Interim Results

RNS Number : 9966B

Wincanton PLC

05 November 2009

 



For Immediate Release

5 November 2009

WINCANTON plc

Half Year Results

for the six months to 30 September 2009 (unaudited)

"A Resilient Performance"

	2009     £m		2008     £m		% change
Revenue	1,079.9		1,199.2		(9.9)%
Underlying operating profit 1	26.0		30.6		(15.0)%
Net financing costs	(8.0)		(9.2)
Underlying profit before tax 2	18.0		21.4		(15.9)%
Net other items 2	(9.1)		(9.4)
Profit before tax	8.9		12.0
Underlying earnings per share 2	10.8p		12.7p		(15.0)%
Basic earnings per share	5.2p		5.2p		-
Proposed interim dividend per share	4.83p		4.83p		-

1  Underlying operating profit is the total underlying operating profit of Group companies plus share of results of associates.

2 Underlying profit before tax and earnings per share are stated before net other items of £(9.1)m (2008: £(9.4)m), comprising exceptional restructuring and other costs of £3.8m (2008: £6.4m), exceptional income of £nil (2008: £1.1m) and amortisation of acquired intangibles of £5.3m (2008: £4.1m). Operating profit, including these items, but before share of results of associates, amounted to £16.4m (2008: £21.1m) down 22%. Profit before tax, including these items plus share of results of associates, amounted to £8.9m (2008: £12.0m), down 26%.

OPERATIONAL HIGHLIGHTS

• Contract and market share gains in traditional core of UK & Ireland operations.

• Growth and recovery potential in newer sectors and services.

• Re-focusing in Germany creates profitable platform for growth in Mainland Europe.

FINANCIAL HIGHLIGHTS

• Interim dividend maintained at 4.83p per share.

• Committed lending facilities renewed and extended, albeit at higher margins.

• Stronger operating profit performance expected in second half from new business gains and restructuring benefits.

Commenting on the results, Graeme McFaull, Wincanton Chief Executive, said:

"We remain on track to deliver a full year performance in line with expectations.

Our UK operations remain strong and we have taken decisive action to address underperformance in Mainland Europe. We are confident that our businesses have significant growth and recovery potential as the European economy emerges from recession."

For further enquiries please contact:

Wincanton

Graeme McFaull, Chief Executive 

Gerard Connell, Group Finance Director                [phone]

Buchanan Communications    

Charles Ryland / Jeremy Garcia / Ben Romney    [phone]

Half Year Review

for the six months to 30 September 2009

Introduction

Wincanton is on track to deliver a resilient profit performance in the year to 31 March 2010.  The Group's markets remain challenging but we nonetheless expect to report full year profits in line with management expectations.

Our first half performance has been underpinned by the rapid action taken to reduce costs last year, with growth momentum being driven by contract gains with existing customers and substantial new customer wins. Further restructuring initiatives in the UK and Germany, together with increasing contributions from recent contract gains, will benefit our performance in the second half.  

We remain encouraged by the growth opportunities in the traditional core of our UK & Ireland operations.  We have also seen further confirmation of the growth and recovery potential in the newer sectors and services in which we have been investing in recent years. 

In Mainland Europe, productivity and cost-cutting initiatives have mitigated the effects of the economic downturn. The restructuring and re-focusing of our German business announced recently is expected to deliver a further significant step towards sustainable profit progress in Mainland Europe. Recent new wins in France, Germany and Poland confirm our growing reputation in these markets.

The combination of the strength of our traditional core in the UK & Ireland, the potential in our newer sectors and services and the market positions being built in Mainland Europe gives the Group three areas of strategic focus with attractive profit potential for the future.

Given our confidence in the shorter-term outlook and the Group's opportunity to benefit from the growth and recovery potential in its portfolio of businesses, the Board is declaring an interim dividend of 4.83p per share, in line with last year's payment to shareholders.

We were also pleased to complete the renewal and extension of our committed lending facilities in the first half, albeit at higher margins which will increase our interest charge going forward. The support that the Group continues to receive from its funding partners is testament to the resilience of the Wincanton business model, the strength of its customer relationships and the cash-generative nature of its operations.

UK & Ireland

Our operations in the UK & Ireland reported underlying operating profit of £24.4m, 6.2 per cent lower than the £26.0m reported in the first half last year.  Revenue, at £663.4m, was 10.4 per cent lower than last year's £740.8m.

Operating profit performance was again underpinned by our substantial portfolio of open book contracts, with good progress continuing to be made on new business. The combination of new business wins and the benefits of last year's cost reduction initiatives was not, however, sufficient to offset volume weakness in our construction and container businesses and the negative effect of the economic downturn on our shared user warehousing and home delivery activities. Our ability to make operating profit progress in the first half was also adversely affected by the profit contributions last year from our Woolworth contracts, since terminated following customer insolvency, and a strong performance in the first half last year from our recycling operations as a result of high recyclate prices.  

Some £35m of the reduction in revenue is attributable to the transfer of our chilled consolidation business to a new joint venture. The other principal factors which contributed to the lower revenue this year were the lower levels of construction and shared user activity and the loss of the Woolworth business noted above.  

Our levels of new business activity, in spite of the economic downturn, confirm the strength and quality of Wincanton's market position.  We have been growing business with existing customers, gaining market share with significant contract gains with new customers, and benefiting in both instances from an increased focus on the attractions of outsourcing in a more challenging economic environment.

We continue to grow business with existing customers because of our focus on operational excellence, our ability to help these customers deliver significant productivity and efficiency gains and our pro-active approach to understanding and addressing their changing needs, both tactically and in a longer-term strategic context.

Initiatives already delivered in the year to date are generating substantial cost savings for customers. Our development pipeline also currently includes a number of large potential projects in which we are working with customers to fundamentally re-assess and restructure their existing supply chain models, driven both by cost reduction and environmental imperatives.  A new project for Britvic, for example, will see 50 vehicle loads per day transfer to rail between Daventry and Scotland, reducing CO2 emissions by some 3,330 tonnes per year for this one customer.

We have been gaining market share principally because of our strong track record of innovation in solution design, expertise in systems integration and successful delivery of complex change management projects.  

The substantial gains with M&S announced in September, at £275m one of the largest contract awards in the UK & Ireland this year, provide further confirmation of this increasing recognition of Wincanton as the market leader in the design, implementation and management of complex supply chain solutions. 

Other notable gains and renewals in the period included contracts with Argos, Micheldever, Dunnes, Matalan and Superquinn and incremental business with AgustaWestland and BAE Systems.

We believe there to be attractive potential for Wincanton to continue to build on its traditional areas of strength in the UK & Ireland in the broad retailing and manufacturing sectors.  Excluding our newer sectors and services from the reported UK & Ireland performance, as further discussed below, these traditional areas performed well in the first half, mitigating the effects of both lower volumes and pressure on pricing on certain contract renewals.  

The first half has also provided grounds for confidence in the significant recovery and growth potential in our newer sectors and services, in spite of the challenging trading conditions experienced in certain areas in the first half.

From a recovery perspective we would expect our construction and container businesses to benefit both from recent new contract gains and volume improvement as the economy emerges progressively from recession.  In the construction sector we now have a market-leading position and expect a continuation of the clear trends in the sector towards greater levels of outsourcing. In containers we have also made good market share progress with major wins with companies such as Argos, Homebase, Screwfix, Mattel and Panasonic, successfully integrated last year's acquisition of CEL Group and opened a new inland container terminal to serve our customers' inbound flows through Southampton.  We are also moving increasing volumes of container traffic by rail from the ports of Felixstowe and Southampton.  Economic recovery should also result in further performance improvement in our recycling activities, both supporting higher recyclate prices and generating incremental volumes for our new Daventry facility opened earlier this year.

From a growth perspective, we remain encouraged by both the short-term progress and longer-term potential in our defence & aerospace, food service, home delivery and records management activities. All of these areas have benefited from recent investment in capacity expansion and all are recording good new contract gains. The first half restructuring of home delivery, closing our shared user operations to focus on dedicated customers, will provide a stronger, more stable platform for future growth in this area.

Although the profit contribution from these newer sectors and services was down from approximately 20 per cent of the UK & Ireland in the first half last year to around 15 per cent of this year's first half performance, we remain confident that these activities will, over time, significantly enhance the Group's ability to deliver higher levels of profit growth.

Mainland Europe

Our operations in Mainland Europe reported underlying profit of £1.6m, £3.0m lower than the £4.6m in the first half last year.  Revenue was approximately 10 per cent lower than last year, at £416.5m, 18 per cent at constant exchange rates.

The majority of the revenue decline was the result of significantly lower volumes across both our intermodal and road transport activities in Germany.  

Our operations in Mainland Europe, although generally contract-backed, are more volume-sensitive than the business in the UK & Ireland. Lower levels of revenue are therefore expected to have a more adverse effect upon our reported operating profit. Cost reduction and efficiency initiatives have mitigated, but not fully offset, the impact of volume decline. 

In France and the Benelux, the principal areas in our Western Europe region, profit improvement continues to be hindered by significant empty space in certain of our warehousing operations, but we reported good new business and successfully delivered a number of last year's contract gains.  Progress included the integration of a factory warehouse in France, a new contract in Eindhoven for InBev, and a new warehouse start-up for Total.  Our remaining in-house transport operations suffered from volume decline in the first half but we are progressively reducing our capacity in this area and focusing our resources on transport management services using sub-contracted operators. Two further transport management locations were added in the first half, in Toulouse and Le Havre.  Approximately 20 per cent of our Mainland European revenue in the first half was generated in Western Europe.

In Central & Eastern Europe, pressure on warehousing volumes and margins, as a result of excess capacity in the market, was offset by good performances and contract gains in domestic and international transport management. As in our other areas of operation, headcount reduction and cost-saving initiatives offset the negative effects of the economic downturn, but Central & Eastern Europe nonetheless again reported a small loss in the period. The region accounted for approximately 10 per cent of Mainland European revenue in the first half.

In Germany, we responded quickly to volume decline in the market by reducing sub-contractor capacity in both road and river transportation. Whilst substantially all of our transport requirements are sub-contracted in Germany we have less flexibility, in the short-term, to reduce costs and capacity in our warehouse and container terminal operations. The 25 - 30 per cent volume declines in road and river traffic were offset slightly by higher volumes in our rail activities, but first half profits were nonetheless materially lower than for the same period last year.  Germany accounted for just under 70 per cent of our first half revenue in Mainland Europe.

We announced last week a substantial restructuring of our German transport operations. The poor performance of our in-house groupage network, within our overall transport operations, has had a material adverse effect upon the profitability of both our German businesses and our Mainland European activities as a whole. Decisive action has now been taken to address this poor performance, create a profitable base for Wincanton in Germany and a stronger platform for the Group in Mainland Europe overall from which more rapid profit progress can be delivered.

The restructuring of our in-house groupage network, at an exceptional cost of up to £13m, which we expect to deliver an attractive profit and cashflow payback, will enable us to focus more clearly on the significant growth opportunities for Wincanton in the German market. Wincanton in Germany has a market-leading intermodal and container forwarding business, a growing portfolio of contract logistics customers, with particular strengths in the high-tech, automotive, paper & packaging and chemicals industries, and a substantial and fast-developing presence in domestic and international transport management. Following the restructuring, our German business will be clearly focused on higher value-added activities and a portfolio of businesses which few, if any, of our competitors can match in terms of range, depth and flexibility.

Contract wins and renewals in Mainland Europe in the period included Alcatel, BASF, Bledina, Kraft, JVC, Nutreco and St. Gobain.

We remain confident that Mainland Europe will contribute materially to the future growth of Wincanton, enabling us to meet the cross-border supply chain requirements of our customers and providing geographic diversification of the Group's income streams.

Financial Performance

Underlying operating profit for the Group, at £26.0m, was 15.0 per cent lower than for the same period last year, on revenue some 10 per cent lower at £1,079.9m. The Group's consolidated underlying operating profit margin, at 2.4 per cent, was slightly below the 2.5 per cent in the first half last year.

Net financing costs fell, from £9.2m to £8.0m, with lower base rates offsetting higher IAS 19 non-cash pension charges.

Both underlying profit before tax, at £18.0m and underlying earnings per share, at 10.8p, were also down by approximately 15 per cent compared to last year's first half.

Exceptional restructuring costs of £3.8m in the first half relate to the closure of our shared user home delivery operations in the UK and the final integration costs in respect of our acquisition of CEL Group in November last year. Restructuring costs of up to £13m are expected in the second half as a consequence of the restructuring of our German road network operations.

Cash flow and net debt

Net debt of £166.3m at 30 September 2009 was £10.1m lower than the net debt of £176.4m reported at the year end.  

Cash management and targeted reductions in the Group's average levels of net debt remain important areas of focus. Net capital expenditure of £15.0m, at approximately 80 per cent of depreciation, brought the Group's levels of investment closer to longer-term trends, following recent heavy investment in certain of our newer sectors and services. This £15.0m net spend nonetheless included a £2.5m investment in freezer capacity at our Northern foodservice centre in Trafford Park, a £2.8m systems investment to support growth in our dedicated home delivery services and approximately £1m to increase national capacity in our records management operations.

Cashflow in the second half of the current year will reflect both the fees payable on our new banking facilities and the cash costs of the restructuring of our German groupage activities.

Refinancing

We have successfully renewed our committed lending facilities. A 3-year facility, of £270m, has been signed with a core group of relationship banks. We have also extended our US private placement facility with PRICOA, adding $35m (approximately £22m) of 7-year maturity notes to our existing $150m facility. Our US private placement notes now mature in tranches between 2012 and 2016.

The fees and margins payable on the new bank facility are significantly higher than on our previous facilities, but are in line with current market rates. Our key interest cover covenant moves from an EBIT basis to an EBITDA basis in the new facility. On the new basis, adjusted interest is required to be covered 3.5 times by EBITDA. EBITDA interest cover in the first half was 7.3 times, confirming the Group's ability to operate, with appropriate headroom, within its banking covenants.

The renewal and extension of these facilities is confirmation of the strong support of our funding partners for the quality, resilience and growth potential of the Wincanton business model.

Dividend

The Board has declared an interim dividend of 4.83p per share, maintaining the dividend paid to shareholders in the first half last year. This will be paid to shareholders on 5 January 2010 to shareholders on the register at 4 December 2009.

Risks

The key risks and uncertainties facing Wincanton in the second half of the current financial year have not changed materially from those outlined in the Annual Report for the year ended 31 March 2009.  The principal commercial and operational risks are the Group's ability to source new contracts, at an appropriate financial return for an acceptable level of risk, and subsequent performance of new and existing contracts. The principal strategic risk is the requirement to continue to identify sufficient new areas of potential growth.

  Outlook

Given the substantially contract-based nature of our UK & Ireland operations, we have good visibility of our expected performance through the second half of the financial year. New contract gains and the benefits of the restructuring of our home delivery operations are expected to lead to a stronger second half performance in the UK & Ireland.

We also anticipate a stronger second half performance in Mainland Europe, driven by both cost reduction initiatives and new business gains, with the restructuring of the German road network expected to deliver the most significant element of the overall improvement.

The stronger operating profit performance projected in both the UK & Ireland and Mainland Europe will be broadly offset by higher financing costs as a result of the increased fees and margin on our new banking facilities.

Whilst the economic outlook remains challenging, we continue to expect that the Group's performance for the year to 31 March 2010 will be in line with management expectations.

Looking beyond the current year, the Group remains clearly focused on delivering the growth potential from its three key strategic platforms; the traditional core of its UK & Ireland operations, the newer sectors and services under development, and its Mainland European businesses with their principal markets of France, Germany and Poland.

We believe that the Group can continue to gain market share in the UK & Ireland, drive faster growth from the newer sectors and services and build sustainable profit momentum in Mainland Europe, generating dividend and capital growth for shareholders.

David Edmonds

Chairman

4 November 2009

Statement of Directors' responsibilities 

The Board confirms to the best of their knowledge:  

• that the consolidated half year financial statements for the six months to 30 September 2009 have been prepared in accordance with IAS 34 'Interim Financial Reporting' amended in accordance to changes in IAS 1 'Presentation of Financial Statements, as adopted by the EU; and 

• that the Half Year Report includes a fair review of the information required by sections 4.2.7R and 4.2.8R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the period and their impact on the consolidated half year financial statements; a description of the principal risks and uncertainties for the remainder of the current financial year; and the disclosure requirements in respect of material related party transactions.

The Board of Directors has changed since the publication of the Annual Report in June 2009.  PG Cox resigned from the Board at the 2009 Annual General meeting. P Venables was appointed as a non-executive Director and a member of the Audit and Remuneration Committees on 2 September 2009.  

The above Statement of Directors' responsibilities was approved by the Board on 4 November 2009.

  Consolidated income statement

for the six months to 30 September 2009 (unaudited)

	Note	Six months to 30 Sept  2009		Six months to  30 Sept  2008		Year  ended 31 March  2009
		£m		£m		£m
Revenue	2	1,079.9		1,199.2		2,361.3
Underlying operating profit of Group companies		25.5		30.5		59.5
Share of profit of associates after financing costs and taxation		0.5		0.1		0.1
Total underlying operating profit of Group companies plus share of result of associates	2	26.0		30.6		59.6
Amortisation of acquired intangibles		(5.3)		(4.1)		(9.0)
Exceptional restructuring and other costs	3	(3.8)		(6.4)		(23.1)
Other exceptional income	3	-		1.1		10.8
Exclude share of results of associates		(0.5)		(0.1)		(0.1)
Operating profit		16.4		21.1		38.2
Financing income	4	0.4		0.9		2.9
Financing cost	4	(8.4)		(10.1)		(21.2)
Net financing costs		(8.0)		(9.2)		(18.3)
Share of results of associates		0.5		0.1		0.1
Profit before tax		8.9		12.0		20.0
Income tax expense	5	(2.6)		(5.6)		(6.0)
Profit for the period		6.3		6.4		14.0
Attributable to
- equity shareholders of Wincanton plc		6.0		6.0		13.5
- minority interests		0.3		0.4		0.5
Profit for the period		6.3		6.4		14.0
Earnings per share	6
- basic		5.2p		5.2p		11.6p
- diluted		5.2p		5.1p		11.6p
Dividend declared and paid in the period (£m)	7	11.6		12.0		17.6

All operations in the above financial periods were continuing.

The dividend per share proposed in respect of the above period is 4.83p (2008: 4.83p).

  Consolidated statement of comprehensive income 

for the six months to 30 September 2009 (unaudited)

	Six months to 30 Sept  2009		Six months to 30 Sept  2008		Year  ended 31 March  2009
	£m		£m		£m
Profit for the period	6.3		6.4		14.0
Other comprehensive income
Actuarial losses on defined benefit pension schemes (net of deferred tax)	-		-		(63.4)
Net foreign exchange gain/(loss) on investments in foreign subsidiaries net of hedged items	1.2		0.9		(0.3)
Tax taken directly to equity	-		-		(2.5)
Other comprehensive income for the period, net of income tax	1.2		0.9		(66.2)
Total comprehensive income/(expense) for the period	7.5		7.3		(52.2)
Attributable to
- equity shareholders of Wincanton plc	7.2		6.9		(52.7)
- minority interests	0.3		0.4		0.5
Total comprehensive income/(expense) for the period	7.5		7.3		(52.2)

  Consolidated balance sheet

at 30 September 2009 (unaudited)

	Note	30 Sept  2009		30 Sept  2008		31 March  2009
		£m		£m		£m
Non-current assets
Goodwill and intangible assets		203.1		173.2		209.1
Property, plant and equipment	8	246.1		235.0		249.1
Investments, including those equity accounted		15.0		0.8		15.3
Deferred tax assets		2.2		2.4		3.8
		466.4		411.4		477.3
Current assets
Inventories		8.5		10.1		8.9
Trade and other receivables		359.3		414.2		386.3
Cash and cash equivalents	9	50.5		51.3		48.3
		418.3		475.6		443.5
Current liabilities
Income tax payable		(10.9)		(8.0)		(11.9)
Borrowings	9	(12.8)		(13.1)		(12.2)
Trade and other payables		(518.5)		(525.3)		(525.9)
Employee benefits		(9.4)		(8.7)		(11.0)
Provisions		(11.9)		(18.2)		(24.9)
		(563.5)		(573.3)		(585.9)
Net current liabilities		(145.2)		(97.7)		(142.4)
Total assets less current liabilities		321.2		313.7		334.9
Non-current liabilities
Borrowings	9	(204.0)		(192.1)		(212.5)
Other payables		(1.3)		(1.0)		(1.5)
Employee benefits		(103.4)		(24.9)		(112.6)
Provisions		(47.6)		(36.2)		(37.0)
Deferred tax liabilities		(4.3)		(25.6)		(4.6)
		(360.6)		(279.8)		(368.2)
Net (liabilities)/assets		(39.4)		33.9		(33.3)
Add back: pension deficit, net of deferred tax		80.4		24.8		89.6
Net assets before net pension deficit		41.0		58.7		56.3
Equity
Issued share capital		12.1		12.1		12.1
Share premium		12.2		12.2		12.2
Merger reserve		3.5		3.5		3.5
Translation reserve		4.6		4.6		3.4
Retained earnings		(72.4)		1.1		(65.1)
(Equity deficit)/equity attributable to shareholders of Wincanton plc		(40.0)		33.5		(33.9)
Minority interest		0.6		0.4		0.6
Total (equity deficit)/equity		(39.4)		33.9		(33.3)

Consolidated statement of changes in equity

	Issued share capital	Share premium	Merger reserve	Translation reserve	Retained earnings	Total	Minority interest	Total (equity deficit)/ equity
	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 April 2009	12.1	12.2	3.5	3.4	(65.1)	(33.9)	0.6	(33.3)
Total comprehensive income	-	-	-	1.2	6.0	7.2	0.3	7.5
Decrease in IFRS 2 reserve	-	-	-	-	(0.3)	(0.3)	-	(0.3)
Own shares acquired	-	-	-	-	(1.4)	(1.4)	-	(1.4)
Dividends paid to shareholders	-	-	-	-	(11.6)	(11.6)	(0.3)	(11.9)
Balance at 30 September 2009	12.1	12.2	3.5	4.6	(72.4)	(40.0)	0.6	(39.4)
Balance at 1 April 2008	12.1	11.9	3.5	3.7	5.4	36.6	0.4	37.0
Total comprehensive income	-	-	-	0.9	6.0	6.9	0.4	7.3
Increase in IFRS 2 reserve	-	-	-	-	1.7	1.7	-	1.7
Shares issued	-	0.3	-	-	-	0.3	-	0.3
Dividends paid to shareholders	-	-	-	-	(12.0)	(12.0)	(0.4)	(12.4)
Balance at 30 September 2008	12.1	12.2	3.5	4.6	1.1	33.5	0.4	33.9
Balance at 1 April 2008	12.1	11.9	3.5	3.7	5.4	36.6	0.4	37.0
Total comprehensive income/(expense)	`	-	-	(0.3)	(52.4)	(52.7)	0.5	(52.2)
Increase in IFRS 2 reserve	-	-	-	-	2.2	2.2	-	2.2
Shares issued	-	0.3	-	-	-	0.3	-	0.3
Own shares acquired	-	-	-	-	(2.7)	(2.7)	-	(2.7)
Minority interest acquired	-	-	-	-	-	-	0.3	0.3
Dividends paid to shareholders	-	-	-	-	(17.6)	(17.6)	(0.6)	(18.2)
Balance at 31 March 2009	12.1	12.2	3.5	3.4	(65.1)	(33.9)	0.6	(33.3)

Consolidated statement of cash flows

for the six months to 30 September 2009 (unaudited)

	Six  months  to 30  Sept 2009			Six  months  to 30  Sept 2008					Year ended 31 March 2009
			£m			£m			£m
Operating activities
Profit before tax			8.9			12.0			20.0
Adjustments for
- depreciation and amortisation			24.0			22.6			46.3
- interest expense			8.0			9.2			18.3
- share of results of associates			(0.5)			(0.1)			(0.1)
- gain on disposal of subsidiary			-			-			(14.4)
- profit on sale of property, plant and equipment			(0.1)			(1.2)			(5.5)
- share-based payments fair value (credit)/charges			(0.3)			1.7			2.2
Operating profit before changes in working capital and provisions			40.0			44.2			66.8
Decrease/(increase) in trade and other receivables			27.1			(5.1)			55.0
Decrease/(increase) in inventories			0.3			(0.5)			1.3
(Decrease)/increase in trade and other payables			(0.5)			1.3			(44.3)
Decrease in provisions			(3.1)			(6.4)			(4.2)
Decrease in employee benefits			(13.0)			(8.0)			(11.6)
Income taxes paid			(2.3)			(3.6)			(5.5)
Cash generated from operations			8.5			(22.3)			(9.3)
Cash flows from operating activities			48.5			21.9			57.5
Investing activities
Proceeds from sale of property, plant and equipment			1.2			3.5			23.2
Interest received			0.1			0.6			2.8
Dividends received from associates			-			-			0.2
Acquisitions net of cash acquired and debt repaid on acquisition			(3.0)			(30.0)			(58.0)
Additions of property, plant and equipment			(16.2)			(23.2)			(52.6)
Cash flows from investing activities			(17.9)			(49.1)			(84.4)
Financing activities
Proceeds from the issue of share capital			-			0.3			0.3
Own shares acquired			(1.4)			-			(2.7)
(Decrease)/increase in borrowings			(5.6)			33.4			43.6
Payment of finance lease liabilities			(2.6)			(1.5)			(1.9)
Dividends paid to minority interest in subsidiary undertakings			(0.3)			(0.4)			(0.6)
Equity dividends paid			(11.6)			(12.0)			(17.6)
Interest paid			(6.9)			(8.9)			(16.4)
Cash flows from financing activities			(28.4)			10.9			4.7
Net increase/(decrease) in cash and cash equivalents			2.2			(16.3)			(22.2)
Cash and cash equivalents at beginning of the period			48.3			67.4			67.4
Effect of exchange rate fluctuations on cash held			-			0.2			3.1
Cash and cash equivalents at end of period			50.5			51.3			48.3
Represented by
- cash at bank and in hand			26.0			22.1			23.4
- restricted cash, being deposits held by the Group's captive insurer			24.5			29.2			24.9
			50.5			51.3			48.3

  Notes to the consolidated half year financial statements

for the six months to 30 September 2009 (unaudited)

1    Basis of preparation and Statement of compliance

Wincanton plc (the "Company") is a company incorporated in the UK. The consolidated half year financial statements of the Company for the six months to 30 September 2009 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities.

These consolidated half year financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' amended in accordance to changes to IAS 1 'Presentation of financial statements', as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the half year financial statements have been prepared on the basis of the accounting policies adopted by the Group and applied and disclosed in its consolidated financial statements for the year ended 31 March 2009.  In addition the following standards are effective for accounting periods commencing after 31 March 2009 and have been applied in these consolidated half year financial statements; IFRS 8, Operating Segments, IAS 1 (Amendment), Presentation of Financial Statements, IFRS 2 (Amendment) Share-based Payment: Vesting Conditions and Cancellations and IAS 23 (Amendment) Borrowing Costs. The impact of the adoption of these policies is given in the consolidated financial statements for the year ended 31 March 2009.  These policies are in accordance with IFRS as adopted by the EU (Adopted IFRS). 

These consolidated half year financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements for the year ended 31 March 2009. The comparative figures for the year ended 31 March 2009 have been extracted from those accounts but do not comprise the full statutory accounts for that financial year. Except for the 31 March 2009 comparatives 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 20.

The consolidated financial statements for the year ended 31 March 2009 have been reported on by the Group's auditors; delivered to the Registrar of Companies; and are available upon request from the Company's registered office at Methuen Park, Chippenham, Wiltshire SN14 0WT or at www.wincanton.co.uk. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

The preparation of these consolidated half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these consolidated half year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key areas of estimation were the same as those that applied to the consolidated financial statements for the year ended 31 March 2009.

The Half Year Report, which includes the consolidated half year financial statements, was approved by the Board on 4 November 2009.  

2    Operating segments

Wincanton plc provides contract logistics services. The Group manages its operations in two geographic operating segments, comprised of United Kingdom & Ireland and Mainland Europe. The results of these two operating segments are regularly reviewed by the Board to allocate resources to these segments and to assess their performance. The Group evaluates performance of the operating segments on the basis of underlying operating profit.

Notes to the consolidated half year financial statements (continued)

for the six months to 30 September 2009 (unaudited)

2    Operating segments (continued)

UK & Ireland

Mainland Europe

Consolidated

	Six months to 30 Sept 2009	Six months to 30 Sept 2008	Year ended 31 March 2009	Six months to 30 Sept 2009	Six months to 30 Sept 2008	Year ended 31 March 2009	Six months to 30 Sept 2009	Six months to 30 Sept 2008	Year ended 31 March 2009
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenues from external customers	663.4	740.8	1,455.5	416.5	458.4	905.8	1,079.9	1,199.2	2,361.3
Inter-segment revenues	-	0.8	1.7	1.2	1.1	0.8	1.2	1.9	2.5
Depreciation	(13.0)	(12.9)	(25.8)	(4.9)	(4.5)	(9.7)	(17.9)	(17.4)	(35.5)
Amortisation of software intangibles	(0.2)	(0.4)	(0.7)	(0.6)	(0.7)	(1.1)	(0.8)	(1.1)	(1.8)
Share of results of associates	0.5	-	-	-	0.1	0.1	0.5	0.1	0.1
Reportable segment underlying operating profit 1	24.4	26.0	52.5	1.6	4.6	7.1	26.0	30.6	59.6

1  Underlying operating profit includes the share of results of associates after financing costs and taxation, and is stated before amortisation of acquired intangibles and any goodwill impairment and exceptionals.

3    Exceptionals

	Six  months to  30 Sept 2009 £m		Six  months to 30 Sept 2008 £m			Year  ended  31 March 2009 £m
Exceptional restructuring and other costs
Costs of acquisitions and post acquisition reorganisation of operating structures		(0.7)		(0.5)		(3.0)
Closure and restructuring of operations
- UK		(3.1)		(2.8)		(9.3)
- Mainland Europe		-		(1.9)		(8.7)
Cost of abortive acquisition project		-		(1.2)		-
Under recovery of amounts owing by Woolworths plc		-		-		(2.1)
		(3.8)		(6.4)		(23.1)
Other exceptional income
Property profits - sale of freehold land and buildings		-		1.1		5.2
Partial settlement of the PGN Logistics Ltd arbitration case		-		-		5.6
		-		1.1		10.8

Notes to the consolidated half year financial statements (continued)

for the six months to 30 September 2009 (unaudited)

4    Net financing costs

	Six months to 30 Sept 2009 £m			Six  months  to 30 Sept 2008 £m		Year  ended  31 March 2009 £m
Interest income		0.4		0.9		2.9
		0.4		0.9		2.9
Interest expense		(4.2)		(7.8)		(15.4)
Finance charges payable in respect of finance leases		(0.5)		(0.5)		(1.4)
Unwinding of discount on insurance and other provisions		(1.1)		(1.3)		(3.4)
Expected return on defined benefit pension scheme assets		15.6		18.0		36.0
Interest on defined benefit pension scheme obligations		(18.2)		(18.6)		(37.2)
		(8.4)		(10.2)		(21.4)
Less: finance costs capitalised		-		0.1		0.2
		(8.4)		(10.1)		(21.2)
Net financing costs		(8.0)		(9.2)		(18.3)

5    Income tax expense

	Six  months  to 30 Sept  2009 £m		Six  months to 30 Sept  2008 £m		Year  ended 31 March  2009 £m
Current tax expense
Current year	1.6		3.1		6.2
Adjustments for prior years	(0.3)		(0.2)		0.1
	1.3		2.9		6.3
Deferred tax expense
Current year	1.3		2.7		(0.3)
	1.3		2.7		(0.3)
Total income tax expense in the income statement	2.6		5.6		6.0

In accordance with IAS 34 the tax expense recognised in the income statement for the half year is calculated on the basis of the estimated effective full year tax rate.  

Notes to the consolidated half year financial statements (continued)

for the six months to 30 September 2009 (unaudited)

6    Earnings per share

Earnings per share are calculated on the basis of earnings attributable to the equity shareholders of Wincanton plc of £6.0m (2008: £6.0m) and the weighted average of 114.6m (2008: 116.5m) shares which have been in issue throughout the period. The diluted earnings per share are calculated on the basis of an additional nil (2008: 0.5m) shares deemed to be issued at £nil consideration under the Company's share option schemes.

The weighted average number of ordinary shares for both basic and diluted earnings per share are calculated as follows: 

Weighted average number of ordinary shares	Six  months to  30 Sept  2009  millions		Six months to  30 Sept  2008 millions		Year ended 31 March 2009 millions
Issued ordinary shares at the beginning of the period	115.3		116.5		116.5
Net effect of shares issued and purchased during the period	(0.7)		-		(0.5)
	114.6		116.5		116.0
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares at the end of the period	114.6		116.5		116.0
Effect of share options in issue but not exercised	-		0.5		0.2
	114.6		117.0		116.2

An alternative earnings per share number is set out below, being before amortisation of acquired intangibles and any impairment of goodwill and exceptionals plus related tax, since the Directors consider that this provides further information on the underlying performance of the Group:  

	Six  months to  30 Sept 2009  pence		Six months to  30 Sept  2008 pence		Year ended 31 March 2009 pence
Underlying earnings per share
- basic	10.8		12.7		24.7
- diluted	10.8		12.6		24.7

Notes to the consolidated half year financial statements (continued)

for the six months to 30 September 2009 (unaudited)

6    Earnings per share (continued)

Underlying earnings are determined as follows:

	Six months to  30 Sept 2009  £m		Six months to  30 Sept  2008 £m		Year ended 31 March 2009 £m
Profit for the period attributable to equity shareholders of Wincanton plc	6.0		6.0		13.5
Exceptional restructuring and other costs (note 3)	3.8		6.4		23.1
Other exceptional income (note 3)	-		(1.1)		(10.8)
Amortisation of acquired intangibles	5.3		4.1		9.0
Tax on the above items	(2.7)		(2.2)		(6.1)
Tax related to withdrawal of IBAs	-		1.6		-
Underlying earnings	12.4		14.8		28.7

7    Dividends

An interim dividend is proposed of 4.83p per share to be paid on 5 January 2010 to shareholders on the register on 4 December 2009.  

Under Adopted IFRS dividends are only provided in the financial statements when they are declared and become a liability of the Company. The total of the interim dividend is expected to be £5.5m (2008: £5.6m). In August 2009 the final dividend of 10.08p per share was paid to shareholders, a total of £11.6m (2008: £12.0m).

8     Property, plant and equipment

Additions and disposals

During the half year to 30 September 2009 the Group acquired assets with a cost of £15.2m (2008: £20.5m).

Assets with a carrying amount of £1.1m were disposed of during the half year ended 30 September 2009 (2008: £2.3m).

Capital commitments

At 30 September 2009 the Group had entered into contracts to purchase property, plant and equipment for £6.4m (2008: £23.6m); delivery is expected in the second half of the year to 31 March 2010.

Notes to the consolidated half year financial statements (continued)

for the six months to 30 September 2009 (unaudited)

9    Analysis of net debt

	30 Sept  2009 £m		30 Sept  2008 £m		31 March  2009 £m
Cash and cash equivalents
Cash at bank and in hand	26.0		22.1		23.4
Restricted cash, being deposits held by the Group's captive insurer	24.5		29.2		24.9
	50.5		51.3		48.3
Borrowings
Current
Bank loans and overdrafts	(10.0)		(11.7)		(9.3)
Finance lease liabilities	(2.8)		(1.4)		(2.9)
	(12.8)		(13.1)		(12.2)
Non-current
US$ private placement	(111.9)		(98.8)		(113.3)
Bank loans	(81.0)		(82.2)		(85.6)
Finance lease liabilities	(11.1)		(11.1)		(13.6)
	(204.0)		(192.1)		(212.5)
Total net debt	(166.3)		(153.9)		(176.4)

Independent review report to Wincanton plc

Introduction

We have been engaged by the Company to review the consolidated half year financial statements in the Half Year Report for the six months to 30 September 2009 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated statement of cash flows and the related explanatory notes.  We have read the other information contained in the Half Year Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the consolidated half year financial statements.

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 Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA").  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 Half Year Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Year Report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The consolidated half year financial statements included in this Half Year Report have been prepared in accordance with IAS 34, Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the consolidated half year financial statements in the Half Year Report based on our review. 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the consolidated half year financial statements in the Half Year Report for the six months to 30 September 2009 are not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Virginia Stevens

for and on behalf of KPMG Audit Plc
Chartered Accountants 

100 Temple Street 

Bristol 

BS1 6AG

4 November 2009

Shareholder information

Shares traded ex-dividend	2 December 2009
Record date for interim dividend 1	4 December 2009
Interim dividend paid	5 January 2010
Preliminary announcement of full year results and dividend	June 2010
Annual General Meeting	July 2010
Announcement of half year results and dividend	November 2010

1 Shareholders on the register at this date will receive the dividend.

Shareholders' enquiries

All administrative enquiries relating to shareholdings should, in the first instance, be directed to the Registrar at the following address:

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Telephone: [phone] Fax: [phone]

Text phone: [phone]

Web queries: www.investorcentre.co.uk/contactus

 

END

 

 

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