Interim Results
November 12 2003 - 2:00AM
UK Regulatory
RNS Number:9583R
Wincanton PLC
12 November 2003
12 November 2003
WINCANTON plc
Interim Results
for the half year ended 30 September 2003
"A stronger platform for growth"
2003 2002 % change
#m #m
Turnover 845.4 389.2 +117.2%
Adjusted operating profit 19.8 15.1 +31.1%
Interest charge (net) (6.6) (1.3)
Adjusted profit before tax 13.2 13.8 (4.3%)
Adjustments (note 1) (1.5) 2.0
Profit before tax 11.7 15.8
Adjusted earnings per share 7.0p 8.5p (17.6%)
Basic earnings per share 5.9p 9.7p
Dividend per share 3.48p 3.31p +5.1%
Note 1. Operating profit, profit before tax and earnings per share have been
adjusted to exclude pension credit #2.0m, operating exceptional items #(2.8)m
and goodwill amortisation #(0.7)m
OPERATIONAL HIGHLIGHTS
* Acquisition integration continues on track
Gross UKI cost savings of #4.0m per annum identified to date, double
the initial target
Steps taken to address under-performing activities within German road
and logistics business
* Good business wins in both UKI and Continental Europe with particular
progress in new services
* Business development activity remains at high levels despite
challenging market conditions
FINANCIAL HIGHLIGHTS
* 31.1% increase in adjusted operating profit reflects change in scale
and scope of the new Group
* Prior year pre-tax and earnings comparisons affected by higher
interest charge, exceptional restructuring charges and minority interest
deduction
* Strong cash flow performance; #38.6m reduction in net debt to #109.1m
at 30 September 2003
* Adjusted pre-tax profit and earnings performance expected to be
weighted towards the second half
* Interim dividend up 5.1% to 3.48p per share
Commenting on the results, Paul Bateman, Wincanton's Chief Executive, said:
"Our recent acquisition makes us a leading pan-European operator in our sector
and we are successfully building a stronger platform for growth. Good progress
has already been made and there is much more that can and will be done to
deliver the full potential of the enlarged Group."
For further enquiries please contact:
Wincanton
Paul Bateman, Chief Executive
Gerard Connell, Group Finance Director
Charles Carr, Group Corporate Communications Director
+44 (0) 1963 828282
Buchanan Communications
Charles Ryland/Jeremy Garcia
+44 (0) 207 466 5000
WINCANTON PLC
HALF YEAR REVIEW
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2003
Introduction
The enlarged Wincanton is now one of the leading supply chain management
companies in Europe, with a blue-chip customer base, operations in 15 countries
and a growing range of services. The first half year has not been without its
challenges, but we have successfully continued the integration of the recently
acquired businesses, creating a stronger platform for future growth.
A 31.1% increase in adjusted operating profit reflects the significant change in
scale and scope of the Group's operations. Our focus on improving cash flow is
showing early results, with net debt reduced to #109.1m at 30 September 2003
from #147.7m at 31 March 2003.
Dividend
The Board has declared an interim dividend of 3.48p per share, an increase of
5.1% on last year's interim dividend of 3.31p per share. This will be paid on
14 January 2004 to shareholders on the register as at 12 December 2003.
Operational review
Since completing the Trans European acquisition, we have concentrated on four
objectives:
* to maximise the benefits of integrating our operations in the UK and
Ireland
* to address under-performing operations in Continental Europe
* to improve asset efficiency and enhance cash flow generation
* to accelerate new business win momentum across countries, sectors and
services.
Good progress has already been made in all these areas, and there is much more
that can and will be done to deliver the full potential of the enlarged Group.
We now expect the gross savings arising from the UK integration to be not less
than #4.0m per annum, double our initial target. Opportunities to achieve
further savings remain under active review. Whilst there will be incremental
investment in areas such as marketing and business development, the net impact
of these savings will nonetheless represent a useful contribution to future
profits.
Plans prepared to address under-performance in certain of our operations in
Continental Europe are being implemented, with clear improvements already being
achieved in many areas. We expect, for example, to see better performance in
the second half from those activities within German road and logistics which
have been a particular area of initial focus .
Our plans to improve cash flow and reduce asset intensity have begun to show
encouraging results, with a #38.6m reduction in net debt in the first half.
Progress has also been made in utilising vacant space within the warehousing
operations of the acquired businesses, particularly in the UK. We remain
confident that improved profit and cash flow performance can be generated from
the significant asset base of the enlarged Group.
In the UK and Ireland, the first half saw the successful commencement of
operations, in respect of a number of previously announced contract wins, for
Matalan, Lever Faberge, Somerfield and Dairy Crest. Contracts were also
successfully renewed or extended with customers such as Tesco and Waitrose. New
wins in the period included Next, Stylo and GGP and, for Pullman Fleet Services,
Tesco, Sainsbury and Booker. There were also a number of encouraging successes
in some of our newer service areas. A new contract for Marks & Spencer,
managing their in-store fittings on a national basis, added to business
previously won with B&Q in this sector. KNW Retail Solutions, our joint venture
in inbound logistics, won a supply chain management contract with Hamleys.
Consilium, our recently launched consultancy operation, has been working on a
number of advisory assignments, including a supply chain review for Focus.
Good progress was also reported in data records management and waste management,
two new activities for Wincanton that came with our recent acquisition, both of
which have considerable potential. In waste management, new contracts for
fridge recycling were awarded by a number of local councils, adding to the
national fridge collection and recycling operation already successfully launched
for Comet.
In Continental Europe we are beginning to re-build new business win momentum, at
pan-European, international and national level, supported by the sector and
service specialists in our UK and Ireland operations.
Particular progress has been made in adding further business to existing
pan-European and 4PL supply chain management contracts in the chemical,
automotive and capital equipment sectors. Such contracts increasingly represent
a significant part of our operations, contributing some #80m of turnover in the
first half, approximately 24% of Continental European turnover.
New international operations were launched in the first half across Poland,
Hungary, the Czech Republic and Slovakia for Philips and another multinational
consumer electronics company. In national markets new business has been gained
with Bestfoods and Systeme U in France, with Dow in Belgium and with a leading
health insurance company and the in-house logistics operation of KarstadtQuelle
in Germany.
Financial review
Group adjusted operating profit of #19.8m represented a 31.1% increase on last
year. Turnover in the UK and Ireland, at #515.8m, increased by 32.5% from the
#389.2m reported in the first half last year, substantially as a result of the
Trans European acquisition. Our road and logistics operations in Continental
Europe reported turnover of #265.9m. Total turnover in Continental Europe was
#334.1m including a #68.2m contribution from the intermodal activities.
Profit progress in the UK and Ireland was restricted by volume reduction in our
chilled consolidation operations and contract losses. Although higher pension
and national insurance contributions were generally recovered from UK customers
there was an adverse effect upon the indirect element of our cost base. New
business wins and cost savings from integration are expected to contribute to a
stronger second half.
Low water levels in the Rhine, which at the end of September was at its lowest
since 1947, severely disrupted barge traffic. This resulted in a reduced
contribution from our intermodal activities which offset profit improvement in
the German road and logistics business. Although the full year result from the
intermodal operations may be up to Euro2m below our previous expectations, we
anticipate better results from the German operations as a whole in the second
half. Elsewhere in Continental Europe there were good performances in Poland,
Hungary and in our pan-European and 4PL operations. Lower volumes in Spain and
parts of our French activities, however, led to profit coming in below our
expectations in these countries.
The increased interest charge of #6.6m in the first half reflects the higher
levels of Group debt following our recent acquisition. This is the principal
factor behind the 4.3% reduction in adjusted pre-tax profit at the interim
stage. We expect profit and earnings performance to be weighted towards the
second half of the year. #2.8m of operating exceptional items relate largely to
post-acquisition restructuring measures in the UK and Ireland.
We will continue to focus on enhancing the free cash flow and capital efficiency
of the enlarged Group. Gross capital expenditure in the period was 58% of
depreciation. The capital base was further reduced through property disposals
and working capital improvements. We expect the progressive de-gearing of the
balance sheet to have a positive effect upon the interest charge, and therefore
upon the potential for pre-tax profit growth.
Outlook
Integration of our new businesses is progressing well. Cost reductions are
being achieved and our focus on profitable growth is improving performance and
returns on capital. Cash flow is strong, we are reducing debt and levels of new
business enquiry are encouraging. We are building a stronger platform for
future growth.
Our markets remain challenging and competitive. We nonetheless look forward to
a year of progress for the enlarged Group.
Victor Benjamin
Chairman
11 November 2003
WINCANTON PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
Note #m #m #m
Turnover 3 845.4 389.2 998.0
Operating profit before pension credit, goodwill
amortisation and exceptional items 3 19.8 15.1 33.3
Pension credit 3 2.0 2.0 4.0
Goodwill amortisation (0.7) - (0.3)
Operating exceptional items 4 (2.8) - (5.3)
Operating profit 18.3 17.1 31.7
Net interest payable and similar charges (6.6) (1.3) (5.0)
Profit on ordinary activities before taxation 11.7 15.8 26.7
Tax on profit on ordinary activities 6 (3.9) (4.7) (6.1)
Profit on ordinary activities after taxation 7.8 11.1 20.6
Equity minority interests (1.0) - (0.5)
Profit for the financial period 6.8 11.1 20.1
Dividends 10 (4.0) (3.8) (11.6)
Retained profit for the financial period 2.8 7.3 8.5
Earnings per share 5
- basic 5.9p 9.7p 17.5p
- diluted 5.9p 9.6p 17.4p
Earnings per share before exceptional items and
goodwill amortisation
- basic 8.2p 9.7p 18.9p
- diluted 8.2p 9.6p 18.7p
Earnings per share before exceptional items,
goodwill amortisation and excluding pension
credit
- basic 7.0p 8.5p 16.5p
- diluted 7.0p 8.4p 16.3p
All operations in the above financial periods were continuing.
WINCANTON PLC
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2003 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
Note #m #m #m
Fixed assets
Intangible assets 27.6 - 24.7
Tangible assets 268.3 145.1 286.5
Investments 0.8 - 1.2
296.7 145.1 312.4
Current assets
Stocks 7.3 3.8 7.3
Debtors 284.6 99.1 281.7
Cash at bank and in hand 9 47.7 24.9 37.0
339.6 127.8 326.0
Creditors: amounts falling due within one year
Borrowings (30.3) (12.4) (25.6)
Other creditors (358.8) (161.7) (338.3)
(389.1) (174.1) (363.9)
Net current liabilities (49.5) (46.3) (37.9)
Total assets less current liabilities 247.2 98.8 274.5
Creditors: amounts falling due after more than one year
Borrowings (126.5) (20.3) (159.1)
Other creditors (2.7) - (3.2)
Provisions for liabilities and charges (89.9) (62.5) (87.8)
Net assets 28.1 16.0 24.4
Capital and reserves
Called up share capital 11.5 11.5 11.5
Share premium reserve 1.0 - 0.3
Merger reserve 3.5 3.5 3.5
Profit and loss account 3.9 1.0 1.7
Equity shareholders' funds 19.9 16.0 17.0
Equity minority interests 8.2 - 7.4
28.1 16.0 24.4
WINCANTON PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
Note #m #m #m
Cash inflow from operating activities 7 57.4 31.4 70.4
Returns on investments and servicing of finance 8 (6.2) (1.0) (3.9)
Taxation (4.4) (3.2) (10.4)
Capital expenditure (net) 8 3.5 (0.7) (8.5)
Acquisitions 8 (3.2) - (143.2)
Dividends paid (7.8) (7.3) (11.1)
Cash inflow/(outflow) before financing 39.3 19.2 (106.7)
Management of liquid resources 8 (13.5) (6.7) (4.0)
Financing 8 (28.6) (12.9) 125.1
(Decrease)/increase in cash in the financial (2.8) (0.4) 14.4
period
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
Note #m #m #m
(Decrease)/increase in cash in the financial (2.8) (0.4) 14.4
period
Decrease/(increase) in debt and lease financing 29.3 12.9 (124.8)
Increase in liquid resources 13.5 6.7 4.0
Change in net debt resulting from cash flows 40.0 19.2 (106.4)
Loans and finance leases acquired - - (9.8)
New finance leases - - (0.2)
Translation difference (1.4) - (4.3)
Movement in net debt in the financial period 38.6 19.2 (120.7)
Net debt at the start of the financial period (147.7) (27.0) (27.0)
Net debt at the end of the financial period 9 (109.1) (7.8) (147.7)
WINCANTON PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
Note #m #m #m
Profit for the financial period
Group 6.8 11.1 20.1
Gross exchange differences on the retranslation of
net investments and related borrowings (0.6) - (0.5)
Total recognised gains and losses relating to the
financial period 6.2 11.1 19.6
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
Note #m #m #m
Profit for the financial period 6.8 11.1 20.1
Dividend 10 (4.0) (3.8) (11.6)
Retained profit for the financial period 2.8 7.3 8.5
Other recognised gains and losses (0.6) - (0.5)
Issue of share capital 0.7 - 0.3
Net addition to equity shareholders' funds 2.9 7.3 8.3
Opening equity shareholders' funds 17.0 8.7 8.7
Closing equity shareholders' funds 19.9 16.0 17.0
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2003 (UNAUDITED)
1 STATUS OF INTERIM REPORT
The Interim Report was approved by the Board on 11 November 2003. The
financial information set out herein is unaudited but has been reviewed by
the auditors and their report to the Company is set out on page 13.
The financial information contained in the Interim Report does not
constitute statutory accounts. The comparative figures for the half year
ended 30 September 2002 have been extracted from the Group's Interim Report
for that period. The figures for the year ended 31 March 2003 have been
extracted from the Group's audited financial statements for that year which
have been delivered to the Registrar of Companies. The auditors' report
was unqualified and did not contain a statement under section 237 (2) or
(3) of the Companies Act 1985.
2 BASIS OF PREPARATION
The financial information contained in the Interim Report has been prepared
on the basis of the accounting policies set out in the Group's audited
financial statements for the year ended 31 March 2003.
3 SEGMENTAL INFORMATION
Turnover Operating Profit
Half year Half year Year Half year Half year Year
ended ended ended ended ended ended
30 Sept 30 Sept 31 March 30 Sept 30 Sept 31 March
2003 2002 2003 2003 2002 2003
#m #m #m #m #m #m
UK & Ireland 515.8 389.2 851.2 18.0 15.1 32.0
Continental Europe 334.1 - 148.8 1.8 - 1.3
- less share of joint ventures and
associates (4.5) - (2.0) - - -
845.4 389.2 998.0 19.8 15.1 33.3
Pension credit 2.0 2.0 4.0
Goodwill amortisation (0.7) - (0.3)
Operating profit before exceptional
items 21.1 17.1 37.0
Operating exceptional items (note 4) (2.8) - (5.3)
Profit on ordinary activities before
interest 18.3 17.1 31.7
UK & Ireland 17.3 17.1 30.6
Continental Europe 1.0 - 1.1
The segmental analysis set out in this note is given on a geographical
basis only as this is the basis on which the business is now managed
following the Trans European acquisition.
The pension credit adjusted in the analysis above is the variation credit
to the regular cost arising under SSAP 24 'Accounting for Pension Costs'.
Operating profit after pension credit, goodwill amortisation and operating
exceptional items includes the Group's share of the operating profit of
joint ventures and associates of #(0.1)m (2002:#nil).
4 EXCEPTIONAL ITEMS
Half year ended Half year ended Year ended
30 Sept 30 Sept 31 March
2003 2002 2003
#m #m #m
Operating exceptional items
Reorganisation of operating structure post acquisition (2.8) - (2.9)
Write down of an investment in a suite of supply chain
software programmes - - (2.4)
(2.8) - (5.3)
The tax effect of the exceptional items is a credit of #0.8m (2002:#nil).
5 EARNINGS PER SHARE
Earnings per share are calculated on the basis of earnings of #6.8m
(2002: #11.1m), basic weighted average shares of 115.1m (2002: 114.8m) and
diluted weighted average shares of 115.6m (2002: 116.2m).
6 TAXATION
Half year ended Half year ended Year ended
30 Sept 30 Sept 31 March
2003 2002 2003
#m #m #m
Corporation tax
Current tax on income for the financial period 4.2 4.7 8.6
Adjustments in respect of prior financial periods (0.3) - (2.5)
Tax on profit on ordinary activities 3.9 4.7 6.1
7 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
Half year Half year
ended ended Year ended
30 Sept 2003 30 Sept 2002 31 March 2003
#m #m #m
Operating profit 18.3 17.1 31.7
Depreciation 19.2 13.3 28.6
Goodwill amortisation 0.7 - 0.3
Increase in stocks - - (0.2)
Decrease/(increase) in debtors 5.0 5.6 (13.6)
Increase/(decrease) in creditors 13.6 (3.4) 21.7
Increase/(decrease) in provisions 0.6 (1.2) 0.1
Loss on sale of fixed assets including the impact of the
exceptional software asset write down (note 4) - - 1.8
Net cash inflow from operating activities 57.4 31.4 70.4
8 ANALYSIS OF CASH FLOWS
Half year Half year
ended ended Year ended
30 Sept 2003 30 Sept 2002 31 March 2003
#m #m #m
Returns on investments and servicing of
finance
Interest received 0.3 0.4 1.0
Interest paid (5.9) (1.3) (4.7)
Interest element of finance lease rental (0.1) (0.1) (0.2)
payments
Dividends paid to equity minority interests (0.5) - -
(6.2) (1.0) (3.9)
Capital expenditure
Purchase of tangible assets (11.2) (6.3) (17.7)
Sale of tangible assets 14.6 5.6 9.2
Repayment of loans by joint ventures 0.1 - -
3.5 (0.7) (8.5)
Acquisitions (note 11)
Purchase of Rhinecontainer/ Trans European (3.5) - (158.4)
Cash acquired with Rhinecontainer/ Trans 0.3 - 15.2
European
(3.2) - (143.2)
Management of liquid resources
Increase in cash deposits held by the captive insurer (13.5) (6.7) (4.0)
Financing
(Decrease)/increase in borrowings (29.1) (12.5) 125.9
Capital element of finance lease rental payments (0.2) (0.4) (1.1)
Issue of share capital 0.7 - 0.3
(28.6) (12.9) 125.1
9 ANALYSIS OF NET DEBT
30 Sept 30 Sept 31 March
2003 2002 2003
#m #m #m
Cash at bank and in hand 12.5 0.5 15.3
Cash deposits held by the Group's captive insurer 35.2 24.4 21.7
47.7 24.9 37.0
Finance leases - due within one year (1.8) (1.1) (1.3)
- due after one year (0.2) (1.0) (0.9)
Debt - due within one year (28.5) (11.3) (24.3)
- due after one year (126.3) (19.3) (158.2)
Total (109.1) (7.8) (147.7)
10 DIVIDENDS
An interim dividend of 3.48p per share will be paid on 14 January
2004 to shareholders on the register at 12 December 2003.
The dividend charge of #11.6m for the year ended 31 March 2003 is
the aggregate of an interim dividend of 3.31p per share paid on 8 January
2003 and a final dividend of 6.75p per share paid on 13 August 2003.
11 ACQUISITIONS
On 31 December 2002 the Group acquired P&O Trans European on a debt free
basis for #152.5m in cash plus #5.9m of costs and other incidental
settlement items. The resulting goodwill of #24.3m has been capitalised and
will be written off over 20 years in line with standard accounting
practice.
The goodwill value remains subject to change pending the resolution of the
ongoing completion discussions with the vendor and the finalisation of the
fair values of the net assets acquired.
In July 2003 the Group acquired a further 31.4% interest in Rhinecontainer
BV for Euro5.0m. Up until this date the entity was treated as an associate
and subsequently as a consolidated subsidiary. The operating results since
acquisition are not material in the context of the Group such as to warrant
separate disclosure. The acquisition has given rise to a provisional value
of goodwill of #3.3m.
INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC TO WINCANTON PLC
Introduction
We have been engaged by the Company to review the financial information set out
on pages 5 to 12 and we have read the other information contained in the Interim
Report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
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 Listing
Rules of the Financial Services Authority. 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.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the half year ended
30 September 2003.
KPMG Audit Plc
Chartered Accountants
Bristol
11 November 2003
SHAREHOLDER INFORMATION
Interim results and dividend announced 12 November 2003
Shares traded ex-dividend 10 December 2003
Record date for interim dividend (1) 12 December 2003
Interim dividend paid 14 January 2004
Preliminary announcement of full year results June 2004
Annual General Meeting July 2004
(1) Shareholders on the register at this date will receive the dividend
SHAREHOLDER ENQUIRIES
All administrative enquiries relating to shareholdings should, in the first
instance, be directed to the Registrar at the following address:
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
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