TIDMWIN
RNS Number : 6984G
Wincanton PLC
08 November 2018
For immediate release 8 November 2018
WINCANTON plc
Half Year Results for the six months to 30 September 2018
(unaudited)
"Robust operating performance and cash generation"
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
2018.
Key financial measures 2018 2017 Change
---------------------------------------- ------- ------- -------
Revenue (GBPm) 581.8 581.0 0.1%
Underlying EBITDA (GBPm)(1) 33.0 31.5 4.8%
Underlying operating profit (GBPm)(2) 27.0 25.7 5.1%
Underlying profit before tax (GBPm)(2) 24.1 22.5 7.1%
Underlying EPS (p)(2) 16.2 15.0 8.0%
Dividend per share - interim (p) 3.60 3.27 10.1%
Net debt (GBPm)(3) (24.2) (43.5)
Statutory results
---------------------------------------- ------- ------- -------
Operating profit (GBPm)(2) 33.0 23.5 40.4%
Profit before tax (GBPm) 30.1 20.3 48.3%
Basic EPS (p) 21.3 13.7 55.5%
(1) Underlying EBITDA refers to underlying operating profit
before depreciation and amortisation and is reconciled in Note 3 to
the consolidated half year 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 9 to the
financial statements provides a breakdown of net debt for the
current and prior periods.
Highlights
-- New business wins include EDF Energy, Roper Rhodes and Hapag-Lloyd
-- Key renewals completed in period with Ibstock, Halfords, Loaf.com and AvantiGas
-- Underlying operating profit increase of 5.1% to GBP27.0m
driven by improved profitability in Industrial & Transport from
actions taken to address cost base and performance
-- Underlying EPS growth of 8.0% to 16.2 pence per share
-- Strong free cash flow generation of GBP33.5m, with net debt reduced to GBP24.2m
-- 2017 triennial pension valuation agreed during the period
providing the Group with the ability to continue to invest in the
business and to pay a progressive dividend
-- Interim dividend of 3.60p, representing an increase of 10.1%
which continues to broadly follow the growth in underlying
earnings
Adrian Colman, Wincanton Chief Executive Officer commented:
"In the first half of the year the Group has delivered a healthy
overall performance from a stable platform. We continue to develop
our business and propositions to meet the needs of our customers,
especially benefitting from growth in eCommerce in the Retail &
Consumer environment. The strong operating profit growth delivered
in the period reflects the improvements we made to our performance
and cost base last year and the robust approach taken to only
renewing work where we can see appropriate rates of return.
The strong underlying earnings per share growth of 8.0% and free
cash flow generation highlights our continued ability to deliver
predictable results and returns for all stakeholders. We look
forward to making further strategic and operational progress to
support long term returns for our stakeholders."
For further enquiries please contact:
Wincanton plc Tel: 020 7466 5000 today,
Adrian Colman, Chief Executive thereafter
Officer Tel: 01249 710000
Tim Lawlor, Chief Financial Officer
Buchanan Tel: 020 7466 5000
Richard Oldworth, Madeleine Seacombe
A meeting for analysts will be held at Buchanan, 107 Cheapside,
London, EC2V 6DN today, Thursday 8 November 2018, commencing at
9.30am. Wincanton's Half Year Results 2018 are available at
www.wincanton.co.uk
An audio webcast of the analysts' meeting will be available from
12 noon today:
http://webcasting.buchanan.uk.com/broadcast/5bb4af47c6ec681d9e06bbfd
Half Year Review
for the six months to 30 September 2018
Summary
Results
Revenue and underlying profit before tax have grown by 0.1% and
7.1% respectively in the half year compared to the same period last
year. The Group has delivered a period of strong underlying
performance which has balanced new wins, organic growth with
existing customers and the exit of certain contracts which were not
capable of being renewed at the appropriate operating margins.
Profitability was further supported by the benefits from the
performance improvement and cost saving measures initiated in the
second half of the prior year and has resulted in growth in
underlying operating profit and improvement in underlying operating
margin to 4.6% (30 September 2017: 4.4%). The underlying operating
profit of the Group has increased to GBP27.0m (30 September 2017:
GBP25.7m) which has driven strong free cash flow generation of
GBP33.5m (30 September 2017: GBP(1.0)m).
An exceptional profit of GBP6.0m has been reported from the
disposal of a historically under-utilised freehold property and the
transition of the related operations.
Underlying EPS increased by 8.0% to 16.2p per share (30
September 2017: 15.0p per share) with further improvement from
lower net finance charges.
Additionally, the 2017 triennial valuation of the pension scheme
has been finalised in the period, with an appropriate future
funding plan agreed with the Scheme Trustee which allows the Group
to move forward with confidence and certainty.
Dividend
The Board is pleased to declare an interim dividend of 3.60p per
Ordinary Share (30 September 2017: 3.27p per share) representing a
10.1% increase over the prior period. This reflects the confidence
in the Group's performance as it continues with its progressive
dividend policy which broadly follows the growth in underlying
earnings.
Board
During the period Dr Martin Read CBE was appointed Chairman of
the Board with effect from 1 August 2018, following a thorough,
independent, external selection process. Martin has extensive and
varied experience as a former Chief Executive of international IT
services company, Logica, as Chairman of Laird plc and as a
Non-executive Director on the boards of Invensys, Aegis Group,
British Airways, Boots, Asda and the UK Government Efficiency and
Reform Board. He spent the first seven years of his career in the
container transport sector. Martin has also been appointed as the
Chairman of the Nomination Committee.
Stewart Oades stepped down from the position of Interim Chairman
at the same date and will resume his former role as Senior
Independent Director of the Board which he temporarily vacated
during the completion of the selection process for a permanent
Chairman. Martin Sawkins stepped down from the Remuneration
Committee on 5 November 2018 and will retire from the Board on 31
December 2018, after seven years with the Group. We would like to
take this opportunity to thank Martin for his contribution to
Wincanton over this period. Gill Barr has succeeded Martin as chair
of the Remuneration Committee.
Key priorities and outlook
The Group's priority will be to continue to make further
progress in the delivery of its organic growth strategy. This is
built on strong and resilient operational performance for our
customers, especially across their seasonal peaks and the creation
of market leading propositions for them to help solve the
challenges they face in their markets.
We will continue our W(2) Labs start-up incubator programme as a
cornerstone of innovation within Wincanton with a second wave of
this programme running in the second half. W(2) Labs has already
contributed to the enhancements that we have made to our eCommerce
logistics solutions in the period.
Over the coming year we will deliver an improved suite of
transport technology platforms through the roll out of enhanced
telematics capabilities across the fleet, the implementation of a
new Transport Management System and the completion of the roll out
of our in-cab smartphone app to enhance track and trace visibility
of transport loads. These initiatives will help drive lower costs
of operation for our transport activities and enhance our service
levels to customers.
We are also focused on providing solutions and industry leading
insights for our customers as we approach Brexit and helping UK
businesses create robust contingency plans and arrangements to deal
with changes as the UK leaves the European Union over the coming
months.
The Group remains well positioned in its chosen markets and
continues to experience good levels of trading. The medium term
forecasts in our focus growth markets of eCommerce, general
merchandise and construction continue to remain strong. 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
Revenue for the six months increased by 0.1% to GBP581.8m (30
September 2017: GBP581.0m) with prior year contract wins and
organic growth being offset by some contract losses.
Underlying operating profit increased by 5.1% to GBP27.0m (30
September 2017: GBP25.7m) partly as a result of the impact of the
performance improvement and cost saving initiatives taking effect
and the exit of certain contracts which were not capable of
delivering the appropriate operating margins for the Group. This
has in particular driven an improvement within the Industrial &
Transport sector. As a result, the underlying operating profit
margin has increased to 4.6% (30 September 2017: 4.4%).
An exceptional profit of GBP6.0m has been reported relating to
the profit on disposal of an under-utilised freehold property net
of the costs of disposal and of transitioning the operations to
another site.
Underlying EPS increased by 8.0% to 16.2p per share (30
September 2017: 15.0p per share) reflecting the increase in
underlying operating profit and reduction in net financing
costs.
Net debt decreased to GBP24.2m (30 September 2017: GBP43.5m, 31
March 2018: GBP29.5m) with the net cash inflow since 31 March 2018
of GBP5.3m including the net proceeds from the property disposal of
GBP12.8m (gross proceeds of GBP14.5m less costs of disposal and
transitioning operations to another site of GBP1.7m) and after
deducting a one-off additional contribution to the pension scheme
of GBP15.0m and payment of the final dividend of GBP8.2m. The
Group's pension scheme deficit stood at GBP28.9m at 30 September
2018 (30 September 2017: GBP69.3m, 31 March 2018: GBP49.5m).
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
2018 2017 Change
--------------------------------------- ----- ----- -------
Revenue (GBPm) 357.7 333.9 7.1%
Underlying operating profit (GBPm) 15.4 15.1 2.0%
Underlying operating profit margin (%) 4.3% 4.5% (20)bps
--------------------------------------- ----- ----- -------
The split of Retail & Consumer revenue by the industry
sectors it serves is as follows:
2018 2017
GBPm GBPm(1) Change
--------------------------- ----- -------- -------
Retail general merchandise 219.3 176.8 24.0%
Retail grocery 88.6 104.1 (14.9)%
Consumer products 49.8 53.0 (6.0)%
--------------------------- ----- -------- -------
357.7 333.9 7.1%
--------------------------- ----- -------- -------
(1) Certain contracts within Retail general merchandise and
Retail grocery have been realigned within the sector split, in line
with how management reviews the business.
The overall revenue increase was driven primarily by the impact
of prior year contract wins and organic volume growth within Retail
general merchandise from customers such as IKEA, wilko and
Screwfix. This growth was partly offset by the impact of lost
volumes due to contract cessations in the prior year primarily in
Retail grocery where we see the impact of the loss of the Tesco
contract and in Consumer products with the loss of a contract with
Premier Foods.
In Retail general merchandise our market leading household, home
and DIY logistics offerings helped us secure new business with
Roper Rhodes bathrooms. Across the sector we also completed key
renewals with Halfords, Loaf.com and Micheldever Tyres.
Industrial & Transport
2018 2017 Change
--------------------------------------- ----- ----- ------
Revenue (GBPm) 224.1 247.1 (9.3)%
Underlying operating profit (GBPm) 11.6 10.6 9.4%
Underlying operating profit margin (%) 5.2% 4.3% 90bps
--------------------------------------- ----- ----- ------
The split of Industrial & Transport revenue by the industry
sectors it serves is as follows:
2018 2017
GBPm GBPm(1) Change
------------------- ----- -------- -------
Transport services 89.8 107.8 (16.7)%
Construction 72.2 78.4 (7.9)%
Other 62.1 60.9 2.0%
------------------- ----- -------- -------
224.1 247.1 (9.3)%
------------------- ----- -------- -------
(1) Certain contracts within Transport services and Construction
have been realigned within the sector split, in line with how
management reviews the business.
The decrease in revenue was primarily due to the impact of
contract losses in Transport services including the loss of the
Britvic transport contract. The improvement in operating profit and
margin was driven by the impact of actions taken to reduce the cost
base and to right-size some areas of transport capacity along with
the exit from certain lower margin contracts.
Construction extended and expanded a number of contracts within
the period, including a four-year expansion with Ibstock to cover
its new factory facility. New contracts include a 10-year contract
with EDF Energy to provide on-site logistics management services
for the new power station build programme at Hinkley Point C. In
addition, our Containers business has also won a one-year contract
with Hapag-Lloyd. These wins broadly offset the end of a
construction contract with Wavin in the period. Other key renewals
in the period included an extension of our contract with
AvantiGas.
Financing costs
2018 2017
GBPm GBPm
------------------------------------------------------ ----- -----
Bank interest payable on loans 1.9 2.0
Unwinding of discount on provisions 0.4 0.3
Interest on the net defined benefit pension liability 0.6 0.9
------------------------------------------------------ ----- -----
Financing costs 2.9 3.2
------------------------------------------------------ ----- -----
Financing costs were GBP2.9m, GBP0.3m lower overall compared to
the prior period charge of GBP3.2m.
Bank interest payable on loans was GBP1.9m (30 September 2017:
GBP2.0m), a reduction of GBP0.1m in line with the prior period.
The non-cash financing items total GBP1.0m (30 September 2017:
GBP1.2m) and comprise the discount unwinding on the Group's
provisions for property and insurance claims, plus the financing
charge in respect of the defined benefit deficit, which is lower in
the year because of a reduction in the opening pension deficit.
Amortisation of acquired intangibles
There has been no amortisation charge in the period (30
September 2017: GBP1.1m), as the acquired intangibles were fully
amortised at 31 March 2018.
Exceptional items
2018 2017
GBPm GBPm
--------------------------------------------- ----- -----
Net profit on freehold property disposal 6.0 -
Restructuring costs - (2.9)
Pension scheme liability management exercise - 1.8
Exceptional items 6.0 (1.1)
--------------------------------------------- ----- -----
During the period we completed the disposal of a freehold
property receiving gross sales proceeds of GBP14.5m and incurring
costs of disposal and transitioning operations to another site of
GBP1.2m and GBP0.5m respectively. The carrying value of the
property was GBP6.8m generating a net profit on the disposal and
transition of GBP6.0m.
In the six months to 30 September 2017 the Group commenced a
restructuring programme to competitively position the business for
the future with a charge of GBP2.9m included as exceptional.
Additionally, the conclusion of the pension scheme liability
management exercise resulted in a settlement gain of GBP1.8m.
Taxation
2018 2017
--------------------------------------------------- ----- -----
Underlying profit before tax (GBPm) 24.1 22.5
--------------------------------------------------- ----- -----
Underlying tax (GBPm) 4.0 4.0
Tax on amortisation of acquired intangibles (GBPm) - (0.2)
Tax on exceptional items (GBPm) (0.3) (0.5)
--------------------------------------------------- ----- -----
Tax as reported (GBPm) 3.7 3.3
--------------------------------------------------- ----- -----
Effective tax rate on underlying profit before tax
(%) 16.5% 18.0%
--------------------------------------------------- ----- -----
Underlying tax of GBP4.0m (30 September 2017: GBP4.0m)
represents an underlying effective tax rate of 16.5% (30 September
2017: 18.0%) on underlying profit before tax and is stated before
tax on exceptional items of GBP0.3m (30 September 2017: GBP0.5m)
and, in the prior period, a tax credit of GBP0.2m in respect of the
amortisation of acquired intangibles. The underlying effective 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 GBP1.9m (30
September 2017: GBP1.8m).
The total net deferred tax asset has reduced to GBP8.3m (30
September 2017: GBP14.6m) 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 GBP26.4m, an increase of
GBP9.4m (30 September 2017: GBP17.0m) which translates to a basic
EPS of 21.3p (30 September 2017: 13.7p).
Underlying EPS, which excludes from earnings amortisation of
acquired intangibles and exceptional items where relevant, has
increased by 8.0% to 16.2p (30 September 2017: 15.0p).
The calculation of these EPS measures is set out in Note 6.
Dividends
The Group's policy is for dividend growth to broadly match 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.
The Board has declared an interim dividend of 3.60p (30
September 2017: 3.27p) per share relating to the six-month period
ended 30 September 2018, payable in January 2019.
The Group paid a final dividend in the six-month period of 6.63p
per share relating to the year ended 31 March 2018 (30 September
2017: 6.1p).
Financial position
The summary financial position of the Group is set out
below:
30 September 2018 30 September 2017 31 March 2018
GBPm GBPm GBPm
--------------------------------------------------------- ----------------- ----------------- -------------
Non-current assets 130.0 147.6 136.0
Net current liabilities (excl. net debt) (138.4) (134.1) (136.4)
Non-current liabilities (excl. net debt/pension deficit) (31.4) (35.0) (33.1)
Net debt (24.2) (43.5) (29.5)
Pension deficit (gross of deferred tax) (28.9) (69.3) (49.5)
--------------------------------------------------------- ----------------- ----------------- -------------
Net liabilities (92.9) (134.3) (112.5)
--------------------------------------------------------- ----------------- ----------------- -------------
The reduction in net liabilities since the year ended 31 March
2018 of GBP19.6m is primarily represented by the profit after tax
of GBP26.4m less the payment of the prior year final dividend of
GBP8.2m.
The movement in the pension deficit is primarily due to the
employer contributions paid into the Scheme.
Net debt and cash flows
Net debt at 30 September 2018 was GBP24.2m (30 September 2017:
GBP43.5m), reflecting a net cash inflow of GBP19.3m over the
intervening 12 months and GBP5.3m since 31 March 2018.
The Group's cash flows for the six months to 30 September are
summarised in the following table:
2018 2017
GBPm GBPm
---------------------------------- ------ ------
Underlying EBITDA 33.0 31.5
Capital expenditure (4.2) (9.4)
Net proceeds from asset disposals 13.1 0.3
Working capital (1.5) (15.2)
Tax (1.9) (1.8)
Interest (1.8) (2.1)
Other items (3.2) (4.3)
---------------------------------- ------ ------
Free cash flow 33.5 (1.0)
Pension payments (20.0) (8.8)
Dividends (8.2) (7.6)
Own shares acquired - (1.8)
---------------------------------- ------ ------
Net cash flow 5.3 (19.2)
---------------------------------- ------ ------
The Group generated a GBP5.3m net cash inflow in the period (30
September 2017: GBP19.2m outflow) with a free cash inflow of
GBP33.5m (30 September 2017: GBP1.0m outflow), the increase on the
prior year reflecting the proceeds from the property disposal and a
neutral working capital position in the period.
Capital expenditure of GBP4.2m (30 September 2017: GBP9.4m)
principally consists of investments in IT systems including the
enhancement of transport systems which will continue in the second
half of the year.
Net proceeds from asset disposals comprise an under-utilised
freehold property which was disposed of for gross proceeds of
GBP14.5m, with costs of disposal and transition of GBP1.2m and
GBP0.5m respectively and proceeds from other asset disposals of
GBP0.3m.
Working capital movements have been relatively neutral in the
period compared with a GBP(15.2)m outflow in the prior period which
related to working capital investment in new contracts commenced in
the prior period and the unwinding of timing movements.
The Group paid cash tax in the period of GBP1.9m (30 September
2017: GBP1.8m). 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 GBP1.8m (30
September 2017: GBP2.1m) 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 GBP2.6m (30 September 2017:
nil) relating to the costs of restructuring and other settlements
recorded as other provisions at 31 March 2018. Other movements
include payments in respect of property provisions.
The cash contribution to fund the pension deficit in the current
year to 31 March 2019 will be GBP17.3m plus a one--off lump--sum
contribution of GBP15.0m (31 March 2018: GBP14.6m plus a one-off
lump-sum of GBP1.5m) funded by the gross sale proceeds of the
freehold property; of which GBP20.3m was paid in the first half,
less GBP0.3m for certain administration costs agreed to be paid
directly by the Group.
No own shares were acquired in the period (30 September 2017:
GBP1.8m acquired in order to satisfy share option awards).
Financing and covenants
The Group's committed facilities at the period end were GBP141m
(30 September 2017: GBP141m) and the headroom in these committed
facilities to reported net debt at 30 September 2018 was GBP117m
(30 September 2017: GBP98m). The Group also had a Receivables
Purchase Facility with Santander UK plc and operating overdrafts
which provide day to day flexibility and amount to a further GBP50m
and GBP8m respectively in uncommitted facilities.
During the period, utilisation of the Group's non-recourse
GBP50m Receivables Purchase Facility has commenced, with the value
at the period end being GBP3m. The level of utilisation will
continue to grow into the second half of the year as additional
customers are added to the facility.
At the period end the Group's committed facilities comprised 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 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 2018
--------------------------- --------- ----------------------
Adjusted net debt: EBITDA <2.75:1 0.74
Interest cover >3.5:1 18.7
Fixed charge cover >1.4:1 3.4
--------------------------- --------- ----------------------
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 GBP28.9m
(GBP24.0m net of deferred tax) at 30 September 2018 (30 September
2017: GBP69.3m, 31 March 2018: GBP49.5m). The following table shows
the reported IAS 19 deficit:
30 Sept 30 Sept 31 March
2018 2017 2018
------------------- --------- --------- ---------
Assets (GBPm) 1,063.4 1,035.4 1,075.9
Liabilities (GBPm) (1,092.3) (1,104.7) (1,125.4)
------------------- --------- --------- ---------
Total (GBPm) (28.9) (69.3) (49.5)
------------------- --------- --------- ---------
Discount rate (%) 2.85 2.70 2.60
------------------- --------- --------- ---------
The movement in the deficit since 31 March 2018 is primarily due
to the employer contributions paid into the Scheme. The discount
rate has decreased from 2.70% at 30 September 2017 to 2.60% at 31
March 2018 and then increased to 2.85% at 30 September 2018. Each
0.1% movement in the rate impacts the liabilities of the Scheme by
2.0%, currently some GBP22m. 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 2018. As
at 30 September 2018 the Scheme's investment was split between 38%
in return-seeking assets and 62% in defensive assets.
The interest and inflation rate risks facing the Scheme are
hedged at 100% of the Scheme's assets.
The Company reached an agreement with the Trustee on the 2017
triennial valuation and recovery plan in the period. The net annual
deficit contributions have been agreed at GBP17.3m per annum
increasing by RPI over the three years to March 2021 and GBP24.3m
per annum increasing by RPI from April 2022 to March 2027. In
addition, the Company made a one-off contribution of GBP15.0m in
August 2018. These payments are deductible for UK corporation tax
purposes in the year they are paid and therefore materially reduce
the net cash impact of the contributions to the Group. The
agreement is based on the Technical Provisions calculation of the
pension deficit which at 30 September 2018 is estimated to be
c.GBP170m and is subject to other provisions as detailed in the
announcement made on 8 August 2018.
On 26 October 2018, the High Court of Justice of England and
Wales issued a judgment in a claim regarding the rights of members
to equality of treatment in relation to pension benefits. The court
ruling has made it clear that schemes are under a duty to equalise
benefits for men and women in relation to guaranteed minimum
pension benefits. The extent to which the judgement will increase
the liabilities of the Scheme is under consideration and any
adjustment is expected to be recognised in the second half of
2018/19.
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 28 to 31 of the Annual Report for the year
ended 31 March 2018. 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 scheme, being the
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.
2018 2017
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
Amortisation of
Exceptional acquired Exceptional
Statutory items(1) Underlying Statutory intangibles items(1) Underlying
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
Revenue (GBPm) 581.8 - 581.8 581.0 - - 581.0
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
EBITDA (GBPm)(2) 39.0 (6.0) 33.0 30.4 - 1.1 31.5
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
Operating profit
(GBPm) 33.0 (6.0) 27.0 23.5 1.1 1.1 25.7
Operating margin
(%) 5.7 4.6 4.0 4.4
Net financing
costs (GBPm) (2.9) - (2.9) (3.2) - - (3.2)
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
Profit before
tax (GBPm) 30.1 (6.0) 24.1 20.3 1.1 1.1 22.5
Income tax
(GBPm) (3.7) (0.3) (4.0) (3.3) (0.2) (0.5) (4.0)
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
Profit after tax
(GBPm) 26.4 (6.3) 20.1 17.0 0.9 0.6 18.5
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
Earnings per
share (p)(3) 21.3 16.2 13.7 15.0
Dividend per
share (p) 3.60 3.60 3.27 3.27
Net debt (GBPm) (24.2) (24.2) (43.5) (43.5)
---------------- --------- --------------- ---------- --------- --------------- ---------------- ----------
1 Note 3 provides further detail of exceptional items
2 EBITDA refers to operating profit before depreciation and
amortisation and is reconciled in Note 3.
3 Note 6 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 9 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 2018 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 2018, 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 7 November 2018.
T Lawlor
Director
Consolidated income statement
for the six months to 30 September 2018 (unaudited)
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2018 2017(1) 2018(1)
Note GBPm GBPm GBPm
Revenue 2,3 581.8 581.0 1,171.9
---------------------------------------------------- ------- ---------------- ---------------- -------------
Underlying operating profit 3 27.0 25.7 52.9
---------------------------------------------------- ------- ---------------- ---------------- -------------
Amortisation of acquired intangibles - (1.1) (2.3)
Exceptional items 3 6.0 (1.1) (6.2)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Operating profit 3 33.0 23.5 44.4
Financing costs 4 (2.9) (3.2) (6.5)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Profit before tax 30.1 20.3 37.9
Income tax expense 5 (3.7) (3.3) (6.7)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Profit attributable to equity shareholders of
Wincanton plc 26.4 17.0 31.2
---------------------------------------------------- ------- ---------------- ---------------- -------------
Earnings per share
- basic 6 21.3p 13.7p 25.2p
- diluted 6 21.1p 13.5p 24.8p
---------------------------------------------------- ------- ---------------- ---------------- -------------
(1) IFRS 15 Revenue from contracts with customers has been
applied using the cumulative effect method, therefore
comparative periods have not been restated
Consolidated statement of comprehensive income
for the six months to 30 September 2018 (unaudited)
Six Six
months to months to Year
30 Sept 30 Sept ended
2018 2017(1) 31 March 2018(1)
GBPm GBPm GBPm
Profit for the period 26.4 17.0 31.2
---------------------------------------------------------------------- ----------- ----------- ------------------
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income
statement
Remeasurements of defined benefit liability 1.5 (0.1) 13.8
Income tax relating to items that will not subsequently be
reclassified to profit or loss (0.2) - (2.4)
---------------------------------------------------------------------- ----------- ----------- ------------------
1.3 (0.1) 11.4
Items which are or may subsequently be reclassified to the income
statement
Effective portion of changes in fair value of cash flow hedges - (0.2) (0.1)
Net change in fair value of cash flow hedges transferred to the
income statement - - 0.1
---------------------------------------------------------------------- ----------- ----------- ------------------
- (0.2) -
---------------------------------------------------------------------- ----------- ----------- ------------------
Other comprehensive income/(expense) for the period, net of income
tax 1.3 (0.3) 11.4
---------------------------------------------------------------------- ----------- ----------- ------------------
Total comprehensive income attributable to equity shareholders of
Wincanton plc 27.7 16.7 42.6
---------------------------------------------------------------------- ----------- ----------- ------------------
(1) IFRS 15 Revenue from contracts with customers has been
applied using the cumulative effect method, therefore
comparative periods have not been restated
Consolidated balance sheet
at 30 September 2018 (unaudited)
30 Sept 30 Sept 31 March
2018 2017(1) 2018(1)
Note GBPm GBPm GBPm
---------------------------------------------------- -------- --------- ---------
Non-current assets
Goodwill and intangible assets 82.6 84.9 82.7
Property, plant and equipment 8 38.9 48.0 41.7
Investments, including those equity accounted 0.2 0.1 0.1
Deferred tax assets 8.3 14.6 11.5
----------------------------------------------- --- -------- --------- ---------
130.0 147.6 136.0
----------------------------------------------- --- -------- --------- ---------
Current assets
Inventories 4.3 4.4 4.4
Trade and other receivables 142.4 150.2 140.7
Assets classified as held for sale - - 6.1
Cash and cash equivalents 9 18.9 22.9 17.6
----------------------------------------------- --- -------- --------- ---------
165.6 177.5 168.8
----------------------------------------------- --- -------- --------- ---------
Current liabilities
Income tax payable (4.3) (5.0) (5.7)
Borrowings and other financial liabilities 9 (0.1) (0.3) -
Trade and other payables (264.2) (270.2) (264.1)
Provisions 10 (16.6) (13.5) (17.8)
----------------------------------------------- --- -------- --------- ---------
(285.2) (289.0) (287.6)
----------------------------------------------- --- -------- --------- ---------
Net current liabilities (119.6) (111.5) (118.8)
----------------------------------------------- --- -------- --------- ---------
Total assets less current liabilities 10.4 36.1 17.2
----------------------------------------------- --- -------- --------- ---------
Non-current liabilities
Borrowings and other financial liabilities 9 (43.0) (66.1) (47.1)
Employee benefits 11 (28.9) (69.3) (49.5)
Provisions 10 (31.4) (35.0) (33.1)
(103.3) (170.4) (129.7)
----------------------------------------------- --- -------- --------- ---------
Net liabilities (92.9) (134.3) (112.5)
----------------------------------------------- --- -------- --------- ---------
Equity
Issued share capital 12.5 12.5 12.5
Share premium 12.9 12.9 12.9
Merger reserve 3.5 3.5 3.5
Hedging reserve (0.1) (0.3) (0.1)
Translation reserve (0.3) (0.3) (0.3)
Retained earnings (121.4) (162.6) (141.0)
----------------------------------------------- --- -------- --------- ---------
Total equity deficit (92.9) (134.3) (112.5)
----------------------------------------------- --- -------- --------- ---------
(1) IFRS 15 Revenue from contracts with customers has been
applied using the cumulative effect method, therefore
comparative periods have not been restated
Consolidated statement of changes in equity
at 30 September 2018 (unaudited)
Retained earnings
---------------------
Issued Total
share Share Merger Hedging Translation Own Profit equity
capital premium reserve reserve reserve shares and loss deficit
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ --------- --------- --------- --------- ------------ --------- ---------- ---------
Balance at 1
April 2018 12.5 12.9 3.5 (0.1) (0.3) (2.0) (139.0) (112.5)
Profit for the
period - - - - - - 26.4 26.4
Other
comprehensive
expense - - - - - - 1.3 1.3
------------------ --------- --------- --------- --------- ------------ --------- ---------- ---------
Total
comprehensive
income - - - - - - 27.7 27.7
------------------ --------- --------- --------- --------- ------------ --------- ---------- ---------
Share based
payment
transactions - - - - - 1.0 (1.1) (0.1)
Current tax on
share based
payments - - - - - - 0.2 0.2
Dividends paid to
shareholders - - - - - - (8.2) (8.2)
Balance at 30
September 2018 12.5 12.9 3.5 (0.1) (0.3) (1.0) (120.4) (92.9)
================== ========= ========= ========= ========= ============ ========= ========== =========
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
income/(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 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 six months to 30 September 2018 (unaudited)
Six
Six months Year
months to 30 ended
to 30 Sept Sept 31 March
2018 2017 2018
GBPm GBPm GBPm
-------------------------------------------------------------------------- ------------ ------------- -----------
Operating activities
Profit before tax 30.1 20.3 37.9
Adjustments for
- depreciation and amortisation 6.0 6.9 14.2
- interest expense 2.9 3.2 6.5
- profit on disposal of property, plant and equipment (5.9) - -
- share based payment transactions (0.1) (2.4) (2.1)
-------------------------------------------------------------------------- ------------ ------------- -----------
33.0 28.0 56.5
Increase in trade and other receivables (1.8) (16.4) (7.2)
Decrease/(increase) in inventories 0.1 (0.4) (0.4)
Increase/(decrease) in trade and other payables 0.2 4.5 (1.6)
(Decrease)/increase in provisions (3.4) (1.9) 0.2
Increase/(decrease) in employee benefits before pension deficit payment 0.3 (1.6) (2.6)
Income taxes paid (1.9) (1.8) (4.0)
-------------------------------------------------------------------------- ------------ ------------- -----------
Cash generated before pension deficit payment 26.5 10.4 40.9
Pension deficit payment (20.0) (8.8) (14.6)
-------------------------------------------------------------------------- ------------ ------------- -----------
Cash flows from operating activities 6.5 1.6 26.3
-------------------------------------------------------------------------- ------------ ------------- -----------
Investing activities
Proceeds from sale of property, plant and equipment 13.1 0.3 0.4
Proceeds from sale of computer software - - 0.1
Trade investment (0.1) - -
Additions of property, plant and equipment (3.4) (9.4) (14.5)
Additions of computer software (0.8) - -
------------------------------------------------------------------------- ------------ ------------- -----------
Cash flows from investing activities 8.8 (9.1) (14.0)
-------------------------------------------------------------------------- ------------ ------------- -----------
Financing activities
Own shares acquired - (1.8) (1.8)
Borrowings repaid - (25.0) (25.0)
(Decrease)/increase in borrowings (4.0) 26.0 6.9
Equity dividends paid (8.2) (7.6) (11.6)
Interest paid (1.8) (2.1) (4.1)
-------------------------------------------------------------------------- ------------ ------------- -----------
Cash flows from financing activities (14.0) (10.5) (35.6)
-------------------------------------------------------------------------- ------------ ------------- -----------
Net increase/(decrease) in cash and cash equivalents 1.3 (18.0) (23.3)
Cash and cash equivalents at beginning of the period 17.6 40.9 40.9
Cash and cash equivalents at end of the period 18.9 22.9 17.6
-------------------------------------------------------------------------- ------------ ------------- -----------
Represented by:
- cash at bank and in hand 12.0 15.1 11.7
- restricted cash, being deposits held by the Group's insurance
subsidiary 6.9 7.8 5.9
-------------------------------------------------------------------------- ------------ ------------- -----------
18.9 22.9 17.6
------------------------------------------------------------------------- ------------ ------------- -----------
Notes to the consolidated half year financial statements
for the six months to 30 September 2018 (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 2018 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 consolidated half year
financial statements have been prepared on the basis of the
accounting policies adopted by the Group and applied and disclosed
in its consolidated financial statements for the year ended 31
March 2018, except as described below. As stated in the financial
statements for the year ended 31 March 2018 the following
amendments have been applied where applicable: amendments as a
result of Annual Improvements 2014-2016 Cycle; and amendments to
IFRS 2 Classification and measurement of share-based payment
transactions. The Group has adopted IFRS 9 Financial Instruments
and IFRS 15 Revenue from Contracts with Customers from 1 April
2018. The adoption of these amendments and new standards has not
had a significant effect on the consolidated results or financial
position of the Group, with further information regarding IFRS 9
and IFRS 15 given below. These policies are in accordance with IFRS
as adopted by the EU (Adopted IFRS).
As reported within the 2018 Annual Report and Accounts, IFRS 9
Financial Instruments was issued by the IASB in July 2014, and
became effective for the Group from 1 April 2018. Applying IFRS 9
has resulted in changes to the measurement and disclosure of
financial instruments and introduced a new expected loss impairment
model. The Group has adopted the simplified approach to recognise
lifetime credit losses for trade receivables and contract assets.
The adoption of the standard has not had a significant impact on
the Group's consolidated results or financial position.
IFRS 15 Revenue from Contracts with Customers was issued by the
IASB in May 2014 and became effective for the Group from 1 April
2018. The Group has applied the cumulative catch-up approach,
therefore comparative periods have not been restated, and are
presented as previously reported, under IAS 18.
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 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 implementation of the standard did not
have a material effect on the Group's financial statements as at 1
April 2018, therefore no transition adjustment was made. There was
no material effect on the Group's results in the six-month period
to 30 September 2018 compared to those that would have been
reported under IAS 18.
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 2018. The
comparative figures for the year ended 31 March 2018 have been
extracted from those accounts but do not comprise the full
statutory accounts for that financial year. Except for the 31 March
2018 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 28.
The consolidated financial statements for the year ended 31
March 2018 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 2018.
The Group has net liabilities of GBP92.9m (30 September 2017:
GBP134.3m) primarily as a result of the pension deficit as well as
previous retained losses. The improvement in the period principally
relates to the profit for the period partly 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 7 November
2018.
2 Revenue
The Group has applied IFRS 15 from 1 April 2018, using the
cumulative effect method, therefore comparative information has not
been restated and continues to be reported under IAS 18. The
following practical expedients have been applied:
- where we have a right to invoice the customer at an amount
that corresponds directly with performance to date, for example
according to an agreed rate-card, revenue is recognised at that
amount; and
- incremental costs of obtaining a contract have not been
capitalised where the amortisation period for the asset is one year
or less.
The implementation of the standard did not have a material
effect on the Group's financial statements as at 1 April 2018,
therefore no transition adjustment was made.
There was no material effect on the Group's results in the
six-month period to 30 September 2018 compared to those that would
have been reported under IAS 18. A reclassification has been made
within current assets, to present costs of fulfilling a contract
separately from trade and other receivables.
Nature, timing and satisfaction of performance obligations
Customer contracts are disaggregated into their component
performance obligations, typically transport services and warehouse
services, with revenue generally being recognised over time.
Further detail is given in the table below:
Area Explanation Nature of change in accounting policy
Fixed/variable management fee Open book contracts will typically cover Fixed management fees are recognised
costs plus an agreed management fee. over the contract term. Variable
management fees (a fixed
percentage of costs) are recognised as
the corresponding costs are incurred
i.e. where we
have the right to invoice the customer
at an amount that corresponds directly
with performance
to date, we apply the practical
expedient to recognise revenue at that
amount. Revenue relating
to costs to serve the customer are
invoiced in line with the customer
receiving and consuming
benefits under the contract, and is
recognised in the period in which it is
earned. There
has been no change in the timing of
revenue recognition on application of
IFRS 15.
Deferred management fees Contracts may contain fee-free periods, Revenue is spread over the term of the
where no management fee is payable by contract to the extent it is highly
the customer. probable a significant
revenue reversal will not occur. If
there is a risk of significant reversal,
revenue is constrained
until the uncertainty is resolved. There
has been no change in the timing of
revenue recognition
on application of IFRS 15.
Rate-card revenue In closed book contracts, revenue is Revenue based on a pre-agreed rate-card
typically recognised based on a is recognised as services are provided,
pre-agreed rate-card. in line with
the customer receiving and consuming
benefits under the contract. There has
been no change
in the timing of revenue recognition on
application of IFRS 15.
Long term contract recoverables Costs incurred to set up the contract, Costs to fulfil a contract are
in advance of the go-live date. capitalised, with costs and revenue
spread over the term of
the contract. Such costs must: relate
directly to the contract; generate or
enhance resources;
and be expected to be recovered. Where
this definition isn't met, costs are
expensed as incurred
if not specifically recoverable under
the contract. This has resulted in later
recognition
of revenue for some contracts.
Performance-related revenue Revenue linked to performance measures, Variable revenue is recognised to the
such as Key Performance Indicators extent it is highly probable a
(KPIs) and gain-share significant revenue reversal
mechanisms. will not occur. This has resulted in
earlier revenue recognition for some
contracts.
Payments to customers Transition payments made to the Payments made to customers that are not
customer, or payments in relation to KPI for the provision of distinct goods or
performance. services are
recognised as a rebate at the later of:
when revenue is recognised for the
related services;
or when it is paid or promised to be
paid. This has resulted in a reduction
in revenue over
the contract term for some contracts.
================================ ========================================= =========================================
Disaggregation of revenue
In the following table, revenue is disaggregated by industry
sector. The table also provides a reconciliation of the
disaggregated revenue to the Group's operating segments (see Note
3).
Six months to Six months to Year ended
30 September 2018 30 September 2017(1) 31 March 2018(1)
GBPm GBPm GBPm
----------------------------- ------------------ --------------------- -----------------
Retail general merchandise 219.3 176.8 388.8
Retail grocery 88.6 104.1 193.2
Consumer products 49.8 53.0 109.7
----------------------------- ------------------ --------------------- -----------------
Total Retail & Consumer 357.7 333.9 691.7
Transport services 89.8 107.8 210.6
Construction 72.2 78.4 150.3
Other 62.1 60.9 119.3
----------------------------- ------------------ --------------------- -----------------
Total Industrial & Transport 224.1 247.1 480.2
----------------------------- ------------------ --------------------- -----------------
Total revenue 581.8 581.0 1,171.9
----------------------------- ------------------ --------------------- -----------------
(1) The Group has initially applied IFRS 15 at 1 April 2018
using the cumulative catch-up method, meaning comparative periods
have not been restated. Certain contracts within Retail general
merchandise, Retail grocery, Transport services and Construction
have been realigned within the sector split, in line with how
management reviews the business.
3 Operating segments
Wincanton plc provides contract logistics services in the UK and
Ireland. In the period to 30 September 2018 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 2018
Retail & Consumer Industrial & Transport Total
GBPm GBPm GBPm
-------------------------------------- ------------------ ----------------------- ------
Revenue from external customers(1) 357.7 224.1 581.8
-------------------------------------- ------------------ ----------------------- ------
Underlying EBITDA(2) 18.4 14.6 33.0
Depreciation (2.5) (2.6) (5.1)
Amortisation of software intangibles (0.5) (0.4) (0.9)
-------------------------------------- ------------------ ----------------------- ------
Underlying operating profit(2) 15.4 11.6 27.0
Exceptional items 6.0
-------------------------------------- ------------------ ----------------------- ------
Operating profit 33.0
Net financing costs (2.9)
-------------------------------------- ------------------ ----------------------- ------
Profit before tax 30.1
-------------------------------------- ------------------ ----------------------- ------
(1) Included in segment revenue is GBP575.7m (30 September 2017:
GBP575.7m) 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, where applicable.
Six months to 30 Sept 2017
Retail &
Consumer Industrial & Transport Total
GBPm GBPm GBPm
-------------------------------------- ---------- ----------------------- ------
Revenue from external customers 333.9 247.1 581.0
-------------------------------------- ---------- ----------------------- ------
Underlying EBITDA 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 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
-------------------------------------- ---------- ----------------------- ------
Year ended 31 March 2018
Retail & Consumer Industrial & Transport Total
GBPm GBPm GBPm
--------------------------------------- ------------------ ----------------------- --------
Revenue from external customers 691.7 480.2 1,171.9
--------------------------------------- ------------------ ----------------------- --------
Underlying EBITDA 36.4 28.4 64.8
Depreciation (5.6) (4.4) (10.0)
Amortisation of software intangibles (1.1) (0.8) (1.9)
--------------------------------------- ------------------ ----------------------- --------
Underlying operating profit 29.7 23.2 52.9
Amortisation of acquired intangibles (2.3)
Exceptional items (6.2)
--------------------------------------- ------------------ ----------------------- --------
Operating profit 44.4
Net financing costs (6.5)
--------------------------------------- ------------------ ----------------------- --------
Profit before tax 37.9
--------------------------------------- ------------------ ----------------------- --------
Revenue of GBP108.5m (30 September 2017: GBP103.2m) and GBP68.9m
(30 September 2017: GBP64.2m) arose from sales to the Group's two
largest 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.
During the period we completed on the disposal of a freehold
property receiving sales proceeds of GBP14.5m and incurring costs
of disposal and of transitioning operations to another site of
GBP1.2m and GBP0.5m respectively. The carrying value of the
property was GBP6.8m therefore generating a net profit on disposal
and transition of GBP6.0m.
In the six months to 30 September 2017 the Group commenced a
restructuring programme to competitively position the business for
the future. A charge of GBP2.9m was included as exceptional (31
March 2018: GBP8.2m). The conclusion of the pension scheme
liability management exercise resulted in a settlement gain of
GBP1.8m (31 March 2018: GBP2.0m).
4 Financing costs
Six Six
months to months to Year
30 Sept 30 Sept ended
2018 2017 31 March 2018
GBPm GBPm GBPm
--------------------------------------------------------------- ----------- ---------------
Recognised in the income statement
Interest expense (1.9) (2.0) (4.1)
Unwinding of discount on provisions (0.4) (0.3) (0.6)
Interest on the net defined benefit pension liability (0.6) (0.9) (1.8)
-------------------------------------------------------- ------ ----------- ---------------
Financing costs (2.9) (3.2) (6.5)
-------------------------------------------------------- ------ ----------- ---------------
5 Income tax expense
Six Six Year
months to months to ended
30 Sept 30 Sept 31 March
2018 2017 2018
Recognised in the income statement GBPm GBPm GBPm
----------------------------------- ----------- ---------- ---------
Current tax expense
Current year 1.5 1.9 4.2
Adjustments for prior years (0.8) (0.5) (0.8)
----------------------------------- ----------- ---------- ---------
0.7 1.4 3.4
----------------------------------- ----------- ---------- ---------
Deferred tax expense
Current year 3.0 1.9 3.0
Adjustments for prior years - - 0.3
----------------------------------- ----------- ---------- ---------
3.0 1.9 3.3
----------------------------------- ----------- ---------- ---------
Total income tax expense 3.7 3.3 6.7
----------------------------------- ----------- ---------- ---------
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the Income statement:
Remeasurements of defined benefit pension liability 0.2 - 2.4
--------------------------------------------------------------------------- ----- ------ -----
Recognised directly in equity
Current tax on share based payment transactions (0.2) (0.9) (0.1)
Deferred tax on share based payment transactions - 0.7 -
--------------------------------------------------------------------------- ----- ------ -----
(0.2) (0.2) (0.1)
--------------------------------------------------------------------------- ----- ------ -----
In accordance with IAS 34 Interim Financial Reporting the tax
expense recognised in the income statement for the half year is
calculated on the basis of the estimated underlying effective full
year tax rate of 16.5% (30 September 2017: 18.0%, 31 March 2018:
18.0%).
The main UK Corporation tax rate has 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 closing UK deferred tax provision is calculated based on the
rate of 17% which was substantively enacted at the balance sheet
date.
6 Earnings per share
Earnings per share calculation is based on the earnings
attributable to the equity shareholders of Wincanton plc of
GBP26.4m (30 September 2017: GBP17.0m) and the weighted average
shares of 123.9m (30 September 2017: 123.7m) which have been in
issue throughout the period.
The diluted earnings per share calculation is based on there
being 1.3m (30 September 2017: 2.5m) 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 2017 31 March 2018
30 Sept 2018 millions millions Millions
-------------------------------------------------------- ----------------------- -------------- ---------------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the period 123.7 123.5 123.5
Net effect of shares issued and purchased during the
period 0.2 0.2 0.3
-------------------------------------------------------- ----------------------- -------------- ---------------
123.9 123.7 123.8
-------------------------------------------------------- ----------------------- -------------- ---------------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares at the end
of the period 123.9 123.7 123.8
Effect of share options on issue 1.3 2.5 2.1
-------------------------------------------------------- ----------------------- -------------- ---------------
125.2 126.2 125.9
-------------------------------------------------------- ----------------------- -------------- ---------------
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
2018 2017 2018
pence pence Pence
------------------------------- -------------- -------------- -----------
Underlying earnings per share
- basic 16.2 15.0 30.8
- diluted 16.1 14.7 30.3
------------------------------- -------------- -------------- -----------
Underlying earnings are determined as follows:
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2018 2017 2018
GBPm GBPm GBPm
----------------------------------------------------- -------------- -------------- -----------
Profit for the period attributable to equity
shareholders of Wincanton plc 26.4 17.0 31.2
Exceptional items (6.0) 1.1 6.2
Amortisation of acquired intangibles - 1.1 2.3
Tax impact of above items and exceptional tax items (0.3) (0.7) (1.6)
----------------------------------------------------- -------------- -------------- -----------
Underlying earnings 20.1 18.5 38.1
----------------------------------------------------- -------------- -------------- -----------
7 Dividends
During the period a final dividend of 6.63p per share was paid,
relating to the year ended 31 March 2018.
The Board has declared an interim dividend of 3.60p per share
for the period ended 30 September 2018 (30 September 2017: 3.27p
per share) which will be paid on 11 January 2019 to shareholders on
the register on 7 December 2018, an estimated total of GBP4.5m.
8 Property, plant & equipment
Additions and disposals
During the half year to 30 September 2018 the Group acquired
assets with a cost of GBP3.4m (30 September 2017: GBP9.4m). Assets
with a carrying amount of GBP7.2m were disposed of during the half
year to 30 September 2018 (30 September 2017: GBP0.3m).
Capital commitments
At 30 September 2018 the Group had entered into contracts to
purchase property, plant and equipment for GBP0.2m (30 September
2017: GBP1.2m); delivery is expected in the second half of the year
to 31 March 2019.
9 Analysis of changes in net debt
1 April 30 Sept
2018 Cash flow 2018
GBPm GBPm GBPm
----------------------------- -------- ---------- --------
Cash and bank balances 17.6 1.3 18.9
Bank loans and overdrafts (47.0) 4.0 (43.0)
Other financial liabilities (0.1) - (0.1)
----------------------------- -------- ---------- --------
Net debt (29.5) 5.3 (24.2)
----------------------------- -------- ---------- --------
1 April 30 Sept
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 31 March
2017 Cash flow 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)
----------------------------- -------- ---------- ---------
IFRS 9 Financial Instruments became effective for the Group from
1 April 2018. The standard has been applied retrospectively, as
required by IFRS 9, but the designation of financial assets and
liabilities has been taken at the date of initial application. The
Group has adopted the simplified approach to recognise lifetime
credit losses for trade receivables and contract assets. The change
in approach has not had a material impact on the bad debt
provision.
IFRS 9 largely retains the existing classifications for
financial liabilities. For the Group's financial assets, the
following table shows the new measurement categories under IFRS
9:
Financial asset IFRS 9 classification Previous classification under IAS 39
Cash and cash equivalents Amortised cost Loans and receivables
Trade and other receivables Amortised cost Loans and receivables
Interest rate swap Fair value through OCI Fair value through OCI
============================ ======================= =====================================
There has been no significant impact on the carrying amounts of
assets held.
10 Provisions
Insurance Property Other provisions Total
GBPm GBPm GBPm GBPm
---------------------------------------- ----------- ---------- ---------------- -------
At 1 April 2018 28.1 18.0 4.8 50.9
Provisions made during the period 5.9 1.2 0.9 8.0
Provisions used during the period (2.6) (1.3) (2.6) (6.5)
Provisions released during the period (3.8) (0.2) (0.9) (4.9)
Unwinding of discount 0.3 0.1 - 0.4
Effect of movements in foreign exchange - 0.1 - 0.1
At 30 September 2018 27.9 17.9 2.2 48.0
---------------------------------------- ----------- ---------- ---------------- -------
Current 7.7 6.7 2.2 16.6
Non-current 20.2 11.2 - 31.4
---------------------------------------- ----------- ---------- ---------------- -------
27.9 17.9 2.2 48.0
---------------------------------------- ----------- ---------- ---------------- -------
The insurance provisions in the above table are held in respect
of outstanding insurance claims, the majority of which are expected
to be paid within one to seven years.
The property provision comprises onerous leases and
dilapidations. The onerous lease provisions are utilised over the
relevant lease term, with the majority expected to be utilised over
the next three years.
Other provisions include costs of the restructuring programme
together with provision for sundry claims and settlements where the
timing or amount is uncertain. The majority of the balance is
expected to be utilised in the second half of the year.
11 Employee benefits
The Company reached an agreement with the Trustee on the 2017
triennial valuation and recovery plan in the period. The annual
deficit contributions have been agreed at GBP18.0m per annum
increasing by RPI over the three years to March 2021 and GBP25.0m
per annum increasing by RPI from April 2022 to March 2027. In
addition, the Company made a one-off contribution of GBP15.0m in
August 2018. The agreement is subject to other provisions as
detailed in the announcement made on 8 August 2018.
Movements in the net pension obligations recognised:
Assets Liabilities Total 30 Sept 31 March
2018 2018 30 Sept 2017 2018
GBPm GBPm 2018 GBPm GBPm
GBPm
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Opening position 1,075.9 (1,125.4) (49.5) (78.4) (78.4)
Included in Income statement:
Administration costs (0.8) - (0.8) (0.8) (1.7)
Effect of settlements - - - 1.8 1.8
Interest on the net defined benefit liability 13.9 (14.5) (0.6) (0.9) (1.8)
Cash:
Employer contributions 20.5 - 20.5 9.1 16.8
Benefits paid (15.3) 15.3 - - -
Included in Other comprehensive income:
Changes in financial assumptions - 36.1 36.1 20.7 (33.5)
Changes in demographic assumptions - - - - 23.8
Experience - (3.8) (3.8) 0.1 5.2
Return on assets excluding amounts included in net financing
costs (30.8) - (30.8) (20.9) 18.3
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Closing defined benefit liability 1,063.4 (1,092.3) (28.9) (69.3) (49.5)
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Liabilities in the table above include unfunded
arrangements.
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. Other administration expenses are paid directly by
the Group in addition to the deficit funding contributions. These
total GBP0.5m in the period and are included in employer
contributions in the table above.
The movement in the net defined benefit liability in the period
was primarily the result of the contributions received from the
Group. 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 GBP24.0m (30 September
2017: GBP57.5m).
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
2018 30 Sept 2017 2018
% % %
------------------------------------------- --------- ------------ ---------
Discount rate 2.85 2.70 2.60
Price inflation rate - RPI 3.45 3.15 3.35
Price inflation rate - CPI 2.45 2.15 2.35
Rate of increase of pensions in deferment 2.45 2.15 2.35
Rate of increase of pensions in payment(1) 1.90-3.30 1.75-3.05 1.85-3.25
------------------------------------------- --------- ------------ ---------
(1) A range of assumed rates exist due to the application of
annual caps and floors to certain elements of service.
12 Post balance sheet event
On 26 October 2018, the High Court of Justice of England and
Wales issued a judgment in a claim regarding the rights of members
to equality of treatment in relation to pension benefits. The court
ruling has made it clear that schemes are under a duty to equalise
benefits for men and women in relation to guaranteed minimum
pension benefits. The extent to which the judgement will increase
the liabilities of the Scheme is under consideration and any
adjustment is expected to be recognised in the second half of
2018/19.
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 2018 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 2018 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
7 November 2018
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FKODPOBDDPDK
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November 08, 2018 02:00 ET (07:00 GMT)
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