announcement contains certain forward-looking
statements, which have been made by the directors in good faith
based on the information available to them up to the time of the
approval of this report and such information should be treated with
caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking
information. Nothing in this report should be construed as a profit
forecast.
Going concern
As stated in note 2 to the condensed consolidated interim
financial statements, the Directors are satisfied that the Group
has sufficient resources to continue in operation for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the condensed consolidated interim
financial statements.
Related-party transactions
As stated in note 17 to the condensed consolidated interim
financial statements, there were no transactions with related
parties during the six months ended 30 September 2013 which have
had a material effect on the results or the financial position of
the Group. The nature of the related party transactions has not
changed from those described in the Group's 2013 Annual Report and
Accounts.
Consolidated Statement of Comprehensive Income
for the six months ended 30
September 2013
Unaudited Unaudited Audited
Six months Six months Year to
to 30 September to 30 September 31 March
2013 2012 2013
Note GBPm GBPm GBPm
Revenue 6 243.4 225.7 475.4
Cost of sales (212.0) (201.6) (420.7)
Gross profit 31.4 24.1 54.7
Administrative expenses (19.6) (16.9) (37.0)
----------------- ----------------- ----------
Operating profit 6 11.8 7.2 17.7
Finance income 0.1 0.1 0.2
Finance costs - - (0.1)
----------------- ----------------- ----------
Profit before taxation 11.9 7.3 17.8
Total taxation 12 (2.6) (1.8) (4.3)
----------------- ----------------- ----------
Profit for the period 9.3 5.5 13.5
----------------- ----------------- ----------
Total comprehensive income
attributable to:
Equity holders of the
company 9.3 5.5 13.5
================= ================= ==========
Basic earnings per share 13 17.0p 10.1p 24.7p
Diluted earnings per
share 13 16.9p 10.1p 24.6p
The notes on the following pages form an integral part of these condensed
consolidated interim financial statements
Consolidated Balance Sheet
at 30 September 2013
Unaudited Unaudited
30 30 Audited
September September 31 March
2013 2012 2013
Note GBPm GBPm GBPm
Assets
Non-current assets
Goodwill 7 9.5 9.5 9.5
Intangible assets 7 5.8 4.9 4.9
Investment properties 7 1.8 1.8 1.8
Property, plant and
equipment 7 35.2 33.1 33.5
Deferred tax assets 0.4 0.3 0.3
52.7 49.6 50.0
----------- ------------ ----------
Current assets
Inventories 0.4 0.2 0.3
Trade and other receivables 70.0 62.0 66.7
Cash and cash equivalents 10 20.0 18.2 28.2
90.4 80.4 95.2
----------- ------------ ----------
Liabilities
Current liabilities
Borrowings 10 (0.5) (1.4) (0.8)
Trade and other payables (69.7) (62.1) (74.3)
Current tax liabilities (2.8) (1.9) (2.3)
Provisions 11 (0.2) (0.7) (0.3)
(73.2) (66.1) (77.7)
----------- ------------ ----------
Net current assets 17.2 14.3 17.5
----------- ------------ ----------
Non-current liabilities
Borrowings 10 - (1.1) (0.4)
Deferred tax liabilities (1.4) (2.0) (1.7)
Provisions 11 (1.2) (0.9) (1.0)
(2.6) (4.0) (3.1)
----------- ------------ ----------
Net assets 67.3 59.9 64.4
=========== ============ ==========
Shareholders' equity
Ordinary shares 8 5.5 5.5 5.5
Share premium 8 15.3 15.3 15.3
Retained earnings 46.5 39.1 43.6
Total shareholders'
equity 67.3 59.9 64.4
=========== ============ ==========
Consolidated Statement of Cash Flows
for the six months ended 30 September 2013
Unaudited Unaudited
Audited
Six months Six months Year to
to 30 September to 30 September 31 March
2013 2012 2013
Note GBPm GBPm GBPm
Continuing operations
Operating activities
Cash generated from operations 9 7.0 10.0 31.1
Finance income received 0.1 0.1 0.1
Finance costs paid - - (0.1)
Taxation paid (2.4) (1.8) (4.1)
Net cash inflow from operating
activities 4.7 8.3 27.0
----------------- ----------------- ---------- ----
Investing activities
Proceeds from disposal of property,
plant and equipment 7 0.1 0.1 -
Purchase of property, plant
and equipment 7 (3.7) (3.0) (6.2)
Purchase of intangible assets 7 (1.7) (1.1) (1.6)
Net cash outflow from investing
activities (5.3) (4.0) (7.8)
----------------- ----------------- ---------- ----
Financing activities
Dividends paid to shareholders 14 (6.8) (6.4) (9.9)
Repayment of finance lease
liabilities 10 (0.7) (0.4) (0.8)
Net proceeds from issue of
ordinary share capital 0.1 0.1 0.1
Purchase of UK Mail shares
by the Company's Employee Share
Ownership Trust (0.2) - -
Repayment of borrowings 10 - (1.0) (2.0)
Net cash outflow from financing
activities (7.6) (7.7) (12.6)
----------------- ----------------- ---------- ----
Net (decrease)/increase in
cash and cash equivalents 10 (8.2) (3.4) 6.6
Cash and cash equivalents at
the start of the period 10 28.2 21.6 21.6
Cash and cash equivalents at
the end of period 10 20.0 18.2 28.2
================= ================= ========== ====
Consolidated Statement of Changes in Shareholders' Equity (unaudited)
Attributable to equity holders of the
company
Ordinary Share Retained Total
shares premium earnings equity
Note GBPm GBPm GBPm GBPm
Balance as at 1 April 2013 5.5 15.3 43.6 64.4
Profit for the period - - 9.3 9.3
---------- ----------- -------------- ----------
Total comprehensive income for
the period - - 9.3 9.3
---------- ----------- -------------- ----------
Dividends paid to shareholders 14 - - (6.8) (6.8)
Purchase of UK Mail shares
by the ESOT - - (0.1) (0.1)
Employees' share option
scheme:
- share based payments - - 0.4 0.4
- deferred tax on employee
share options - - 0.1 0.1
Total transactions with
shareholders recorded
directly
in equity - - (6.4) (6.4)
---------- ----------- -------------- ----------
Balance as at 30 September
2013 5.5 15.3 46.5 67.3
---------- ----------- -------------- ----------
Balance as at 1 April 2012 5.5 15.3 40.1 60.9
Profit for the period - - 5.5 5.5
---------- ----------- -------------- ----------
Total comprehensive income for
the period - - 5.5 5.5
---------- ----------- -------------- ----------
Dividends paid to shareholders 14 - - (6.4) (6.4)
Employees' share option
scheme:
- deferred tax on employee
share options - - (0.1) (0.1)
Total transactions with
shareholders recorded
directly
in equity - - (6.5) (6.5)
---------- ----------- -------------- ----------
Balance as at 30 September
2013 5.5 15.3 39.1 59.9
---------- ----------- -------------- ----------
Balance as at 1 April 2012 5.5 15.3 40.1 60.9
Profit for the year - - 13.5 13.5
---------- ----------- -------------- ----------
Total comprehensive income for
the year - - 13.5 13.5
---------- ----------- -------------- ----------
Dividends paid to shareholders 14 - - (9.9) (9.9)
Employees' share option
scheme:
- share-based payments - - (0.1) (0.1)
Total transactions with
shareholders recorded
directly
in equity - - (10.0) (10.0)
---------- ----------- -------------- ----------
Balance as at 31 March 2013 5.5 15.3 43.6 64.4
---------- ----------- -------------- ----------
Notes to condensed consolidated interim financial statements
1 General information
UK Mail Group Plc ('the Company') and its subsidiaries (together
'the Group') are engaged in the provision of express collection
and delivery services for mail, parcels and palletised goods.
The Company (registration number 02800218) is a public limited
company incorporated and domiciled in England. The address of
its registered office is 120 Buckingham Avenue, Slough, SL1
4LZ. The Company is listed on the London Stock Exchange (LSE:
UKM).
The condensed consolidated interim financial statements were
approved for issue on 19 November 2013.
The condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Within the notes to these financial
statements the half year periods to 30 September 2013 and 2012
are unaudited. Statutory accounts for the year ended 31 March
2013 were approved by the Board of directors on 21 May 2013
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain
an emphasis of matter paragraph and did not contain any statement
under Section 498(2) or (3) of the Companies Act 2006.
2 Basis of preparation
The condensed consolidated interim financial statements for
the half year ended 30 September 2013 have been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Services Authority and with IAS 34, 'Interim financial
reporting' as adopted by the European Union. They do not include
all of the information and disclosures required for full annual
financial statements, and should be read in conjunction with
the consolidated annual financial statements of the Group as
at and for the year ended 31 March 2013, which were prepared
in accordance with IFRSs as adopted by the European Union.
The consolidated financial statements of the Group as at and
for the year ended 31 March 2013 are available upon request
from the Company's registered office at 120 Buckingham Avenue,
Slough, SL1 4LZ or at www.ukmail.com.
The condensed consolidated interim financial statements are
presented in Sterling.
After making enquiries, the directors have a reasonable expectation
that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. The Group
meets its day to day working capital requirements through operating
cash flows, with borrowings to fund acquisitions and capital
expenditure, as necessary. Movements in the Group's overall
net funds position are shown in note 10. The Group has a committed
bank facility in place, comprising of a GBP7m revolving credit
facility until 30 November 2014. Discussions are proceeding
to put in place replacement facilities. Accordingly they continue
to adopt the going concern basis in preparing the condensed
consolidated interim financial statements.
3 Accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are consistent with
those applied by the Group in its consolidated annual financial
statements as at and for the year ended 31 March 2013.
Adoption of new standards, and amendments to standards or interpretations,
which are mandatory for the first time for the financial year
beginning 1 April 2013, have had no material impact on the financial
position and performance of the Group.
4 Changes in accounting estimates
The preparation of the condensed consolidated interim 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 condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those applied to
the consolidated financial statements as at and for the year
ended 31 March 2013.
There have been no material changes in contingent liabilities
during the current interim period.
5 Financial instruments
The activities of the Group exposes it to a number of financial
risks, including credit risk, market risk, price risk, liquidity
risk, foreign exchange risk and capital risk.
These condensed consolidated interim financial statements do
not include all of the financial risk management information
and disclosures required in the annual financial statements,
and should be read in conjunction with the Group's 2013 Annual
Report and Accounts.
There have been no changes in the Group's financial risk management
policies since the year end 31 March 2013.
6 Segmental information
Management has determined the operating segments based on reports
that are reviewed by the Board for making strategic decisions.
These reports reflect the Group's defined management structure,
whereby distinct managers are accountable to the Board for the
results and activities of their identified segments and the
different markets in which they operate. The Board, which is
the Group's chief operating decision maker, considers that the
Group has four reportable operating segments.
The Group's operating segments consist of Mail, Parcels, Courier
and Pallet Services. The Board assesses the performance of the
operating segments based on a measure of operating profit before
net finance costs and taxation.
Central costs comprises of network costs and central support
costs. Central assets comprise mainly of corporate assets, cash,
current and deferred tax balances.
The Group manages its business segments on a national basis,
with all its operations in the UK, as are nearly all of its
customers.
Inter-company transactions, (which are conducted on an arm's
length basis) balances and unrealised gains on transactions
between segments are eliminated. Unrealised losses are also
eliminated.
No individual customer accounted for more than 10% of revenue
in the periods included in these condensed consolidated interim
financial statements.
Six months ended 30 September 2013 (unaudited)
Business Segment
Mail Parcels Courier Pallets Central Total
GBPm GBPm GBPm GBPm GBPm GBPm
Segmental revenue 115.6 105.8 9.1 14.1 - 244.6
Inter-segment revenue - - (1.2) - - (1.2)
------- -------- -------- -------- -------- ---------
Group revenue 115.6 105.8 7.9 14.1 - 243.4
Operating profit/(loss) 6.3 11.1 1.4 0.6 (7.6) 11.8
Finance income 0.1
---------
Profit before taxation 11.9
Taxation (2.6)
---------
Profit for the period 9.3
---------
Assets
Segment assets 41.5 65.2 0.1 9.2 43.9 159.9
Eliminations (10.5) (2.2) - (4.1) - (16.8)
------- -------- -------- -------- -------- ---------
Total assets 31.0 63.0 0.1 5.1 43.9 143.1
------- -------- -------- -------- -------- ---------
Six months ended 30 September
2012 (unaudited)
Business Segment
Mail Parcels Courier Pallets Central Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------
Segmental revenue 115.9 87.2 9.2 14.3 - 226.6
Inter-segment revenue - - (0.9) - - (0.9)
------- -------- -------- -------- -------- ---------
Group revenue 115.9 87.2 8.3 14.3 - 225.7
Operating profit/(loss) 5.7 5.8 1.1 0.8 (6.2) 7.2
Finance income 0.1
---------
Profit before taxation 7.3
Taxation (1.8)
---------
Profit for the period 5.5
---------
Assets
Segment assets 59.7 94.5 0.1 9.4 34.5 198.2
Eliminations (28.2) (35.4) - (4.6) - (68.2)
------- -------- -------- -------- -------- ---------
Total assets 31.5 59.1 0.1 4.8 34.5 130.0
------- -------- -------- -------- -------- ---------
Year ended 31 March 2013 (audited)
Business Segment
Mail Parcels Courier Pallets Central Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 241.6 189.3 18.8 28.0 - 477.7
Inter-segment revenue - - (2.3) - - (2.3)
------- -------- -------- -------- -------- -------
Group revenue 241.6 189.3 16.5 28.0 - 475.4
Operating profit/(loss) 10.7 16.3 2.6 0.8 (12.7) 17.7
Finance income 0.2
Finance costs (0.1)
-------
Profit before taxation 17.8
Taxation (4.3)
-------
Profit for the year 13.5
-------
Assets
Segment assets 52.6 58.6 0.1 9.0 46.5 166.8
Eliminations (17.1) - - (4.5) - (21.6)
------- -------- -------- -------- -------- -------
Total assets 35.5 58.6 0.1 4.5 46.5 145.2
------- -------- -------- -------- -------- -------
30 September 30 September 31 March
2013 2012 2013
Total segment capital expenditure 4.0 2.5 5.0
Central capital expenditure 2.7 2.2 4.1
------
Total capital expenditure 6.7 4.7 9.1
---- ---- ------
Total segment depreciation
and amortisation 2.1 2.3 4.7
Central depreciation and
amortisation 1.7 1.5 3.0
----
Total depreciation and amortisation 3.8 3.8 7.7
---- ---- ----
Property, plant and equipment, intangible assets, goodwill and
7 investment properties
Six months ended 30 September 2013 (unaudited) GBPm
Opening net book value at 1 April
2013 49.7
Additions 6.7
Disposals (0.3)
Depreciation and amortisation (3.8)
Closing net book value at 30 September
2013 52.3
--------
Six months ended 30 September 2012 (unaudited) GBPm
Opening net book value at 1 April
2012 48.5
Additions 4.7
Disposals (0.1)
Depreciation and amortisation (3.8)
Closing net book value at 30 September
2012 49.3
------
Year ended 31 March 2013 (audited) GBPm
Opening net book value at 1 April
2012 48.5
Additions 9.1
Disposals (0.2)
Depreciation and amortisation (7.7)
Closing net book value at 31 March
2013 49.7
------
8 Share Capital
Number
of Ordinary Share Unaudited
ordinary shares premium Total
Capital shares GBPm GBPm GBPm
At 1 April 2013 54,732,981 5.5 15.3 20.8
Allotted under SAYE schemes 1,501 - - -
------------- --------- -------- ---------------
At 30 September 2013 54,734,482 5.5 15.3 20.8
------------- --------- -------- ---------------
At 1 April 2012 54,731,471 5.5 15.3 20.8
Allotted under SAYE schemes 1,510 - - -
------------- --------- -------- ---------------
At 30 September 2012 54,732,981 5.5 15.3 20.8
------------- --------- -------- ---------------
The Company's Employee Share Ownership Trust ('ESOT') holds shares
in the Company for subsequent transfer to employees under its
incentive scheme awards. Shares held by the ESOT are not voted
at shareholder meetings and do not accrue dividends. At 31 March
2013 the ESOT held a total of 55,493 shares (31 March 2012: 126,471
shares). During the six months to 30 September 2013, the ESOT
settled 20,473 shares following the successful vesting of the
2010 SAYE plan (Six months to 30 September 2012: 25,400 shares
under the 2009 SAYE plan), 51,100 shares following the successful
vesting of the 2010 LTIP plan (Six months to 30 September 2012:
no shares), and repurchased 31,811 shares at GBP5.10 (Six months
to 30 September 2012: no shares), and as a result held 15,731
shares at 30 September 2013 (30 September 2012: 101,071 shares).
9 Reconciliation of profit to net cash flow generated from operations
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 September 30 September 31 March
2013 2012 2013
GBPm GBPm GBPm
Profit for the period 9.3 5.5 13.5
Taxation 2.6 1.8 4.3
Finance income receivable (0.1) (0.1) (0.2)
Finance costs payable - - 0.1
Depreciation and amortisation 3.8 3.8 7.7
Loss on disposal of property,
plant and equipment 0.3 - 0.2
Share-based payments 0.4 - (0.1)
Decrease/(increase) in
trade and other receivables (3.3) 1.4 (3.2)
(Increase)/decrease in
inventories (0.1) - (0.1)
(Decrease)/increase in
trade and other payables (6.0) (2.0) 9.6
(Decrease)/increase in
provisions 0.1 (0.4) (0.7)
Net cash flow generated
from operations 7.0 10.0 31.1
------------- ------------- --------- ----
10 Analysis of net funds/(debt)
Unaudited
Audited At 30
At 1 April September
2013 Cash flow Other 2013
GBPm GBPm GBPm GBPm
Cash at bank and in hand 28.2 (8.2) - 20.0
Total cash 28.2 (8.2) - 20.0
------------ ---------- ------- ----------- -----
Debt due within one year - - - -
Finance leases due within
one year (0.8) 0.7 (0.4) (0.5)
Debt due after one year - - - -
Finance leases due after
one year (0.4) - 0.4 -
Total debt (1.2) 0.7 - (0.5)
------------ ---------- ------- ----------- -----
Net funds 27.0 (7.5) - 19.5
------------ ---------- ------- ----------- -----
Unaudited
Audited At 30
At 1 April September
2012 Cash flow Other 2012
GBPm GBPm GBPm GBPm
Cash at bank and in hand 21.6 (3.4) - 18.2
Total cash 21.6 (3.4) - 18.2
------------ ---------- ------- -----------
Debt due within one year (1.0) 1.0 (1.0) (1.0)
Finance leases due within
one year (0.8) 0.4 - (0.4)
Debt due after one year (1.0) - 1.0 -
Finance leases due after
one year (0.4) - (0.7) (1.1)
Total debt (3.2) 1.4 (0.7) (2.5)
------------ ---------- ------- -----------
Net funds 18.4 (2.0) (0.7) 15.7
------------ ---------- ------- -----------
Audited
Audited At 31
At 1 April March
2012 Cash flow Other 2013
GBPm GBPm GBPm GBPm
Cash at bank and in
hand 21.6 6.6 - 28.2
------------ --------
Total cash 21.6 6.6 - 28.2
-------------- ------------ -------- --------
Debt due within one
year (1.0) 1.0 - -
Finance leases due within
one year (0.8) 0.8 (0.8) (0.8)
Debt due after one year (1.0) 1.0 - -
Finance leases due after
one year (0.4) - - (0.4)
------------ --------
Total debt (3.2) 2.8 (0.8) (1.2)
-------------- ------------ -------- --------
Net funds 18.4 9.4 (0.8) 27.0
-------------- ------------ -------- --------
11 Provisions for liabilities
Unaudited Unaudited Unaudited
Restructuring Property Total
costs related Provisions
Six months ended 30 September
2013 GBPm GBPm GBPm
At 1 April 2013 0.5 0.8 1.3
Provided during the period - 0.2 0.2
Utilised during the period (0.1) - (0.1)
At 30 September 2013 0.4 1.0 1.4
---------------- ------------ -------------
Unaudited Unaudited Unaudited
Restructuring Property Total
costs related Provisions
Six months ended 30 September
2012 GBPm GBPm GBPm
At 1 April 2012 1.4 0.7 2.1
Provided during the period - 0.2 0.2
Utilised during the period (0.6) (0.1) (0.7)
At 30 September 2012 0.8 0.8 1.6
--------------- ---------- ------------
Audited Audited Audited
Restructuring Property Total
costs related Provisions
Year ended 31 March 2013 GBPm GBPm GBPm
At 1 April 2012 1.4 0.7 2.1
Provided during the
period - 0.4 0.4
Utilised during the
period (0.9) (0.3) (1.2)
At 31 March 2013 0.5 0.8 1.3
--------------- ---------- ------------
The provision for property leases relates to dilapidations on
properties under leases expiring within 1 year and up to 13 years.
The properties have been inspected by the Group Property Manager,
and estimates made for the anticipated dilapidation expenditure
to be incurred prior to sub-letting, or reversion of the lease.
The provision for restructuring costs relates to costs expensed
in the year ended 31 March 2012, and relates mainly to an onerous
lease expiring within four years.
12 Taxation
Taxation is provided based on management's best estimate of the
effective tax rate expected for the full financial year. The
estimated annual tax rate used for the six months to 30 September
2013 is 22.0% (Six months to 30 September 2012: 25.0%, Year to
31 March 2013: 24.3%).
This reduction reflects the fall in the UK Corporation tax rate
from 24% to 23% on 1 April 2013 and the impact on deferred tax
of further reductions to 21% (effective from 1 April 2014) and
20% (effective from 1 April 2015) that were substantively enacted
on 2 July 2013.
13 Earnings per share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the
basic earnings per share, adjusted to allow for the issue of
shares on the assumed conversion of all dilutive options.
The earnings per share is calculated as follows;
Unaudited Unaudited Audited
Six months to Six months Year to
30 September to 30 September 31 March
2013 2012 2013
GBPm GBPm GBPm
Profit after tax 9.3 5.5 13.5
The weighted average number of shares used in the calculations
are as follows;
No. of shares No. of shares No. of shares
Weighted average number
of shares in issue 54,685,253 54,573,649 54,632,719
Dilutive effect of options 227,339 14,620 75,042
-------------- ----------------- --------------
Diluted weighted average
number of shares 54,912,592 54,588,269 54,707,761
-------------- ----------------- --------------
Earnings per share - basic 17.0p 10.1p 24.7p
Earnings per share - diluted 16.9p 10.1p 24.6p
14 Dividends
The final dividend for the year ended 31 March 2013 of 12.4p
per share (2012: 11.8p) was paid on 26 July 2013. The GBP6.8m
distribution (2012: GBP6.4m) is reflected in the financial statements
for the six months ended 30 September 2013.
In addition, the Directors propose an interim dividend of 7.1p
per share (2012: 6.4p per share) payable on 17 January 2014 to
shareholders who are on the register at 6 December 2013. This
interim dividend, amounting to GBP3.9m (2012: GBP3.5m) has not
been recognised as a liability in these condensed consolidated
interim financial statements.
15 Commitments and contingencies
Group capital expenditure committed, for the purchase of property,
software, plant and equipment, but not provided for in these
financial statements amounted to GBP64,000 (2012: GBPnil).
16 Events occurring after the reporting period
There are no material events occurring after the reporting period,
other than the proposed dividend referred to in note 14.
17 Related-party transactions
The nature of the related party transactions of the Group has
not changed from those described in the Groups' 2013 Annual Report
and Accounts. There were no transactions with related parties
during the six months ended 30 September 2013 which have had
a material effect on the results or the financial position of
the Group.
Transactions between the Company and its subsidiaries, which
are related parties, have been eliminated on consolidation and
are not disclosed in this note.
18 Risks and uncertainties
The specific principal risks and uncertainties that may affect
the Group's performance, together with relevant mitigating factors
as identified by the Group's risk management process were discussed
on page 16 of the Group's 2013 Annual Report and Accounts. These
included risks relating to HS2, IT systems, business continuity,
legislation and regulation, competition and fuel factors, in
addition to financial risks including credit risk. It is considered
that these still remain the most likely areas of potential risk
and uncertainty, with the position unchanged from that set out
in the 2013 Annual Report and Accounts.
19 Seasonality
Historically, the Group experiences marginally greater demand
for its parcels and palletised goods collection and delivery
services in the second half of the year, as consignments increase
in advance of the Christmas season. Such trends are not discernible
within either the mail or courier markets.
Statement of directors' responsibilities
The Interim report is the responsibility of, and has been approved
by, the directors of UK Mail Group plc. The directors are responsible
for preparing the Interim report in accordance with the Disclosure
and Transparency Rules of the United Kingdom's Financial Services
Authority. The Disclosure and Transparency Rules require that the
accounting policies and presentation applied to the half-yearly
figures must be consistent with those applied in the latest published
annual accounts, except where the accounting policies and presentation
are to be changed in the subsequent annual accounts, in which case
the new accounting policies and presentation should be followed,
and the changes and the reasons for the changes should be disclosed
in the Interim report, unless the United Kingdom Financial Services
Authority agrees otherwise.
The directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with IAS 34,
'Interim financial reporting', as adopted by the European Union,
and that the interim management report includes a fair review of:
-- the important events that have occurred during the first
six
months and their impact on the condensed consolidated
interim
financial statements, and a description of the principal
risks
and uncertainties for the remaining six months of the
financial
year as required by DTR 4.2.7; and
-- related-party transactions that have taken place in the
first
six months of the current financial year and changes in the
related-party
transactions described in the last annual report that have
materially
affected the financial position or performance of the group
during
the first six months of the current financial year as
required
by DTR 4.2.8.
The directors of UK Mail Group plc are listed in the UK Mail Group
Annual Report for the year ended 31 March 2013. A list of current
directors is maintained on the UK Mail Group website: www.ukmail.com.
By order of the Board
Guy Buswell, Chief Executive Steven Glew, Finance Director
19 November 2013 19 November 2013
Independent review report to UK Mail Group plc
Introduction
We have been engaged by the company to review the condensed consolidated
interim financial statements for the six months ended 30 September
2013, which comprises the Consolidated Statement of Comprehensive
Income, Consolidated Balance Sheet, Consolidated Statement of Cash
Flows, Consolidated Statement of Changes in Shareholders' Equity
and related notes. We have read the other information contained
in the interim management report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed consolidated interim financial statements.
Directors' responsibilities
The interim financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing
the interim financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the Group
are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of consolidated interim financial statements
included in this interim financial report has been prepared in accordance
with IAS 34, 'Interim financial reporting', as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the interim
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of the Disclosure and Transparency Rules of the Financial
Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
Scope of review
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Auditing Practices Board for use in the United
Kingdom. 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 Ireland)
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.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of consolidated interim financial
statements in the interim financial report for the six months ended
30 September 2013 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Thames Valley
19 November 2013
Notes:
(a) The maintenance and integrity of the UK Mail Group Plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the half-yearly financial
information since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial information may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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