Interim Results
Wincanton PLC
11 November 2004
11 November 2004
WINCANTON plc
Interim Results
for the half year ended 30 September 2004
'Creative Solutions and Consistent Performance'
2004 2003 % change
£m £m
Turnover 844.5 845.4
Adjusted operating profit 21.5 19.8 8.6%
Interest charge (net) (5.3) (6.6)
Adjusted profit before tax 16.2 13.2 22.7%
Adjustments (Note) (4.2) (1.5)
Profit before tax 12.0 11.7
Adjusted earnings per share 8.1p 7.0p 15.7%
Basic earnings per share 5.0p 5.9p
Dividend per share 3.66p 3.48p 5.2%
Note: Operating profit, profit before tax and earnings per share have been
adjusted to exclude pension credit £2.0m (2003: £2.0m), operating exceptional
items of £5.2m (2003: £2.8m) and goodwill amortisation of £1.0m (2003: £0.7m).
OPERATIONAL HIGHLIGHTS
• Renewed progress in automated warehousing
• Encouraging new business pipeline in UK and Ireland
• Building development momentum in Continental Europe
• Gaining market share with blue-chip customers
FINANCIAL HIGHLIGHTS
• Adjusted operating profit up by 8.6%
• Adjusted pre-tax profit up by 22.7%, and adjusted earnings per share
up by 15.7%
• Net debt reduced to £55.4m
• 5.2% increase in interim dividend, to 3.66p per share
Commenting on the results, Paul Bateman, Wincanton Chief Executive, said:
'The quality of our creative solutions and the consistency of our operational
performance continue to strengthen our market position. We have made further
good progress in the first half of the year, both operationally and financially.
We are confident that our strategy of offering our customers national, regional
and pan-European solutions will deliver enhanced opportunities for growth.'
For further enquiries please contact:
Wincanton
Paul Bateman, Chief Executive ) +44 (0) 1963 828282
Gerard Connell, Group Finance Director )
Charles Carr, Group Corporate Communications Director )
Buchanan Communications
Charles Ryland/Jeremy Garcia +44 (0) 207 466 5000
WINCANTON PLC
HALF YEAR REVIEW
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2004
Operational Review
Wincanton now has a blue-chip customer base, a portfolio of services and a
pan-European presence which gives the group a solid platform for future
development. We are confident that our strategy of offering our customers
national, regional and pan-European solutions will deliver enhanced
opportunities for growth.
In the UK and Ireland, contract renewals with customers such as Heinz, Pernod
Ricard, Britvic and Procter & Gamble confirmed the continuing importance to
Wincanton of the consistent delivery of the highest levels of operational
performance. Contract wins in transport and warehousing included gains with
Alba, Arnotts, B&Q, Argos, First Milk and Dairy Farmers of Britain, J Sainsbury,
Comet, Statoil and Twyford Bathrooms. New operations successfully implemented
in the first half included an automated warehouse for Matalan and a new import
centre for Tesco in Daventry.
We were particularly pleased to be able to announce recently a 10-year contract
to operate a new automated warehouse for GlaxoSmithKline. At the same time, we
renewed the contract for our existing automated warehouse for GlaxoSmithKline
for a further 10 years. These contracts, together with the successful delivery
of a new automated facility for Matalan and the renewal of our contract for the
automated warehouse operated for Britvic, confirmed our leading position in
supply chain automation. We now operate twelve automated facilities in the UK
and one in Germany. These long-term contracts place us at the centre of our
customers' future supply chain needs and represent a strong and stable core to
our financial performance.
Good progress was also made in other service areas. Our data records management
operation continues to expand its portfolio of blue-chip customers and will
benefit next year from significant capacity extension in both London and Dublin.
Consilium, our consultancy and advisory activity, has worked on assignments
for Heals, Musgrave, B&Q and Argos. Our first reverse logistics project was
successfully established for Index and we continue to progress discussions with
other retailers. Our new store fittings operation, now working for customers
such as Marks & Spencer and WH Smith, reported good progress. Pullman Fleet
Services, our vehicle maintenance business, gained new contracts with Tesco and
Polypipe. Delivering profitable growth from an expanding range of services has
been important to our progress in the past and will continue to be important to
us in the future.
Operations in Continental Europe also continued to make progress in the first
half. Our businesses in the Benelux countries reported an improved performance,
winning new business with Mitsubishi Motors and Nedcar and extending our
warehousing operation for Dow. Our Strasbourg-based operations in France
delivered a new European distribution centre for Viking. In central Europe we
continued to see high levels of activity, particularly in Poland, and new
business was won with a number of multinational customers including Goodyear.
In Hungary, new business was added with Hipp, serving their regional
requirements across Central Eastern Europe and South Eastern Europe from a
warehouse in Budapest.
Progress has been sustained in Germany following last year's return to
profitability. Our intermodal activities, in particular, saw a stronger first
half. As one of the leading freight forwarders on the Rhine we benefited from
higher volumes of container traffic and good new business progress. We have yet
to see signs of sustained higher volumes in our road transport network but
profitability continues to improve and further investment is planned in both
systems and capacity. A number of new contract logistics gains in Germany
included a warehouse operation for Honeywell.
Continuing difficulties in international groupage led us to take the decision to
close two sites, one in France and one in Spain.
Financial Review
Group adjusted operating profit of £21.5m represented an 8.6% increase on last
year. Turnover, at £844.5m showed a marginal decline on the prior year.
Profit progress was particularly marked in Continental Europe, albeit from a low
base. An improved performance in the German intermodal business, steady
progress in most other countries and good results from our pan-European 4PL
activities were the principal factors behind a 77.8% increase in reported
operating profit, to £3.2m. Overall progress was hindered by slower trading in
Spain. Operating profit of £18.3m in the UK & Ireland represented a 1.7%
increase on the same period last year. Adjusting for rental income foregone on
an investment property sold last year, the increase would have been
approximately 4.2%.
Another good cashflow and working capital performance saw net debt reduced to
£55.4m, and the interest charge fall by nearly 20% to £5.3m. Net capex of
£8.9m, after £3.5m of disposals, was 50% of depreciation. Period-end working
capital remained at broadly the same levels as at 31 March 2004, but a reduction
in average levels of working capital was an important factor in the lower
reported interest charge. A cash receipt of £7.8m, relating to the settlement
of completion accounts discussions in respect of our acquisition last year, was
offset by an £8.5m outlay to purchase Wincanton shares for our Employee Benefit
Trust. Towards the end of the first half we extended the maturity of our
committed banking facilities at a reduced margin.
The increase in adjusted operating profit and reduction in interest charge gave
rise to a 22.7% increase in adjusted pre-tax profit. Equity minority interests
increased to £1.7m as a consequence of a higher contribution from certain shared
activities in Continental Europe. Adjusted earnings per share increased by
15.7%.
An exceptional charge of £5.2m includes £3.6m in respect of the closure of two
sites in Continental Europe and £1.6m of UK costs relating principally to the
relocation of our head office to Chippenham.
Dividend
The Board has declared an interim dividend of 3.66p per share, an increase of
5.2% on last year's interim dividend of 3.48p per share. This will be paid on
12 January 2005 to shareholders on the register as at 10 December 2004.
Outlook
Contract renewals and contract wins in the first half, together with continuing
high levels of new business activity, represent encouraging indications of the
potential for further progress.
Board Change
I am pleased to be able to announce that David Malpas, currently the senior
independent non-executive Director, has agreed to become Chairman following my
retirement from the Board at the next Annual General Meeting.
Victor Benjamin
Chairman
10 November 2004
WINCANTON PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2004 2003 2004
Note £m £m £m
Turnover 3 844.5 845.4 1,680.5
Operating profit before pension credit, goodwill
amortisation and exceptional items 3 21.5 19.8 43.2
Pension credit 3 2.0 2.0 4.0
Goodwill amortisation (1.0) (0.7) (2.2)
Operating exceptional items 4 (5.2) (2.8) (10.0)
Operating profit 17.3 18.3 35.0
Net interest payable and similar charges (5.3) (6.6) (12.6)
Profit on ordinary activities before taxation 12.0 11.7 22.4
Tax on profit on ordinary activities 6 (4.6) (3.9) (8.5)
Profit on ordinary activities after taxation 7.4 7.8 13.9
Equity minority interests (1.7) (1.0) (2.8)
Profit for the financial period 5.7 6.8 11.1
Dividends 10 (4.2) (4.0) (12.3)
Retained profit/(loss) for the financial period 1.5 2.8 (1.2)
Earnings per share 5 9.6p
- basic 5.0p 5.9p
- diluted 4.9p 5.9p 9.6p
Earnings per share before exceptional items and
goodwill amortisation
- basic 9.3p 8.2p 18.4p
- diluted 9.2p 8.2p 18.3p
Earnings per share before exceptional items,
goodwill amortisation and excluding pension
credit
- basic 8.1p 7.0p 16.0p
- diluted 8.0p 7.0p 15.8p
All operations in the above financial periods were continuing.
WINCANTON PLC
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2004 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2004 2003 2004
Note £m £m £m
Fixed assets
Intangible assets 35.9 27.6 38.3
Tangible assets 242.9 268.3 247.3
Investments 0.6 0.8 0.6
279.4 296.7 286.2
Current assets
Stocks 5.7 7.3 5.5
Debtors 289.2 284.6 258.1
Cash at bank and in hand 9 53.3 47.7 55.5
348.2 339.6 319.1
Creditors: amounts falling due within one year
Borrowings (2.8) (30.3) (23.1)
Other creditors (393.1) (358.8) (349.4)
(395.9) (389.1) (372.5)
Net current liabilities (47.7) (49.5) (53.4)
Total assets less current liabilities 231.7 247.2 232.8
Creditors: amounts falling due after more than one year
Borrowings (105.9) (126.5) (107.7)
Other creditors (1.8) (2.7) (2.1)
Provisions for liabilities and charges (101.2) (89.9) (97.4)
Net assets 22.8 28.1 25.6
Capital and reserves
Called up share capital 11.7 11.5 11.6
Share premium account 3.4 1.0 1.9
Merger reserve 3.5 3.5 3.5
Profit and loss account 2.1 3.9 (0.8)
Own shares held by employee benefit trust (8.5) - -
Equity shareholders' funds 12.2 19.9 16.2
Equity minority interests 10.6 8.2 9.4
22.8 28.1 25.6
WINCANTON PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2004 2003 2004
Note £m £m £m
Cash inflow from operating activities 7 42.1 57.4 105.3
Returns on investments and servicing of finance 8 (4.7) (6.2) (10.5)
Taxation 0.5 (4.4) (9.1)
Capital expenditure (net) 8 (8.9) 3.5 (4.1)
Acquisition and disposal of businesses 8 7.8 (3.2) (0.7)
Equity dividends paid (8.3) (7.8) (11.8)
Cash inflow before financing 28.5 39.3 69.1
Management of liquid resources 8 (9.8) (13.5) (10.0)
Financing 8 (31.5) (28.6) (50.1)
(Decrease)/increase in cash in the financial (12.8) (2.8) 9.0
period
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2004 2003 2004
Note £m £m £m
(Decrease)/increase in cash in the financial (12.8) (2.8) 9.0
period
Decrease in debt and lease financing 24.6 29.3 51.8
Increase in liquid resources 9.8 13.5 10.0
Change in net debt resulting from cash flows 21.6 40.0 70.8
New finance leases - - (0.2)
Exchange movement (1.7) (1.4) 1.8
Movement in net debt in the financial period 19.9 38.6 72.4
Net debt at the start of the financial period (75.3) (147.7) (147.7)
Net debt at the end of the financial period 9 (55.4) (109.1) (75.3)
WINCANTON PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2004 2003 2004
Note £m £m £m
Profit for the financial period 5.7 6.8 11.1
Net exchange adjustments arising on foreign
currency investments and related borrowings 1.4 (0.6) (1.3)
Total recognised gains and losses relating to
the financial period 7.1 6.2 9.8
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004 (UNAUDITED)
Half year Half year
ended ended Year ended
30 September 30 September 31 March
2004 2003 2004
Note £m £m £m
Profit for the financial period 5.7 6.8 11.1
Dividends 10 (4.2) (4.0) (12.3)
Retained profit/(loss) for the financial period 1.5 2.8 (1.2)
Other recognised gains and losses 1.4 (0.6) (1.3)
Issue of share capital 1.6 0.7 1.7
Purchase of own shares (8.5) - -
Net movements in equity shareholders' funds (4.0) 2.9 (0.8)
Opening equity shareholders' funds 16.2 17.0 17.0
Closing equity shareholders' funds 12.2 19.9 16.2
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2004 (UNAUDITED)
1 STATUS OF INTERIM REPORT
The Interim Report was approved by the Board on 10 November 2004. 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 2003 have been extracted from the Group's Interim Report
for that period. The figures for the year ended 31 March 2004 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 2004. In addition the
Group has adopted UTIF 38 'Accounting for ESOP Trusts' and applied it in
accounting for the own shares purchased in the period.
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
2004 2003 2004 2004 2003 2004
£m £m £m £m £m £m
UK & Ireland 526.7 515.8 1,041.3 18.3 18.0 36.1
Continental Europe 317.8 329.6 639.2 3.2 1.8 7.1
844.5 845.4 1,680.5 21.5 19.8 43.2
Pension credit 2.0 2.0 4.0
Goodwill amortisation (1.0) (0.7) (2.2)
Operating profit before exceptional
items 22.5 21.1 45.0
Operating exceptional items (note 4) (5.2) (2.8) (10.0)
Profit on ordinary activities before
interest 17.3 18.3 35.0
UK & Ireland 18.0 17.3 31.1
Continental Europe (0.7) 1.0 3.9
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
associates of £0.1m (2003 : £(0.1)m).
4 EXCEPTIONAL ITEMS
Half year ended Half year ended Year
30 Sept 30 Sept ended
31 March
2004 2003 2004
£m £m £m
£m
Operating exceptional items
Reorganisation of operating structure post acquisition - (2.8) (10.0)
Relocation of UK head office and UK rationalisation (1.6) - -
Closure of operations in Spain and France (3.6) - -
(5.2) (2.8) (10.0)
The tax effect of the exceptional items is a credit of £1.2m (2003 : £0.8m).
5 EARNINGS PER SHARE
Earnings per share are calculated on the basis of earnings of £5.7m (2003:
£6.8m), basic weighted average shares of 115.1m (2003: 115.1m) and diluted
weighted average shares of 116.2m (2003: 115.6m).
6 TAXATION
Half year ended Half year ended Year
30 Sept 30 Sept ended
31 March
2004 2003 2004
£m £m £m
Corporation tax
Current tax on income for the financial period 4.6 4.2 9.0
Adjustments in respect of prior financial periods - (0.3) (0.5)
Tax on profit on ordinary activities 4.6 3.9 8.5
7 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
Half year Half year
ended ended Year ended
30 Sept 2004 30 Sept 2003 31 March 2004
£m £m £m
Operating profit 17.3 18.3 35.0
Depreciation and amortisation 18.7 19.9 40.5
(Increase)/decrease in stocks (0.2) - 0.3
(Increase)/decrease in debtors (33.3) 5.0 23.5
Increase in creditors 37.6 13.6 6.8
Increase/(decrease) in provisions 2.0 0.6 (0.8)
Net cash inflow from operating activities 42.1 57.4 105.3
8 ANALYSIS OF CASH FLOWS
Half year Half year
ended ended Year ended
30 Sept 2004 30 Sept 2003 31 March 2004
£m £m £m
Returns on investments and servicing of finance
Interest received 1.5 0.3 1.4
Interest paid (5.6) (5.9) (11.0)
Interest element of finance lease rental payments - (0.1) (0.2)
Dividends paid to equity minority interests in
subsidiary undertakings
(0.6) (0.5) (0.7)
(4.7) (6.2) (10.5)
Capital expenditure
Purchase of tangible assets (12.4) (11.2) (20.9)
Sale of tangible assets 3.5 14.6 16.8
Repayment of loans by joint ventures - 0.1 -
(8.9) 3.5 (4.1)
Acquisitions
Purchase of Rhinecontainer - (3.5) (3.3)
Cash acquired with Rhinecontainer - 0.3 0.3
Disposal of non-core business - - 2.3
Trans European completion settlement (note 11) 7.8 - -
7.8 (3.2) (0.7)
Management of liquid resources
Increase in cash deposits held by the captive (9.8) (13.5) (10.0)
insurer
Financing
Decrease in borrowings (23.9) (29.1) (50.6)
Capital element of finance lease rental payments (0.7) (0.2) (1.2)
Issue of share capital 1.6 0.7 1.7
Purchase of own shares (8.5) - -
(31.5) (28.6) (50.1)
9 ANALYSIS OF NET DEBT
30 Sept 30 Sept 31 March
2004 2003 2004
£m £m £m
Cash at bank and in hand 11.8 12.5 23.8
Cash deposits held by the captive insurer 41.5 35.2 31.7
53.3 47.7 55.5
Finance leases (2.5) (2.0) (3.1)
Debt - due within one year (2.2) (28.5) (22.1)
- due after one year (104.0) (126.3) (105.6)
Total (55.4) (109.1) (75.3)
10 DIVIDENDS
An interim dividend of 3.66p per share will be paid on 12 January 2005 to
shareholders on the register at 10 December 2004.
The dividend charge of £12.3m for the year ended 31 March 2004 is the
aggregate of an interim dividend of 3.48p per share paid on 14 January 2004
and a final dividend of 7.08p per share paid on 11 August 2004.
11 COMPLETION SETTLEMENT
In July 2004 the completion discussions in respect of the acquisition of
Trans European were concluded with the vendor and a settlement of £7.8m
received. After accounting for the amounts anticipated in the 31 March 2004
balance sheet, a reduction of £1.8m has been made to the amount of goodwill
arising on the acquisition.
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 2004.
KPMG Audit Plc
Chartered Accountants
Bristol
10 November 2004
SHAREHOLDER INFORMATION
Interim results and dividend announced 11 November 2004
Shares traded ex-dividend 8 December 2004
Record date for interim dividend (1) 10 December 2004
Interim dividend paid 12 January 2005
Preliminary announcement of full year results June 2005
Annual General Meeting July 2005
(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
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