21st Nov 2012 07:00
21st November 2012
UK MAIL GROUP plc
INTERIM RESULTS
For the 6 months ended 30 September 2012
Highlights
·; Group revenues up 11.9% to £225.7m (2011: £201.6m)
o Mail revenues up 23.6% to £115.9m (2011: £93.8m)
o Parcels revenues up 4.4% to £87.2m (2011: £83.5m)
·; Group profit before tax (before exceptional items) up 7.8% to £7.3m (2011: £6.8m)
·; Group profit before tax (reported) up 21.4% to £7.3m (2011: £6.0m)
·; Strong balance sheet, net cash at period end of £15.7m (2011: £11.6m)
·; Interim dividend maintained at 6.4p per share (2011: 6.4p)
·; Strong levels of customer retention and new client wins
·; Continued to build market share as the market landscape evolves
·; New products and service offerings, including imail and ipostparcels, continue to make good progress
Guy Buswell, Chief Executive Officer of UK Mail, said:-
"The Group had an encouraging first half, demonstrating the results of our continued efforts to reduce costs and further improve our efficient network. The whole team has done a great job in enabling us to build on our leading market positions, maintain our high service levels and strengthen our brand. The second half to date has continued in this vein, with current trading in line with our expectations.
"With our highly competitive business model, tight focus on costs, and strong balance sheet providing strategic flexibility, we are well prepared for the competitive environment, and general economic backdrop, to remain tough into 2013. We are therefore confident that we will come through this period of significant change in our industry as one of the strongest players in the markets in which we operate."
For further information, please contact:
UK Mail Group plc | |
Guy Buswell, Chief Executive Officer | 0121 335 1111 |
Steven Glew, Group Finance Director
| 0175 370 6070 |
MHP Communications | |
John Olsen Ian Payne Giles Robinson | 0203 128 8100 |
Introduction
Overall performance in the first half of the year was encouraging, particularly given the difficult trading environment, and in line with our expectations. We have continued to benefit from our strong market positions, high service levels and efficient network.
Reported Group revenues for the first half increased by 11.9% compared to the same period in the previous year. Adjusting for the increase in Royal Mail prices implemented on 2 April 2012, and one less working day than in the same period in the previous year, underlying Group revenues increased by 9.9%. Group profit before tax before exceptional items increased by 7.8% on the previous year to £7.3m.
Our Mail business (51% of group revenues) grew its revenues on a reported basis by 23.6%; on an underlying basis, revenues were up by 17.0% compared with the previous year. This good revenue growth is driven by strong customer retention and new customer wins. Mail operating profit increased by 12.9% compared to the prior year. Our Mail business remains well positioned in its market with a healthy pipeline of new business opportunities. We again saw good progress from imail and related new product innovations.
Our Parcels business (39% of group revenues) grew its revenues by 4.4% compared to the same period in the previous year, reflecting the benefit of recent customer wins. The pricing environment remains challenging and the shift in mix towards B2C continues. Despite this mix effect the Parcels operating margin has improved to 6.7% for the period (2011: 6.6%), leading to good growth of 5.5% in the Parcels operating profit compared to the same period last year. We continue to focus on innovation and on operational efficiency to help drive further Parcels margin improvements.
In our Courier business (4% of group revenues) revenues have declined, as expected, by 18.4% compared to the prior year. Strong operational management reduced operating costs, helping to restrict the operating profit decline to 6.5%.
Our Pallets business (6% of group revenues) has achieved revenue growth of 0.8% compared to the same period last year. However, Pallets operating profits have declined by 26.4% compared to the same period last year. This decline was caused by temporary gaps in our nationwide member network which resulted in additional temporary operating costs. Actions are being taken to fill these gaps.
We remain highly focused on innovation as we seek to further expand the size of the markets available to us and continue increasing our share of those markets. The new products and services we have introduced in both our Mail and Parcels businesses in recent years have continued to gain valuable traction and we are constantly developing these to open up new opportunities.
On our operational network and our costs, we continue to manage these tightly, whilst keeping our possible future needs under constant review in the context of changing market dynamics.
Our financial position remains strong, with net cash balances at the period end of £15.7m (2011: £11.6m).
Results
The results can be summarised as follows:
Six months ending 30th September
| |||||
2012 £m | 2011 £m | Inc/(Dec) % | |||
Group revenue | 225.7 | 201.6 | 11.9% | ||
Operating profit (before exceptional items) | 7.2 | 6.8 | 6.5% | ||
Net finance income | 0.1 | - | - | ||
Profit before taxation (before exceptional items) | 7.3 | 6.8 | 7.8% | ||
Exceptional items | - | (0.8) | - | ||
Profit before tax (after exceptional items) | 7.3 | 6.0 | 21.4% | ||
Taxation | (1.8) | (1.6) | 11.8% | ||
Profit after taxation | 5.5 | 4.4 | 25.0% | ||
Basic earnings per share | 10.1p | 8.1p | 24.9% | ||
Underlying basic earnings per share | 10.1p | 9.1p | 10.7% | ||
Revenue and operating profit are analysed as follows:
Revenue | Operating Profit | ||||||||||
2012 £m | 2011 £m | Inc/ (Dec) % | 2012 £m | 2011 £m | Inc/ (Dec) % | ||||||
115.9 | 93.8 | 23.6% | 5.7 | 5.0 | 12.9% | ||||||
Parcels | 87.2 | 83.5 | 4.4% | 5.8 | 5.6 | 5.5% | |||||
Courier | 8.3 | 10.1 | (18.4)% | 1.1 | 1.2 | (6.5)% | |||||
Pallets | 14.3 | 14.2 | 0.8% | 0.8 | 1.0 | (26.4)% | |||||
Total | 225.7 | 201.6 | 11.9% | 13.4 | 12.8 | 4.7% | |||||
Central costs | (6.2) | (6.0) | 2.7% | ||||||||
Operating profit before exceptional items | 7.2 | 6.8 | 6.5% | ||||||||
Mail showed further growth in revenues of 23.6% to £115.9m (2011: £93.8m). The Mail revenue growth includes the impact of the Royal Mail price increase on 2 April 2012, which increased prices by some 11.0% on an annualised basis. On an underlying basis, revenues increased by 17.0%.
Our mail volumes increased by some 2% compared to the prior year, while the overall UK mail market has experienced a decline in transactional volumes of some 5% per annum in recent years. We have therefore gained market share during the period. This growth has been achieved through generating additional mail volumes from existing customers, largely due to switching from Royal Mail as their prices increase, and a number of new customer wins.
Another important factor in the volume growth is product innovation. imail, our web-to-print postal service, continues to grow. We have invested to increase our capacity and to provide additional services, such as high speed insertion. We are developing this product further to support its market leadership, including the addition of data services. imail's average daily volumes in September 2012 were again more than double those of a year ago. We have a strong pipeline of new opportunities for this product as we identify new areas where it can be applied successfully.
Mail operating profits were up 12.9% to £5.7m (2011: £5.0m). The operating margin reduced to 4.9% (2011: 5.4%), which is largely the effect of the 11% price increase imposed by Royal Mail.
On 10 October 2012 Royal Mail published a discussion document on the development of Access contracts, with the aim that the new agreements will be in place by April 2013. Overall, we believe that the document covers issues that have long needed to be addressed and, to that extent, we welcome it as a step towards a position of greater clarity for all market participants. Our expectation is that the proposals, once amended for customer feedback, should not have a material adverse impact on our business.
Parcels
Revenues in Parcels, which comprises the Group's business-to-business, business-to-consumer and international parcel delivery service, were up 4.4% for the period to £87.2m (2011: £83.5m). We have again achieved good volume growth in both B2B and B2C with Parcels volumes increasing by over 10% compared to the prior year. This performance reflects the benefits of recent customer wins, although we continue to see an on-going mix change towards B2C, and further gains in market share.
We achieved good volume growth throughout the summer period with no noticeable impact from the Olympics. We had planned for the games period carefully and therefore saw little additional cost incurred. We also took the decision not to increase charges to our customers for deliveries into the Olympic area, in contrast to many of our competitors. The result was good volume growth and many accolades from our customers for our performance.
Parcels operating profit increased by 5.5% to £5.8m (2011: £5.6m) with the operating margin improving to 6.7% (2011: 6.6%).
We continue to drive down costs to improve the profitability of our parcels operations. A key area of focus is our vehicle fleet, where we have now introduced telematics into all our trunking vehicles. This technology allows us to closely monitor vehicles and driver performance, generating improvements in fuel efficiency and vehicle damage rates.
We have introduced a number of major improvements to our I.T. infrastructure. These include the provision of industry-leading functionality both to our customers, and to the recipients of the parcels they despatch via our services. All customers can now be notified in advance of expected delivery times and given easy-to-use facilities if they need to re-arrange deliveries.
A key factor in driving down the operating costs of our Parcels business is the use of automated sortation. We introduced a major automated sortation facility into our Birmingham hub in October 2010, which has proved successful. We are continuing to review the potential opportunities to extend the benefits of automation across our network and develop our plans in this area.
Our Retail Logistics product, which provides services tailored to the specific needs of retailers, continues to make good progress and we have a number of major retailers trading with us. Our service offering now provides the ability to handle hanging garments, as well as providing customers with returns and inter-store transfer facilities.
Our ipostparcels product allows any customer, be they an individual or a small business, to arrange parcel collection and delivery directly with UK Mail through an easy-to-use website. This product has been successfully established in the market and is achieving rapid growth. There is an increasing trend for parcel collection and delivery services to be purchased on-line, partly caused by the growth of on-line transaction sites such as ebay and Amazon market place. We will continue to develop and market this product which we see as a good source of future profitability.
The overall parcels market in the UK remains a highly competitive environment. Major change is underway at a number of our competitors, including the potential consolidation of two of the major players. For our part, we continue to succeed in winning new Parcels customers as a result of our high service levels, low-cost network, innovation and strong brand in the market. We will seek to benefit further from this position as the market around us changes.
Courier
Revenues in our Courier business, which provides same-day delivery services, decreased as expected by 18.4% to £8.3m (2011: £10.1m). The same day courier market remains challenging. We are continuing to focus on national contracts that can leverage our network and blue chip customer base. Operating margins increased to 13.5% (2011: 11.8%) leading to an operating profit of £1.1m (2011: £1.2m). The increase in operating margin reflects the actions we have taken to improve effectiveness and reduce overheads in the business.
We have now developed a highly efficient nationwide courier network with a proven ability to support national contracts, which adds to our ability to offer a fully integrated proposition and supports product development across the Group.
Pallets
Revenues in our Pallets business, which provides a nationwide palletised goods delivery service, increased by 0.8% for the period to £14.3m (2011: £14.2m). Operating profit for the period declined by £0.2m to £0.8m (2011: £1.0m).
The Pallets business is based on a national network of members. During the period we experienced temporary gaps in this network which gave rise to additional delivery costs. Actions are being taken to fill these gaps.
From a revenue perspective this business has performed well in a market that remains challenging, and we will continue to focus on sectors of the palletised distribution market which are best placed to benefit as the economy recovers.
Finance costs
We continue to repay debt and benefit from the good cash balances we have maintained. As a result we are now in a position of generating interest income and so net interest income for the period was £0.1m (2011: nil).
Cash Flow and Balance Sheet
The Group has a strong balance sheet with net cash at the end of the period of £15.7m (2011: £11.6m).
Net cash inflow from operating activities totalled £8.3m (2011: £3.9m). Net cash outflow for the period was £3.4m (2011: £7.2m) which included £1.0m of cash consumed in working capital (2011: £4.4m), reflecting the normal first half trend in our business.
Capital expenditure for the period, including assets acquired under finance leases, was £4.7m (2011: £3.4m). The capital expenditure for the period includes £2.4m on IT, as we continue to develop our systems infrastructure, and £1.9m on our network.
The Group paid £6.4m (2011: £6.4m) of dividends during the period being the 11.8p final dividend approved at the AGM on 11 July 2012 (2011: 11.8p).
Earnings per share
Basic earnings per share increased 24.9% to 10.1p (2011: 8.1p). The underlying basic earnings per share, excluding the impact of exceptional items last year, increased 10.7% to 10.1p (2011: 9.1p).
Dividend
The Board has declared an unchanged Interim Dividend of 6.4p (2011: 6.4p), to be paid on 18 January 2013 to shareholders registered on 7 December 2012.
CURRENT TRADING & OUTLOOK
Trading in the initial weeks of the second half of the year has been in line with our expectations.
We expect the economic backdrop to remain challenging into 2013 and the pricing environment to stay competitive. We are continuing to plan accordingly, with tight control of our costs remaining a key focus. We have a strong brand and leading positions in our markets, a highly competitive business model and a strong balance sheet. All of this gives us confidence that we can outperform our competitors and gain further market share as our industry continues to undergo significant change.
Guy Buswell
Chief Executive Officer
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 21 of the 2012 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 15 of the Group's 2012 Annual Report and Accounts. These included risks relating to HS2, IT systems, business continuity, legislation and regulation, competition and fuel factors, in addition to financial risks including credit risk. Save for the risks relating to HS2 and the removal of the potential for disruption during the now completed Olympic games, 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 2012 Annual Report and Accounts. The plans for HS2 are becoming clearer, including the potential impact on our Birmingham hub. We continue to actively manage the situation with the Government and HS2 to ensure any impact on our business is minimal.
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 for the foreseeable future. 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 2012 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 2012 Annual Report and Accounts.
Consolidated Statement of Comprehensive Income | ||||||||||||
for the six months ended 30 September 2012 | ||||||||||||
Unaudited Six months to 30 September 2012 £m | Unaudited Six months to 30 September 2011 £m | Audited Year to 31 March 2012 £m | ||||||||||
Note | ||||||||||||
Continuing operations | ||||||||||||
Revenue | 6 | 225.7 | 201.6 | 429.0 | ||||||||
Cost of sales | (201.6) | (178.4) | (380.4) | |||||||||
Gross profit | 24.1 | 23.2 | 48.6 | |||||||||
Administrative expenses | (16.9) | (17.2) | (35.7) | |||||||||
Operating profit before exceptional items | 7.2 | 6.8 | 15.1 | |||||||||
Exceptional administrative items | 7 | - | (0.8) | (2.2) | ||||||||
Operating profit | 6 | 7.2 | 6.0 | 12.9 | ||||||||
Finance income | 0.1 | 0.1 | 0.1 | |||||||||
Finance costs | - | (0.1) | (0.1) | |||||||||
Profit before taxation | 7.3 | 6.0 | 12.9 | |||||||||
Taxation before exceptional items | (1.8) | (1.8) | (4.1) | |||||||||
Exceptional taxation items | 7 | - | 0.2 | 0.6 | ||||||||
Total taxation | 13 | (1.8) | (1.6) | (3.5) | ||||||||
Profit for the period | 5.5 | 4.4 | 9.4 | |||||||||
Total comprehensive income attributable to: | ||||||||||||
Equity holders of the company | 5.5 | 4.4 | 9.4 | |||||||||
Basic earnings per share | 14 | 10.1p | 8.1p | 17.3p | ||||||||
Diluted earnings per share | 14 | 10.1p | 8.0p | 17.3p | ||||||||
The notes on the following pages form an integral part of these condensed consolidated interim financial statements
| ||||||||||||
Consolidated Balance Sheet | ||||||||||
at 30 September 2012 | ||||||||||
Unaudited 30 September 2012 £m | Unaudited 30 September 2011 £m | Audited 31 March 2012 £m | ||||||||
Note | ||||||||||
Assets | ||||||||||
Non-current assets | ||||||||||
Goodwill | 8 | 9.5 | 9.5 | 9.5 | ||||||
Intangible assets | 8 | 4.9 | 3.6 | 3.8 | ||||||
Investment properties | 8 | 1.8 | 0.9 | 1.8 | ||||||
Property, plant and equipment | 8 | 33.1 | 35.9 | 33.4 | ||||||
Deferred tax assets | 0.3 | 0.4 | 0.4 | |||||||
49.6 | 50.3 | 48.9 | ||||||||
Current assets | ||||||||||
Inventories | 0.2 | 0.3 | 0.2 | |||||||
Trade and other receivables | 62.0 | 55.9 | 63.5 | |||||||
Cash and cash equivalents | 11 | 18.2 | 15.2 | 21.6 | ||||||
80.4 | 71.4 | 85.3 | ||||||||
Liabilities | ||||||||||
Current liabilities | ||||||||||
Borrowings | 11 | (1.4) | (1.8) | (1.8) | ||||||
Trade and other payables | (62.1) | (53.8) | (64.1) | |||||||
Current tax liabilities | (1.9) | (1.3) | (1.7) | |||||||
Provisions | 12 | (0.7) | (0.1) | (1.3) | ||||||
(66.1) | (57.0) | (68.9) | ||||||||
Net current assets | 14.3 | 14.4 | 16.4 | |||||||
Non-current liabilities | ||||||||||
Borrowings | 11 | (1.1) | (1.8) | (1.4) | ||||||
Deferred tax liabilities | (2.0) | (3.1) | (2.2) | |||||||
Provisions | 12 | (0.9) | (0.3) | (0.8) | ||||||
(4.0) | (5.2) | (4.4) | ||||||||
Net assets | 59.9 | 59.5 | 60.9 | |||||||
Shareholders' equity | ||||||||||
Ordinary shares | 9 | 5.5 | 5.5 | 5.5 | ||||||
Share premium | 9 | 15.3 | 16.8 | 15.3 | ||||||
Retained earnings | 39.1 | 37.2 | 40.1 | |||||||
Total shareholders' equity | 59.9 | 59.5 | 60.9 | |||||||
Consolidated Statement of Cash Flows | ||||||||
for the six months ended 30 September 2012 | ||||||||
Unaudited Six months to 30 September 2012 £m | Unaudited Six months to 30 September 2011 £m | |||||||
Audited Year to 31 March 2012 £m | ||||||||
Note | ||||||||
Continuing operations | ||||||||
Operating activities | ||||||||
Cash generated from operations | 10 | 10.0 | 6.1 | 21.8 | ||||
Finance income received | 0.1 | 0.1 | 0.1 | |||||
Finance costs paid | - | (0.1) | (0.1) | |||||
Taxation paid | (1.8) | (2.2) | (4.5) | |||||
Net cash inflow from operating activities | 8.3 | 3.9 | 17.3 | |||||
Investing activities | ||||||||
Proceeds from disposal of property, plant and equipment | 8 | 0.1 | - | - | ||||
Purchase of property, plant and equipment | 8 | (3.0) | (2.4) | (4.7) | ||||
Purchase of intangible assets | 8 | (1.1) | (1.0) | (1.8) | ||||
Net cash outflow from investing activities | (4.0) | (3.4) | (6.5) | |||||
Financing activities | ||||||||
Dividends paid to shareholders | 15 | (6.4) | (6.4) | (9.9) | ||||
Repayment of finance lease liabilities | 11 | (0.4) | (0.4) | (0.8) | ||||
Net proceeds from issue of ordinary share capital | 0.1 | 0.1 | 0.1 | |||||
Repayment of borrowings | 11 | (1.0) | (1.0) | (1.0) | ||||
Net cash outflow from financing activities | (7.7) | (7.7) | (11.6) | |||||
Net decrease in cash and cash equivalents | 11 | (3.4) | (7.2) | (0.8) | ||||
Cash and cash equivalents at the start of the period | 11 | 21.6 | 22.4 | 22.4 | ||||
Cash and cash equivalents at the end of period | 11 | 18.2 | 15.2 | 21.6 | ||||
Consolidated Statement of Changes in Shareholders' Equity (unaudited) | |||||||||||||||||
for the six months ended 30 September 2012 | |||||||||||||||||
Attributable to equity holders of the company | |||||||||||||||||
Ordinary shares £m | Share premium £m | Retained earnings £m | Total equity £m | ||||||||||||||
Note | |||||||||||||||||
Balance as at 1 April 2012 | 5.5 | 15.3 | 40.1 | 60.9 | |||||||||||||
Dividends paid to shareholders | 15 | - | - | (6.4) | (6.4) | ||||||||||||
Employees' share option scheme: | |||||||||||||||||
- tax on employee share options | - | - | (0.1) | (0.1) | |||||||||||||
Profit for the period | - | - | 5.5 | 5.5 | |||||||||||||
Balance as at 30 September 2012 | 5.5 | 15.3 | 39.1 | 59.9 | |||||||||||||
Balance as at 1 April 2011 | 5.5 | 16.7 | 38.9 | 61.1 | |||||||||||||
Dividends paid to shareholders | 15 | - | - | (6.4) | (6.4) | ||||||||||||
Employees' share option scheme: | |||||||||||||||||
- share-based payments | - | - | 0.3 | 0.3 | |||||||||||||
- exercise of share options | - | 0.1 | - | 0.1 | |||||||||||||
Profit for the period | - | - | 4.4 | 4.4 | |||||||||||||
Balance as at 30 September 2011 | 5.5 | 16.8 | 37.2 | 59.5 | |||||||||||||
Balance as at 1 April 2011 | 5.5 | 16.7 | 38.9 | 61.1 | |||||||||||||
Dividends paid to shareholders | 15 | - | - | (9.9) | (9.9) | ||||||||||||
Employees' share option scheme: | |||||||||||||||||
- share-based payments | - | - | 0.2 | 0.2 | |||||||||||||
- exercise of share options | - | 0.1 | - | 0.1 | |||||||||||||
Transfer between reserves | - | (1.5) | 1.5 | - | |||||||||||||
Profit for the period | - | - | 9.4 | 9.4 | |||||||||||||
Balance as at 31 March 2012 | 5.5 | 15.3 | 40.1 | 60.9 | |||||||||||||
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 express collection and delivery services for mail, parcels and palletised goods. | ||||||||
The Company (Registered No. 02800218) is a public limited liability company incorporated and domiciled in England. The address of its registered office is 464 Berkshire Avenue, Slough, Berkshire, SL1 4PL. The Company is listed on the London Stock Exchange (LSE:UKM). | ||||||||
The condensed consolidated interim financial statements were approved for issue on 20 November 2012. | ||||||||
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 2012 and 2011 are unaudited. Statutory accounts for the year ended 31 March 2012 were approved by the Board of directors on 21 May 2012 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 2012 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services 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 2012, 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 2012 are available upon request from the Company's registered office at 464 Berkshire Avenue Slough, SL1 4PL 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 for the foreseeable future. The Group meets its day to day working capital requirements through operating cash flows, with borrowings in place to fund acquisitions and capital expenditure. Movements in the Group's overall net cash position are shown in note 11. The Group has committed bank facilities in place, comprising of a £5m undrawn overdraft facility until 30 June 2013 and a £7m revolving credit facility until 30 November 2014. 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 by the Group in its consolidated annual financial statements as at and for the year ended 31 March 2012. | ||||||||
Adoption of new standards, and amendments to standards or interpretations, which are mandatory for the first time for the financial year beginning 1 April 2012, 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 2012. | ||||||
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, liquidity risk, foreign exchange 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 2012 Annual Report and Accounts. | ||||||
There have been no changes in the Group's risk management policies since the year end 31 March 2012. | ||||||
The Group's financial instruments measured at fair value are all classed as Level 2 fair value measurements, which is unchanged from the position at 31 March 2012. | ||||||
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 considers that the Group has four reportable operating segments. | ||||||
The Group's operating segments consist of Mail, Parcels, Courier and Pallet Services. The Board assesses the performance of the operating segments based on a measure of operating profit before net finance costs and taxation.
Central costs comprises of network costs and central support costs. Central assets comprise mainly of corporate assets, cash, current and deferred tax balances. | ||||||
The Group manages its business segments on a national basis, with all its operations in the UK, as are nearly all of its customers. | ||||||
Inter-company transactions, balances and unrealised gains on transactions between segments are eliminated. Unrealised losses are also eliminated. | ||||||
No individual customer accounted for more than 5% of revenue in the periods included in these condensed consolidated interim financial statements. | ||||||
Six months ended 30 September 2012 (unaudited) | ||||||||||||||||||
Parcels | Courier | Pallets | Group | |||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||
Segmental revenue | 115.9 | 87.2 | 9.2 | 14.3 | 226.6 | |||||||||||||
Inter-segment revenue | - | - | (0.9) | - | (0.9) | |||||||||||||
Revenue (from external customers) | 115.9 | 87.2 | 8.3 | 14.3 | 225.7 | |||||||||||||
Operating profit before exceptional expenses | 5.7 | 5.8 | 1.1 | 0.8 | 13.4 | |||||||||||||
Exceptional - administrative expenses | - | - | - | - | - | |||||||||||||
Operating profit before central costs | 5.7 | 5.8 | 1.1 | 0.8 | 13.4 | |||||||||||||
Central costs | (6.2) | |||||||||||||||||
Operating profit | 7.2 | |||||||||||||||||
Finance income | 0.1 | |||||||||||||||||
Finance costs | - | |||||||||||||||||
Profit before taxation | 7.3 | |||||||||||||||||
Taxation | (1.8) | |||||||||||||||||
Profit for the period | 5.5 | |||||||||||||||||
| ||||||||||||||||||
Assets | ||||||||||||||||||
Segment assets | 59.7 | 94.5 | 0.1 | 9.4 | 163.7 | |||||||||||||
Eliminations | (28.2) | (35.4) | - | (4.6) | (68.2) | |||||||||||||
Net segment assets | 31.5 | 59.1 | 0.1 | 4.8 | 95.5 | |||||||||||||
Central assets | 34.5 | |||||||||||||||||
Total assets per balance sheet | 130.0 | |||||||||||||||||
Six months ended 30 September 2011 (unaudited) | ||||||||||||||||||
Parcels | Courier | Pallets | Group | |||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||
Segmental revenue | 93.8 | 83.5 | 10.8 | 14.2 | 202.3 | |||||||||||||
Inter-segment revenue | - | - | (0.7) | - | (0.7) | |||||||||||||
Revenue (from external customers) | 93.8 | 83.5 | 10.1 | 14.2 | 201.6 | |||||||||||||
Operating profit before exceptional items | 5.0 | 5.6 | 1.2 | 1.0 | 12.8 | |||||||||||||
Exceptional items - administrative items | - | (0.7) | (0.1) | - | (0.8) | |||||||||||||
Operating profit before central costs | 5.0 | 4.9 | 1.1 | 1.0 | 12.0 | |||||||||||||
Central costs | (6.0) | |||||||||||||||||
Operating profit | 6.0 | |||||||||||||||||
Finance income | 0.1 | |||||||||||||||||
Finance costs | (0.1) | |||||||||||||||||
Profit before taxation | 6.0 | |||||||||||||||||
Taxation | (1.6) | |||||||||||||||||
Profit for the period | 4.4 | |||||||||||||||||
Assets |
| |||||||||||||||||
| ||||||||||||||||||
Segment assets | 51.6 | 76.8 | 0.1 | 8.1 | 136.6 | |||||||||||||
Eliminations | (26.9) | (16.8) | - | (3.4) | (47.1) | |||||||||||||
Net segment assets | 24.7 | 60.0 | 0.1 | 4.7 | 89.5 | |||||||||||||
Central assets | 32.2 | |||||||||||||||||
Total assets per balance sheet | 121.7 | |||||||||||||||||
Year ended 31 March 2012 (audited) | ||||||||||||||||||
Parcels | Courier | Pallets | Group | |||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||
Revenue | 208.1 | 172.1 | 22.2 | 28.3 | 430.7 | |||||||||||||
Inter-segment revenue | - | - | (1.7) | - | (1.7) | |||||||||||||
Revenue (from external customers) | 208.1 | 172.1 | 20.5 | 28.3 | 429.0 | |||||||||||||
Operating profit before exceptional expenses | 10.0 | 11.6 | 2.7 | 2.1 | 26.4 | |||||||||||||
Exceptional - administrative expenses | (0.7) | (1.2) | (0.3) | - | (2.2) | |||||||||||||
Operating profit before central costs | 9.3 | 10.4 | 2.4 | 2.1 | 24.2 | |||||||||||||
Central costs | (11.3) | |||||||||||||||||
Operating profit | 12.9 | |||||||||||||||||
Finance income | 0.1 | |||||||||||||||||
Finance costs | (0.1) | |||||||||||||||||
Profit before taxation | 12.9 | |||||||||||||||||
Taxation | (3.5) | |||||||||||||||||
Profit for the period | 9.4 | |||||||||||||||||
Assets | |||||||||||||||
Segment assets | 62.7 | 89.6 | 0.1 | 8.7 | 161.1 | ||||||||||
Eliminations | (28.2) | (31.0) | - | (4.2) | (63.4) | ||||||||||
Net segment assets | 34.5 | 58.6 | 0.1 | 4.5 | 97.7 | ||||||||||
Central assets | 36.5 | ||||||||||||||
Total assets per balance sheet | 134.2 | ||||||||||||||
| |||||||||||||||
30 September 2012 | 30 September 2011 | 31 March 2012 | |||||||||||||
Total segment capital expenditure | 2.5 | 1.3 | 3.5 | ||||||||||||
Central capital expenditure | 2.2 | 2.1 | 3.0 | ||||||||||||
Total capital expenditure | 4.7 | 3.4 | 6.5 | ||||||||||||
Total segment depreciation and amortisation | 2.3 | 2.8 | 5.8 | ||||||||||||
Central depreciation and amortisation | 1.5 | 1.3 | 2.6 | ||||||||||||
Total depreciation and amortisation | 3.8 | 4.1 | 8.4 | ||||||||||||
7 | Exceptional administrative items | ||||||||||||||
30 September | 30 September | 31 March | |||||||||||||
2012 | 2011 | 2012 | |||||||||||||
Restructuring costs | - | 0.8 | 2.2 | ||||||||||||
Exceptional taxation credit - relief on restructuring costs | - | (0.2) | (0.6) | ||||||||||||
Exceptional items | - | 0.6 | 1.6 | ||||||||||||
Restructuring costs | |||||||||||||||
During the year ended 31 March 2012, the board approved a change programme, designed to improve the efficiency of the network infrastructure, and to reduce the fixed cost of the business, This resulted in a number of restructuring changes in operational, sales and head office management with further changes surrounding the regionalisation of customer care centres, the closure of four depots and the restructuring of Courier operations. | |||||||||||||||
The exceptional taxation credit relates to relief in respect of the restructuring costs above. Further details can be found in the Annual Report 2012. | |||||||||||||||
8 | Property, plant and equipment and intangible assets | ||||||||||||||
Six months ended 30 September 2012 (unaudited) | £m | ||||||||||||||
Opening net book value at 1 April 2012 | 48.5 | ||||||||||||||
Additions | 4.7 | ||||||||||||||
Disposals | (0.1) | ||||||||||||||
Depreciation and amortisation | (3.8) | ||||||||||||||
Closing net book value at 30 September 2012 | 49.3 | ||||||||||||||
Six months ended 30 September 2011 (unaudited) | £m | ||||||||||||||
Opening net book value at 1 April 2011 | 50.6 | ||||||||||||||
Additions | 3.4 | ||||||||||||||
Disposals | - | ||||||||||||||
Depreciation and amortisation | (4.1) | ||||||||||||||
Closing net book value at 30 September 2011 | 49.9 | ||||||||||||||
Year ended 31 March 2012 (audited) | £m | ||||
Opening net book value at 1 April 2011 | 50.6 | ||||
Additions | 6.5 | ||||
Disposals | (0.2) | ||||
Depreciation and amortisation | (8.4) | ||||
Closing net book value at 31 March 2012 | 48.5 |
9 | Share Capital | |||||||||||||||||
Number of | Ordinary | Share | Unaudited | |||||||||||||||
ordinary | shares | premium | Total | |||||||||||||||
Capital | shares | £m | £m | £m | ||||||||||||||
At 1 April 2012 | 54,731,471 | 5.5 | 15.3 | 20.8 | ||||||||||||||
Allotted under SAYE schemes | 1,510 | - | - | - | ||||||||||||||
At 30 September 2012 | 54,732,981 | 5.5 | 15.3 | 20.8 | ||||||||||||||
At 1 April 2011 | 54,693,973 | 5.5 | 16.7 | 22.2 | ||||||||||||||
Allotted under SAYE schemes | 33,723 | - | 0.1 | 0.1 | ||||||||||||||
At 30 September 2011 | 54,727,696 | 5.5 | 16.8 | 22.3 | ||||||||||||||
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 31 March 2012 the ESOT held a total of 126,471 shares (31 March 2011: 127,723 shares). During the period to 30 September 2012, the ESOT settled 25,400 shares to a number of employees following the successful vesting of the 2009 SAYE plan (Period to 30 September 2011: no shares issued), and as a result held 101,071 shares at 30 September 2012 (30 September 2011: 127,723 shares). | ||||||||||||||||||
10 | Reconciliation of profit to net cash flow generated from operations | |||||||||||||||||
Unaudited Six months to 30 September 2012 £m | Unaudited Six months to 30 September 2011 £m | Audited Year to 31 March 2012 £m | ||||||||||||||||
Profit for the period | 5.5 | 4.4 | 9.4 | |||||||||||||||
Taxation | 1.8 | 1.6 | 3.5 | |||||||||||||||
Finance income receivable | (0.1) | (0.1) | (0.1) | |||||||||||||||
Finance costs payable | - | 0.1 | 0.1 | |||||||||||||||
Depreciation and amortisation | 3.8 | 4.1 | 8.4 | |||||||||||||||
Loss on disposal of property, plant and equipment | - | - | 0.2 | |||||||||||||||
Share-based payments | - | 0.4 | 0.1 | |||||||||||||||
Decrease/(increase) in trade and other receivables | 1.4 | 0.8 | (6.8) | |||||||||||||||
(Decrease)/increase in trade and other payables | (2.0) | (5.0) | 5.5 | |||||||||||||||
(Decrease)/increase in provisions | (0.4) | (0.2) | 1.5 | |||||||||||||||
Net cash flow generated from operations | 10.0 | 6.1 | 21.8 | |||||||||||||||
11 | Analysis of net cash/(debt) | ||||||||||||
Audited At 1 April 2012 £m | Unaudited At 30 September 2012 £m | ||||||||||||
Cash flow | Other | ||||||||||||
£m | £m | ||||||||||||
Cash at bank and in hand | 21.6 | (3.4) | - | 18.2 | |||||||||
Total cash | 21.6 | (3.4) | - | 18.2 | |||||||||
Debt due within one year | (1.0) | 1.0 | (1.0) | (1.0) | |||||||||
Finance leases due within one year | (0.8) | 0.4 | - | (0.4) | |||||||||
Debt due after one year | (1.0) | - | 1.0 | - | |||||||||
Finance leases due after one year | (0.4) | - | (0.7) | (1.1) | |||||||||
Total debt | (3.2) | 1.4 | (0.7) | (2.5) | |||||||||
Net cash | 18.4 | (2.0) | (0.7) | 15.7 | |||||||||
Audited At 1 April 2011 £m | Unaudited At 30 September 2011 £m | ||||||||||||
Cash flow | Other | ||||||||||||
£m | £m | ||||||||||||
Cash at bank and in hand | 22.4 | (7.2) | - | 15.2 | |||||||||
Total cash | 22.4 | (7.2) | - | 15.2 | |||||||||
Debt due within one year | (1.0) | 1.0 | (1.0) | (1.0) | |||||||||
Finance leases due within one year | (0.8) | 0.4 | (0.4) | (0.8) | |||||||||
Debt due after one year | (2.0) | - | 1.0 | (1.0) | |||||||||
Finance leases due after one year | (1.2) | - | 0.4 | (0.8) | |||||||||
Total debt | (5.0) | 1.4 | - | (3.6) | |||||||||
Net cash | 17.4 | (5.8) | - | 11.6 | |||||||||
Audited At 1 April 2011 £m | Cash flow | Other | Audited At 31 March 2012 £m | ||||||||||
£m | £m | ||||||||||||
Cash at bank and in hand | 22.4 | (0.8) | - | 21.6 | |||||||||
Total cash | 22.4 | (0.8) | - | 21.6 | |||||||||
Debt due within one year | (1.0) | 1.0 | (1.0) | (1.0) | |||||||||
Finance leases due within one year | (0.8) | 0.8 | (0.8) | (0.8) | |||||||||
Debt due after one year | (2.0) | - | 1.0 | (1.0) | |||||||||
Finance leases due after one year | (1.2) | - | 0.8 | (0.4) | |||||||||
Total debt | (5.0) | 1.8 | - | (3.2) | |||||||||
Net cash | 17.4 | 1.0 | - | 18.4 | |||||||||
| |||||||||||||||||
| |||||||||||||||||
12 | Provisions for liabilities and charges |
| |||||||||||||||
Unaudited | Unaudited | Unaudited | |||||||||||||||
Restructuring | Property | Total | |||||||||||||||
costs | related | Provisions | |||||||||||||||
Six months ended 30 September 2012 | £m | £m | £m | ||||||||||||||
| |||||||||||||||||
At 1 April 2012 | 1.4 | 0.7 | 2.1 |
| |||||||||||||
Provided during the period | - | 0.2 | 0.2 |
| |||||||||||||
Utilised during the period | (0.6) | (0.1) | (0.7) |
| |||||||||||||
At 30 September 2012 | 0.8 | 0.8 | 1.6 |
| |||||||||||||
| |||||||||||||||||
Unaudited | Unaudited | Unaudited | |||||||||||||||
Restructuring costs | Property related | Total Provisions | |||||||||||||||
Six months ended 30 September 2011 | £m | £m | £m | ||||||||||||||
At 1 April 2011 | - | 0.6 | 0.6 | ||||||||||||||
Provided during the period | - | - | - | ||||||||||||||
Utilised during the period | - | (0.2) | (0.2) | ||||||||||||||
At 30 September 2011 | - | 0.4 | 0.4 | ||||||||||||||
Audited | Audited | Audited | |||||||||||||||
Restructuring costs | Property related | Total Provisions | |||||||||||||||
Year ended 31 March 2012 | £m | £m | £m | ||||||||||||||
At 1 April 2011 | - | 0.6 | 0.6 | ||||||||||||||
Provided during the period | 2.2 | 0.2 | 2.4 | ||||||||||||||
Utilised during the period | (0.8) | (0.1) | (0.9) | ||||||||||||||
At 31 March 2012 | 1.4 | 0.7 | 2.1 | ||||||||||||||
The provision for property leases relates to dilapidations on properties under leases expiring within 1 year and up to 14 years. The properties have been inspected by the Group Property Manager, and estimates made for the anticipated dilapidation expenditure to be incurred prior to sub-letting, or reversion of the lease.
|
| ||||||||||||||||
The provision for restructuring costs relates to exceptional costs as detailed in note 7. |
| ||||||||||||||||
13 | Taxation | |||||||||
Taxation is provided based on management's best estimate of the weighted average annual corporation tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 March 2013 is 25.0% (Six months to 30 September 2012: 27.0%, Year to 31 March 2012: 27.1%).
This reduction reflects the fall in the UK Corporation tax rate from 26% to 25% on 1 April 2012.
The closing deferred tax assets and liabilities as at 31 March 2012 were recognised at a rate of 24% based on the corporation tax rate substantively enacted at the balance sheet date. On 17 July 2012 a further reduction to 23% was substantively enacted, and therefore the closing deferred tax assets and liabilities at 30 September 2012 have been recognised at this rate as required under IFRS accounting standards. The impact of this change to the Group is immaterial.
The proposed future reductions in the rate to 22% by 1 April 2014 will be reflected when the relevant legislation is substantively enacted. | ||||||||||
14 | Earnings per share | |||||||||
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. | ||||||||||
The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.
| ||||||||||
Underlying earnings per share | ||||||||||
It is the directors' view that underlying earnings per share is a fairer reflection of the underlying results of the business. The adjusted basic and diluted underlying earnings per share have been calculated excluding the exceptional items and the associated tax impact. | ||||||||||
| The underlying profit for the period is calculated as follows; | |||||||||
Unaudited | Unaudited | Audited | ||||||||
Six months to 30 September | Six months to 30 September | Year to 31 March | ||||||||
2012 | 2011 | 2012 | ||||||||
£m | £m | £m | ||||||||
Profit after tax | 5.5 | 4.4 | 9.4 | |||||||
Exceptional items - restructuring costs | - | 0.8 | 2.2 | |||||||
Exceptional taxation credit - relief on restructuring costs | - | (0.2) | (0.6) | |||||||
Underlying profit for the period | 5.5 | 5.0 | 11.0 | |||||||
The weighted average number of shares used in the calculations are as follows; | ||||||||||
No. of shares | No. of shares | No. of shares | ||||||||
Weighted average number of shares in issue | 54,573,649 | 54,566,250 | 54,586,755 | |||||||
Dilutive effect of options | 14,620 | 25,637 | 10,282 | |||||||
Diluted weighted average number of shares | 54,588,269 | 54,591,887 | 54,597,037 | |||||||
Earnings per share - basic | 10.1p | 8.1p | 17.3p | |||||||
Earnings per share - diluted | 10.1p | 8.0p | 17.3p | |||||||
Underlying earnings per share - basic | 10.1p | 9.1p | 20.1p | |||||||
Underlying earnings per share - diluted | 10.1p | 9.1p | 20.1p | |||||||
15 | Dividends | |||||||||
The final dividend for the year ended 31 March 2012 of 11.8p per share (2011: 11.8p) was paid on 27 July 2012. The £6.4m distribution (2011: £6.4m) is reflected in the financial statements for the six months ended 30 September 2012. | ||||||||||
In addition, the directors propose an interim dividend of 6.4p per share (2011: 6.4p per share) payable on 18 January 2013 to shareholders who are on the register at 7 December 2012. This interim dividend, amounting to £3.5m (2011: £3.5m) has not been recognised as a liability in these condensed consolidated interim financial statements. | ||||||||||
16 | Commitments and contingencies | |||||
Group capital expenditure committed, for the purchase of property, software, plant and equipment, but not provided for in these financial statements amounted to £nil (2011: £nil). | ||||||
17 | Events occurring after the reporting period | |||||
There are no events occurring after the reporting period, other than the proposed dividend referred to in note 15. | ||||||
18 | Related-party transactions | |||||
P Kane, a director of the Company, and members of his close family and certain family trusts, the beneficiaries of which are persons connected with P Kane, control directly and indirectly 45.7% of the issued share capital of the Company.
The nature of the related party transactions of the Group has not changed from those described in the Groups' 2012 Annual Report and Accounts. There were no transactions with related parties during the six months ended 30 September 2012 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. | ||||||
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 15 of the Group's 2012 Annual Report and Accounts. These included risks relating to HS2, IT systems, business continuity, legislation and regulation, competition and fuel factors, in addition to financial risks including credit risk. Save for the risks relating to HS2 and the removal of the potential for disruption during the now completed Olympic games, 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 2012 Annual Report and Accounts. The plans for HS2 are becoming clearer, including the potential impact on our Birmingham hub. We continue to actively manage the situation with the Government and HS2 to ensure any impact on our business is minimal. | ||||||
20 | Seasonality | |||||
Historically, the Group experiences marginally greater demand for its parcels and palletised goods 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 either the mail or courier markets. | ||||||
Statement of directors' responsibilities | |||||||||
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 Services 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 Services Authority agrees otherwise. | |||||||||
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: | |||||||||
■ | 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 | ||||||||
■ | 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. | ||||||||
The directors of UK Mail Group plc are listed in the UK Mail Group Annual Report for the year ended 31 March 2012, with the exception that Bill Cockburn retired on 31 May 2012, and Jessica Burley was appointed as a non-executive director on 1 September 2012. A list of current directors is maintained on the UK Mail Group website: www.ukmail.com. | |||||||||
By order of the Board | |||||||||
Guy Buswell, Chief Executive | Steven Glew, Finance Director | ||||||||
20 November 2012 | 20 November 2012 | ||||||||
Independent review report to UK Mail Group plc | |||||||||
Introduction | |||||||||
We have been engaged by the company to review the condensed consolidated interim financial statements for the six months ended 30 September 2012, which comprises the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Shareholders' Equity and related notes. We have read the other information contained in the interim management report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements. | |||||||||
Directors' responsibilities | |||||||||
The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. | |||||||||
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated interim financial statements included in this interim financial report has been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union. | |||||||||
Our responsibility | |||||||||
Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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. | |||||||||
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 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. | |||||||||
Conclusion |
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated interim financial statements in the interim financial report for the six months ended 30 September 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. |
PricewaterhouseCoopers LLP |
Chartered Accountants |
Thames Valley |
20 November 2012 |
Notes:
(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 half-yearly financial information since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
Related Shares:
UKM.L