8th Nov 2007 07:01
Wincanton PLC08 November 2007 For immediate release 8 November 2007 WINCANTON plc Half Year Results for the six months to 30 September 2007 (unaudited) "Focusing on continued growth" 2007 2006 % increase £m £m Revenue 1,030.2 931.8 10.6% ======= ====== Underlying operating profit 25.5 21.4 19.2%Net financing costs (5.4) (4.4)Share of results of associates 0.1 - ------- ------ Underlying profit before tax 20.2 17.0 18.8% ------- ------Net other items (note) 1.9 (1.9) Profit before tax 22.1 15.1 Underlying earnings per share 11.7p 10.1p 15.8%Basic earnings per share 13.1p 8.8pProposed interim dividend per share 4.60p 4.26p 8.0% Note: Underlying profit before tax and earnings per share are stated before netother items of £1.9m (2006: £(1.9)m), comprising exceptional restructuring costsof £nil (2006: £1.8m), exceptional income of £4.5m (2006: £0.7m) andamortisation of acquired intangibles of £2.6m (2006: £0.8m). Operating profit,including these items, amounted to £27.4m (2006: £19.5m) up 40.5%. Profit beforetax, including these items, amounted to £22.1m (2006: £15.1m), up 46.4%. FINANCIAL HIGHLIGHTS • Underlying operating profit up 19.2% to £25.5m • Underlying earnings per share up 15.8% to 11.7p • Dividend growth again significantly in excess of inflation at 8.0% OPERATIONAL HIGHLIGHTS • Business development momentum in the UK remains strong; very highlevels of new contract start-ups successfully delivered. • Continuing investment in Mainland European businesses in people,systems and marketing; development pipeline beginning to build and profit improvement plans on track. • Recent acquisitions performing well; further infills under activereview. Commenting on the results, Graeme McFaull, Wincanton Chief Executive, said: "We are successfully targeting growth opportunities in our focus markets, bothorganically and through infill acquisitions. We remain encouraged by this further period of strong profit and cash flowperformance and by the new business momentum being sustained, or developing,across all of our operations. We expect the full year to be another year of strategic and operational progressfor Wincanton." For further enquiries please contact: Wincanton Graeme McFaull, Chief Executive ) +44 (0) 1249 710000 Gerard Connell, Group Finance Director ) Buchanan Communications Charles Ryland / Jeremy Garcia +44 (0) 207 466 5000 Half Year Review for the six months to 30 September 2007 Introduction We are successfully targeting growth opportunities in our focus markets, bothorganically and through infill acquisitions. Our track record of organic growth is built upon our commitment to long-termrelationships with our customers, the ability to develop new solutions toaddress their changing supply chain needs, and the project management skills andoperational excellence that ensure the successful implementation of these newsolutions. The first half has seen a record number of operational start-ups, alldelivered for customers on time and to budget. More than 40 successful projectimplementations have seen in excess of 3 million sq ft of additional warehousingspace seamlessly commissioned for customers across Europe. Infill acquisitions, at reasonably-priced entry multiples, continue tocomplement this organic growth and accelerate our overall rate of profitprogress. Our two most recent acquisitions in the UK, which expanded our homedelivery activities and gave us a strong position in the construction sector,have been rapidly integrated and delivered good operational and financialperformances in the first half. A further small infill acquisition in the UK construction sector is today beingseparately announced. A number of further such opportunities remain under activereview, both in the UK and Mainland Europe. Our UK & Ireland activities again reported a double-digit percentage increase inunderlying operating profit. The first half result of £23.4m represented a net17.0 per cent increase on the prior year, with a limited number of contractlosses and pricing pressure on certain renewals more than offset by very strongnew business momentum and the benefit of successful acquisition integration. Ouroperations in Mainland Europe also reported an improved performance, withunderlying operating profit increasing from £1.4m to £2.1m. Some margin pressureremains in our transport activities as a consequence of a continuing shortage ofsub-contractor capacity, but the elimination of our Spanish losses allowedprofit progress to be made even after significant additional businessdevelopment and marketing investment and the further strengthening of ourmanagement teams in a number of countries. Another period of strong profit and cash flow performance, building further onWincanton's successful track record since demerger, has again enabled the Boardto recommend a dividend increase significantly in excess of inflation. The Boardhas declared an interim dividend of 4.60p, an increase of 8.0 per cent on lastyear's dividend of 4.26p. UK & Ireland Growth in new services, expansion into new sectors and strong continuingmomentum within our existing customer portfolio resulted in another period ofexcellent performance in the UK & Ireland. Both last year's acquisitions, which were made early in the second half of thefinancial year, contributed well. The home delivery business was rapidlyintegrated, operational standards were materially improved and a significant newcustomer, Hoover Candy, will shortly be added to the network. Our constructionacquisition benefited from higher volumes from existing customers such as Cemexand Ibstock and is also successfully generating contract gains, including asignificant win with a major new customer, confirmed shortly after the periodend. Our recycling business had a very active first half, with the new WEEE Directivefinally going live on 1 July. Our new WEEE plant is fully operational andinitial volumes being processed by the plant are encouraging. Ourfridge-recycling plant is also seeing the benefit of higher volumes, as localauthorities, waste management companies and producer compliance schemes awardintegrated contracts to manage the disposal of all white goods and WEEEmaterials. Interesting opportunities are beginning to emerge, in addition to thephysical handling of the flows, to advise customers on the overall management oftheir recycling responsibilities under the new legislation. We are also pleased with encouraging signs of early progress in our new jointventure with Kerry Logistics. Discussions are under way with customers, in boththe UK and Mainland Europe, and we expect to be able to announce our first majorbusiness win early in the second half. The new contract, with a UK retailer,will cover pre-consolidation warehousing in China, shipping from Asia, anddistribution and transportation to all UK stores. Good progress was made in most areas of our existing UK & Ireland operations,with only our chilled consolidation activities reporting lower year-on-yearprofits as a result of lower volumes being processed by the network and acontract lost in the prior year. Pullman Fleet Services delivered higher profitsafter a disappointing year last year. Our food service business benefited fromthe major renewal with Punch, a 5-year extension of our contract to manage theorder processing and physical distribution of food products to their managedestate across the UK. A new customer, Tragus, was added to the food serviceoperations in the first half. A 3-year contract will see Wincanton managing anadditional 2.6 million cases and 30,000 deliveries each year through the networkto Tragus outlets including Cafe Rouge and Bella Italia. In addition to growingour food service portfolio we have been expanding further in the drinks sectorwith a new warehousing, distribution and co-packing contract for E. & J. Gallo. Other growth opportunities included new collaborative solutions implemented forexisting customers such as Pernod Ricard and Mattel, the expansion of ourtransport management operations for Unilever and an extension of our businesswith Procter & Gamble, with a contract awarded to Wincanton to manage theirNorthern Service Centre in Skelmersdale. Wincanton already manages Procter &Gamble's Southern Service Centre in West Thurrock. Other gains with existing customers saw us add the warehousing of bathroomproducts to our kitchen home delivery operations for Homebase, a newe-fulfilment and multi-channel retailing centre for Woolworths, successfullyimplemented in only 16 weeks, and a significant expansion of the scale and scopeof the activities managed for Dunnes Stores in Ireland. Having progressivelytaken over a number of facilities from other logistics providers to Dunnes, wenow operate 500,000 sq ft of space across four sites, processing some 8 millioncases per annum of boxed and hanging garments. Also in Ireland we renewed ourexisting Superquinn contract for a further two years. The Wincanton RetailSolutions team has, in addition, been supporting Superquinn with its storerefurbishment programme. This team has also been working with Marks & Spencer inthe UK in respect of its major store refurbishment programme, building on anexisting contract to manage all of Marks & Spencer's shop-fitting requirementsin the UK. Other renewals included four major contract extensions in the fuel and gassector, with ConocoPhillips, Esso, Total and Shell Gas, confirming our abilityto sustain the highest levels of quality assurance and industry-leading healthand safety standards which are so critical in the petroleum sector. Business gains in the period with new customers included a 3-year transportmanagement contract awarded to Wincanton by adidas UK and a 7-year contract tomanage a new 320,000 sq ft facility in Milton Keynes for Jenks, the grocery andpharmacy brands broker. Mainland Europe We have continued to invest in people, processes, systems, business developmentand marketing to strengthen our platform for growth across Mainland Europe, inaccordance with our profit improvement plan. We remain confident that moresignificant growth can be delivered from these operations, which provide theGroup with the operational presence to serve the supply chain requirements ofits customers on a national, regional and Pan-European basis. We believe there to be attractive opportunities for future growth for Wincanton,both in our current focus markets of France, Germany and Poland and, in duecourse, from an enhanced presence in other markets. Current profitabilitycontinues to be held back by the cost of under-utilised space, particularly inFrance and Germany, but we are generally encouraged by both progress on thisshorter-term issue and indications of the higher levels of new business momentumthat will be required to deliver more substantial profit improvement in themedium term and beyond. Our continuing investment in strengthening our management teams has seen theappointments of new managing directors in several countries, a new regionalmanaging director for our operations in France and the Benelux countries, andincreased and improved resource in a number of support functions such asfinance, IT and business development. Our investment in raising brand awarenesshas funded trade press advertising in key markets, an active programme ofconference sponsorship and stands at major trade fairs in Paris, Munich andShanghai. Our investment in processes and systems is consolidating the progressalready made in customer account planning disciplines, project management andoperational excellence. We are also developing the next generation ofwarehousing and transport management software. Our German operations reported a very good performance in our intermodal andcontainer management activities and steady progress in our contract logisticsportfolio. Overall performance continues to be held back, however, bydisappointing results at several of the depots in our road transport network. New business wins in our intermodal operations included gains with GermanPellets, CMA CGM and Van Donge & de Roo. For German Pellets, for example, we areorganising bulk barge and coaster transports, principally to Belgium and theNetherlands and also managing the handling and storage products for twomanufacturing facilities in Southern Germany. For CMA CGM we are handling some16,000 containers per annum through our Mannheim terminal and also managingcontainer movements by rail between Mannheim and Le Havre. Our high-techoperations added new business with NCR, Wincor Nixdorf and Diebold, amongstothers, and we expanded our contract logistics activities elsewhere withcustomers such as Dow and M-Real. For Dow, for example, we added the managementof new activities in Italy and Romania to our existing Pan-European operation. Our road operations combine both warehousing activities on certain sites and anational network of cross-docking facilities which allow us to offer next-daydelivery across Germany. Good progress was made in certain areas of theseactivities, including new wins with Exxon Mobil, Plastal, a major supplier ofengineered plastics to the automotive industry, and Lorenz, a leading snack foodmanufacturer. The Exxon Mobil win in particular will bring significant volume toour Duisburg site, one of the currently under-utilised warehouses which has beenhindering our ability to make more significant profit progress. Action plans arebeing implemented to address the performance of the remaining under-utilisedsites. Our strategic review of the German market has also identified a number ofpotentially attractive infill acquisition targets, several of which arecurrently being actively reviewed. We are pleased with the progress being made by our enlarged French business inthe building of a more substantial pipeline of development opportunities.Under-utilised space at certain sites, as in Germany, prevents more substantiveshort-term profit progress, but we are encouraged by the early signs of enhancednew business momentum. Contract gains in the period included wins with EDFEnergies Nouvelles, HSS and Mister Gooddeal, Jardiland and Total. For EDFEnergies Nouvelles we are managing the warehousing of a new range of solarpanels in our Toulouse facility and organising transport flows throughout theSouth of France and into Spain. For HSS and Mister Gooddeal, both parts of theBertelsmann Group and leaders in e-commerce and internet shopping in France, wehave successfully taken over both the running of their in-house warehousingoperations and also expanded an existing Wincanton warehouse in Caudebec,including an investment in automation to handle the high levels of growth inthis fast-expanding sector. The addition of Jardiland to our growing customerbase in DIY retailing will secure additional volume for one of our sites withspare capacity in the Orleans area. More investment, and time, will be requiredto accelerate the improvement of Wincanton's brand awareness in France, butcontract wins such as these, together with our growing pipeline of new businessopportunities, give us confidence that a sizeable and profitable operation canbe built successfully in this important focus market. In Central & Eastern Europe we have resolved the contractual issues relating tothe project start-ups in Hungary last year that have had an adverse effect uponour financial performance. We are now again able to concentrate our efforts,having also reinforced our management resource across the region, on takingprofitable advantage of the many opportunities for new business in thesefast-growing economies. Wins and renewals in the period included a 2-yearextension of our warehousing and distribution contract with Leroy Merlin and newwins to manage the warehousing and distribution requirements of OBI in Polandand also national distribution for Electrolux in Poland. We were awarded a new3-year contract with JohnsonDiversey, a 5-year contract with Rieber Food and newtransport management operations, both nationally and internationally, for KraftFoods, Kingspan and Cussons. High rates of wage inflation and labour shortagesin certain areas are creating operational challenges, but our reputation for thequality and reliability of our service performance is of increasing importancein the generation of new business opportunities. Our international transport hub, at s'Heerenberg on the Dutch/German border,successfully brought on-stream a major Pan-European contract for theconsolidation and delivery of automotive components into Pininfarina in NorthernItaly. Good new business wins were also recorded with Akzo Nobel and Ciba-Geigy.A project to significantly expand the capacity of this hub is now under way,with our new facility expected to be operational from the middle of next year.We believe there to be attractive growth potential for Wincanton in themanagement and operation of international transport flows and this is anotherarea in which we have been strengthening our management resource for the future. Work to establish the potential in Mainland Europe for some of our higher growthactivities in the UK has led to us to focus, initially, on Consilium, ourconsultancy business. Consilium has developed rapidly and profitably in the UKand is making good early progress in extending the scope of its operationsoutside of the UK. The first half, for example, saw projects successfullycompleted for a Scandinavian brewer and food importer and also a European supplychain review for a major international brewer. Financial review Group turnover, at £1,030.2m, was 10.6 per cent higher than for the same periodlast year. Underlying operating profit, at £25.5m, was 19.2 per cent ahead oflast year. In a strong first half, the UK & Ireland delivered a 17.0 per cent increase inunderlying operating profit, to £23.4m, on turnover up by 16.2 per cent to£668.3m. Underlying operating profit in Mainland Europe increased from £1.4m to£2.1m on turnover broadly unchanged at £361.9m. Exceptional income of £4.5m has been generated in the first half. £3.7m of thisis derived from the expected receipt of a monetary award in respect ofarbitration proceedings. A joint venture, 50 per cent owned by Wincanton, hasbeen seeking compensation for the early termination of a contract. Finalresolution of these arbitration proceedings, which may lead to further moniesbeing awarded to the joint venture, is expected in the final quarter of thecurrent financial year. The balance of the exceptional profit, £0.8m, was theresult of the sale of a UK property which had become surplus to operationalrequirements. We expect to review possible restructuring options in respect ofcertain areas of our activities in the second half, which may lead toexceptional costs being incurred. Net financing costs increased from £4.4m to £5.4m, giving underlying profitbefore tax, including associates, of £20.2m, up 18.8 per cent. An underlying taxcharge of 31 per cent and minority interest charge of £0.2m produced underlyingearnings of £13.7m, a 17.1 per cent increase on last year. Underlying earningsper share increased at the slightly lower rate of 15.8 per cent, to 11.7p pershare, as a consequence of an increase of approximately 1.9m shares in theGroup's average issued share capital through the exercise of share options. As a result of another period of good cash flow generation, net debt, at £62.0m,was down both compared to the year end and the first half last year. Thecompensation monies referred to above were received following the period end. Dividend The Board has declared an interim dividend of 4.60p, an increase of 8.0 per centon last year's dividend of 4.26p. This will be paid on 8 January 2008 toshareholders on the register at 7 December 2007. Risks The key risks and uncertainties facing Wincanton in the second half of thecurrent financial year have not changed from those outlined in the Annual Reportfor the year ended 31 March 2007. Outlook We expect to see the encouraging momentum of our UK & Ireland business continueinto the second half. The improved first half performance in Mainland Europe isalso expected to be sustained in the second half, although the costs of emptyspace will continue to limit the speed of profit progress. The second half will again be a very active period for new projectimplementations, including a new 650,000 sq ft multi-temperature site forSainsbury's in Northampton and an additional 500,000 sq ft of warehousing for anautomotive customer in Germany. We expect the full year to be another year of operational and strategic progressfor Wincanton, with attractive opportunities for further development, bothorganically and through acquisition. Wincanton is well-placed, with leading positions in fragmented markets, to buildfurther on its strong track record of consistent profit growth and cash flowgeneration. Board change I am pleased to announce that David Edmonds, currently the Senior IndependentDirector, has agreed to become Chairman following my retirement from the Boardat the next Annual General meeting. David will become Deputy Chairman withimmediate effect. David Malpas Chairman 7 November 2007 Statement of Directors' responsibilities The Board confirms to the best of their knowledge: • that the consolidated half year financial statements for the sixmonths to 30 September 2007 have been prepared in accordance with IAS 34'Interim Financial Reporting' as adopted by the EU; and • that the Half Year Report includes a fair review of the informationrequired by sections 4.2.7R and 4.2.8R of the Disclosure and Transparency Rules,being an indication of important events that have occurred during the period andtheir impact on the consolidated half year financial statements; a descriptionof the principal risks and uncertainties for the remainder of the currentfinancial year; and the disclosure requirements in respect of material relatedparty transactions. The Board of Directors has remained unchanged since the publication of theAnnual Report in June 2007. The above Statement of Directors' responsibilitieswas approved by the Board on 7 November 2007. Consolidated income statement for the six months to 30 September 2007 (unaudited) Note Six months to Six months to Year 30 Sept 30 Sept ended 2007 2006 31 March 2007 £m £m £m Revenue 2 1,030.2 931.8 1,933.1 ======= ======= ======= Underlying operating profit 2 25.5 21.4 45.5 ------------------------------- ----- ------- ------- -------Amortisation of acquiredintangibles 2 (2.6) (0.8) (3.2)Exceptional restructuring costs 3 - (1.8) (6.0)Exceptional income 3 4.5 0.7 6.2------------------------------- ----- ------- ------- ------- Operating profit 27.4 19.5 42.5 Financing income 4 1.9 1.7 3.7Financing cost 4 (7.3) (6.1) (13.6)------------------------------- ----- ------- ------- -------Net financing costs (5.4) (4.4) (9.9)------------------------------- ----- ------- ------- -------Share of results of associates 0.1 - - ------- ------- -------Profit before tax 22.1 15.1 32.6Income tax expense 5 (6.6) (5.0) (9.6) ------- ------- -------Profit for the period 15.5 10.1 23.0 ======= ======= =======Attributable to - equity shareholders of Wincanton plc 15.3 10.1 22.9 - minority interests 0.2 - 0.1 ------- ------- -------Profit for the period 15.5 10.1 23.0 ======= ======= =======Earnings per share 6 - basic 13.1p 8.8p 19.7p - diluted 12.8p 8.6p 19.4pDividend declared and paid inthe period (£m) 7 10.9 9.9 14.9 ======= ======= ======= All operations in the above financial periods were continuing. The dividend per share proposed in respect of the above period is 4.60p (2006:4.26p). Consolidated statement of recognised income and expense for the six months to 30 September 2007 (unaudited) Six months to Six months to Year 30 Sept 30 Sept ended 2007 2006 31 March 2007 £m £m £m Actuarial gains on defined benefitpension schemes (net of deferred tax) - 14.9 9.4Net foreign exchange gain/(loss) oninvestments in foreign subsidiaries netof hedge instruments 0.2 (0.8) -Tax taken directly to equity - - 0.7 ------- ------- -------Net gain recognised directly in equity 0.2 14.1 10.1 Profit for the period 15.5 10.1 23.0 ------- ------- -------Total recognised income and expense forthe period 15.7 24.2 33.1 ======= ======= ======= Attributable to - equity shareholders of Wincanton plc 15.5 24.2 33.0 - minority interests 0.2 - 0.1 ------- ------- -------Total recognised income and expense forthe period 15.7 24.2 33.1 ======= ======= ======= Consolidated balance sheet at 30 September 2007 (unaudited) Note 30 Sept 30 Sept 31 March 2007 2006 2007 £m £m £m Non-current assets Goodwill and intangible assets 112.8 68.8 113.2 Property, plant and equipment 8 207.8 226.7 211.4 Investments 0.7 0.6 0.6 Deferred tax assets 9.4 21.9 11.8 ------- ------- ------- 330.7 318.0 337.0 ------- ------- ------- Current assets Inventories 8.1 7.6 8.2 Trade and other receivables 365.2 330.8 331.1 Cash and cash equivalents 9 67.8 50.6 60.9 ------- ------- ------- 441.1 389.0 400.2 ------- ------- ------- Current liabilities Income tax payable (7.2) (5.2) (4.4) Borrowings 9 (1.7) (16.3) (1.6) Trade and other payables (477.2) (419.5) (444.1) Employee benefits (6.9) (6.4) (7.7) Provisions (19.5) (17.5) (20.1) ------- ------- ------- (512.5) (464.9) (477.9) ------- ------- ------- Net current liabilities (71.4) (75.9) (77.7) ------- ------- ------- Total assets less current liabilities 259.3 242.1 259.3 ------- ------- ------- Non-current liabilities Borrowings 9 (128.1) (120.0) (125.1) Other payables (1.1) (1.0) (5.0) Employee benefits (95.1) (95.7) (99.6) Provisions (41.6) (44.5) (42.0) Deferred tax liabilities (1.3) (1.1) (1.3) ------- ------- ------- (267.2) (262.3) (273.0) ------- ------- ------- Net liabilities (7.9) (20.2) (13.7) ======= ======= ======= Equity Issued share capital 12.0 12.0 12.0 Share premium 9.8 8.5 9.6 Merger reserve 3.5 3.5 3.5 Translation reserve 2.9 1.9 2.7 Retained earnings (36.4) (46.4) (41.8) ------- ------- ------- Equity deficit attributable to shareholders of Wincanton plc (8.2) (20.5) (14.0) Minority interest 0.3 0.3 0.3 ------- ------- ------- Total equity deficit (7.9) (20.2) (13.7) ======= ======= ======= Consolidated statement of cash flows for the six months to 30 September 2007 (unaudited) Six months to Six months to Year 30 Sept 30 Sept ended 2007 2006 31 March 2007 £m £m £mOperating activitiesProfit before tax 22.1 15.1 32.6Adjustments for - depreciation and amortisation 18.6 17.1 35.1 - interest expense 5.4 4.4 9.9 - share of results of associates (0.1) - - - profit on sale of property, plant and equipment (1.0) (0.7) (9.3) - share-based payments fair value charges 1.0 0.7 1.6 ------- ------- -------Operating profit before changes inworking capital and provisions 46.0 36.6 69.9Increase in trade and other receivables (29.4) (23.7) (10.3)Decrease/(increase) in inventories 0.1 (0.3) (0.4)Increase in trade and other payables 26.5 12.2 15.0(Decrease)/increase in provisions (2.5) 1.5 (3.1)Decrease in employee benefits (5.3) (28.2) (29.6)Income taxes paid (1.4) (1.3) (1.4) ------- ------- -------Cash generated from operations (12.0) (39.8) (29.8) ------- ------- -------Cash flows from operating activities 34.0 (3.2) 40.1 ======= ======= =======Investing activitiesProceeds from sale of property, plantand equipment 4.0 3.8 32.2Proceeds from sale of unlisted tradeinvestments - 0.1 0.1Interest received 0.9 0.7 1.7Acquisitions net of cash acquired anddebt repaid on acquisition (1.6) - (29.7)Acquisition of property, plant andequipment (13.3) (16.7) (29.5) ------- ------- -------Cash flows from investing activities (10.0) (12.1) (25.2) ======= ======= =======Financing activitiesProceeds from the issue of sharecapital 0.2 2.2 3.1Disposal of own shares on exercise ofoptions - 0.3 1.2Increase in borrowings 0.1 22.3 13.4Payment of finance lease liabilities (0.5) (0.3) (1.6)Dividends paid to minority interest insubsidiary undertakings (0.2) - (0.1)Equity dividends paid (10.9) (9.9) (14.9)Interest paid (6.6) (4.4) (10.9) ------- ------- -------Cash flows from financing activities (17.9) 10.2 (9.8) ======= ======= =======Net increase/(decrease) in cash andcash equivalents 6.1 (5.1) 5.1Cash and cash equivalents at beginningof the period 60.9 56.1 56.1Effect of exchange rate fluctuations oncash held 0.8 (0.4) (0.3) ------- ------- -------Cash and cash equivalents at end ofperiod 67.8 50.6 60.9 ======= ======= =======Represented by - cash at bank and in hand 37.6 21.3 33.5 - restricted cash, being deposits held by the Group's captive insurer 30.2 29.3 27.4 ------- ------- ------- 67.8 50.6 60.9 ======= ======= ======= Notes to the consolidated half year financial statements for the six months to 30 September 2007 (unaudited) 1 Basis of preparation and Statement of compliance Wincanton plc (the "Company") is a UK company incorporated in England and Wales.The consolidated half year financial statements of the Company for the sixmonths to 30 September 2007 comprise the Company and its subsidiaries (togetherreferred to as the "Group") and the Group's interests in associates and jointlycontrolled entities. These consolidated half year financial statements have been prepared inaccordance with IAS 34 'Interim Financial Reporting', as adopted by the EU, andon the basis of the accounting policies applied by the Group in its consolidatedfinancial statements for the year ended 31 March 2007, which are in accordancewith IFRS as adopted by the EU (Adopted IFRS). There have not been anysignificant changes to Adopted IFRS since 31 March 2007 which give rise to anychanges to the Group's accounting policies. These consolidated half year financial statements do not include all of theinformation required for full annual financial statements, and should be read inconjunction with the consolidated financial statements for the year ended 31March 2007. The comparative figures for the year ended 31 March 2007 have beenextracted from those accounts but do not comprise the full statutory accountsfor that financial year. Except for the 31 March 2007 comparatives, thefinancial information set out herein is unaudited but has been reviewed by theauditors and their report to the Company is set out on page 18. The consolidated financial statements for the year ended 31 March 2007 have beenreported on by the Group's auditors; delivered to the Registrar of Companies;and are available upon request from the Company's registered office at MethuenPark, Chippenham, Wiltshire, SN14 0WT or at www.wincanton.co.uk. The report ofthe auditors was (i) unqualified, (ii) did not include a reference to anymatters to which the auditors drew attention by way of emphasis withoutqualifying their report, and (iii) did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The preparation of these consolidated half year financial statements requiresmanagement to make judgements, estimates and assumptions that affect theapplication of accounting policies and the reported amounts of assets andliabilities, income and expense. Actual results may differ from these estimates.In preparing these consolidated half year financial statements, the significantjudgements made by management in applying the Group's accounting policies andthe key areas of estimation were the same as those that applied to theconsolidated financial statements for the year ended 31 March 2007. The Half Year Report was approved by the Board on 7 November 2007. 2 Segment information Segment information is presented in respect of the Group's geographicalsegments, being the primary segmentation format based on the Group's managementand internal reporting structure. As the secondary segment is the business ofcontract logistics services which encompasses the entire scope of Wincanton'soperations, no further segment analysis is required. The Group operates in two principal geographical areas, the UK & Ireland, andMainland Europe. In presenting information on the basis of geographicalsegments, segment revenue is based on the geographical location of the businessoperations. Underlying operating profit by segment includes items directly attributable to asegment as well as those that can be allocated on a reasonable basis. Notes to the consolidated half year financial statements (continued) for the six months to 30 September 2007 (unaudited) 2 Segment information (continued) UK & Ireland Mainland Europe Consolidated Six Six Year Six Six Year Six Six Year months months ended months months ended months months ended to to 31 to to 31 to to 31 30 Sept 30 Sept March 30 Sept 30 Sept March 30 Sept 30 Sept March 2007 2006 2007 2007 2006 2007 2007 2006 2007 £m £m £m £m £m £m £m £m £m Revenue* 668.3 575.1 1,214.5 361.9 356.7 718.6 1,030.2 931.8 1,933.1 ======= ======= ======= ======= ======= ====== ======= ======= =======Underlying operatingprofit bysegment 23.4 20.0 42.0 2.1 1.4 3.5 25.5 21.4 45.5Amortisation ======= ====== ======= ======= ======= ====== ======= ======= =======of acquiredintangibles (1.8) - (1.7) (0.8) (0.8) (1.5) (2.6) (0.8) (3.2)Exceptionalrestructuringcosts - - (2.0) - (1.8) (4.0) - (1.8) (6.0)Exceptionalincome 0.8 0.7 5.8 3.7 - 0.4 4.5 0.7 6.2Operating ------- ------- ------- ------- ------- ------ ------- ------- ------- profit 22.4 20.7 44.1 5.0 (1.2) (1.6) 27.4 19.5 42.5 ======= ======= ======= ======= ======= ====== ======= ======= ======= * Revenue derived from sales to external parties only. 3 Exceptionals Six months to Six months to Year 30 Sept 2007 30 Sept 2006 ended £m £m 31 March 2007 £mExceptional restructuring costs Reorganisation of operatingstructures - (0.2) (4.0)post-acquisition Relocation of UK head office andbusiness rationalisation - - 0.2 Closure and reorganisation ofoperations - (1.6) (2.2)(2006 : Spain) -------- -------- -------- - (1.8) (6.0) ======== ======== ========Exceptional incomeProperty profits - sale of freeholdland 0.8 0.7 6.2and buildings Partial settlement of the PGNLogistics 3.7 - -Ltd arbitration case -------- -------- -------- 4.5 0.7 6.2 ======== ======== ======== The arbitration involving PGN Logistics Ltd, a jointly owned entity of theGroup, has been successfully concluded and a partial settlement awarded of£27.4m, which was received after the period end. The Group's 50% share of thisexpected receipt has been utilised to settle various amounts receivable andreimburse certain accrued costs. The balance of the £13.7m receivable by theGroup, as its share of the £27.4m, has given rise to the above exceptionalincome. Notes to the consolidated half year financial statements (continued) for the six months to 30 September 2007 (unaudited) 4 Net financing costs Six months to Six months to Year 30 Sept 2007 30 Sept 2006 ended £m £m 31 March 2007 £mInterest income 1.3 0.7 1.7Expected return on defined benefitpension scheme assets 17.7 16.1 32.0Interest on defined benefit pensionscheme obligations (17.1) (15.1) (30.0) -------- -------- -------- 1.9 1.7 3.7 ======== ======== ========Interest expense (5.8) (4.7) (11.0)Finance charges payable in respectof (0.2) (0.2) (0.5)finance leasesUnwinding of discount on insuranceand (1.3) (1.2) (2.1)other provisions -------- -------- -------- (7.3) (6.1) (13.6)Less finance costs capitalised - - - -------- -------- -------- (7.3) (6.1) (13.6) ======== ======== ========Net financing costs (5.4) (4.4) (9.9) ======== ======== ======== 5 Income tax expense Six months to Six months to Year 30 Sept 30 Sept ended 2007 2006 31 March 2007 £m £m £m Current tax expenseCurrent year 4.3 0.7 1.5Adjustments for prior years (0.1) - (1.5) ------- ------ -------- 4.2 0.7 - ======= ====== ========Deferred tax expenseCurrent year 2.4 4.3 8.8Adjustments for prior years - - 0.8 ------- ------ -------- 2.4 4.3 9.6 ======= ====== ======== Total income tax expense in the incomestatement 6.6 5.0 9.6 ======= ====== ======== In accordance with IAS 34 the tax expense recognised in the income statement forthe half year is calculated on the basis of the estimated effective full yeartax rate. Notes to the consolidated half year financial statements (continued) for the six months to 30 September 2007 (unaudited) 6 Earnings per share Earnings per share are calculated on the basis of earnings attributable to theequity shareholders of Wincanton plc of £15.3m (2006: £10.1m) and the weightedaverage of 117.2m (2006:115.3m) shares which have been in issue throughout theperiod. The diluted earnings per share are calculated on the basis of anadditional 2.3m (2006: 2.0m) shares deemed to have been issued at £nilconsideration under the Company's share option schemes. The weighted average number of ordinary shares for both basic and dilutedearnings per share are calculated as follows: Weighted average number of ordinary Six months to Six months to Year ended 31shares March 2007 30 Sept 2007 30 Sept millions millions 2006 millionsIssued ordinaryshares at thebeginning of theperiod 116.1 114.9 114.9Net effect ofshares issuedduring the period 1.1 0.4 1.2 -------- ------- ------- 117.2 115.3 116.1 ======== ======= ======= Weighted average number of ordinaryshares (diluted)Weighted averagenumber of ordinaryshares at the endof the period 117.2 115.3 116.1Effect of shareoptions in issuebut not exercised 2.3 2.0 1.8 -------- ------- ------- 119.5 117.3 117.9 ======== ======= ======= An alternative earnings per share number is shown below, being beforeexceptionals, amortisation of acquired intangibles and related tax, since theDirectors consider that this provides further information on the underlyingperformance of the Group. Six months to Six months to Year ended 31 March 2007 30 Sept 2007 30 Sept pence pence 2006 penceUnderlying earnings per share - basic 11.7 10.1 21.0 - diluted 11.5 10.0 20.7 ======== ======= ======= Notes to the consolidated half year financial statements (continued) for the six months to 30 September 2007 (unaudited) 6 Earnings per share (continued) Underlying earnings are determined as follows: Six months to Six months to Year ended 31 March 2007 30 Sept 2007 30 Sept £m £m 2006 £mProfit for theperiod attributableto equityshareholders ofWincanton plc 15.3 10.1 22.9Exceptionalrestructuring costs(note 3) - 1.8 6.0Exceptional income(note 3) (4.5) (0.7) (6.2)Amortisation ofacquiredintangibles 2.6 0.8 3.2Tax on the aboveitems 0.3 (0.3) (1.5) -------- ------- -------Underlying earnings 13.7 11.7 24.4 ======== ======= ======= 7 Dividends An interim dividend is proposed of 4.60p per share to be paid on 8 January 2008to shareholders on the register on 7 December 2007. Under Adopted IFRS dividends are only provided in the financial statements whenthey are declared and become a liability of the Company. The total of theinterim dividend is expected to be £5.4m (2006: Interim £5.0m). In August 2007the final dividend of 9.29p per share was paid to shareholders, a total of£10.9m. 8 Property, plant and equipment Acquisitions and disposals During the half year to 30 September 2007 the Group acquired assets with a costof £12.4m (2006: £15.1m). Assets with a carrying amount of £3.0m were disposed of during the half yearended 30 September 2007 (2006: £3.0m) Capital commitments At 30 September 2007 the Group had entered into contracts to purchase property,plant and equipment for £16.6m (2006: £5.5m); delivery is expected in the secondhalf of the year to 31 March 2008. Notes to the consolidated half year financial statements (continued) for the six months to 30 September 2007 (unaudited) 9 Analysis of net debt 30 Sept 30 Sept 31 March 2007 2006 2007 £m £m £mCash and cash equivalentsCash at bank and in hand 37.6 21.3 33.5Restricted cash, being deposits held by theGroup's captive insurer 30.2 29.3 27.4 ------- ------- ------- 67.8 50.6 60.9 ------- ------- -------Borrowings === ===Current === ===Bank loans and overdrafts (1.0) (15.2) (1.0)Finance lease liabilities (0.7) (1.1) (0.6) ------- ------- ------- (1.7) (16.3) (1.6) ------- ------- -------Non-current ===US$ private placement (88.7) (86.4) (86.7)Bank loans (36.9) (29.7) (35.3)Finance lease liabilities (2.5) (3.9) (3.1) ------- ------- ------- (128.1) (120.0) (125.1) ------- ------- -------Total net debt (62.0) (85.7) (65.8) ======= ======= ======= Independent review report to Wincanton PLC Introduction We have been engaged by the Company to review the consolidated half yearfinancial statements in the Half Year Report for the six months to 30 September2007 which comprises the consolidated income statement, the consolidated balancesheet, the consolidated statement of recognised income and expense, theconsolidated statement of cash flows and the related explanatory notes. We haveread the other information contained in the Half Year Report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe information in the consolidated half year financial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the Disclosureand Transparency Rules ("the DTR") of the UK's Financial Services Authority("the UK FSA"). Our review has been undertaken so that we might state to theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The Half Year Report is the responsibility of, and has been approved by, theDirectors. The Directors are responsible for preparing the Half Year Report inaccordance with the DTR of the UK FSA. As disclosed in note 1, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the EU. The consolidated halfyear financial statements included in this Half Year Report have been preparedin accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Our responsibility Our responsibility is to express to the Company a conclusion on the consolidatedhalf year financial statements in the Half Year Report based on our review. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the consolidated half year financial statements in the Half Year Report forthe six months to 30 September 2007 are not prepared, in all material respects,in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA. KPMG Audit PlcChartered Accountants 100 Temple Street Bristol BS1 6AG 7 November 2007 Shareholder information Shares traded ex-dividend 5 December 2007Record date for interim dividend 1 7 December 2007Interim dividend paid 8 January 2008Preliminary announcement of full year results June 2008Annual General Meeting July 2008Half year results and dividend announced November 2008 1 Shareholders on the register at this date will receive the dividend. Shareholders' enquiries All administrative enquiries relating to shareholdings should, in the firstinstance, be directed to the Registrar at the following address: Equiniti Aspect House Spencer Road Lancing West Sussex BN15 8AH This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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