TIDMWIN
RNS Number : 9813V
Wincanton PLC
09 November 2017
9 November 2017
WINCANTON plc
Half Year Results for the six months ended 30 September 2017
(unaudited)
"Delivering Our Organic Growth Strategy"
Wincanton plc ("Wincanton" or "the Group"), a leading provider
of supply chain solutions in the UK and Ireland, today announces
its half year results for the six months ended 30 September
2017.
Key financial measures 2017 2016 Change
---------------------------------------- ------- ------- -------
Revenue (GBPm) 581.0 561.8 3.4%
Underlying EBITDA (GBPm)(1) 31.5 32.3 (2.5)%
Underlying operating profit (GBPm)(2) 25.7 26.1 (1.5)%
Underlying profit before tax (GBPm)(2) 22.5 20.7 8.7%
Underlying EPS (p)(2) 15.0 14.0 7.1%
Dividend per share - interim (p) 3.27 3.0 9.0%
Net debt (GBPm)(3) (43.5) (32.2)
Statutory results
---------------------------------------- ------- ------- -------
Operating profit (GBPm)(2) 23.5 25.0 (6.0)%
Profit before tax (GBPm) 20.3 19.6 3.6%
Basic EPS (p) 13.7 13.2 3.8%
(1) Underlying EBITDA refers to underlying operating profit
before depreciation and amortisation and is reconciled in Note 2 to
the financial statements.
(2) The section on Alternative Performance Measures (APMs) below
provides further information on these measures, including
definitions and a reconciliation of APMs to statutory measures.
(3) Net debt is the sum of cash and bank balances, bank loans
and overdrafts and other financial liabilities. Note 8 to the
financial statements provides a breakdown of net debt for the
current and prior periods.
Highlights
-- Continuing to deliver against organic growth strategy through
attracting new customers and increasing share of wallet with
existing customers
- New business wins include an expansion of our partnerships
with IKEA and Argos and the introduction of new customers such as
Thales
- Successful renewals including Ibstock, Aggregate Industries
and Argos
- Organic growth particularly in the Retail general merchandise
sector
-- Underlying operating profit decrease of 1.5% to GBP25.7m,
with strong operating profit performance from Retail & Consumer
partly offset by the impact of weaker performance within certain
transport-related activities in Industrial & Transport and the
inclusion of end of contract settlement credits in the prior
year
-- Underlying profit before tax increase of 8.7% to GBP22.5m,
driven by lower net finance charges
-- Restructuring programme underway to deliver greater
efficiencies in the business resulting in an exceptional cost of
GBP2.9m in the half year
Adrian Colman, Wincanton Chief Executive Officer commented:
"In the first half of the year the Group has delivered a good
overall performance. During the period we successfully commenced
operations on a number of new contracts, which have helped mitigate
some of the trading challenges we faced in Industrial &
Transport, highlighting the benefit of our well diversified
operational and customer portfolio. We have reacted quickly to the
challenges identified earlier in the year, taking action by
identifying cost saving initiatives to protect margins and ensure
the business is competitively positioned going forward.
The Group continues to perform well from a stable platform which
will provide the capacity for future investment to deliver against
our organic growth strategy. We look forward to making further
strategic and operational progress to support long term returns for
stakeholders."
For further enquiries please contact:
Wincanton plc
Adrian Colman, Chief Executive Tel: 020 7466 5000
Officer today, thereafter
Tim Lawlor, Chief Financial Tel: 01249 710000
Officer
Buchanan
Richard Oldworth, Victoria Tel: 020 7466 5000
Hayns
A meeting for analysts will be held at Buchanan, 107 Cheapside,
London, EC2V 6DN today, Thursday 9 November 2017, commencing at
9.30am. Wincanton's Half Year Results 2017 are available at
www.wincanton.co.uk
An audio webcast of the analysts' meeting will be available from
12 noon today:
http://vm.buchanan.uk.com/2017/wincanton091117/registration.htm
Half Year Review
for the six months to 30 September 2017
Summary
Results
Revenue and underlying profit before tax have grown by 3.4% and
8.7% respectively in the half year compared to the same period last
year. The Group has delivered this growth through a continued focus
on its organic growth strategy by winning new business and by
expanding wallet share with existing customers. In the first half
the business experienced some challenging trading performance in
certain transport-related activities. In response to this, and to
position the business competitively for the years ahead, a
restructuring programme is being undertaken to reduce the cost base
of the business. As previously reported a restructuring charge of
up to GBP7m for the year is expected, of which GBP2.9m was incurred
in the first six months. Underlying EPS also increased by 7.1% to
15.0p per share (2016: 14.0p per share) driven by lower net finance
charges.
Dividend
The Board is pleased to declare an interim dividend of 3.27p per
Ordinary Share (2016: 3.0p per share).
Board
During the half year Gill Barr joined the Board as a
Non-executive Director. Her background in retail and technology
businesses as well as her broad marketing experience is a strong
addition to the Board. Very sadly, the Group's Chairman, Steve
Marshall, passed away unexpectedly in September and Stewart Oades,
Senior Independent Director has taken on the role of Interim
Chairman whilst the Board conducts a search for a permanent
Chairman.
Key priorities
The Group's priority will be to continue to make further
progress in the delivery of the organic growth strategy. This
requires targeted investments in people and processes, to extend
our capabilities in areas directly relevant to customers in our
existing contract logistics heartland. In this area our W(2) Labs
initiative has created a foundation for innovation within
Wincanton, through a start-up incubator programme. This is helping
us identify and nurture partnerships with providers that will
enhance and extend our e-fulfilment propositions. Additionally, the
2017 triennial review of the pension scheme is underway to agree an
appropriate future funding plan with the Scheme Trustee. The Group
still has a sizeable pension deficit, and so the pension scheme
remains a significant stakeholder of the Group.
Outlook
The Group remains well positioned in its chosen markets and
continues to perform as expected. The Group's restructuring
programme, which will be completed in the second half, will ensure
the business is competitively positioned for the future. During the
second half of the year the Board expects Wincanton to make
continued progress and that full year results for the Group will be
in line with expectations.
Performance summary
The Group has made good progress in the first half of the year
with several significant new contracts commencing in the
period.
Revenue for the six months increased by 3.4% to GBP581.0m (2016:
GBP561.8m) driven primarily by the impact of contract wins
announced in the prior year and strong volume growth with Home
& DIY customers.
Underlying operating profit decreased by 1.5% to GBP25.7m (2016:
GBP26.1m), partly as a result of property-related credits arising
at the end of contract terms in the prior year together with
operational headwinds in Industrial & Transport which have been
partially offset by a strong performance in Retail & Consumer.
As a result, the underlying operating margin has reduced to 4.4%
(2016: 4.6%).
Cost saving opportunities have been identified which will offset
weaker than expected performance in some of the transport-related
activities. The implementation of these cost saving initiatives is
expected to result in a full year exceptional charge of up to GBP7m
of which GBP2.9m has been incurred in the first half of the year.
These savings will also position the business to be more
competitive in the future.
Underlying EPS increased by 7.1% to 15.0p per share (2016: 14.0p
per share) reflecting the reduction in net financing costs which
more than offsets the decrease in underlying operating profit.
Net debt increased to GBP43.5m (30 September 2016: GBP32.2m, 31
March 2017: GBP24.3m) with the cash outflow since 31 March 2017 of
GBP19.2m being after the working capital investment in new
contracts started in the period and the payment of a final dividend
totalling GBP7.6m. The Group's pension scheme deficit stood at
GBP69.3m at 30 September 2017 (30 September 2016: GBP169.2m, 31
March 2017: GBP78.4m).
Trading
The Group's internal management structure, which has remained
constant with the prior period, aligns the Group under two sectors;
Retail & Consumer and Industrial & Transport.
Retail & Consumer
2017 2016 Change
----------------------------------- ----- ----- ------
Revenue (GBPm) 333.9 319.6 4.5%
Underlying operating profit (GBPm) 15.1 11.8 28.0%
Margin (%) 4.5% 3.7% 80bps
----------------------------------- ----- ----- ------
Retail & Consumer reported revenues of GBP333.9m, up 4.5% on
the GBP319.6m reported in the same period in the prior year.
Underlying operating profit was GBP15.1m, up 28.0% (2016:
GBP11.8m) as a result of the commencement of the new contracts
announced in the second half of last year, together with strong
operating performance in existing contracts.
The split of Retail & Consumer revenue by the industry
sectors it serves is as follows:
2017 2016
GBPm GBPm Change
--------------------------- ----- ----- ------
Retail general merchandise 174.6 154.3 13.2%
Retail grocery 106.3 114.4 (7.1)%
Consumer products 53.0 50.9 4.1%
--------------------------- ----- ----- ------
333.9 319.6 4.5%
--------------------------- ----- ----- ------
The overall revenue increase was driven primarily by the impact
of new contract wins and strong volume growth with Home & DIY
customers, reported within Retail general merchandise above. This
growth was partly offset by the impact of lost volumes due to
contract cessations primarily in Retail grocery due to the loss of
a Tesco contract.
Several significant new contracts commenced operations during
the period, including a four-year contract with IKEA to set up and
operate two new distribution centres to support their multichannel
distribution growth strategy; a five-year contract with wilko
managing all UK transport operations from store replenishment to
yard management and backhaul; a three-year contract with Wickes to
operate home delivery of building products where Wincanton has
implemented new technology and a specialist fleet to support their
multichannel strategy; and a three-year warehousing contract with
Argos to manage and support a network reorganisation.
Retail general merchandise has also further expanded its
relationship with IKEA with the award in October of a three-year
contract to provide two-man home delivery services in the South
East of England.
Industrial & Transport
2017 2016 Change
----------------------------------- ----- ----- --------
Revenue (GBPm) 247.1 242.2 2.0%
Underlying operating profit (GBPm) 10.6 14.3 (25.9)%
Margin (%) 4.3% 5.9% (160)bps
----------------------------------- ----- ----- --------
Industrial & Transport reported revenues of GBP247.1m, up
2.0% on the GBP242.2m reported in the same period in the prior
year.
Underlying operating profit was GBP10.6m, down 25.9% (2016:
GBP14.3m). This decrease is a result of lower volumes in Transport
services and weaker than expected operational and financial
performance from certain transport-related activities together with
property-related credits from a contract cessation recognised in
the prior period.
The split of Industrial & Transport revenue by the industry
sectors it serves is as follows:
2017 2016
GBPm GBPm Change
------------------- ----- ----- ------
Transport services 107.5 108.3 (0.7)%
Construction 78.7 67.1 17.3%
Other 60.9 66.8 (8.8)%
------------------- ----- ----- ------
247.1 242.2 2.0%
------------------- ----- ----- ------
The increase in revenue was primarily due to the impact of prior
year contract wins in Transport services and Construction partly
offset by volume pressures in transport operations, especially
containers, and the cessation at the end of the comparative half
year of a contract within defence operations (included in
'Other').
Construction extended and expanded a number of contracts within
the period, including a two-year renewal with Ibstock covering
national distribution of bricks and a four-year renewal with
Aggregate Industries including an expansion of our distribution
services. Within Transport services, the Group's relationship with
Argos was further extended by a two-year renewal covering fleet
maintenance with Pullman Fleet Services. In addition, the Group
extended the services provided to Britvic with a five-year contract
to include their national transport operations, as well as
extending the existing warehouse services contract reported within
Retail & Consumer.
New business wins included a five-year warehousing and
distribution contract with Thales in which Wincanton will become
sole logistics provider, supporting the simplification and
increased efficiency of Thales' supply chain to operate national
distribution and warehousing of their critical component supply
chain.
Net financing costs
2017 2016
GBPm GBPm
------------------------------------------------------ ----- -----
Bank interest payable on loans 2.0 3.1
Interest receivable - (0.1)
------------------------------------------------------ ----- -----
Net interest payable 2.0 3.0
Unwinding of discount on provisions 0.3 0.7
Interest on the net defined benefit pension liability 0.9 1.7
------------------------------------------------------ ----- -----
Net financing costs 3.2 5.4
------------------------------------------------------ ----- -----
Net financing costs were GBP3.2m, GBP2.2m lower overall compared
to the prior year charge of GBP5.4m.
Bank interest payable on loans was GBP2.0m (2016: GBP3.1m), a
reduction of GBP1.1m reflecting the maturity of the US$ Private
Placement in November 2016, the repayment of the GBP25m
Prudential/M&G UK Companies Financing Fund LP facility in July
2017 and the lower average borrowing rate on the remaining
facilities.
The non-cash financing items total GBP1.2m (2016: GBP2.4m) and
comprise the discount unwinding on the Group's provisions for
property and insurance claims, which has reduced primarily due to a
change in the discount rate used for the property provision; plus
the financing charge in respect of the defined benefit deficit,
lower in the year because of a reduction in the opening pension
deficit.
Amortisation of acquired intangibles
The amortisation charge has remained at GBP1.1m (2016: GBP1.1m)
in the period. This is expected to be fully amortised by 31 March
2018.
Exceptional items
2017 2016
GBPm GBPm
--------------------------------------------- ----- -----
Restructuring costs (2.9) -
Pension scheme liability management exercise 1.8 -
Exceptional items (1.1) -
--------------------------------------------- ----- -----
The Group is undertaking a restructuring programme to ensure the
business is competitively positioned for the future. A charge of
GBP2.9m is included as exceptional in the period with an
expectation of a charge of up to GBP7m for the full year.
The Group has also concluded the pension scheme liability
management exercise initiated in conjunction with the Trustee at
the end of last year, reducing liabilities by GBP27.6m and
resulting in settlement gains of GBP1.8m (see Pensions section
below).
Taxation
2017 2016
-------------------------------------------- ----- -----
Underlying profit before tax (GBPm) 22.5 20.7
-------------------------------------------- ----- -----
Underlying tax (GBPm) 4.0 3.6
Tax on amortisation of acquired intangibles
(GBPm) (0.2) (0.2)
Tax on exceptional items (GBPm) (0.5) -
-------------------------------------------- ----- -----
Tax as reported (GBPm) 3.3 3.4
-------------------------------------------- ----- -----
Effective tax rate on underlying profit
before tax (%) 18.0% 17.5%
-------------------------------------------- ----- -----
Underlying tax of GBP4.0m (2016: GBP3.6m) represents an
underlying effective tax rate of 18.0% (2016: 17.5%, March 2017:
18.0%) on underlying profit before tax and is stated before tax
credits of GBP0.2m (2016: GBP0.2) in respect of the amortisation of
acquired intangibles and tax on exceptional items of GBP0.5m (2016:
GBPnil). The effective underlying tax rate applied at the half year
is an estimate of the expected full year rate.
Corporation tax paid in respect of the period was GBP2.9m,
partly offset by a refund in respect of the prior year of
GBP1.1m.
The total net deferred tax asset has reduced to GBP14.6m (2016:
GBP31.1m) primarily as a result of the reduction in the pension
deficit and the deferred tax asset thereon.
Profit after tax and EPS
Profit after tax for the period was GBP17.0m, an increase of
GBP0.8m (2016: GBP16.2m) which translates to a basic EPS of 13.7p
(2016: 13.2p).
Underlying EPS, which excludes from earnings amortisation of
acquired intangibles and, where relevant, exceptional items, has
increased year on year by 7.1% to 15.0p (2016: 14.0p).
The calculation of these EPS measures is set out in Note 5.
Dividends
The Group's policy is to show dividend growth broadly matched to
growth in underlying earnings.
In setting the dividend the Board considers a range of factors,
including the Group's strategy (including downside sensitivities),
the current and projected level of distributable reserves and
projected cash flows.
The Board has declared an interim dividend of 3.27p (2016: 3.0p)
per share relating to the six-month period ended 30 September 2017,
payable in January 2018.
The Group paid a final dividend in the six-month period of 6.1p
per share relating to the period ended 31 March 2017 (2016:
5.5p).
Financial position
The summary financial position of the Group is set out
below:
30 September 2017 30 September 2016 31 March 2017
GBPm GBPm GBPm
--------------------------------------------------------- ----------------- ----------------- -------------
Non-current assets 147.6 155.3 147.9
Net current liabilities (excl. net debt) (134.1) (153.9) (149.8)
Non-current liabilities (excl. net debt/pension deficit) (35.0) (33.5) (34.8)
Net debt (43.5) (32.2) (24.3)
Pensions deficit (gross of deferred tax) (69.3) (169.2) (78.4)
--------------------------------------------------------- ----------------- ----------------- -------------
Net liabilities (134.3) (233.5) (139.4)
--------------------------------------------------------- ----------------- ----------------- -------------
The reduction in net liabilities since the year ended 31 March
2017 of GBP5.1m is represented by the profit after tax of GBP17.0m,
the remeasurement of the pension deficit net of deferred tax of
GBP(0.1)m less the payment of the prior year final dividend of
GBP(7.6)m, movements in equity relating to shares and share based
payment transactions GBP(4.0)m and other movements in equity of
GBP(0.2)m.
Net debt and cash flows
Net debt(1) at 30 September 2017 was GBP43.5m (2016: GBP32.2m),
reflecting a net cash outflow of GBP11.3m over the intervening 12
months and GBP19.2m since 31 March 2017.
The average level of net debt for the six-month period to 30
September 2017 was GBP70.7m, a GBP16.7m increase from the average
of GBP54.0m in the comparative period, primarily reflecting the
investment in mobilising new contracts.
The Group's cash flows for the six months to 30 September are
summarised in the following table:
2017 2016
GBPm GBPm
------------------------ ------ -----
Underlying EBITDA 31.5 32.3
Net capital expenditure (9.1) (4.8)
Working capital (15.2) 0.3
Tax (1.8) 1.0
Net interest (2.1) (2.6)
Other items (4.3) (5.2)
------------------------ ------ -----
Free cash flow (1.0) 21.0
Pension payments (8.8) (7.0)
Dividends (7.6) (6.7)
Own shares acquired (1.8) -
------------------------ ------ -----
Net cash flow (19.2) 7.3
------------------------ ------ -----
The Group incurred a GBP(19.2)m net cash outflow in the period
(2016: GBP7.3m inflow), with a free cash outflow of GBP(1.0)m
(2016: GBP21.0m inflow).
Net capital expenditure was GBP9.1m (2016: GBP4.8m), the
increase on the prior half year being driven by investment to
support new business growth including GBP5.9m for specialist
vehicles and GBP1.8m warehouse fit out. The capital expenditure is
net of cash receipts on sale of assets of GBP0.3m (2016:
GBP0.3m).
The GBP15.2m outflow on working capital in the period is
primarily due to the reversal of year end working capital movements
as previously noted and working capital investment in new contracts
started in the period.
The Group paid cash tax in the period of GBP1.8m (2016: GBP1.0m
refund received in respect of prior years). The cash tax payable
continues to trend below the underlying charge due to the impact of
tax relief on the pension deficit recovery payments made in the
year and on share options exercised.
The amount of cash interest paid, excluding fees, of GBP2.1m
(2016: GBP2.6m) reduced compared to the prior half year due to the
overall reduction in the interest charge.
Other cash outflows include payments in respect of provision
movements. There was a cash outflow of property provisions of
GBP0.8m (2016: GBP1.9m), and this is anticipated to be higher in
the second half of the year as we expect to settle certain
dilapidation claims.
The cash contribution to fund the pension deficit in the current
year to 31 March 2018 will be GBP15.2m (31 March 2017: GBP14.8m);
of which GBP7.6m was paid in the first half, less GBP0.3m for
certain administration costs agreed to be paid directly by the
Group. Total contributions in the period of GBP8.8m comprise the
deficit recovery payments of GBP7.3m plus the additional payments
for the liability management exercise of GBP1.5m.
Own shares were acquired in the period, amounting to GBP1.8m
(2016: GBPnil), in order to satisfy share option awards.
Financing and covenants
The Group's committed facilities at the period end were GBP141m
(2016: GBP205m) and the headroom in these committed facilities to
reported net debt at 30 September 2017 was GBP98m (2016: GBP173m).
The Group also had additional operating overdrafts which provide
day to day flexibility and amount to a further GBP9m in uncommitted
facilities.
At the period end the Group's facilities comprised the
syndicated main bank facility of GBP141.2m which amortises by
GBP8.8m in October 2019, with a second equal amortisation at the
four-year anniversary in October 2020. The GBP25m facility with
Prudential/M&G UK Companies Financing Fund LP was prepaid
without penalty on 14 July 2017 from cash generated in the period
and from other facilities. The Group has consciously reduced
facility levels as overall net debt levels have fallen, most
notably the GBP75m M&G facility has been fully paid down over
the last eighteen months.
The Group maintains a mix of hedging instruments (swaps) to give
an appropriate level of protection against changes in interest
rates. At the half year, GBP20m of debt was at fixed rates and the
balance at floating rates.
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
Covenant Ratio At 30 September 2017
--------------------------- --------- ----------------------
Adjusted net debt: EBITDA <2.75:1 1.08
Interest cover >3.5:1 16.8
Fixed charge cover >1.4:1 3.0
--------------------------- --------- ----------------------
Pensions
The Group operates a number of pension arrangements in the UK
and Ireland.
Defined benefit arrangements
The Wincanton plc Pension Scheme (the Scheme), which closed to
future accrual on 31 March 2014, had an IAS 19 deficit of GBP69.3m
(GBP57.5m net of deferred tax) at 30 September 2017 (September
2016: GBP169.2m, March 2017: GBP78.4m). The following table shows
the reported IAS 19 deficit:
30 Sept 30 Sept 31 March
2017 2016 2017
------------------- --------- --------- ---------
Assets (GBPm) 1,035.4 1,086.0 1,080.5
Liabilities (GBPm) (1,104.7) (1,255.2) (1,158.9)
------------------- --------- --------- ---------
Total (GBPm) (69.3) (169.2) (78.4)
------------------- --------- --------- ---------
Discount rate (%) 2.70 2.30 2.60
------------------- --------- --------- ---------
The movement in the deficit since March 2017 is primarily due to
the employer contributions paid into the Scheme and the impact of
the liability management exercise. The discount rate has increased
from 2.30% at 30 September 2016 to 2.60% at 31 March 2017 and to
2.70% at 30 September 2017. Each 0.1% movement in the rate impacts
the liabilities of the Scheme by 1.8%, currently some GBP20m. Any
movement is mitigated by the level of liability hedging in the
Scheme.
Over recent years, the Trustee has pursued a diversification of
the investment portfolio as part of a de-risking strategy and the
programme has continued in the period ended 30 September 2017. As
at 30 September 2017 the Scheme's investment was split between 50%
in return-seeking assets and 50% in defensive assets.
To hedge the interest and inflation rate risks facing the Scheme
the Trustee is increasing the level of the hedge to 100% of the
Scheme's assets by November 2017, subject to leverage restrictions.
At 30 September 2017 the Scheme had hedged 94% of the value of its
assets against inflation and interest rate risk.
In conjunction with the Trustee, the Group also initiated a
liability management exercise in the form of an Enhanced Transfer
Value in the year to 31 March 2017, whereby deferred members
approaching retirement could choose to transfer their benefits out
of the Scheme in order to access the new flexible retirement
options available. In the period to 30 September 2017 the Group has
recognised an exceptional item of GBP1.8m, being the settlement
gain generated on completion of the exercise, together with an
associated cash outflow to fund the enhanced transfer values and a
reduction in pension liabilities. As part of the exercise the Group
paid top up payments to the Scheme of GBP1.5m resulting in a total
reduction in the deficit on an IAS 19 basis of GBP3.3m. The impact
of the exercise on the assets, liabilities and deficit is shown in
the table below:
IAS 19
GBPm
-------------------------------- -------
Cash Equivalent Transfer Value (24.3)
Liabilities extinguished 27.6
-------------------------------- -------
Deficit reduction 3.3
Group top up (1.5)
-------------------------------- -------
Net gain on settlement 1.8
-------------------------------- -------
Discussions have commenced with the Trustee in respect of the
triennial valuation of the Scheme. The future deficit funding
contributions are subject to the outcome of these discussions which
we expect to become effective in 2018.
Risks
The key risks and uncertainties facing Wincanton in the second
half of the current financial year have not changed materially from
those outlined on pages 24 to 27 of the Annual Report for the year
ended 31 March 2017. The principal commercial and operational risks
are the Group's ability to source new contracts, at an appropriate
financial return for an acceptable level of risk, and subsequent
performance of new and existing contracts. Wincanton has a
diversified customer base which spans large sectors of the UK
economy. The majority of our contracts are open book and we are not
directly exposed to foreign currency movements in our business. The
impact of Britain's decision to leave the EU is being closely
monitored by the Board and will continue to be monitored as the
political and economic consequences become clearer.
Alternative Performance Measures
Alternative Performance Measures (APMs) are used by the Board in
assessing 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. Additionally, underlying EPS is used as a
key performance indicator for the share incentive schemes,
including the Special Option Plan and Long Term Incentive Plan.
These measures are not defined by IFRS and are not intended to be a
substitute for IFRS measures.
The Group presents underlying EBITDA, operating profit and EPS
which are calculated as the statutory measures stated before
amortisation of acquired intangibles and exceptional items,
including related tax where applicable. The table below reconciles
the APMs to the statutory reported measures.
2017 2016
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
Amortisation Amortisation
of acquired Exceptional of acquired
Statutory intangibles items(1) Underlying Statutory intangibles Underlying
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
Revenue (GBPm) 581.0 - - 581.0 561.8 - 561.8
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
EBITDA (GBPm)(2) 30.4 - 1.1 31.5 32.3 - 32.3
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
Operating
profit (GBPm) 23.5 1.1 1.1 25.7 25.0 1.1 26.1
Operating
margin (%) 4.0 4.4 4.4 4.6
Net financing
costs (GBPm) (3.2) - - (3.2) (5.4) - (5.4)
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
Profit before
tax (GBPm) 20.3 1.1 1.1 22.5 19.6 1.1 20.7
Income tax
(GBPm) (3.3) (0.2) (0.5) (4.0) (3.4) (0.2) (3.6)
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
Profit after
tax (GBPm) 17.0 0.9 0.6 18.5 16.2 0.9 17.1
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
Earnings
per share
(p)(3) 13.7 15.0 13.2p 14.0p
Dividend
per share
(p) 3.27 3.27 3.0p 3.0p
Net debt
(GBPm) (43.5) (43.5) (32.2) (32.2)
----------------- --------- ------------ ----------- ---------- --------- ------------ ----------
1 Note 2 provides further detail of exceptional items
2 EBITDA refers to operating profit before depreciation and
amortisation and is reconciled in Note 2.
3 Note 5 provides further detail of underlying earnings per
share.
4 Net debt is the sum of cash and bank balances, bank loans and
overdrafts and other financial liabilities. Note 8 provides a
breakdown of net debt for the current and prior periods.
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 2017 have been prepared in accordance
with IAS 34 Interim Financial Reporting amended in accordance with
changes in IAS 1 Presentation of Financial Statements, as adopted
by the EU; 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 composition of the Board of Directors has changed since the
publication of the Annual Report in May 2017, as noted on page 3. A
list of current Directors is maintained on the Wincanton plc
website at www.wincanton.co.uk.
The above Statement of Directors' responsibilities was approved
by the Board on 8 November 2017.
T Lawlor
Director
Consolidated income statement
for the six months to 30 September 2017 (unaudited)
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2017 2016 2017
Note GBPm GBPm GBPm
Revenue 2 581.0 561.8 1,118.1
---------------------------------------------------- ------- ---------------- ---------------- -------------
Underlying operating profit 2 25.7 26.1 52.1
---------------------------------------------------- ------- ---------------- ---------------- -------------
Amortisation of acquired intangibles (1.1) (1.1) (2.2)
Exceptional items 2 (1.1) - 6.1
---------------------------------------------------- ------- ---------------- ---------------- -------------
Operating profit 2 23.5 25.0 56.0
Financing income 3 - 0.1 0.1
Financing cost 3 (3.2) (5.5) (10.7)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Net financing costs (3.2) (5.4) (10.6)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Profit before tax 20.3 19.6 45.4
Income tax expense 4 (3.3) (3.4) (3.4)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Profit attributable to equity shareholders of
Wincanton plc 17.0 16.2 42.0
---------------------------------------------------- ------- ---------------- ---------------- -------------
Earnings per share
- basic 5 13.7p 13.2p 34.2p
- diluted 5 13.5p 12.9p 33.0p
---------------------------------------------------- ------- ---------------- ---------------- -------------
Consolidated statement of comprehensive income
for the six months to 30 September 2017 (unaudited)
Six Six
months to months to Year
30 Sept 30 Sept ended
2017 2016 31 March 2017
GBPm GBPm GBPm
Profit for the period 17.0 16.2 42.0
------------------------------------------------------------------------- ----------- ----------- ---------------
Other comprehensive (expense)/income
Items which will not subsequently be reclassified to the income
statement
Remeasurements of defined benefit liability (0.1) (68.5) 17.6
Income tax relating to items that will not subsequently be reclassified
to profit or loss - 10.6 (4.0)
------------------------------------------------------------------------- ----------- ----------- ---------------
(0.1) (57.9) 13.6
Items which are or may subsequently be reclassified to the income
statement
Net foreign exchange loss on investment in foreign subsidiaries net of
hedged items - - (0.1)
Effective portion of changes in fair value of cash flow hedges (0.2) 0.1 0.4
Net change in fair value of cash flow hedges transferred to the income
statement - 0.1 0.2
------------------------------------------------------------------------- ----------- ----------- ---------------
(0.2) 0.2 0.5
------------------------------------------------------------------------- ----------- ----------- ---------------
Other comprehensive (expense)/income for the period, net of income tax (0.3) (57.7) 14.1
------------------------------------------------------------------------- ----------- ----------- ---------------
Total comprehensive income/(expense) attributable to equity shareholders
of Wincanton plc 16.7 (41.5) 56.1
------------------------------------------------------------------------- ----------- ----------- ---------------
Consolidated balance sheet
at 30 September 2017 (unaudited)
30 Sept 30 Sept 31 March
2017 2016 2017
Note GBPm GBPm GBPm
---------------------------------------------------- -------- -------- ---------
Non-current assets
Goodwill and intangible assets 84.9 88.9 86.9
Property, plant and equipment 7 48.0 34.4 43.7
Investments, including those equity accounted 0.1 0.1 0.1
Deferred tax assets 14.6 31.9 17.2
----------------------------------------------- --- -------- -------- ---------
147.6 155.3 147.9
----------------------------------------------- --- -------- -------- ---------
Current assets
Inventories 4.4 4.1 4.0
Trade and other receivables 150.2 147.6 133.4
Cash and cash equivalents 8 22.9 50.8 40.9
----------------------------------------------- --- -------- -------- ---------
177.5 202.5 178.3
----------------------------------------------- --- -------- -------- ---------
Current liabilities
Income tax payable (5.0) (9.9) (6.4)
Borrowings and other financial liabilities 8 (0.3) (20.2) (0.2)
Trade and other payables (270.2) (280.2) (265.4)
Employee benefits - (0.3) (0.2)
Provisions 9 (13.5) (15.2) (15.2)
----------------------------------------------- --- -------- -------- ---------
(289.0) (325.8) (287.4)
----------------------------------------------- --- -------- -------- ---------
Net current liabilities (111.5) (123.3) (109.1)
----------------------------------------------- --- -------- -------- ---------
Total assets less current liabilities 36.1 32.0 38.8
----------------------------------------------- --- -------- -------- ---------
Non-current liabilities
Borrowings and other financial liabilities 8 (66.1) (62.8) (65.0)
Employee benefits 10 (69.3) (169.2) (78.4)
Provisions 9 (35.0) (32.7) (34.8)
Deferred tax liabilities - (0.8) -
----------------------------------------------- --- -------- -------- ---------
(170.4) (265.5) (178.2)
----------------------------------------------- --- -------- -------- ---------
Net liabilities (134.3) (233.5) (139.4)
----------------------------------------------- --- -------- -------- ---------
Equity
Issued share capital 12.5 12.4 12.4
Share premium 12.9 12.9 12.9
Merger reserve 3.5 3.5 3.5
Hedging reserve (0.3) (0.5) (0.1)
Translation reserve (0.3) (0.2) (0.3)
Retained earnings (162.6) (261.6) (167.8)
----------------------------------------------- --- -------- -------- ---------
Total equity deficit (134.3) (233.5) (139.4)
----------------------------------------------- --- -------- -------- ---------
Consolidated statement of changes in equity
at 30 September 2017 (unaudited)
Retained earnings
------------------------------
Issued Total
share Share Merger Hedging Translation Profit and equity
capital premium reserve reserve reserve Own shares loss deficit
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ --------- --------- --------- --------- ------------ ----------- --------------- ----------
Balance at 1
April 2017 12.4 12.9 3.5 (0.1) (0.3) (0.5) (167.3) (139.4)
Profit for the
period - - - - - - 17.0 17.0
Other
comprehensive
expense - - - (0.2) - - (0.1) (0.3)
------------------ --------- --------- --------- --------- ------------ ----------- --------------- ----------
Total
comprehensive
income - - - (0.2) - - 16.9 16.7
------------------ --------- --------- --------- --------- ------------ ----------- --------------- ----------
Share based
payment
transactions - - - - - 0.5 (2.9) (2.4)
Current tax on
share based
payments - - - - - - 0.9 0.9
Deferred tax on
share based
payments - - - - - - (0.7) (0.7)
Shares issued 0.1 - - - - (0.1) - -
Own shares
acquired - - - - - (1.8) - (1.8)
Dividends paid to
shareholders - - - - - - (7.6) (7.6)
Balance at 30
September 2017 12.5 12.9 3.5 (0.3) (0.3) (1.9) (160.7) (134.3)
================== ========= ========= ========= ========= ============ =========== =============== ==========
Balance at 1
April 2016 12.4 12.9 3.5 (0.7) (0.2) (3.1) (209.1) (184.3)
Profit for the
period - - - - - - 16.2 16.2
Other
comprehensive
income/(expense) - - - 0.2 - - (57.9) (57.7)
------------------ --------- --------- --------- --------- ------------ ----------- --------------- ----------
Total
comprehensive
income - - - 0.2 - - (41.7) (41.5)
------------------ --------- --------- --------- --------- ------------ ----------- --------------- ----------
Share based
payment
transactions - - - - - 2.0 (3.3) (1.3)
Current tax on
share based
payments - - - - - - 0.6 0.6
Deferred tax on
share based
payments - - - - - - (0.3) (0.3)
Dividends paid to
shareholders - - - - - - (6.7) (6.7)
Balance at 30
September 2016 12.4 12.9 3.5 (0.5) (0.2) (1.1) (260.5) (233.5)
================== ========= ========= ========= ========= ============ =========== =============== ==========
Consolidated statement of changes in equity (continued)
at 30 September 2017 (unaudited)
Retained earnings
-----------------------------
Issued Total
share Share Merger Hedging Translation equity
capital premium reserve reserve reserve Own shares Profit and loss deficit
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
April 2016 12.4 12.9 3.5 (0.7) (0.2) (3.1) (209.1) (184.3)
Profit for the
year - - - - - - 42.0 42.0
Other
comprehensive
income/(expense) - - - 0.6 (0.1) - 13.6 14.1
------------------ --------- --------- --------- --------- ------------ ----------- ---------------- ---------
Total
comprehensive
income - - - 0.6 (0.1) - 55.6 56.1
------------------ --------- --------- --------- --------- ------------ ----------- ---------------- ---------
Share based
payment
transactions - - - - - 2.7 (4.4) (1.7)
Current tax on
share based
payment
transactions - - - - - - 1.1 1.1
Deferred tax on
share based
payment
transactions - - - - - - (0.1) (0.1)
Own shares
acquired - - - - - (0.1) - (0.1)
Dividends paid to
shareholders - - - - - - (10.4) (10.4)
------------------ --------- --------- --------- --------- ------------ ----------- ---------------- ---------
Balance at 31
March 2017 12.4 12.9 3.5 (0.1) (0.3) (0.5) (167.3) (139.4)
================== ========= ========= ========= ========= ============ =========== ================ =========
Consolidated statement of cash flows
for the six months to 30 September 2017 (unaudited)
Six
months Six Year
to 30 months ended
Sept to 30 31 March
2017 Sept 2016 2017
GBPm GBPm GBPm
----------------------------------------------------------------------------- -------- ------------ -------------
Operating activities
Profit before tax 20.3 19.6 45.4
Adjustments for
- depreciation and amortisation 6.9 7.3 14.0
- interest expense 3.2 5.4 10.6
- exceptional items (non cash) - - (4.6)
- share based payment transactions* (2.4) (1.3) (1.7)
----------------------------------------------------------------------------- -------- ------------ -----------
28.0 31.0 63.7
(Increase)/decrease in trade and other receivables (16.4) (8.4) 6.2
(Increase)/decrease in inventories (0.4) 0.7 0.8
Increase in trade and other payables 4.5 8.0 -
Decrease in provisions (1.9) (4.5) (4.3)
(Decrease)/increase in employee benefits before pension deficit payment (1.6) 0.4 0.9
Income taxes (paid)/received (1.8) 1.0 (2.6)
----------------------------------------------------------------------------- -------- ------------ -----------
Cash generated before pension deficit payment 10.4 28.2 64.7
Pension deficit payment (8.8) (7.0) (14.1)
----------------------------------------------------------------------------- -------- ------------ -----------
Cash flows from operating activities 1.6 21.2 50.6
----------------------------------------------------------------------------- -------- ------------ -----------
Investing activities
Proceeds from sale of property, plant and equipment 0.3 0.3 0.1
Proceeds from sale of computer software - - 0.4
Interest received - 0.1 0.1
Additions of property, plant and equipment (9.4) (5.0) (18.0)
Additions of computer software - (0.1) (1.2)
----------------------------------------------------------------------------- -------- ------------ -----------
Cash flows from investing activities (9.1) (4.7) (18.6)
----------------------------------------------------------------------------- -------- ------------ -----------
Financing activities
Own shares acquired (1.8) - (0.1)
Borrowings repaid (25.0) - (20.1)
Increase in borrowings 26.0 7.4 10.1
Equity dividends paid (7.6) (6.7) (10.4)
Interest paid (2.1) (2.7) (6.9)
----------------------------------------------------------------------------- -------- ------------ -----------
Cash flows from financing activities (10.5) (2.0) (27.4)
----------------------------------------------------------------------------- -------- ------------ -----------
Net (decrease)/increase in cash and cash equivalents (18.0) 14.5 4.6
Cash and cash equivalents at beginning of the period 40.9 36.3 36.3
Cash and cash equivalents at end of the period 22.9 50.8 40.9
----------------------------------------------------------------------------- -------- ------------ -----------
Represented by:
- cash at bank and in hand 15.1 41.8 33.0
- restricted cash, being deposits held by the Group's insurance subsidiary 7.8 9.0 7.9
----------------------------------------------------------------------------- -------- ------------ -----------
22.9 50.8 40.9
---------------------------------------------------------------------------- -------- ------------ -----------
* Prior period amounts include the reallocation of cash flows
arising on the settlement of share options
Notes to the consolidated half year financial statements
for the six months to 30 September 2017 (unaudited)
1 Basis of preparation and Statement of compliance
Wincanton plc (the 'Company') is a company incorporated in
England and Wales. The consolidated half year financial statements
of the Company for the six months to 30 September 2017 comprise the
Company and its subsidiaries (together referred to as the 'Group')
and, where relevant, the Group's interests in jointly controlled
entities.
These consolidated half year financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting. As
required by the Disclosure Guidance and Transparency Rules of the
UK's Financial Conduct Authority, the 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 2017.
As stated in the financial statements for the year ended 31 March
2017 the following amendments have been applied where applicable:
amendments to IFRS 12 as a result of Annual Improvements 2014-2016
Cycle; amendments to IAS 7 Disclosure Initiative; and amendments to
IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses.
The adoption of these amendments has not had a significant effect
on the consolidated results or financial position of the Group.
These policies are in accordance with IFRS as adopted by the EU
(Adopted IFRS).
As reported within the 2017 Annual Report and Accounts, IFRS 9
Financial Instruments was issued by the IASB in July 2014, and is
effective for the Group for the year ended 31 March 2019. Applying
IFRS 9 will result in changes to the measurement and disclosure of
financial instruments and introduces a new expected loss impairment
model. The Group does not currently expect adoption of the standard
to have a significant impact on its consolidated results or
financial position, but will result in increased disclosure.
IFRS 15 Revenue from Contracts with Customers was issued by the
IASB in May 2014 and becomes effective for the Group for the year
ended 31 March 2019. The Group expects to apply IFRS 15
retrospectively, with the year ended 31 March 2018 restated as the
comparative period. Under IFRS 15 revenue is recognised when the
customer obtains control of the goods and services transferred by
the Group and the related performance obligations have been
satisfied. The amount recognised reflects the amount of
consideration that the Group expects to be entitled to in exchange
for those goods and services.
The Group will be required to present separate line items for
contract assets and contract liabilities and to disclose further
details on significant changes in these balances, as well as
judgements made in determining which costs of fulfilling a contract
can be capitalised.
The anticipated effects of implementing IFRS 15 include changes
in the timing of revenue recognition on certain contracts for:
costs to fulfil a contract; deferred management fees and revenue
linked to performance measures such as Key Performance Indicators
and gain-share mechanisms. The Group does not expect a significant
impact on the total Group revenue recognised nor on the timing of
this recognition.
IFRS 16 Leases was issued by the IASB in January 2016 and
becomes effective for the Group for the year ended 31 March 2020.
Adoption of this standard will result in the recognition on balance
sheet of assets and liabilities relating to leases which are
currently being accounted for as operating leases. The Group
continues to assess the impact of adopting IFRS 16, with a
significant impact anticipated on the reported assets, liabilities,
and income statement of the Group, as well as extensive additional
disclosures.
These consolidated half year financial statements do not include
all of 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 2017. The
comparative figures for the year ended 31 March 2017 have been
extracted from those accounts but do not comprise the full
statutory accounts for that financial year. Except for the 31 March
2017 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 on page 27.
The consolidated financial statements for the year ended 31
March 2017 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 (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under Section 498(2) or (3) of the Companies Act
2006.
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 significant
judgements made by management in applying the Group's accounting
policies and the key areas of estimation were the same as those
that applied to the consolidated financial statements for the year
ended 31 March 2017.
The Group has net liabilities of GBP134.3m (2016: GBP233.5m)
primarily as a result of the pension deficit as well as previous
retained losses. The reduction in the period principally relates to
the profit for the period and reduced pension deficit offset by
dividend payments. The consolidated half year financial statements
have been prepared on a going concern basis, which assumes the
Group will be able to meet its liabilities as they fall due for the
foreseeable future. The Directors have prepared cash flow forecasts
on the basis of which they expect that the Group will continue as a
going concern.
The Half Year Report, which includes the consolidated half year
financial statements, was approved by the Board on 8 November
2017.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
2 Operating segments
Wincanton plc provides contract logistics services in the UK and
Ireland. In the period to 30 September 2017 the Group managed its
operations in two distinct operating segments; Retail &
Consumer (including retail general merchandise, retail grocery and
consumer products) and Industrial & Transport (including
transport services, construction and other).
The results of the operating segments are regularly reviewed by
the Executive Management Team (EMT) to allocate resources to these
segments and to assess their performance. The Group evaluates
performance of the operating segments on the basis of revenue and
underlying operating profit.
Six months to 30 Sept 2017
Retail & Consumer Industrial & Transport Total
GBPm GBPm GBPm
-------------------------------------- ------------------ ----------------------- ------
Revenue from external customers(1) 333.9 247.1 581.0
-------------------------------------- ------------------ ----------------------- ------
Underlying EBITDA(2) 17.8 13.7 31.5
Depreciation (2.2) (2.7) (4.9)
Amortisation of software intangibles (0.5) (0.4) (0.9)
-------------------------------------- ------------------ ----------------------- ------
Underlying operating profit(2) 15.1 10.6 25.7
Amortisation of acquired intangibles (1.1)
Exceptional items (1.1)
-------------------------------------- ------------------ ----------------------- ------
Operating profit 23.5
Net financing costs (3.2)
-------------------------------------- ------------------ ----------------------- ------
Profit before tax 20.3
-------------------------------------- ------------------ ----------------------- ------
(1) Included in segment revenue is GBP575.7m (2016: GBP557.6m)
in respect of customers based in the UK.
(2) Underlying EBITDA refers to underlying operating profit
before depreciation and amortisation. Underlying operating profit
is stated before amortisation of acquired intangibles and
exceptional items.
Six months to 30 Sept 2016
Retail &
Consumer Industrial & Transport Total
GBPm GBPm GBPm
-------------------------------------- ---------- ----------------------- ------
Revenue from external customers 319.6 242.2 561.8
-------------------------------------- ---------- ----------------------- ------
Underlying EBITDA 15.0 17.3 32.3
Depreciation (2.7) (2.6) (5.3)
Amortisation of software intangibles (0.5) (0.4) (0.9)
-------------------------------------- ---------- ----------------------- ------
Underlying operating profit 11.8 14.3 26.1
Amortisation of acquired intangibles (1.1)
-------------------------------------- ---------- ----------------------- ------
Operating profit 25.0
Net financing costs (5.4)
-------------------------------------- ---------- ----------------------- ------
Profit before tax 19.6
-------------------------------------- ---------- ----------------------- ------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
2 Operating segments (continued)
Year ended 31 March 2017
Retail & Consumer Industrial & Transport Total
GBPm GBPm GBPm
--------------------------------------- ------------------ ----------------------- --------
Revenue from external customers 649.3 468.8 1,118.1
--------------------------------------- ------------------ ----------------------- --------
Underlying EBITDA 32.0 31.9 63.9
Depreciation (5.0) (4.8) (9.8)
Amortisation of software intangibles (1.2) (0.8) (2.0)
--------------------------------------- ------------------ ----------------------- --------
Underlying operating profit 25.8 26.3 52.1
Amortisation of acquired intangibles (2.2)
Exceptional items 6.1
--------------------------------------- ------------------ ----------------------- --------
Operating profit 56.0
Net financing costs (10.6)
--------------------------------------- ------------------ ----------------------- --------
Profit before tax 45.4
--------------------------------------- ------------------ ----------------------- --------
Revenue of GBP103.2m (2016: GBP98.6m) and GBP64.2m (2016:
GBP73.8m) arose from sales to the Group's two largest single
customers, being groups of companies under common control, and is
reported within the Retail & Consumer segment. 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.
The Group incurred a restructuring charge of GBP2.9m primarily
in respect of redundancy costs which is included as an exceptional
item in the period, partly offset by GBP1.8m of settlement gains
following the liability management exercise in the pension scheme
undertaken in the period.
3 Net financing costs
Six Six
months to months to Year
30 Sept 30 Sept ended
2017 2016 31 March 2017
GBPm GBPm GBPm
--------------------------------------------------------------------------------- ----------- ---------------
Recognised in the income statement
Interest income - 0.1 0.1
-------------------------------------------------------------------------- ------ ----------- ---------------
Interest expense (2.0) (3.1) (6.0)
Unwinding of discount on provisions (0.3) (0.7) (1.2)
Interest on the net defined benefit pension liability (0.9) (1.7) (3.5)
-------------------------------------------------------------------------- ------ ----------- ---------------
(3.2) (5.5) (10.7)
-------------------------------------------------------------------------- ------ ----------- ---------------
Net financing costs (3.2) (5.4) (10.6)
-------------------------------------------------------------------------- ------ ----------- ---------------
Recognised in other comprehensive income
-------------------------------------------------------------------------- ------ ----------- ---------------
Foreign currency translation differences for foreign operations -
recognised in the translation
reserve - - (0.1)
-------------------------------------------------------------------------- ------ ----------- ---------------
The interest income relates primarily to the deposits held by
the Group's insurance subsidiary.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
4 Income tax expense
Six Six Year
months to months to ended
30 Sept 30 Sept 31 March
2017 2016 2017
Recognised in the income statement GBPm GBPm GBPm
----------------------------------- ----------- ---------- ---------
Current tax expense
Current year 1.9 2.4 7.0
Adjustments for prior years (0.5) (0.2) (4.3)
----------------------------------- ----------- ---------- ---------
1.4 2.2 2.7
----------------------------------- ----------- ---------- ---------
Deferred tax expense
Current year 1.9 1.2 1.6
Adjustments for prior years - - (0.9)
----------------------------------- ----------- ---------- ---------
1.9 1.2 0.7
----------------------------------- ----------- ---------- ---------
Total income tax expense 3.3 3.4 3.4
----------------------------------- ----------- ---------- ---------
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the Income statement:
Remeasurements of defined benefit pension liability - (10.6) 4.0
--------------------------------------------------------------------------- ----- ------ -----
Recognised directly in equity
Current tax on share based payment transactions (0.9) (0.6) (1.1)
Deferred tax on share based payment transactions 0.7 0.3 0.1
--------------------------------------------------------------------------- ----- ------ -----
(0.2) (0.3) (1.0)
--------------------------------------------------------------------------- ----- ------ -----
In accordance with IAS 34 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 18% (2016:
17.5%, March 2017: 18%).
The main UK Corporation tax rate has reduced from 20% to 19%
with effect from 1 April 2017 and will further reduce to 17% with
effect from 1 April 2020. This should reduce the Group's future
current tax charge accordingly.
The closing UK deferred tax provision is calculated based on the
rate of 17% which was substantively enacted at the balance sheet
date.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
5 Earnings per share
Earnings per share calculation is based on the earnings
attributable to the equity shareholders of Wincanton plc of
GBP17.0m (2016: GBP16.2m) and the weighted average shares of 123.7m
(2016: 122.4m) which have been in issue throughout the period.
The diluted earnings per share calculation is based on there
being 2.5m (2016: 3.5m) 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
30 Sept Year ended
Six months to 2016 31 March 2017
30 Sept 2017 millions millions millions
------------------------------------------------------ ----------------------- -------------- ---------------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the period 123.5 121.9 121.9
Net effect of shares issued and purchased during the
period 0.2 0.5 0.9
------------------------------------------------------ ----------------------- -------------- ---------------
123.7 122.4 122.8
------------------------------------------------------ ----------------------- -------------- ---------------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares at the end
of the period 123.7 122.4 122.8
Effect of share options on issue 2.5 3.5 4.3
------------------------------------------------------ ----------------------- -------------- ---------------
126.2 125.9 127.1
------------------------------------------------------ ----------------------- -------------- ---------------
An alternative earnings per share number is set out below, being
earnings before amortisation of acquired intangibles and
exceptional items, including related tax and exceptional tax items
where applicable, since the Directors consider that this provides
further information on the underlying performance of the Group:
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2017 2016 2017
pence pence pence
------------------------------- -------------- -------------- -----------
Underlying earnings per share
- basic 15.0 14.0 27.7
- diluted 14.7 13.6 26.8
------------------------------- -------------- -------------- -----------
Underlying earnings are determined as follows:
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2017 2016 2017
GBPm GBPm GBPm
----------------------------------------------------- -------------- -------------- -----------
Profit for the period attributable to equity
shareholders of Wincanton plc 17.0 16.2 42.0
Exceptional items 1.1 - (6.1)
Amortisation of acquired intangibles 1.1 1.1 2.2
Tax impact of above items and exceptional tax items (0.7) (0.2) (4.1)
----------------------------------------------------- -------------- -------------- -----------
Underlying earnings 18.5 17.1 34.0
----------------------------------------------------- -------------- -------------- -----------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
6 Dividends
During the period a final dividend of 6.1p per share was paid,
relating to the year ended 31 March 2017.
The Board has declared an interim dividend of 3.27p per share
for the period ended 30 September 2017 (2016: 3.0p per share) which
will be paid on 10 January 2018 to shareholders on the register on
8 December 2017, an estimated total of GBP4.0m.
7 Property, plant and equipment
Additions and disposals
During the half year to 30 September 2017 the Group acquired
assets with a cost of GBP9.4m (2016: GBP5.1m). Assets with a
carrying amount of GBP0.3m were disposed of during the half year to
30 September 2017 (2016: GBP0.3m).
Capital commitments
At 30 September 2017 the Group had entered into contracts to
purchase property, plant and equipment for GBP1.2m (2016: GBP4.8m);
delivery is expected in the second half of the year to 31 March
2018.
8 Analysis of changes in net debt
30 Sept
1 April 2017 Cash flow Net movement on cash flow hedges 2017
GBPm GBPm GBPm GBPm
----------------------------- ------------- ---------- --------------------------------- --------
Cash and bank balances 40.9 (18.0) - 22.9
Bank loans and overdrafts (65.1) (1.0) - (66.1)
Other financial liabilities (0.1) - (0.2) (0.3)
----------------------------- ------------- ---------- --------------------------------- --------
Net debt (24.3) (19.0) (0.2) (43.5)
----------------------------- ------------- ---------- --------------------------------- --------
1 April 30 Sept
2016 Cash flow Net movement on cash flow hedges 2016
GBPm GBPm GBPm GBPm
----------------------------- -------- ---------- --------------------------------- --------
Cash and bank balances 36.3 14.5 - 50.8
Bank loans and overdrafts (75.1) (7.4) - (82.5)
Other financial liabilities (0.7) - 0.2 (0.5)
----------------------------- -------- ---------- --------------------------------- --------
Net debt (39.5) 7.1 0.2 (32.2)
----------------------------- -------- ---------- --------------------------------- --------
1 April 31 March
2016 Cash flow Net movement on cash flow hedges 2017
GBPm GBPm GBPm GBPm
----------------------------- -------- ---------- --------------------------------- ---------
Cash and bank balances 36.3 4.6 - 40.9
Bank loans and overdrafts (75.1) 10.0 - (65.1)
Other financial liabilities (0.7) - 0.6 (0.1)
----------------------------- -------- ---------- --------------------------------- ---------
Net debt (39.5) 14.6 0.6 (24.3)
----------------------------- -------- ---------- --------------------------------- ---------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
9 Provisions
Insurance Property Total
GBPm GBPm GBPm
---------------------------------------- ----------- ---------- -------
At 1 April 2017 33.5 16.5 50.0
Effect of movements in foreign exchange - 0.1 0.1
Provisions used during the period (3.0) (0.8) (3.8)
Unwinding of discount 0.2 0.1 0.3
Provisions made during the period 1.9 - 1.9
---------------------------------------- ----------- ---------- -------
At 30 September 2017 32.6 15.9 48.5
---------------------------------------- ----------- ---------- -------
Current 8.8 4.7 13.5
Non-current 23.8 11.2 35.0
---------------------------------------- ----------- ---------- -------
32.6 15.9 48.5
---------------------------------------- ----------- ---------- -------
10 Employee benefits
Pension schemes
Movements in the net pension obligations recognised:
Assets Liabilities Total 30 Sept 31 March
2017 2017 30 Sept 2016 2017
GBPm GBPm 2017 GBPm GBPm
GBPm
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Opening position 1,080.5 (1,158.9) (78.4) (105.6) (105.6)
Included in Income statement:
Administration costs (0.8) - (0.8) (0.8) (1.7)
Effect of settlements (25.8) 27.6 1.8
Interest on the net defined benefit liability 13.8 (14.7) (0.9) (1.7) (3.5)
Cash:
Employer contributions 9.1 - 9.1 7.4 14.8
Benefits paid (20.5) 20.5 - - -
Included in Other comprehensive income:
Changes in financial assumptions - 20.7 20.7 (269.2) (202.5)
Changes in demographic assumptions - - - 17.8 24.2
Experience - 0.1 0.1 - (0.6)
Return on assets excluding amounts included in net financing
costs (20.9) - (20.9) 182.9 196.5
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Closing defined benefit liability 1,035.4 (1,104.7) (69.3) (169.2) (78.4)
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Liabilities in the table above include unfunded
arrangements.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2017 (unaudited)
10 Employee benefits (continued)
The Group, in agreement with the Trustee, has arranged to pay
certain administration expenses directly and, in line with the
Schedule of Contributions, these amounts have been deducted from
the deficit funding contributions and are therefore not included in
the above table.
The movement in the net defined benefit liability in the period
was primarily the result of the contributions received from the
Group and the impact of the liability management exercise. The
reduction in liabilities resulting from an increase in the discount
rate was offset by a fall in the market value of the assets held.
The defined benefit liability, after taking into account the
related deferred tax asset, is GBP57.5m (2016: GBP140.4m).
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
2017 30 Sept 2016 2017
% % %
------------------------------------------ ------- ------------ --------
Discount rate 2.70 2.30 2.60
Price inflation rate - RPI 3.15 3.05 3.15
Price inflation rate - CPI 2.15 2.05 2.15
Rate of increase of pensions in deferment
* for service to 31 March 2006 3.05 3.00 3.05
* for service from 1 April 2006 2.15 2.15 2.15
------------------------------------------ ------- ------------ --------
Independent review report to Wincanton plc
Conclusion
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 2017 which comprises the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated balance sheet, the consolidated statement
of changes in equity, the consolidated statement of changes in cash
flows and the related explanatory notes.
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 2017 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
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
UK. 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. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
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.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The Directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Simon Haydn-Jones
for and on behalf of KPMG LLP
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
8 November 2017
Shareholders' enquiries
All administrative enquiries relating to shareholdings should,
in the first instance, be directed to the Registrar at the
following address:
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Telephone: 0370 702 0000 Fax: 0370 703 6101
Web queries: www.investorcentre.co.uk/contactus
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BPBPTMBMMBRR
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