TIDMWIN
RNS Number : 3412F
Wincanton PLC
17 May 2017
17 May 2017
WINCANTON plc
Preliminary Announcement of Results
for the financial year ended 31 March 2017
"Resilient trading and strong earnings growth"
Wincanton plc ("Wincanton" or the "Group"), a leading provider
of supply chain solutions in the UK and Ireland, today announces
its preliminary results for the year ended 31 March 2017.
2017 2016 Change Change (excl. WRM)(1)
--------------------------------------- ------- ------- ------- ---------------------
Revenue (GBPm) 1,118.1 1,147.4 (2.6)% (1.3)%
Underlying EBITDA(2) 63.9 65.4 (2.3)% 2.9%
Underlying operating profit (GBPm)(3) 52.1 50.9 2.4% 7.0%
Operating profit (GBPm)(1) 56.0 81.4
Underlying profit before tax (GBPm)(3) 41.5 35.3 17.6%
Profit before tax (GBPm)(1) 45.4 65.8
Underlying EPS (p)(3) 27.7 23.9 15.9%
Basic EPS (p) 34.2 50.7
Dividend per share (p) 9.1 5.5
Closing net debt (GBPm)(4) (24.3) (39.5) (38.5)%
--------------------------------------- ------- ------- ------- ---------------------
(1) On a like for like basis excluding the results of Wincanton
Records Management (WRM) from the prior year, which was disposed of
in December 2015. The reported operating profit and profit before
tax in 2016 includes the exceptional gain of GBP32.5m arising on
disposal of WRM.
(2) Underlying EBITDA refers to underlying operating profit
before depreciation and amortisation and is reconciled in Note 2 to
the financial statements.
(3) The section on Alternative Performance Measures (APMs) below
provides further information on these measures, including
definitions and a reconciliation of APMs to statutory measures.
(4) Net debt is the sum of cash and bank balances, bank loans
and overdrafts and other financial liabilities. Note 8 to the
financial statements provides a breakdown of net debt for the
current and prior periods.
Operating highlights
-- New business wins include contracts with wilko to manage all
UK transport operations, IKEA to operate two new distribution
centres and a home delivery contract with Wickes
-- Expansion of services for Screwfix to manage its newly built
warehouse and Britvic to operate its national transport
operations
-- Investment in construction logistics capability with the
acquisition of more than 100 ready-mix vehicles supported by a
contract with Hanson UK
Financial highlights
-- Revenue decreased by 2.6% primarily due to disposal of WRM
and exit from loss making Pullman home shopping contracts
-- Underlying operating profit increase of 7.0%(1) to GBP52.1m
(2016: GBP48.7m), benefitting from a strong operating performance,
the improvement in Pullman and end of contract settlements
-- Underlying profit before tax increase of 17.6% to GBP41.5m
(2016: GBP35.3m) generating underlying EPS growth of 15.9% to 27.7p
(2016: 23.9p)
-- Closing net debt down GBP15.2m to GBP24.3m (2016: GBP39.5m)
on the back of strong cash generation
-- Final dividend of 6.1p proposed, full year dividend of
9.1p
Adrian Colman, Wincanton Chief Executive Officer, commented:
"Wincanton has delivered a strong set of financial results,
supported by a good stream of contract renewals and new business
wins in the year. The business is well positioned to invest and
continue to grow in attractive markets such as eCommerce and
construction.
We are pleased to propose an increase in the final dividend to
6.1 pence per share, making a total of 9.1 pence per share for the
year. We look forward to the future with confidence in the Group's
ability to grow for the benefit of all its key stakeholders."
For further enquiries please
contact:
Wincanton plc Tel: 020 7466 5000 today, thereafter
Adrian Colman, Chief Executive Tel: 01249 710000
Officer
Tim Lawlor, Chief Financial
Officer Tel: 020 7466 5000
Buchanan
Richard Oldworth, Victoria Hayns
A meeting for analysts will be held at Buchanan, 107 Cheapside,
London, EC2V 6DN on 17 May 2017 commencing at 9.30am. Wincanton's
Preliminary Results 2017 are available at www.wincanton.co.uk
An audio webcast of the analysts' meeting will be available from
12 noon today:
http://vm.buchanan.uk.com/2017/wincanton170517/registration.htm
Chairman's review
Introduction
The year ended 31 March 2017 represented a further year of good
progress for Wincanton. The focus of the Board and the Executive
Management Team is on positioning the Group to deliver long term
organic growth, whilst also meeting its obligations to all
stakeholders. This will be achieved by maintaining and deepening
strong working partnerships with our customers.
The success of an outsourcing business model such as ours is
driven by providing great customer service and value, maintaining
high levels of contract retention and renewal and by securing new
contracts to grow the business.
Results
Underlying earnings per share was up by 15.9% over the prior
year to 27.7p, and has increased by 108.3% since the year ended 31
March 2013.
Year end net debt at GBP24.3m (2016: GBP39.5m) was once again
reduced, cumulatively a 78.8% reduction over the same period. The
Group's existing banking facilities were satisfactorily extended
during the year to provide an appropriate level of maturity.
People and the Board
Board membership was unchanged during the year. Adrian Colman
has continued to strengthen the senior management team, with a
healthy mixture of internal promotions and external appointments;
broadening our talent pool is fundamental to the Group delivering
on its organic growth strategy and meeting customer
expectations.
The contribution of the Group's 17,500 employees is once again
recognised. The Group's strong reputation for consistent
operational delivery is above all the product of their hard
work.
Dividend
The Board is pleased to be recommending an increased final
dividend of 6.1p per Ordinary Share for the year ended 31 March
2017 (2016: 5.5p). This reflects the Group's strong operating
profits and dividend policy outlined to shareholders last year when
we resumed dividend payments. The proposed annual dividend is
covered 3.0 times by underlying earnings. The Board's progressive
dividend policy is unchanged.
Key priorities and prospects
The Group's overriding priority will be to oversee further
progress in the delivery of the organic growth trading strategy, as
set out in the Chief Executive's statement. This requires targeted
investments in people and processes, to extend our capabilities in
areas directly relevant to customers in our existing contract
logistics heartland. The Group now has the capacity to invest in
business development, and is actively doing so; but it remains
selective in its approach, with a risk appetite best described as
low to moderate.
The Board will also be focused on the forthcoming triennial
review of the pension scheme and in agreeing an appropriate future
funding plan with the Scheme Trustee. The Group still has a
sizeable pension deficit, and so the pension scheme will remain a
significant stakeholder for many years to come.
As already noted, talent management is a key focus, and
increasing diversity in all its forms will be a priority for the
coming year, from the warehouse to the boardroom. The Board will
also ensure that their stewardship obligations, not least in the
areas of operational safety, sustainability and financial
assurance, remain centre stage and in line with best practice.
Outlook
The Group remains well positioned in its chosen markets and
continues to perform robustly and deliver strong service levels for
customers. To date the Group has experienced no significant impact
from the Brexit vote in June 2016, and we believe the Group can
adequately manage any future uncertainty that arises during the
Brexit process.
Robust cash generation supports limited scale investments in
skills and technology capabilities to both protect and grow the
business for the longer term without raising the Group's overall
risk profile.
During the coming year the Board expect Wincanton to make
continued progress.
Chief Executive's statement
Performance summary
The year ended 31 March 2017 has been another year of good
progress and strong trading performance, securing important
renewals and winning new contracts with new services and new
customers.
Revenue in the year ended 31 March 2017 was GBP1,118.1m (2016:
GBP1,132.5m excluding WRM), which represents a year on year
decrease of 1.3%. This has been driven primarily by the full year
impact of contracts exited in the prior year, including all closed
book home shopping contracts in Pullman, partly offset by revenue
from contract wins.
Underlying operating profit grew by 7.0% to GBP52.1m (2016:
GBP48.7m excluding WRM), reflecting a continued strong operating
and financially disciplined performance across the business
including an improvement in the performance of the Pullman business
following the exit of loss-making contracts in the prior year. As a
result we have achieved an underlying operating margin of 4.7%, up
from 4.3% (excluding WRM) in the prior year.
Underlying EPS grew a healthy 15.9% and supports the growth in
the final dividend per share to 6.1p, resulting in a total 9.1p for
the year.
Following the disposal of Wincanton Records Management (WRM) in
December 2015, the Group has, with effect from 1 April 2016,
refocused its internal management structure under the following two
reportable segments; Retail & Consumer and Industrial &
Transport.
Segmental information for the year ended 31 March 2016 has been
realigned to aid comparability, and in line with management
reporting, the results of WRM have been excluded from the results
of the reportable segments in the prior year.
Retail & Consumer
2017 2016 Change
----------------------------------- ----- ----- -------
Revenue (GBPm) 649.3 624.4 4.0%
Underlying operating profit (GBPm) 25.8 25.2 2.4%
Margin (%) 4.0% 4.0% nil bps
----------------------------------- ----- ----- -------
Retail & Consumer reported revenues of GBP649.3m in the
year, a 4.0% year on year increase compared with the GBP624.4m
reported in the year to 31 March 2016. The contractual split of
this segment between open and closed book remains relatively
constant at 87% open book (2016: 90%).
Underlying operating profit for the year was GBP25.8m, up 2.4%
on the GBP25.2m reported last year.
The split of Retail & Consumer revenue by the industry
sectors it serves is as follows:
2017 2016
GBPm GBPm Change
--------------------------- ----- ----- ------
Retail general merchandise 315.5 278.2 13.4%
Retail grocery 228.7 234.7 (2.6)%
Consumer products 105.1 111.5 (5.7)%
--------------------------- ----- ----- ------
649.3 624.4 4.0%
--------------------------- ----- ----- ------
The overall revenue increase was driven primarily by the impact
of contract wins and strong volume growth with Home & DIY
business customers, reported within Retail general merchandise.
This growth was partly offset by the impact of lost volumes due to
contract cessations in Retail grocery and Consumer products.
The business successfully renewed a number of important
contracts and extended the services with key customers, such as
Co-op, providing food distribution services and Sainsbury's
providing warehousing and distribution services. Both of these
important renewals demonstrate the strong partnership-based ethos
with our customers and our commitment to driving greater efficiency
into these logistics operations. In a challenging grocery
marketplace we will deliver substantial savings into the future for
our customers.
New business wins included a five year contract with wilko, one
of the UK's fastest growing retailers, to manage all UK transport
operations, a three year warehouse management contract with
Coca-Cola, a four year contract with IKEA and a five year contract
with Majestic Wine to establish and operate an eCommerce National
Fulfilment Centre. For IKEA, we will provide operational
development and support for two new distribution centres,
supporting their multichannel distribution growth strategy.
In any contracting business inevitably the new business growth
has been partially offset by revenue reduction on contract losses
and exits due to changes in customer requirements or transfers to
alternative providers. During the year, this included the cessation
of the Morrisons convenience store business, and a lost contract
with Nestlé both announced last year as well as the cessation of a
Tesco contract from July 2017.
Industrial & Transport
2017 2016 Change
----------------------------------- ----- ----- ------
Revenue (GBPm) 468.8 508.1 (7.7)%
Underlying operating profit (GBPm) 26.3 23.5 11.9%
Margin (%) 5.6% 4.6% 100bps
----------------------------------- ----- ----- ------
Industrial & Transport reported revenues of GBP468.8m in the
year, down 7.7% on the GBP508.1m reported in the prior year.
The underlying operating profit of GBP26.3m was up 11.9%
compared to GBP23.5m last year, driven by the improvement in
performance of the Pullman business together with non-recurring
items from contract cessations such as property-related
credits.
The split of Industrial & Transport revenue by the industry
sectors it serves is as follows:
2017 2016
GBPm GBPm Change
------------------- ----- ----- -------
Transport services 207.0 234.8 (11.8)%
Construction 134.4 138.5 (3.0)%
Other 127.4 134.8 (5.5)%
------------------- ----- ----- -------
468.8 508.1 (7.7)%
------------------- ----- ----- -------
The decrease in revenue compared to last year is primarily due
to the cessation of the closed book Pullman home shopping contracts
in the second half of last year, volume pressures in container
transport operations (both within Transport services), the
insourcing of a construction logistics contract and the cessation
of a contract within defence operations (included within 'Other')
at the half year, partially offset by growth in our EnergyLink
business and the start-up of our ready-mix concrete offering.
With over 60 years' experience supporting the defence sector we
received another gold standard accreditation known as the 'SC21'
during the year. We are the first third party logistics company to
be accredited with the gold SC21 award. Our defence operation was
recognised for our change programme designed to accelerate the
competitiveness of the aerospace and defence industry. This award
demonstrates our commitment to continuous improvement and
efficiency that we deliver through our tailored innovative supply
chain solutions.
Strategic Progress
We have made good progress against our strategic goals in both
sectors as follows:
Delivering improvements for our customers in our existing
operations and retaining existing contracts
Significant contracts were renewed during the year including
Sainsbury's and Co-op. Both are long standing customers of over 20
years. The renewals are based on the strength of our relationships
and a partnership approach to their supply chain needs as well as
on our service excellence, adaptability and dependability. As
customers adapt to changing consumer behaviour the evolution of the
supply chain is an increasingly important part of the renewal
process.
During the year, the Construction business expanded its service
offering into the ready-mixed concrete market and has commenced the
acquisition of more than 100 ready-mix vehicles. This investment is
backed by an eight year contract with Hanson UK and supports the
Group's view that the prospects for the UK construction industry
are positive as evidenced by the Government's desire to build a
million new homes by 2020 and to invest in major infrastructure
projects.
Improving 'share of wallet' with our existing customers and
focusing on cross selling our services
Excellent relationships are at the heart of our success and we
ensure that we understand their needs and challenges so that we can
add value to their business. During the period, we have extended
the services we provide to a number of customers including Britvic
and Screwfix. With Britvic we have extended our 19 year partnership
and in addition to the distribution centre operation we have won a
five year contract to operate its national transport operations. We
have also extended our relationship with Screwfix with an agreement
to design and manage a newly built warehouse.
These extended contracts demonstrate our track record of service
excellence combined with a compelling commercial approach and added
value.
Acquiring new customers through improved prospecting process and
innovative service propositions
We were pleased to win new contracts with IKEA, wilko and
Majestic Wine during the year.
To support IKEA's multichannel distribution growth strategy, we
have sourced and fitted out two warehouses in South East England
which are now in operation. The new facilities will create an
efficient and reliable operation which will support IKEA's future
growth plans.
We were delighted to be awarded the contract to manage all UK
transport operations for wilko, the family owned retailer. We will
be responsible for the replenishment of their 900-strong store
portfolio making over 100,000 deliveries per annum.
The set up and successful Christmas operation of a new National
Fulfilment Centre (NFC) for Majestic Wine has again proven our
eCommerce expertise. We now generate over GBP250m of revenue from
customers where we help them deliver their multichannel operations,
which demonstrates great capability in a changing retail
landscape.
Driving ongoing cost reductions and cash generation
Our track record in continuous improvement helps our customers
in terms of lowering their cost of operations in open book
contracts and supports our margins in closed book contracts. This
continued drive to improve efficiency of operations strongly
supports our ability to retain existing contracts with customers
and build long term partnerships.
We continued the year on year trend of strong positive net cash
flow of GBP15.2m (2016: GBP18.1m), see cash flow table within the
Financial Review. This excellent cash performance enables us to
have the confidence to lift our final dividend from 5.5p to 6.1p
per share this year resulting in a total dividend for the year of
9.1p per share (2016: 5.5p per share). We also continue to support
our legacy pension scheme with deficit recovery plan payments, net
of certain Scheme administration costs, of GBP14.1m in the year
(2016: GBP20.9m). The remainder of cash generated reduced the level
of closing net debt to GBP24.3m (2016: GBP39.5m).
Financial review
Change
(excl.
2017 2016 Change WRM)
-------------------------------------------- ------- ------- ------- -------
Revenue (GBPm) 1,118.1 1,147.4 (2.6)% (1.3)%
-------------------------------------------- ------- ------- ------- -------
Underlying EBITDA (GBPm) 63.9 65.4 (2.3)% 2.9%
-------------------------------------------- ------- ------- ------- -------
Underlying operating profit (GBPm) 52.1 50.9 2.4% 7.0%
Underlying operating margin (%) 4.7% 4.4% 30bps 40bps
Net financing costs (GBPm) (10.6) (15.6)
-------------------------------------------- ------- ------- ------- -------
Underlying profit before tax (GBPm) 41.5 35.3 17.6%
Amortisation of acquired intangibles (GBPm) (2.2) (4.5)
Exceptionals (GBPm) 6.1 35.0
-------------------------------------------- ------- ------- ------- -------
Profit before tax (GBPm) 45.4 65.8
Income tax (GBPm) (3.4) (4.7)
-------------------------------------------- ------- ------- ------- -------
Profit after tax (GBPm) 42.0 61.1
-------------------------------------------- ------- ------- ------- -------
Underlying EPS (p) 27.7 23.9 15.9%
Basic EPS (p) 34.2 50.7
Dividend per share (p) 9.1 5.5
Closing net debt (GBPm) (24.3) (39.5) (38.5)%
-------------------------------------------- ------- ------- ------- -------
The Directors present the results of the business on an
underlying basis, excluding amortisation of acquired intangibles
and exceptional items from operating profit, profit before tax and
EPS, as they believe this better represents the performance of the
business. A reconciliation of these measures to their statutory
equivalent is shown in the table within the Alternative Performance
Measure section below.
The Group's revenue of GBP1,118.1m in the year ended 31 March
2017 was 2.6% lower than the prior year (2016: GBP1,147.4m).
Excluding WRM, which was sold in December 2015, the decrease in
revenue was 1.3%. This decrease is principally due to contract
exits, including those from all closed book contracts providing
fleet maintenance for home delivery services in the Pullman
business. The impact of the contract exits, together with some
volume pressure in the Containers business, has been partly offset
by new wins and volume growth, particularly in the Retail general
merchandise business.
Underlying operating profit grew by 2.4% to GBP52.1m. Excluding
WRM, which recorded GBP2.2m operating profit in the year ended 31
March 2016, the Group's underlying profit grew by 7.0%. This growth
reflected the continued strong operating performance, the
improvement in the Pullman business, primarily due to the exit of
the loss-making home shopping contracts and credits from
end-of-contract property settlements. As a result we have achieved
an underlying operating margin of 4.7%, up from 4.4% in the prior
year (4.3% excluding WRM).
Net financing costs
2017 2016
GBPm GBPm
------------------------------------------------------ ----- -----
Bank interest payable on loans 6.0 10.1
Interest receivable (0.1) (0.2)
------------------------------------------------------ ----- -----
Net interest payable 5.9 9.9
Unwinding of discount on provisions 1.2 1.3
Interest on the net defined benefit pension liability 3.5 4.4
------------------------------------------------------ ----- -----
Net financing costs 10.6 15.6
------------------------------------------------------ ----- -----
Net financing costs were GBP10.6m (2016: GBP15.6m), GBP5.0m
lower year on year.
Bank interest payable on loans was GBP6.0m (2016: GBP10.1m) due
to reduced average net debt and the repayment of the GBP20m balance
of the more expensive US Private Placement debt in November
2016.
The non-cash financing items total GBP4.7m (2016: GBP5.7m) and
comprise the discounts unwinding on the Group's provisions for
property and insurance claims plus the financing charge in respect
of the defined benefit deficit, lower in the year because of a
reduction in the opening pension deficit.
Amortisation of acquired intangibles
Amortisation of acquired intangibles of GBP2.2m is GBP2.3m lower
than the prior year as a result of the intangible relating to the
acquired construction business being fully amortised at the end of
March 2016. The remaining balance will be fully amortised by 31
March 2018.
Exceptionals
2017 2016
GBPm GBPm
----------------------------------------- ----- -----
Items related to disposed businesses 4.6 2.6
Profit recognised on the disposal of WRM - 32.4
Other items 1.5 -
----------------------------------------- ----- -----
Exceptionals 6.1 35.0
----------------------------------------- ----- -----
During the year, non-cash gains of GBP4.6m (2016: GBP2.6m) were
recognised on the remeasurement of liabilities relating to disposed
businesses. These included warranty balances held in respect of the
disposal of the European operations and WRM.
In the prior year, exceptional profit arose on the disposal of
WRM.
Other items comprise the settlement of a claim against a
supplier, partially offset by the costs of initiating an Enhanced
Transfer Value exercise in the pension scheme (see Pensions
section, below).
Taxation
2017 2016
------------------------------------------------------- ----- -----
Underlying profit before tax (GBPm) 41.5 35.3
------------------------------------------------------- ----- -----
Underlying tax (GBPm) 7.5 6.5
Tax on amortisation of acquired intangibles (GBPm) (0.4) (0.9)
Exceptional tax (GBPm) (3.7) (0.9)
------------------------------------------------------- ----- -----
Tax as reported (GBPm) 3.4 4.7
------------------------------------------------------- ----- -----
Effective tax rate on underlying profit before tax (%) 18.0% 18.4%
------------------------------------------------------- ----- -----
Underlying tax of GBP7.5m (2016: GBP6.5m) represents an
effective tax rate of 18.0% (2016: 18.4%) on underlying profit
before tax and is stated before tax credits of GBP0.4m (2016:
GBP0.9m) in respect of the amortisation of acquired intangibles and
exceptional tax of GBP3.7m (2016: GBP0.9m).
Exceptional tax comprises a tax credit of GBP4.0m (2016:
GBP0.9m) relating to previous years' tax liabilities offset by a
tax charge of GBP0.3m (2016: GBPnil) on exceptional profit.
The total net deferred tax asset has reduced to GBP17.2m (2016:
GBP22.0m), primarily as a result of the reduction in the pension
deficit and the deferred tax asset thereon.
Profit after tax and earnings per share
Profit after tax for the year is GBP42.0m (2016: GBP61.1m), the
reduction of GBP19.1m due to lower exceptional profit following the
GBP32.4m gain on the sale of WRM in the year ended 31 March 2016.
The reduction arising from the lower exceptional profit was partly
offset by improvements in underlying operating profit, financing
costs and amortisation of acquired intangibles.
Underlying EPS, which excludes from earnings amortisation of
acquired intangibles and exceptionals, increased by 15.9% to 27.7p
(2016: 23.9p). Basic EPS was 34.2p (2016: 50.7p) with the decrease
again being explained by the reduction in exceptional profit.
The calculation of these EPS measures is set out in Note 6.
Dividends
2017 2016
pence pence
----------------- ------ ------
Interim 3.0 -
Final (proposed) 6.1 5.5
----------------- ------ ------
Total 9.1 5.5
----------------- ------ ------
The Group's policy is to show dividend growth broadly matched to
growth in underlying earnings.
In setting the dividend the Board considers a range of factors,
including the Group's strategy (including downside sensitivities),
the current and projected level of distributable reserves and
projected cash flows.
The Board has proposed a final dividend of 6.1p per share
relating to the year ended 31 March 2017, an increase compared to
the final dividend paid in respect of the year ended 31 March
2016.
Dividend payments of GBP10.4m (2016: GBPnil) in the year
comprised the final dividend of 5.5p per share relating to the
period ended 31 March 2016 and the 2017 interim dividend of 3.0p
per share.
Financial position
The summary financial position of the Group is set out
below:
2017 2016
GBPm GBPm
--------------------------------------------------------- ------- -------
Non-current assets 147.9 148.5
Net current liabilities (excl. net debt) (149.8) (150.9)
Non-current liabilities (excl. net debt/pension deficit) (34.8) (36.8)
Net debt (24.3) (39.5)
Pensions deficit (gross of deferred tax) (78.4) (105.6)
--------------------------------------------------------- ------- -------
Net liabilities (139.4) (184.3)
--------------------------------------------------------- ------- -------
The reduction in net liabilities of GBP44.9m is represented by
the profit after tax of GBP42.0m, the remeasurement of the pension
deficit net of deferred tax of GBP13.6m, less dividends paid in the
year of GBP(10.4)m and other movements in equity of GBP(0.3)m.
Net debt and cash flows
Net debt at 31 March 2017 was GBP24.3m (2016: GBP39.5m),
reflecting a net cash inflow in the year of GBP15.2m.
The average level of net debt was reduced by GBP54.0m from
GBP108.0m in the prior year to GBP54.0m in the current year from
the cash generation of the business and the proceeds received from
the disposal of WRM.
The Group's cash flows can be summarised in the following
table:
2017 2016
GBPm GBPm
------------------------- ------ ------
Underlying EBITDA 63.9 65.4
Net capital expenditure (18.7) (6.0)
Onerous leases (2.7) (7.7)
Working capital 6.5 (51.8)
Tax (2.6) (3.1)
Net interest (6.8) (9.1)
Other items 0.2 0.1
------------------------- ------ ------
Free cash flow 39.8 (12.2)
Disposal of WRM - 55.7
Pension recovery payment (14.1) (20.9)
Dividends (10.4) -
Own shares acquired (0.1) (4.5)
------------------------- ------ ------
Net cash flow 15.2 18.1
------------------------- ------ ------
The Group generated a GBP15.2m (2016: GBP18.1m) net cash inflow
in the period, with a free cash flow of GBP39.8m (2016:
GBP(12.2)m).
Net capital expenditure was GBP18.7m (2016: GBP6.0m), the
increase being driven by investment to support new business growth
including GBP10.9m for specialist vehicles and GBP2.4m on the
Group's information systems infrastructure. The capital expenditure
is net of cash receipts on sale of assets of GBP0.5m (2016:
GBP4.4m), with the prior year including GBP4.0m in respect of a
single sale of end-of-contract assets.
Cash outflows in respect of onerous lease liabilities were
GBP2.7m, a GBP5.0m reduction compared to the prior year of GBP7.7m.
This is in line with the previously expressed view that the Group's
cash exposure to these onerous leases will fall materially over
time.
The GBP6.5m inflow on working capital in the year ended 31 March
2017 is due to favourable timing on year end collections in the
normal course of business. The large working capital outflow of
GBP51.8m in the year ended 31 March 2016 was the result of a
one-off adjustment to year end working capital management
activities.
The Group paid cash tax in the current year of GBP2.6m (2016:
GBP3.1m). The cash tax payable continues to trend below the
underlying charge due to the impact of tax relief on the pension
deficit recovery payments made in the year and on share options
exercised. This is expected to continue going forward.
The amount of cash interest paid, excluding fees, of GBP6.8m
(2016: GBP9.1m) reduced significantly in the year reflecting the
lower level of average net debt compared to the prior year.
Free cash flow of GBP39.8m (2016: GBP(12.2)m) has been used to
maintain the pension recovery payments of GBP14.1m (2016:
GBP20.9m), to pay equity dividends of GBP10.4m (2016: GBPnil), and
to reduce net debt by GBP15.2m (2016: GBP18.1m).
Financing and covenants
The Group's committed facilities at the year end were GBP166m
(2016: GBP215m) and the headroom in these committed facilities to
reported net debt at 31 March 2017 was GBP142m (2016: GBP176m). The
Group also has additional operating overdrafts which provide day to
day flexibility and amount to a further GBP11m in uncommitted
facilities. Sterling and Euro pools are operated and whenever
possible, surplus cash is netted against overdrafts.
During the year, the Group agreed an extension of the maturity
of its syndicated facilities to October 2021.
The US Private Placement debt of GBP20m was redeemed from cash
generated in the year and from other facilities on 7 November
2016.
The Group's facilities at 31 March 2017 comprise the following:
the syndicated main bank facility of GBP141.2m which amortises by
GBP8.8m in October 2019, with a second equal amortisation at the 4
year anniversary in October 2020; and GBP25m from the
Prudential/M&G UK Companies Financing Fund LP, which amortises
by GBP6.2m in January 2021 with the remaining balance maturing in
January 2022.
The Group maintains a mix of hedging instruments (swaps) to give
an appropriate level of protection against changes in interest
rates. At the year end, GBP20m of debt was at fixed rates and the
balance at floating rates.
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
At 31 March
Covenant Ratio 2017
-------------------------- -------- -----------
Adjusted net debt: EBITDA <2.75:1 0.77
Interest cover >3.5:1 14.1
Fixed charge cover >1.4:1 2.9
-------------------------- -------- -----------
Pensions
The Group operates a number of pension arrangements in the UK
and Ireland.
Defined benefit arrangements
The Wincanton plc Pension Scheme (the Scheme) includes defined
benefit sections which were closed to future accrual on 31 March
2014.
The membership data split by key categories is as follows:
2017 2016
----------- ------ ------
Deferred 8,030 8,525
Pensioners 5,883 7,125
----------- ------ ------
13,913 15,650
----------- ------ ------
The Scheme had an IAS 19 deficit of GBP78.4m at 31 March 2017
(2016: GBP105.6m). The deficit at 30 September 2016 was
GBP169.2m.
The deficit has reduced due to an increase in the market value
of the investments, a reduction in liabilities due to demographic
assumptions and contributions received from the Group, being partly
offset by an increase in liabilities resulting from a fall in the
discount rate. The discount rate has fallen to 2.6% compared with
the prior year of 3.5%. Each 0.1% increase in the rate impacts the
liabilities of the Scheme by approximately GBP21.5m.
The last triennial valuation of the Scheme was undertaken as at
31 March 2014 and was finalised in April 2015. This showed a
deficit on a technical provision basis of GBP195m and a deficit
recovery payment plan was agreed with the Trustee which provided
for a baseline annual payment of GBP14.4m increasing by RPI each
year through the recovery period to September 2024. The cash
contribution made in the current year to fund the deficit was
GBP14.8m. Certain administration costs have also been paid directly
by the Group and in line with the agreement with the Trustee,
deducted from these contributions. The next triennial valuation
will be based on the position as at 31 March 2017.
Over recent years, the Trustee has pursued a diversification of
the investment portfolio as part of a de-risking strategy and the
programme has continued in the year ended 31 March 2017. As at 31
March 2017 the Scheme's investment was split between 56% in
return-seeking assets and 44% in defensive assets.
The Trustee has also decided to hedge the interest and inflation
rate risks facing the Scheme and will systematically increase the
level of this hedge to 100% of the Scheme's assets over a period of
15 months from August 2016 to November 2017, subject to leverage
restrictions. This increase will, as far as practicable, eliminate
changes in the funding level driven by changes in interest or
inflation rates. At 31 March 2017 the Scheme hedged 89% of its
inflation rate risk and 78% of the interest rate risk.
In conjunction with the Trustee, the Group has also initiated an
Enhanced Transfer Value exercise, whereby deferred members
approaching retirement may choose to transfer their assets out of
the Scheme in order to access the new flexible retirement options
available. As a result of this exercise the Group has recognised an
exceptional item of GBP(0.9)m, being the costs associated with
making the transfer offer, including the provision of independent
financial advice. This exercise will conclude in the first half of
the year ended 31 March 2018 together with an associated cash
outflow to fund the enhanced transfer values and an expected
reduction in pension liabilities.
The Trustee has also written to members with small pension pots
to remind them of the option under normal Scheme rules to exchange
their benefits for a one-off cash sum. In response to this
communication 1,566 members have taken up this option resulting in
a reduction in the IAS 19 liability of GBP3.8m.
Defined contribution arrangements
The Group's defined contribution arrangements include the
Retirement Savings Section, Pension Builder Plan and Auto Enrolment
section in the UK and a separate similar local scheme in Ireland.
Active membership of these schemes was 15,524 (2016: 15,437) in the
year. The charge incurred for these arrangements totals GBP17.9m
(2016: GBP18.1m).
Alternative Performance Measures
Alternative performance measures (APMs) are used by the Board in
assessing the Group's performance and are applied consistently from
one period to the next. They therefore provide additional useful
information for shareholders on the underlying performance and
position of the Group. Additionally, underlying EPS is used as a
key performance indicator for the share incentive schemes,
including the Special Option Plan and Long Term Incentive Plan.
These measures are not defined by IFRS and are not intended to be a
substitute for IFRS measures.
The Group presents underlying EBITDA, operating profit and EPS
which are calculated as the statutory measures stated before
amortisation of acquired intangibles and exceptionals, including
related tax and exceptional tax items where applicable. The table
below reconciles the APMs to the statutory reported measures.
2017 2016
--------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
Amortisation Amortisation
of acquired of acquired Excl.
Statutory intangibles Exceptionals(1) Underlying Statutory intangibles Exceptionals(1) Underlying WRM(2)
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
Revenue
(GBPm) 1,118.1 - - 1,118.1 1,147.4 - - 1,147.4 1,132.5
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
EBITDA
(GBPm)(3) 67.8 2.2 (6.1) 63.9 95.9 4.5 (35.0) 65.4 62.1
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
Operating
profit
(GBPm) 56.0 2.2 (6.1) 52.1 81.4 4.5 (35.0) 50.9 48.7
Operating
margin
(%) 5.0 0.2 (0.5) 4.7 7.1 0.4 (3.1) 4.4 4.3
Net
financing
costs
(GBPm) (10.6) - - (10.6) (15.6) - - (15.6)
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
Profit
before
tax
(GBPm) 45.4 2.2 (6.1) 41.5 65.8 4.5 (35.0) 35.3
Income tax
(GBPm) (3.4) (0.4) (3.7) (7.5) (4.7) (0.9) (0.9) (6.5)
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
Profit
after tax
(GBPm) 42.0 1.8 (9.8) 34.0 61.1 3.6 (35.9) 28.8
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
Earnings
per share
(p) 34.2p 27.7p 50.7p 23.9p
Dividend
per share
(p) 9.1p 9.1p 5.5p 5.5p
Closing
net debt
(GBPm) (24.3) (24.3) (39.5) (39.5)
---------- --------- ------------ --------------- ---------- --------- ------------ --------------- ---------- -------
1 Note 3 provides further detail of exceptionals and also
includes any tax releases/credits that are classed as
exceptional.
2 On a like for like basis excluding the results of the
Wincanton Records Management (WRM) from the prior period, which was
disposed of in December 2015. Note 2 provides a reconciliation to
the reported results.
3 EBITDA refers to operating profit before depreciation and
amortisation and is reconciled in Note 2.
4 Note 6 provides further detail of underlying earnings per
share.
5 Net debt is the sum of cash and bank balances, bank loans and
overdrafts and other financial liabilities. Note 8 provides a
breakdown of net debt for the current and prior periods.
Consolidated income statement
For the year ended 31 March 2017
2017 2016
Note GBPm GBPm
------------------------------------------------------------ ---- ------- -------
Revenue 2 1,118.1 1,147.4
------------------------------------------------------------ ---- ------- -------
Underlying operating profit 2 52.1 50.9
------------------------------------------------------------ ---- ------- -------
Amortisation of acquired intangibles (2.2) (4.5)
Exceptionals 3 6.1 35.0
------------------------------------------------------------ ---- ------- -------
Operating profit 56.0 81.4
Financing income 4 0.1 0.2
Financing cost 4 (10.7) (15.8)
------------------------------------------------------------ ---- ------- -------
Net financing costs 4 (10.6) (15.6)
------------------------------------------------------------ ---- ------- -------
Profit before tax 45.4 65.8
Income tax expense 5 (3.4) (4.7)
------------------------------------------------------------ ---- ------- -------
Profit attributable to equity shareholders of Wincanton plc 42.0 61.1
------------------------------------------------------------ ---- ------- -------
Earnings per share
- basic 6 34.2p 50.7p
- diluted 6 33.0p 47.4p
------------------------------------------------------------ ---- ------- -------
Consolidated statement of comprehensive income
For the year ended 31 March 2017
2017 2016
Note GBPm GBPm
------------------------------------------------------------------------------------------- ---- ----- -----
Profit for the year 42.0 61.1
------------------------------------------------------------------------------------------- ---- ----- -----
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income statement
Remeasurements of defined benefit liability 17.6 23.0
Income tax relating to items that will not subsequently be reclassified to profit or loss 5 (4.0) (7.0)
------------------------------------------------------------------------------------------- ---- ----- -----
13.6 16.0
Items which are or may subsequently be reclassified to the income statement
Net foreign exchange (loss)/gain on investment in foreign subsidiaries net of hedged items 4 (0.1) 0.3
Effective portion of changes in fair value of cash flow hedges 0.4 (0.4)
Net change in fair value of cash flow hedges transferred to the income statement 0.2 1.3
------------------------------------------------------------------------------------------- ---- ----- -----
0.5 1.2
------------------------------------------------------------------------------------------- ---- ----- -----
Other comprehensive income for the year, net of income tax 14.1 17.2
------------------------------------------------------------------------------------------- ---- ----- -----
Total comprehensive income attributable to equity shareholders of Wincanton plc 56.1 78.3
------------------------------------------------------------------------------------------- ---- ----- -----
Consolidated balance sheet
At 31 March 2017
2017 2016
Note GBPm GBPm
---------------------------------------------- ---- ------- -------
Non-current assets
Goodwill and intangible assets 86.9 90.0
Property, plant and equipment 43.7 35.6
Investments, including those equity accounted 0.1 0.1
Deferred tax assets 17.2 22.8
---------------------------------------------- ---- ------- -------
147.9 148.5
---------------------------------------------- ---- ------- -------
Current assets
Inventories 4.0 4.8
Trade and other receivables 133.4 139.4
Cash and cash equivalents 8 40.9 36.3
---------------------------------------------- ---- ------- -------
178.3 180.5
---------------------------------------------- ---- ------- -------
Current liabilities
Income tax payable (6.4) (7.3)
Borrowings and other financial liabilities 8 (0.2) (20.4)
Trade and other payables (265.4) (272.1)
Employee benefits (0.2) (0.3)
Provisions 9 (15.2) (15.4)
---------------------------------------------- ---- ------- -------
(287.4) (315.5)
---------------------------------------------- ---- ------- -------
Net current liabilities (109.1) (135.0)
---------------------------------------------- ---- ------- -------
Total assets less current liabilities 38.8 13.5
---------------------------------------------- ---- ------- -------
Non-current liabilities
Borrowings and other financial liabilities 8 (65.0) (55.4)
Employee benefits 10 (78.4) (105.6)
Provisions 9 (34.8) (36.0)
Deferred tax liabilities - (0.8)
---------------------------------------------- ---- ------- -------
(178.2) (197.8)
---------------------------------------------- ---- ------- -------
Net liabilities (139.4) (184.3)
---------------------------------------------- ---- ------- -------
Equity
Issued share capital 12.4 12.4
Share premium 12.9 12.9
Merger reserve 3.5 3.5
Hedging reserve (0.1) (0.7)
Translation reserve (0.3) (0.2)
Retained earnings (167.8) (212.2)
---------------------------------------------- ---- ------- -------
Total equity deficit (139.4) (184.3)
---------------------------------------------- ---- ------- -------
These financial statements were approved by the Board of
Directors on 16 May 2017 and were signed on its behalf by:
A Colman T Lawlor
Chief Executive Officer Chief Financial Officer
Consolidated statement of changes in equity
For the year ended 31 March 2017
Retained earnings
---------------------
Issued Total
share Share Merger Hedging Translation Own Profit and equity
capital premium reserve reserve reserve shares loss deficit
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Balance at 1 April 2015 12.2 12.8 3.5 (1.6) (0.5) (14.1) (274.0) (261.7)
Profit for the year - - - - - - 61.1 61.1
Other comprehensive income - - - 0.9 0.3 - 16.0 17.2
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Total comprehensive income - - - 0.9 0.3 - 77.1 78.3
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Share based payment transactions - - - - - - 0.9 0.9
Current tax on share based
payment transactions - - - - - - 2.2 2.2
Deferred tax on share based
payment transactions - - - - - - 0.5 0.5
Shares issued 0.2 - - - - (0.2) - -
Own shares acquired - - - - - (4.5) - (4.5)
Own shares disposed of on
exercise of options - 0.1 - - - 15.7 (15.8) -
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Balance at 31 March 2016 12.4 12.9 3.5 (0.7) (0.2) (3.1) (209.1) (184.3)
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Balance at 1 April 2016 12.4 12.9 3.5 (0.7) (0.2) (3.1) (209.1) (184.3)
Profit for the year - - - - - - 42.0 42.0
Other comprehensive income - - - 0.6 (0.1) - 13.6 14.1
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Total comprehensive income - - - 0.6 (0.1) - 55.6 56.1
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Share based payment transactions - - - - - - 0.9 0.9
Current tax on share based
payment transactions - - - - - - 1.1 1.1
Deferred tax on share based
payment transactions - - - - - - (0.1) (0.1)
Own shares acquired - - - - - (0.1) - (0.1)
Own shares disposed of on
exercise of options - - - - - 2.7 (5.3) (2.6)
Dividends paid to shareholders - - - - - - (10.4) (10.4)
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Balance at 31 March 2017 12.4 12.9 3.5 (0.1) (0.3) (0.5) (167.3) (139.4)
--------------------------------- -------- -------- -------- -------- ----------- ------- ---------- --------
Consolidated statement of cash flows
For the year ended 31 March 2017
2017 2016
GBPm GBPm
--------------------------------------------------------------------------- ------ -------
Operating activities
Profit before tax 45.4 65.8
Adjustments for
- depreciation and amortisation 14.0 19.0
- interest expense 10.6 15.6
- exceptionals (non cash) (4.6) (35.0)
- share based payments fair value charges 0.9 0.9
--------------------------------------------------------------------------- ------ -------
66.3 66.3
Decrease/(increase) in trade and other receivables 6.2 (4.5)
Decrease in inventories 0.8 0.8
Decrease in trade and other payables (2.6) (49.0)
Decrease in provisions (4.3) (10.0)
Increase in employee benefits before pension deficit payment 0.9 0.9
Income taxes paid (2.6) (3.1)
--------------------------------------------------------------------------- ------ -------
Cash generated before pension deficit payment 64.7 1.4
Pension deficit payment (14.1) (20.9)
--------------------------------------------------------------------------- ------ -------
Cash flows from operating activities 50.6 (19.5)
--------------------------------------------------------------------------- ------ -------
Investing activities
Proceeds from sale of property, plant and equipment 0.1 4.4
Proceeds from sale of computer software 0.4 -
Proceeds from WRM disposal - 55.7
Interest received 0.1 0.2
Additions of property, plant and equipment (18.0) (10.0)
Additions of computer software (1.2) (0.4)
--------------------------------------------------------------------------- ------ -------
Cash flows from investing activities (18.6) 49.9
--------------------------------------------------------------------------- ------ -------
Financing activities
Own shares acquired (0.1) (4.5)
Decrease in borrowings (10.0) (86.2)
Equity dividends paid (10.4) -
Interest paid (6.9) (9.3)
--------------------------------------------------------------------------- ------ -------
Cash flows from financing activities (27.4) (100.0)
--------------------------------------------------------------------------- ------ -------
Net increase/(decrease) in cash and cash equivalents 4.6 (69.6)
Cash and cash equivalents at beginning of year 36.3 105.8
Effect of exchange rate fluctuations on cash held - 0.1
--------------------------------------------------------------------------- ------ -------
Cash and cash equivalents at end of year 40.9 36.3
--------------------------------------------------------------------------- ------ -------
Represented by:
- cash at bank and in hand 33.0 26.3
- restricted cash, being deposits held by the Group's insurance subsidiary 7.9 10.0
--------------------------------------------------------------------------- ------ -------
40.9 36.3
--------------------------------------------------------------------------- ------ -------
Notes to the consolidated financial statements
1. Accounting policies
The financial information set out in this preliminary
announcement does not constitute Wincanton plc's statutory accounts
for the years ended 31 March 2017 and 31 March 2016. Statutory
accounts for the year ended 31 March 2017 will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. Statutory accounts for the year ended 31 March 2016 have
been delivered to the Registrar of Companies. The Auditor has
reported on those accounts; their reports were unqualified and did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The preliminary announcement has been prepared and approved by
the Directors in accordance with International Financial Reporting
Standards (IFRS) and its interpretations as adopted by the
International Accounting Standards Board (IASB) and by the EU
(Adopted IFRS).
2. Operating segments
Wincanton plc provides contract logistics services in the UK and
Ireland. Following the disposal of the Records Management business
(WRM), the Group has, from 1 April 2016, refocused its internal
management structure under the following two reportable segments;
Retail & Consumer (including retail general merchandise, retail
grocery and consumer products) and Industrial & Transport
(including transport services, construction and other).
Segmental information for the period ended 31 March 2016 has
been realigned to reflect the changes to the reportable
segments.
The results of the operating segments are regularly reviewed by
the Executive Management Team (EMT) to allocate resources to these
segments and to assess their performance. The Group evaluates
performance of the operating segments on the basis of revenue and
underlying operating profit. Assets and liabilities are reviewed at
a consolidated level only, therefore segmental information is not
provided.
Retail Industrial
& Consumer & Transport Total
2017 2017 2017
Note GBPm GBPm GBPm
---------------------------------------------------- ---- ----------- ------------ -------
Revenue from external customers(1) 649.3 468.8 1,118.1
---------------------------------------------------- ---- ----------- ------------ -------
Underlying EBITDA(2) 32.0 31.9 63.9
Depreciation (5.0) (4.8) (9.8)
Amortisation of software intangibles (1.2) (0.8) (2.0)
---------------------------------------------------- ---- ----------- ------------ -------
Underlying operating profit(2) 25.8 26.3 52.1
Amortisation of acquired intangibles (2.2)
Exceptionals 3 6.1
---------------------------------------------------- ---- ----------- ------------ -------
Operating profit 56.0
Net financing costs 4 (10.6)
---------------------------------------------------- ---- ----------- ------------ -------
Profit before tax 45.4
---------------------------------------------------- ---- ----------- ------------ -------
Total Group assets(3) 326.2
Additions to reportable segment non-current assets:
- property, plant and equipment 3.0 15.0 18.0
- computer software costs 0.7 0.5 1.2
Total Group liabilities (465.6)
---------------------------------------------------- ---- ----------- ------------ -------
1 Included in segment revenue is GBP1,109.0m (2016: GBP1,134.7m)
in respect of customers based in the UK.
2 Underlying EBITDA refers to underlying operating profit before
depreciation and amortisation. Underlying operating profit is
stated before amortisation of acquired intangibles and
exceptionals.
3 Total Group assets include non-current assets of GBP147.9m
(2016: GBP148.5m) in the UK.
Total
Retail Industrial excl.
& Consumer & Transport WRM WRM Total
2016 2016 2016 2016 2016
Note GBPm(1) GBPm(1) GBPm GBPm GBPm
------------------------------------- ---- ----------- ------------ ------- ----- -------
Revenue from external customers 624.4 508.1 1,132.5 14.9 1,147.4
------------------------------------- ---- ----------- ------------ ------- ----- -------
Underlying EBITDA 32.7 29.4 62.1 3.3 65.4
Depreciation (5.9) (4.6) (10.5) (1.1) (11.6)
Amortisation of software intangibles (1.6) (1.3) (2.9) - (2.9)
------------------------------------- ---- ----------- ------------ ------- ----- -------
Underlying operating profit 25.2 23.5 48.7 2.2 50.9
Amortisation of acquired intangibles (4.5)
Exceptionals 3 35.0
------------------------------------- ---- ----------- ------------ ------- ----- -------
Operating profit 81.4
Net financing costs 4 (15.6)
------------------------------------- ---- ----------- ------------ ------- ----- -------
Profit before tax 65.8
------------------------------------- ---- ----------- ------------ ------- ----- -------
Total Group assets 329.0
Additions to reportable segment
non-current assets:
- property, plant and equipment 2.2 6.3 8.5 1.5 10.0
- computer software costs 0.2 0.1 0.3 0.1 0.4
Total Group liabilities (513.3)
------------------------------------- ---- ----------- ------------ ------- ----- -------
1 Segmental information has been restated to reflect changes to
the reportable segments.
Revenue of GBP201.7m (2016: GBP162.4m) and GBP143.3m (2016: n/a)
arose from sales to the Group's two largest single customers, being
groups of companies under common control, and is reported within
the Retail & Consumer segment above. No other single customer
or group of customers under common control contributed 10% or more
to the Group's revenue in either the current or prior year.
3. Exceptionals
2017 2016
GBPm GBPm
----------------------------------------- ----- -----
Exceptional income
Items related to disposed businesses 4.6 2.6
Profit recognised on the disposal of WRM - 32.4
Other items 1.5 -
----------------------------------------- ----- -----
6.1 35.0
----------------------------------------- ----- -----
Costs and incomes are included as exceptionals where they are
non-recurring and where not to do so would distort the reported
underlying profit performance of the Group.
During the year, non-cash gains of GBP4.6m (2016: GBP2.6m) were
recognised on the remeasurement of liabilities relating to disposed
businesses. These include warranty balances held in respect of the
disposal of the European operations and WRM.
In the prior year, exceptional profit arose on the disposal of
WRM.
Other items comprise the settlement of a claim against a
supplier, partially offset by the costs of initiating an Enhanced
Transfer Value exercise in the Pension Scheme.
4. Net financing costs
Recognised in the income statement
2017 2016
Note GBPm GBPm
------------------------------------------------------ ---- ------ ------
Interest income 0.1 0.2
------------------------------------------------------ ---- ------ ------
Interest expense (6.0) (10.1)
Unwinding of discount on provisions 9 (1.2) (1.3)
Interest on the net defined benefit pension liability 10 (3.5) (4.4)
------------------------------------------------------ ---- ------ ------
(10.7) (15.8)
------------------------------------------------------ ---- ------ ------
Net financing costs (10.6) (15.6)
------------------------------------------------------ ---- ------ ------
Recognised in other comprehensive income
2017 2016
GBPm GBPm
------------------------------------------------------------------------------------------------ ----- -----
Foreign currency translation differences for foreign operations - recognised in the translation
reserve (0.1) 0.3
------------------------------------------------------------------------------------------------ ----- -----
5. Income tax expense
Recognised in the income statement
2017 2016
GBPm GBPm
--------------------------------------------------------------------------- ----- -----
Current tax expense
Current year 7.0 6.7
Adjustments for prior years (4.3) (2.9)
--------------------------------------------------------------------------- ----- -----
2.7 3.8
--------------------------------------------------------------------------- ----- -----
Deferred tax expense
Current year 1.6 0.8
Adjustments for prior years (0.9) 0.1
--------------------------------------------------------------------------- ----- -----
0.7 0.9
--------------------------------------------------------------------------- ----- -----
Total income tax expense 3.4 4.7
--------------------------------------------------------------------------- ----- -----
Reconciliation of effective tax rate
Profit before tax 45.4 65.8
--------------------------------------------------------------------------- ----- -----
Income tax using the UK corporation tax rate of 20% (2016: 20%) 9.1 13.2
Non-deductible expenditure 0.4 1.2
Non-taxable income (1.0) (8.0)
Change in UK corporation tax rate - (0.1)
Effect of tax rate in foreign jurisdictions (0.1) -
Adjustments for prior years
- current tax (4.3) (2.9)
- deferred tax (0.9) 0.1
Other 0.2 1.2
--------------------------------------------------------------------------- ----- -----
Total tax expense for the year 3.4 4.7
--------------------------------------------------------------------------- ----- -----
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the Income statement:
Remeasurements of defined benefit pension liability 4.0 7.0
--------------------------------------------------------------------------- ----- -----
Recognised directly in equity
Current tax on share based payments (1.1) (2.2)
Deferred tax on share based payments 0.1 (0.5)
--------------------------------------------------------------------------- ----- -----
(1.0) (2.7)
--------------------------------------------------------------------------- ----- -----
The main UK Corporation tax rate, which has remained at 20%
since 1 April 2015, will reduce to 19% with effect from 1 April
2017 and will further reduce to 17% with effect from 1 April 2020
and should reduce the Group's future current tax charge
accordingly.
The Group maintains a provision against tax risks, which is
included within Income tax payable.
The total tax expense above includes tax credits of GBP0.4m
(2016: GBP0.9m) in respect of amortisation of acquired intangibles
and exceptional tax of GBP3.7m (2016: GBP0.9m).
6. Earnings per share
Earnings per share calculation is based on the profit
attributable to the equity shareholders of Wincanton plc of
GBP42.0m (2016: GBP61.1m) and the weighted average shares in issue
throughout the year as calculated below of 122.8m (2016: 120.5m).
The diluted earnings per share calculation is based on there being
4.3m (2016: 8.5m) additional shares deemed to be issued at GBPnil
consideration under the Company's share option schemes.
2017 2016
millions millions
----------------------------------------------------------------------------- --------- ---------
Weighted average number of ordinary shares (basic)
Issued ordinary shares at the beginning of the year 121.9 116.5
Net effect of shares issued and purchased during the year 0.9 4.0
----------------------------------------------------------------------------- --------- ---------
122.8 120.5
----------------------------------------------------------------------------- --------- ---------
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares at the end of the year (as above) 122.8 120.5
Effect of share options on issue 4.3 8.5
----------------------------------------------------------------------------- --------- ---------
127.1 129.0
----------------------------------------------------------------------------- --------- ---------
An alternative earnings per share measure is set out below,
being earnings, before amortisation of acquired intangibles and
exceptionals including related tax and exceptional tax items where
applicable, since the Directors consider that this provides further
information on the underlying performance of the Group:
2017 2016
pence pence
------------------------------ ------ ------
Underlying earnings per share
- basic 27.7 23.9
- diluted 26.8 22.3
------------------------------ ------ ------
Underlying earnings are determined as follows:
2017 2016
Note GBPm GBPm
------------------------------------------------------------------------- ---- ----- ------
Profit for the year attributable to equity shareholders of Wincanton plc 42.0 61.1
Exceptionals 3 (6.1) (35.0)
Amortisation of acquired intangibles 2.2 4.5
Tax impact of above items and exceptional tax items (4.1) (1.8)
------------------------------------------------------------------------- ---- ----- ------
Underlying earnings 34.0 28.8
------------------------------------------------------------------------- ---- ----- ------
7. Dividends
Dividends paid in the year comprise:
2017 2016
GBPm GBPm
-------------------------------------------------------------------------------------- ----- -----
Final dividend for the year ended 31 March 2016 of 5.5p per share (2015: nil) 6.7 -
Interim dividend for the period ended 30 September 2016 of 3.0p per share (2015: nil) 3.7 -
-------------------------------------------------------------------------------------- ----- -----
10.4 -
-------------------------------------------------------------------------------------- ----- -----
The Directors are proposing a final dividend of 6.1p per share
for the year ended 31 March 2017 (2016: 5.5p) which, if approved by
shareholders, will be paid on 4 August 2017 to shareholders on the
register on 7 July 2017, an estimated total of GBP7.5m. The
proposed final dividend is subject to approval by shareholders at
the Annual General Meeting on 29 June 2017 and in accordance with
Adopted IFRS has not been included as a liability in these
financial statements.
In setting the dividend the Directors have considered a range of
factors, including the Group's strategy (including downside
sensitivities), the Group's net debt position, the current and
projected level of distributable reserves and projected cash
flows.
The Employee Benefit Trust has waived the right to receive
dividends in respect of the shares it holds.
8. Analysis of changes in net debt
Net movement on
1 April 2016 Cash flow cash flow hedges 31 March 2017
GBPm GBPm GBPm GBPm
---------------------------- ------------ --------- ----------------- -------------
Cash and bank balances 36.3 4.6 - 40.9
Bank loans & overdrafts (75.1) 10.0 - (65.1)
Other financial liabilities (0.7) - 0.6 (0.1)
---------------------------- ------------ --------- ----------------- -------------
Net debt (39.5) 14.6 0.6 (24.3)
---------------------------- ------------ --------- ----------------- -------------
9. Provisions
Other
Insurance Property provisions Total
Note GBPm GBPm GBPm GBPm
---------------------------------------- ---- --------- -------- ----------- ------
At 1 April 2016 35.6 15.3 0.5 51.4
Effect of movements in foreign exchange - 0.3 - 0.3
Provisions used during the year (9.0) (2.7) (0.5) (12.2)
Unwinding of discount 4 0.6 0.6 - 1.2
Reclassification 1.4 0.9 - 2.3
Provisions made during the year 4.9 2.1 - 7.0
---------------------------------------- ---- --------- -------- ----------- ------
At 31 March 2017 33.5 16.5 - 50.0
---------------------------------------- ---- --------- -------- ----------- ------
Current 10.0 5.2 - 15.2
Non-current 23.5 11.3 - 34.8
---------------------------------------- ---- --------- -------- ----------- ------
33.5 16.5 - 50.0
---------------------------------------- ---- --------- -------- ----------- ------
The Group owns 100% of the share capital of an insurance company
which insures certain of the risks of the Group. The insurance
provisions in the above table are held in respect of outstanding
insurance claims, the majority of which are expected to be paid
within one to seven years. The discount unwinding arises primarily
on the employers' liability policy which is discounted over a
period of seven years at a rate based on the Group's assessment of
a risk free rate.
The property provisions are determined on a site by site basis,
as the best estimate of the expected costs of empty and
under-utilised properties, including dilapidations. Provisions made
in the year comprise dilapidations made in the normal course of
business. The provisions are utilised over the relevant lease term,
with the majority expected to be utilised over the next three
years. Amounts have been discounted at a rate based on the Group's
assessment of a risk free rate.
Reclassification includes amounts previously reported within
creditors.
10. Employee benefits
Employees of Wincanton participated in funded pension
arrangements in the UK and Ireland during the year ended 31 March
2017 details of which are given below.
The principal Wincanton Scheme in the UK (the Scheme) is a
funded arrangement which has three defined benefit sections and two
defined contribution sections, called the Wincanton Retirement
Savings Section and the Wincanton Pension Builder Plan. The
employees of Wincanton Ireland Limited are eligible to participate
in a separate defined contribution scheme. Assets of these pension
arrangements are held in separate Trustee administered funds
independent of Wincanton. The weighted average duration of the
funded defined benefit obligation is approximately 18 years.
In previous years, a small number of employees, who were subject
to the statutory earnings cap on pensionable earnings prior to 6
April 2006, were entitled to participate in an unfunded unapproved
arrangement in addition to accruing benefits from the Scheme. There
have been no active members of this arrangement throughout the
years ended 31 March 2016 and 2017.
The defined benefit sections of the Scheme were closed to future
accrual on 31 March 2014. This means that no future service benefit
will accrue but pensions built up to the date of closure have been
preserved.
The latest formal valuation of the Scheme was carried out as at
31 March 2014 by the Scheme actuary, Hymans Robertson. It was
agreed between the Trustee and the Group in April 2015 and
submitted to the Pension Regulator. The Group, in consultation with
the Trustee, agreed to leave the terms of the cash contribution
that the Group makes to the Scheme in order to address the past
service deficit unchanged from that previously agreed and it will
continue to increase by RPI each year through to September 2024. In
addition, it was agreed that certain administration expenses would
be paid directly by the Group and deducted from these deficit
funding contributions. The expenses, which amount to GBP0.7m (2016:
GBP0.6m), are not included in the contributions below. The deficit
funding contribution in the year net of these expenses was GBP14.1m
(2016: GBP13.9m; GBP20.9m including an additional GBP7.0m paid into
the Scheme following the disposal of WRM). The next triennial
valuation will be carried out by the Scheme actuary as at 31 March
2017.
In the year commencing 1 April 2017 the Group contributions are
expected to be the deficit funding contribution of GBP15.2m
(GBP14.6m after deduction of certain administration expenses as
mentioned above) which has been increased by RPI as set out in the
triennial valuation as at 31 March 2014. In addition, other
administration costs of the Scheme will be borne directly by the
Group, these are expected to total GBP0.7m.
The defined benefit sections of the Scheme expose the Group to
various risks: longevity risk (members living longer than
expected), inflation and interest rate risk (higher or lower than
expected), and market (investment) risk (lower returns than
expected). The Trustee and Group have taken steps to mitigate these
risks through the use of:
-- hedging instruments within the investment portfolio; and
-- diversification of the investment portfolio.
The Group has also taken steps to reduce risk and the build-up
of further liabilities and associated risk, as mentioned above, by
closing the defined benefit section to future benefit accrual and
undertaking various liability management exercises. These include a
pension increase exchange exercise reducing the Group's exposure to
inflation risk; a trivial commutation exercise where, in line with
the Scheme rules, members with small accrued defined benefit
pensions are able to exchange their pension for a one off cash sum;
and a recently launched Enhanced Transfer Value exercise, where
deferred members approaching retirement may choose to transfer out
of the Scheme in order to access the new flexible retirement
options now available.
The Group is not exposed to any unusual, entity specific or
scheme specific risks.
The assets and liabilities of the defined benefit sections of
the Group are calculated in accordance with IAS 19 Employee
Benefits (Revised) and are set out in the tables below.
The calculations under IAS 19 are based on actuarial assumptions
which are the best estimates chosen from a range of possible
assumptions about the long term future which, unless by chance,
will not necessarily be borne out in practice. The fair value of
the assets, which are not intended to be realised in the short
term, may be subject to significant change before they are
realised, and the present value of the liabilities are derived from
cash flow projections over long periods and are thus inherently
uncertain.
2017 2016
GBPm GBPm
------------------------------------------------------ --------- ---------
Present value of unfunded defined benefit obligations (2.2) (1.7)
Present value of funded defined benefit obligations (1,156.7) (1,001.0)
Fair value of Scheme assets 1,080.5 897.1
------------------------------------------------------ --------- ---------
Net defined benefit liability (78.4) (105.6)
------------------------------------------------------ --------- ---------
The movement in the above net defined benefit liability in the
year was primarily the result of an increase in the market value of
the investments, a reduction in liabilities due to demographic
assumptions and contributions received from the Group, being partly
offset by an increase in liabilities resulting from a fall in the
discount rate. The net defined benefit liability, after taking into
account the related deferred tax asset, is GBP65.1m (2016:
GBP86.6m).
Movements in the present value of the net defined benefit
liability
Unfunded Total
Assets Obligations Net liability arrangements net liability
31 March 2017 GBPm GBPm GBPm GBPm GBPm
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Opening position 897.1 (1,001.0) (103.9) (1.7) (105.6)
Included in Income statement:
Administration costs (1.7) - (1.7) - (1.7)
Interest on the net defined benefit liability 30.8 (34.2) (3.4) (0.1) (3.5)
Cash:
Employer contributions 14.8 - 14.8 - 14.8
Benefits paid (57.0) 57.0 - - -
Included in Other comprehensive income:
Changes in financial assumptions - (202.1) (202.1) (0.4) (202.5)
Changes in demographic assumptions 24.2 24.2 - 24.2
Experience - (0.6) (0.6) - (0.6)
Return on assets excluding amounts included in
net financing costs 196.5 - 196.5 - 196.5
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Closing defined benefit liability 1,080.5 (1,156.7) (76.2) (2.2) (78.4)
----------------------------------------------- ------- ----------- ------------- ------------- --------------
Unfunded Total
Assets Obligations Net liability arrangements net liability
31 March 2016 GBPm GBPm GBPm GBPm GBPm
----------------------------------------------- ------ ----------- ------------- ------------- --------------
Opening position 924.8 (1,067.2) (142.4) (1.8) (144.2)
Included in Income statement:
Administration costs (1.5) - (1.5) - (1.5)
Interest on the net defined benefit liability 29.8 (34.1) (4.3) (0.1) (4.4)
Cash:
Employer contributions 21.5 - 21.5 - 21.5
Benefits paid (32.2) 32.2 - - -
Included in Other comprehensive income:
Changes in financial assumptions - 53.3 53.3 0.2 53.5
Experience - 14.8 14.8 - 14.8
Return on assets excluding amounts included in
net financing costs (45.3) - (45.3) - (45.3)
----------------------------------------------- ------ ----------- ------------- ------------- --------------
Closing defined benefit liability 897.1 (1,001.0) (103.9) (1.7) (105.6)
----------------------------------------------- ------ ----------- ------------- ------------- --------------
Liability for defined benefit obligations
The principal actuarial assumptions for the Scheme and for the
UK unfunded arrangement at the balance sheet date were as
follows:
2017 2016
% %
------------------------------------------ ---- ----
Discount rate 2.60 3.50
Price inflation rate - RPI 3.15 2.95
Price inflation rate - CPI 2.15 1.95
Rate of increase of pensions in deferment
- for service to 31 March 2006 3.05 2.90
- for service from 1 April 2006 2.15 2.10
------------------------------------------ ---- ----
The assumptions used for mortality rates for members of these
arrangements at the expected retirement age of 65 years are as
follows:
2017 2016
Years Years
--------------------- ------ ------
Male aged 65 today 21.2 21.4
Male aged 45 today 23.5 23.8
Female aged 65 today 23.4 23.5
Female aged 45 today 26.4 26.5
--------------------- ------ ------
Sensitivity table
The sensitivity of the present value of the Scheme obligations
to changes in the key actuarial assumptions are set out in the
following table. The illustrations consider the result of only a
single assumption changing with the others assumed unchanged,
although in reality it is more likely that more than one assumption
would change and potentially the results would offset each other.
For example, a fall in interest rates will increase the Scheme
obligations, but may also trigger an offsetting increase in market
value of certain Scheme assets.
Change Impact
in on liability
assumption GBPm
---------------------- ----------- -------------
Discount rate +0.1% (21.5)
Price inflation - RPI +0.1% 10.9
Mortality rate + 1 year 46.3
---------------------- ----------- -------------
Defined contribution schemes
The total expense relating to the Group's defined contribution
schemes in the current year was GBP17.9m (2016: GBP18.1m).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGUGUAUPMGQQ
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