Interim Results
Wincanton PLC
06 November 2002
6 November 2002
WINCANTON plc
Interim Results
for the half year ended 30 September 2002
CONTINUED GROWTH WITH BLUE CHIP CUSTOMERS
2002 2001 Change
£m £m
Turnover 389.2 366.4 6.2%
Operating profit : excluding pension credit 15.1 14.6 3.4%
: including pension credit 17.1 17.0
Interest Charge (Net) : (1.3) (2.2)
Profit before tax : excluding pension credit 13.8 12.4 11.3%
: including pension credit 15.8 14.8
Earnings per share : excluding pension credit 8.5p 7.4p 14.9%
: including pension credit 9.7p 8.9p
Dividend per share 3.31p 3.15p 5.0%
Note: The profit and EPS numbers are stated before exceptional items.
OPERATIONAL HIGHLIGHTS
• Appointment of Paul Bateman as Chief Executive
• Encouraging period of further growth with blue-chip customer base
• High levels of business development activity
• Strategic initiatives to expand range and geographic scope of
services
FINANCIAL HIGHLIGHTS
• 3.4% increase in operating profit
• 11.3% increase in pre-tax profit
• Strong cash inflow, resulting in a reduction in net debt to £7.8m
• Improvement in ROCE to 30.7%
• 5% increase in dividend
Commenting on the results, Paul Bateman, Wincanton's Chief Executive, said:
'Wincanton is on track to produce another year of good progress. The business
has a strong platform for the future, with supply chain initiatives within our
blue-chip customer base continuing to generate growth opportunities.
'We are also pleased to announce two strategic initiatives that will further
expand the range and geographic scope of our service offering.'
For further enquiries please contact:
Wincanton
Paul Bateman, Chief Executive ) 01963 828282
Gerard Connell, Group Finance Director )
Charles Carr, Director of Marketing & Communications )
Buchanan Communications
Charles Ryland/Jeremy Garcia 0207 466 5000
WINCANTON PLC
HALF YEAR REVIEW
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2002
Introduction
As announced on 9 October, Chas Lawrence has stepped down as Chief Executive.
The Board would like to thank Chas for his contribution, over many years, to the
development of Wincanton, culminating in our establishment as a successful
independent company. We have been pleased to announce the appointment of Paul
Bateman as Chas's successor. Paul brings a great depth of supply chain
experience, both in the UK and internationally.
Wincanton made continued progress in the 6 months ended 30 September 2002.
Operating profit, up by 3.4%, again benefited from high levels of new business
activity. Another period of strong cash flow led to a lower interest charge and
contributed to an 11.3% increase in pre-tax profit.
Two strategic initiatives announced today, in respect of reverse logistics and
inbound logistics, will further expand the range and geographic scope of
Wincanton's service offering to its blue-chip customer base.
Dividend
The Board has declared an interim dividend of 3.31p per Ordinary Share, an
increase of 5% on last year's interim dividend of 3.15p per Ordinary Share.
This will be paid on 8 January 2003 to shareholders on the register as at 6
December 2002.
Operational Review
Both the short-term environment and the prospect of long-term strategic change
continue to drive supply chain initiatives within our customer base. Markets
remain competitive, but Wincanton has again gained net new business in the
period as a result of such initiatives.
New customers, contract renewals and expansion of the range of services offered
to customers have reinforced the company's market position.
Recent gains included a national fuel distribution contract for TotalFinaElf, a
significant expansion of our business with this existing customer; management of
an automated warehouse for Procter & Gamble, a major new customer for Wincanton;
and the establishment of a customer service centre, adding to the automated
warehouse and national distribution operations already managed for
GlaxoSmithKline.
Further changes in retail, particularly in the growing non-food and general
merchandise areas, have presented new opportunities. Wincanton's strong
credentials in this sector have been further reinforced by the continuing
expansion of our business with major companies such as Argos, Somerfield,
Superquinn, Tesco and Woolworths.
Good progress has been made on contract renewals in the current year. Customer
relationships successfully extended in the period included Britvic, Comet and
Safeway.
Financial Review
Group operating profit improved from £14.6m to £15.1m, a 3.4% increase, with the
Consumer and Industrial business units showing similar levels of headline
growth. This is a pleasing rate of overall progress with new business wins
again more than offsetting contract losses.
Another period of strong cash flow led to a reduction in the interest charge to
£1.3m, substantially below the charge of £2.2m for the comparable period last
year. Cash flow also benefited from cash receipts of some £4m in respect of a
property disposal, and from new business wins that made limited calls upon the
Group's balance sheet. Profit before tax increased by 11.3%, from £12.4m to
£13.8m.
Net debt at 30 September stood at £7.8m, as compared to £27.0m at 31 March 2002.
Return on capital employed also improved, from 25.3% last year to 30.7% this
year.
Strategic Initiatives
Two strategic initiatives are being announced today that will expand the range
and geographic scope of Wincanton's services to customers.
R-Log is a joint venture with Genco, a US software and logistics company. The
joint venture will target the reverse logistics market, an area identified by
Wincanton as offering attractive growth opportunities, assisting our major
retail customers to improve the efficiency with which customer returns, product
recalls and promotional stocks are managed. The US market for such services, in
which Genco has a well-established presence, is currently better developed than
the UK. The combination of Genco's systems expertise and Wincanton's market
presence in the UK allows us to create a strong service proposition to
customers.
KNW Retail Solutions is a joint venture with Kuehne & Nagel, a leading freight
forwarder. This joint venture is being established to create and manage
inbound, end-to-end, supply chain solutions for imported products. The
combination of the respective areas of expertise of Wincanton and Kuehne & Nagel
will represent another strong offering to customers.
New business opportunities are being actively pursued by both joint ventures and
discussions with new and existing customers give us encouragement that these
extensions to our services will be well received.
Outlook
Good progress has been made towards our new business targets and levels of
enquiry remain encouraging. Our markets continue to be challenging and
competitive, but we remain confident that Wincanton will achieve further good
progress this year.
The two new strategic initiatives announced today are evidence of Wincanton's
ability to generate new growth opportunities for the future. Active review of
opportunities, remains a major area of focus.
Victor Benjamin
CHAIRMAN
5 November 2002
WINCANTON PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002 (UNAUDITED)
Half year Half year Year ended
ended ended 31 March 2002
30 Sept 2002 30 Sept 2001
£m £m £m
Turnover (note 3) 389.2 366.4 745.6
Operating Profit excluding pension
credit and before exceptional items 15.1 14.6 29.7
Pension credit (note 3) 2.0 2.4 4.8
Operating Profit including pension
credit and before exceptional items
(note 3) 17.1 17.0 34.5
Operating exceptional items (note 4) - - (0.4)
Operating Profit 17.1 17.0 34.1
Non operating exceptional items (note 4) - 0.6 0.6
Finance costs (1.3) (2.2) (3.9)
Profit on ordinary activities
before taxation 15.8 15.4 30.8
Taxation (note 6) (4.7) (4.6) (8.8)
Profit for the financial period 11.1 10.8 22.0
Dividends (note 9) (3.8) (3.6) (10.9)
Retained profit for the
financial period 7.3 7.2 11.1
Earnings per share (note 5)
- basic 9.7p 9.4p 19.2p
- diluted 9.6p 9.4p 19.1p
Earnings per share including pension
credit and before exceptional items
- basic 9.7p 8.9p 18.9p
- diluted 9.6p 8.9p 18.8p
Earnings per share excluding pension
credit and before exceptional items
- basic 8.5p 7.4p 16.0p
- diluted 8.4p 7.4p 15.9p
There are no recognised gains and losses either for the period ended 30
September 2002 or preceding financial periods other than those included in the
profit and loss account as above, and all operations in the financial periods
were continuing.
WINCANTON PLC
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2002 (UNAUDITED)
30 Sept 30 Sept 31 March
2002 2001 2002
£m £m £m
Fixed assets
Tangible assets 145.1 161.2 157.5
Current assets
Stocks 3.8 4.1 3.8
Debtors 99.1 105.9 104.8
Cash at bank and in hand (note 8) 24.9 20.4 18.6
127.8 130.4 127.2
Creditors : amounts falling due within one year
Borrowings and finance leases (note 8) (12.4) (10.3) (14.2)
Other creditors (161.7) (167.6) (167.4)
(174.1) (177.9) (181.6)
Net current liabilities (46.3) (47.5) (54.4)
Total assets less current liabilities 98.8 113.7 103.1
Creditors : amounts falling due after more than one year
Borrowings and finance leases (note 8) (20.3) (43.0) (31.4)
Provisions for liabilities and charges (62.5) (65.9) (63.0)
Net assets 16.0 4.8 8.7
Capital and reserves
Called up share capital 11.5 11.5 11.5
Merger reserve 3.5 3.5 3.5
Profit and loss account 1.0 (10.2) (6.3)
Equity shareholders' funds 16.0 4.8 8.7
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002 (UNAUDITED)
Half year Half year Year ended
ended ended 31 March
30 Sept 2002 30 Sept 2001 2002
£m £m £m
Profit for the financial period 11.1 10.8 22.0
Dividends (3.8) (3.6) (10.9)
Net addition to shareholders' funds 7.3 7.2 11.1
Opening shareholders' funds 8.7 (2.4) (2.4)
Closing shareholders' funds 16.0 4.8 8.7
WINCANTON PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002 (UNAUDITED)
Half year Half year
ended ended Year ended
30 Sept 2002 30 Sept 2001 31 March 2002
£m £m £m
Cash inflow from operating activities (note 7) 31.4 30.4 57.8
-
Returns on investments and servicing of finance
Interest received 0.4 - 0.8
Interest paid (1.3) (2.1) (3.6)
Interest element of finance lease rental payments (0.1) (0.1) (0.2)
Net cash outflow from returns on investments
and servicing of finance (1.0) (2.2) (3.0)
Taxation
UK corporation tax paid (3.2) (2.8) (10.4)
Capital expenditure
Purchase of tangible assets (6.3) (3.4) (14.7)
Sale of tangible assets 5.6 1.5 3.9
Net cash outflow for capital expenditure (0.7) (1.9) (10.8)
Equity dividends paid (7.3) (6.6) (10.2)
Cash inflow before financing 19.2 16.9 23.4
Financing
Capital element of finance lease rental payments (0.4) (0.9) (1.6)
Reduction in inter-company borrowings - (62.0) -
(Decrease)/increase in borrowings (12.5) 50.7 (18.9)
Increase in cash in the financial period 6.3 4.7 2.9
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (UNAUDITED)
30 Sept 30 Sept 31 March
2002 2001 2002
£m £m £m
Increase in cash 6.3 4.7 2.9
Decrease in borrowings 12.9 12.2 20.5
Change in net debt resulting from cash flows 19.2 16.9 23.4
New finance leases - - (0.6)
Movement in net debt 19.2 16.9 22.8
Net debt at beginning of the financial period (27.0) (49.8) (49.8)
Net debt at end of the financial period (7.8) (32.9) (27.0)
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2002 (UNAUDITED)
1 STATUS OF INTERIM REPORT
The Interim Report was approved by the Board on 5 November 2002. 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 11.
The financial information contained in the Interim Report does not constitute
statutory accounts. The comparative figures for the half year ended 30
September 2001 have been extracted from the Group's Interim Report for that
period. The figures for the year ended 31 March 2002 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 financial statements
for the year ended 31 March 2002.
3 SEGMENTAL INFORMATION
Half year Half year
ended ended Year ended
30 Sept 2002 30 Sept 2001 31 March 2002
£m £m £m
Turnover
Consumer Logistics 204.0 198.8 403.5
Industrial Logistics 185.2 167.6 342.1
389.2 366.4 745.6
Operating profit excluding
pension credit and before
exceptional items
Consumer Logistics 6.0 5.8 11.8
Industrial Logistics 9.1 8.8 17.9
15.1 14.6 29.7
All activities are within the geographical area of the UK and
Eire. The pension credit adjusted above is the variation credit to the regular
cost arising under SSAP24 'Accounting for Pension Costs'.
4 EXCEPTIONAL ITEMS
Half year Half year Year ended
ended ended 31 March
30 Sept 2002 30 Sept 2001 2002
£m £m £m
Operating exceptional items
Closure of Chippenham consolidation - - (0.4)
depot
Non operating exceptional items
Profit on disposal of a surplus property - 0.6 0.6
Taxation credit on exceptional items - - 0.1
- 0.6 0.3
The prior year non operating exceptional item, a profit arising on disposal of a
surplus property, is not subject to tax due to the availability of brought
forward capital losses.
5 EARNINGS PER SHARE
Earnings per share are calculated on the basis of earnings of
£11.1m (2001: £10.8m), basic weighted average shares of 114.8 million (2001:
114.7 million) and diluted weighted average shares of 116.2 million (2001: 114.7
million).
6 TAXATION
Half year Half year
ended ended Year ended
30 Sept 2002 30 Sept 2001 31 March 2002
£m £m £m
UK Corporation Tax:
On ordinary activities before 4.7 4.6 8.9
exceptional items
On exceptional items - - (0.1)
4.7 4.6 8.8
7 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
Half year Half year
ended ended Year ended
30 Sept 2002 30 Sept 31 March
£m 2001 2002
£m £m
Operating profit 17.1 17.0 34.1
Depreciation 13.3 12.5 24.8
Increase in stocks - (0.1) 0.2
Decrease/(increase) in debtors 5.6 (9.8) (9.4)
(Decrease)/increase in creditors (3.4) 11.8 13.0
Decrease in provisions (1.2) (1.0) (4.9)
Net cash inflow from operating activities 31.4 30.4 57.8
8 ANALYSIS OF NET DEBT
30 Sept 30 Sept 31 March
2002 2001 2002
£m £m £m
Cash at bank and in hand (primarily cash deposits
held by the Group's captive insurer) 24.9 20.4 18.6
Finance leases - due within one year (1.1) (1.1) (1.1)
- due after one year (1.0) (1.5) (1.4)
Debt - due within one year (11.3) (9.2) (13.1)
- due after one year (19.3) (41.5) (30.0)
Total (7.8) (32.9) (27.0)
9 DIVIDEND
An interim dividend of 3.31p per share will be paid on 8
January 2003 to shareholders on the register at 6 December 2002.
The dividend charge of £10.9m for the year ended 31 March 2002
is the aggregate of an interim dividend of 3.15p per share paid on 9 January
2002 and a final dividend of 6.3p per share on 7 August 2002.
INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC TO WINCANTON PLC
Introduction
We have been instructed by the Company to review the financial information set
out on pages 5 to 10 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.
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 of the Financial Services Authority 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 UK. 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 2002.
KPMG Audit Plc
Chartered Accountants
Bristol
5 November 2002
SHAREHOLDER INFORMATION
Interim results and dividend announced 6 November 2002
Shares traded ex-dividend 4 December 2002
Record date for interim dividend (1) 6 December 2002
Interim dividend paid 8 January 2003
Preliminary announcement of full year results (2) 5 June 2003
Annual General Meeting (2) 17 July 2003
(1) Shareholders on the register at this date will receive the dividend
(2) Provisional dates
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
W. Sussex
BN99 6DA
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