TIDMWIN
RNS Number : 3477O
Wincanton PLC
17 May 2018
17 May 2018
WINCANTON plc
Preliminary Announcement of Results
for the financial year ended 31 March 2018
"Successfully Delivering Our Growth Strategy"
Wincanton plc ("Wincanton" or the "Group"), a leading provider
of supply chain solutions in the UK and Ireland, today announces
its preliminary results for the year ended 31 March 2018.
Key financial measures 2018 2017 Change
---------------------------------------- -------- -------- --------
Revenue (GBPm) 1,171.9 1,118.1 4.8%
Underlying EBITDA (GBPm)(1) 64.8 63.9 1.4%
Underlying operating profit (GBPm)(2) 52.9 52.1 1.5%
Underlying profit before tax (GBPm)(2) 46.4 41.5 11.8%
Underlying EPS (p)(2) 30.8 27.7 11.2%
Dividend per share (p) 9.9 9.1 8.8%
Net debt (GBPm)(3) (29.5) (24.3)
Statutory results
---------------------------------------- -------- -------- --------
Operating profit (GBPm)(2) 44.4 56.0 (20.7)%
Profit before tax (GBPm) 37.9 45.4 (16.5)%
Basic EPS (p) 25.2 34.2 (26.3)%
(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.
Operating highlights
-- Strong delivery of our organic growth strategy through
attracting new customers and increasing share of wallet with
existing customers
- Revenue increased by 4.8% with strong underlying growth from
the Retail & Consumer sector backed by continued growth in our
multichannel services across the General Merchandise portfolio,
especially in Home & DIY. New business wins include an
expansion of our partnership with IKEA to provide two-man home
delivery services in the South East, contract wins with new
customers such as Wickes and Thales and the expansion of our
ready-mix cement operations in the Construction sector
- Enhanced eFulfilment proposition, supported by cloud-based
technology solutions, introduced to the market to provide returns,
carrier management and direct shipment from suppliers to
consumers
- First UK logistics provider to introduce production-level
electric vehicles to its fleet for urban home delivery services
-- Underlying operating profit increased by 1.5% to GBP52.9m
(2017: GBP52.1m), benefitting from a strong operating performance
in Retail & Consumer partly offset by operational challenges in
Industrial & Transport and the inclusion of end of contract
settlement credits in the prior year
-- Underlying profit before tax increased by 11.8% to GBP46.4m
(2017: GBP41.5m) generating underlying EPS growth of 11.2% to 30.8p
(2017: 27.7p)
-- Net debt increased by GBP5.2m to GBP29.5m (2017: GBP24.3m)
reflecting the investment in mobilising new contracts during the
year
-- Final dividend of 6.63p proposed, full year dividend of 9.9p
Adrian Colman, Wincanton Chief Executive Officer, commented:
"During the year we have successfully grown our business as we
have driven our key focus markets of retail eFulfilment and the
Construction sector. We have also taken action to reposition the
cost base and capacity in some of our transport operations and
support functions to address the trading challenges we faced within
Industrial & Transport in the year and to ensure our business
is competitively positioned going forward.
The robust underlying earnings per share growth of over 11%
highlights the benefit of our well diversified operations and
customer portfolio and our ability to deliver predictable results
and returns for all stakeholders. This platform provides the
capacity for future investment to deliver our organic growth
strategy and we look forward to making further strategic and
operational progress in the coming year."
For further enquiries please
contact:
Wincanton plc Tel: 020 7466 5000 today, thereafter
Adrian Colman, Chief Executive Tel: 01249 710000
Officer
Tim Lawlor, Chief Financial
Officer Tel: 020 7466 5000
Buchanan
Richard Oldworth, Madeleine
Seacombe
A meeting for analysts will be held at Buchanan, 107 Cheapside,
London, EC2V 6DN on 17 May 2018 commencing at 11.00am. Wincanton's
Preliminary Results 2018 are available at www.wincanton.co.uk
An audio webcast of the analysts' meeting will be available
after 2pm today:
http://vm.buchanan.uk.com/2018/wincanton170518/registration.htm
Interim Chairman's Review
Introduction
We have delivered a solid performance this year with the Group
remaining focused on driving long term organic growth from the
logistics sectors in which it has chosen to focus.
During the year Wincanton has materially enhanced its
eFulfilment logistics offering to ensure it brings cutting edge
capability to this growing channel to market. We have successfully
grown our two-man home delivery services where we enjoy a market
leading position. In more traditional sectors, the Group continues
to innovate its services such as the Construction sector where it
has invested in the development of on-site logistics services to
enhance the control and flow of materials into major build
programmes for customers. This area of investment, coupled with
good coverage across most of the major elements of the UK and
Ireland's physical goods economy and combined with a diverse
customer portfolio, means that the business provides a reliable and
predictable revenue and earnings stream generating cash and returns
for all our stakeholders.
Results
The Group delivered strong revenue growth in the year of
approximately 5%, taking revenue to a six year high of GBP1,171.9m.
This was delivered from a combination of organic growth from
existing customers with cross selling of other services and the
on-boarding of new customers to the Group. Underlying earnings per
share was up by 11.2% over the prior year to 30.8p and by 131.6%
over a five year period
Our cash generation remains strong enabling us to invest in our
organic growth strategy as well as satisfying the needs of our
other material stakeholders in the Group such as our pension scheme
and our shareholders.
People and the board
Very sadly, the Group's Chairman, Steve Marshall, passed away
unexpectedly in September and I have taken on the role of Interim
Chairman whilst the Board conducts a search for a permanent
Chairman. An appointment is expected to be made by late summer.
In September 2017 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.
I would like to personally thank the Group's 17,700 employees
for their contribution to the progress made and the results
delivered during the year. Their commitment, focus and hard work is
the cornerstone of what drives our strong reputation for
operational delivery, a safe working environment and the delivery
of excellent results throughout the year.
We published our first gender pay report in March and were
pleased to report a median gender pay gap below the national
average at 7%. Wincanton is committed to ensuring colleagues in
similar roles are paid equitably and we are committed to narrowing
the gender pay gap through increasing the proportion of women in
certain roles that attract higher pay such as HGV drivers. We were
also delighted that during the year three of our colleagues were
shortlisted for the Everywoman in Transport & Logistics awards
to celebrate the most inspirational women within the transport and
logistics sector.
Dividend
The Board is pleased to be recommending an increased final
dividend of 6.63p per Ordinary Share for the year ended 31 March
2018 (2017: 6.1p) bringing the total dividend for the year to 9.9p
per Ordinary Share (2017: 9.1p). This reflects the Group's growth
in operating profit and its progressive dividend policy. The
Board's dividend policy remains unchanged.
Key priorities and prospects
The Group's overriding priority will be to oversee further
progress in the delivery of the organic growth trading strategy.
During the year we made significant progress by launching our
enhanced propositions to cover the growing eFulfilment needs of
customers. Additionally, we have brought new business development
talent into the organisation to support our objective to drive
future revenue growth. We continue to invest in the capabilities
and resources to deliver our organic growth strategy, with our risk
appetite remaining low to moderate. We continue to monitor the
risks and opportunities that may arise from the Brexit process and
to date the Group has experienced no material impact from the
process.
The 2017 triennial review of the pension scheme continues and
the Board seeks to agree an appropriate future plan with the Scheme
Trustee whilst ensuring we take account of our commitment to the
wider stakeholder group. The Group still has a sizeable pension
deficit when measured on the more prudent Technical Provisions
basis used for the triennial review, and so the pension scheme
remains a significant stakeholder in the Group.
Outlook
The Group remains well positioned in its chosen markets and
continues to deliver strong service levels for customers. The
action taken during the past year to reduce costs where necessary
ensures we remain competitive for our customers and has been
important in order to position the Group for the future. Robust
cash generation supports our ability to invest in skills and
technology capabilities to both protect and grow the business for
the longer term. During the coming year the Board expects Wincanton
to make continued strategic and operational progress.
Chief Executive's Statement
Performance summary
During the year ended 31 March 2018 the Group has delivered a
positive set of results underpinned by consistent operational
performance. The Group has also made good progress against its
strategic objectives during the year as it adds capability to meet
the changing needs of our customers.
Revenue in the year ended 31 March 2018 was GBP1,171.9m (2017:
GBP1,118.1m), which represents a year on year increase of 4.8%.
This has been driven primarily by revenue from contract wins
including IKEA, Hanson, wilko and Wickes.
Underlying operating profit increased by 1.5% to GBP52.9m (2017:
GBP52.1m). A strong performance in our Retail & Consumer
business was partly offset by a more challenging year for our
Industrial & Transport business. As a result, the underlying
operating margin of 4.5% is slightly lower than the 4.7% achieved
in the prior year.
The Group took action during the year to reposition its cost
base and capacity in certain areas to mitigate the weaker than
expected performance in the Industrial & Transport sector. The
implementation of these cost saving initiatives has resulted in a
net exceptional charge of GBP6.2m and helps position the business
so that it remains competitive and effective for future years.
Strong underlying EPS growth of 11.2% reflects the growth in
operating profit and lower net financing costs as we reduced the
average cost of debt utilised during the year. This growth in
underlying earnings enables us to also increase our recommended
final dividend per share to 6.63p, resulting in a total dividend
per share of 9.9p for the year.
Retail & Consumer
2018 2017 Change
----------------------------------- ----- ----- ------
Revenue (GBPm) 691.7 649.3 6.5%
Underlying operating profit (GBPm) 29.7 25.8 15.1%
Margin (%) 4.3% 4.0% 30 bps
----------------------------------- ----- ----- ------
Retail & Consumer reported revenues of GBP691.7m in the
year, a 6.5% year on year increase compared with the GBP649.3m
reported in the year to 31 March 2017. The contractual split of
this segment between open and closed book remains relatively
unchanged with 85% under open book terms (2017: 87%).
Underlying operating profit for the year was GBP29.7m, up 15.1%
on the GBP25.8m reported last year as a result of new business wins
together with increased volume predominantly in Retail general
merchandise.
The split of Retail & Consumer revenue by the industry
sectors it serves is as follows:
2018 2017
GBPm GBPm Change
--------------------------- ----- ----- -------
Retail general merchandise 384.2 315.5 21.8%
Retail grocery 197.8 228.7 (13.5)%
Consumer products 109.7 105.1 4.4%
--------------------------- ----- ----- -------
691.7 649.3 6.5%
--------------------------- ----- ----- -------
The overall revenue increase was driven primarily by strong wins
and volume growth in Retail general merchandise. Our strong
eFulfilment proposition continues to drive revenue growth,
especially in Home & DIY markets, where our market leading
two-man home delivery service helps our customers improve their
customers' experience.
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 implementing new
technology and fleet to support their multichannel strategy; and a
three year contract with Argos to manage and support a network
reorganisation.
Retail general merchandise has also further expanded its
relationship with IKEA with the award of a three year contract to
provide two-man home delivery services in the South East of
England.
The business also successfully renewed a number of important
contracts with key customers, such as KraftHeinz and Argos. All of
these important renewals demonstrate the strong partnership-based
ethos with our customers and our commitment to driving greater
efficiency into these logistics operations.
Overall sector growth was partially offset by a contract loss in
Retail grocery with Tesco who took back the operation of a
warehouse in-house.
Industrial & Transport
2018 2017 Change
----------------------------------- ----- ----- -------
Revenue (GBPm) 480.2 468.8 2.4%
Underlying operating profit (GBPm) 23.2 26.3 (11.8)%
Margin (%) 4.8% 5.6% (80)bps
----------------------------------- ----- ----- -------
Industrial & Transport reported revenues of GBP480.2m in the
year, up 2.4% on the GBP468.8m reported in the prior year.
The underlying operating profit of GBP23.2m compared to GBP26.3m
last year and was driven by weaker than expected operational and
financial performance from certain transport-related activities and
a contract cessation realising property-related credits in the
prior year.
The split of Industrial & Transport revenue by the
activities undertaken is as follows:
2018 2017
GBPm GBPm Change
------------------- ----- ----- ------
Transport services 210.3 207.0 1.6%
Construction 150.6 134.4 12.1%
Other 119.3 127.4 (6.4)%
------------------- ----- ----- ------
480.2 468.8 2.4%
------------------- ----- ----- ------
The increase in revenue compared to last year is primarily due
to new contracts within Construction including several contract
wins for our new ready-mix cement proposition as it gains traction
in the market place. The growth in Construction was partly offset,
however, by lower than expected volumes in our final quarter, in
part attributable to the poor weather and the year-on-year impact
of the cessation of a contract within our defence operations in the
prior year. During the year the markets for our Transport Services
activities, which comprise General Haulage, Container Logistics and
Pullman Fleet Services, have all been extremely competitive with
customers seeking lowest cost service provision to help mitigate
other cost challenges that they face. As a result, we have seen
significant change in the contract profile and mix of work in this
area through a number of contract wins and losses that have broadly
left revenue flat year-on-year.
The level of change in the contract portfolio and mix of work
across the sector, particularly in Transport Services, impacted the
balance of activities and operational effectiveness across our
networks, adversely affecting the operating profit performance for
the year. This required the Group to take significant action to
rebalance costs and capacity across our networks to improve
performance. The costs of this reorganisation are included within
the exceptional charge for the year noted above.
The business also successfully renewed a number of contracts
during the year including those with Phillips 66 and Pernod
Ricard.
Strategic Progress
We continue to focus on growing the Group organically and aim to
deliver a resilient, predictable cash and profit stream and a
growing return for all our stakeholders. We do this through the
following strategic pillars:
1. Differentiate our position in the logistics industry through
delivering innovation, collaboration and safe, sustainable
operations
2. Grow by putting customers at the centre of what we do
3. Drive efficient operations through integrated and consistent
services
4. Be an organisation that people aspire to work for and
with
We have set out our progress against these pillars as below.
1. Differentiate our position in the logistics industry
Innovation
We make innovation a central theme internally, in our engagement
with colleagues and externally in our everyday engagement with
customers. Our W(2) programme is the linking theme for innovation
at Wincanton. W(2) is all about the power of two, the combined
power of Wincanton with our colleagues, or our customers or our
partners.
During the year we sought to generate and capture great ideas
and convert these into new propositions to take to our customers
through a variety of programmes under the W(2) umbrella.
-- W(2) Labs
We ran a W(2) Labs initiative, to identify and work with a
number of start-up businesses from around the globe that had the
potential to add value to our business. This programme helped us
enhance our eFulfilment proposition, by partnering with two
companies who brought capability and differentiation, and enabled
us to get to market faster than if we had built these capabilities
in-house.
-- W2 Partner Network
We launched the W(2) Partner Network, which will help us add
more partners to collaborate with and to grow the business by
widening our offering and working with companies whose reach opens
up new areas of mutual opportunity.
-- W2 Ideas Accelerator
We launched an internal programme supported by a social media
platform that allows colleagues to pose challenges and problems and
seek ideas, solutions and comments from across the business. This
helps us ensure that great ideas from colleagues are shared across
the organisation, recognised, rewarded and where possible
commercialised into propositions that we can take to our customers
to enhance our services to them.
We seek to position our business at the leading edge of thought
leadership around the challenges that our industry and our
customers will face over the medium term. This was embodied in 'The
Wincanton Guide to the Digitised Supply Chain'. We are gearing up
for our role in the digitised supply chain by developing a deep
understanding of what our customer needs are and how they are
developing their own unique approach to robotics, autonomous
vehicles, artificial intelligence, machine learning and so on. It
is essential for us to be recognised as a leading logistics
business where digitisation is a central component of our highly
compelling, differentiated, offering to the market.
Collaboration
Wincanton operates across a wide cross section of the physical
goods economy. As such its operations deal with all of the
cyclicality of its customers' businesses on a daily, weekly and
annual basis. Uniquely we aim to analyse and interpret this data to
provide the flexible solutions that enable our customers to meet
their seasonal peaks in their demand for logistics services by
smart deployment of capability and assets from other sectors when
they are in quieter periods. Bringing this to life we provided over
1,450 extra peak transport shifts into the Retail sector across the
Christmas peak period, many of which were provided from within the
talent pool of drivers and the vehicle assets from our Construction
business which typically is coming out of its autumnal peak cycle
at that time. This benefits our customers as they are able to
access flexible resources when they need them rather than having to
commit to resource levels across a full year at the peak level, and
thereby reducing costs to their organisation.
Safety and Sustainability
Behaving as a responsible business is central to everything we
do at Wincanton.
Our people and their health, safety and wellbeing come first in
every decision we make. The safety of colleagues is a
non-negotiable commitment and we believe that this is achieved
through ensuring strong cultural engagement around behavioural
approach to health and safety as well as technical training and
robust processes. This is highlighted in our Your Pulse colleague
engagement survey where scores on health and safety awareness and
responsibilities continue to be the highest scoring areas amongst
our colleagues. In the last 12 months we saw a continued reduction
in reported safety incidents and a continued improvement in our
Lost Time Incident Frequency Rate performance indicator from 0.68
last year to 0.62 this year. We were also recognised for our
performance with safety awards during the year from external bodies
such as Chartered Institute for Logistics and Transport (CILT) and
the Royal Society for the Prevention of Accidents (RoSPA). This
confirms the value of our approach, focus and ongoing training
programmes with our people.
During the year we again worked hard to minimise our impact on
the environment. We were very pleased to take delivery of our first
fully electric trucks from Daimler. The Group will initially deploy
the 7.5 tonne vehicles for use in inner city logistics, where the
challenges of emissions, noise and congestion are greatest. These
vehicles will be rolled out as part of our home delivery fleet. The
environmental challenges of delivery in urban areas, particularly
in 'the last mile', are significant and growing. As a business, we
are committed to addressing these issues, to find cost-effective
and sustainable solutions for our customers.
The introduction of production-level electric vehicles to our
fleet means we can operate more efficiently, more quietly and
without locally emitted CO(2) . When we are delivering in towns and
cities, we know that this really does matter, right down to the
door step. These vehicles are a key part of our innovation roadmap,
and our growth plan for the future of urban distribution transport
at Wincanton.
2. Grow
We aim to grow the Group into a full service contract logistics
provider, putting the customer at the centre and driving efficient
operations. During the period we grew revenue by 4.8%, achieving
this through a combination of extending the services we provide to
existing customers as well as acquiring new customers.
We have expanded our relationship with IKEA with the award of a
three year contract to provide two-man home delivery services in
the South East of England. This builds on Wincanton's strength as a
leading provider of high quality consumer experience for our retail
customers and enhances the range of services we provide to IKEA to
add to the warehouse operations that we established for them in the
previous year. For Aggregate Industries we have expanded the range
of services we provide to them through the introduction of
ready-mix cement services which we have been rolling out to the
construction sector to offer a new level of service resilience and
consistency to the industry.
We were also delighted to commence partnering with new customers
such as Wickes and Thales during the year. For Wickes, part of the
Travis Perkins Group, we have started to manage the collation and
delivery of bulky goods, such as bricks, tiles and paving, to
customers. This solution draws on our expertise in customer service
from our market leading two-man home delivery service together with
the technical knowledge and expertise from our Construction
business in handling and delivering such products. With Thales we
are pleased to have been awarded a five year warehousing and
distribution contract 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.
3. Drive efficient operations
Our track record in continuous improvement helps our customers
in terms of lowering their cost of operations in open book
contracts and supports our margins in closed book contracts. This
continued drive to improve efficiency of operations strongly
supports our ability to retain existing contracts with customers
and build long term partnerships. During the year we successfully
renewed and extended contracts with existing customers including
Argos, Phillips 66, Pernod Ricard and Ibstock. We also responded to
the needs of the competitive market place we operate in and the
challenges in our Industrial & Transport business with a
restructuring of the capabilities in this sector in order to
reposition the business to remain competitive in future years.
4. Be an organisation that people aspire to work for and
with
Our people are central to the great operational delivery that
Wincanton prides itself on, working to make our customers'
businesses better every day. Without their support, we have no
business to run so their engagement is a key priority. I would like
to thank them for their dedication and performance during the
year.
Developing a pipeline of talent is a high priority for the Group
to ensure that we nurture and develop talent for the maintenance of
existing activities and drive the delivery of our ambitious growth
targets. During the year Wincanton ran 45 apprenticeship programmes
as part of this commitment to develop logistics talent inside our
organisation.
In the UK economy over the past year we have seen very high
levels of employment and we are focused on ensuring that we recruit
and retain people into our business to deliver great customer
service and to help us grow. We have continued our specific focus
on driver resourcing. Our ability to attract drivers to our
business is a real strength of the Group and presents a compelling
proposition to customers who recognise the scarcity of qualified
and talented drivers in the UK. We source drivers from as wide a
pool as possible, conduct and support driver training and licence
acquisition and do all that we can to ensure we retain our driving
talent by recognising their skills through such events as the
Wincanton Driver of the Year competition. Our Warehouse to Wheels
driver programme supports talented colleagues from non-driving
roles to train to be drivers in our business and we see this as a
great advantage as part of our focus on recruiting and retaining
talent.
FINANCIAL REVIEW
Performance summary
2018 2017 Change
-------------------------------------------- ------- ------- -------
Revenue (GBPm) 1,171.9 1,118.1 4.8%
-------------------------------------------- ------- ------- -------
Underlying EBITDA (GBPm) 64.8 63.9 1.4%
-------------------------------------------- ------- ------- -------
Underlying operating profit (GBPm) 52.9 52.1 1.5%
Underlying operating margin (%) 4.5% 4.7% (20)bps
Net financing costs (GBPm) (6.5) (10.6)
-------------------------------------------- ------- ------- -------
Underlying profit before tax (GBPm) 46.4 41.5 11.8%
Amortisation of acquired intangibles (GBPm) (2.3) (2.2)
Exceptional items (GBPm) (6.2) 6.1
-------------------------------------------- ------- ------- -------
Profit before tax (GBPm) 37.9 45.4
Income tax (GBPm) (6.7) (3.4)
-------------------------------------------- ------- ------- -------
Profit after tax (GBPm) 31.2 42.0
-------------------------------------------- ------- ------- -------
Underlying EPS (p) 30.8 27.7 11.2%
Basic EPS (p) 25.2 34.2
Dividend per share (p) 9.9 9.1
Closing net debt (GBPm) (29.5) (24.3) 21.4%
-------------------------------------------- ------- ------- -------
The Directors present the results of the business on an
underlying basis, excluding amortisation of acquired intangibles
and exceptional items, the related tax and exceptional tax items,
from operating profit, profit before tax and EPS where applicable,
as they believe this better represents the performance of the
business. A reconciliation of these measures to their statutory
equivalent is shown in the section on Alternative Performance
Measures below.
The Group's revenue of GBP1,171.9m in the year ended 31 March
2018 was 4.8% higher than the prior year (2017: GBP1,118.1m). This
strong level of growth reflects the impact of new business
commencing in the year as well as strong organic growth,
particularly in Retail general merchandise within the Retail &
Consumer sector.
Underlying operating profit grew by 1.5% to GBP52.9m, as a
result of a strong performance in Retail & Consumer partly
offset by weaker performance within certain transport related areas
in Industrial & Transport and property-related credits arising
at the end of contract terms in the prior year. As a result, the
underlying operating margin has reduced to 4.5% (2017: 4.7%).
Net financing costs
2018 2017
GBPm GBPm
------------------------------------------------------ ----- -----
Bank interest payable on loans 4.1 6.0
Interest receivable - (0.1)
------------------------------------------------------ ----- -----
Net interest payable 4.1 5.9
Unwinding of discount on provisions 0.6 1.2
Interest on the net defined benefit pension liability 1.8 3.5
------------------------------------------------------ ----- -----
Net financing costs 6.5 10.6
------------------------------------------------------ ----- -----
Net financing costs were GBP6.5m (2017: GBP10.6m), GBP4.1m lower
year on year.
Bank interest payable on loans was GBP4.1m (2017: GBP6.0m), a
reduction of GBP1.9m 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 GBP2.4m (2017: GBP4.7m) 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
Amortisation of acquired intangibles of GBP2.3m is consistent
with the prior year of GBP2.2m and relates to the intangible asset
recognised on the acquisition of a defence business in 2008. This
asset has now been amortised in full.
Exceptional items
2018 2017
GBPm GBPm
--------------------------------------------- ----- -----
Restructuring costs (8.2) -
Pension scheme liability management exercise 2.0 (0.9)
Other items - 7.0
--------------------------------------------- ----- -----
Net exceptional items (6.2) 6.1
--------------------------------------------- ----- -----
The Group has undertaken a restructuring programme in the year
to ensure that the business is competitively positioned for the
future. A charge of GBP8.2m is included as an exceptional charge
for the year comprising principally of costs in relation to the
exit of people and associated property costs.
The conclusion of the pension scheme liability management
exercise initiated at the end of last year has resulted in a
settlement gain of GBP1.8m together with a release of GBP0.2m due
to actual costs of the exercise being lower than expected.
Other items in the prior year of GBP7.0m comprise non-cash gains
of GBP4.6m recognised on the remeasurement of liabilities relating
to disposed businesses; and the settlement of a claim against a
supplier.
Taxation
2018 2017
------------------------------------------------------- ----- -----
Underlying profit before tax (GBPm) 46.4 41.5
------------------------------------------------------- ----- -----
Underlying tax (GBPm) 8.3 7.5
Tax on amortisation of acquired intangibles (GBPm) (0.4) (0.4)
Exceptional tax (GBPm) (1.2) (3.7)
------------------------------------------------------- ----- -----
Tax as reported (GBPm) 6.7 3.4
------------------------------------------------------- ----- -----
Effective tax rate on underlying profit before tax (%) 18.0% 18.0%
------------------------------------------------------- ----- -----
Underlying tax of GBP8.3m (2017: GBP7.5m) represents an
effective tax rate of 18.0% (2017: 18.0%) on underlying profit
before tax and is stated before tax credits of GBP0.4m (2017:
GBP0.4m) in respect of the amortisation of acquired intangibles and
exceptional tax of GBP1.2m (2017: GBP3.7m, comprising a GBP4.0m tax
credit relating to previous years' tax liabilities offset by a tax
charge of GBP0.3m on exceptional profit).
The total net deferred tax asset has reduced to GBP11.5m (2017:
GBP17.2m), primarily as a result of the reduction in the pension
deficit and the deferred tax asset thereon.
Profit after tax and earnings per share
Profit after tax for the year is GBP31.2m (2017: GBP42.0m), the
reduction of GBP10.8m due to exceptional items, a charge in the
current year compared to a gain in the prior year, partly offset by
improvements in underlying operating profit and financing
costs.
Underlying EPS, which excludes from earnings amortisation of
acquired intangibles and exceptional items, increased by 11.2% to
30.8p (2017: 27.7p). Basic EPS was 25.2p (2017: 34.2p) with the
decrease again being explained by the exceptional items.
The calculation of these EPS measures is set out in Note 6.
Dividends
2018 2017
pence pence
----------------- ------ ------
Interim 3.27 3.00
Final (proposed) 6.63 6.10
----------------- ------ ------
Total 9.90 9.10
----------------- ------ ------
The Group's policy is to show dividend growth broadly matched to
the 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 including cash payments to the pension
scheme.
The Board has proposed a final dividend of 6.63p per share
relating to the year ended 31 March 2018, an increase of 8.7%
compared to the final dividend paid in respect of the year ended 31
March 2017.
Dividend payments of GBP11.6m (2017: GBP10.4m) in the year
comprised the final dividend of 6.1p per share relating to the
period ended 31 March 2017 and the 2018 interim dividend of 3.27p
per share.
Financial position
The summary financial position of the Group is set out
below:
2018 2017
GBPm GBPm
--------------------------------------------------------- ------- -------
Non-current assets 136.0 147.9
Net current liabilities (excl. net debt) (136.4) (149.8)
Non-current liabilities (excl. net debt/pension deficit) (33.1) (34.8)
Net debt (29.5) (24.3)
Pensions deficit (gross of deferred tax) (49.5) (78.4)
--------------------------------------------------------- ------- -------
Net liabilities (112.5) (139.4)
--------------------------------------------------------- ------- -------
The reduction in net liabilities of GBP26.9m is represented by
the profit after tax of GBP31.2m, the remeasurement of the pension
deficit net of deferred tax of GBP11.4m, less dividends paid in the
year of GBP(11.6)m and other movements in equity of GBP(4.1)m.
Cash flows
The Group's cash flows can be summarised in the following
table:
2018 2017
GBPm GBPm
-------------------------------------- ------ ------
Underlying EBITDA 64.8 63.9
Net capital expenditure (14.0) (18.7)
Working capital (8.3) 6.5
Tax (4.0) (2.6)
Net interest (4.1) (6.8)
Other items (9.4) (2.5)
-------------------------------------- ------ ------
Free cash flow 25.0 39.8
Pension recovery payment (14.6) (14.1)
Pension liability management exercise (2.2) -
Dividends (11.6) (10.4)
Own shares acquired (1.8) (0.1)
-------------------------------------- ------ ------
Net cash flow (5.2) 15.2
-------------------------------------- ------ ------
The Group incurred a GBP(5.2)m net cash outflow (2017: GBP15.2m
inflow) in the period, with a free cash inflow of GBP25.0m (2017:
GBP39.8m), defined as the cash movements in net debt, before
pension payments, dividends and the acquisition of own shares.
Net capital expenditure was GBP14.0m (2017: GBP18.7m),
reflecting our investment to support new business growth including
GBP6.2m for specialist vehicles, GBP4.7m for warehouse fit out and
GBP3.0m for new fleet on start-up contracts or renewals. The
capital expenditure is net of cash receipts on sale of assets of
GBP0.5m (2017: GBP0.5m).
The GBP8.3m outflow (2017: GBP6.5m inflow) on working capital in
the year ended 31 March 2018 is primarily due to working capital
investment in mobilising new contracts started in the year.
The Group paid cash tax in the current year of GBP4.0m (2017:
GBP2.6m). 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. This is expected to continue going forward.
The amount of cash interest paid, excluding fees, of GBP4.1m
(2017: GBP6.8m) reduced in the year reflecting the lower average
cost of debt following the repayment of two tranches of more
expensive debt: the US Private Placement debt of GBP20m which
matured in November 2016 and the final element of the M&G debt
of GBP25m which was repaid in July 2017.
Other cash outflows include payments in respect of exceptional
charges, property provisions and share based payments.
Approximately GBP4m was paid in respect of restructuring costs in
the year. A cash outflow in respect of property provisions of
GBP3.9m, compared to the prior year of GBP2.7m, the increase due to
the settlement of a dilapidation claim in the second half.
Free cash flow of GBP25.0m (2017: GBP39.8m) has been used to
maintain the annual pension recovery payments of GBP14.6m (2017:
GBP14.1m) and to pay equity dividends of GBP11.6m (2017: GBP10.4m).
In addition, total payments of GBP2.2m were incurred in respect of
the pension liability management exercise, including the transfer
payments to the Scheme and the cost of running the exercise. The
Group acquired 850,000 shares during the year for a total payment
of GBP1.8m to provide shares for the Employee Benefit Trust in
respect of long term incentive plan commitments.
Financing and covenants
The Group's committed facilities at the end of the year were
GBP141m (2017: GBP166m) and the headroom in these committed
facilities to reported net debt at 31 March 2018 was GBP112m (2017:
GBP142m). The Group also has additional operating overdrafts which
provide day to day flexibility and amount to a further GBP8m in
uncommitted facilities.
In March 2018 the Group agreed an uncommitted GBP50m Receivables
Purchase Facility with Santander UK Plc. This will allow the Group
to access funds held within debtors earlier which will provide a
flexible tool to manage working capital fluctuations.
Sterling and Euro pools are operated and whenever possible,
surplus cash is netted against overdrafts.
The Group's facilities at 31 March 2018 comprise the syndicated
main bank facility of GBP141m which amortises by GBP8.8m in October
2019, with a second equal amortisation at the four year anniversary
in October 2020 before maturing in October 2021. 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 maintains a mix of hedging instruments (swaps) to give
an appropriate level of protection against changes in interest
rates. At the year end, 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 31 March 2018
-------------------------- -------- ----------------
Adjusted net debt: EBITDA <2.75:1 0.81
Interest cover >3.5:1 17.8
Fixed charge cover >1.4:1 2.5
-------------------------- -------- ----------------
Pensions
The Group operates a number of pension arrangements in the UK
and Ireland.
Defined benefit arrangements
The Wincanton plc Pension Scheme (the Scheme) includes defined
benefit sections which were closed to future accrual on 31 March
2014.
The membership data split by key categories is as follows:
2018 2017
----------- ------ ------
Deferred 7,404 8,030
Pensioners 5,810 5,883
----------- ------ ------
13,214 13,913
----------- ------ ------
At 31 March 2018, the Group is reporting an IAS 19 deficit of
GBP49.5m (2017: GBP78.4m).
The deficit has reduced due to a reduction in liabilities due to
demographic assumptions, an increase in the market value of the
investments and contributions received from the Group, being partly
offset by an increase in liabilities due to an increase in the
inflation rate assumption. The discount rate has remained at 2.6%
in line with the prior year. On an IAS 19 basis of measurement,
each 0.1% increase in the rate decreases the liabilities of the
Scheme by approximately GBP22m, however, due to the hedging in
place, assets would also decrease by approximately GBP24m.
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 year ended 31 March 2018. As at 31
March 2018 the Scheme's investment was split between 42.4% in
return-seeking assets and 57.6% in defensive assets. The interest
and inflation rate risks facing the Scheme are hedged and the
Trustee has increased the level of this hedge during the year to
100% of the Scheme's assets.
In conjunction with the Trustee, the Group also initiated a
liability management exercise in the form of an Enhanced Transfer
Value, whereby deferred members approaching retirement may choose
to transfer their assets out of the Scheme in order to access the
new flexible retirement options available. As a result of this
exercise the Group has recognised an exceptional credit of GBP2.0m,
being a settlement gain of GBP1.8m generated on completion of the
exercise and GBP0.2m release due to a reduction in the costs
associated with the exercise; together with an associated cash
outflow to fund the enhanced transfer values; and a reduction in
the pension liabilities (2017: exceptional cost of GBP(0.9)m, being
the costs associated with making the transfer offer, including the
provision of independent financial advice). As part of the exercise
the Group paid top up payments to the Scheme of GBP1.5m resulting
in a 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
------------------------------- ------
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 with the Trustee in respect of the triennial
valuation as at 31 March 2017 are continuing. These discussions are
based on a Technical Provisions valuation (the "TP deficit"), which
uses a more prudent set of assumptions than those used for the
purpose of the IAS 19 balance sheet valuation. As a result, the TP
deficit is higher than the balance sheet deficit (the 31 March 2014
TP deficit was GBP195m compared with the balance sheet deficit of
GBP110.9m) and the movements in the deficits over time may not be
proportionate due to the different basis of calculation. The
objective of the triennial process is to agree the valuation, an
investment strategy for the Scheme assets, the Company's annual
deficit funding contribution, the recovery period for these
payments and contingent protections for the Scheme. We expect to
conclude the discussions with Trustees during the calendar year
2018.
The last triennial valuation of the Scheme, undertaken as at 31
March 2014, resulted in a deficit recovery payment plan with a
baseline annual payment of GBP14.4m increasing by RPI each year
through the recovery period to September 2024. The cash
contribution made in the current year to fund the deficit was
GBP14.6m which is after the deduction of certain administration
costs paid directly by the Group as agreed with the Trustee.
Defined contribution arrangements
The Group's defined contribution arrangements include the
Retirement Savings Section including the Auto Enrolment section,
and the Pension Builder Plan in the UK and a separate similar local
scheme in Ireland. Active membership of these schemes was 15,728
(2017: 15,524) in the year. The charge incurred for these
arrangements totals GBP19.0m (2017: GBP17.9m).
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 and exceptional tax items where applicable.
The table below reconciles the APMs to the statutory reported
measures.
2018 2017
-------------- ------------------------------------------------- -------------------------------------------------
Amortisation Amortisation
of acquired Exceptional of acquired Exceptional
Statutory intangibles items(1) Underlying Statutory intangibles items(1) Underlying
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
Revenue (GBPm) 1,171.9 - - 1,171.9 1,118.1 - - 1,118.1
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
EBITDA
(GBPm)(2) 58.6 - 6.2 64.8 70.0 - (6.1) 63.9
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
Operating
profit (GBPm) 44.4 2.3 6.2 52.9 56.0 2.2 (6.1) 52.1
Operating
margin (%) 3.8 0.2 0.5 4.5 5.0 0.2 (0.5) 4.7
Net financing
costs (GBPm) (6.5) - - (6.5) (10.6) - - (10.6)
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
Profit before
tax (GBPm) 37.9 2.3 6.2 46.4 45.4 2.2 (6.1) 41.5
Income tax
(GBPm) (6.7) (0.4) (1.2) (8.3) (3.4) (0.4) (3.7) (7.5)
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
Profit after
tax (GBPm) 31.2 1.9 5.0 38.1 42.0 1.8 (9.8) 34.0
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
Earnings per
share (p)(3) 25.2p 30.8p 34.2p 27.7p
Dividend per
share (p) 9.9p 9.9p 9.1p 9.1p
Closing net
debt
(GBPm)(4) (29.5) (24.3)
-------------- --------- ------------- ----------- ---------- --------- ------------- ----------- ----------
1 Note 3 provides further detail of exceptional items and also
includes any tax releases/credits that are classed as
exceptional.
2 EBITDA refers to operating profit before depreciation and
amortisation and is reconciled in Note 2 to the financial
statements.
3 Note 6 to the financial statements 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 to the financial
statements provides a breakdown of net debt for the current and
prior periods.
Consolidated income statement
FOR THE YEARED 31 MARCH 2018
2018 2017
Note GBPm GBPm
------------------------------------------------------------ ---- ------- -------
Revenue 2 1,171.9 1,118.1
Underlying operating profit 2 52.9 52.1
------------------------------------------------------------ ---- ------- -------
Amortisation of acquired intangibles (2.3) (2.2)
Exceptional items 3 (6.2) 6.1
------------------------------------------------------------ ---- ------- -------
Operating profit 2 44.4 56.0
Financing income 4 - 0.1
Financing cost 4 (6.5) (10.7)
------------------------------------------------------------ ---- ------- -------
Net financing costs 4 (6.5) (10.6)
------------------------------------------------------------ ---- ------- -------
Profit before tax 37.9 45.4
Income tax expense 5 (6.7) (3.4)
------------------------------------------------------------ ---- ------- -------
Profit attributable to equity shareholders of Wincanton plc 31.2 42.0
------------------------------------------------------------ ---- ------- -------
Earnings per share
- basic 6 25.2p 34.2p
- diluted 6 24.8p 33.0p
------------------------------------------------------------ ---- ------- -------
Consolidated statement of comprehensive income
FOR THE YEARED 31 MARCH 2018
2018 2017
Note GBPm GBPm
------------------------------------------------------------------------------------------ ---- ----- -----
Profit for the year 31.2 42.0
------------------------------------------------------------------------------------------ ---- ----- -----
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income statement
Remeasurements of defined benefit liability 9 13.8 17.6
Income tax relating to items that will not subsequently be reclassified to profit or loss 5 (2.4) (4.0)
------------------------------------------------------------------------------------------ ---- ----- -----
11.4 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 4 - (0.1)
Effective portion of changes in fair value of cash flow hedges (0.1) 0.4
Net change in fair value of cash flow hedges transferred to the income statement 0.1 0.2
------------------------------------------------------------------------------------------ ---- ----- -----
- 0.5
------------------------------------------------------------------------------------------ ---- ----- -----
Other comprehensive income for the year, net of income tax 11.4 14.1
------------------------------------------------------------------------------------------ ---- ----- -----
Total comprehensive income attributable to equity shareholders of Wincanton plc 42.6 56.1
------------------------------------------------------------------------------------------ ---- ----- -----
Consolidated balance sheet
AT 31 MARCH 2018
2018 2017
Note GBPm GBPm
---------------------------------------------- ---- ------- -------
Non-current assets
Goodwill and intangible assets 82.7 86.9
Property, plant and equipment 41.7 43.7
Investments, including those equity accounted 0.1 0.1
Deferred tax assets 11.5 17.2
---------------------------------------------- ---- ------- -------
136.0 147.9
---------------------------------------------- ---- ------- -------
Current assets
Inventories 4.4 4.0
Trade and other receivables 140.7 133.4
Assets classified as held for sale 6.1 -
Cash and cash equivalents 8 17.6 40.9
---------------------------------------------- ---- ------- -------
168.8 178.3
---------------------------------------------- ---- ------- -------
Current liabilities
Income tax payable (5.7) (6.4)
Borrowings and other financial liabilities 8 - (0.2)
Trade and other payables (264.1) (265.4)
Employee benefits - (0.2)
Provisions (17.8) (15.2)
---------------------------------------------- ---- ------- -------
(287.6) (287.4)
---------------------------------------------- ---- ------- -------
Net current liabilities (118.8) (109.1)
---------------------------------------------- ---- ------- -------
Total assets less current liabilities 17.2 38.8
---------------------------------------------- ---- ------- -------
Non-current liabilities
Borrowings and other financial liabilities 8 (47.1) (65.0)
Employee benefits 9 (49.5) (78.4)
Provisions (33.1) (34.8)
---------------------------------------------- ---- ------- -------
(129.7) (178.2)
---------------------------------------------- ---- ------- -------
Net liabilities (112.5) (139.4)
---------------------------------------------- ---- ------- -------
Equity
Issued share capital 12.5 12.4
Share premium 12.9 12.9
Merger reserve 3.5 3.5
Hedging reserve (0.1) (0.1)
Translation reserve (0.3) (0.3)
Retained earnings (141.0) (167.8)
---------------------------------------------- ---- ------- -------
Total equity deficit (112.5) (139.4)
---------------------------------------------- ---- ------- -------
These financial statements were approved by the Board of
Directors on 16 May 2018 and were signed on their behalf by:
A Colman T Lawlor
Chief Executive Officer Chief Financial Officer
Consolidated statement of changes in equity
FOR THE YEARED 31 MARCH 2018
Retained earnings
-------------------
Issued Total
share Share Merger Hedging Translation Own Profit and equity
capital premium reserve reserve reserve shares 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 - - - 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)
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Balance at 1 April 2017 12.4 12.9 3.5 (0.1) (0.3) (0.5) (167.3) (139.4)
Profit for the year - - - - - - 31.2 31.2
Other comprehensive income - - - - - - 11.4 11.4
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Total comprehensive income - - - - - - 42.6 42.6
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Share based payment transactions - - - - - 0.7 (2.8) (2.1)
Current tax on share based
payment transactions - - - - - - 0.1 0.1
Shares issued 0.1 - - - - (0.1) - -
Own shares acquired - - - - - (2.1) - (2.1)
Dividends paid to shareholders - - - - - - (11.6) (11.6)
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Balance at 31 March 2018 12.5 12.9 3.5 (0.1) (0.3) (2.0) (139.0) (112.5)
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Consolidated statement of cash flows
FOR THE YEARED 31 MARCH 2018
2018 2017
GBPm GBPm
--------------------------------------------------------------------------- ------ ------
Operating activities
Profit before tax 37.9 45.4
Adjustments for
- depreciation and amortisation 14.2 14.0
- interest expense 6.5 10.6
- exceptional items (non cash) - (4.6)
- share based payments fair value charges (2.1) (1.7)
--------------------------------------------------------------------------- ------ ------
56.5 63.7
(Increase)/decrease in trade and other receivables (7.2) 6.2
(Increase)/decrease in inventories (0.4) 0.8
Decrease in trade and other payables (1.6) -
Increase/(decrease) in provisions 0.2 (4.3)
(Decrease)/increase in employee benefits before pension deficit payment (2.6) 0.9
Income taxes paid (4.0) (2.6)
--------------------------------------------------------------------------- ------ ------
Cash generated before pension deficit payment 40.9 64.7
Pension deficit payment (14.6) (14.1)
--------------------------------------------------------------------------- ------ ------
Cash flows from operating activities 26.3 50.6
--------------------------------------------------------------------------- ------ ------
Investing activities
Proceeds from sale of property, plant and equipment 0.4 0.1
Proceeds from sale of computer software 0.1 0.4
Interest received - 0.1
Additions of property, plant and equipment (14.5) (18.0)
Additions of computer software - (1.2)
--------------------------------------------------------------------------- ------ ------
Cash flows from investing activities (14.0) (18.6)
--------------------------------------------------------------------------- ------ ------
Financing activities
Own shares acquired (1.8) (0.1)
Borrowings repaid (25.0) (20.1)
Increase in borrowings 6.9 10.1
Equity dividends paid (11.6) (10.4)
Interest paid (4.1) (6.9)
--------------------------------------------------------------------------- ------ ------
Cash flows from financing activities (35.6) (27.4)
--------------------------------------------------------------------------- ------ ------
Net (decrease)/increase in cash and cash equivalents (23.3) 4.6
Cash and cash equivalents at beginning of year 40.9 36.3
Cash and cash equivalents at end of year 17.6 40.9
--------------------------------------------------------------------------- ------ ------
Represented by:
- cash at bank and in hand 11.7 33.0
- restricted cash, being deposits held by the Group's insurance subsidiary 5.9 7.9
--------------------------------------------------------------------------- ------ ------
17.6 40.9
--------------------------------------------------------------------------- ------ ------
Notes to the consolidated financial statements
1. Accounting policies
The financial information set out in this preliminary
announcement does not constitute Wincanton plc's statutory accounts
for the years ended 31 March 2018 and 31 March 2017. Statutory
accounts for the year ended 31 March 2018 will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. Statutory accounts for the year ended 31 March 2017 have
been delivered to the Registrar of Companies. The Auditor has
reported on those accounts; their reports were unqualified and did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The preliminary announcement has been prepared and approved by
the Directors in accordance with International Financial Reporting
Standards (IFRS) and its interpretations as adopted by the
International Accounting Standards Board (IASB) and by the EU
(Adopted IFRS).
2. Operating segments
Wincanton plc provides contract logistics services in the UK and
Ireland. The Group manages 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 the
performance of the operating segments on the basis of revenue and
underlying operating profit. Assets and liabilities are reviewed at
a consolidated level only, therefore segmental information is not
provided.
Industrial &
Retail & Industrial & Total Retail & Transport Total
Consumer 2018 Transport 2018 2018 Consumer 2017 2017 2017
Note GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
Revenue from
external
customers(1) 691.7 480.2 1,171.9 649.3 468.8 1,118.1
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
Underlying
EBITDA(2) 36.4 28.4 64.8 32.0 31.9 63.9
Depreciation (5.6) (4.4) (10.0) (5.0) (4.8) (9.8)
Amortisation of
software
intangibles (1.1) (0.8) (1.9) (1.2) (0.8) (2.0)
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
Underlying
operating
profit(2) 29.7 23.2 52.9 25.8 26.3 52.1
Amortisation of
acquired
intangibles (2.3) (2.2)
Exceptionals 3 (6.2) 6.1
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
Operating profit 44.4 56.0
Net financing
costs 4 (6.5) (10.6)
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
Profit before tax 37.9 45.4
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
Total Group
assets(3) 304.8 326.2
Additions to
reportable
segment
non-current
assets:
- property, plant
and equipment 3.7 10.8 14.5 3.0 15.0 18.0
- computer
software costs - - - 0.7 0.5 1.2
Total Group
liabilities (417.3) (465.6)
----------------- ---- ---------------- ---------------- ------- ---------------- ----------------- -------
1 Included in segment revenue is GBP1,160.4m (2017: GBP1,109.0m)
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.
3 Total Group assets include non-current assets of GBP136.0m
(2017: GBP147.9m), of which GBP135.9m (2017: GBP147.9m) are held in
the UK.
Revenue of GBP212.5m (2017: GBP201.7m) and GBP145.7m (2017:
GBP143.3m) 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 above. 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 year.
3. Exceptional items
2018 2017
GBPm GBPm
-------------------------------------- ----- -----
Restructuring costs (8.2) -
Pension liability management exercise 2.0 (0.9)
Other items - 7.0
-------------------------------------- ----- -----
(6.2) 6.1
-------------------------------------- ----- -----
The Group has undertaken a restructuring programme in the year
within the Industrial & Transport sector and the Group's
support functions, to ensure that the business is competitively
positioned for the future. A charge of GBP8.2m is included as
exceptional for the year comprising primarily of the costs of exit
of people and associated property costs.
The Group initiated a pension scheme liability management
exercise in conjunction with the Trustee at the end of last year.
The estimated costs of the exercise were accrued in the prior year,
with the settlement gains and adjustment to the estimated costs
being recognised in the current year.
Other items in the prior year of GBP7.0m comprise non-cash gains
of GBP4.6m which were recognised on the remeasurement of
liabilities relating to disposed businesses, including warranty
balances held in respect of the disposal of the European operations
and WRM; and the settlement of a claim against a supplier.
4. Net financing costs
Recognised in the income statement
2018 2017
Note GBPm GBPm
------------------------------------------------------ ---- ----- ------
Interest income - 0.1
------------------------------------------------------ ---- ----- ------
Interest expense (4.1) (6.0)
Unwinding of discount on provisions (0.6) (1.2)
Interest on the net defined benefit pension liability 9 (1.8) (3.5)
------------------------------------------------------ ---- ----- ------
(6.5) (10.7)
------------------------------------------------------ ---- ----- ------
Net financing costs (6.5) (10.6)
------------------------------------------------------ ---- ----- ------
Recognised in other comprehensive income
2018 2017
GBPm GBPm
------------------------------------------------------------------------------------------------ ----- -----
Foreign currency translation differences for foreign operations - recognised in the translation
reserve - (0.1)
------------------------------------------------------------------------------------------------ ----- -----
5. Income tax expense
Recognised in the income statement
2018 2017
GBPm GBPm
---------------------------- ----- -----
Current tax expense
Current year 4.2 7.0
Adjustments for prior years (0.8) (4.3)
---------------------------- ----- -----
3.4 2.7
---------------------------- ----- -----
Deferred tax expense
Current year 3.0 1.6
Adjustments for prior years 0.3 (0.9)
---------------------------- ----- -----
3.3 0.7
---------------------------- ----- -----
Total income tax expense 6.7 3.4
---------------------------- ----- -----
2018 2017
GBPm GBPm
---------------------------------------------------------------- ----- -----
Reconciliation of effective tax rate
Profit before tax 37.9 45.4
---------------------------------------------------------------- ----- -----
Income tax using the UK corporation tax rate of 19% (2017: 20%) 7.2 9.1
Non-deductible expenditure 0.3 0.4
Non-taxable income - (1.0)
Change in UK corporation tax rate (0.3) -
Effect of tax rate in foreign jurisdictions - (0.1)
Adjustments for prior years
- current tax (0.8) (4.3)
- deferred tax 0.3 (0.9)
Other - 0.2
---------------------------------------------------------------- ----- -----
Total tax expense for the year 6.7 3.4
---------------------------------------------------------------- ----- -----
Recognised in other comprehensive income
2018 2017
GBPm GBPm
--------------------------------------------------------------------------- ----- -----
Items which will not subsequently be reclassified to the Income statement:
Remeasurements of defined benefit pension liability 2.4 4.0
--------------------------------------------------------------------------- ----- -----
Recognised directly in equity
2018 2017
GBPm GBPm
-------------------------------------------------- ----- -----
Current tax on share based payment transactions (0.1) (1.1)
Deferred tax on share based payments transactions - 0.1
-------------------------------------------------- ----- -----
(0.1) (1.0)
-------------------------------------------------- ----- -----
The main UK Corporation tax rate reduced to 19% with effect from
1 April 2017 (20% prior to 1 April 2017) and will further reduce to
17% with effect from 1 April 2020 which should reduce the Group's
future current tax charge accordingly.
The Group maintains a provision against tax risks, which is
included within income tax payable.
The total tax expense above includes tax credits of GBP0.4m
(2017: GBP0.4m) in respect of amortisation of acquired intangibles
and exceptional tax of GBP1.2m (2017: GBP3.7m).
6. Earnings per share
Earnings per share calculation is based on the profit
attributable to the equity shareholders of Wincanton plc of
GBP31.2m (2017: GBP42.0m) and the weighted average shares in issue
throughout the year as calculated below of 123.8m (2017: 122.8m).
The diluted earnings per share calculation is based on there being
2.1m (2017: 4.3m) additional shares deemed to be issued at GBPnil
consideration under the Company's share option schemes.
2018 2017
millions millions
------------------------------------------------------------------- --------- ---------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the year 123.5 121.9
Net effect of shares issued and purchased during the year 0.3 0.9
------------------------------------------------------------------- --------- ---------
123.8 122.8
------------------------------------------------------------------- --------- ---------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares for the year (as above) 123.8 122.8
Effect of share options on issue 2.1 4.3
------------------------------------------------------------------- --------- ---------
125.9 127.1
------------------------------------------------------------------- --------- ---------
An alternative earnings per share measure 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:
2018 2017
pence pence
------------------------------ ------ ------
Underlying earnings per share
- basic 30.8 27.7
- diluted 30.3 26.8
------------------------------ ------ ------
Underlying earnings are determined as follows:
2018 2017
Note GBPm GBPm
------------------------------------------------------------------------- ---- ----- -----
Profit for the year attributable to equity shareholders of Wincanton plc 31.2 42.0
Exceptional items 3 6.2 (6.1)
Amortisation of acquired intangibles 2.3 2.2
Tax impact of above items and exceptional tax items (1.6) (4.1)
------------------------------------------------------------------------- ---- ----- -----
Underlying earnings 38.1 34.0
------------------------------------------------------------------------- ---- ----- -----
7. Dividends
Dividends paid in the year comprise:
2018 2017
GBPm GBPm
---------------------------------------------------------------------------------------- ----- -----
Final dividend for the year ended 31 March 2017 of 6.1p per share (2016: 5.5p) 7.6 6.7
Interim dividend for the period ended 30 September 2017 of 3.27p per share (2016: 3.0p) 4.0 3.7
---------------------------------------------------------------------------------------- ----- -----
11.6 10.4
---------------------------------------------------------------------------------------- ----- -----
The Directors are proposing a final dividend of 6.63p per share
for the year ended 31 March 2018 (2017: 6.1p) which, if approved by
shareholders, will be paid on 3 August 2018 to shareholders on the
register on 6 July 2018, an estimated total of GBP8.2m. The
proposed final dividend is subject to approval by shareholders at
the Annual General Meeting on 28 June 2018 and in accordance with
Adopted IFRS has not been included as a liability in these
financial statements.
In setting the dividend the Directors have considered a range of
factors, including the Group's strategy (including downside
sensitivities), the Group's net debt position, the current and
projected level of distributable reserves and projected cash
flows.
The Employee Benefit Trust has waived the right to receive
dividends in respect of the shares it holds.
8. Analysis of changes in net debt
1 April 2017 Cash flow 31 March 2018
GBPm GBPm GBPm
---------------------------- ------------ --------- -------------
Cash and bank balances 40.9 (23.3) 17.6
Bank loans and overdrafts (65.1) 18.1 (47.0)
Other financial liabilities (0.1) - (0.1)
---------------------------- ------------ --------- -------------
Net debt (24.3) (5.2) (29.5)
---------------------------- ------------ --------- -------------
9. Employee benefits
Employees of Wincanton participated in funded pension
arrangements in the UK and Ireland during the year ended 31 March
2018 details of which are given below.
The principal Wincanton Scheme in the UK (the Scheme) is a
funded arrangement which has two defined benefit sections and two
defined contribution sections, called the Wincanton Retirement
Savings Section and the Wincanton Pension Builder Plan. The
employees of Wincanton Ireland Limited are eligible to participate
in a separate defined contribution scheme. Assets of these pension
arrangements are held in separate Trustee administered funds
independent of Wincanton. The weighted average duration of the
funded defined benefit obligation is approximately 20 years.
In previous years, a small number of employees, who were subject
to the statutory earnings cap on pensionable earnings prior to 6
April 2006, were entitled to participate in an unfunded unapproved
arrangement in addition to accruing benefits from the Scheme. There
have been no active members of this arrangement throughout the
years ended 31 March 2017 and 2018.
The defined benefit sections of the Scheme were closed to future
accrual on 31 March 2014. This means that no future service benefit
will accrue but pensions built up to the date of closure have been
preserved.
The latest formal valuation of the Scheme was carried out as at
31 March 2014 by the Scheme actuary, Hymans Robertson, and was
agreed with the Trustee in 2015. In addition, it was agreed that
certain administration expenses would be paid directly by the Group
and deducted from the deficit funding contributions. The expenses,
which amount to GBP0.7m (2017: GBP0.7m), are not included in the
contributions below. The deficit funding contribution in the year
net of these expenses was GBP14.6m (2017: GBP14.1m) with a further
GBP1.5m top up payment to the Scheme as a result of an enhanced
transfer value exercise. Discussions are ongoing 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 conclude in 2018. The defined
benefit sections of the Scheme expose the Group to various risks:
longevity risk (members living longer than expected), inflation and
interest rate risk (higher or lower than expected), and market
(investment) risk (lower returns than expected). The Trustee and
Group have taken steps to mitigate these risks through the use
of:
-- hedging instruments within the investment portfolio; and
-- diversification of the investment portfolio.
The Group is not exposed to any unusual, entity specific or
scheme specific risks.
The assets and liabilities of the defined benefit sections of
the Group are calculated in accordance with IAS 19 Employee
Benefits (Revised) and are set out in the tables below.
The calculations under IAS 19 are based on actuarial assumptions
which are the best estimates chosen from a range of possible
assumptions about the long term future which, unless by chance,
will not necessarily be borne out in practice. The fair value of
the assets, which are not intended to be realised in the short
term, may be subject to significant change before they are
realised, and the present value of the liabilities are derived from
cash flow projections over long periods and are thus inherently
uncertain.
2018 2017
GBPm GBPm
------------------------------------------------------ --------- ---------
Present value of unfunded defined benefit obligations (2.3) (2.2)
Present value of funded defined benefit obligations (1,123.1) (1,156.7)
Fair value of Scheme assets 1,075.9 1,080.5
------------------------------------------------------ --------- ---------
Net defined benefit liability (49.5) (78.4)
------------------------------------------------------ --------- ---------
The movement in the above net defined benefit liability in the
year was primarily the result of a reduction in liabilities due to
demographic assumptions, an increase in the market value of the
investments and contributions received from the Group, being partly
offset by an increase in liabilities resulting from an increase in
the inflation rate assumption. The net defined benefit liability,
after taking into account the related deferred tax asset, is
GBP41.1m (2017: GBP65.1m).
Movements in the present value of the net defined benefit
liability
Unfunded Total
Assets Obligations Net liability arrangements net liability
31 March 2018 GBPm GBPm GBPm GBPm GBPm
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Opening position 1,080.5 (1,156.7) (76.2) (2.2) (78.4)
Included in Income statement:
Administration costs (1.7) - (1.7) - (1.7)
Effect of settlements (25.8) 27.6 1.8 - 1.8
Interest on the net defined benefit liability 27.3 (29.1) (1.8) - (1.8)
Cash:
Employer contributions 16.8 - 16.8 - 16.8
Benefits paid (39.5) 39.5 - - -
Included in Other comprehensive income:
Changes in financial assumptions - (33.4) (33.4) (0.1) (33.5)
Changes in demographic assumptions - 23.8 23.8 - 23.8
Experience - 5.2 5.2 - 5.2
Return on assets excluding amounts included
in net financing costs 18.3 - 18.3 - 18.3
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Closing defined benefit liability 1,075.9 (1,123.1) (47.2) (2.3) (49.5)
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Unfunded Total
Assets Obligations Net liability arrangements net liability
31 March 2017 GBPm GBPm GBPm GBPm GBPm
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Opening position 897.1 (1,001.0) (103.9) (1.7) (105.6)
Included in Income statement:
Administration costs (1.7) - (1.7) - (1.7)
Interest on the net defined benefit liability 30.8 (34.2) (3.4) (0.1) (3.5)
Cash:
Employer contributions 14.8 - 14.8 - 14.8
Benefits paid (57.0) 57.0 - - -
Included in Other comprehensive income:
Changes in financial assumptions - (202.1) (202.1) (0.4) (202.5)
Changes in demographic assumptions 24.2 24.2 - 24.2
Experience - (0.6) (0.6) - (0.6)
Return on assets excluding amounts included
in net financing costs 196.5 - 196.5 - 196.5
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Closing defined benefit liability 1,080.5 (1,156.7) (76.2) (2.2) (78.4)
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Liability for defined benefit obligations
The principal actuarial assumptions for the Scheme and for the
UK unfunded arrangement at the balance sheet date were as
follows:
2018 2017
% %
------------------------------------------- --------- ---------
Discount rate 2.60 2.60
Price inflation rate - RPI 3.35 3.15
Price inflation rate - CPI 2.35 2.15
Rate of increase of pensions in deferment 2.35 2.15
Rate of increase of pensions in payment(1) 1.85-3.25 1.75-3.05
------------------------------------------- --------- ---------
1 A range of assumed rates exist due to the application of
annual caps and floors to certain elements of service.
The assumptions used for mortality rates for members of these
arrangements at the expected retirement age of 65 years are as
follows:
2018 2017
Years Years
--------------------- ------ ------
Male aged 65 today 21.1 21.2
Male aged 45 today 23.0 23.5
Female aged 65 today 22.9 23.4
Female aged 45 today 25.4 26.4
--------------------- ------ ------
Sensitivity table
The sensitivity of the present value of the Scheme obligations
to changes in the key actuarial assumptions are set out in the
following table. The illustrations consider the result of only a
single assumption changing with the others assumed unchanged and
includes the impact of the interest rate and inflation rate
hedging. In reality it is more likely that more than one assumption
would change and potentially the results would offset each other,
for example, a fall in interest rates will increase the Scheme
obligations, but may also trigger an offsetting increase in market
value of certain Scheme assets.
Increase/(decrease) Increase/(decrease)
Change in in liability in assets
assumption GBPm GBPm
---------------------- ----------- ------------------- -------------------
Discount rate +0.1% (22.0) (24.0)
Price inflation - RPI +0.1% 14.0 13.0
Mortality rate + 1 year 44.9 -
---------------------- ----------- ------------------- -------------------
Defined contribution schemes
The total expense relating to the Group's defined contribution
schemes in the current year was GBP19.0m (2017: GBP17.9m).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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May 17, 2018 02:00 ET (06:00 GMT)
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