14th Nov 2007 07:01
Business Post Group PLC14 November 2007 14 November 2007 BUSINESS POST GROUP PLC INTERIM RESULTS 2007/08 (Unaudited) 6 months ended 30 September 2007 Highlights • Group revenues up 9% to £167m (2006: £153m) • Group revenues excluding Federal Express up 15% • UK Mail Revenues up 59% to £60m (2006: £37m) • Profit before tax (before exceptionals) up 50% to £4.8m (2006: £3.2m) • Profit before tax up 182% to £4.8m (2006: £1.7m) • Interim dividend of 6.4p per share (2006: 6.4p) Guy Buswell, Chief Executive said: "We have seen a significantly improved Group performance compared to a year ago,with like-for-like revenue growth of 15% and profit before tax (beforeexceptionals) up 50%. This has been driven primarily by further very stronggrowth in UK Mail, good performances in the business-to-business segment, whichmakes up 80% of our parcels business, and in our pallets business. In UK Mail wecontinue to win significant new business, including Abbey, HBOS, and VirginMedia. We are making good progress in changing and improving the way in which we bothmarket and operate. Central to this is the greater integration of our businesses- particularly mail, parcels and courier - and the introduction of new productsand services. The advancements we are making bode well for the future." For further information, please contact: Business Post Group plc Guy Buswell (Group Chief Executive) 0121 335 1111 Steven Glew (Group Finance Director) 01753 706 070 Hogarth Partnership John Olsen 020 7357 9477 Fiona Noblet Ian Payne INTRODUCTION The Group made good progress in the first half of the year, with continuedstrong growth of UK Mail, reinforcing its position as a leading supplier in themail market, a solid recovery in the business-to-business segment of our parcelsbusiness, and important operational and strategic progress across the Group. The result is a much improved financial performance compared to thecorresponding period in the prior year, and a stronger platform for the future.Group revenues grew by 9% to £167m and profit before tax, at £4.8m, was 50% upon the same period last year (excluding the effect of exceptional items lastyear). This profit increase was achieved despite the loss of the Federal Expresscontract which ceased in April 2007. STRATEGY We continue successfully to implement the Change Programme necessary to developBusiness Post into the UK's leading independent integrated postal group. Thisinvolves a more integrated management approach, a much greater degree ofcustomer orientation and continued product innovation, all of which are servingto reinforce our market leadership and differentiated positioning. Fullintegration of our activities is fundamental to our strategic goal. We arecurrently combining the sales, marketing and customer relations teams in ourparcels and mail businesses. We have also progressed the development of anefficient integrated network. The benefits of these measures are expected to show through in the nextfinancial year. RESULTS The results can be summarised as follows: 6 months to 30 September 2007 2006 Inc/(Dec) % £m £m Group revenue 167.3 153.0 9.3% ======= ======= ======== Operating profit (before exceptional items) 5.0 3.5 42.9%Exceptional items - (1.5) - ------- ------- --------Operating profit 5.0 2.0 150.0%Net interest payable (0.2) (0.3) 33.0% ------- ------- --------Profit before tax 4.8 1.7 182.4%Tax (1.5) (0.5) (200.0%) ------- ------- --------Profit after tax 3.3 1.2 175.0% ======= ======= ======== Basic earnings per share 6.1p 2.2p Revenue and operating profit are analysed as follows: Revenue Operating Profit 2007 2006 Inc/ 2007 2006* Inc/ £m £m (Dec) £m £m (Dec) % % Parcels 86.8 94.4 (8.1%) 6.5 6.6 (1.5%)Mail 59.6 37.5 58.9% 4.3 2.6 65.4%Specialistservices 20.9 21.1 (0.9%) 0.9 1.2 (25.0%) ------- ------ ------- ------- ------- ------- Total 167.3 153.0 9.3% 11.7 10.4 12.5% ======= ====== ======= Central costs (6.7) (6.9) 2.9% ------- ------- -------Total operatingprofit (beforeexceptional items) 5.0 3.5 42.9% ======= ======= ======= * before exceptional items Parcels Revenues in parcels, which comprises the Group's business-to-business (B2B),business-to-consumer (B2C) and international parcel delivery service, were up0.1% for the half year on a like-for-like basis (i.e. excluding the revenuesfrom the terminated Federal Express contract). Reported revenues were 8.1% lowerat £86.8m (2006: £94.4m.). In the B2B segment, which represents approximately 80% of our parcels revenues,we have achieved good growth in the period with revenues up some 5%. Our B2Boffering is based on high levels of customer service and innovative productofferings. Revenues in the B2C segment, which represents approximately 15% of our parcelsrevenues, were down some 8% in the period. As we have previously indicated, theB2C market was very competitive, particularly in the latter part of the period.We expect the second half to be challenging in our B2C business, but continue tosee attractive opportunities, particularly with customers that need a premiumservice due to the nature of the goods - for example perishables, high value orother time sensitive products. We have continued to reduce the cost of operation and improve service levels inparcels. We have introduced automatic signature capture which allows thecustomer signature on delivery to be electronically captured and communicated inreal time to our central systems. This is one example of the way in which we aresignificantly improving customer service whilst reducing costs. A further 4 franchises have been transferred to corporate ownership since May2007, resulting in a remaining franchise network of 12 franchisees. Parcels operating profit for the period was down slightly on last year at £6.5m(2006: £6.6m). Within this number is a £0.8m impact from the loss of the FederalExpress contract. Parcels operating margin increased by 0.5% to 7.5%. Overall, the focus in our parcels business is to achieve revenue growth in thoseareas that offer the most attractive returns whilst driving the efficiency ofour operations to reduce our cost base. We believe that the achievement of thesetwo objectives will allow us to progressively increase parcels margins. Mail UK Mail showed further strong growth. We have enjoyed continued success inattracting new business, as the mail industry continues to deregulate. As aresult, revenues rose 58.9% to £59.6m (2006: £37.5m). We have won a significant number of new customers during the period, includingAbbey, HBOS, and Virgin Media. We have also continued to win further businessfrom existing customers, and renewed a number of large contracts. A vitalelement of our success has been the very high levels of service we provide andwe continue to achieve recognition for service levels which are the best in theindustry. We have won, for the second year running, the Royal Mail sponsored"Down Stream Access Supplier of the Year" award. In September 2007 we handled 130 million mail items, representing some 7.5% ofthe total mail market by volume, compared to 5.5% in March. The industrial action at Royal Mail during the period had no impact on ourrevenues and no significant impact on our ability to collect mail from ourcustomers and deliver to Royal Mail for the "final mile" delivery. There has been some recent commentary about the longer term impact of thisindustrial action on the postal market. Whilst Royal Mail is predicting a modestdecline in overall mail volumes, the total market value is expected to remainbroadly unchanged. The UK mail market today is estimated by Postcomm at £6.6bn. For UK Mail, the impact of any such decline in volumes is insignificant comparedto the numerous substantial opportunities open to us. Our growth will come fromcontinuing to increase our share of the currently accessible market whilstintroducing new products and services which will give us entry into new segmentsof the market. As an example, in January 2008 we will be trialling'i-mail' a new next-day mail delivery service. This innovative product willallow customers to send an encrypted electronic letter or document to one of UKMail's sortation centres where it will be printed, enveloped and transferred toRoyal Mail for delivery next day. UK Mail operating profits were up 65% to £4.3m (2006: £2.6m), reflecting thestrong revenue growth combined with an increase in the operating margin to 7.2%(2006: 6.9%). Specialist Services Overall revenues in Specialist Services, comprising our nationwide palletisedgoods delivery service (UK Pallets) and same-day courier activities (UK Today),were down 0.9%, to £20.9m (2006: £21.1m). UK Pallets again performed well, with revenues up 3% to £15.2m (2006: £14.8m),driven by improvements in the quality of the pallet network, management andmarketing initiatives. Revenues in our courier business were down 10% to £5.7m (2006: £6.3m). In March,we effected a change in management in this business and the new team areimplementing the necessary changes to return it to growth. We see significantopportunities for our courier business, to be renamed under the UK Mail brand,to benefit from existing customer relationships elsewhere in the Group,particularly in the financial services sector. In both businesses we have improved our management capability and are investingin physical infrastructure and I.T. to improve profitability and support futuregrowth. Overall operating profit in Specialist Services was down 25% to £0.9m (2006:£1.2m). This decrease reflects the reduction in revenues and operating marginsin the courier business. Interest Net interest payable decreased to £0.2m (2006: £0.3m) due to the increased cashbalances. Cash Flow and Balance Sheet The Group had a net cash outflow of £4.9m in the period, leading to netborrowings at the end the period of £3.5m, compared to net cash at March 2007 of£0.1m. Gearing continues to be low at 6.9%. Cash inflow from operatingactivities totalled £6.3m, including £2.5m of cash consumed in working capital. Capital expenditure for the period was £1.8m (2006: £5.5m). We continue torefine plans for automation of our operations. We plan to focus initially on ourmail operations, and will roll out automation across the Group progressivelythereafter. We now expect capital expenditure for the full year to be in theregion of £7.0m (2006: £9.6m). Dividend The Board has proposed an Interim Dividend of 6.4p (2006: 6.4p) to be paid on 16January 2008 to shareholders registered on 14 December 2007 with an ex-dividenddate of 12 December 2007. OUTLOOK We see significant opportunities across the Group. The parcels business isfocused on segments with clear growth potential, and we continue to lead the wayin the rapidly evolving mail market. The start of the second half has beenencouraging with trading in the early weeks in line with management'sexpectations. The Board expects to achieve good progress for the year. Consolidated Income Statementfor the six months ended 30 September 2007 Unaudited Unaudited Audited Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 Note £m £m £m Revenue 4 167.3 153.0 325.6Cost of sales (143.2) (130.2) (275.6) --------- -------- ---------Gross profit 24.1 22.8 50.0Administrative expenses (19.1) (20.8) (39.6)------------------------- --------- -------- ---------Operating profit before exceptionalitems 5.0 3.5 12.1Exceptional items 5 - (1.5) (1.7)------------------- --------- -------- ---------Operating profit 4 5.0 2.0 10.4Interest payable (0.4) (0.4) (0.7)Interest receivable 0.2 0.1 0.1 --------- -------- ---------Profit before taxation 4.8 1.7 9.8Taxation 11 (1.5) (0.5) (2.9) --------- -------- ---------Profit for the period 3.3 1.2 6.9 --------- -------- --------- Earnings per share - basic 12 6.1p 2.2p 12.8pEarnings per share - diluted 12 6.0p 2.2p 12.6p Consolidated Balance Sheetat 30 September 2007 Unaudited Unaudited Audited 30 September 30 September 31 March 2007 2006 2007 Note £m £m £mAssetsNon-current assetsGoodwill 6 9.5 9.5 9.5Intangible assets 6 1.0 1.2 1.2Investment properties 6 1.1 1.1 1.1Property, plant and equipment 6 36.3 37.6 37.3Deferred tax assets - 0.1 - --------- --------- -------- 47.9 49.5 49.1 --------- --------- --------Current assetsInventories 0.2 0.2 0.2Trade and other receivables 54.7 57.1 56.2Current tax assets - 0.2 -Cash and cash equivalents 9 7.1 - 12.0 --------- --------- -------- 62.0 57.5 68.4 --------- --------- --------LiabilitiesCurrent liabilitiesBorrowings 9 (1.3) (2.3) (1.7)Trade and other payables (45.2) (44.7) (48.8)Current tax liabilities (1.7) - (1.4)Provisions 10 (0.3) (0.1) (0.6) --------- --------- -------- (48.5) (47.1) (52.5) --------- --------- -------- Net current assets 13.5 10.4 15.9 --------- --------- -------- Non-current liabilitiesBorrowings 9 (9.3) (7.6) (10.2)Deferred tax liabilities (0.3) (1.3) (0.5)Provisions 10 (0.8) (0.5) (0.8) --------- --------- -------- (10.4) (9.4) (11.5) --------- --------- -------- Net assets 51.0 50.5 53.5 ========= ========= ======== Shareholders' equityOrdinary shares 7 5.5 5.5 5.5Share premium 7 16.6 14.7 16.2Retained earnings 28.9 30.3 31.8 --------- --------- -------- 51.0 50.5 53.5 ========= ========= ======== Consolidated Cash Flow Statementfor the six months ended 30 September 2007 Unaudited Unaudited Audited Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 Note £m £m £mOperating activitiesCash generated from operations 8 6.3 11.3 28.2Interest received 0.2 0.1 0.1Interest paid (0.4) (0.4) (0.7)Taxation paid (1.4) - (1.4) --------- ---------- -------Net cash inflow from operating activities 4.7 11.0 26.2 Investing activitiesProceeds from disposal ofproperty, plant and equipment - - 2.3Purchase of property, plant and equipment 6 (1.7) (4.8) (8.6)Purchase of intangible assets 6 (0.1) (0.7) (1.0) --------- ---------- -------Net cash outflow from investing activities (1.8) (5.5) (7.3) Financing activitiesEquity dividends paid 13 (5.8) (5.8) (9.3)Proceeds from re-financingunder finance leases - 0.6 3.9Repayment of finance lease liabilities (0.3) (0.1) (0.3)Net proceeds from issue ofordinary share capital 7 0.3 0.1 0.2Purchase of Business Post shares by the ESOT 7 (1.0) - -Repayment of borrowings 9 (1.0) (1.0) (1.0) --------- ---------- -------Net cash outflow from financing activities (7.8) (6.2) (6.5) --------- ---------- -------Net(decrease)/increase incash and cash equivalents 9 (4.9) (0.7) 12.4Cash and cash equivalents atthe start of the period 9 12.0 (0.4) (0.4) --------- ---------- -------Cash and cash equivalents at the end of period 9 7.1 (1.1) 12.0 ========= ========== ======= Consolidated Statement of Changes in Shareholders' Equity (unaudited)for the six months ended 30 September 2007 Ordinary Share Retained Total shares premium earnings equity Note £m £m £m £m Balance as at 1 April 2007 5.5 16.2 31.8 53.5Equity dividends paid toshareholders 13 - - (5.8) (5.8)Employees' share option scheme - value of employee services - - 0.7 0.7 - proceeds from shares issued 7 - 0.3 - 0.3Transfer between reserves 7 - 0.1 (0.1) -Purchase of Business Postshares by the ESOT 7 - - (1.0) (1.0)Profit for the period - - 3.3 3.3 -------- -------- -------- -------Balance as at 30 September 2007 5.5 16.6 28.9 51.0 -------- -------- -------- ------- Balance as at 1 April 2006 5.5 14.6 34.5 54.6Equity dividends paid toshareholders 13 - - (5.8) (5.8)Employees' share option scheme - value of employee services - - 0.4 0.4 - proceeds from shares issued 7 - 0.1 - 0.1Profit for the period - - 1.2 1.2 -------- -------- -------- -------Balance as at 30 September 2006 5.5 14.7 30.3 50.5 -------- -------- -------- ------- Notes to condensed consolidated half-yearly financial information 1. General information The company is a public limited liability company incorporated and domiciled inEngland and the holding company of UK Mail Ltd, Business Post Ltd, BXT Limitedand UK Pallets Ltd. The address of its registered office is 464 BerkshireAvenue, Slough, Berkshire, SL1 4PL. The company is listed on the London Stock Exchange (LSE: BPG). The condensed consolidated half-yearly financial information was approved forissue on 13 November 2007. These interim financial results do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. Within the notes to thisfinancial information the half year periods to 30 September 2007 and 2006 areunaudited. Statutory accounts for the year ended 31 March 2007 were approved bythe Board of directors on 22 May 2007 and delivered to the Registrar ofCompanies. The report of the auditors on those accounts was unqualified, did notcontain an emphasis of matter paragraph and did not contain any statement underSection 237 of the Companies Act 1985. 2. Basis of preparation This condensed consolidated half-yearly financial information for the half-yearended 30 September 2007 has been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, 'Interimfinancial reporting' as adopted by the European Union. The half-yearly condensedconsolidated financial report should be read in conjunction with the annualfinancial statements for the year ended 31 March 2007, which have been preparedin accordance with IFRSs as adopted by the European Union. 3. Accounting policies The accounting policies adopted are consistent with those of the annualfinancial statements for the year ended 31 March 2007, as described in thoseannual financial statements. The following new standards, amendments to standards or interpretations aremandatory for the first time for the financial year ending 31 March 2008. • IFRIC 8, 'Scope of IFRS 2', effective for annual periods beginning on or after 1 May 2006. This interpretation has not had any impact on the recognition of share-based payments in the Group. • IFRIC 9, 'Re-assessment of embedded derivatives', effective for annual periods beginning on or after 1 June 2006. This interpretation has not had a significant impact on the reassessment of embedded derivatives as the Group already assessed if embedded derivatives should be separated using principles consistent with IFRIC 9. • IFRIC 10, 'Interim financial reporting and impairment', effective for annual periods beginning on or after 1 November 2006. This interpretation has not had any impact on the timing or recognition of impairment losses as the Group already accounted for such amounts using principles consistent with IFRIC 10. • IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effective for annual periods beginning on or after 1 March 2007. Management do not expect this interpretation to have any impact on the recognition of share-based payments for the Group. • IFRS 7, 'Financial instruments: Disclosures', and IAS 1, 'Amendments to capital disclosures', effective for annual periods beginning on or after 1 January 2007. As this interim report contains only condensed financial statements, and as there are no material financial instrument related transactions in the period, full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures, including the sensitivity analysis to market risk and capital disclosures required by the amendment of IAS 1, will be given in the annual financial statements. • IFRS 4, 'Insurance contracts', revised implementation guidance, effective when an entity adopts IFRS 7. Management do not expect this standard to be relevant to the Group. The following new standards, amendments to standards and interpretations havebeen issued, but are not effective for the financial year ending 31 March 2008and have not been early adopted; • IFRIC 12, 'Service concession arrangements', effective for annual periods beginning on or after 1 January 2008. Management do not expect this interpretation to be relevant for the Group. • IFRS 8, 'Operating segments', effective for annual periods beginning on or after 1 January 2009, subject to EU endorsement. Management do not currently foresee any changes to the Group's business segments. 4. Segmental reporting The Group's primary reporting format is business segments, consisting of ParcelServices, Mail Services, Specialist Services (UK Pallets and Courier) andCentral Support. The Group manages its business segments on a national basis, with all itsoperations in the UK, as are nearly all of the customers. The Group thereforeconsiders that it operates in one geographic market, namely the UK. Primary segments - business activities Six months ended 30 September 2007 (unaudited) Parcel Mail Specialist Central Services Services Services Support Eliminations Group £m £m £m £m £m £mRevenue 86.8 59.6 20.9 - - 167.3 Operating profit/(loss) 6.5 4.3 0.9 (6.7) - 5.0Interest payable (0.4)Interest receivable 0.2 ------Profit before taxation 4.8Taxation (1.5) ------Net profit attributableto equity shareholders 3.3 ------Capital expenditure 1.0 0.1 - 0.7 - 1.8Depreciation andamortisation 1.1 0.6 0.1 1.2 - 3.0Segment assets 58.4 33.6 7.9 43.0 (33.0) 109.9Segment liabilities (30.9) (22.9) (21.5) (16.6) 33.0 (58.9) Capital expenditure comprises additions to property, plant and equipment andintangible assets, including additions resulting from acquisitions throughbusiness combinations. Six months ended 30 September 2006 (unaudited) Parcel Mail Specialist Central Services Services Services Support Eliminations Group £m £m £m £m £m £mRevenue 94.4 37.5 21.1 - - 153.0 Operating profit/(loss)before exceptional items 6.6 2.6 1.2 (6.9) - 3.5Exceptional items (1.5) - - - - (1.5) --------- ------- -------- ------- --------- -------Operating profit/(loss) 5.1 2.6 1.2 (6.9) - 2.0Interest payable (0.4)Interest receivable 0.1 -------Profit before taxation 1.7Taxation (0.5) -------Net profit attributableto equity shareholders 1.2 -------Capital expenditure 1.8 2.6 0.1 1.1 - 5.6Depreciation andamortisation 1.1 0.3 0.1 1.3 - 2.8Segment assets 62.5 22.4 8.7 55.4 (42.0) 107.0Segment liabilities (48.3) (17.1) (14.5) (18.6) 42.0 (56.5) Year ended 31 March 2007 (audited) Parcel Mail Specialist Central Services Services Services Support Eliminations Group £m £m £m £m £m £mRevenue 193.8 90.3 41.5 - - 325.6 Operating profit/(loss)before exceptional items 15.1 6.4 2.0 (11.4) - 12.1Exceptional items (1.7) - - - - (1.7) --------- ------- -------- ------- -------- -------Operating profit/(loss) 13.4 6.4 2.0 (11.4) - 10.4Interest payable (0.7)Interest receivable 0.1 -------Profit before taxation 9.8Taxation (2.9) -------Net profit attributableto equity shareholders 6.9 -------Capital expenditure 2.4 5.0 0.1 2.3 - 9.8Depreciation andamortisation 2.2 0.8 0.4 2.7 - 6.1Segment assets 61.5 31.9 8.1 50.3 (34.3) 117.5Segment liabilities (37.7) (25.4) (17.5) (17.7) 34.3 (64.0) 5. Exceptional items Unaudited Unaudited Audited Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m Provision against franchisedebtors - 1.5 1.5Fed Ex termination costs - - 1.3Profit on sale of freeholdproperty - - (1.1) ---------- --------- ---------Exceptional items - 1.5 1.7 ---------- --------- --------- Franchise-related provision This relates to an increase in the provision made against franchise debt, in thesix month period to 30 September 2006. Fed Ex termination costs This represents the costs of exiting the contract to act as Fed Ex's globalservice participant in the UK, following the acquisition of the UK parceldelivery company ANC Holdings Limited by Fed Ex Corporation. Sale of freehold property A property in Bristol was disposed of in February 2007, realising proceeds of£2.2m before costs. 6. Capital Expenditure Unaudited Tangible and Intangible assets £mSix months ended 30 September 2007Opening net book value 1 April 2007 49.1Additions 1.8Disposals -Depreciation, amortisation, impairment and other movements (3.0)----------------------------------------- -----------Closing net book value 30 September 2007 47.9----------------------------------------- ----------- Unaudited Tangible and intangible assets £mSix months ended 30 September 2006Opening net book value 1 April 2006 46.5Additions 5.6Disposals -Depreciation, amortisation, impairment and other movements (2.7)----------------------------------------- -----------Closing net book value 30 September 2006 49.4----------------------------------------- ----------- 7. Share Capital Number of Ordinary Share Unaudited shares shares premium Total £m £m £m Capital Opening balance 1 April 2007 54,595,502 5.5 16.2 21.7 Proceeds from shares issued - employee share schemes 78,735 - 0.3 0.3 Transfer between reserves on exercise of share options - - 0.1 0.1 ------------------- --------- --------- --------- ---------- At 30 September 2007 54,674,237 5.5 16.6 22.1 ------------------- --------- --------- --------- ---------- Opening balance 1 April 2006 54,530,862 5.5 14.6 20.1 Proceeds from shares issued - employee share schemes 34,564 - 0.1 0.1 ------------------- --------- --------- --------- ---------- At 30 September 2006 54,565,426 5.5 14.7 20.2 ------------------- --------- --------- --------- ---------- The Company's Employee Share Ownership Trust ("ESOT") holds shares in the Company for subsequent transfer to employees under the Long Term Incentive Plan. At 31 March 2007 the ESOT held a total of 414,252 shares (31 March 2006: 414,252 shares). During June 2007, the ESOT acquired 210,565 shares through purchases on the London Stock Exchange, and as a result held 624,817 shares as at 30 September 2007 (30 September 2006: 414,252 shares). The total amount paid to acquire the shares in June 2007, was £1.0m, which has been deducted from shareholders' equity. During the six months to 30 September 2007, 78,735 shares (30 September 2006: 34,564 shares) were allotted on the exercise of share options for an aggregate cash consideration of £0.4m (2006: £0.1m). The related weighted average exercise price was £3.94 (30 September 2006: £3.30) per share. 8. Reconciliation of profit to net cash flow generated from operations Unaudited Unaudited Audited Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m Profit for the period 3.3 1.2 6.9 Taxation 1.5 0.5 2.9 Interest payable 0.4 0.4 0.7 Interest receivable (0.2) (0.1) (0.1) Exceptional items - 1.5 1.7 Depreciation and amortisation 3.0 2.8 6.0 Share-based payments 0.8 0.3 0.9 Decrease/(increase) in trade and other receivables 1.4 (3.7) (2.5) (Decrease)/increase in trade and other payables (3.6) 8.3 11.9 Increase/(decrease) in provisions (0.3) 0.1 (0.2) ---------- ----------- --------- Net cash inflow generated from operations 6.3 11.3 28.2 ---------- ----------- --------- 9. Reconciliation of net debt Audited Unaudited At 1 April At 30 September 2007 Cash flow Other 2007 £m £m £m £m Cash at bank and in hand 12.0 (4.9) - 7.1 ---------- --------- -------- ------------ Net cash and cash equivalents 12.0 (4.9) - 7.1 ---------- --------- -------- ------------ Debt due within one year (1.0) 1.0 (1.0) (1.0) Debt due after one year (6.0) - 1.0 (5.0) Finance leases (4.9) 0.3 - (4.6) ---------- --------- -------- ------------ Net debt (11.9) 1.3 - (10.6) ---------- --------- -------- ------------ Net cash/(debt) 0.1 (3.6) - (3.5) ---------- --------- -------- ------------ Audited Unaudited At 1 April At 30 September 2006 Cash flow Other 2006 £m £m £m £m Bank overdrafts (0.4) (0.7) - (1.1) ---------- --------- -------- ------------ Net cash and cash equivalents (0.4) (0.7) - (1.1) ---------- --------- -------- ------------ Debt due within one year (1.0) 1.0 (1.0) (1.0) Debt due after one year (7.0) - 1.0 (6.0) Finance leases (1.2) (0.6) - (1.8) ---------- --------- -------- ------------ Net debt (9.2) 0.4 - (8.8) ---------- --------- -------- ------------ Net cash/(debt) (9.6) (0.3) - (9.9) ---------- --------- -------- ------------ Audited Audited At 1 April At 31 March 2006 Cash flow Other 2007 £m £m £m £m Cash at bank and in hand - 12.0 - 12.0 Bank overdrafts (0.4) 0.4 - - ---------- --------- -------- ------------ Net cash and cash equivalents (0.4) 12.4 - 12.0 ---------- --------- -------- ------------ Debt due within one year (1.0) 1.0 (1.0) (1.0) Debt due after one year (7.0) - 1.0 (6.0) Finance leases (1.2) (3.7) - (4.9) ---------- --------- -------- ------------ Net debt (9.2) (2.7) - (11.9) ---------- --------- -------- ------------ Net cash/(debt) (9.6) 9.7 - 0.1 ---------- --------- -------- ------------ 10. Provision for liabilities and charges Unaudited Properties Claims Total Six months ended 30 September 2007 £m £m £m Opening amount at 1 April 2007 1.1 0.3 1.4 Additional provisions charged to the income statement - 0.1 0.1 Unused amounts released to the income statement - (0.1) (0.1) Utilised during the period - (0.3) (0.3) ----------------------- --------- ------- --------- Closing amount at 30 September 2007 1.1 - 1.1 -------------------------- --------- ------- --------- Franchise related Unaudited costs Properties Claims Total Six months ended 30 September 2006 £m £m £m £m Opening amount at 1 April 2006 0.8 0.5 0.3 1.6 Additional provisions charged to the income statement 1.5 - 0.1 1.6 Unused amounts released to the income statement (1.5) - (0.1) (1.6) Utilised during the period (0.8) (0.2) (0.3) (1.3) -------------------------- -------- --------- ------- --------- Closing amount at 30 September 2006 - 0.3 - 0.3 -------------------------- -------- --------- ------- --------- As detailed in the 2007 Annual Report, the Group paid £0.3m in settlement of potential legal actions brought from previous franchisees. 11. Income taxes Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 March 2008 is 30.8% (2007: 29.6%). The Chancellor announced on 21 March 2007 proposals to lower the corporation tax rate from 30% to 28% effective from 6 April 2008, and to phase out Industrial Building Allowances ('IBA's') over a period of 4 years. Management estimate that the phasing out of IBA's will result in a deferred tax charge of £2.4m which would be recognised in the financial statements to 31 March 2009. 12. Earnings per share Earnings per share attributable to equity holders of the company arises from continuing operations as follows: Half year ended 30 September (unaudited) (pence per share) 2007 2006 Earnings per share for profit from continuing operations attributable to the equity holders of the company - basic 6.1p 2.2p - diluted 6.0p 2.2p Adjusted earnings per share have been calculated excluding the exceptional items and the associated tax impact. Adjusted earnings per share for profit from continuing operations attributable to the equity holders of the company - basic 6.1p 4.2p - diluted 6.0p 4.1p 13. Dividends The final dividend for the year ended 31 March 2007 of 10.8p per share (2006: 10.8p) was paid on 27 July 2007. The £5.8m distribution (2006: £5.8m) is reflected in the accounts for the half year ended 30 September 2007. In addition, the directors propose an interim dividend of 6.4p per share (2006: 6.4p per share) payable on 16 January 2008 to shareholders who are on the register at 14 December 2007. This interim dividend, amounting to £3.5m (2006: £3.5m) has not been recognised as a liability in this half-yearly financial report. 14. Capital commitments Group capital expenditure committed, for the purchase of property, software, plant and equipment, but not provided for in these financial statements amounted to £1.4m (at 30 September 2006 - £0.7m; at 31 March 2007 - £1.6m). 15. 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. In addition his brother M Kane controls a further 12.8% of the issued share capital of the Company. 16. 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
UKM.L