17th Nov 2016 07:00
17th November 2016
UK MAIL GROUP plc
UNAUDITED INTERIM RESULTS
For the 6 months ended 30 September 2016
'Strong momentum leading into peak trading period'
Results highlights
· Group revenues down 3.2% to £230.2m (2015: £237.6m)
· Group profit before tax (pre-exceptional) up 16.9% to £5.8m (2015: £4.9m)
· Group profit before tax (post-exceptional) up 158.4% to £5.8m (2015: £2.2m) *
· Net debt at period end of £5.7m (2015: £12.7m)
· Interim dividend of 5.5p (2015: 5.5p) per share
* 2015 interim results included net exceptional costs of £2.7m, primarily relating to the cost of relocating the central hub
Recommended offer from Deutsche Post AG ("Deutsche Post DHL")
· On 28 September 2016, Deutsche Post DHL and UK Mail announced the terms of a recommended cash offer by Deutsche Post DHL of 440p per share
· Deutsche Post DHL currently has received irrevocable undertakings to vote in favour of the offer representing, in aggregate, 62.6% of UK Mail's ordinary share capital
· The offer is conditional on, amongst other things, UK Mail shareholder approval at a General Meeting and a Court Meeting convened for 18 November 2016, Court sanction at a hearing expected to be on 20 December 2016, and European Commission ('EC') merger control clearance.
Peter Kane, Chairman of UK Mail, said:-
"Today's results are further evidence of the good strategic progress we have made in recent years. Our operations are consistently delivering strong service levels while our new automated hub continues to perform very well and is starting to achieve the targeted efficiency levels. We are also creating the capacity for future growth with the further development of our site network and have recently won a number of major new customers. Given this positive momentum in our business, we are confident heading into our peak trading period.
"However, the Board believes that UK Mail will benefit significantly from becoming part of Deutsche Post DHL, and will be better positioned to continue to develop our parcels and mail businesses with the benefit of their greater financial and operational resources. Furthermore, the Offer provides shareholders with the opportunity to realise their investment for cash at a significant premium to the levels at which the share price has traded in the recent months before announcement of the offer."
For further information, please contact:
UK Mail Group plc |
|
Steven Glew, Group Finance Director
| 0175 370 6070 |
MHP Communications |
|
John Olsen Giles Robinson Gina Bell | 0203 128 8100 |
Introduction
The results for the first half are in line with the Board's expectations.
With our operations consistently delivering strong service levels to customers and our new automated hub continuing to perform very well, the focus in the half year has been on improving efficiency to eliminate excess costs and improve the profitability of the business.
The new hub is now starting to achieve the required efficiency levels, and we are also creating the capacity for future growth with the further development of our site network. With this positive momentum, we are confident that the Group is well positioned ahead of our peak trading period
Reported Group revenues for the first half decreased by 3.2% compared to the same period last year. Group profit before tax and exceptional items increased by 16.9%, or £0.9m, to £5.8m (2015: £4.9m). Results for the first half of last year included net exceptional costs of £2.7m, primarily relating to the cost of relocating the central hub, whereas there were net exceptional items of £nil in the first half of this year. Group profit before tax and post-exceptional items increased by 158.4% to £5.8m (2015: £2.2m).
In our Parcels business (53% of group revenues) revenues reduced by 1.2%, partially due to average daily volumes being down by 2.1%. This decline reflects the exceptionally strong growth in the first half of last year, when volumes were up some 9% on the prior year, largely due to the volumes taken on from City Link in the first quarter, some of which were short-term in nature. Parcels operating costs have reduced compared to the first half of last year as our operations are now starting to achieve the targeted efficiency levels. This has meant that the Parcels operating margin has increased to 7.2% (2015: 6.3%), and the operating profit has increased to £8.8m (2015: £7.9m).
Revenues in our Mail business (47% of group revenues) reduced by 5.3%. Our daily mail volumes reduced by 0.4% in the half year. The slight volume decline is compared to an overall mail market volume decline of some 4.0%. We continue to offset the market decline with new customer wins and strong customer retention. The mail market remains highly competitive and the resultant revenue decline has meant that the operating profit decreased by 16.0% to £4.3m (2015: £5.1m) with the operating margin reducing to 4.0% (2015: 4.5%). We continue to see good progress from imail and related new product innovations.
The Group remains in a sound financial position. Net debt at the period end was £5.7m (2015: net debt £12.7m).
The Board has declared an Interim Dividend of 5.5p per share (2015: 5.5p), payable on 2 December 2016 to shareholders on the register on 25 November 2016.
RECOMMENDED OFFER FROM DEUTSCHE POST DHL
On 28 September 2016, the Boards of Deutsche Post DHL and UK Mail announced the terms of a recommended cash offer (the "Offer") of 440p per share by Deutsche Post DHL for the entire issued and to be issued ordinary share capital of UK Mail. Deutsche Post DHL currently has received irrevocable undertakings to vote in favour of the offer in respect of c.62.6% of UK Mail's ordinary share capital.
This offer represents a premium of approximately 43.1% to the closing price on 27 September 2016 (being the date before announcement of the Offer), and of approximately 43.2% to the volume-weighted average price for the previous three-month period ended on that date.
We have made good strategic progress in recent years, establishing leading positions in our key markets of parcels and mail, investing in additional capacity in our operations and in IT and product and service innovation. Today's results represent further evidence of that progress.
However, the Board believes that UK Mail will benefit significantly from becoming part of Deutsche Post DHL for the reasons stated in the Scheme Document posted to UK Mail shareholders on 26 October 2016, and will be better positioned to continue to develop our parcels and mail businesses with the benefit of their greater financial and operational resources. Furthermore, the Offer provides our shareholders with the opportunity to realise their investment for cash at a significant premium to the levels at which the share price has traded in recent months.
The Offer remains conditional on, amongst other things, UK Mail shareholder approval at a General Meeting and a Court Meeting convened for 18 November 2016, Court sanction at a hearing expected to be held on 20 December 2016, and European Commission merger control clearance.
Results
The results can be summarised as follows:
| Six months ended 30th September
| ||||
Continuing operations | Unaudited 2016 £m |
| Unaudited 2015 £m |
| Inc/(Dec) % |
|
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|
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|
|
Group revenue | 230.2 |
| 237.6 |
| (3.2)% |
|
|
|
|
|
|
Operating profit (before exceptional items) | 6.0 |
| 5.2 |
| 15.0% |
Net finance costs | (0.2) |
| (0.3) |
| 16.1% |
Profit before tax (before exceptional items) | 5.8 |
| 4.9 |
| 16.9% |
Net exceptional items | - |
| (2.7) |
| - |
Profit before tax (after exceptional items) | 5.8 |
| 2.2 |
| 158.4% |
Taxation | (1.6) |
| (0.5) |
| 203.5% |
Profit after taxation | 4.2 |
| 1.7 |
| 144.3% |
|
|
|
|
|
|
Basic earnings per share - continuing operations | 7.6p |
| 3.1p |
| 146.0% |
Underlying basic earnings per share * - continuing operations | 7.6p |
| 7.1p |
| 6.4% |
* - excludes exceptional items
Revenue and operating profit (before exceptional items) are analysed as follows:
| Revenue |
| Operating Profit (before exceptional items) | ||||||||
| 2016 £m |
| 2015 £m |
| Inc/ (Dec) % |
| 2016 £m |
| 2015 £m |
| Inc/ (Dec) % |
|
|
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|
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|
|
|
Parcels | 122.5 |
| 124.0 |
| (1.2)% |
| 8.8 |
| 7.9 |
| 12.6% |
107.7 |
| 113.6 |
| (5.3)% |
| 4.3 |
| 5.1 |
| (16.0)% | |
Total | 230.2 |
| 237.6 |
| (3.2)% |
| 13.1 |
| 13.0 |
| 1.3% |
|
|
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|
|
|
|
|
|
|
|
|
Central costs |
|
|
|
|
|
| (7.1) |
| (7.8) |
| 7.9% |
Operating profit before exceptional items |
| 6.0 |
| 5.2 |
| 15.0% | |||||
Parcels
Revenues in Parcels, which comprises the Group's business-to-business (B2B), business-to-consumer (B2C) international parcel delivery service and courier operations, were down 1.2% to £122.5m (2015: £124.0m).
Parcels average daily volumes decreased by 2.1% compared to last year. This decline reflects the exceptionally strong growth in the first half of last year, when volumes were up some 9% on the prior year, largely due to the volumes taken on from City Link in the first quarter, some of which were short-term in nature. We continue to see an on-going volume mix change towards the lower margin B2C segment however there has been strong momentum in recent weeks with a number of significant contract wins.
The Parcels operating margin for the period increased to 7.2% (2015: 6.3%), resulting in operating profit for the period increasing to £8.8m (2015: £7.9m).
Our Parcels operations are now starting to achieve the targeted efficiency levels under the direction of Peter Fuller who joined as Operations Director in April 2016. The automated sortation equipment is operating efficiently, and service levels are the highest we have achieved in our recent history. The focus has been on maintaining these performance levels whilst driving operating efficiencies, eliminating the excess costs experienced last year and starting to achieve the expected benefits from our investment in automation. These are now being delivered with further improvements planned for the second half year.
We are also increasing our capacity through improved operating methods at our central hub combined with developing our delivery networks. Both our Dartford and Basildon sites will see significant capacity increases in the second half of the year.
The re-engineering of our linehaul template to fully align it with the efficiency of the new hub is now complete. We have introduced a new computerised model to optimise the planning of our linehaul routing, with the new routing being rolled out during the second half of the year. This is expected to deliver improvements in trunk vehicle utilisation levels and therefore a reduction in overall linehaul costs.
Key to our parcels market position is the provision of value added services that customers increasingly demand. A key current focus is the provision of parcel drop-off and collection points. We are making good progress in this area following the successful trial with a multi-site retailer.
Mail revenues decreased by 5.3% to £107.7m (2015: £113.6m).
The Mail market remains highly competitive, and operating profits decreased by 16.0% to £4.3m (2015: £5.1m). The operating margin decreased to 4.0% (2015: 4.5%).
Our daily Mail volumes decreased by 0.4% compared to the same period last year, while the overall UK mail market has seen a decline in transactional volumes of some 4% per annum, demonstrating further market share gains.
This has been achieved through our continued product innovation. imail, our web-to-print postal service, continues to show good revenue and profit growth. We continue to invest to increase our capacity and provide additional services. 'imailprint' has now been successfully launched, providing a specialist printing service which, rather than being purely mail-related as with our current service, can produce printed documents for general usage. We see this as a medium-term low risk growth opportunity using our existing infrastructure.
A key growth element of the Mail market is the rising popularity of packets; a market we estimate to be worth some £1.2bn. We have a clear plan in place to grow our market share, and have recently opened our new dedicated packets sortation centre in Leeds. This centre allows us to process all our packet volumes in the same location, ensuring we can provide a very efficient process and offer a service that fully meets our customers' requirements. We have increased the size of our sales team to support this new capability and are gaining good traction with customers. We continue to believe that this area will be key to growing our Mail revenues and profitability in the future.
In July 2015 Ofcom published a Discussion Paper on the review of the regulation of Royal Mail. We responded to this, making clear the need for Ofcom to protect and promote competition; to require Royal Mail to improve its efficiency, with possible price capping, for the benefit of mail customers; and to require service and product equivalence between Royal Mail Retail and Wholesale.
Ofcom then published a more detailed Consultation Document in May 2016. The proposals were generally positive for UK Mail but did not, in our view, go far enough in requiring Royal Mail to become more efficient nor in promoting competition. We have responded accordingly, with more detail and further evidence, and will continue to press our case ahead of Ofcom's final position being announced in March 2017.
UK Mail remains a market leader with an operational template ideally suited to the evolving demands of the mail market. We remain focussed on growing our business by handling additional mail for existing customers and winning volumes from other Downstream Access operators. We continue to invest for the future, and see substantial growth opportunities for the medium and longer term.
Central costs
Central costs for the period reduced by 7.9% to £7.1m (2015: £7.8m). We continue to invest in I.T., although this spend has been more than offset by savings in other areas.
Net Finance cost
Net finance cost for the period was £0.2m (2015: £0.3m). The investment in our new hub and automation is now completed and debt levels have reduced since last year.
Financial Position
The Group's financial position remains sound. Net debt at the end of the period was £5.7m (2015: £12.7m).
Net cash inflow from operations totalled £2.7m (2015: £5.7m), including £2.7m (2015: £5.3m) from continuing operations.
The total consolidated net cash outflow for the period was £2.2m (2015: inflow £1.9m) which included £8.1m consumed in working capital (2015: £4.2m), and a net £4.1m expended on capital additions (2015: £5.7m).
The Group paid £6.0m (2015: £7.9m) in dividends during the period.
Capital Additions
Capital additions for the period were as follows:
This can be summarised as follows:
| 6 months to 30 September |
| Year to 31 March | |||
| 2016 £m |
| 2015 £m |
|
| 2016 £m |
|
|
|
|
|
|
|
Underlying capital additions | 3.5 |
| 4.1 |
|
| 10.2 |
Investment in new hub | - |
| 1.3 |
|
| 1.5 |
Investment in automation | - |
| 1.5 |
|
| 1.5 |
Total gross capital additions | 3.5 |
| 6.9 |
|
| 13.2 |
Compensation from DfT and HS2 | - |
| (5.4) |
|
| (5.4) |
Net capital additions | 3.5 |
| 1.5 |
|
| 7.8 |
The underlying capital addition includes £2.6m on I.T. as we continue to develop our system infrastructure, and £0.9m on our network.
Exceptional items
Details of exceptional items are provided in note 7.
Earnings per share
Underlying basic earnings per share increased by 6.4% to 7.6p (2015: 7.1p). Basic earnings per share increased 161% to 7.6p (2015: 2.9p).
Dividend
The Board has declared an Interim Dividend of 5.5p per share (2015: 5.5p), payable on 2 December 2016 to shareholders on the register on 25 November 2016.
CURRENT TRADING AND OUTLOOK
Trading in the initial weeks of the second half, and overall trends within our individual businesses, have been in line with the Board's expectations.
Our operations are consistently delivering strong service levels while our new automated hub continues to perform very well and is starting to achieve the targeted efficiency levels. We are also creating the capacity for future growth with the further development of our site network and have recently won a number of major new customers. Given this positive momentum in our business, we are confident heading into our peak trading period.
Peter Kane
Chairman
ADDITIONAL DISCLOSURES
Principal risks and uncertainties facing the business
UK Mail's business and share price may be affected by a number of risks, not all of which are within our control. The process UK Mail has in place for identifying, assessing and managing risks is set out in the Corporate Governance Report on page 27 of the 2016 Annual Report and Accounts. The specific principal risks and uncertainties that may affect the Group's performance, together with relevant mitigating factors as identified by the Group's risk management process were discussed on page 28 of the Group's 2016 Annual Report and Accounts. These included risks relating to operational plan failure, loss of key management, IT systems, competition, business continuity, physical theft and security, and legislation and regulation, in addition to financial risks (details of which can be found in note 25 of the 2016 Annual Report and Accounts) including credit risk. It is considered that these still remain the most likely areas of potential risk and uncertainty, with the position unchanged from that set out in the 2016 Annual Report and Accounts.
Cautionary statement
This interim announcement contains certain forward-looking statements, which have been made by the directors in good faith based on the information available to them up to the time of the approval of this report and such information should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. Nothing in this report should be construed as a profit forecast.
Going concern
As stated in note 2 to the condensed consolidated interim financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.
Related-party transactions
As stated in note 18 to the condensed consolidated interim financial statements, there were no transactions with related parties during the six months ended 30 September 2016 which have had a material effect on the results or the financial position of the Group. The nature of the related party transactions has not changed from those described in the Group's 2016 Annual Report and Accounts.
Consolidated Statement of Comprehensive Income |
| ||||||
for the six months ended 30 September 2016 |
|
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| ||||
|
|
| Unaudited Six months to 30 September 2016 | Unaudited Six months to 30 September 2015 | Audited Year to 31 March 2016 | ||
Continuing operations | Note | £m | £m | £m | |||
|
|
|
|
| |||
Revenue | 6 | 230.2 | 237.6 | 481.0 | |||
Cost of sales |
| (204.9) | (213.2) | (431.6) | |||
Gross profit |
| 25.3 | 24.4 | 49.4 | |||
Administrative expenses |
| (19.3) | (19.2) | (38.2) | |||
Operating profit before exceptional items | 6.0 | 5.2 | 11.2 | ||||
Profit on sale of national hub | 7 | - | 1.1 | 1.1 | |||
HS2 compensation | 7 | 0.3 | 6.8 | 16.5 | |||
Cost of automation implementation | 7 | - | (0.7) | (0.6) | |||
National hub relocation costs | 7 | - | (6.7) | (7.1) | |||
Impairment of intangible assets | 7 | - | (3.2) | (3.8) | |||
Impairment of tangible assets | 7 | - | - | (1.0) | |||
Management reorganisation | 7 | (0.3) | - | (1.4) | |||
Net exceptional items - (cost)/income | - | (2.7) | 3.7 | ||||
Operating profit after exceptional items | 6.0 | 2.5 | 14.9 | ||||
Finance costs |
| (0.2) | (0.3) | (0.5) | |||
Profit before taxation | 5.8 | 2.2 | 14.4 | ||||
Taxation - on profit before exceptional items | 13 | (1.6) | (1.1) | (2.2) | |||
Taxation - on exceptional items | - | 0.6 | (0.3) | ||||
Total taxation | 13 | (1.6) | (0.5) | (2.5) | |||
Profit for the period from continuing operations | 4.2 | 1.7 | 11.9 | ||||
Loss for the period from discontinued operations | - | (0.1) | - | ||||
Profit for the period | 4.2 | 1.6 | 11.9 | ||||
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| ||
Total comprehensive income attributable to:
|
|
|
| ||||
- Continuing operations |
| 4.2 | 1.7 | 11.9 | |||
- Discontinued operations |
| - | (0.1) | - | |||
Total comprehensive income attributable to equity holders of the company | 4.2 | 1.6 | 11.9 | ||||
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Earnings/(loss) per share from continuing and discontinued operations |
|
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Basic earnings per share |
|
|
| ||||
From continuing operations | 14 | 7.6p | 3.1p | 21.6p | |||
From discontinued operations | 14 | - | (0.2)p | - | |||
Total basic earnings per share | 7.6p | 2.9p | 21.6p | ||||
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Diluted earnings per share |
|
|
| ||||
From continuing operations | 14 | 7.6p | 3.1p | 21.6p | |||
From discontinued operations | 14 | - | (0.2)p | - | |||
Total diluted earnings per share | 7.6p | 2.9p | 21.6p | ||||
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The notes on the following pages form an integral part of these condensed consolidated interim financial statements. | |||||||
Consolidated Balance Sheet |
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as at 30 September 2016 |
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| Unaudited 30 September 2016 |
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| Unaudited 30 September 2015 |
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| Audited 31 March 2016 |
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| Note | £m |
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| £m |
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| £m |
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Assets |
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Non-current assets |
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Goodwill |
| 9 | 1.6 |
| 1.6 |
| 1.6 | |||||
Intangible assets |
| 9 | 9.7 |
| 7.7 |
| 8.9 | |||||
Investment properties |
| 9 | - |
| 1.7 |
| 1.7 | |||||
Property, plant and equipment |
| 9 | 73.1 |
| 74.4 |
| 73.4 | |||||
Deferred tax assets |
|
| 0.1 |
| 0.6 |
| 0.3 | |||||
|
|
| 84.5 |
| 86.0 |
| 85.9 | |||||
Current assets |
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Inventories |
|
| 0.3 |
| 0.2 |
| 0.2 | |||||
Trade and other receivables |
|
| 60.9 |
| 70.5 |
| 64.3 | |||||
Cash and cash equivalents |
| 11 | 4.6 |
| 6.5 |
| 6.8 | |||||
Current tax assets |
|
| - |
| 0.1 |
| - | |||||
|
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| 65.8 |
| 77.3 |
| 71.3 | |||||
Liabilities |
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Current liabilities |
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Borrowings |
| 11 | (6.2) |
| (14.6) |
| (0.2) | |||||
Trade and other payables |
|
| (68.2) |
| (79.5) |
| (80.1) | |||||
Current tax liabilities |
|
| (1.6) |
| - |
| (0.5) | |||||
Provisions |
| 12 | (1.4) |
| (0.8) |
| (1.2) | |||||
|
|
| (77.4) |
| (94.9) |
| (82.0) | |||||
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Net current liabilities |
|
| (11.6) |
| (17.6) |
| (10.7) | |||||
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Non-current liabilities |
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Borrowings |
| 11 | (4.1) |
| (4.6) |
| (4.4) | |||||
Deferred tax liabilities |
|
| (2.7) |
| (2.9) |
| (2.8) | |||||
Provisions |
| 12 | (0.6) |
| (0.7) |
| (0.8) | |||||
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|
| (7.4) |
| (8.2) |
| (8.0) | |||||
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Net assets |
|
| 65.5 |
| 60.2 |
| 67.2 | |||||
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Shareholders' equity |
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Ordinary shares |
| 10 | 5.5 |
| 5.5 |
| 5.5 | |||||
Share premium |
| 10 | 15.7 |
| 15.6 |
| 15.7 | |||||
Retained earnings |
|
| 44.3 |
| 39.1 |
| 46.0 | |||||
Total shareholders' equity |
|
| 65.5 |
| 60.2 |
| 67.2 | |||||
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Consolidated Cash Flow Statement |
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for the six months ended 30 September 2016 |
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| Unaudited | Unaudited | Audited | |
| 30 September 2016 | 30 September 2015 | 31 March 2016 | |
Continuing operations | Note | £m | £m | £m |
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Profit for the period |
| 4.2 | 1.7 | 11.9 |
Adjustments for: |
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|
Net exceptional items | 7 | - | 2.7 | 5.1 |
Depreciation and amortisation | 9 | 4.6 | 4.4 | 9.0 |
Share-based payment expense |
| 0.1 | 0.2 | (0.1) |
Loss on sale of property, plant and equipment |
| 0.1 | 0.1 | 0.1 |
Finance costs |
| 0.2 | 0.3 | 0.5 |
Taxation | 13 | 1.6 | 0.5 | 2.5 |
Operating profit before changes in working capital |
| 10.8 | 9.9 | 29.0 |
|
|
|
|
|
Decrease/(increase) in trade and other receivables |
| 3.4 | 4.1 | 10.4 |
(Decrease)/increase in trade and other payables |
| (11.4) | (8.4) | (8.1) |
(Decrease)/increase in provisions |
| (0.1) | (0.3) | (0.3) |
Total cash flow from changes in working capital - continuing operations |
| (8.1) | (4.6) | 2.0 |
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Cash generated from continuing operations |
| 2.7 | 5.3 | 31.0 |
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Discontinued operations |
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(Loss)/profit for the year |
| - | (0.1) | - |
Adjustments for: |
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Exceptional items | 7 | - | 0.1 | - |
Operating profit before changes in working capital - discontinued operations |
| - | - | - |
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Decrease/(increase) in trade and other receivables |
| - | 1.4 | 1.4 |
(Decrease)/increase in trade and other payables |
| - | (0.7) | (0.4) |
(Decrease)/increase in provisions |
| - | (0.3) | (0.7) |
Total cash flow from working capital - discontinued operations |
| - | 0.4 | 0.3 |
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Cash generated from continuing operations |
| 2.7 | 5.3 | 31.0 |
Cash generated from discontinued operations |
| - | 0.4 | 0.3 |
Total cash generated from operations |
| 2.7 | 5.7 | 31.3 |
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Income taxes paid |
| (0.3) | (0.5) | (0.4) |
Finance costs paid |
| (0.2) | (0.2) | (1.8) |
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|
Net cash flow from continuing operating activities |
| 2.2 | 4.6 | 28.8 |
Net cash flow from discontinued operating activities |
| - | 0.4 | 0.3 |
Total net cash flow from operating activities |
| 2.2 | 5.0 | 29.1 |
Investing activities |
|
|
|
| |
Purchase of property, plant and equipment |
| (1.0) | (8.5) | (11.9) | |
Purchase of intangible assets |
| (3.1) | (2.6) | (4.7) | |
Deferred compensation |
| - | 5.4 | 5.4 | |
Proceeds from sale of property, plant and equipment |
| - | 0.8 | - | |
Net cash flow from investing activities - continuing operations |
| (4.1) | (4.9) | (11.2) | |
Net cash flow from investing activities - discontinued operations |
| - | - | - | |
Total net cash flow from investing activities |
| (4.1) | (4.9) | (11.2) | |
|
|
|
|
| |
Financing activities |
|
|
|
| |
Proceeds from re-financing under finance leases |
| - | 13.7 | 13.7 | |
Repayment of finance leases |
| (0.2) | (8.7) | (8.9) | |
Dividends paid to shareholders | 15 | (6.0) | (7.9) | (11.0) | |
Net proceeds from issue of ordinary share capital |
| - | 0.3 | 0.4 | |
Draw down/(repayment) of revolving credit facility |
| 5.9 | 4.4 | (9.9) | |
Net cash flow from financing activities - continuing operations |
| (0.3) | 1.8 | (15.7) | |
Net cash flow from financing activities - discontinued operations |
| - | - | - | |
Total net cash flow from financing activities |
| (0.3) | 1.8 | (15.7) | |
|
|
|
|
| |
Net (decrease)/increase in cash and cash equivalents |
| (2.2) | 1.9 | 2.2 | |
Cash and cash equivalents at the beginning of the period |
| 6.8 | 4.6 | 4.6 | |
Cash and cash equivalents at the end of the period | 11 | 4.6 | 6.5 | 6.8 | |
|
|
|
|
| |
|
| ||||
Consolidated Statement of Changes in Equity (unaudited) for the six months ended 30 September 2016 | ||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
|
| Attributable to equity holders of the company | ||||||||||||||||
|
| Ordinary shares |
| Share premium |
| Retained earnings |
|
| Total equity | |||||||||
|
|
|
|
|
| |||||||||||||
| Note | £m |
| £m |
| £m |
|
| £m | |||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Balance as at 1 April 2016 |
| 5.5 |
| 15.7 |
| 46.0 |
| 67.2 | ||||||||||
| ||||||||||||||||||
Profit for the period |
| - |
| - |
| 4.2 |
| 4.2 | ||||||||||
Total comprehensive income for the period | - |
| - |
| 4.2 |
| 4.2 | |||||||||||
| ||||||||||||||||||
Dividends paid to shareholders | 15 | - |
| - |
| (6.0) |
| (6.0) | ||||||||||
Employees' share option scheme: |
|
|
|
|
|
|
|
| ||||||||||
- share-based payments |
| - |
| - |
| 0.1 |
| 0.1 | ||||||||||
Total transactions with shareholders recorded directly in equity |
| - |
| - |
| (5.9) |
| (5.9) | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Balance as at 30 September 2016 |
| 5.5 |
| 15.7 |
| 44.3 |
| 65.5 | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Balance as at 1 April 2015 |
| 5.5 |
| 15.3 |
| 45.3 |
| 66.1 | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Profit for the period |
| - |
| - |
| 1.6 |
| 1.6 | ||||||||||
Total comprehensive income for the period | - |
| - |
| 1.6 |
| 1.6 | |||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Dividends paid to shareholders | 15 | - |
| - |
| (7.9) |
| (7.9) | ||||||||||
Employees' share option scheme: |
|
|
|
|
|
|
|
| ||||||||||
- share-based payments |
| - |
| - |
| 0.2 |
| 0.2 | ||||||||||
- exercise of share options |
| - |
| 0.3 |
| - |
| 0.3 | ||||||||||
- tax charged directly to equity |
| - |
| - |
| (0.1) |
| (0.1) | ||||||||||
Total transactions with shareholders recorded directly in equity |
| - |
| 0.3 |
| (7.8) |
| (7.5) | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Balance as at 30 September 2015 |
| 5.5 |
| 15.6 |
| 39.1 |
| 60.2 | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Balance as at 1 April 2015 |
| 5.5 |
| 15.3 |
| 45.3 |
| 66.1 | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Profit for the year |
| - |
| - |
| 11.9 |
| 11.9 | ||||||||||
Total comprehensive income for the year | - |
| - |
| 11.9 |
| 11.9 | |||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Dividends paid to shareholders | 15 | - |
| - |
| (11.0) |
| (11.0) | ||||||||||
Employees' share option scheme: |
|
|
|
|
|
|
|
| ||||||||||
- net proceeds from issue of ordinary share capital |
|
|
| 0.4 |
| - |
| 0.4 | ||||||||||
- share-based payments |
| - |
| - |
| (0.1) |
| (0.1) | ||||||||||
- tax charged directly to equity |
| - |
| - |
| (0.1) |
| (0.1) | ||||||||||
Total transactions with shareholders recorded directly in equity |
| - |
| 0.4 |
| (11.2) |
| (10.8) | ||||||||||
|
|
|
|
|
|
|
|
| ||||||||||
Balance as at 31 March 2016 |
| 5.5 |
| 15.7 |
| 46.0 |
| 67.2 | ||||||||||
| Notes to condensed consolidated interim financial statements | |||||||
|
|
|
| |||||
1 | General information | |||||||
|
|
|
|
|
| |||
| UK Mail Group Plc ('the Company') and its subsidiaries (together 'the Group') are engaged in the provision of parcels, mail and logistical service solutions. | |||||||
|
|
|
|
|
| |||
| The Company (registration 02800218) is a public limited company incorporated and domiciled in England. The address of its registered office is 120 Buckingham Avenue, Slough, SL1 4LZ. The Company is listed on the London Stock Exchange (LSE: UKM). | |||||||
|
|
|
|
|
| |||
| The condensed consolidated interim financial statements were approved for issue on 16 November 2016. | |||||||
|
|
|
|
|
|
|
|
|
| The condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Within the notes to these financial statements, the half year periods to 30 September 2016 and 2015 are unaudited. Statutory accounts for the year ended 31 March 2016 were approved by the Board of directors on 23 May 2016 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. | |||||||
|
|
|
|
|
|
| ||
2 | Basis of preparation | |||||||
|
|
|
|
|
|
| ||
| The condensed consolidated interim financial statements for the half year ended 30 September 2016 have been prepared in accordance with the Disclosure and Transparency Rules ('DTR') of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. They do not include all of the information and disclosures required for full annual financial statements, and should be read in conjunction with the consolidated annual financial statements of the Group as at and for the year ended 31 March 2016, which were prepared in accordance with IFRSs as adopted by the European Union. | |||||||
|
|
|
|
|
|
| ||
| The consolidated financial statements of the Group as at and for the year ended 31 March 2016 are available upon request from the Company's registered office at 120 Buckingham Avenue, Slough, SL1 4LZ or at www.ukmail.com. | |||||||
|
|
|
|
|
|
| ||
| The condensed consolidated interim financial statements are presented in Sterling. | |||||||
|
|
|
|
|
|
|
| |
| After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence. The Group meets its day to day working capital requirements through operating cash flows, with borrowings to fund acquisitions and capital expenditure, as necessary. Movements in the Group's overall net (debt)/funds position are shown in note 11. The Group has committed bank facilities in place, comprising of a five year £25m revolving credit facility available until 31 May 2019, and a £10m overdraft facility available until 31 May 2017. Accordingly they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements. | |||||||
|
|
|
|
|
|
|
| |
3 | Accounting policies | |||||||
|
|
|
|
|
|
|
| |
| The accounting policies applied by the Group in these condensed consolidated interim financial statements are consistent with those applied and disclosed by the Group in its consolidated annual financial statements as at and for the year ended 31 March 2016. | |||||||
|
| |||||||
| Adoption of new standards, and amendments to standards or interpretations, which are mandatory for the first time for the financial year beginning 1 April 2016, have had no material impact on the financial position and performance of the Group. | |||||||
4 | Changes in accounting estimates | |||||
|
|
|
|
|
|
|
| The preparation of the condensed consolidated interim 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 condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 March 2016. | |||||
|
|
|
|
|
|
|
| There have been no material changes in contingent liabilities during the current interim period. | |||||
|
| |||||
5 | Financial instruments | |||||
|
| |||||
| The activities of the Group exposes it to a number of financial risks, including credit risk, market risk, price risk, interest risk, liquidity risk and capital risk. | |||||
|
| |||||
| These condensed consolidated interim financial statements do not include all of the financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's 2016 Annual Report and Accounts. | |||||
|
| |||||
| There have been no changes in the Group's financial risk management policies since the year end 31 March 2016. | |||||
6 | Segmental information | |||||
|
|
|
|
|
|
|
| Management has determined the operating segments based on reports that are reviewed by the Board for making strategic decisions. These reports reflect the Group's defined management structure, whereby distinct managers are accountable to the Board for the results and activities of their identified segments and the different markets in which they operate. The Board, which is the Group's chief operating decision maker, considers that the Group has two reportable operating segments being the Parcels and Mail segments, following the integration of the Courier operations into Parcels and the cessation of trading of UK Pallets Ltd in March 2015. | |||||
|
|
|
|
|
|
|
| The Group manages its business segments on a national basis, with all its operations in the UK, as are nearly all of the customers. | |||||
|
| |||||
| Inter-company transactions, (which are conducted on an arm's length basis), balances and unrealised gains on transactions between segments are eliminated. Unrealised losses are also eliminated. | |||||
|
|
|
|
|
|
|
| No individual customer accounted for more than 7% of revenue in the periods included in these condensed consolidated interim financial statements. | |||||
| Six months ended 30 September 2016 (unaudited) |
|
|
|
|
|
| Continuing operations |
|
| |
|
| Parcels | Central | Total | |
|
| £m | £m | £m | £m |
|
|
|
|
|
|
| Segmental revenue | 122.5 | 107.7 | - | 230.2 |
|
|
|
|
|
|
| Operating profit/(loss) before exceptional items | 8.8 | 4.3 | (7.1) | 6.0 |
| Exceptional items - administrative expenses | (0.3) | 0.2 | 0.1 | - |
| Operating profit | 8.5 | 4.5 | (7.0) | 6.0 |
| Finance costs |
|
|
| (0.2) |
| Profit before taxation |
|
|
| 5.8 |
| Taxation |
|
|
| (1.6) |
| Profit attributable to equity shareholders |
|
|
| 4.2 |
|
|
|
|
|
|
| Intangible assets | 0.2 | 2.8 | 8.3 | 11.3 |
| Property, plant and equipment | 67.4 | 2.3 | 3.4 | 73.1 |
| Deferred tax assets | - | - | 0.1 | 0.1 |
| Inventories | 0.3 | - | - | 0.3 |
| Cash and cash equivalents | (1.8) | 1.5 | 4.9 | 4.6 |
| Trade and other receivables | 34.0 | 34.0 | 12.5 | 80.5 |
| Intercompany eliminations | - | (8.3) | (11.3) | (19.6) |
| Total assets | 100.1 | 32.3 | 17.9 | 150.3 |
| Six months ended 30 September 2015 (unaudited) |
|
|
|
|
|
| Continuing operations |
|
| |
|
| Parcels | Central | Total | |
|
| £m | £m | £m | £m |
|
|
|
|
|
|
| Segmental revenue | 124.0 | 113.6 | - | 237.6 |
|
|
|
|
|
|
| Operating profit/(loss) before exceptional items | 7.9 | 5.1 | (7.8) | 5.2 |
| Exceptional items - administrative expenses | 0.9 | (0.2) | (3.4) | (2.7) |
| Operating profit | 8.8 | 4.9 | (11.2) | 2.5 |
| Finance costs |
|
|
| (0.3) |
| Profit before taxation |
|
|
| 2.2 |
| Taxation |
|
|
| (0.5) |
| Profit attributable to equity shareholders |
|
|
| 1.7 |
|
|
|
|
|
|
| Intangible assets | 0.2 | 2.0 | 7.1 | 9.3 |
| Property, plant and equipment | 68.2 | 3.0 | 4.9 | 76.1 |
| Deferred tax assets | - | - | 0.5 | 0.5 |
| Inventories | 0.2 | - | - | 0.2 |
| Cash and cash equivalents | 0.2 | 2.5 | 3.8 | 6.5 |
| Current tax assets | - | - | 0.1 | 0.1 |
| Trade and other receivables | 34.6 | 39.7 | 1.1 | 75.4 |
| Intercompany eliminations | - | (4.9) | - | (4.9) |
| Total assets | 103.4 | 42.3 | 17.5 | 163.2 |
| Year ended 31 March 2016 (audited) | Continuing operations |
|
| ||
|
|
| Parcels | Central | Total | |
|
|
| £m | £m | £m | £m |
|
|
|
|
|
|
|
| Segmental revenue | 247.9 | 233.1 | - | 481.0 | |
|
|
|
|
|
| |
| Operating profit/(loss) before exceptional items | 15.9 | 10.1 | (14.8) | 11.2 | |
| Exceptional items - administrative expenses | 11.6 | (1.6) | (6.3) | 3.7 | |
| Operating profit | 27.5 | 8.5 | (21.1) | 14.9 | |
| Finance costs |
|
|
| (0.5) | |
| Profit before taxation |
|
|
| 14.4 | |
| Taxation |
|
|
| (2.5) | |
| Profit attributable to equity shareholders |
|
|
| 11.9 | |
|
|
|
|
|
| |
| Intangible assets | 0.2 | 2.6 | 7.7 | 10.5 | |
| Property, plant and equipment | 67.3 | 3.1 | 5.3 | 75.7 | |
| Deferred tax assets | - | - | 0.3 | 0.3 | |
| Inventories | 0.2 | - | - | 0.2 | |
| Cash and cash equivalents | 0.6 | 2.8 | 3.4 | 6.8 | |
| Trade and other receivables | 32.5 | 44.7 | 15.2 | 92.4 | |
| Intercompany eliminations | - | (14.0) | (14.1) | (28.1) | |
| Total assets | 100.8 | 39.2 | 17.8 | 157.8 | |
7 | Exceptional items - income/(cost) | Unaudited 30 September 2016 | Unaudited 30 September 2015 | Audited 31 March 2016 |
|
| £m | £m | £m |
|
|
|
|
|
| Profit on sale of national hub | - | 1.1 | 1.1 |
| HS2 compensation | 0.3 | 6.8 | 16.5 |
| Exceptional income - continuing items | 0.3 | 7.9 | 17.6 |
|
|
|
|
|
| Cost of automation implementation | - | (0.7) | (0.6) |
| National hub relocation costs | - | (6.7) | (7.1) |
| Impairment of intangible assets | - | (3.2) | (3.8) |
| Impairment of tangible assets | - | - | (1.0) |
| Management reorganisation | (0.3) | - | (1.4) |
| Exceptional costs - continuing operations | (0.3) | (10.6) | (13.9) |
|
|
|
|
|
| Net exceptional (costs)/income - continuing operations (*) | - | (2.7) | 3.7 |
|
|
|
|
|
| Impairment charges (including goodwill) | - | - | - |
| Closure costs | - | (0.1) | - |
| Exceptional costs - discontinued operations (**) | - | (0.1) | - |
|
|
|
|
|
| Net exceptional items | - | (2.8) | 3.7 |
* Presented on the face of the Income Statement
** Presented within the loss for the period from discontinued operations
| Profit on sale of national hub |
|
|
| This represents the profit on sale following the compulsory acquisition of the National hub and offices at Birmingham by the DfT and HS2 Ltd, as a result of the proposed High Speed Two ('HS2') railway. |
|
|
| HS2 compensation |
|
|
| HS2 compensation comprises of disturbance and other costs reimbursed from the Department of Transport ('DfT') and HS2 Ltd under the Compensation Code. |
|
|
| Cost of automation implementation |
|
|
| The cost of automation implementation represents the costs incurred largely in the March to April 2015 period as the Group moved towards the implementation and roll-out of new automation equipment. These costs largely comprise of asset write-offs and contract termination costs. |
|
|
| National hub relocation costs |
|
|
| These comprise of disturbance costs (including recruitment and redundancy costs), dual running costs (largely property costs relating to running two sites whilst relocating), compensation paid to customers following a temporary deterioration in service performance and the loss of profit resulting from the delay in increasing the hub's extended capacity. |
|
|
| Impairment of intangible assets |
|
|
| The Group undertook a comprehensive strategic review in 2016 of its I.T. systems which identified a number of software assets that did not fit within the medium- and long-term strategic goals of the Group, and which therefore offered no future economic value to the Group. As a result an impairment charge was recognised. |
|
|
| Management reorganisation |
|
|
| The management reorganisation costs, which principally relate to the reorganisation of the Board, include the contractually agreed payments to departing directors on termination, following mitigation, and the appointment costs of new directors. |
|
|
| Discontinued operations - closure costs |
|
|
| As detailed in the 2015 Annual Report and Accounts, a decision was taken to close the business of UK Pallets in January 2015, and consequently £1.4m of closure costs were recognised in the financial statements to 31 March 2015. A further £0.1m of costs were recognised in the six month period to 30 September 2015 as the Group administered the company's voluntary liquidation. |
|
|
8 | Discontinued operations | Unaudited 30 September 2016 | Unaudited 30 September 2015 | Audited 31 March 2016 |
|
| £m | £m | £m |
| The results of discontinued operations were as follows: |
|
|
|
|
|
|
|
|
| Revenue | - | - | - |
| Cost of sales | - | - | - |
| Gross profit | - | - | - |
| Administrative expenses | - | - | - |
| Operating (loss)/profit before exceptional items | - | - | - |
| Exceptional items | - | (0.1) | - |
| Operating (loss)/profit | - | (0.1) | - |
| Taxation on (loss)/profit before exceptional items | - | - | - |
| Taxation on exceptional items | - | - | - |
| Total taxation | - | - | - |
| (Loss)/profit for the period | - | (0.1) | - |
These represent the results of UK Pallets Ltd which ceased trading in March 2015.
9 | Property, plant and equipment, intangible assets, goodwill and investment properties | ||
|
| ||
| Six months ended 30 September 2016 | Unaudited | |
|
|
| £m |
|
|
|
|
| Opening net book value at 1 April 2016 |
| 85.6 |
| Additions |
| 3.5 |
| Disposals |
| (0.1) |
| Depreciation and amortisation |
| (4.6) |
| Closing net book value at 30 September 2016 |
| 84.4 |
| Six months ended 30 September 2015 |
| Unaudited £m |
|
|
|
|
| Opening net book value at 1 April 2015 |
| 100.3 |
| Additions |
| 6.9 |
| Disposals |
| (12.0) |
| HS2 Compensation |
| (5.4) |
| Depreciation and amortisation |
| (4.4) |
| Closing net book value at 30 September 2015 |
| 85.4 |
| Year ended 31 March 2016 |
| Audited £m |
|
|
|
|
| Opening net book value at 1 April 2015 |
| 100.3 |
| Additions |
| 13.2 |
| Disposals |
| (13.2) |
| HS2 Compensation |
| (5.4) |
| Depreciation and amortisation* |
| (9.3) |
| Closing net book value at 31 March 2016 |
| 85.6 |
* includes £0.3m reported as exceptional costs
|
| Unaudited 30 September |
| Unaudited 30 September |
| Audited 31 March | ||
|
| 2016 |
| 2015 |
| 2016 | ||
| £m |
| £m |
| £m | |||
|
|
|
|
|
| |||
| Total segment capital expenditure | 1.5 |
| 3.9 |
| 21.0 | ||
| Central capital expenditure | 2.0 |
| 3.0 |
| 5.9 | ||
| HS2 compensation | - |
| (5.4) |
| (5.4) | ||
| Total capital expenditure | 3.5 |
| 1.5 |
| 21.5 | ||
|
| |||||||
| Total segment depreciation and amortisation | 2.8 |
| 2.8 |
| 5.7 | ||
| Central depreciation and amortisation | 1.8 |
| 1.6 |
| 3.3 | ||
| Total depreciation and amortisation | 4.6 |
| 4.4 |
| 9.0 | ||
10 | Share capital | |||||||||||||
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
| Number of |
| Ordinary |
| Share |
| Unaudited | ||
|
|
|
|
|
| ordinary |
| shares |
| premium |
| Total | ||
| Capital |
|
|
| shares |
| £m |
| £m |
| £m | |||
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| At 1 April 2016 | 55,151,254 |
| 5.5 |
| 15.7 |
| 21.2 | ||||||
| Allotted under SAYE schemes | 2,293 |
| - |
| - |
| - | ||||||
| At 30 September 2016 | 55,153,547 |
| 5.5 |
| 15.7 |
| 21.2 | ||||||
|
|
|
|
|
|
|
|
| ||||||
| At 1 April 2015 | 54,740,618 |
| 5.5 |
| 15.3 |
| 20.8 | ||||||
| Allotted under SAYE schemes | 174,199 |
| - |
| 0.3 |
| 0.3 | ||||||
| At 30 September 2015 | 54,914,817 |
| 5.5 |
| 15.6 |
| 21.1 | ||||||
|
|
|
|
|
|
|
|
| ||||||
| The Company's Employee Share Ownership Trust ('ESOT') holds shares in the Company for subsequent transfer to employees under its incentive scheme awards. Shares held by the ESOT are not voted at shareholder meetings and do not accrue dividends. At 30 September 2016 the trust held a total of 1,325 shares (30 September 2015: 6,801 shares and 31 March 2016: 1,325 shares) | |||||||||||||
11 | Analysis of net cash/(debt) | ||||||||||
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| Audited 1 April 2016 |
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| Unaudited 30 September 2016 |
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| Cash flow |
| Other |
| ||
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| £m |
| £m |
| £m |
| £m |
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|
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| Cash at bank and in hand | 6.8 |
| (2.2) |
| - |
| 4.6 | |||
| Total cash | 6.8 |
| (2.2) |
| - |
| 4.6 | |||
|
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|
|
|
|
|
|
| |||
| Revolving credit facility | - |
| (5.9) |
| - |
| (5.9) | |||
| RCF arrangement fee | 0.2 |
| - |
| (0.1) |
| 0.1 | |||
| Finance leases due within one year | (0.4) |
| 0.2 |
| (0.2) |
| (0.4) | |||
| Finance leases due after more than one year | (4.4) |
| - |
| 0.3 |
| (4.1) | |||
| Total debt | (4.6) |
| (5.7) |
| - |
| (10.3) | |||
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|
|
|
|
|
|
|
| |||
| Net cash/(debt) | 2.2 |
| (7.9) |
| - |
| (5.7) | |||
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| Audited 1 April 2015 |
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| Unaudited 30 September 2015 |
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| ||
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| Cash flow |
| Other |
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|
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| £m |
| £m |
| £m |
| £m |
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|
|
|
|
|
|
|
|
|
| Cash at bank and in hand | 4.6 |
| 1.9 |
| - |
| 6.5 | ||
| Total cash | 4.6 |
| 1.9 |
| - |
| 6.5 | ||
|
|
|
|
|
|
|
|
| ||
| Revolving credit facility | (10.0) |
| (4.4) |
| - |
| (14.4) | ||
| RCF arrangement fee | 0.2 |
| - |
| - |
| 0.2 | ||
| Finance leases due within one year | - |
| (0.4) |
| - |
| (0.4) | ||
| Finance leases due after more than one year | - |
| (4.6) |
| - |
| (4.6) | ||
| Total debt | (9.8) |
| (9.4) |
| - |
| (19.2) | ||
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|
|
|
|
|
|
|
|
| |
| Net (debt) | (5.2) |
| (7.5) |
| - |
| (12.7) | ||
|
|
| Audited 1 April 2015 |
| Cash flow |
| Non-cash movement |
| Audited 31 March 2016 | |
|
|
| £m |
| £m |
| £m |
| £m | |
|
|
|
|
|
|
|
|
| ||
| Cash at bank and in hand | 4.6 |
| 2.2 |
| - |
| 6.8 | ||
| Total cash | 4.6 |
| 2.2 |
| - |
| 6.8 | ||
|
|
|
|
|
|
|
| |||
| Revolving credit facility | (10.0) |
| 10.0 |
| - |
| - | ||
| RCF arrangement fee | 0.2 |
| - |
| - |
| 0.2 | ||
| Finance leases | - |
| (4.8) |
| - |
| (4.8) | ||
| Total debt | (9.8) |
| 5.2 |
| - |
| (4.6) | ||
|
|
|
|
|
|
|
|
|
| |
| Net (debt)/cash | (5.2) |
| 7.4 |
| - |
| 2.2 | ||
12 | Provisions |
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| |||
|
| Unaudited | Unaudited | Unaudited | Unaudited | ||||
|
| Lease dilapidations | Restructuring | Management reorganisation | Total Provisions | ||||
| Six months ended 30 September 2016 | £m | £m | £m | £m | ||||
|
|
|
|
|
| ||||
| At 1 April 2016 | 1.3 | 0.1 | 0.6 | 2.0 | ||||
| Provided in the year | 0.1 | - | 0.3 | 0.4 | ||||
| Utilised during the period | - | (0.1) | (0.3) | (0.4) | ||||
| At 30 September 2016 | 1.4 | - | 0.6 | 2.0 | ||||
|
|
|
|
|
|
|
|
|
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited |
|
|
| Automation | Closure costs | Lease dilapidations | Restructuring | Total Provisions |
|
| Six months ended 30 September 2015 | £m | £m | £m | £m | £m |
|
|
|
|
|
|
|
|
|
| At 1 April 2015 | 0.2 | 0.3 | 1.5 | 0.2 | 2.2 |
|
| Provided in the year | - | - | 0.1 | - | 0.1 |
|
| Utilised during the period | (0.2) | (0.3) | (0.2) | (0.1) | (0.8) |
|
| At 30 September 2015 | - | - | 1.4 | 0.1 | 1.5 |
|
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|
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|
|
| Audited | Audited | Audited | Audited | Audited | Audited |
|
| Automation | Closure costs | Lease dilapidations | Restructuring | Management reorganisation | Total Provisions |
| Year ended 31 March 2016 | £m | £m | £m | £m | £m | £m |
|
|
|
|
|
|
|
|
| At 1 April 2015 | 0.2 | 0.3 | 1.5 | 0.2 | - | 2.2 |
| Provided during the period | - | - | 0.3 | - | 0.6 | 0.9 |
| Utilised during the period | (0.2) | (0.3) | (0.5) | (0.1) | - | (1.1) |
| At 31 March 2016 | - | - | 1.3 | 0.1 | 0.6 | 2.0 |
| Lease dilapidations represent the anticipated expenditure resulting from the Group's contractual obligations to make good properties prior to reversion of the building to the landlord in respect of leases expiring within one year and up to 14 years. The timing of outflows is variable, and is dependent not only on property lease expiry dates, and opportunities to surrender leases, but repair programmes and the results of negotiation. |
|
Restructuring relates to provisions arising following a change programme initiated in the financial year ended 31 March 2012 and relates to onerous property lease costs. |
|
Management reorganisation provisions largely relate to the Board changes during the year ended 31 March 2016, including the exit costs in respect of the previous Group Operations Director and the appointment costs for both the new CEO and Group Operations Director. |
13 | Taxation |
|
|
| Taxation is provided based on management's best estimate of the effective tax rate expected for the full financial year. The estimated annual tax rate (pre-exceptional items) used for the six months to 30 September 2016 is 21.4% (Six months to 30 September 2015: 21.7%).
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the company's future current tax charge accordingly. The deferred tax balances at 30 September 2016 have been calculated based on these rates.
|
14 | Earnings per share | ||||||
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| ||||||
| The basic, diluted and underlying earnings per share are calculated based on the following data: | ||||||
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| ||||||
|
|
|
| Unaudited | Unaudited | Audited | |
|
|
|
| Six months to 30 September 2016 | Six months to 30 September 2015 | Year to 31 March 2016 | |
|
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|
|
| (restated) |
| |
|
|
|
| £m | £m | £m | |
|
|
|
|
| |||
| Profit after taxation - continuing operations | 4.2 | 1.7 | 11.9 | |||
| (Loss)/profit after taxation - discontinued operations | - | (0.1) | - | |||
|
| 4.2 | 1.6 | 11.9 | |||
|
|
|
|
| |||
| The weighted average number of shares used in the calculations are as follows; | ||||||
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|
|
|
| |||
|
| No. of shares | No. of shares | No. of shares | |||
|
|
|
|
| |||
| Weighted average number of shares in issue | 55,151,070 | 54,762,072 | 54,888,887 | |||
| Dilutive effect of options | 4,420 | 335,533 | 12,848 | |||
| Diluted weighted average number of shares | 55,155,490 | 55,097,605 | 54,901,735 | |||
|
|
|
|
|
|
| |
| The Group has two classes of dilutive potential ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year, and the contingency issuable shares under the Group's Long Term Incentive Plan. | ||||||
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|
|
|
| |||
|
| Unaudited | Unaudited | Audited | |||
|
| Six months to 30 September 2016 | Six months to 30 September 2015 | Year to 31 March 2016 | |||
|
|
| (restated) |
| |||
|
|
|
|
| |||
| Basic earnings per share - continuing operations | 7.6p | 3.1p | 21.6p | |||
| Basic (loss)/earnings per share - discontinued operations | - | (0.2)p | - | |||
| Basic earnings per share | 7.6p | 2.9p | 21.6p | |||
|
Basic earnings per share is calculated by dividing the profit for the year (the 'earnings') attributable to ordinary shareholders by the weighted average number of ordinary shares during the year, excluding those held in the ESOT (note 10), which are treated as cancelled. | |||
|
|
|
|
|
| Diluted earnings per share - continuing operations | 7.6p | 3.1p | 21.6p |
| Diluted (loss)/earnings per share - discontinued operations | - | (0.2)p | - |
| Diluted earnings per share | 7.6p | 2.9p | 21.6p |
|
|
|
|
|
| For diluted earnings per share, the weighted average number of shares is adjusted to assume conversion of all dilutive potential ordinary shares. | |||
| Underlying earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
| Unaudited 30 September 2016 | Unaudited 30 September 2015 | Audited 31 March 2016 |
|
|
|
| (restated) |
|
|
|
| £m | £m | £m |
|
|
|
|
|
|
| Profit before taxation - continuing operations |
| 5.8 | 2.2 | 14.4 |
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
| Exceptional administrative items - continuing operations |
| - | 2.7 | (3.7) |
| Underlying profit before taxation - continuing operations |
| 5.8 | 4.9 | 10.7 |
| Taxation - continuing operations |
| (1.6) | (1.1) | (2.2) |
| Underlying profit after taxation - continuing operations |
| 4.2 | 3.8 | 8.5 |
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|
|
|
|
|
| Underlying earnings per share |
|
|
|
|
| Basic |
| 7.6p | 7.1p | 15.4p |
| Diluted |
| 7.6p | 7.1p | 15.4p |
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|
|
| The directors consider that the underlying EPS better reflects the underlying performance of the business by excluding the impact of exceptional items. | ||||
15 | Dividends | |||||
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| |||||
| The final dividend for the year ended 31 March 2016 of 10.9p per share (2015: 14.5p) was paid on 25 August 2016. The £6.0m distribution (2015: £7.9m) is reflected in the financial statements for the six months ended 30 September 2016. | |||||
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| In addition, the Directors propose an interim dividend of 5.5p per share (2015: 5.5p per share) payable on 2 December 2016 to shareholders who are on the register at 25 November 2016. This interim dividend, amounting to £3.0m (2015: £3.0m) has not been recognised as a liability in these condensed consolidated interim financial statements. | |||||
16 | Commitments and contingencies | |||||
|
| |||||
| The Company has guaranteed bank and other borrowings of subsidiary undertakings in a cross-guarantee agreement of an undrawn Group borrowing facility amounting to £10.0m (2015: £20m).
As reported in the 2016 Annual Report and Accounts, the Group has further contingent liabilities in respect of bank guarantees and documentary credit facilities entered into during the normal course of business, and is subject to litigation from time to time as a result of its activities, in respect of which no material loss is expected. | |||||
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| |||||
| Group capital expenditure committed, for the purchase of property, software, plant and equipment, but not provided for in these financial statements amounted to £0.4m (2015: £1.4m). | |||||
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17 | Events occurring after the reporting period | |||||
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|
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| On 28 September 2016, the Boards of Deutsche Post DHL and UK Mail Group plc. announced the terms of a recommended cash offer of 440p per share by Deutsche Post DHL for the entire issued and to be issued ordinary share capital of UK Mail Group plc.
On 26 October 2016, the Board of UK Mail Group plc. posted a circular in relation to the offer (the 'Scheme document') setting out amongst other things, the full terms and conditions of the Scheme, an expected timetable of principal events and notices of the Court Meeting and General Meeting, copies of which are available on the Group's website.
As at 16 November 2016, Deutsche Post DHL had received irrevocable undertakings to vote in favour of the offer in respect of approximately 62.6% of UK Mail Group's ordinary share capital. | |||||
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| |||||
| Additionally, note 15 provides detail of an interim dividend of 5.5p per share (the 'Agreed Dividend') which is intended to be paid on 2 December 2016. The offer provides that if any dividend or other distribution is authorised, declared, made or paid in respect of UK Mail Shares during the Offer Period other than the Agreed Dividend, or in excess of the Agreed Dividend, Deutsche Post DHL reserves the right to reduce the Offer Price by the amount of all or part of any such excess, in the case of a dividend or other distribution in excess of the Agreed Dividend, or otherwise by the amount of any such dividend or other distribution. | |||||
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18 | Related-party transactions | |||||
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| |||||
| The nature of the related party transactions of the Group has not changed from those described in the Groups' 2016 Annual Report and Accounts. There were no transactions with related parties during the six months ended 30 September 2016 which have had a material effect on the results or the financial position of the Group.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. | |||||
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| |||||
19 | Risks and uncertainties | |||||
|
| |||||
| The specific principal risks and uncertainties that may affect the Group's performance, together with relevant mitigating factors as identified by the Group's risk management process were discussed on page 27 of the Group's 2016 Annual Report and Accounts. These included risks relating to operational plan failure, loss of key management, I.T. systems, competition, business continuity, physical theft and security and legislation and regulation, in addition to financial risks (details of which can be found in Note 25 of the 2016 Annual Report and Accounts) including credit risk. It is considered that these still remain the most likely areas of potential risk and uncertainty, with the position unchanged from that set out in the 2016 Annual Report and Accounts. | |||||
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| |||||
20 | Seasonality | |||||
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| |||||
| Historically, the Group experiences marginally greater demand for its parcel collection and delivery services in the second half of the year, as consignments increase in advance of the Christmas season. Such trends are not discernible within the mail market. | |||||
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| |||||
Statement of directors' responsibilities | |||||||||
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The Interim report is the responsibility of, and has been approved by, the directors of UK Mail Group plc. The directors are responsible for preparing the Interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. The Disclosure and Transparency Rules require that the accounting policies and presentation applied to the half-yearly figures must be consistent with those applied in the latest published annual accounts, except where the accounting policies and presentation are to be changed in the subsequent annual accounts, in which case the new accounting policies and presentation should be followed, and the changes and the reasons for the changes should be disclosed in the Interim report, unless the United Kingdom Financial Conduct Authority agrees otherwise. | |||||||||
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The directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union, and that the interim management report includes a fair review of: | |||||||||
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■ | the important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year as required by DTR 4.2.7; and | ||||||||
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■ | related-party transactions that have taken place in the first six months of the current financial year and changes in the related-party transactions described in the last annual report that have materially affected the financial position or performance of the group during the first six months of the current financial year as required by DTR 4.2.8. | ||||||||
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The directors of UK Mail Group plc are as those listed in the UK Mail Group Annual Report for the year ended 31 March 2016. A list of current directors is maintained on the UK Mail Group website: www.ukmail.com. | |||||||||
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By order of the Board | |||||||||
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Peter Kane, Chairman |
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| Steven Glew, Group Finance Director | |||||
16 November 2016 |
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| 16 November 2016 | ||||
Independent review report to UK Mail Group Plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed UK Mail Group Plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim results of UK Mail Group Plc for the 6 month period ended 30 September 2016. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
· the Consolidated Balance Sheet as at 30 September 2016;
· the Consolidated Statement of Comprehensive Income for the period then ended;
· the Consolidated Cash flow Statement for the period then ended;
· the Consolidated Statement of Changes in Equity for the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
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 United Kingdom. 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.
We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
16 November 2016
a) The maintenance and integrity of the UK Mail Group Plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Related Shares:
UKM.L