26 February 2003
TDG plc
PRELIMINARY RESULTS 2002
Transformation Delivering Encouraging Results
Highlights
Turnover up 7% to �567 million
Profit before tax up 49% to �22.4 million
Earnings per share up 56% to 21.5p
Headline profit before tax down 4% to �22.6 million, with growth of 6% in the
second half
Headline earnings per share down 5% to 20.1p
Strong cash inflow further reduces net debt to �37 million, with gearing at 20%
A table analysing the Group results is included in the Operating Review.
David Garman, Chief Executive of TDG, commented:
"The actions we have taken to transform TDG into a focused European Contract
Logistics business are delivering encouraging results. Turnover is up 7% to �
567m and although headline profit before tax is down 4% at �22.6m, headline
profit in the second half of 2002 was 6% higher than in the comparable period a
year ago. Overall, this is a creditable performance given difficult trading
conditions and a �2m increase in annual insurance costs.
Trading conditions in both the UK and Continental Europe were challenging
throughout 2002, and we do not anticipate significant improvement in 2003.
Economic uncertainty persists, and many of our customers are maintaining a
cautious outlook, with a consequential delay in decision-making on investment
and outsourcing. Nevertheless, we expect to continue to benefit from the
actions we have taken to strengthen the Group both strategically and
operationally. Barring any further deterioration in market conditions we
therefore expect to show modest improvement in headline profit in 2003".
Enquiries:
TDG Financial Dynamics
David Garman, Chief Executive Ben Foster/Andrew Dowler
Paul Mainwaring, Finance Director Tel: 020 7831 3113
Tel: 020 7222 7411
CHAIRMAN'S STATEMENT
I am pleased to report that the actions we have taken to transform TDG into a
focused European Contract Logistics business are delivering encouraging
results. Turnover is up 7% to �567m and although headline profit before tax
is down 4% at �22.6m, headline profit in the second half of 2002 was 6% higher
than in the comparable period a year ago.
Overall, this is a creditable performance given the difficult trading
conditions in both the UK and Continental Europe and a �2m increase in annual
insurance costs. We are particularly pleased with the growth in headline
profit in the second half as we indicated at the time of the interim results
that we expected our financial performance in this period to demonstrate more
clearly the underlying improvement in the Group.
Profit before tax, after goodwill amortisation and exceptional items, is �
22.4m, 49% ahead of last year, with earnings per share up 56% at 21.5p.
We delivered another good cash inflow in 2002 and as a result our net debt has
been reduced to �37m. Our sound balance sheet, with gearing at only 20%, puts
us in a strong financial position.
Despite the external uncertainties that we, like all businesses, face in the
short term, we are confident that we now have a robust business for the
future.
The Board is recommending an unchanged final dividend of 7.4p which together
with the unchanged interim payment gives a total dividend for the year of
12.65p. The final dividend is payable on 27 May 2003 to shareholders on the
register on 2 May 2003.
The results for the year are discussed in more detail in the Operating and
Financial Review.
Strategy
Over the last three years we have taken significant steps to transform the
Group. We have invested in quality businesses in the UK, Holland and Ireland
and have established strong and growing operations in those markets. We have
continued to invest in expanding our capabilities and in strengthening our
management team.
The rationalisation programme that we announced last year involving the exit of
non-strategic, low-returning assets has been completed. As a result of this
programme we have exited from general haulage operations in the UK and Holland,
reduced the number of cold stores in the UK from 35 to 25, exited cold storage
completely in Ireland and France, exited a number of smaller uneconomic sites,
and sold a number of investment properties in the UK earning single digit
returns. In addition, during 2002, we disposed of our Data Services business
and the associated property.
Our strategy is to develop our strong positions in our chosen sectors in
selected markets in Europe. We will continue to focus our investment and
activities in those markets where we believe appropriate and sustainable
returns can be achieved for shareholders. In other markets which have less
attractive characteristics, we will continue to provide operational capability
to serve our customers, but we will aim to do so with minimal risk for
shareholders. This strategy, and the approach we are taking to our existing
business in France, is discussed in more detail in the Chief Executive's
review.
Our priority for 2003 is to drive benefits from the investments we have made in
the last three years in order to deliver both an improvement in earnings this
year and to establish the momentum for profitable growth in the years ahead.
Outlook
Trading conditions in both the UK and Continental Europe were challenging
throughout 2002, and we do not anticipate significant improvement in 2003.
Economic uncertainty persists, and many of our customers are maintaining a
cautious outlook, with a consequential delay in decision-making on investment
and outsourcing. Nevertheless, we expect to continue to benefit from the
actions we have taken to strengthen the Group both strategically and
operationally. Barring any further deterioration in market conditions we
therefore expect to show modest improvement in headline profit in 2003.
CHIEF EXECUTIVE'S REVIEW
During 2002 we continued our transition programme to create a focused European
Contract Logistics business. After three years this programme is substantially
complete and I am confident that TDG is well placed to compete in its chosen
markets and deliver value for shareholders. During this period we have made
major investment in acquisitions in Holland and Ireland, supply chain
consultancy and other new products, and in improving operational efficiency
across the Group. All these initiatives are progressing well, financed by the
proceeds from our rationalisation programme and the disposal of our non-core
Data Services business, thus placing the Group in a very sound financial
position.
Effective execution is dependent upon good management and we have continued to
strengthen our management team and focused the organisation on delivery. I
therefore believe we go into 2003 with the strongest management team TDG has
had under my leadership.
We have grown our business in each of our two principal sectors of consumer
goods and chemicals by over 15% annually in the last two years. Although the
total value of new contracts won during 2002 at �62m was down on the previous
year, they included significant new operations on behalf of existing clients
such as Kimberly-Clark where we won two European Supplier Awards in respect of
TDG's work on cost reduction and supply chain innovation. We also commenced
new relationships with customers such as Proctor & Gamble and Johnson
Diversey. We have made further investment in our leading edge transport
management systems and believe that our combination of transport optimisation
and integration capabilities are more than a match for the best alternatives in
the industry.
In Ireland and Holland we implemented our first major supply chain projects
with international clients and they are now operating effectively and will make
their first full year contribution in 2003. Our Storage division disposed of
its Data Services business, and is now totally focused on our remaining 25 cold
stores. We successfully commenced operations in Germany with good start-ups on
behalf of DuPont and Kimberly-Clark. We also launched our Inbound Logistics
product with Unilever in the UK, building on our existing Dutch relationship
with this important client.
Given the challenging market conditions in 2002, particularly in France, it is
very encouraging that we have achieved growth of 7% in our turnover and that we
increased headline profit before tax in the second half by 6% versus the
comparable period a year ago. The current level of economic uncertainty has
reduced the number of outsourcing projects available for tender, increased the
timescales for decision making and put pressure on margins. However, the
Group's continued growth demonstrates the benefit of our product improvement
and new product development programmes. The Group is therefore well placed to
respond when the upturn comes.
Our vision of establishing Europe-wide reach on behalf of our customers has not
changed over the last three years, but we have adapted the implementation in
the light of an indepth market evaluation and our own experience. The core of
TDG consists of our successful businesses in the UK, Ireland and Holland which
will be progressively complemented by operational alliances in other large
countries where it is difficult to achieve profitable scale. For example, in
Spain, Germany and Poland we will seek collaborative arrangements to enhance
our capability to meet customer needs.
This approach can be illustrated by our experience in France where our relative
lack of scale in a market characterised by lower margins, volume dependent
contracts and inflexible labour agreements, has led to losses in the currently
weak economic environment. As a matter of policy TDG will not continue with
loss-making operations and in December we announced the decision to exit from a
number of unprofitable contracts in France, and that we are undertaking a
strategic review of our French business. We will continue the process of
reshaping our activities and investment in France during 2003, and we
anticipate that we will eliminate the losses and realise net cash from this
programme.
Our alliances with Cap Gemini Ernst & Young and EGL have enabled us to bid for
several supply chain re-engineering projects. These projects have also enabled
us for the first time to achieve a contribution to the improvement in Group
results from consultancy charges.
Our performance during 2002 has been characterised by our focus on the
implementation of our major strategic initiatives. This will continue to be
our priority during 2003 to establish the momentum for profitable growth.
OPERATING REVIEW
Group Results
Turnover Profit before tax
�m 2002 2001 Growth 2002 2001 Growth
Ongoing operations 562.3 490.0 +15% 27.5 29.0 -5%
Discontinued operation 4.3 5.8 0.5 0.5
Rationalisation - 34.2 - 2.2
programme
------- ------- ------ ------ ------ ------
Total 566.6 530.0 +7% 28.0 31.7 -12%
==== ==== ===
Interest (5.4) (8.2)
------ ------ ------
Headline profit before 22.6 23.5 -4%
tax
Amortisation of goodwill (1.8) (1.4)
Exceptional items 1.6 (7.1)
----- ----- ------
Profit on ordinary activities 22.4 15.0 +49%
before tax
=== === ====
The table above analyses the Group results and highlights the turnover and
operating profit of the Group's ongoing operations, separating out the impact
of the actions taken in the rationalisation programme to exit from
non-strategic, low-returning activities, and the disposal of the Data Services
business.
The businesses and activities that we exited through the rationalisation
programme make no contribution to this year's operating results, but
represented �34m of turnover and �2.2m of operating profits in 2001. The Data
Services business was sold at the beginning of August, contributing turnover
and operating profit for only seven months of the year, and is shown as
discontinued in the table above. Collectively these actions have resulted in
a substantial cash inflow, and the reduction in operating profit is more than
matched by the benefit in interest costs.
The reviews that follow for each division present the financial performance in
a format consistent with the table above, with the narrative focused on the
turnover and operating profit of the ongoing operations.
UK & Ireland Contract Logistics
Turnover Operating Profit
�m 2002 2001 Growth 2002 2001 Growth
Ongoing operations 330.0 274.5 +20% 18.4 19.4 -5%
Rationalisation - 8.2 - 1.6
programme
------- ------- ------ ------ ------ ------
330.0 282.7 +17% 18.4 21.0 -12%
==== ==== === === === ===
Turnover from the ongoing operations in our UK & Ireland Contract Logistics
business increased by 20%, but operating profit was �1.0m (5%) lower. These
figures include the benefit of the acquisition of IWT from August 2001.
Excluding IWT from both years, turnover from our UK & Ireland activities was up
10% with operating profit down 9%. This reduction in profit is primarily due
to the increase in insurance costs, particularly related to warehouse property,
that we suffered in the year, together with the increased costs that this
division has borne as a result of the integration of Scio into the Group's
wider solutions capability. Scio's development costs in 2001 of �2.3m were
treated as exceptional operating costs.
The continuing strong turnover growth reflects the benefit of the development
of our relationships with a number of our major customers, most notably
Kimberly-Clark and Diageo. We were delighted that the quality of our service to
Kimberly-Clark was recognised by TDG being awarded European Supplier of the
Year. During 2002 we have added a further five operations to our activities
on their behalf, involving the management of 100,000 sq.m. of additional
warehouse space, and the related distribution. Our relationship extends
beyond the UK, and on the Continent we manage their European Professional
products distribution centre in Koblenz, Germany, which services 16
countries. We have extended our relationship with Diageo through the
commencement of the consolidated small pack beers, wines and spirits
warehousing and distribution operations serving all their requirements in the
Republic of Ireland. TDG is now well established as the leading logistics
service provider in the Irish drinks market.
Within the UK and Ireland business we have won new contracts with an annualised
value of �36m during the year, �10m of which comes from Ireland. We are
pleased with the performance of our enlarged business in Ireland which has
benefited from the full integration of IWT. We have won new business with a
number of the existing customers in Ireland in addition to securing the renewal
of significant contracts, and we have had success in establishing new
relationships in the consumer goods sector. The excellent potential for us to
grow in Ireland and to extend existing customer relationships into other
countries has led us to appoint a full-time Managing Director to lead these
initiatives.
We have continued to invest in new products and operational improvement and in
the UK we now offer two major IT based transport services which can deliver
substantial cost savings for customers. Our Optimised Transport product is
being successfully rolled out to manage all our sub-contractor procurement on
behalf of customers. Our Integrated Contract Transport product facilitates
significant improvement in the efficiencies within dedicated fleets.
We are delighted to have appointed a highly experienced Managing Director from
within the industry to lead our UK business in delivering the benefits from
these and other investments, and to build on our strong customer relationships
and sector expertise.
European Chemicals
Turnover Operating Profit
�m 2002 2001 Growth 2002 2001 Growth
Ongoing 109.1 99.0 +10% 5.7 5.1 +12%
operations
==== ==== === === === ===
Our Chemicals logistics business performed strongly in the year as a whole,
with turnover 10% higher and operating profit up 12%. The performance was
particularly encouraging in the second half, with turnover up 11% and operating
profit 50% higher, reflecting a recovery in volumes in our bulk chemicals
operations due to the restocking of depleted inventories in the supply chain,
together with the benefit of the actions taken to reduce costs and increase
flexibility.
The double-digit turnover growth results from the implementation of business
won last year for customers including DuPont in Germany, and Alcoa and Huntsman
in the UK, and from the extension of activities and growth in our existing
business. This includes expansion of our fuel delivery operations with Tesco
and J Sainsbury, and increased volumes for BP handled through our Grangemouth
rail terminal.
Despite the challenging trading conditions for the Chemicals industry we have
maintained a strong new business pipeline secured by the increased investment
we have made in our sales and marketing capability. The division won �25m
annualised turnover of new contracts during the year, the majority of which
will start to flow through into turnover in 2003. This includes wins with two
new customers in our priority growth sector of packed and speciality chemicals,
Johnson Diversey and Bayer.
Margins have been maintained as a result of our continued focus on cost. Our
operational excellence programme has been implemented at all sites, generating
significant savings for our customers and for TDG. During the year we merged
two of our largest sites as part of our strategy to operate from larger, more
efficient centres, and we will continue to look for opportunities to improve
our efficiency in order to better serve our customers.
France
Turnover Operating Profit
�m 2002 2001 Growth 2002 2001 Growth
Ongoing operations 43.8 39.5 +11% (1.4) (0.6) (0.8)
==== ==== ===== ===== ===== =====
Turnover in France increased by 11% (9% adjusting for exchange) as a result of
new contract wins, but despite the action taken at the end of 2001 to change
the management team and to focus the business on operational performance,
operating losses increased to �1.4m. The increased loss is primarily due to
intensified margin pressure in our distribution operations, a reduction in
activity with our major customer in Luxembourg, and the losses made on the
distribution network that we established during the year on behalf of Brandt.
In response to the continuing losses in France we have decided to exit from a
number of unprofitable contracts. After successfully implementing a major new
warehouse facility for Brandt at the end of 2001 we commenced the management of
their distribution requirements in Northern France in April 2002. The actual
volume and mix of activity in this operation made it unprofitable for us, and
as a result of our inability to agree price changes with Brandt that would make
the operation profitable, we withdrew during September. During the second
half we also withdrew from two of our Retail sector operations and have served
notice of our intention to cease operations during 2003 at a further five of
our locations serving our Chemicals and Home Appliances activities. The �2.5m
cost of our decision to exit from these activities has been charged as an
exceptional operating cost and is not included in the figures shown above.
The unprofitable contracts that we have decided to exit accounted for 20% of
our turnover in France in 2002, and made an operating loss of �0.4m.
In order to improve the performance of our distribution activities an
operational improvement team from the UK was deployed during the last quarter
with the target of achieving breakeven in these activities during 2003.
Overhead costs have also been reduced, and we anticipate an improvement in the
results for France in 2003.
Netherlands
Turnover Operating Profit
�m 2002 2001 Growth 2002 2001 Growth
Ongoing operations 55.1 51.8 +6% 1.9 1.9 -
Rationalisation - 10.0 - 0.1
programme
------- ------- ------ ------ ------ ------
55.1 61.8 -11% 1.9 2.0 -5%
==== ==== === === === ===
Turnover from our ongoing operations in the Netherlands was 6% higher (5%
adjusting for exchange). The rate of turnover growth has been held back by
decreasing volumes with Lucent and Avaya in the telecoms sector and by a
downturn in the construction market in Holland which impacts on the activity of
one of our largest customers, Betonson. Our consumer goods activities have
grown in the year, benefiting from the implementation for Heinz-Honig in our
Nijmegen facility, and from growth with our major retail customer. Operating
profit from the ongoing operations was maintained at �1.9m. Operating profits
were adversely affected by the decline in our activity with Lucent and Avaya,
and by initial implementation difficulties with the Heinz-Honig contract which
are now resolved.
Market conditions are not expected to significantly improve in 2003, but we are
confident that with the appointment of a new managing director to lead a
strengthened management team we are well placed to benefit from the actions we
have taken in the last two years to reshape our operations in the
Netherlands. This has involved exiting low return storage and haulage
activities and investing in acquisitions and facilities to drive growth in
value added Contract Logistics.
We continue to invest in the two world class facilities we acquired with TCG.
We are building a 19,500 sq.m extension to our ambient food warehousing
facility at Nijmegen, taking it to 44,500 sq.m., to allow us to grow with our
two major customers, Heinz and Unilever. Additional Heinz business will be
implemented during the first quarter of this year. We have strengthened our
relationship with our major customer at our household and bodycare products
focused facility at Veenendaal, including investing to develop our IT
capability. We have improved the quality of our relationship with Betonson,
Europe's largest manufacturer of pre-fab concrete parts, by agreeing a new
three year deal. During this year we plan to start the construction of a major
new facility on the land we acquired last year at Almere, near Amsterdam, which
will significantly add to our service capability and coverage.
UK Storage
Turnover Operating Profit
�m 2002 2001 Growth 2002 2001 Growth
Ongoing operations 24.3 25.2 -4% 2.9 3.2 -9%
Rationalisation - 16.0 - 0.5
programme
------- ------- ------ ------ ------ ------
24.3 41.2 -41% 2.9 3.7 -22%
==== ==== === === === ====
Our ongoing UK Storage operations comprise the Group's 25 public cold stores
and two small ambient operations. The public cold stores offer temperature
controlled storage and associated services to customers mainly operating in the
food manufacturing, food service and food retail sectors. We have the largest
network of stores of any UK operator and combined with the layout of the
stores, many of which have multiple chambers, we are able to tailor unique
solutions for our customers.
Turnover from the stores was down 4% in the year with operating profit 9%
lower. This reflects the generally difficult market conditions with
continuing over-capacity. In response to this environment we are increasing
the flexibility of our facilities, in particular allocating more space to
chilled and ambient products, reducing the proportion of our capacity serving
the frozen market. We will also continue to invest in the stores in order to
deliver customer service requirements.
FINANCIAL REVIEW
The operating performance of the business is explained in the operating
review. This review gives information on other significant financial matters.
France rationalisation
The background to the decision to exit from a number of unprofitable contracts
in France is discussed in the operating review. �2.5m has been charged as an
exceptional operating cost, of which �0.4m is non-cash asset write downs. In
2002, �0.2m has been spent in cash, and this is more than offset by related
asset disposal proceeds, arising on the sale of a property, of �1.2m.
Profit on disposal of businesses and on sale of properties
In August the Group announced the disposal of its Data Services business to
Iron Mountain and the main site of the business in London to Prologis. The
exceptional profit on these related transactions is �3.3m. The Group also
disposed of a number of other properties during the year resulting in an
exceptional profit of �0.8m.
Goodwill amortisation
Goodwill amortisation of �1.8m in 2002 is higher than the 2001 charge of �1.4m
reflecting a full year of amortisation of goodwill arising on the acquisition
of IWT in 2001. Of the �1.8m, �0.1m relates to the Data Services business
which was sold during the year.
Interest
The reduction in net interest payable in 2002 reflects the lower average debt
levels throughout the year compared with 2001, together with the benefit of
lower interest rates on the Group's variable rate debt. The lower average
debt levels result from the significant net cash inflows in 2001 and 2002.
Taxation
The Group has adopted FRS19 'Deferred Tax' for the first time in 2002 and the
2001 comparatives have been restated accordingly. The Group's tax charge on
headline profit is �6.8m, representing an effective rate of 30.1% (2001:
29.8%). Tax relief of �1.3m has been recognised with respect to exceptional
operating costs and exceptional items. This reflects the release of deferred
tax provisions relating to assets written down whilst the capital gains on
property and business disposals are offset against brought forward capital
losses. The Group's overall effective tax rate for the year is 24.6% (2001:
28.0%).
Exchange rate impact
The average Euro:Sterling exchange rate for 2002 used in these accounts is Euro
1.587: �1 (2001: Euro1.61: �1). This slight strengthening of the Euro has only a
negligible impact on reported turnover and reported profit before tax.
The Euro exchange rate at 31 December 2002 was Euro1.535: �1, with the Euro 6%
stronger than at the end of 2001. As a result the year end Euro denominated
net debt is �3.5m higher in sterling equivalent than if exchange rates had
remained unchanged.
Cash flow
The Group's cash inflow before acquisitions and dividends of �32.4m reflects
free cash flow of �13.9m plus �23.2m benefit from property and business
disposal proceeds partly offset by reorganisation and rationalisation cash
payments of �4.7m.
Headline EBITDA, at �50.3m, is lower than in 2001 reflecting the lower headline
operating profit and lower depreciation as a result of asset disposals over the
last two years. Capital expenditure, at �17.7m, is one third lower than in
2001, and represents less than 80% of depreciation.
The working capital outflow of �9.2m arises due to the payment of �4.5m of VAT
relating to the property disposals at the end of 2001 together with the �4.6m
impact of the move by a major customer from making payments in advance to
paying in arrears. This move has no profit impact on the Group as the
payments in advance were made net of an interest deduction that we no longer
suffer. The underlying change in working capital adjusting for these two
items is an outflow of �0.1m.
Lower interest payments reflect the lower profit and loss charge. Tax
payments of �5.4m reflect the benefit of our offset of UK tax due against ACT
that is repayable to the Group, and the receipt of a refund in Holland relating
to a prior year.
The �23.2m inflow from property and business disposals includes �9.5m relating
to properties and businesses identified as part of the rationalisation
programme, �8.8m relating to the disposal of the Data Services business and its
associated London property, �1.2m relating to the France rationalisation, and �
3.7m relating to other properties. This inflow is partly offset by cash
payments relating to charges made in 2001 for the rationalisation programme and
reorganisation/acquisition integration, and �0.2m relating to the France
rationalisation.
�m 2002 2001
Headline operating profit 28.0 31.7
Depreciation/grant amortisation 22.3 26.8
------ ------
EBITDA 50.3 58.5
Capital expenditure (17.7) (28.0)
Asset disposals NBV 1.4 7.8
Cash investment in Scio - (2.3)
Working capital (9.2) 13.6
Interest (5.5) (8.3)
Tax (5.4) (5.7)
------ -----
Free cash flow 13.9 35.6
Property & business disposals 23.2 40.8
Rationalisation programme (1.5) (3.5)
France rationalisation (0.2) -
Reorganisation/acquisition integration (3.0) (1.7)
------ ------
Cash inflow before acquisitions and 32.4 71.2
dividends
==== ====
Movement in net debt
After dividends, acquisition payments and exchange, the Group's net debt
reduced by �15.1m to �37.2m. The acquisition payment reflects the second
instalment for IWT of �2.5m plus the payment of �1.8m following agreement of
the value of net assets acquired.
�m 2002
Cash inflow before acquisitions and dividends 32.4
Dividends (9.9)
Acquisitions (4.3)
Issue of ordinary shares 0.4
Exchange (3.5)
------
Movement in net debt 15.1
Opening net debt (52.3)
------
Closing net debt (37.2)
====
Pensions
The Group continues to account for pensions under SSAP24. The profit and loss
charge of �3.6m (2001: �3.4m) includes the benefit of �4.4m (2001: �4.4m) of
amortisation of the �32m actuarial surplus in the main funded scheme, the TDG
UK Pension Scheme, as at April 2001.
Under FRS17 the profit and loss charge for 2002 would be �6.4m, comprising an
operating profit charge of �9.4m and a net benefit in interest of �3.0m. As a
result of the decline in equity markets the Group's defined benefit pension
schemes show a net pension liability at 31 December 2002 under FRS17 of �21.9m
after tax (2001: �9.1m net pension asset after tax). The net pension
liability is equal to 10% of the defined benefit schemes' assets.
We have taken steps to reduce the Group's exposure to defined benefit
liabilities, and the existing sections of the TDG Pension Scheme in the UK are
to be closed to new members from 5 April 2003. We will continue to monitor
the position. The next actuarial valuation for the TDG UK Pension Scheme will
be as at April 2004.
Consolidated Profit and Loss Account
Year Ended 31 December 2002
2001
2002 Exceptional
Exceptional items and
items and Headline goodwill Total
Headline Goodwill Total (Restated) (Restated) (Restated)
�'m �'m �'m �'m �'m �'m
Turnover
Continuing operations 562.3 - 562.3 524.2 - 524.2
Discontinued operation 4.3 - 4.3 5.8 - 5.8
566.6 - 566.6 530.0 - 530.0
Operating expenses (538.6) - (538.6) (498.3) - (498.3)
Rationalisation costs - (2.5) (2.5) - (3.5) (3.5)
Reorganisation and - - - - (4.9) (4.9)
acquisition integration
costs
Scio development costs - - - - (2.3) (2.3)
Amortisation of goodwill - - (1.7) (1.7) - (1.2) (1.2)
continuing
Amortisation of goodwill - - (0.1) (0.1) - (0.2) (0.2)
discontinued
Net operating expenses (538.6) (4.3) (542.9) (498.3) (12.1) (510.4)
Operating profit
Continuing operations 27.5 (4.2) 23.3 31.2 (11.9) 19.3
Discontinued operation 0.5 (0.1) 0.4 0.5 (0.2) 0.3
28.0 (4.3) 23.7 31.7 (12.1) 19.6
Exceptional items
Profit on sale of - 0.8 0.8 - 5.0 5.0
properties
Loss on disposal of
businesses
- continuing operations - - - - (1.4) (1.4)
Profit on disposal of
business
- discontinued operation - 3.3 3.3 - - -
Profit on ordinary 28.0 (0.2) 27.8 31.7 (8.5) 23.2
activities before interest
Net interest payable (5.4) - (5.4) (8.2) - (8.2)
Profit on ordinary 22.6 (0.2) 22.4 23.5 (8.5) 15.0
activities before tax
Tax on profit on ordinary (6.8) 1.3 (5.5) (7.0) 2.8 (4.2)
activities
Profit for the financial 15.8 1.1 16.9 16.5 (5.7) 10.8
year
Dividends including (10.0) (10.0)
non-equity
Transfer to reserves 6.9 0.8
Earnings per Ordinary Share
Basic 20.1p 21.5p 21.1p 13.8p
Diluted 20.0p 21.4p 20.9p 13.7p
Consolidated Balance Sheet
31 December 2002
2002 2001
(Restated)
�'m �'m �'m �'m
Fixed assets
Intangible assets 30.4 35.2
Tangible assets 223.0 244.0
Investments 1.6 1.9
255.0 281.1
Current assets
Stocks 1.3 1.3
Debtors 111.0 110.6
Bank deposits 24.3 5.9
Cash at bank 9.6 13.5
146.2 131.3
Creditors: amounts falling due within
one year
Borrowings 21.0 7.7
Other creditors 129.1 143.0
150.1 150.7
Net current liabilities (3.9) (19.4)
Total assets less current liabilities 251.1 261.7
Creditors: amounts falling due after
more
than one year
Borrowings 50.1 64.0
Deferred income 8.9 9.6
59.0 73.6
Provisions for liabilities and 10.7 14.6
charges
69.7 88.2
181.4 173.5
Capital and reserves
Equity share capital 0.8 0.8
Non-equity share capital 0.4 0.4
Called up share capital 1.2 1.2
Share premium 4.7 4.3
Revaluation reserve 18.9 20.6
Capital redemption reserve 51.4 51.4
Profit and loss account 105.2 96.0
Reserves attributable to equity 180.2 172.3
shareholders
181.4 173.5
Shareholders' funds
Equity 181.0 173.1
Non-equity 0.4 0.4
181.4 173.5
Consolidated Cash Flow Statement
Year ended 31 December 2002
2002 2001
�'m �'m �'m �'m
Net cash inflow from operating 35.8 63.0
activities (note 4)
Returns on investments and servicing
of finance
Interest received 0.2 0.5
Interest paid (4.9) (7.8)
Interest element of finance lease (0.8) (1.0)
payments
Net cash outflow from returns on
investments
and servicing of finance (5.5) (8.3)
Taxation (5.4) (5.7)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (17.9) (28.9)
Investment grants received 0.2 0.9
Sale of tangible fixed assets 12.7 40.2
Net movement on investments - 0.1
Net cash (outflow)/inflow from
capital expenditure
and financial investment (5.0) 12.3
Acquisitions and disposals 19.9 61.3
Sale of businesses 12.5 9.9
Purchase of businesses and (4.3) (15.3)
subsidiary undertakings
Net cash inflow/(outflow) from 8.2 (5.4)
acquisitions and disposals
Equity dividends paid (9.9) (9.9)
Cash inflow before use of liquid
resources
and financing 18.2 46.0
Management of liquid resources
Increase in short-term bank deposits
and bank
certificates of deposit (18.5) (1.2)
Financing
Issue of Ordinary Share capital 0.4 0.6
Purchase of own shares - (0.1)
Repayment of loan stock - (5.0)
Repayment of loan notes (1.4) (1.4)
Repayment of term loans (5.1) (47.7)
Capital element of finance lease (0.4) (0.6)
rental payments
Further draw down of medium-term 3.2 25.8
loans
New property finance lease - 0.7
(3.3) (27.7)
(Decrease)/increase in cash in the (3.6) 17.1
period
Reconciliation to net debt
(Decrease)/increase in cash in the (3.6) 17.1
period
Decrease in debt and lease financing 3.7 28.2
Cash inflow from increase in liquid 18.5 1.2
resources
Change in net debt resulting from 18.6 46.5
cash flows
Loans and finance lease obligations - (14.9)
of subsidiary undertakings
acquired during the year
Translation difference (3.5) 1.2
Decrease in net debt in the period 15.1 32.8
Net debt at 1 January (52.3) (85.1)
Net debt at 31 December (37.2) (52.3)
Statement of Total Recognised Gains and Losses
Year ended 31 December 2002
2002 2001
(Restated)
�'m �'m
Profit for the financial year 16.9 10.8
Net translation gains/(losses) on foreign currency net 0.6 (0.4)
Investments
Total gains and losses recognised for the year 17.5 10.4
Prior year adjustment (note 5) (13.1)
Total gains recognised since last Report & Accounts 4.4
Reconciliation of Movements in Shareholders' Funds
Year ended 31 December 2002
2002 2001
�'m (Restated)
�'m
Profit for the financial year 16.9 10.8
Dividends (10.0) (10.0)
Net translation gains/(losses) on foreign currency net 0.6 (0.4)
investments
Equity share capital issued 0.4 0.6
Purchase of own shares - (0.1)
Net increase in shareholders' funds 7.9 0.9
Shareholders' funds at 1 January after prior year
adjustment of �13.1m
in 2002 and �14.4m in 2001 (note 5) 173.5 172.6
Shareholders' funds at 31 December 181.4 173.5
Segmental Analysis
Year ended 31 December 2002
2002 2001
Operating Net Operating Net
Business activities Turnover Profit Assets Turnover Profit Assets
Continuing operations �'m �'m �'m �'m �'m �'m
Contract Logistics
UK & Ireland 330.0 18.4 101.2 282.7 21.0 96.8
European Chemicals 109.1 5.7 33.5 99.0 5.1 36.0
France 43.8 (1.4) 14.6 39.5 (0.6) 18.7
Netherlands 55.1 1.9 50.4 61.8 2.0 48.8
538.0 24.6 199.7 483.0 27.5 200.3
UK Storage 24.3 2.9 25.6 41.2 3.7 29.9
562.3 27.5 225.3 524.2 31.2 230.2
Discontinued operation 4.3 0.5 4.0 5.8 0.5 10.2
566.6 28.0 229.3 530.0 31.7 240.4
Amortisation of goodwill (1.8) (1.4)
Exceptional operating (2.5) (10.7)
costs
566.6 23.7 229.3 530.0 19.6 240.4
Geographical analysis
United Kingdom
Continuing operations 400.6 25.6 146.5 388.1 29.0 153.9
Discontinued operation 4.3 0.5 4.0 5.8 0.5 10.2
404.9 26.1 150.5 393.9 29.5 164.1
Continental Europe 161.7 1.9 78.8 136.1 2.2 76.3
566.6 28.0 229.3 530.0 31.7 240.4
Amortisation of goodwill
United Kingdom (0.3) (0.4)
Continental Europe (1.5) (1.0)
(1.8) (1.4)
Exceptional operating
costs
United Kingdom - (8.6)
Continental Europe (2.5) (2.1)
566.6 23.7 229.3 530.0 19.6 240.4
Net asset reconciliation
As above 229.3 240.4
Net borrowings (37.2) (52.3)
Provisions for liabilities and charges (2001 (10.7) (14.6)
restated note 5)
Shareholders' funds 181.4 173.5
The discontinued operation relates to the Data Services business sold in August
2002.
Notes on the accounts
1. Profit and loss accounts in overseas currencies have been translated
into sterling at the average rate for the year. Assets and liabilities are
translated at exchange rates ruling at the year end.
Tax
2002 2001
(Restated)
�'m �'m �'m �'m
The tax charge is based on the profit
on ordinary activities for the
year and is made up as follows:
United Kingdom corporation tax at 30% 7.0 4.5
(2001 30%)
Overseas tax 2.1 0.1
Deferred tax (0.5)
(2.3)
Prior year United Kingdom corporation - 0.1
tax
Prior year overseas tax - 0.3
Prior year deferred tax - (0.3)
6.8 4.2
Analysed as:
Tax charge on headline profit on 6.8 7.0
ordinary activities
Tax credit on exceptional operating - (2.8)
costs
6.8 4.2
Tax charge in respect of exceptional
items:
United Kingdom corporation tax 0.2 0.5
Overseas tax - 1.0
Deferred tax (1.5) (1.5)
(1.3) -
5.5 4.2
3. Earnings per Ordinary Share
The calculations of earnings per Ordinary Share are based on the
following earnings and number of shares in issue:
2002 2001
Earnings per Earnings per share
share
(Restated) (Restated) (Restated)
�'m Basic Diluted �'m Basic Diluted
Profit for the financial year 16.9 21.5p 21.4p 10.8 13.8p 13.7p
Net exceptional items and (1.1) 5.7
goodwill amortisation
Headline earnings 15.8 20.1p 20.0p 16.5 21.1p 20.9p
Adjusted (headline) earnings per share is shown by reference to
earnings before amortisation of goodwill, operating and non operating
exceptional items and the related tax. The Directors consider that this
provides a more meaningful measure of the underlying performance of the Group.
2002 2001
'000 '000
Weighted average shares in issue in year 78,723 78,330
Calculation of shares under option per FRS 14 386 689
Diluted weighted average shares in year 79,109 79,019
4. Reconciliation of operating profit to net cash inflow from operating
activities
2002 2001
Continuing Discontinued Continuing Discontinued
operations operation Total operations operation Total
�'m �'m �'m �'m �'m �'m
Operating profit 27.5 0.5 28.0 31.2 0.5 31.7
before exceptional
operating costs and
amortisation of
goodwill
Depreciation charge 23.0 0.2 23.2 27.1 0.4 27.5
Profit on sale of (0.6) - (0.6) (1.6) - (1.6)
tangible fixed assets
Release of investment (0.9) - (0.9) (0.7) - (0.7)
grants
Decrease in stocks - - - 0.4 - 0.4
(Increase)/decrease (4.0) 0.8 (3.2) 18.5 (0.9) 17.6
in debtors
(Decrease)/increase (5.2) (0.8) (6.0) (5.2) 0.8 (4.4)
in creditors
39.8 0.7 69.7 0.8 70.5
40.5
Reorganisation and acquisition integration (3.0) (1.7)
costs
Rationalisation costs - (1.5) (3.5)
UK
Rationalisation costs - (0.2) -
France
Scio development costs - (2.3)
(4.7) (7.5)
Net cash inflow from operating 35.8 63.0
activities
5. Prior year adjustment
Financial Reporting Standard 19 'Deferred Tax' (FRS 19) has been
adopted for the first time by the Group in this annual report.
In previous years the Group has complied with SSAP 15 'Accounting for
deferred tax'.
FRS 19 requires full provision to be made for deferred tax arising from
timing differences between the recognition of gains and losses in the financial
statements and their recognition in tax computations.
At 31 December 2000 and 31 December 2001 the provision for liabilities
and charges has been restated resulting in an increase of �14.4m and �13.1m
respectively and a decrease in reserves attributable to equity shareholders of
�14.4m and �13.1m respectively.
The tax charge in the profit and loss account for the year ending 31
December 2001 has been restated to increase the tax charge on headline profits
by �0.2m and reduce the tax charge on exceptional items by �1.5m.
The effect on the tax charge in 2002 of implementing FRS 19 is to
increase the tax charge on headline profits by �0.2m and reduce the tax charge
on exceptional items by �1.4m.
6. Dividends paid and proposed
2002 2001
p per share �'m p per share �'m
Equity
Ordinary shares (1p shares)
Interim paid 5.25 4.1 5.25 4.1
Proposed final 7.40 5.9 7.40 5.9
12.65 10.0 12.65 10.0
7. Preliminary announcement
The financial information set out in the announcement does not constitute
the Company's statutory accounts for the years ended 31 December 2001 or 31
December 2002. The financial information for the year ended 31 December 2001
is derived from the statutory accounts for that year which have been delivered
to the Registrar of Companies. The financial information for the year ended
31 December 2002 is derived from the statutory accounts for that year which
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting. The auditors have reported on the statutory accounts for
both years; their report was unqualified in both years and did not contain a
statement under either Section 237(2) or Section 237(3) of the Companies Act
1985.
The preliminary announcement was approved by the Board of Directors on 26
February 2003.
END