Interim Results
Wincanton PLC
7 November 2001
7 November 2001
WINCANTON plc
Interim Results
for the half year ended 30 September 2001
AN ENCOURAGING START
2001 Pro forma Change
£m 2000
£m
Turnover 366.4 353.9 3.5%
Operating profit before pension credit 14.6 13.3 9.8%
Operating profit 17.0 15.7 8.3%
Interest charge (net) (2.2) (2.5) (12.0)%
Profit before tax and exceptional items 14.8 13.2 12.1%
Earnings per share excluding exceptional items 8.9p 8.0p 11.3%
Earnings per share including exceptional items 9.4p 8.0p 17.5%
FINANCIAL HIGHLIGHTS
* Operating profit up 8.3% to £17m (9.8% to £14.6m excluding pension
credit)
* Profit before tax (excluding an exceptional property profit) up by
12.1% to £14.8m
* Adjusted earnings per share up 11.3% to 8.9p
* 5% increase in interim dividend to 3.15p per ordinary share
OPERATIONAL HIGHLIGHTS
* Steady flow of new business wins
* Further development of long-standing blue-chip customer base
* High levels of operational performance on existing contracts
Commenting on the results, Chas Lawrence, Wincanton's Chief Executive, said:
'We have made an encouraging start to our first year as an independent
company. Our markets are challenging but continue to offer attractive
opportunities.'
For further enquiries please contact:
Chas Lawrence, Chief Executive 0207 466 5000 all day thereafer
Gerard Connell, Group Finance Director 01963 828206
Wincanton plc
Charles Ryland/Jeremy Garcia 0207 466 5000
Buchanan Communications
WINCANTON PLC
HALF YEAR REVIEW
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2001
Introduction
Wincanton has grown rapidly and successfully in recent years by building
further on a strong base of long-term dedicated contracts with blue-chip
customers. The financial results for the 6 months ended 30 September 2001
show another period of encouraging progress, confirming the Group's position
as one of the leading providers of supply chain services in the UK.
Dividend
The Board has declared an interim dividend of 3.15p per ordinary share, an
increase of 5% on last year's pro forma dividend. This will be paid on 9
January 2002 to shareholders on the register as at 7 December 2001.
Operational Review
Wincanton's blue-chip customer base has been developed over many years. Our
continuing success with these customers has been built on creativity, the
highest levels of operational performance and complete dedication to working
to exceed our customers' expectations. We have therefore been pleased to see
the benefit of further opportunities with a number of long-standing customers
in the first half.
New long-term contracts were agreed with Argos and British Airways. We
successfully completed consultancy assignments for a number of customers
looking at a broad range of supply chain issues. We continue to identify and
implement software-driven solutions to add value to our customers' operations.
High levels of customer service benefited our financial performance on many
existing contracts.
We were also pleased to see a steady flow of new business wins in the period,
reflecting our core focus on the further development of both our customer
portfolio and our range of services. Contributions from new business included
recent contract gains with B&Q, Heinz, Safeway, Somerfield, Campina and Tesco.
Good progress was made in the period with both new and existing customers.
Financial Review
Operating profit growth of 8.3% to £17m represented another strong performance
by the Group. Excluding pension credit, which was flat at £2.4m, Wincanton's
underlying rate of operating profit growth in the period was 9.8%.
For reporting purposes we separate our activities into two business units,
Industrial and Consumer. In operational terms, both business units are
closely integrated and share support functions. They also service in a number
of cases, different aspects of the supply chain requirements of the same
customers.
The Industrial business unit, which focuses principally on supply chain
movements from factory to warehouse, increased operating profit by 14.3% to
£10.4m (17.3% excluding pension credit). In addition to new business wins,
Industrial benefited from a full 6 months' contribution from the major new
automated facility created and successfully delivered last year for the
Friskies Petfood business of Nestle.
Good operational progress was also made in the Consumer business unit.
Consumer focuses principally on supply chain movements from warehouse to point
of sale. New business wins and high levels of performance on existing
contracts were positive factors but progress overall was held back by the
effect of prior year business losses. Headline operating profit was in line
with last year at £6.6m.
Interest, at £2.2m, was 12% lower than for the comparable period last year.
The interest charge benefited from lower market rates, improvement in the
group's working capital position and both the phasing and method of funding of
new business wins in the period. Interest cover improved from 6.3 times for
the last financial year to 7.7 times. Net debt at 30 September was reduced to
£32.9m following a cash inflow of £16.9m.
Profit before tax (excluding an exceptional profit of £0.6m on a property
disposal) increased by 12.1% to £14.8m. On this same basis, adjusted earnings
per share increased by 11.3% to 8.9p.
Outlook
Recent wins are expected to contribute significantly towards our growth
targets for the year. As in any period, we will have to contend with business
losses and possible volume reductions and the economic environment also gives
grounds for some caution. We nonetheless remain confident that the current
financial year should be another year of good progress for Wincanton.
Beyond the current year, the long-term nature of our customer base and the
substantially dedicated and open-book nature of our contract portfolio give
sound defensive qualities to our business. Our current industry focus in the
UK, predominantly in the food/FMCG manufacturing and retail sectors, should
also continue to provide a stable core to our operations.
The skills and commitment of our people, our leading-edge systems expertise
and our blue chip customer base provide a strong platform for further
development. Opportunities are being explored in new sectors, new services
and new markets. We continue to be encouraged by the long-term growth
prospects of the outsourcing markets in which we operate and remain confident
in Wincanton's ability to build further on its growth record.
Victor Benjamin Chas Lawrence
CHAIRMAN CHIEF EXECUTIVE
6 November 2001
WINCANTON PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
Pro Pro As As
forma* forma* reported* reported*
Half Half Half
year year Year year Year
ended ended ended ended ended
30 30 31 30 31
Sept Sept March Sept March
2001 2000 2001 2000 2001
£m £m £m £m £m
Turnover (note 4) 366.4 353.9 721.8 353.9 721.8
Operating Profit excluding
pension credit before
exceptional items 14.6 13.3 26.8 13.3 26.8
Pension credit (note 4) 2.4 2.4 4.8 2.4 4.8
Operating Profit including
pension credit before
exceptional items (note 4) 17.0 15.7 31.6 15.7 31.6
Operating exceptional items
(note 5) - - (3.3) - (3.3)
Operating Profit 17.0 15.7 28.3 15.7 28.3
Non operating exceptional items
(note 5) 0.6 - - - -
Finance costs (2.2) (2.5) (4.9) (0.8) (1.2)
Profit on ordinary activities
before taxation 15.4 13.2 23.4 14.9 27.1
Taxation (note 7) (4.6) (4.0) (7.1) (4.6) (8.2)
Profit for the financial period 10.8 9.2 16.3 10.3 18.9
Dividends (note 10) (3.6) (3.4) (10.3) - (6.6)
Retained profit for the
financial period 7.2 5.8 6.0 10.3 12.3
Earnings per share - basic and
diluted (note 6) 9.4p 8.0p 14.2p
Earnings per share before
exceptional items - basic and
diluted 8.9p 8.0p 16.2p
(note 6)
There are no recognised gains and losses either for the period ended 30
September 2001 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.
* The basis of preparation of the above pro forma numbers and a reconciliation
to those as reported are set out in note 2.
WINCANTON PLC
CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2001 (UNAUDITED)
30 Sept 2001 30 Sept 2000 31 March 2001
£m £m £m
Fixed Assets
Tangible fixed assets 161.2 179.7 171.2
Current Assets
Stocks 4.1 3.7 4.0
Debtors 105.9 113.1 96.1
Cash and deposits (see note 9) 20.4 12.8 15.7
130.4 129.6 115.8
Creditors - Amounts falling due
within one year
Borrowings and finance leases (10.3) (1.3) (1.5)
(see note 9)
Other creditors (167.6) (172.4) (156.1)
(177.9) (173.7) (157.6)
Net current liabilities (47.5) (44.1) (41.8)
Total assets less current 113.7 135.6 129.4
liabilities
Creditors - Amounts falling due
after more than one year (43.0) (71.8) (64.0)
Borrowings and finance leases
(see note 9)
Provisions for liabilities and (65.9) (68.2) (67.8)
charges
Net assets/(liabilities) 4.8 (4.4) (2.4)
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 (10.2) (19.4) (17.4)
Equity shareholders' funds 4.8 (4.4) (2.4)
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
Half year Half year Year
ended ended ended
30 Sept 30 Sept 31 March
2001 2000 2001
£m £m £m
Profit for the financial period 10.8 10.3 18.9
Dividends (3.6) - (6.6)
Retained profit for the financial period 7.2 10.3 12.3
Capital contribution from Uniq plc - 4.8 4.8
Net increase in shareholders' funds 7.2 15.1 17.1
Equity shareholders' funds at beginning (2.4) (19.5) (19.5)
of period
Equity shareholders' funds at end of 4.8 (4.4) (2.4)
period
WINCANTON PLC
GROUP CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
Half year Half year Year
ended ended ended
30 Sept 30 Sept 31 March
2001 2000 2001
£m £m £m
Cash inflow from operating activities 30.4 31.3 59.5
(note 8)
Returns on investments and servicing of
finance
Net interest paid (2.1) (0.7) (1.1)
Interest element of finance lease (0.1) (0.1) (0.3)
rental payments
Net cash outflow from returns on
investments (2.2) (0.8) (1.4)
and servicing of finance
Taxation
UK corporation tax paid (2.8) - (10.6)
Capital expenditure
Purchase of tangible fixed assets (3.4) (11.0) (22.1)
Sale of tangible fixed assets 1.5 5.9 11.0
Net cash outflow for capital (1.9) (5.1) (11.1)
expenditure
Equity dividends paid (6.6) - -
Net cash inflow before financing 16.9 25.4 36.4
Financing
Capital element of finance lease rental (0.9) (0.9) (1.8)
payments
Reduction in inter-company borrowings (62.0) (11.8) (19.0)
Increase in bank loans and overdrafts 50.7 - -
Increase in net cash in the financial 4.7 12.7 15.6
period
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (UNAUDITED)
30 Sept 30 Sept 31 March
2001 2000 2001
£m £m £m
Increase in net cash 4.7 12.7 15.6
Decrease in borrowings 12.2 17.5 25.6
Decrease in net debt resulting from cash 16.9 30.2 41.2
flows
New finance leases - - (0.5)
Allocation of provisions on demerger from - 39.9 39.9
Uniq plc
Decrease in net debt 16.9 70.1 80.6
Net debt at beginning of financial period (49.8) (130.4) (130.4)
Net debt at end of financial period (32.9) (60.3) (49.8)
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
1 STATUS OF INTERIM REPORT
The Interim Report was approved by the Board on 6 November 2001. The
financial information set out in the Interim Report 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 2000 are audited and have been extracted from the Accountants'
Report included in the Wincanton Listing Particulars dated 28 March 2001, as
adjusted for the pro forma adjustments set out in note 2 and the restatement
of the Uniq management charge by £0.4m from the second to the first half of
the year ended 31 March 2001. The figures for the year ended 31 March 2001
have been extracted from the Group's non-statutory pro forma financial
statements for that year which have been reported on by the Group's auditors
and delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under section 237 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 non-statutory pro
forma financial statements for the year ended 31 March 2001.
The comparative pro forma profit and loss accounts set out on page 4
incorporate adjustments principally designed to illustrate the impact on
profit for the financial period, financing costs and EPS, had the debt assumed
at demerger been the basis of Group funding throughout the year to 31 March
2001.
These adjustments are summarised below:
Half year ended Year ended
30 September 2000 31 March 2001
£m £m
Profit for the period 10.3 18.9
Less: Pro forma additional finance costs (1.7) (3.7)
Taxation impact of above (note 7) 0.6 1.1
Pro forma profit for the period 9.2 16.3
The balance sheet at 30 September 2000 has been restated to provide a more
appropriate comparative by adjusting for the changes to inter-company debt
with Uniq and the transfers of provisions which arose prior to the March 2001
year end in anticipation of the demerger.
These adjustments include the transfers to Wincanton of pension provision (£
48.3m) (less related deferred tax asset of £13.5m), of tax creditor (£5.1m)
and of captive insurance company balances (£12.7m) previously held by Uniq,
and the forgiveness of £4.8m of intra-group indebtedness.
3 DEMERGER FROM UNIQ PLC
On 17 May 2001, the logistics business of Uniq plc (Wincanton Logistics) was
transferred to Wincanton plc, and amounts due to Uniq plc and its subsidiary
undertakings were repaid utilising Wincanton plc's medium term loan
facilities. Uniq shareholders received 1 Wincanton share of 5 pence each for
every Uniq share held at Demerger Record Time. The Wincanton shares were then
consolidated on a 1 for 2 basis into new Wincanton shares of 10 pence each.
These financial statements have been prepared using merger accounting
principles as if the companies comprising the Group had been owned by
Wincanton plc for all relevant periods.
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
4 ANALYSIS OF RESULTS BY BUSINESS SEGMENT
Turnover
Half year Half year
ended ended Year ended
30 Sept 2001 30 Sept 2000 31 March 2001
£m £m £m
Consumer Logistics 198.8 189.8 391.6
Industrial Logistics 167.6 164.1 330.2
366.4 353.9 721.8
Operating profit including pension credit before exceptional items
Consumer Logistics 6.6 6.6 13.2
Industrial Logistics 10.4 9.1 18.4
17.0 15.7 31.6
Operating profit excluding pension credit before
exceptional items
Consumer Logistics 5.8 5.8 11.6
Industrial Logistics 8.8 7.5 15.2
14.6 13.3 26.8
The pension credit adjusted above is the variation credit to the
regular cost arising under SSAP24 'Accounting for pension costs'.
All activities are within the geographical area of the UK and Eire.
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
5 EXCEPTIONAL ITEMS
Half year Half year
ended ended Year ended
30 Sept 30 Sept 31 March
2001 2000 2001
£m £m £m
Operating exceptional items - - (3.3)
Non operating exceptional items 0.6 - -
Taxation credit on exceptional - - 1.0
items
0.6 - (2.3)
The current year non operating exceptional items relate to a profit arising on
the sale of surplus property which is not subject to tax due to the
availability of brought forward capital losses. In the prior year the
operating exceptional items relate to redundancy and other costs arising on an
internal reorganisation of Wincanton's operating structure and the costs of
the planned closure of the Chippenham transhipment depot.
6 EARNINGS PER SHARE
Earnings per share are calculated on the basis of earnings of
£10.8m (£9.2m) and the weighted average of 114.7 million ordinary new
Wincanton shares which have been issued as part of the demerger from Uniq plc,
and have been assumed to have been in issue throughout the period.
7 TAXATION
Half year Half year Year
ended ended ended
30 Sept 30 Sept 31 March
2001 2000 2001
£m £m £m
UK Tax:
On ordinary activities before exceptional 4.6 4.6 9.2
items
On exceptional items - - (1.0)
On pro forma adjustments (note 2) - (0.6) (1.1)
4.6 4.0 7.1
8 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
Half Half
year year Year
ended ended ended
30 Sept 30 Sept 31 March
2001 2000 2001
£m £m £m
Operating profit 17.0 15.7 28.3
Depreciation 12.5 13.3 25.9
Increase in stocks (0.1) (0.4) (0.7)
Increase in debtors (9.8) (29.4) (11.6)
Increase in creditors 11.8 20.3 5.5
Decrease in provisions (1.0) (1.0) (0.9)
Loss on sale of fixed assets - 0.1 0.3
30.4 18.6 46.8
Transfer of captive insurance provisions on - 12.7 12.7
demerger from Uniq plc
Cash inflow from operating activities 30.4 31.3 59.5
WINCANTON PLC
NOTES TO THE INTERIM REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2001 (UNAUDITED)
9 ANALYSIS OF NET DEBT
30 30 31
Sept Sept March
2001 2000 2001
£m £m £m
Cash and deposits 20.4 12.8 15.7
Finance leases - due within one year (1.1) (1.3) (1.5)
- due after one year (1.5) (2.6) (2.0)
Bank loans and overdrafts - due within one year (9.2) - -
- due after one year (41.5) - -
Amounts owed to Uniq - (69.2) (62.0)
Net debt at end of period (32.9) (60.3) (49.8)
10 DIVIDEND
An interim dividend of 3.15p per Wincanton share will be paid on 9 January 2002
to ordinary shareholders on the register at 7 December 2001.
The pro forma total dividend for the year ended 31 March 2001 was 9p per
Wincanton share. Based on the policy of a one third : two thirds split of
interim and final dividends adopted by the Group, the pro forma comparative
interim dividend is 3p per Wincanton share.
The reported dividend of £6.6m for the year ended 31 March 2001 is the aggregate
of a dividend of 1.2p per Wincanton share paid to Uniq on 17 May 2001 as part of
the settlement of intra-group borrowings and a final dividend of 4.6p per
Wincanton share paid to shareholders on 3 August 2001.
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 4 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 2001.
KPMG Audit Plc
Chartered Accountants
Bristol
6 November 2001
WINCANTON PLC
UK CAPITAL GAINS TAX
The base cost splits for CGT purposes for shareholders who previously held
Uniq plc and/or Unigate PLC shares have now been agreed with the Inland
Revenue. The details are as follows :
If you were a Uniq (Unigate) shareholder on 3 July 2000 you were given shares
representing an interest in Unigate Dairies which Dairy Crest then offered to
buy from you for cash, a loan note or Dairy Crest shares. The Inland Revenue
have indicated that they will accept a split of your base cost 78.66% Uniq and
21.34% to the cash, shares or loan note given by Dairy Crest.
If you were a Uniq shareholder on 17 May 2001 you will have received 1 Uniq
share and 1 Wincanton share for every 2 Uniq shares then held. You should
again split your base cost (that is the 78.66% of your original base cost if
you held the shares prior to 3 July 2000) between your Wincanton and Uniq
shares and this base cost should be allocated 50.24% to Wincanton and 49.76%
to Uniq shares. The Inland Revenue have indicated that for convenience a 50/
50 split may be used.
Shareholders who have any questions regarding the impact of the above on their
personal tax circumstances should obtain suitably independent financial
advice.
SHAREHOLDER INFORMATION
Interim results and dividend announced 7 November 2001
Shares traded ex-dividend 5 December 2001
Record date for interim dividend (1) 7 December 2001
Interim dividend paid 9 January 2002
Preliminary announcement of full year results (2) 6 June 2002
Annual General Meeting (2) 18 July 2002
(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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