TIDMWIN
RNS Number : 2355T
Wincanton PLC
13 November 2019
For immediate release 13 November 2019
WINCANTON plc
Half Year Results for the six months to 30 September 2019
(unaudited)
"Strong momentum yielding margin improvement and 10% EPS
growth"
Wincanton plc ("Wincanton" or "the Group"), the largest British
third-party logistics company, today announces its half year
results for the six months ended 30 September 2019.
Key financial measures
Note: discussion of the results is on a comparable IAS 17 basis,
unless otherwise stated.
H1 2019 H1 2019 H1 2018 Change
IFRS 16(1) IAS 17(1) IAS 17 vs IAS 17
------------------------------------------------ ------------------ ----------- -------- -----------
Revenue (GBPm) 592.9 592.9 581.8 1.9%
Underlying EBITDA (GBPm) (2,3) 50.9 34.4 33.0 4.2%
Underlying operating profit (GBPm)(3) 30.3 28.5 27.0 5.6%
Underlying profit before tax (GBPm)(3) 26.2 26.3 24.1 9.1%
Underlying EPS (p)(3) 17.8 17.8 16.2 9.9%
Dividend per share - interim (p) 3.90 3.90 3.60 8.3%
Net debt excluding lease liabilities (GBPm)(4) (14.8) (14.8) (24.2)
Statutory results
------------------------------------------------ ------------------ ----------- -------- -----------
Operating profit (GBPm)(3) 32.6 33.0
Profit before tax (GBPm) 28.5 30.1
Basic EPS (p) 19.7 21.3
Operational highlights
-- New business wins include a five-year deal with Morrisons plc
for the provision of transportation and vehicle maintenance
services and a leading fuels distribution business.
-- Key renewals with Ibstock, Muller, adidas, Williams Sonoma and Cormar Carpets.
Financial highlights
-- Increase in revenue of 1.9% from H1 18/19 to GBP592.9m (2018:
GBP581.8m), and up 5.9% from H2 18/19. Strong growth in Retail
& Consumer due to new contracts with The Co-op, Morrisons and
Weetabix, partly offset by lower Industrial & Transport revenue
following exits from underperforming contracts in 18/19.
-- Underlying operating profit growth of 5.6% and margin
increase of 20bps to 4.8% (2018: 4.6%) driven by new business,
strong operational performance and exit from lower margin
contracts.
-- Underlying profit before tax increased by 9.1% to GBP26.3m
(2018: GBP24.1m) generating underlying EPS growth of 9.9% to 17.8p
(2018: 16.2p)
-- Continued strong cash generation leading to a reduction in
net debt to GBP14.8m (2018: GBP24.2m)
-- Defined benefit pension scheme has moved into surplus of
GBP8.1m (2018: deficit of GBP28.9m)
-- Interim dividend per share of 3.90p (2018: 3.60p), representing an increase of 8.3%
-- The Group continues to perform due diligence on the merits of
a potential combination with Eddie Stobart Logistics plc ("Eddie
Stobart"), however there can be no certainty any offer will be
made
James Wroath, Wincanton Chief Executive Officer commented:
"Since joining the Company in September, I have visited many of
our customers and the sites we operate for them. Our focus on
operational excellence, high quality people, continued innovation
and meeting our customers' needs is embedded across the business
and drives our healthy performance, as shown in the results
announced today. Signing significant new business wins and renewing
key contracts in the first half is evidence that our customers
continue to find our service and propositions compelling.
We continue to drive efficiency across the business which
supports our underlying operating profit, which has increased by
5.6% compared to last year, and has enabled us to reduce our net
debt once again. We will continue the disciplined focus on winning
more profitable business, maintaining our emphasis on performance
improvement and cost management, and I look forward to establishing
more opportunities for further growth in the future.
I have started to review the opportunities facing the Group as
part of our wider strategy and look forward to updating the market
in due course as we continue to take the business forward."
For further enquiries please contact:
Wincanton plc
Tim Lawlor, Chief Financial Officer Tel: 01249 710000
Buchanan
Richard Oldworth, Victoria Hayns Tel: 020 7466 5000
A meeting for analysts will be held at Buchanan, 107 Cheapside,
London, EC2V 6DN today, Wednesday 13 November 2019, commencing at
9.30am. Wincanton's Half Year Results 2019 are available at
www.wincanton.co.uk
An audio webcast of the analysts' meeting will be available from
12 noon today:
https://webcasting.buchanan.uk.com/broadcast/5d9b4842f8cc7162f3b033c1
Notes
(1) Wincanton reports key financial measures based on underlying
performance. IFRS 16 Leases, which replaces IAS 17 Leases, has been
adopted in the period using the modified retrospective approach and
accordingly prior periods are not restated. Consequently, the
results for the six months ended 30 September 2019 under IFRS 16
are not directly comparable with prior periods and therefore they
have also been presented on an IAS 17 basis.
(2) Underlying EBITDA refers to underlying operating profit
before depreciation and amortisation and is reconciled in Note 2 to
the consolidated half year financial statements.
(3) The section on Alternative Performance Measures (APMs) below
provides further information on these measures, including
definitions and a reconciliation of APMs to statutory measures.
(4) Net debt is the sum of cash and bank balances, bank loans
and overdrafts and other financial liabilities excluding lease
liabilities. Note 8 to the consolidated half year financial
statements provides a breakdown of net debt for the current and
prior periods.
Half Year Review
for the six months to 30 September 2019
Summary
The Group has again delivered a good performance in the first
half which has seen the commencement of operations with Morrisons,
the onboarding of new wins announced in the second half of last
year including EDF, Weetabix, HMRC, Aggregate Industries and The
Co-op, and organic growth with existing customers. Revenue and
underlying profit before tax (before the impact of IFRS 16) have
grown by 1.9% and 9.1% respectively in the half year compared to
the same period last year.
Revenue increased to GBP592.9m (2018: GBP581.8m) driven by wins
announced over the last 12 months. Retail & Consumer achieved
revenue growth of 5.8%, primarily because of recent wins with
existing and new customers. This growth was partly offset by a fall
in Industrial & Transport revenue of 4.2% due to the exit from
or changes made to underperforming contracts last year. We continue
to have a healthy pipeline of sales opportunities but we are
monitoring market conditions and corresponding activity levels
closely in the light of reported slowdowns in certain sectors, such
as construction.
Underlying operating profit increased by 5.6% to GBP28.5m (2018:
GBP27.0m) due to new business wins, our continued focus on
efficiency and the exit from certain low margin contracts last
year. As a result, the Group's underlying operating profit margin
has increased to 4.8% (2018: 4.6%).
An exceptional profit of GBP2.3m has been reported from the
disposal of two under-utilised freehold properties and the
transition of the related operations to other sites.
Underlying EPS increased by 9.9% to 17.8p per share (2018: 16.2p
per share) with further improvement from lower net finance
charges.
Net debt decreased to GBP14.8m (30 September 2018: GBP24.2m, 31
March 2019: GBP19.3m) with the net cash inflow since 31 March 2019
of GBP4.5m including the net proceeds from the property disposal of
GBP4.7m and the payment of the final dividend of GBP9.0m. The
increase in underlying operating profit and net proceeds from the
property disposal has delivered free cash flow of GBP22.4m (30
September 2018: GBP33.5m, including gross proceeds of GBP14.5m on
the disposal of a freehold property).
The Group's pension scheme on an IAS 19 basis reported a surplus
of GBP8.1m at 30 September 2019 (30 September 2018: deficit of
GBP28.9m, 31 March 2019: deficit of GBP7.1m) with the improved
position primarily attributable to cash contributions of GBP9.7m
made in the first half of the year.
Dividend
The Board is pleased to declare an interim dividend of 3.90p per
Ordinary Share (2018: 3.60p per share) representing an increase of
8.3% over the prior period. This reflects the confidence in the
Group's performance as it continues with its dividend policy which
broadly follows the growth in underlying earnings.
Board
On 2 September 2019, James Wroath became the Group's Chief
Executive Officer, succeeding Adrian Colman. James has extensive
experience of the logistics industry, having held senior roles in
firms in the UK and the United States, most recently as Head of
North America at LSG Sky Chefs, the world's largest provider of
airline catering and in-flight services. He has also held
leadership positions at Kuehne & Nagel and Scottish &
Newcastle.
On 3 May 2019, the Group announced that David Radcliffe will
retire as a Non-Executive Director at the end of December 2019
after seven years with the Group. On 1 June 2019 Debbie Lentz
joined the Board as a Non-Executive Director. Debbie is currently
President, Global Supply Chain of Electrocomponents plc, the FTSE
250 global multichannel provider of industrial and electronic
products and solutions.
Key priorities and outlook
The Group remains committed to the execution of its growth
strategy, as evidenced by the growth from existing major customers
such as The Co-Op and Aggregate Industries and the addition of new,
high quality customers such as Morrisons. We remain focused on
ensuring that this growth is both profitable and cash generative
and will continue to pursue a disciplined approach in our delivery.
Healthy cash flow sustains our growth capability, our significant
investment in talent and innovation, and our distributions to our
shareholders and the pension scheme.
The Group remains well positioned in its chosen markets and we
have delivered robust trading in the first half of the year. We are
focused on implementing our strategy and expect to continue to
deliver a strong operational performance across the second half of
the year to support our customers through the Brexit process, the
Retail & Consumer peak holiday trading period and other
industry peaks such as Black Friday.
Uncertainty remains as to the outcome of the UK's proposed
withdrawal from the European Union and to the recently announced
General Election - we continue to regularly review the potential
risks and impacts of these and update our assessments and plans
accordingly.
Potential offer for Eddie Stobart Logistics plc
As per the announcement on 18 October 2019, the Group is engaged
in a thorough assessment of the potential merits of a combination
with Eddie Stobart. Wincanton's ability to deliver any firm offer
for the listed entity, Eddie Stobart Logistics plc, primarily
remains contingent upon the provision of outstanding due diligence
information, including the finalisation of the ongoing accounting
review by Eddie Stobart's auditor.
Our remaining due diligence is focused on achieving assurance as
to the underlying profitability, balance sheet and cash flow; cost
saving opportunities; and the funding of working capital
requirements on a short- and medium-term basis. Consistent with
Eddie Stobart's announcements to its shareholders on 9 July, 23
August and 16 September 2019, we still have no visibility on when
Eddie Stobart's auditor's review may be complete.
There can be no certainty any offer will be made, nor as to the
terms of any such offer, and a further update will be provided in
due course.
Trading
The Group's internal management structure, which has remained
consistent with the prior period, aligns the Group under two
sectors: Retail & Consumer and Industrial & Transport. IFRS
16 Leases was adopted with effect from 1 April 2019. To aid
comparison with the prior year the alternative performance measures
for the six months ended 30 September 2019 set out below are also
provided on an IAS 17 basis. These measures have been used by the
Board for evaluating performance of the sectors.
As a result of adopting IFRS 16, operating lease rental costs
have been replaced by depreciation of right-of-use assets and
interest on lease liabilities. This has resulted in an increase in
underlying operating profit of GBP1.8m compared to on the previous
IAS 17 basis. Net financing costs have increased by GBP1.9m leaving
underlying profit before tax GBP0.1m lower on an IFRS 16 compared
to an IAS 17 basis.
Retail & Consumer
H1 2019 H1 2019 H1 2018 Change
IFRS 16(1) IAS 17(1) IAS 17 IAS 17
--------------------------------------- ----------- ---------- ------- -------
Revenue (GBPm) 378.3 378.3 357.7 5.8%
Underlying operating profit (GBPm) 17.9 16.6 15.4 7.8%
Underlying operating profit margin (%) 4.7% 4.4% 4.3% 10bps
--------------------------------------- ----------- ---------- ------- -------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures. As a
result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS
16 is presented in Note 10 to the consolidated half year financial
statements.
The split of Retail & Consumer revenue by the industry
sectors it serves is as follows:
H1 2019 H1 2018
GBPm GBPm Change
--------------------------- ------- ------- ------
Retail General Merchandise 218.9 219.3 (0.2%)
Retail Grocery 104.2 88.6 17.6%
Consumer Products 55.2 49.8 10.8%
---------------------------- ------- ------- ------
378.3 357.7 5.8%
--------------------------- ------- ------- ------
The overall revenue increase has been driven principally by
contract wins this year and in the second half of last year in
Retail Grocery, including Morrisons, Sainsbury's and The Co-op and
in Consumer Products driven by the Weetabix warehousing contract
win.
Retail General Merchandise, which includes our market-leading
household, home and DIY logistics offerings, experienced relatively
flat volumes but completed a number of key renewals including a
four-year warehousing and transport contract with Williams Sonoma
and a five-year transport, planning and fulfilment contract with
Cormar Carpets.
We remain focussed on operational efficiency while delivering
the highest levels of customer service, which has resulted in
operating profit margin increasing by 10bps compared to the prior
period.
Industrial & Transport
H1 2019 H1 2019 H1 2018 Change
IFRS 16(1) IAS 17(1) IAS 17 IAS 17
--------------------------------------- ----------- ---------- ------- -------
Revenue (GBPm) 214.6 214.6 224.1 (4.2%)
Underlying operating profit (GBPm) 12.4 11.9 11.6 2.6%
Underlying operating profit margin (%) 5.8% 5.5% 5.2% 30bps
--------------------------------------- ----------- ---------- ------- -------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures. As a
result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS
16 is presented in Note 10 to the consolidated half year financial
statements.
The split of Industrial & Transport revenue by the industry
sectors it serves is as follows:
H1 2019 H1 2018
GBPm GBPm(1) Change
------------------- ------- -------- -------
Transport Services 77.5 89.8 (13.7%)
Construction 73.7 72.2 2.1%
Other 63.4 62.1 2.1%
-------------------- ------- -------- -------
214.6 224.1 (4.2%)
------------------- ------- -------- -------
The decrease in revenue in Transport Services was primarily
attributable to an exit from the Britvic transport contract and a
reduction in the scope of the Tarmac contracts during the prior
year. Excluding revenue from these contracts from the prior period,
revenues have increased by 1.1%. The effect of these changes has
been offset in part by the Weetabix transport and DCS contract wins
in the second half of last year, which became operational this
year.
Construction increased its revenue as a result of the Aggregate
Industries and EDF contract wins more than offsetting prior period
contract losses. The new contract with HMRC has driven the increase
in Other revenues in the first half, while key renewals include a
three-year renewal with Müller for the collection and delivery of
milk products.
The improvement in operating profit and margin is the result of
actions taken in previous periods to reduce the cost base and to
right-size some areas of transport capacity along with the exit
from certain lower margin contracts. These improvements have been
partly offset by a small reduction in the profitability of our
fleet management business due to a decline in workshop volumes as a
result of which we have rationalised our workshop network.
Net financing costs
H1 2019 H1 2019 H1 2018
IFRS 16(1) IAS 17(1) IAS 17
GBPm GBPm GBPm
------------------------------------------------------ ----------- ---------- -------
Interest income 0.1 0.1 -
Bank interest payable on loans (2.0) (2.0) (1.9)
Unwinding of discount on provisions (0.3) (0.3) (0.4)
Interest on the net defined benefit pension liability - - (0.6)
Interest on lease liabilities (1.9) - -
------------------------------------------------------ ----------- ---------- -------
Net financing costs (4.1) (2.2) (2.9)
------------------------------------------------------ ----------- ---------- -------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures. As a
result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS
16 is presented in Note 10 to the consolidated half year financial
statements.
Net financing costs were GBP2.2m, GBP0.7m lower compared to the
prior period (2018: GBP2.9m).
Bank interest payable on loans was GBP2.0m (2018: GBP1.9m),
slightly higher than the prior year.
Of the non-cash financing items, the charge in respect of the
unwinding of the discount on provisions has reduced by GBP0.1m
while the defined benefit pension charge in the period has been
immaterial (2018: GBP0.6m) due to the reduction in the opening
pension deficit and the expected cash contributions into the
Scheme.
On an IFRS 16 basis, a financing charge of GBP1.9m has been
recognised for the first time this period in respect of the
interest on lease liabilities.
Exceptional items
H1 2019 H1 2018
GBPm GBPm
----------------------------------------- ------- -------
Net profit on freehold property disposal 2.3 6.0
------------------------------------------ ------- -------
During the period we completed the disposal of two freehold
properties, receiving gross sales proceeds of GBP5.5m and
recognising costs of disposal and transitioning operations to
another site of GBP0.8m. The carrying value of the properties was
GBP2.4m generating a net profit on the disposal and transition of
GBP2.3m.
In the prior 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
GBP1.7m. The carrying value of the property was GBP6.8m generating
a net profit on the disposal and transition of GBP6.0m.
Taxation
H1 2019 H1 2019 H1 2018
IFRS 16(1) IAS 17(1) IAS 17
---------------------------------------- ----------- ---------- -------
Underlying profit before tax (GBPm) 26.2 26.3 24.1
---------------------------------------- ----------- ---------- -------
Underlying tax (GBPm) 4.2 4.3 4.0
Tax on exceptional items (GBPm) - - (0.3)
---------------------------------------- ----------- ---------- -------
Tax as reported (GBPm) 4.2 4.3 3.7
---------------------------------------- ----------- ---------- -------
Effective tax rate on underlying profit
before tax (%) 16.2% 16.2% 16.5%
---------------------------------------- ----------- ---------- -------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures. As a
result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS
16 is presented in Note 10 to the consolidated half year financial
statements.
Underlying tax of GBP4.3m (2018: GBP4.0m) represents an
underlying effective tax rate of 16.2% (2018: 16.5%) on underlying
profit before tax. No tax arises on the exceptional profit in the
period due to a capital loss arising on the disposal of the
freehold properties. A tax credit on exceptional items of GBP0.3m
was recognised in the prior period. 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 GBP4.9m (2018:
GBP1.9m), with the increase being due to changes in HMRC rules
around payments on account which have come into effect in the
period.
The total net deferred tax asset has reduced to GBP3.1m (2018:
GBP8.3m) primarily as a result of the pension deficit becoming a
pension asset in the period and includes GBP2.0m on restatement to
IFRS 16.
Profit after tax and EPS
Profit after tax including the impact of IFRS 16 for the period
was GBP24.3m (2018: GBP26.4m) which translates to a basic EPS of
19.7p (2018: 21.3p). The decrease compared to the prior period is
due to higher exceptional profits from property disposals being
recognised last year.
Underlying EPS, which excludes from earnings amortisation of
acquired intangibles and exceptional items where relevant, has
increased by 9.9% to 17.8p (2018: 16.2p).
The calculation of these EPS measures is set out in Note 5.
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, including cash payments to the pension
scheme.
The Board has declared an interim dividend of 3.90p (2018:
3.60p) per share relating to the six-month period ended 30
September 2019, payable on 10 January 2020.
The Group paid a final dividend in the six-month period of 7.29p
per share relating to the year ended 31 March 2019 (2018:
6.63p).
Financial position
The summary financial position of the Group is set out
below:
30 September 2019 30 September 2019 30 September 2018 31 March 2019
IFRS 16(1) IAS 17(1) IAS 17 IAS 17
GBPm GBPm GBPm GBPm
---------------------------------------------- ----------------- ----------------- ----------------- -------------
Non-current assets (excl. employee benefits) 225.5 118.5 130.0 122.9
Net current liabilities (excl. net debt) (159.3) (130.0) (138.4) (133.2)
Non-current liabilities (excl. net
debt/pension deficit) (116.9) (28.0) (31.4) (30.4)
Net debt (excl. lease liabilities) (14.8) (14.8) (24.2) (19.3)
Pension asset/(deficit) (excl. deferred tax) 8.1 8.1 (28.9) (7.1)
---------------------------------------------- ----------------- ----------------- ----------------- -------------
Net liabilities (57.4) (46.2) (92.9) (67.1)
---------------------------------------------- ----------------- ----------------- ----------------- -------------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures. As a
result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS
16 is presented in Note 10 to the consolidated half year financial
statements.
The reduction in net liabilities since the year ended 31 March
2019 of GBP20.9m is primarily due to the profit after tax of
GBP24.3m less the payment of the prior year final dividend of
GBP9.0m.
The movement in the pension asset/(deficit) is primarily due to
the employer contributions paid into the Scheme plus net actuarial
movements on pension assets and liabilities.
A reconciliation of the numbers to an IFRS 16 basis is presented
in Note 10 to these consolidated half year financial
statements.
Net debt and cash flows
Net debt at 30 September 2019 was GBP14.8m (2018: GBP24.2m),
reflecting a net cash inflow of GBP9.4m over the intervening 12
months and GBP4.5m since 31 March 2019.
The Group's cash flows for the six months to 30 September 2019
are summarised in the following table:
H1 2019 H1 2019 H1 2018
IFRS 16(1) IAS 17(1) IAS 17
GBPm GBPm GBPm
-------------------------------------- ----------- ---------- -------
Underlying EBITDA 50.9 34.4 33.0
Capital expenditure (4.7) (4.7) (4.2)
Repayment of obligations under leases (15.8) - -
Net proceeds from asset disposals 5.0 5.0 13.1
Working capital (2.5) (3.3) (1.5)
Tax (4.9) (4.9) (1.9)
Interest (4.1) (2.2) (1.8)
Other items (1.5) (1.9) (3.2)
-------------------------------------- ----------- ---------- -------
Free cash flow 22.4 22.4 33.5
Pension payments (8.9) (8.9) (20.0)
Dividends (9.0) (9.0) (8.2)
---------- -------
Net cash flow 4.5 4.5 5.3
-------------------------------------- ----------- ---------- -------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures. As a
result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS
16 is presented in Note 10 to the consolidated half year financial
statements.
The Group generated a GBP4.5m net cash inflow in the period
(2018: GBP5.3m inflow) with a free cash inflow of GBP22.4m (2018:
GBP33.5m inflow). The decrease on the prior year reflects lower
proceeds from property disposals and higher tax payments due to
changes in HMRC rules around the timing of payments on account
which have come into effect in the period.
Capital expenditure of GBP4.7m (2018: GBP4.2m) principally
consists of investments in IT systems, including the enhancement of
our transport management system which will continue in the second
half of the year, and fit out costs relating to operational
sites.
Net proceeds from asset disposals of GBP5.0m primarily arose on
the disposal of two under-utilised freehold properties and the
transition of the related operations to other sites (gross proceeds
of GBP5.5m less costs of disposal and transitioning operations to
another site of GBP0.8m).
There has been a working capital outflow in the period of
GBP3.3m (2018: outflow of GBP1.5m) related to investment in new
contracts commenced in the period and timing differences on the
underlying working capital balances.
The Group paid cash tax in the period of GBP4.9m (2018:
GBP1.9m), with the increase being due to timing changes in HMRC
rules around payments on account which have come into effect in the
period.
The amount of cash interest paid, excluding fees, of GBP2.2m
(2018: GBP1.8m) has increased in the period due to changes in the
timings of certain interest payments.
Other cash outflows include payments in respect of provision
movements. There was a cash outflow of GBP1.9m (2018: GBP3.2m
outflow) primarily relating to the costs of restructuring and
payments in respect of the property and insurance provisions.
The cash contribution to fund the pension deficit in the current
year to 31 March 2020 will be GBP18.4m less certain administration
costs of GBP0.6m agreed to be paid directly by the Group (31 March
2019: GBP17.3m plus a one-off lump-sum of GBP15.0m) of which
GBP8.9m was paid in the first half, being pension contributions of
GBP9.2m less the agreed GBP0.3m administration costs.
Financing and covenants
The Group's committed facilities at the period end were
GBP141.2m (2018: GBP141.2m) and the headroom in these committed
facilities to reported net debt at 30 September 2019 was GBP126.4m
(2018: GBP117.0m). 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. At 30 September 2019,
utilisation of the Group's non-recourse GBP50m Receivables Purchase
Facility was GBP10.1m (2018: GBP3.0m).
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
Covenant Ratio At 30 September 2019
--------------------------- --------- ----------------------
Adjusted net debt: EBITDA <2.75:1 0.73
Interest cover >3.5:1 18.6
Fixed charge cover >1.4:1 3.4
--------------------------- --------- ----------------------
Pensions
The Group has a number of pension arrangements in the UK and
Ireland including defined benefit arrangements which are described
below.
The Wincanton plc Pension Scheme (the Scheme), which closed to
future accrual on 31 March 2014, had an IAS 19 asset of GBP8.1m
(GBP6.7m net of deferred tax) at 30 September 2019 (2018: liability
of GBP28.9m, 31 March 2019: liability of GBP7.1m). The following
table shows the reported IAS 19 asset/(deficit):
30 Sept 30 Sept 31 March
GBPm 2019 2018 2019
------------------------ --------- --------- ---------
Assets 1,272.5 1,063.4 1,146.6
Liabilities (1,264.4) (1,092.3) (1,153.7)
------------------------ --------- --------- ---------
Pension asset/(deficit) 8.1 (28.9) (7.1)
------------------------ --------- --------- ---------
Discount rate (%) 1.80 2.85 2.40
------------------------ --------- --------- ---------
The movement in the deficit since 31 March 2019 is primarily due
to employer contributions paid into the Scheme. The discount rate
has decreased from 2.85% at 30 September 2018 to 2.40% at 31 March
2019 and then to 1.80% at 30 September 2019. Each 0.1% movement in
the rate impacts the liabilities of the Scheme by 2.1%, currently
some GBP26m. 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 2019. As
at 30 September 2019 the Scheme's investment was split between 30%
in return-seeking assets and 70% 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 last year. 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.
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 30 to 33 of the Annual Report for the year
ended 31 March 2019. 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. The impact
of the recently announced General Election will also be monitored
and potential risks and opportunities reviewed and assessed.
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.
2019 2018
------------- --------------------------------------------------------------- ------------------------------------
Exceptional IFRS 16 Exceptional
Statutory items(1) Underlying impact(2) Underlying Statutory items(1) Underlying
IFRS 16 IFRS 16 IAS 17 IAS 17 IAS 17 IAS 17
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
Revenue
(GBPm) 592.9 - 592.9 - 592.9 581.8 - 581.8
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
EBITDA
(GBPm)(3) 50.9 - 50.9 (16.5) 34.4 39.0 (6.0) 33.0
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
Operating
profit
(GBPm) 32.6 (2.3) 30.3 (1.8) 28.5 33.0 (6.0) 27.0
Operating
margin (%) 5.5% 5.2% 4.8% 5.7% 4.6%
Net financing
costs (GBPm) (4.1) - (4.1) 1.9 (2.2) (2.9) - (2.9)
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
Profit before
tax (GBPm) 28.5 (2.3) 26.2 0.1 26.3 30.1 (6.0) 24.1
Income tax
(GBPm) (4.2) - (4.2) (0.1) (4.3) (3.7) (0.3) (4.0)
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
Profit after
tax (GBPm) 24.3 (2.3) 22.0 - 22.0 26.4 (6.3) 20.1
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
Earnings per
share (p)(4) 19.7 17.8 17.8 21.3 16.2
Dividend per
share (p) 3.90 3.90 3.90 3.60 3.60
Net debt
excluding
lease
liabilities
(GBPm)(5) (14.8) (14.8) (14.8) (24.2) (24.2)
------------- --------- ------------- ---------- ------------- ---------- --------- ------------- ----------
1 Note 2 provides further detail of exceptional items
2 IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures.
Consequently, the results for the six months ended 30 September
2019 are not directly comparable with prior periods and therefore
they have also been presented on an IAS 17 basis.
3 EBITDA refers to operating profit before depreciation and
amortisation and is reconciled in Note 2.
4 Note 5 provides further detail of underlying earnings per
share.
5 Net debt is the sum of cash and bank balances, bank loans and
overdrafts and other financial liabilities excluding lease
liabilities. Note 8 to the consolidated half year financial
statements 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 2019 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 2019, 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 12 November 2019.
T Lawlor
Director
Consolidated income statement
for the six months to 30 September 2019 (unaudited)
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2019 2018 2019
Note IFRS 16(1) IAS 17(1) IAS 17
GBPm GBPm GBPm
Revenue 2 592.9 581.8 1,141.5
---------------------------------------------------- ------- ---------------- ---------------- -------------
Underlying operating profit 2 30.3 27.0 55.3
---------------------------------------------------- ------- ---------------- ---------------- -------------
Exceptional items 2 2.3 6.0 (0.7)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Operating profit 2 32.6 33.0 54.6
Financing Income 3 0.1 - 0.1
Financing costs 3 (4.2) (2.9) (6.1)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Net Financing Costs (4.1) (2.9) (6.0)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Profit before tax 28.5 30.1 48.6
Income tax expense 4 (4.2) (3.7) (5.8)
---------------------------------------------------- ------- ---------------- ---------------- -------------
Profit attributable to equity shareholders of
Wincanton plc 24.3 26.4 42.8
---------------------------------------------------- ------- ---------------- ---------------- -------------
Earnings per share
- basic 5 19.7p 21.3p 34.5p
- diluted 5 19.5p 21.1p 34.2p
---------------------------------------------------- ------- ---------------- ---------------- -------------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures.
Information on the impact of adopting IFRS 16 is presented in Note
10 to the consolidated half year financial statements.
Consolidated statement of comprehensive income
for the six months to 30 September 2019 (unaudited)
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2019 2018 2019
IFRS 16(1) IAS 17(1) IAS 17
GBPm GBPm GBPm
Profit for the period 24.3 26.4 42.8
--------------------------------------------------------------------- ---------------- ---------------- -----------
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income
statement
Remeasurements of defined benefit asset/(liability) 6.1 1.5 20.3
Income tax relating to items that will not subsequently be
reclassified to profit or loss (1.0) (0.2) (3.5)
--------------------------------------------------------------------- ---------------- ---------------- -----------
5.1 1.3 16.8
Items which are or may subsequently be reclassified to the income
statement
Net foreign exchange loss on investment in foreign subsidiaries of 0.1 - -
net hedged items
Effective portion of changes in fair value of cash flow hedges - - 0.1
0.1 - 0.1
--------------------------------------------------------------------- ---------------- ---------------- -----------
Other comprehensive income for the period, net of income tax 5.2 1.3 16.9
--------------------------------------------------------------------- ---------------- ---------------- -----------
Total comprehensive income attributable to equity shareholders of
Wincanton plc 29.5 27.7 59.7
--------------------------------------------------------------------- ---------------- ---------------- -----------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures.
Information on the impact of adopting IFRS 16 is presented in Note
10 to the consolidated half year financial statements.
Consolidated balance sheet
at 30 September 2019 (unaudited)
30 Sept 30 Sept 31 March
2019 2018 2019
IFRS 16(1) IAS 17(1) IAS 17
Note GBPm GBPm GBPm
--------------------------------------------------- ------------ ----------- ---------
Non-current assets
Goodwill and intangible assets 84.8 82.6 84.0
Property, plant and equipment 7 32.4 38.9 34.5
Right-of-use assets(1) 105.0 - -
Investments, including those equity accounted 0.2 0.2 0.2
Deferred tax assets 3.1 8.3 4.2
Employee benefits 9 8.1 - -
----------------------------------------------- ------------ ----------- ---------
233.6 130.0 122.9
----------------------------------------------- ------------ ----------- ---------
Current assets
Inventories 4.9 4.3 3.7
Trade and other receivables 149.2 142.4 137.7
Assets classified as held for sale - - 2.4
Cash and cash equivalents 8 39.2 18.9 12.7
----------------------------------------------- ------------ ----------- ---------
193.3 165.6 156.5
----------------------------------------------- ------------ ----------- ---------
Current liabilities
Income tax payable (3.3) (4.3) (6.1)
Borrowings and other financial liabilities 8 - (0.1) -
Lease liabilities(1) (33.9) - -
Trade and other payables (266.1) (264.2) (260.8)
Provisions (10.1) (16.6) (10.1)
----------------------------------------------- ------------ ----------- ---------
(313.4) (285.2) (277.0)
----------------------------------------------- ------------ ----------- ---------
Net current liabilities (120.1) (119.6) (120.5)
----------------------------------------------- ------------ ----------- ---------
Total assets less current liabilities 113.5 10.4 2.4
----------------------------------------------- ------------ ----------- ---------
Non-current liabilities
Borrowings and other financial liabilities 8 (54.0) (43.0) (32.0)
Lease liabilities(1) (89.8) - -
Employee benefits 9 - (28.9) (7.1)
Provisions (27.1) (31.4) (30.4)
(170.9) (103.3) (69.5)
----------------------------------------------- ------------ ----------- ---------
Net liabilities (57.4) (92.9) (67.1)
----------------------------------------------- ------------ ----------- ---------
Equity
Issued share capital 12.5 12.5 12.5
Share premium 12.9 12.9 12.9
Merger reserve 3.5 3.5 3.5
Hedging reserve - (0.1) -
Translation reserve (0.2) (0.3) (0.3)
Retained earnings (86.1) (121.4) (95.7)
----------------------------------------------- ------------ ----------- ---------
Total equity deficit (57.4) (92.9) (67.1)
----------------------------------------------- ------------ ----------- ---------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures.
Information on the impact of adopting IFRS 16 is presented in Note
10 to the consolidated half year financial statements.
Consolidated statement of changes in equity
at 30 September 2019 (unaudited)
Retained earnings
-----------------------
Issued Total
share Share Merger Hedging Translation Profit equity
capital premium reserve reserve reserve Own shares and loss deficit
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Balance at 1
April 2019 12.5 12.9 3.5 - (0.3) (2.2) (93.5) (67.1)
IFRS 16
Restatement(1) - - - - - - (11.2) (11.2)
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Revised balance
as at 1 April
2019 12.5 12.9 3.5 - (0.3) (2.2) (104.7) (78.3)
Profit for the
period - - - - - - 24.3 24.3
Other
comprehensive
income - - - - 0.1 - 5.1 5.2
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Total
comprehensive
income - - - - 0.1 - 29.4 29.5
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Share based
payment
transactions - - - - - - 0.4 0.4
Current tax on - - - - - - - -
share based
payments
Dividends paid
to
shareholders - - - - - - (9.0) (9.0)
Balance at 30
September 2019 12.5 12.9 3.5 - (0.2) (2.2) (83.9) (57.4)
================ ========= ========= ========= ========= ============ =========== ========== =========
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 2018 12.5 12.9 3.5 (0.1) (0.3) (2.0) (139.0) (112.5)
Profit for the
year - - - - - - 42.8 42.8
Other
comprehensive
income - - - 0.1 - - 16.8 16.9
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Total
comprehensive
income - - - 0.1 - - 59.6 59.7
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Share based
payment
transactions - - - - - 1.3 (1.5) (0.2)
Current tax on
share based
payment
transactions - - - - - - 0.1 0.1
Own shares
acquired - - - - - (1.5) - (1.5)
Dividends paid
to
shareholders - - - - - - (12.7) (12.7)
---------------- --------- --------- --------- --------- ------------ ----------- ---------- ---------
Balance at 31
March 2019 12.5 12.9 3.5 - (0.3) (2.2) (93.5) (67.1)
================ ========= ========= ========= ========= ============ =========== ========== =========
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures.
Information on the impact of adopting IFRS 16 is presented in Note
10 to the consolidated half year financial statements.
Consolidated statement of cash flows
for the six months to 30 September 2019 (unaudited)
Six
Six months Year
months to 30 ended
to 30 Sept Sept 31 March
2019 2018 2019
IFRS 16 IAS 17 IAS 17
GBPm GBPm GBPm
---------------------------------------------------------------------------- ------------ ----------- -----------
Operating activities
Profit before tax 28.5 30.1 48.6
Adjustments for
- depreciation and amortisation 20.6 6.0 11.4
- interest expense on borrowings 2.2 2.9 6.0
- interest expense on leases(1) 1.9 - -
- profit on disposal of property, plant and equipment (2.4) (5.9) (6.0)
- share based payment transactions 0.4 (0.1) (0.2)
---------------------------------------------------------------------------- ------------ ----------- -----------
51.2 33.0 59.8
(Increase)/decrease in trade and other receivables (8.4) (1.8) 3.0
(Increase)/decrease in inventories (1.2) 0.1 0.7
Increase/(decrease) in trade and other payables 7.1 0.2 (2.9)
Decrease in provisions (1.6) (3.4) (11.2)
(Decrease)/increase in employee benefits before pension deficit payment (0.2) 0.3 9.2
Income taxes paid (4.9) (1.9) (1.5)
---------------------------------------------------------------------------- ------------ ----------- -----------
Cash generated before pension deficit payment 42.0 26.5 57.1
Pension deficit payment (8.9) (20.0) (32.3)
---------------------------------------------------------------------------- ------------ ----------- -----------
Cash flows from operating activities 33.1 6.5 24.8
---------------------------------------------------------------------------- ------------ ----------- -----------
Investing activities
Proceeds from sale of property, plant and equipment 5.0 13.1 13.8
Interest received - - 0.1
Trade investment - (0.1) (0.1)
Additions of property, plant and equipment (3.1) (3.4) (6.4)
Additions of computer software (1.6) (0.8) (3.3)
---------------------------------------------------------------------------- ------------ ----------- -----------
Cash flows from investing activities 0.3 8.8 4.1
---------------------------------------------------------------------------- ------------ ----------- -----------
Financing activities
Lease repayments(1) (15.8) - -
Own shares acquired - - (1.8)
Increase/(decrease) in borrowings 22.0 (4.0) (15.0)
Equity dividends paid (9.0) (8.2) (12.7)
Interest paid on borrowings (2.2) (1.8) (4.3)
Interest paid on lease liabilities(1) (1.9) - -
--------------------------------------------------------------------------- ------------ ----------- -----------
Cash flows from financing activities (6.9) (14.0) (33.8)
---------------------------------------------------------------------------- ------------ ----------- -----------
Net increase/(decrease) in cash and cash equivalents 26.5 1.3 (4.9)
Cash and cash equivalents at beginning of the period 12.7 17.6 17.6
Cash and cash equivalents at end of the period 39.2 18.9 12.7
---------------------------------------------------------------------------- ------------ ----------- -----------
Represented by:
- cash at bank and in hand 34.3 12.0 7.9
- restricted cash, being deposits held by the Group's insurance
subsidiary 4.9 6.9 4.8
---------------------------------------------------------------------------- ------------ ----------- -----------
39.2 18.9 12.7
--------------------------------------------------------------------------- ------------ ----------- -----------
(1) IFRS 16 was adopted on 1 April 2019 using the modified
retrospective approach, without restating prior year figures.
Information on the impact of adopting IFRS 16 is presented in Note
10 to the consolidated half year financial statements.
Notes to the consolidated half year financial statements
for the six months to 30 September 2019 (unaudited)
1 Basis of preparation and Statement of compliance
Wincanton plc (the 'Company') is a company incorporated,
domiciled and registered in England and Wales. The consolidated
half year financial statements of the Company for the six months to
30 September 2019 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 2019, except as described below. As stated in the financial
statements for the year ended 31 March 2019 the following new
standards and amendments have been applied where applicable: IFRS
16 Leases; Amendments to IFRS 9: Prepayment Features with Negative
Compensation; IFRIC 22 Foreign Currency Transactions and Advance
Consideration; Amendments to IAS 19: Plan Amendment, Curtailment or
Settlement; Amendments to IAS 28: Long-term Interests in Associates
and Joint Ventures; and Annual Improvements 2015-2017 Cycle. Other
than IFRS 16, the adoption of these amendments and new standards
has not had a significant effect on the consolidated results or
financial position of the Group. These policies are in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the EU (Adopted IFRS).
IFRS 16 Leases was issued by the International Accounting
Standards Board (IASB) in January 2016 and is effective for the
Group for the year ending 31 March 2020. IFRS 16 sets out the
principles for the recognition, measurement, presentation and
disclosure of leases for both lessees and lessors. For lessees the
distinction between operating leases and finance leases has been
removed and replaced by a single lease accounting model. Under this
model lessees recognise a right-of-use asset, representing the
right to use the underlying asset, and a corresponding lease
liability, representing the obligation to make lease payments for
all leases except where the lease term is 12 months or less or the
underlying assets is of a low value. In the Income statement
operating lease rentals have been replaced with the amortisation of
the right-of-use asset and lease finance costs.
The Group has applied the modified retrospective approach, where
the cumulative effect of applying IFRS 16 is recognised in retained
earnings with no restatement to prior years. The lease liabilities
on transition were the present value of lease payments discounted
using the incremental borrowing rate at 1 April 2019. The
right-of-use assets were valued at an amount equal to either the
lease liability or the carrying amount as if IFRS 16 had been
applied since the start of the lease, but using the discount rate
at 1 April 2019 (the date of initial application), determined on a
lease by lease basis. The Group took advantage of practical
expedients to:
-- apply IFRS 16 only to contracts previously identified as
leases under IAS 17 Leases and IFRIC 4 Determining whether an
Arrangement contains a Lease;
-- exclude leases where the lease term is 12 months or less from
the date of initial application and class such leases as short-term
leases;
-- exclude low value assets;
-- exclude initial direct costs from the measurement of the
right-of-use asset at the date of initial application;
-- use hindsight, such as in determining the lease term if the
contract contains options to extend or terminate;
-- apply a single discount rate to a portfolio of leases with similar characteristics; and
-- rely on its assessment as to whether a lease is onerous by
applying IAS 37 Provisions, Contingent Liabilities and Contingent
Assets immediately before the date of initial application as an
alternative to performing an impairment review.
The effect on the Group's results for the six months to 30
September 2019 compared to those that would have been reported
under IAS 17 are shown in Note 10.
The covenant requirements for the Group's committed financing
facilities are based on "Frozen GAAP" and therefore are not
impacted by the transition to IFRS 16.
Notes to the consolidated half year financial statements
for the six months to 30 September 2019 (unaudited)
1 Basis of preparation and Statement of compliance (continued)
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 2019. The
comparative figures for the year ended 31 March 2019 have been
extracted from those accounts but do not comprise the full
statutory accounts for that financial year. Except for the 31 March
2019 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 pages 31 to 32.
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 2019.
The Group has net liabilities of GBP57.4m (30 September 2018:
GBP92.9m) primarily as a result of previous retained losses. The
reduction in the net liability in the period principally relates to
the profit for the period together with other comprehensive income,
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 consolidated financial statements for the year ended 31
March 2019 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 Half Year Report, which includes the consolidated half year
financial statements, was approved by the Board on 12 November
2019.
Notes to the consolidated half year financial statements
for the six months to 30 September 2019 (unaudited)
2 Operating segments
Wincanton plc provides contract logistics services in the UK and
Ireland. In the period to 30 September 2019 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. IFRS 16 Leases was adopted with effect
from 1 April 2019.
Six months to 30 Sept 2019
IFRS 16
Retail & Consumer Industrial & Transport Total
GBPm GBPm GBPm
----------------------------------------------- ------------------ ----------------------- -------
Revenue from external customers(1) 378.3 214.6 592.9
----------------------------------------------- ------------------ ----------------------- -------
Underlying EBITDA(2) 27.3 23.6 50.9
Depreciation of property, plant and equipment (2.5) (2.4) (4.9)
Depreciation of right-of-use assets (6.3) (8.4) (14.7)
Amortisation of software intangibles (0.6) (0.4) (1.0)
----------------------------------------------- ------------------ ----------------------- -------
Underlying operating profit(2) 17.9 12.4 30.3
Exceptional items 2.3
Operating profit 32.6
Net financing costs (4.1)
----------------------------------------------- ------------------ ----------------------- -------
Profit before tax 28.5
----------------------------------------------- ------------------ ----------------------- -------
1 Included in segment revenue is GBP586.3m (30 September 2018:
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 2018
IAS 17
Retail &
Consumer Industrial & Transport Total
GBPm GBPm GBPm
-------------------------------------- ---------- ----------------------- ------
Revenue from external customers 357.7 224.1 581.8
-------------------------------------- ---------- ----------------------- ------
Underlying EBITDA 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 15.4 11.6 27.0
Exceptional items 6.0
-------------------------------------- ---------- ----------------------- ------
Operating profit 33.0
Net financing costs (2.9)
-------------------------------------- ---------- ----------------------- ------
Profit before tax 30.1
-------------------------------------- ---------- ----------------------- ------
Notes to the consolidated half year financial statements
for the six months to 30 September 2019 (unaudited)
2 Operating segments (continued)
Year ended 31 March 2019
IAS 17
Retail & Consumer Industrial & Transport Total
GBPm GBPm GBPm
----------------------------------------- ------------------ ----------------------- -----------
Revenue from external customers 708.9 432.6 1,141.5
----------------------------------------- ------------------ ----------------------- -----------
Underlying EBITDA 36.9 29.8 66.7
Depreciation (4.5) (5.0) (9.5)
Amortisation of software intangibles (1.2) (0.7) (1.9)
----------------------------------------- ------------------ ----------------------- -----------
Underlying operating profit 31.2 24.1 55.3
Exceptional items (0.7)
----------------------------------------- ------------------ ----------------------- -----------
Operating profit 54.6
Net financing costs (6.0)
----------------------------------------- ------------------ ----------------------- -----------
Profit before tax 48.6
----------------------------------------- ------------------ ----------------------- -----------
Revenue of GBP115.2m (30 September 2018: GBP108.5m) and GBP70.2m
(30 September 2018: GBP68.9m) 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 the Group completed the disposal of two
freehold properties, receiving gross sales proceeds of GBP5.5m and
recognising costs of disposal and transitioning operations to other
sites of GBP0.8m. The carrying value of the properties was GBP2.4m
generating a net profit on the disposal and transition of
GBP2.3m.
In the six months to 30 September 2018 the Group disposed 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 year ended 31 March 2019 the Group recognised a past
service cost of GBP8.2m as a result of the High Court of Justice of
England and Wales issuing a judgment relating to Lloyds Banking
Group requiring equality of treatment of historic pension benefits
for men and women. The Group also recognised a net profit on
disposal and transition of a freehold property of GBP6.0m as well
as GBP1.5m property provision movements.
3 Net financing costs
Six Six
months to months to Year
30 Sept 30 Sept ended
2019 2018 31 March 2019
IFRS 16 IAS 17 IAS 17
GBPm GBPm GBPm
------------------------------------------------------- ----------- ----------- ---------------
Recognised in the income statement
Interest income 0.1 - 0.1
------------------------------------------------------- ----------- ----------- ---------------
Interest expense (2.0) (1.9) (4.3)
Interest on lease liabilities (1.9) - -
Unwinding of discount on provisions (0.3) (0.4) (0.8)
Interest on the net defined benefit pension liability - (0.6) (1.0)
------------------------------------------------------- ----------- ----------- ---------------
(4.2) (2.9) (6.1)
------------------------------------------------------- ----------- ----------- ---------------
Net financing costs (4.1) (2.9) (6.0)
------------------------------------------------------- ----------- ----------- ---------------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
4 Income tax expense
Six Six Year
months to months to ended
30 Sept 30 Sept 31 March
2019 2018 2019
IFRS 16 IAS 17 IAS 17
Recognised in the income statement GBPm GBPm GBPm
----------------------------------- ----------- ----------- ---------
Current tax expense
Current year 3.4 1.5 3.3
Adjustments for prior years (1.3) (0.8) (1.3)
----------------------------------- ----------- ----------- ---------
2.1 0.7 2.0
----------------------------------- ----------- ----------- ---------
Deferred tax expense
Current year 2.1 3.0 3.6
Adjustments for prior years - - 0.2
----------------------------------- ----------- ----------- ---------
2.1 3.0 3.8
----------------------------------- ----------- ----------- ---------
Total income tax expense 4.2 3.7 5.8
----------------------------------- ----------- ----------- ---------
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the Income statement:
Remeasurements of defined benefit pension liability 1.0 0.2 3.5
--------------------------------------------------------------------------- --- ----- -----
Recognised directly in equity
Current tax on share based payment transactions - (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 16.2% (30 September 2018: 16.5%, 31 March 2019:
15.9%).
The main UK Corporation tax rate remained at 19% (30 September
2018: 19%) 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.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
5 Earnings per share
Earnings per share calculation is based on the earnings
attributable to the equity shareholders of Wincanton plc of
GBP24.3m (30 September 2018: GBP26.4m) and the weighted average
shares of 123.6m (30 September 2018: 123.9m) which have been in
issue throughout the period.
The diluted earnings per share calculation is based on there
being 1.0m (30 September 2018: 1.3m) additional shares deemed to be
issued at GBPnil consideration under the Company's share option
schemes.
The weighted average number of ordinary shares for both basic
and diluted earnings per share is calculated as follows:
Six months to Six months to
30 Sept 30 Sept Year ended
2019 2018 31 March 2019
IFRS16 IAS 17 IAS 17
millions Millions Millions
--------------------------------------------------------------------- -------------- -------------- ---------------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the period 123.6 123.7 123.7
Net effect of shares issued and purchased during the period - 0.2 0.3
--------------------------------------------------------------------- -------------- -------------- ---------------
123.6 123.9 124.0
--------------------------------------------------------------------- -------------- -------------- ---------------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares at the end of the period 123.6 123.9 124.0
Effect of share options on issue 1.0 1.3 1.3
--------------------------------------------------------------------- -------------- -------------- ---------------
124.6 125.2 125.3
--------------------------------------------------------------------- -------------- -------------- ---------------
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 useful information on the underlying performance of the
Group:
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2019 2018 2019
IFRS 16 IAS 17 IAS 17
pence Pence Pence
------------------------------- -------------- -------------- -----------
Underlying earnings per share
- basic 17.8 16.2 33.5
- diluted 17.7 16.1 33.1
------------------------------- -------------- -------------- -----------
Underlying earnings are determined as follows:
Six months to Six months to Year ended
30 Sept 30 Sept 31 March
2019 2018 2019
IFRS 16 IAS 17 IAS 17
GBPm GBPm GBPm
----------------------------------------------------- -------------- -------------- -----------
Profit for the period attributable to equity
shareholders of Wincanton plc 24.3 26.4 42.8
Exceptional items (2.3) (6.0) 0.7
Tax impact of above items and exceptional tax items - (0.3) (2.0)
----------------------------------------------------- -------------- -------------- -----------
Underlying earnings 22.0 20.1 41.5
----------------------------------------------------- -------------- -------------- -----------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
6 Dividends
During the period a final dividend of 7.29p per share was paid,
relating to the year ended 31 March 2019.
The Board has declared an interim dividend of 3.90p per share
for the period ended 30 September 2019 (30 September 2018: 3.60p
per share) which will be paid on 10 January 2020 to shareholders on
the register on 6 December 2019, an estimated total of GBP4.8m.
7 Property, plant & equipment
Additions and disposals
During the half year to 30 September 2019 the Group acquired
tangible fixed assets with a cost of GBP3.1m (30 September 2018:
GBP3.4m). Assets, including those that were shown as held for sale
at 31 March 2019, with a carrying amount of GBP2.7m were disposed
of during the half year to 30 September 2019 (30 September 2018:
GBP7.2m).
Capital commitments
At 30 September 2019 the Group had entered into contracts to
purchase property, plant and equipment for GBP0.6m (30 September
2018: GBP0.2m); delivery is expected in the second half of the year
to 31 March 2020.
8 Analysis of changes in net debt
1 April Adoption of IFRS 16 Non-Cash movements 30 Sept
2019 GBPm Cash flow GBPm 2019
GBPm GBPm GBPm
-------------------------------------- -------- -------------------- ---------- ------------------- --------
Cash and bank balances 12.7 - 26.5 - 39.2
Bank loans and overdrafts (32.0) - (22.0) - (54.0)
Other financial liabilities - - - - -
-------------------------------------- -------- -------------------- ---------- ------------------- --------
Net debt excluding lease liabilities (19.3) - 4.5 - (14.8)
-------------------------------------- -------- -------------------- ---------- ------------------- --------
Lease liabilities - (137.4) 17.7 (4.0) (123.7)
-------------------------------------- -------- -------------------- ---------- ------------------- --------
Net debt including lease liabilities (19.3) (137.4) 22.2 (4.0) (138.5)
-------------------------------------- -------- -------------------- ---------- ------------------- --------
1 April Exchange 30 Sept
2018 GBPm 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 Exchange GBPm 31 March
2018 2019
GBPm Cash flow GBPm GBPm
----------------------------- -------- --------------- --------------- ---------
Cash and bank balances 17.6 - (4.9) 12.7
Bank loans and overdrafts (47.0) - 15.0 (32.0)
Other financial liabilities (0.1) 0.1 - -
----------------------------- -------- --------------- --------------- ---------
Net debt (29.5) 0.1 10.1 (19.3)
----------------------------- -------- --------------- --------------- ---------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
9 Employee benefits
The latest formal valuation of the Scheme was carried out as at
31 March 2017 by the Scheme actuary, Hymans Robertson, and was
agreed with the Trustee last year. The annual deficit funding
contributions have been agreed at GBP18.0m per annum increasing by
RPI over the three years to March 2021, followed by GBP25.0m per
annum from April 2021, increasing by RPI from April 2022 to March
2027. In addition, the Group made a one-off contribution of
GBP15.0m in August 2018.
Movements in the net pension obligations have been recognised as
follows:
Assets Liabilities Total 30 Sept 31 March
2019 2019 30 Sept 2018 2019
GBPm GBPm 2019 GBPm GBPm
GBPm
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Opening position 1,146.6 (1,153.7) (7.1) (49.5) (49.5)
Included in Income statement:
Administration costs (0.9) - (0.9) (0.8) (1.9)
Past service costs - - - - (8.2)
Interest on the net defined benefit liability 13.6 (13.6) - (0.6) (1.0)
Cash:
Employer contributions 9.7 - 9.7 20.5 33.2
Benefits paid (22.0) 22.3 0.3 - -
Included in Other comprehensive income:
Changes in financial assumptions - (115.3) (115.3) 36.1 (58.8)
Changes in demographic assumptions - - - - 25.0
Experience - (4.1) (4.1) (3.8) 6.5
Return on assets excluding amounts included in net financing
costs 125.5 - 125.5 (30.8) 47.6
------------------------------------------------------------------- ------- ----------- -------- ------- --------
Closing defined benefit asset/(liability) 1,272.5 (1,264.4) 8.1 (28.9) (7.1)
------------------------------------------------------------------- ------- ----------- -------- ------- --------
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 GBP0.3m in the period and are included in employer
contributions in the table above.
The movement in the net defined benefit asset/(liability) in the
period was primarily the result of the contributions received from
the Group. The increase in liabilities resulting from a fall in the
discount rate was offset by an increase in the market value of the
assets held. The defined benefit asset, after taking into account
the related deferred tax liability, is GBP6.7m (30 September 2018:
defined benefit liability net of deferred tax asset of
GBP24.0m).
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
2019 30 Sept 2018 2019
% % %
------------------------------------------- --------- ------------ ---------
Discount rate 1.80 2.85 2.40
Price inflation rate - RPI 3.25 3.45 3.45
Price inflation rate - CPI 2.35 2.45 2.45
Rate of increase of pensions in deferment 2.35 2.45 2.45
Rate of increase of pensions in payment(1) 1.85-3.15 1.90-3.30 1.90-3.30
------------------------------------------- --------- ------------ ---------
(1) A range of assumed rates exists due to the application of
annual caps and floors to certain elements of service.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
10 Adoption of IFRS 16 Leases
Adoption Method
During the year, the Group adopted IFRS 16 Leases using the
modified retrospective approach. Comparative information has not
been restated and continues to be reported under IAS 17 Leases and
IFRIC 4 Determining Whether an Arrangement Contains a Lease. The
details of the current and prior years' accounting policies are
disclosed separately below.
Details of the practical expedients taken are included in Note 1
to the consolidated half year financial statements.
Accounting Policies
Policy applicable from 1 April 2019
For contracts entered into on or after 1 April 2019, the Group
assesses at inception whether the contract is, or contains, a
lease. A lease exists if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for
consideration. The Group assessment includes whether the contract:
involves the use of an identified asset; has the right to obtain
substantially all of the economic benefits from the use of the
asset throughout the contract period; and has the right to direct
the use of the asset.
The Group as a lessee
At the commencement of a lease, the Group recognises a
right-of-use asset along with a corresponding lease liability. The
lease liability is initially measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate. The lease term comprises the non-cancellable period
of the contract, together with periods covered by an option to
extend the lease if the lessee is reasonably certain to exercise
that option; and periods following an option to terminate the lease
if the lessee is reasonably certain not to exercise that option
based on operational needs and contractual terms. Subsequently, the
lease liability is measured at amortised cost by increasing the
carrying amount to reflect interest on the lease liability and
reducing it by the lease payments. The lease liability is
remeasured when the Group changes its assessment of whether it will
exercise an extension or termination option. Right-of-use assets
are initially measured at cost, comprising the initial measurement
of the lease liability adjusted for any lease payments made at or
before the commencement date, estimated asset retirement
obligations, lease incentives received and initial direct costs.
Subsequently, right-of-use assets are measured at cost, less any
accumulated depreciation and any accumulated impairment losses, and
are adjusted for certain remeasurements of the lease liability.
Depreciation is calculated on a straight-line basis over the length
of the lease.
The Group has elected to apply exemptions for short-term leases
and leases for which the underlying asset is of low value. For
these leases, payments are charged to the income statement on a
straight-line basis over the term of the lease. Right-of-use assets
are presented within non-current assets on the face of the balance
sheet, and lease liabilities are shown separately on the balance
sheet in current liabilities and non-current liabilities depending
on the length of the lease term.
Policy applicable prior to 1 April 2019
Lease payments made under operating leases are recognised in the
income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the income
statement as an integral part of the total lease expense.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
10 Adoption of IFRS 16 Leases (continued)
Note
31 March 2019 as previously IFRS 16
reported adjustments 1 April 2019 as adjusted
GBPm GBPm GBPm
Consolidated Balance Sheet
Non-current assets
Goodwill and intangible assets 84.0 - 84.0
Property, plant and equipment 34.5 - 34.5
Right-of-use assets a - 117.6 117.6
Investments including those equity
accounted 0.2 - 0.2
Deferred Tax Assets b 4.2 2.0 6.2
------ ------------------------------- -------------- ---------------------------
122.9 119.6 242.5
--------------------------------------- ------------------------------- -------------- ---------------------------
Current assets
Inventories 3.7 - 3.7
Trade and other receivables c 137.7 3.1 140.8
Assets classified as held for sale 2.4 - 2.4
Cash and cash equivalents 12.7 - 12.7
------------------------------- -------------- ---------------------------
156.5 3.1 159.6
--------------------------------------- ------------------------------- -------------- ---------------------------
Current liabilities
Income tax payable (6.1) - (6.1)
Lease liabilities d - (31.5) (31.5)
Trade and other payables c (260.8) 1.5 (259.3)
Provisions c (10.1) 0.7 (9.4)
------ ------------------------------- -------------- ---------------------------
(277.0) (29.3) (306.3)
--------------------------------------- ------------------------------- -------------- ---------------------------
Net current liabilities (120.5) (26.2) (146.7)
------------------------------- -------------- ---------------------------
Total assets less current liabilities 2.4 93.4 95.8
------------------------------- -------------- ---------------------------
Non-current liabilities
Borrowings and other financial
liabilities (32.0) - (32.0)
Lease liabilities d - (105.9) (105.9)
Employee benefits (7.1) - (7.1)
Provisions c (30.4) 1.3 (29.1)
(69.5) (104.6) (174.1)
--------------------------------------- ------------------------------- -------------- ---------------------------
Net liabilities (67.1) (11.2) (78.3)
------------------------------- -------------- ---------------------------
Equity
Issued share capital 12.5 - 12.5
Share premium 12.9 - 12.9
Merger reserve 3.5 - 3.5
Translation reserve (0.3) - (0.3)
Retained earnings e (95.7) (11.2) (106.9)
Total equity deficit (67.1) (11.2) (78.3)
------------------------------- -------------- ---------------------------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
10 Adoption of IFRS 16 Leases (continued)
Notes to IFRS 16 restatement:
a. Right-of-use assets: valued at an amount equal to either the
lease liability or the carrying amount as if IFRS 16 had been
applied since the start of the lease, but using the discount rate
at 1 April 2019 (the date of initial application) and depreciated,
determined on a lease by lease basis. Where applicable, the asset
value has been adjusted by the amount of onerous lease provision
held immediately prior to restatement.
b. Deferred tax asset: under IAS 12, the net liability
recognised on transition to IFRS 16 creates a temporary difference
from that which will be deducted for tax purposes, therefore a
deferred tax asset is recognised.
c. Reclassification of balance sheet items: lease incentive
accruals and onerous lease provisions have been reclassified to
right-of-use assets on adoption. Rent prepayments and accruals are
no longer required as they form part of the lease liability.
d. Lease liabilities: measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate.
e. Retained deficit: for the majority of leases the Group has
calculated the right-of-use asset as though IFRS 16 had been
applied since the start of the lease and depreciated, resulting in
a charge to retained earnings as the right-of-use asset is lower
than the finance lease liability recognised.
The reconciliation between operating lease commitments
previously reported in the financial statements for the year ended
31 March 2019 discounted at the Group's incremental borrowing rate
and the lease liabilities recognised in the balance sheet on
initial application of IFRS 16 is shown below.
GBPm
----------------------------------------------------- -------
Operating lease commitment disclosed as at 31 March
2019 201.8
Discounted using the lessee's incremental borrowing
rate at 1 April 2019 (66.7)
Recognition exemption for:
* Short-term leases (4.3)
Lease termination options 7.8
Other reconciling items (net) (1.2)
----------------------------------------------------- -------
Lease liabilities recognised at 1 April 2019 137.4
----------------------------------------------------- -------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
10 Adoption of IFRS 16 Leases (continued)
The following table summarises the quantitative impact of
adopting IFRS 16 on the Group's financial statements for the six
months to 31 September 2019:
Income statement Amount
before
As reported IFRS 16 adoption of
IFRS 16 adjustments IFRS 16
GBPm GBPm GBPm
------------------------------- ------------ ------------- -------------
Revenue 592.9 - 592.9
Operating profit 32.6 (1.8) 30.8
Net Financing costs (4.1) 1.9 (2.2)
Income tax expense (4.2) (0.1) (4.3)
-------------------------------- ------------ ------------- -------------
Profit after tax 24.3 - 24.3
-------------------------------- ------------ ------------- -------------
Consolidated Balance Sheet
Non-current assets
Right-of-use assets 105.0 (105.0) -
Deferred tax asset 3.1 (2.0) 1.1
Other non-current assets 125.5 - 125.5
-------------------------------- ------------ ------------- -------------
233.6 (107.0) 126.6
Current assets 193.3 (2.5) 190.8
Current liabilities
Lease liabilities (33.9) 33.9 -
Provisions (10.1) (0.7) (10.8)
Other current liabilities (269.4) (1.4) (270.8)
-------------------------------- ------------ ------------- -------------
Net current liabilities (120.1) 29.3 (90.8)
Non-current liabilities
Lease liabilities (89.8) 89.8 -
Provisions (27.1) (0.9) (28.0)
Other non-current liabilities (54.0) - (54.0)
-------------------------------- ------------ ------------- -------------
Net liabilities (57.4) 11.2 (46.2)
-------------------------------- ------------ ------------- -------------
Total equity deficit (57.4) 11.2 (46.2)
-------------------------------- ------------ ------------- -------------
As a result of adopting IFRS 16, operating lease rental costs
have been replaced by depreciation of right-of-use assets and
interest on lease liabilities. This has resulted in an increase in
underlying operating profit of GBP1.8m compared that reported on
the previous IAS 17 basis. Net financing costs have increased by
GBP1.9m leaving underlying profit before tax GBP0.1m lower under
IFRS 16 compared to on an IAS 17 basis.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
10 Impact on application of IFRS 16 (continued)
Cash flow statement
Amount before
adoption
As reported IFRS 16 of IFRS 16
IFRS 16 adjustments GBPm
GBPm GBPm
-------------------------------------- -------------- -------------- --------------------
Operating activities
Profit before tax 28.5 0.1 28.6
Adjustments for
- depreciation and amortisation 20.6 (14.7) 5.9
- interest expense on borrowings 2.2 - 2.2
- interest expense on leases 1.9 (1.9) -
- profit on disposal of property,
plant and equipment (2.4) - (2.4)
- share based payment transactions 0.4 - 0.4
-------------------------------------- -------------- -------------- --------------------
51.2 (16.5) 34.7
(Increase)/decrease in trade
and other receivables (8.4) (0.6) (9.0)
(Increase)/decrease/in inventories (1.2) - (1.2)
Increase/(decrease) in trade
and other payables 7.1 (0.2) 6.9
Decrease in provisions (1.6) (0.4) (2.0)
(Decrease)/increase in employee
benefits before pension deficit
payment (0.2) - (0.2)
Income taxes paid (4.9) - (4.9)
-------------------------------------- -------------- -------------- --------------------
Cash generated before pension
deficit payment 42.0 (17.7) 24.3
Pension deficit payment (8.9) - (8.9)
-------------------------------------- -------------- -------------- --------------------
Cash flows from operating activities 33.1 (17.7) 15.4
-------------------------------------- -------------- -------------- --------------------
Investing activities
Proceeds from sale of property,
plant and equipment 5.0 - 5.0
Additions of property, plant
and equipment (3.1) - (3.1)
Additions of computer software (1.6) - (1.6)
-------------------------------------- -------------- -------------- --------------------
Cash flows from investing activities 0.3 - 0.3
-------------------------------------- -------------- -------------- --------------------
Financing activities
Lease repayments (15.8) 15.8 -
Increase/(decrease) in borrowings 22.0 - 22.0
Equity dividends paid (9.0) - (9.0)
Interest paid on borrowings (2.2) - (2.2)
Interest paid on lease liabilities (1.9) 1.9 -
-------------------------------------- -------------- -------------- --------------------
Cash flows from financing activities (6.9) 17.7 10.8
-------------------------------------- -------------- -------------- --------------------
Net increase/(decrease) in cash
and cash equivalents 26.5 - 26.5
Cash and cash equivalents at
beginning of the period 12.7 - 12.7
Cash and cash equivalents at
end of the period 39.2 - 39.2
-------------------------------------- -------------- -------------- --------------------
Represented by:
- cash at bank and in hand 34.3 - 34.3
- restricted cash, being deposits
held by the Group's insurance
subsidiary 4.9 - 4.9
-------------------------------------- -------------- -------------- --------------------
39.2 - 39.2
-------------------------------------- -------------- -------------- --------------------
Although IFRS 16 has no impact on the Group's total cash flow,
outflows from financing activities increase while the cash inflows
from operating activities have increased as rental costs previously
recognised solely as cash outflows from operations are now
apportioned between finance charges and a reduction of the lease
liability.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2019 (unaudited)
11 Post balance sheet events
On 18 October 2019, the Board of Wincanton announced that it is
undertaking a diligence exercise on a competitor, Eddie Stobart
Logistics plc (ESL) and its assets, in order to enable it to assess
the potential merits of a combination. There can be no certainty
any offer will be made, nor as to the terms of any such offer, and
a further update will be provided in due course
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 2019 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 2019 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.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and at the date of this report its effects are subject to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects unknown. An interim review cannot be
expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in
relation to Brexit.
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.
Michael Froom
for and on behalf of KPMG LLP
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
12 November 2019
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 UOONRKVAAARA
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