RNS No 3374f
UNITED CARRIERS GROUP PLC
23rd September 1998
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1998
CHAIRMAN'S STATEMENT
SUMMARY
In line with my statement at our Annual General Meeting, I am extremely
disappointed to report that the Group has incurred losses before tax of #5.9m
for the six months ended 30 June 1998 after one-off reorganisation costs of
#2.9m. These have arisen within the UK Parcels Network following the poor
implementation of its critical restructuring in February. The Board has
reacted swiftly with the appointment of a new Group Managing Director, Russell
Hodgson. His impact has been immediate, with service levels restored and a
material reduction in the cost base.
The Board has decided that due to these results, no interim dividend will be
declared.
Six Months to Year to
30 June 1998 30 June 1997 31 Dec 1997
Turnover #61.2m #65.6m #133.8m
(Loss)/Profit before
tax# (5.9)m #1.3m #2.2m
(Loss)/Earnings per
share (19.9)p 3.1p 5.7p
Dividend nil 1.7p 3.5p
Gearing 70.1% 38.6% 39.8%
Net Assets per share 59p 76p 79p
Russell Hodgson, Group Managing Director says:
"We have achieved our initial aim to improve our service performance
dramatically, enabling the business to reach record service levels. Total
customer satisfaction will be the area which will differentiate United
Carriers within its chosen market sector."
Enquiries to: Doug Rogers, Chairman (mobile: 0836 512 724)
Russell Hodgson, Group Managing Director (mobile:0411 492 884)
Bill Alexander, Group Finance Director (mobile: 0411 492 518)
RESULTS
In my previous statement dated 16 March 1998, I stressed that in the early
part of this year, we would see the completion of the most important phase of
the restructuring of the UK parcels business. In my statement at the AGM, I
confirmed that the implementation of this critical phase was extremely
disappointing and resulted in a decline in service levels which had a
substantial impact on the results for the first half of this year. The Board
reacted early and swiftly with the appointment of a new Managing Director in
Russell Hodgson, in addition to an experienced management team which he
brought in following his appointment. The impact of this was immediate, with
service performance reaching its highest ever level combined with a material
reduction in the cost base of the business.
The Board has been enormously encouraged by the achievements of this team in a
relatively short period and has every confidence in their ability to deliver
successfully the ongoing strategy of the Group. Overall, the remainder of the
Group's businesses continue to be profitable.
The Group, in the first half of 1998, has posted a loss before tax of #5.9m
compared with a profit of #1.3m in the same period of last year. This
reduction was entirely due to the poor implementation of the Group's strategy
concerning its UK parcels business and includes a reorganisation charge of
#2.9m relating to one-off costs. The loss per share was 19.9p against an
earnings per share in 1997 of 3.1p. A taxation charge of #0.8m resulted from
the write-off of advance corporation tax.
The Group's balance sheet remains strong with net assets of 59p a share. Its
gearing rose to 70.1% against 38.6% in the same period last year. Interest
charges also rose reflecting the higher level of borrowings within the Group.
Our bankers are supportive and ongoing facilities have been renewed.
DIVIDEND
The Board has decided that due to the results in the first half of the year,
no dividend will be declared (1997 : 1.7p).
UK PARCELS NETWORK
The UK Parcels Network is our largest operation and our strategy remains that
of repositioning the Network from a Three Day to a Next Day carrier. The most
important phase of this restructuring was the opening of our hub in
Wellingborough which commenced in February of this year but its implementation
has been a great disappointment. During the following two months, service
performance fell to unacceptable levels which resulted in an increase in the
Network's costs and the loss of a number of previously loyal customers.
Since Russell Hodgson's appointment, he has replaced members of the Network's
board with experienced express parcels management. This team has previously
worked together and has managed the implementation and level of change that is
still required by United Carriers.
The impact has been immediate. Service performance has not only been restored
to historical levels, but record highs have been achieved. As a result,
stability in the customer base has been secured and confidence restored. In
addition, substantial costs have been removed from the Parcels Network.
We believe that the market sector in which we operate now requires a carrier
which is customer facing and service led. Our strategy remains that of
providing this via a network infrastructure and management information systems
capable of meeting the demands of our customers.
INTERNATIONAL PARCELS
International Services continues to progress satisfactorily and remains
profitable. We continue to experience volume growth in this strategically
important market our European partner, General Parcel, continues to grown and
remains focused on providing a high quality service throughout Europe.
CARPET EXPRESS
During the first half of 1998, the carpet market experienced extremely tough
trading conditions, with many of Carpet Express' customers experiencing lower
volumes. By maintaining exceptionally high service levels, Carpet Express has
continued to gain further new contracts during this period and as a
consequence saw volumes rise over the corresponding period last year. The
business maintains its market leadership and continues to make a positive
contribution to the Group's results.
DISCONTINUED OPERATIONS
Mansped Limited was sold to Autologic Holdings plc on 15 August 1998. The
business was sold for a total cash consideration of #2.3m, including #0.5m
which is to be paid following and subject to preparation of completion
accounts. At 31 December 1997, Mansped had net assets of #0.5m and had
returned a small loss for the year.
Mansped is a European logistics provider to the automotive industry and as
such did not form part of the Group's core activities.
BOARD CHANGES
There have been a number of changes to the Board during 1998. Following the
departure of John Toyne on 19 March, Russell Hodgson joined the Group as
Executive Director on 27 April. David Edwards left the business on 5 June and
Russell was appointed as Group Managing Director on 1 September 1998. He has
extensive experience of the parcels industry with Parceline and more recently,
Securicor.
Following the sale of Mansped in August, Jim Painter (Managing Director of the
Specialist Division) has resigned as a Director of the Group, effective 1
September.
We now firmly believe that the current Board has the experience and vision to
complete the strategy that United Carriers has followed over the past three
years.
ADVISORS
The Group is pleased to announce the appointment of Peel Hunt & Company as
corporate brokers.
PROSPECTS
These results are extremely disappointing, but the Board has responded swiftly
and now feels confident that the right team is in place. Service levels have
been restored whilst material costs have been removed from the UK Parcels
Network. Overall, the remaining businesses continue to be profitable. The
economy continues to remain flat and parcel volumes are slightly behind
expectations. There are signs particularly within the carpet market that
business is picking up.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six Months to Year to
30 June 30 June 31 Dec
1998 1997 1997
#'000 #'000 #'000
Turnover
Continuing operations 50,998 51,702 107,347
Discontinued operations 10,187 13,851 26,437
---------- -------- --------
61,185 65,553 133,784
---------- -------- --------
Operating (loss)/profit
Continuing operations -
normal (2,528) 1,839 3,145
Continuing operations -
exceptional 0 0 625
Discontinued operations 48 (81) (5)
---------- -------- --------
(2,480) 1,758 3,765
Reorganisation costs (2,868) 0 (600)
Interest payable (598) (464) (978)
---------- -------- --------
(Loss)/Profit on ordinary
activities
before taxation (5,946) 1,294 2,187
Taxation (807) (259) (256)
---------- -------- --------
(Loss)/Profit for the
financial period (6,753) 1,035 1,931
Dividends 0 (576) (1,186)
---------- -------- --------
Retained (loss)/profit (6,753) 459 745
---------- -------- --------
(Loss)/Earnings per share(p)
(note 2) (19.9) 3.1 5.7
---------- -------- --------
Dividends per ordinary
share(p) 0.0 1.7 3.5
---------- -------- --------
CONSOLIDATED BALANCE SHEET
As at As at As at
30 June 30 June 31 Dec
1998 1997 1997
#'000 #'000 #'000
Fixed assets
Tangible 25,364 23,981 26,063
Investments 38 46 41
-------- -------- --------
25,402 24,027 26,104
Current assets
Properties held for resale 368 818 368
Stock 745 748 795
Debtors 26,512 26,903 29,080
-------- -------- --------
27,625 28,469 30,243
Creditors:
Amounts falling due within
one year (25,817) (20,878) (22,328)
-------- -------- --------
Net current assets 1,808 7,591 7,915
-------- -------- --------
Total assets less current
liabilities 27,210 31,618 34,019
Creditors:
Amounts falling due after
more than one year (6,046) (5,975) (6,200)
Provisions for liabilities
and charges (1,034) (50) (886)
-------- --------- --------
Net assets 20,130 25,593 26,933
-------- --------- --------
Capital and reserves
Called up share capital 1,694 1,694 1,694
Share premium account 5,791 5,791 5,791
Revaluation reserve 1,275 428 1,275
Other reserves 10,636 10,844 10,636
Profit and loss account 734 6,836 7,537
-------- -------- --------
Shareholders' funds 20,130 25,593 26,933
-------- -------- --------
Gearing 70.1% 38.6% 39.8%
CONSOLIDATED CASHFLOW STATEMENT
Six Months Ended Year Ended
30 June 30 June 31 Dec
1998 1997 1997
#'000 #'000 #'000
Operating activities
Operating (loss)/profit (5,348) 1,758 3,765
Depreciation 2,216 2,267 4,535
Net payment relating to
pension schemes 76 (143) (441)
Reversal of revaluation deficit
charged in previous years 0 0 (625)
Loss on sale of fixed assets 44 27 (25)
Decrease in stock 50 42 (5)
(Increase)/decrease in debtors 1,544 432 (883)
Increase/(decrease) in creditors 928 (1,936) (1,229)
------- --------- --------
Net cash inflow from operating
activities (490) 2,447 5,092
-------- --------- --------
Returns on investment and
servicing of finance
Interest paid (250) (52) (276)
Interest element of finance
lease rentals (348) (349) (702)
-------- --------- --------
(598) (401) (978)
-------- --------- --------
Corporation tax (144) (60) (248)
Capital expenditure and
financial investment
Payments to acquire
tangible fixed assets (1,202) (1,267) (2,054)
Receipts from sale of property
held for resale 0 0 450
Receipts from sales of fixed
assets 196 268 510
Receipts from sales of
investments 3 0 0
Deferred acquisition costs 0 0 (99)
-------- --------- ---------
(1,003) (999) (1,193)
--------- --------- ---------
Equity dividends paid (610) (610) (1,186)
--------- --------- ---------
Financing
Receipts from borrowings 0 700 700
Capital element of finance
lease rentals (1,200) (1,454) (2,980)
--------- --------- ---------
(1,200) (754) (2,280)
--------- --------- ---------
Decrease in cash in the period (4,045) (377) (793)
--------- --------- ---------
UNITED CARRIERS GROUP PLC
NOTES
1. Basis of Preparation
The financial information for the half year to 30 June 1998 and the
comparative figures for the half year to 30 June 1997 are unaudited and
have been prepared on the basis of the accounting policies set out in the
statutory accounts for the year to 31 December 1997. This financial
information does not constitute statutory accounts as defined in Section
240 of the Companies Act, 1985. The financial information for the year
to 31 December 1997 is extracted from the statutory accounts for that
period which, together with an unqualified audit report have been
delivered to the Registrar of Companies.
2. (Loss)/Earnings per share
(Loss)/Earnings per share calculations of (19.9)p (1996: 3.1p) are based
on a 1998 loss of (#6,753,000) (1997: profit #1,035,000) and an average
number of shares in issue of 33,879,163.
3. Copies of the Interim Report will be sent to all the shareholders as soon
as possible following the announcement.
Further copies may be obtained from the Company Secretary, United
Carriers Group PLC, PO Box 10, Turnells Mill Lane, Wellingborough,
Northants, NN8 2QQ.
END
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