TIDMWIN
RNS Number : 3701G
Wincanton PLC
15 November 2022
For immediate release 15 November 2022
LEI: 213800Z5WTW8QK0HWQ82
WINCANTON plc
Half Year results for the six months to 30 September 2022
(unaudited)
Diversified customer portfolio delivers sustained growth in a
challenging external environment
Wincanton plc ("Wincanton" or "the Group"), a leading supply
chain partner for UK business, today announces its half year
results for the six months ended 30 September 2022.
Key financial measures
H1 22/23 H1 21/22 Change
-------------------------------------- --------------- ---------------- -------
Revenue (GBPm) 753.6 690.3 9.2%
Underlying EBITDA (GBPm) (1) 57.4 50.8 13.0%
Underlying profit before tax (GBPm)
(1) 28.0 27.3 2.6%
Underlying basic EPS (1) 18.8p 18.2p 3.3%
Dividend per share - interim (pence) 4.4p 4.0p 10.0%
Free cash flow (GBPm) (1) 17.7 17.9
Net debt (GBPm) (1) (2.2) (16.4)
Statutory results
-------------------------------------- --------------- ---------------- -------
Profit before tax (GBPm) 25.8 25.1 2.8%
Basic EPS 17.4p 16.9p 3.0%
Operational highlights
-- Revenue growth delivered across all four sectors against the
backdrop of the challenging economic environment
-- Good new business momentum, contract renewals and extensions
including IKEA Dartford, Husqvarna and La Doria
-- Healthy pipeline of new business opportunities; particular
strength in public and infrastructure markets
-- Continued progress against strategy with further investment
in technology, robotics and automation
-- Diverse customer portfolio mitigating the impact of volume
headwinds in two-person home delivery and transport networks
for retail and construction
Financial highlights
-- Good first half performance with revenue of GBP753.6m up by
9.2% (6.9% excluding Cygnia Logistics acquisition impact)
-- Underlying EBITDA of GBP57.4m, a year-on-year increase of 13.0%
(H1 21/22: GBP50.8m)
-- Underlying profit before tax of GBP28.0m up 2.6% (H1 21/22:
GBP27.3m); profit growth delivered whilst increasing investment
and against a challenging macro-economic environment
-- Successfully managing inflationary pressures, with clear mechanisms
to pass through costs in open book contracts and proactive
actions taken to manage closed book contracts
-- Free cash flow generation of GBP17.7m with robust cash management
resulting in an improved H1 net debt of position of GBP2.2m
(H1 21/22 GBP16.4m)
-- Interim dividend of 4.4p (H1 21/22: 4.0p)
Outlook
We are mindful of the expected continuation of macro-economic
uncertainty, and we will continue to work closely with our
customers to manage inflationary pressures and labour market
challenges across our markets. Our open book contracts and the
contractual positions in our closed book contracts protect our
operating cash flows and ability to deliver sustained growth. The
Board remains confident in the Group's strategy and expects to
deliver revenue and profit in line with market expectations for
FY23, underlining our excellent customer relationships and
resilience to challenging external conditions.
James Wroath, Chief Executive Officer of Wincanton
commented:
"Wincanton has delivered another good performance during the
first half of the year in a challenging macro-economic environment
. I would particularly like to thank our people, who continue to
provide exceptional service to our customers delivering supply
chain value every single day.
We continued to win new business and made further progress
against our growth strategy. Our exceptional customer service and
track record for delivery are the foundations of our business. We
are reinforcing this with sustained investment into automation and
robotic solutions to meet the growing demand for these
technologies, and they are delivering tangible results for our
customers. I am very satisfied with the progress we have made in
the period and, while mindful of the challenging macro-economic
pressures, I remain confident in our strategy."
For further enquiries please contact:
Wincanton plc
James Wroath, Chief Executive Officer Tel: 01249 710 000
Tom Hinton, Chief Financial Officer
Headland
Susanna Voyle Tel: 020 3805 4822
Henry Wallers
Marta Parry-Jones
A presentation for sell-side analysts will be held today at the
offices of Herbert Smith Freehills LLP (Exchange House, Primrose
Street London, EC2 2EG), commencing at 9.00am GMT.
A live audio webcast of the analysts' presentation will be
available on Wincanton's IR website: through the following link:
https://brrmedia.news/Wincanton_HY . The webcast will be available
on demand following the conclusion of the presentation.
Notes
1 The section on Alternative Performance Measures (APMs) below
and Note 3 to the consolidated half year financial statements
provide further information on underlying measures, including
definitions and a reconciliation of APMs to statutory measures
.
Half year review for the six months to 30 September 2022
Summary
The Group has continued to make good progress in both its
financial and operational performance. The benefits of our strategy
of focusing on delivering sustainable and profitable growth are
reflected in these results and the year-on-year improvements are
particularly encouraging given the current economic
environment.
Revenue was GBP753.6m (H1 21/22: GBP690.3m), ahead of prior year
by 9.2%, with growth across all sectors. Our eFulfilment sector
revenue increased by 19.1% driven primarily by the acquisition of
Cygnia (4.1% growth excluding Cygnia). New business from customers
including Primark and DEFRA led to a growth of 14.6% and 5.2% in
the General Merchandise and Public & Industrial sectors,
respectively. Finally, our Grocery & Consumer sector delivered
a steady growth of 3.2%, building upon its already strong market
share position.
Underlying profit before tax increased by 2.6% to GBP28.0m (H1
21/22: GBP27.3m), with underlying profit margin of 3.7% (H1 21/22:
4.0%). The Group's performance was impacted by volume reductions in
the two-person home delivery, retail transport and construction
transport markets. However, a diverse portfolio of customers and
new business wins, together with operational efficiencies, have
provided protection against these commercial headwinds.
The strength of the Group's balance sheet is evidenced by
closing net debt at the end of H1 of GBP2.2m (H1 21/22: GBP16.4m)
demonstrating strong cash conversion. The Group has significant
liquidity headroom enabling further strategic investments in growth
initiatives, alongside providing protection against potential
headwinds from the macro-economic environment.
Strong operational delivery
Our people have delivered a robust operational performance in
keeping with our continuous improvement culture for customers. This
is particularly relevant in our General Merchandise and Grocery
& Consumer sectors.
Performance across the eFulfilment sector has been solid despite
the economic environment. Wins with Gopuff and Nkuku, together with
recent mobilisation for The White Company, have enhanced the
sector's performance. Given the shared-user nature of operations,
processing volumes remain key to the overall profitability of
eFulfilment. Whilst eCommerce volumes have decreased across the
industry, tight margin control is being maintained through good
cost management and contractual pass-through of inflationary cost
increases.
In the Public & Industrial sector, despite delays in
contract wins announced last year, additional revenue has been
generated through supplementary engagement whilst mobilisation and
delivery is planned. There remains a positive momentum with new
work being secured for smaller projects across existing customers
including BAE, Thales, and Alstom.
Our foundation sectors have secured renewals with customers such
as Heinz, La Doria and Husqvarna, extending our long-term
partnerships. Growth has been achieved through the addition of
supplementary support, in particular offering additional warehouse
capacity via our OneVASTwarehouse platform. However, retail volume
pressures are impacting transport and signs of softness are
appearing in the construction transport market.
The broad mix of our customer base, together with the open book
and close book split, c.72%/28%, continues to provide protection
against potential headwinds. In particular, our disciplined
commercial approach ensures we continue to have dialogue with our
customers around addressing and managing this headwind.
We have maintained our high performance on health and safety
with a Lost Time Injury Frequency Rate (LTIFR) of 0.28 in the
period, a year-on-year improvement of 13% (FY22: 0.33).
Investment in automation and innovation
The Group continues to invest in supply chain innovation, with
progress around AMRs (Autonomous Mobile Robot), people recruitment
and warehouse management systems. We accelerated the deployment of
AMR technology in Cygnia, which went live in the period with Molton
Brown and Whittard of Chelsea. We also continue to support our
foundation customers and delivered a seamless mobilisation of new
fulfilment automation on behalf of Screwfix providing an increase
in pick capacity.
Our W(2) Labs programme welcomed five start-ups from across the
world to accelerate innovation, discover emerging ideas and tackle
some of the industry's toughest challenges. The products and
services range from smart pick to making functional products out of
waste plastics. This innovation aims to increase the Group's
propositions and grow its market share.
We are proud to have won two eCommerce awards for our
collaborative and innovative eFulfilment solution for Neal's Yard
Remedies, also winning Best Use of Robotics at the Supply Chain
Excellence awards. We are also finalists for other awards including
HR Excellence, National Technology award, Personnel Today and Motor
Transport.
Capital Markets Day
The Group held a Capital Markets event in July for analysts and
institutional investors with a key focus on the Group's eFulfilment
sector. The event showcased the Group's automation offerings across
some of its key facilities and was able to demonstrate the
investment being made in both the Group's capability and
capacity.
Continued progress on ESG strategy
The Group is actively working to embed its ESG strategy; this
year a new committee has been formed, led by the CEO, to promote
the long-term success with regards to ESG matters. Three key
successes to date include the offer of net-zero propositions to all
our customers, the launch of a social value roadmap, together with
a clear code of conduct setting out what we stand for as a
Group.
Our people are at the heart of our success and during H1 we are
proud to have been part of Birmingham Pride. Our diversity and
inclusion network showcased our support during the event. The Group
was also recognised with a silver status award under the Armed
Forces Covenant for our pledge to help people from the armed forces
make a seamless transition to civilian employment. We also
strengthened our relationship with Mencap to give people with
learning disabilities the opportunity to join our teams across the
country.
People
As previously announced, Tom Hinton joined Wincanton on 15
August 2022 as Chief Financial Officer. The Board welcomes Tom to
the Group and looks forward to working together in leading the
Group through the next stage of its development. In addition, the
Board thanks James Clarke for his support in his role as Interim
CFO and his collaboration with Tom to ensure a smooth
transition.
Dividend
The Board is declaring an interim dividend of 4.4p per Ordinary
Share (H1 21/22: 4.0p per share) in line with its established
policy of growing the dividend broadly in line with underlying
earnings movements. The Group's policy is for the interim to be
approximately one third of the expected full year dividend.
Key priorities and outlook
The Group is mindful of the challenging macro-economic
environment. Whilst open book contracts, which make up c.72% of
revenue, provide a clear mechanism of passing on inflationary
increases, we will continue to drive operational efficiencies for
both open and closed book contracts to mitigate these cost
increases as much as possible. The further continued investment in
automation and robotics will support in driving this
efficiency.
The Group remains on track to deliver full year profits in line
with market expectations. The pipeline for our strategic markets
continues to grow, particularly in the public sector. However, the
rate of growth in this key market will be dependent on the pace of
UK Government spend. The Board is particularly encouraged by the
current sales pipeline across the Group, future growth
opportunities and the Group's ability to mitigate inflationary cost
pressures through its contractual structures with customers.
Trading
H1 22/23 H1 21/22
Sector revenue GBPm GBP m Change
---------------------------------------- -------- -------- -------
eFulfilment 122.9 103.2 19.1%
Grocery & Consumer 260.1 252.1 3.2%
General Merchandise 221.4 193.2 14.6%
Public & Industrial 149.2 141.8 5.2%
Total revenue 753.6 690.3 9.2%
----------------------------------------- -------- -------- -------
Underlying EBITDA 57.4 50.8 13.0%
Underlying profit before tax 28.0 27.3 2.6%
Underlying profit before tax margin (%) 3.7% 4.0% (24)bps
----------------------------------------- -------- -------- -------
eFulfilment delivered a 19.1% increase in revenue, driven
primarily from the acquisition of Cygnia. On a like-for-like basis,
the sector grew by 4.1%, reflecting new business from The White
Company together with the benefit of new business from the last
financial year from customers such as Saint Gobain and Snug Sofa.
This growth was offset by a reduction in volume across our
eCommerce market, particularly in the two-person home delivery
network.
General Merchandise and Grocery & Consumer's revenue
remained strong in the first half of the year, especially against
the Covid-19 peak volumes in the prior year. The growth includes
new business from Primark won at the end of last finance year and
additional support for current customers.
The Public & Industrial sector's growth of 5.2% was driven
primarily by public sector activity most notably with DEFRA and
HMRC for the Inland Border Clearance centres, and the
infrastructure programme for EDF. However, the sector was also
impacted by the reduction in construction activity as seen in the
wider construction industry.
The Group continues to deliver its strategy with underlying
EBITDA increasing by 13.0% to GBP57.4m (HY 21/22: GBP50.8m).
Investment in automated facilities and additional property has
resulted in higher depreciation charges thus reducing growth at the
underlying profit before tax level. However, underlying profit
before tax has increased by 2.6% to GBP28.0m (H1 21/22: GBP27.3m).
This sustained growth is due to our diversified portfolio of
customers and our capacity to successfully manage inflationary
pressures, delivering continued bottom-line growth against the
current macro-economic challenges.
Net financing costs
H1 22/23 H1 21/22 GBPm
GBPm
-------------------------------------------------- ------------- --------------
Interest on the net defined benefit pension asset 1.7 0.6
Bank interest payable on loans (2.6) (1.2)
Unwinding of discount on provisions (0.3) (0.2)
Interest on lease liabilities (3.0) (1.7)
--------------------------------------------------- ------------- --------------
Net financing costs (4.2) (2.5)
--------------------------------------------------- ------------- --------------
Net financing costs have increased to GBP4.2m (H1 21/22:
GBP2.5m), GBP1.7m higher than the comparative period.
Bank interest payable on loans of GBP2.6m (H1 21/22: GBP1.2m)
was higher than the comparative period, primarily due to the
increase in interest rates and drawdown on the Group's RCF facility
in the current period.
Financing charges of GBP3.0m in respect of the interest on lease
liabilities was driven by additional property leases supporting the
Group's growth (H1 21/22: GBP1.7m).
The non-cash interest income on the net defined benefit pension
asset in the period of GBP1.7m (H1 21/22: GBP0.6m) was higher than
the comparative period due to the increased pension net surplus
position reported at the start of the period.
Taxation
H1 22/23 H1 21/22
GBPm GBPm
---------------------------------------- ----------- -------------
Underlying profit before tax 28.0 27.3
----------------------------------------- ----------- -------------
Underlying tax 4.8 4.7
Tax on non-underlying items (0.5) (0.6)
----------------------------------------- ----------- -------------
Tax as reported 4.3 4.1
----------------------------------------- ----------- -------------
Effective tax rate on underlying profit
before tax (%) 17.1% 17.2%
----------------------------------------- ----------- -------------
Underlying tax of GBP4.8m (H1 21/22: GBP4.7m) represents an
underlying effective tax rate (ETR) of 17.1% (H1 21/22: 17.2%) on
underlying profit before tax. The underlying ETR applied at the
half year is an estimate of the expected full year rate and is
lower than the statutory corporation tax rate of 19.0% due to tax
benefits expected under the current Government regime, permitting
capital allowances of 130% on qualifying expenditure to promote
business investment.
Corporation tax paid in respect of the period was GBP4.7m (H1
21/22: GBP1.8m) of which GBP3.8m relates to prior periods. In the
current financial year, payments on account are based on the latest
view of taxable profits for the full year. The Group has tax losses
of GBP43m that it expects to utilise in future periods reducing
future tax payments.
Profit after tax and EPS
Profit after tax for the period was GBP21.5m (H1 21/22:
GBP21.0m) which translates to a basic EPS of 17.4p (H1 21/22:
16.9p). Underlying EPS, which excludes the impact of non-underlying
items, increased to 18.8p (H1 21/22: 18.2p). The calculation of
these EPS measures is set out in Note 6 to the consolidated half
year financial statements.
Dividends
The Group's policy is for the dividend to grow sustainably and
broadly match the 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, including cash payments to the pension scheme
and deferred payment arrangements.
Reflecting the continued growth in underlying profit before tax
and the confidence in the growth prospects and resilience of the
business, the Board has declared an interim dividend of 4.4p (H1
2021: 4.0p) per share relating to the six-month period ended 30
September 2022, payable on 30 December 2022.
Financial position
The summary financial position of the Group is set out
below:
30 September 2022 30 September 2021 31 March 2022
GBPm GBPm GBPm
-------------------------------------------------------------- ----------------- ----------------- -------------
Non-current assets (excl. pension assets) 317.8 290.0 325.6
Net current liabilities (excl. net cash/debt) (160.9) (150.5) (156.2)
Non-current liabilities (excl. net debt / pension liabilities
and borrowings) (208.8) (175.7) (224.0)
Net (debt) / cash (excl. lease liabilities) (2.2) (16.4) 3.7
Net pension asset (excl. deferred tax) 124.5 67.6 114.5
--------------------------------------------------------------- ----------------- ----------------- -------------
Net assets 70.4 15.0 63.6
--------------------------------------------------------------- ----------------- ----------------- -------------
Net assets increased by GBP6.8m since 31 March 2022 to
GBP70.4m.
Non-current assets and non-current liabilities include
right-of-use assets and corresponding lease liabilities which have
both reduced due to the impacts of amortisation of the asset and
lease payments respectively. These changes were partially offset by
additional lease assets and liabilities being recognised of
GBP12.1m which primarily relate to the acquisition of new
sites.
Net current liabilities are comparable to year end: an increase
in trade receivables and trade payables reflects timing of the
month end cycle, offset by changes in the profile of lease
liabilities.
The movement in the net pension asset is primarily due to
employer contributions of GBP10m paid into the Scheme, plus net
actuarial movements on pension assets and liabilities driven by
external market conditions offset by financing income, as shown in
the net financing costs section above.
Net debt and cash flows
Net debt at 30 September 2022 was GBP2.2m (H1 21/22: net debt of
GBP16.4m, 31 March 2022: net cash of GBP3.7m), reflecting a net
cash inflow of GBP14.2m over the intervening 12 months and a net
cash outflow of GBP5.9m since 31 March 2022.
The Group's change in net (debt)/cash is summarised in the
following table:
30 September 2022 30 September 2021 31 March
GBPm GBPm 2022
GBPm
--------------------------------------------- ----------------- ----------------- ------------------
Underlying EBITDA 57.4 50.8 108.3
Working capital (1.9) (10.6) 6.0
Corporation tax (4.7) (1.8) (3.3)
Net interest (5.4) (2.9) (8.3)
Other items 0.5 0.2 -
Repayment of obligations under leases (18.9) (13.5) (37.7)
Capital expenditure net of disposal proceeds (7.6) (1.1) (8.3)
Non-underlying items (1.7) (3.2) (2.7)
Free cash flow 17.7 17.9 54.0
Pension payments (10.0) (9.2) (18.5)
Dividends (9.9) (9.4) (14.3)
Acquisition:
* Consideration - (23.9) (23.9)
* Additional net assets acquired - (3.7) (3.7)
Own shares acquired (3.7) - (1.8)
---------------------------------------------- ----------------- ----------------- ------------------
Increase in net debt/decrease in net cash (5.9) (28.3) (8.2)
---------------------------------------------- ----------------- ----------------- ------------------
The Group's net debt increased by GBP5.9m since 31 March 2022
(H1 21/22: GBP28.3m increase) with a free cash inflow of GBP17.7m
(H1 21/22: GBP17.9m).
Working capital movement in the period resulted in an outflow of
GBP1.9m (H1 21/22: outflow of GBP10.6m), with the reduction driven
mainly by good cash management together with the reset of customer
budgets where invoices are raised in advance of activity delivered
each period. Prior year working capital outflow was impacted by
Covid-19 cash protection measures and the strong volumes in that
period higher than customer budgets resulting in a short-term
outflow.
The Group paid GBP4.7m corporation tax in the period (H1 21/22:
GBP1.8m). The payment includes the impact of the tax losses
deferred to future years to benefit from the higher rate of tax of
25% from 1 April 2023. Corporation tax also includes the benefit of
enhanced capital allowances together with tax deductions received
on pension contributions.
Net interest paid of GBP5.4m (H1 21/22: GBP2.9m) includes the
interest paid on lease liabilities for the Group's investment in
new property leases. Interest paid on borrowings reflects the
increase in bank interest for the RCF drawings together with higher
interest rates.
Other items of GBP0.5m comprise non-cash items relating mainly
to net movements on provisions.
Capital expenditure was GBP7.6m (H1 21/22: GBP2.3m gross cash
outflow) principally consisting investment in AMRs at Cygnia and
fit-out of warehouses in Harlow for the two-person home delivery
network. H1 21/22 included GBP1.2m from proceeds from the disposal
of fleet.
Cash outflow from non-underlying items of GBP1.7m (H1 21/22:
GBP3.2m) relates to phase two implementation costs for the new
upgraded finance and HR systems in the period offset by GBP0.2m of
contingent consideration received from a disposed business.
Defined recovery contributions paid to the Group's defined
benefit pension scheme in the period were GBP10.0m (H1 21/22:
GBP9.2m), which is net of administration costs of GBP0.2m paid
directly by the Group.
The final dividend paid in the period was GBP9.9m (H1 21/22:
GBP9.4m). The interim cash dividend payment in the second half of
the year is expected to be c.GBP5.4m and will be paid on 30
December 2022.
The Group acquired one million of its own shares during the
period at a total cost of GBP3.7m to provide shares for the
Employee Benefit Trust in respect of its long-term incentive plan
commitments.
Financing and covenants
The Group's committed facilities at the period end were
GBP175.0m (H1 21/22: GBP141.2m). The headroom in the committed
facilities compared to net debt of GBP2.2m at H1 22/23 was
GBP172.8m (H1 21/22: GBP124.8m). The Group also has a Receivables
Purchase Facility (RPF) with Santander UK plc and operating
overdrafts which provide day to day flexibility and amount to a
further GBP50m and GBP5m respectively in uncommitted facilities. At
H1 22/23, utilisation of the Group's non-recourse RPF was GBP9.5m
(H1 21/22: GBP8.4m)
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
Covenant Ratio At 30 September 2022
-------------------- -------- ------------------------
Leverage ratio <3.0:1 1.0
Interest cover >3.5:1 22.7
Fixed charge cover >1.4:1 2.7
-------------------- -------- ------------------------
Pensions
The Group has a number of pension arrangements in the UK and
Ireland including defined benefit arrangements which are described
below.
The Group has reported an IAS 19 net asset of GBP124.5m
(GBP93.7m net of deferred tax) at H1 22/23 (H1 21/22: GBP67.6m, 31
March 2022: GBP114.5m) as set out in the following table:
30 September 30 September 31 March
GBPm 2022 2021 2022
------------------ --------------------- --------------------- ---------------------
Assets 880.8 1,256.4 1,208.3
Liabilities (756.3) (1,188.8) (1,093.8)
------------------ --------------------- --------------------- ---------------------
Pension net asset 124.5 67.6 114.5
------------------ --------------------- --------------------- ---------------------
Discount rate (%) 5.15 2.00 2.70
------------------ --------------------- --------------------- ---------------------
The movement in the liability since 31 March 2022 is
predominately GBP333.0m of actuarial movements driven by external
market factors increasing the discount rate, as it is based on high
quality corporate bond yields. The asset portfolio hedges against
this movement and therefore we have seen a corresponding decrease
in the asset balance. In the period, employer contributions of
GBP10.0m have been paid.
The estimated actuarial deficit at H1 22/23 has reduced to
GBP35m, compared to GBP37m at 31 March 2022. At H1 22/23, the
Scheme's investments were split between 24% in return-seeking
assets and 76% in defensive assets. The inflation and interest rate
risks facing the Scheme are hedged to mitigate the quantum of any
future movements in the actuarial deficit as seen in the current
period. In the period, due to rapidly changing interest rates, LDI
portfolio positions and the subsequent cash collateralisation
levels of several defined benefit schemes made headline news. In
this volatile market our pension scheme LDI position required no
further cash collateralisation; the Trustees in conjunction with
the company have reviewed potential future volatility and consider
the collateral position robust, therefore no changes have been made
to the investment strategy.
Risks
The key risks and uncertainties facing Wincanton in the second
half of the current financial year have not changed materially from
those outlined on pages 49 to 51 of the Annual Report for the year
ended 31 March 2022, with the exception of the deterioration of the
UK's macro-economic environment. The principal commercial and
operational risks are the Group's ability to source new contracts,
at an appropriate financial return for an acceptable level of risk,
and the subsequent performance of new and existing contracts
against a backdrop of difficult economic pressures. The Group
continues to manage inflationary pressures across its markets and
c.72% of the Group's contracts are open book, providing a clear
mechanism for cost increases to be passed to customers. The Group
also continues to take a proactive approach to managing the
commercial consequences of cost pressures in its closed book
contracts.
Going concern
The consolidated half year financial statements have been
prepared on a going concern basis. Having considered the ability of
the Group to operate within its existing facilities and meet its
debt covenants, the Directors have a reasonable expectation that
the Group will have adequate resources to continue in operational
existence for the foreseeable future.
In determining whether the financial statements can be prepared
on a going concern basis, the Directors considered the Group's
business activities, together with the factors likely to affect its
future development, performance, and position. The review also
included the financial position of the Group, its cash flows, and
adherence to its banking covenants.
The Board considered the following key uncertainties in
considering the Group's future:
-- a deterioration in trading performance together with unplanned working capital outflows
-- a major customer going into administration
-- a decline in current market conditions, including the impact
of further increases in inflation and increased competition,
resulting in lower Group revenues and profits
The Board has also considered a base case and a severe but
plausible downside case. In both scenarios, the Group has adequate
headroom in existing bank facilities to meet its liabilities as
they fall due, and it complies with the financial covenants under
its committed borrowing facilities throughout the forecast
period.
The Directors have considered the impact of climate related
matters on the Group's going concern assessment, and do not expect
this to have a significant impact on the going concern assessment
throughout the forecast period to 31 March 2024.
Further details are provided in Note 1 to the consolidated half
year financial statements.
Alternative Performance Measures
The Alternative Performance Measures (APMs) or underlying
results reported in this announcement represent statutory measures
adjusted for items which management consider could distort the
understanding of performance and comparability year on year.
APMs are used by the Board to assess 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 but should not
be viewed in isolation. Additionally, underlying profit before tax
is used in determining annual bonus payments and underlying EPS is
used as a key performance indicator for most awards under the
Long-Term Incentive Plan (LTIP) share incentive scheme. These
measures are not defined by IFRS and are not intended to be a
substitute for IFRS measures. Wincanton's underlying measures may
not be comparable to similarly titled measures used by other
companies.
The Group presents underlying EBITDA, operating profit, profit
before tax and EPS which are calculated as the statutory measures
stated before non-underlying items. These are items which the
Directors consider separate disclosure would assist both in a
better understanding of the financial performance achieved and in
making projections of future results. A balanced approach to both
gains and losses is applied, to be both consistent and clear in the
accounting and disclosure of such items.
Further details of underlying results and the definition of
non-underlying items can be found in Note 3 to the consolidated
half year financial statements.
EBITDA refers to earnings (operating profit) before interest,
tax, depreciation and amortisation of finite-lived intangible
assets. This measure also excludes the impact of impairment of
non-current assets.
Other APMs used are net debt/cash and free cash flow, which
relate to liquidity. Net debt/cash is the sum of cash and bank
balances, bank loans and overdrafts and other financial liabilities
excluding lease liabilities. Note 11 to the consolidated half year
financial statements provides a breakdown of net debt/cash for the
current and prior periods. Free cash flow is defined as the
movement in net debt/cash before acquisitions, pension payments,
dividends and purchase of own shares.
The table below reconciles the APMs to the statutory reported
measures.
H1 22/23 H1 21/22
----------------------------
Non-underlying Non-underlying
GBPm Underlying items Statutory Underlying items Statutory
Revenue 753.6 - 753.6 690.3 - 690.3
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
EBITDA 57.4 (1.7) 55.7 50.8 (2.2) 48.6
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
EBITDA margin (%) 7.6% - 7.4% 7.4% - 7.0%
Depreciation,
amortisation, and
impairments (25.2) (0.5) (25.7) (21.0) - (21.0)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Operating profit 32.2 (2.2) 30.0 29.8 (2.2) 27.6
Net financing
costs (4.2) - (4.2) (2.5) - (2.5)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Profit before tax 28.0 (2.2) 25.8 27.3 (2.2) 25.1
Income tax (4.8) 0.5 (4.3) (4.7) 0.6 (4.1)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Profit after tax 23.2 (1.7) 21.5 22.6 (1.6) 21.0
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Earnings per share
(p) (2) 18.8 - 17.4 18.2 - 16.9
Dividend per share
(p) - - 4.4 - - 4.0
Net debt excluding
lease liabilities (2.2) - (2.2) (16.4) - (16.4)
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
(2) Note 6 to the consolidated half year financial statements
provides further detail of underlying earnings per share.
In the period to 30 September 2022 net non-underlying items of
GBP2.2m ( H1 21/22: GBP2.2m) were expensed. These include costs
relating to phase two of the implementation of a new
enterprise-wide finance and HR system and amortisation of acquired
intangible assets.
In the comparative period, non-underlying also included the
release of a historic warranty provision and profits on the
disposal of businesses and other assets.
Further details of other non-underlying items are set out in
Note 3 to the consolidated half year financial statements.
Statement of Directors' responsibilities
The Board confirms to the best of its knowledge:
-- that the consolidated half year financial statements for the
six months to 30 September 2022 have been prepared in accordance
with UK-adopted IAS 34 Interim Financial Reporting; and
-- that the Half Year Report includes a fair review of the
information required by sections 4.2.7R and 4.2.8R of the
Disclosure Guidance and Transparency Rules, being an indication of
important events that have occurred during the period and their
impact on the consolidated half year financial statements; a
description of the principal risks and uncertainties for the
remainder of the current financial year; and the disclosure
requirements in respect of material related party transactions.
The above Statement of Directors' responsibilities was approved
by the Board on 14 November 2022.
T Hinton
Director
Consolidated income statement
for the six months to 30 September 2022 (unaudited)
Six months to Six months to
30 September 2022 30 September 2021
----------------------------------- -----------------------------------
Underlying Non-underlying Total Underlying Non-underlying Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ---------- -------------- ------- ---------- -------------- -------
Revenue 2 753.6 - 753.6 690.3 - 690.3
Net operating costs (721.4) (2.2) (723.6) (660.5) (2.2) (662.7)
------------------------------------------ ---------- -------------- ------- ---------- -------------- -------
Operating profit / (loss) 3 32.2 (2.2) 30.0 29.8 (2.2) 27.6
Financing income 4 1.7 - 1.7 0.6 - 0.6
Financing costs 4 (5.9) - (5.9) (3.1) - (3.1)
-------------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit/(loss) before tax 28.0 (2.2) 25.8 27.3 (2.2) 25.1
Income tax (expense) / credit 5 (4.8) 0.5 (4.3) (4.7) 0.6 (4.1)
-------------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit/(loss) attributable to equity
shareholders of Wincanton plc 23.2 (1.7) 21.5 22.6 (1.6) 21.0
------------------------------------------ ---------- -------------- ------- ---------- -------------- -------
Earnings per share
- basic 6 18.8p 17.4p 18.2p 16.9p
- diluted 6 18.7p 17.3p 17.9p 16.7p
-------------------------------------- ---------- -------------- ------- ---------- -------------- -------
Consolidated statement of comprehensive income
for the six months to 30 September 2022 (unaudited)
Six months to Six months to
30 September 30 September
2022 2021
GBPm GBPm
--------------------------------------------------------------------------------- ---------------- --------------
Profit for the period 21.5 21.0
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income statement
Remeasurements of defined benefit asset (1.2) 10.1
Deferred tax on remeasurements of defined benefit asset (0.4) (5.4)
---------------------------------------------------------------------------------- ---------------- --------------
(1.6) 4.7
--------------------------------------------------------------------------------- ---------------- --------------
Items which are or may subsequently be reclassified to the income statement
Foreign exchange gain on investments in foreign subsidiaries net of hedged items 0.3 -
0.3 -
--------------------------------------------------------------------------------- ---------------- --------------
Total other comprehensive income/(loss) for the period, net of income tax (1.3) 4.7
---------------------------------------------------------------------------------- ---------------- --------------
Total comprehensive income attributable to equity shareholders of Wincanton plc 20.2 25.7
---------------------------------------------------------------------------------- ---------------- --------------
Consolidated balance sheet
at 30 September 2022 (unaudited)
30 Sept 30 Sept 31 March
2022 2021 2022
Note GBPm GBPm GBPm
---------------------------------------------- -------- -------- ---------
Non-current assets
Goodwill and intangible assets 8 109.8 109.2 110.7
Property, plant, equipment and vehicles 9 29.3 23.1 25.9
Right-of-use assets 10 178.7 157.7 189.0
Employee benefits 13 126.1 70.2 117.0
----------------------------------------- --- -------- -------- ---------
443.9 360.2 442.6
----------------------------------------- --- -------- -------- ---------
Current assets
Inventories 2.3 2.4 2.6
Trade and other receivables 232.5 191.0 207.4
Income tax receivable - 0.7 -
Cash at bank and in hand 11 27.8 23.6 28.7
----------------------------------------- --- -------- -------- ---------
262.6 217.7 238.7
Assets classified as held for sale - 0.2 -
----------------------------------------- --- -------- -------- ---------
262.6 217.9 238.7
----------------------------------------- --- -------- -------- ---------
Current liabilities
Income tax payable (0.9) - (3.3)
Lease liabilities 10 (37.8) (38.8) (26.6)
Trade and other payables (346.6) (291.5) (323.6)
Provisions 12 (10.4) (14.5) (12.7)
----------------------------------------- --- -------- -------- ---------
(395.7) (344.8) (366.2)
Net current liabilities (133.1) (126.9) (127.5)
----------------------------------------- --- -------- -------- ---------
Total assets less current liabilities 310.8 233.3 315.1
----------------------------------------- --- -------- -------- ---------
Non-current liabilities
Borrowings 11 (30.0) (40.0) (25.0)
Lease liabilities 10 (155.9) (137.9) (176.5)
Employee benefits 13 (1.6) (2.6) (2.5)
Provisions 12 (33.8) (28.1) (30.6)
Deferred tax liabilities (19.1) (9.7) (16.9)
(240.4) (218.3) (251.5)
----------------------------------------- --- -------- -------- ---------
Net assets 70.4 15.0 63.6
----------------------------------------- --- -------- -------- ---------
Equity
Issued share capital 12.5 12.5 12.5
Share premium 12.9 12.9 12.9
Merger reserve 3.5 3.5 3.5
Translation reserve (0.2) (0.4) (0.5)
Own shares (5.5) (0.8) (2.2)
Retained profits/(losses) 47.2 (12.7) 37.4
----------------------------------------- --- -------- -------- ---------
Total equity 70.4 15.0 63.6
----------------------------------------- --- -------- -------- ---------
Consolidated statement of changes in equity
at 30 September 2022 (unaudited)
Issued
share Share Merger Translation Total
capital premium reserve reserve Own shares Profit and loss equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 1 April 2022 12.5 12.9 3.5 (0.5) (2.2) 37.4 63.6
Profit for the period - - - - - 21.5 21.5
Other comprehensive
income / (expense) - - - 0.3 - (1.6) (1.3)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Total comprehensive
income - - - 0.3 - 19.9 20.2
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Own shares purchased for
share schemes - - - - (3.7) - (3.7)
Share based payment
transactions income /
(expense) - - - - 0.4 (0.4) -
Current tax on share
based payments - - - - - 0.2 0.2
Dividends paid to
shareholders - - - - - (9.9) (9.9)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 30 September
2022 12.5 12.9 3.5 (0.2) (5.5) 47.2 70.4
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 1 April 2021 12.5 12.9 3.5 (0.4) (1.0) (29.2) (1.7)
Profit for the period - - - - - 21.0 21.0
Other comprehensive
income - - - - - 4.7 4.7
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Total comprehensive
income - - - - - 25.7 25.7
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Share based payment
transactions - - - - 0.2 0.3 0.5
Current tax on share
based payments - - - - - (0.2) (0.2)
Deferred tax on share
based payments - - - - - 0.1 0.1
Dividends paid to
shareholders - - - - - (9.4) (9.4)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 30 September
2021 12.5 12.9 3.5 (0.4) (0.8) (12.7) 15.0
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 1 April 2021 12.5 12.9 3.5 (0.4) (1.0) (29.2) (1.7)
Profit for the year - - - - - 47.9 47.9
Other comprehensive
income / (expense) - - - (0.1) - 32.9 32.8
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Total comprehensive
income - - - (0.1) - 80.8 80.7
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Share based payment
transactions expense - - - - (1.2) (0.3) (1.5)
Current tax on share
based payment
transactions - - - - - 0.3 0.3
Deferred tax on share
based payment
transactions - - - - - 0.1 0.1
Dividends paid to
shareholders - - - - - (14.3) (14.3)
-------------------------- --------- --------- --------- ------------ ----------- ---------------- --------
Balance at 31 March 2022 12.5 12.9 3.5 (0.5) (2.2) 37.4 63.6
========================== ========= ========= ========= ============ =========== ================ ========
Consolidated statement of cash flows
for the six months to 30 September 2022 (unaudited)
Six
months Six Year
to 30 months ended
Sept to 30 Sept 31 March
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------- -------- ------------ ----------
Operating activities
Profit before tax 25.8 25.1 54.8
Adjustments for:
- depreciation and amortisation 25.7 21.0 44.2
- research and development expenditure
credit - - (0.6)
- net financing costs 4.2 2.5 6.6
- profit on disposal of property,
plant and equipment - (0.2) (0.1)
- (profit) / loss on derecognition
of lease liabilities (0.6) (0.1) 1.2
- profit on disposal of businesses (0.2) (0.5) (0.9)
- share based payment transactions - 0.5 0.3
---------------------------------------------- -------- ------------ ----------
54.9 48.3 105.5
--------------------------------------------- -------- ------------ ----------
(Increase) / decrease in trade and
other receivables (25.2) 6.8 (7.9)
(Increase) / decrease in inventories 0.3 (0.9) (1.1)
Increase / (decrease) in trade and
other payables 23.0 (16.5) 15.9
Increase / (decrease) in provisions 0.6 (1.6) (1.7)
Increase in employee benefits before
pension deficit payment 0.5 0.5 0.9
Income taxes paid (4.7) (1.8) (3.3)
---------------------------------------------- -------- ------------ ----------
Cash generated before pension deficit
payments 49.4 34.8 108.3
Pension deficit payments (10.0) (9.2) (18.5)
---------------------------------------------- -------- ------------ ----------
Cash flows from operating activities 39.4 25.6 89.8
---------------------------------------------- -------- ------------ ----------
Investing activities
Proceeds from sale of property, plant
and equipment 0.6 1.2 2.9
Purchase of business, net of cash acquired - (13.6) (13.6)
Net cash inflow from disposal of businesses 0.2 0.6 -
Additions of property, plant and equipment (7.9) (2.3) (10.7)
Additions of computer software (0.3) - (0.5)
---------------------------------------------- -------- ------------ ----------
Cash flows from investing activities (7.4) (14.1) (21.9)
---------------------------------------------- -------- ------------ ----------
Financing activities
Increase in borrowings 5.0 24.9 9.9
Repayment of borrowings acquired - (14.0) (14.0)
Own shares acquired (3.7) - (1.8)
Payment of lease liabilities (18.9) (13.5) (37.7)
Equity dividends paid (9.9) (9.4) (14.3)
Interest paid on borrowings (2.4) (1.2) (3.1)
Interest paid on lease liabilities (3.0) (1.7) (5.2)
---------------------------------------------- -------- ------------ ----------
Cash flows from financing activities (32.9) (14.9) (66.2)
---------------------------------------------- -------- ------------ ----------
Net (decrease) / increase in cash and
cash equivalents (0.9) (3.4) 1.7
Cash and cash equivalents at beginning
of the period 28.7 27.0 27.0
Cash and cash equivalents at end of
the period 27.8 23.6 28.7
---------------------------------------------- -------- ------------ ----------
Represented by:
- Cash at bank and in hand 27.8 23.6 28.7
---------------------------------------------- -------- ------------ ----------
Notes to the consolidated half year financial statements
for the six months to 30 September 2022 (unaudited)
1 Accounting policies
General information
Wincanton plc (the 'Company') is a company incorporated in the
United Kingdom and domiciled and registered in England and Wales.
The consolidated half year financial statements of the Company for
the six months to 30 September 2022 comprise the Company and its
subsidiaries (together referred to as the 'Group').
These consolidated half year financial statements do not include
all the information required for full annual financial statements
and should be read in conjunction with the consolidated financial
statements for the year ended 31 March 2022. The comparative
figures for the year ended 31 March 2022 have been extracted from
those accounts but do not comprise the full statutory accounts for
that financial year. Except for the 31 March 2022 comparatives, the
financial information set out herein is unaudited but has been
reviewed by the auditors and their report to the Company is set out
below.
The consolidated financial statements for the year ended 31
March 2022 have been reported on by the Group's auditor, delivered
to the Registrar of Companies, and are available upon request from
the Company's registered office at Methuen Park, Chippenham,
Wiltshire, SN14 0WT or at www.wincanton.co.uk. The report of the
auditor was unqualified and did not contain a statement under
Section 498(2) or (3) of the Companies Act 2006.
The Half Year Report, which includes the consolidated half year
financial statements, was approved by the Board on 14 November
2022.
Basis of preparation
The consolidated half year financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting and
also in accordance with the measurement and recognition principles
of UK-adopted international accounting standards. As required by
the Disclosure Guidance and Transparency Rules of the UK's
Financial Conduct Authority, the consolidated half year financial
statements have been prepared on the basis of the accounting
policies adopted by the Group and applied and disclosed in its
consolidated financial statements for the year ended 31 March 2022,
except as described below.
Critical accounting estimates and judgements
The preparation of these consolidated half year financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. In preparing these
consolidated half year financial statements, the nature of the
significant judgements made by management in applying the Group's
accounting policies and the nature of the key areas of estimation
were the same as those that applied to the consolidated financial
statements for the year ended 31 March 2022. The estimates and
judgements that are specific to the preparation of the half year
financial statements that were considered by the Group are the
consideration of the appropriateness of the recognition and
carrying value of the Group's provisions and the measurement of the
defined benefit pension scheme obligation.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
1 Accounting policies (continued)
Adoption of amended standards
The Group has adopted the following amendments to standards with
effect from 1 April 2022:
- Annual Improvements to IFRS 2018-2020
- Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a
Contract
- Amendments to IAS 16 Property, Plant and Equipment: Proceeds
before Intended Use
- Amendments to IFRS 3 Reference to Conceptual Framework
None of these amendments have had a material impact on the
interim financial report of the Group as at 30 September 2022.
Going concern
The Directors have concluded that it is reasonable to adopt a
going concern basis in preparing the consolidated half year
financial statements. In adopting the going concern basis, the
Directors have considered Wincanton's business activities, together
with factors likely to affect its future development and
performance, as well as Wincanton's principal risks and
uncertainties.
The adoption of the going concern basis is based on an
expectation that the Group will have adequate resources to continue
in operational existence for at least twelve months from the
signing of the consolidated half year financial statements. For the
purpose of this going concern assessment, the Directors have
considered an 18 month period from the balance sheet date, aligned
with the business forecasting outlook period, to 31 March 2024. The
Group has reported a profit before tax of GBP25.8m for the six
months ended 30 September 2022 (30 September 2021: GBP25.1m), has
net current liabilities of GBP133.1m (30 September 2021: GBP126.9m,
31 March 2022: GBP127.5m) and net assets of GBP70.4m (30 September
2021: GBP15.0m, 31 March 2022: GBP63.6m).
The Group's committed facilities at 30 September 2022 comprise a
syndicated Revolving Credit Facility (RCF) of GBP175.0m, which
matures in March 2026. The Group had GBP145.0m of undrawn amounts
against the RCF facility as at 30 September 2022, with drawn debt
being used to fund the working capital cycle during the period. The
RCF requires the Group to comply with the following three financial
covenants at 30 September and 31 March each financial year and the
Group operates comfortably within these covenants with significant
headroom:
30 Sept 30 Sept 31 March
Covenant Ratio 2022 2021 2022
-------------------- --------- -------- -------- ---------
Leverage ratio <3.0:1* 1.0 0.7 0.7
Interest cover >3.5:1 22.7 34.0 38.8
Fixed charge cover >1.4:1 2.7 3.0 2.7
-------------------- --------- -------- -------- ---------
* Leverage ratio was < 2.75:1 under the previous RCF
agreement.
In addition, the Group makes use of cash pooling facilities with
a net overdraft facility available of GBP5m and a GBP30m Receivable
Purchase Facility (RPF), of which GBP9.5m was utilised as at 30
September 2022.
In arriving at the conclusion on going concern, the Directors
have given due consideration to whether the funding and liquidity
resources above are sufficient to accommodate the principal risks
and uncertainties faced by the Group.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
1 Accounting policies (continued)
Going concern (continued)
The Directors have reviewed the financial forecasts across a
range of scenarios including an inflationary environment. In all
scenarios, the Group has sufficient liquidity and adequate headroom
in the committed facilities set out above to meet its liabilities
as they fall due throughout the forecast period and the Group
complies with the financial covenants under the RCF at 30 September
and 31 March throughout the forecast period. The Group has also
carried out reverse stress tests against the downside case to
determine the performance levels that would result in a breach of
covenants and the Directors do not consider such a scenario to be
plausible.
Since performing their assessment, there have been no subsequent
changes in facts and circumstances relevant to the Directors'
assessment of going concern.
2 Revenue
Customer contracts are disaggregated by sector with revenue
generally being recognised over time. Further detail is given in
the table below:
Six months to Six months to
30 Sept 2022 30 Sept 2021
Sector revenue GBPm GBPm
-------------------- ------------- -------------
eFulfilment 122.9 103.2
Grocery & Consumer 260.1 252.1
General Merchandise 221.4 193.2
Public & Industrial 149.2 141.8
Total revenue 753.6 690.3
--------------------- ------------- -------------
Revenue from open book contracts totalled GBP541.8m (30
September 2021: GBP491.1m) and from closed book contracts GBP211.8m
(30 September 2021: GBP199.2m).
Revenue of GBP159.9m (30 September 2021: GBP155.6m) and GBP80.5m
(30 September 2021: GBP82.1m) arose from sales to the Group's two
largest customers, being groups of companies under common control.
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 period.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
3 Alternative performance measures (APMs)
The alternative performance measures (APMs) or underlying
results reported in these consolidated half year financial
statements represent statutory measures adjusted for items which
management consider could distort the understanding of performance
and comparability year on year.
The Group identifies items as non-underlying based on the
following principles:
-- items that are significant in nature. The event or
transaction is clearly unrelated to, or only incidentally related
to, the trading activities of the Group or the event or transaction
would not reasonably be expected to recur in the foreseeable
future; and/or
-- items that are significant in size. The event is considered
significant in size and therefore distorts the underlying
results.
Items reported as non-underlying are as follows:
Six months to 30 Sept 2022 Six months to 30 Sept 2021
Note GBPm GBPm
---------------------------------------------------- ------ --------------------------- ---------------------------
Cloud computing configuration and customisation
costs a (1.9) (3.2)
Gain on disposal of businesses b 0.2 0.5
Amortisation of acquired intangibles c (0.5) -
Acquisition related transaction costs d - (0.7)
Release of warranty provision e - 1.0
Net profit on disposal of assets f - 0.2
Total expense (2.2) (2.2)
------------------------------------------------------------ --------------------------- ---------------------------
a) Cloud computing configuration and customisation costs
The Group is currently undertaking a major systems
implementation for new cloud computing software, resulting in costs
being recognised as an expense in the current and prior period.
Consistent with previous presentation, these costs are recorded as
a non-underlying item, not reflective of underlying performance due
to their size, nature and incidence.
b) Gain on disposal of businesses
The Group disposed of its Containers business in 2020 and
adjustments to contingent consideration related to the disposal
have been recognised and reported in non-underlying consistent with
prior periods.
c) Amortisation of acquired intangibles
As part of the acquisition of the Cygnia in September 2021, the
Group has recorded finite lived intangible assets identified as
part of the purchase price allocation in accordance with IFRS 3
business combinations. The amortisation of these assets is
presented in non-underlying consistent with the presentation of
other acquisition related costs.
d) Acquisition related transaction costs
In the comparative period, the Group incurred acquisition
related costs and professional fees of GBP0.7m related to the
acquisition of Cygnia, which were recognised as an expense as
required by IFRS 3 Business combinations.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
3 Alternative performance measures (APMs) (continued)
e) Release of warranty provision
In the comparative period the Group released a historic warranty
provision where an outflow of economic benefits was now considered
to be remote. As the original provision was recognised as a
non-underlying item, the write-back was recognised in a consistent
manner.
f) Net profit on disposal of assets
The Group disposed of several specialist vehicles in the prior
period that were not required for ongoing operations.
4 Net financing costs
Six months to
30 Sept 2022 Six months to 30 Sept 2021
GBPm GBPm
--------------------------------------------------- -------------- ---------------------------
Recognised in the income statement
Interest on the net defined benefit pension asset 1.7 0.6
--------------------------------------------------- -------------- ---------------------------
Total interest income 1.7 0.6
--------------------------------------------------- -------------- ---------------------------
Interest expense (2.6) (1.2)
Interest on lease liabilities (3.0) (1.7)
Unwinding of discount on provisions (0.3) (0.2)
Total interest expense (5.9) (3.1)
--------------------------------------------------- -------------- ---------------------------
Net financing costs (4.2) (2.5)
--------------------------------------------------- -------------- ---------------------------
5 Income tax expense
Six months to Six months to
30 Sept 2022 30 Sept 2021
Recognised in the income statement GBPm GBPm
--------------------------------------------------------------------------- ------------- -------------
Current year tax expense 2.5 1.8
Current year deferred tax expense 1.8 2.3
Total income tax expense 4.3 4.1
--------------------------------------------------------------------------- ------------- -------------
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the income statement:
Remeasurements of defined benefit pension asset 0.4 5.4
--------------------------------------------------------------------------- ------------- -------------
Recognised directly in equity
Current tax on share based payment transactions (0.2) 0.2
Deferred tax on share based payment transactions - (0.1)
--------------------------------------------------------------------------- ------------- -------------
In accordance with IAS 34 Interim Financial Reporting the tax
expense recognised in the income statement for the half year is
calculated on the basis of the estimated underlying effective full
year tax rate of 17.1% (30 September 2021: 17.2%).
The main UK corporation tax rate remained at 19% (30 September
2021: 19%) and will increase to 25% as from 1 April 2023.
The closing UK deferred tax asset is calculated using a tax rate
of 25%.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
6 Earnings per share
The basic earnings per share of 17.4p (30 September 2021: 16.9p)
is calculated based on the profit attributable to the equity
shareholders of Wincanton plc of GBP21.5m (30 September 2021:
GBP21.0m) and the weighted average shares of 123.5m (30 September
2021: 124.2m) which have been in issue throughout the period.
The diluted earnings per share of 17.3p (30 September 2021:
16.7p) is calculated based on there being 0.8m (30 September 2021:
1.8m) additional shares deemed to be issued at GBPnil consideration
under the Company's share option schemes.
The weighted average number of ordinary shares for both basic
and diluted earnings per share is calculated as follows:
Six months to Six months to
30 Sept 30 Sept
2022 2021
Millions Millions
--------------------------------------------------------------------- -------------- --------------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the period 123.9 124.1
Net effect of shares issued and purchased during the period (0.4) 0.1
--------------------------------------------------------------------- -------------- --------------
123.5 124.2
--------------------------------------------------------------------- -------------- --------------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares at the end of the period 123.5 124.2
Potential ordinary shares 0.8 1.8
--------------------------------------------------------------------- -------------- --------------
124.3 126.0
--------------------------------------------------------------------- -------------- --------------
An alternative earnings per share measure of underlying EPS is
also provided, being earnings before non-underlying items and
related tax where applicable. The underlying basic earnings per
share of 18.8p (30 September 2021: 18.2p) is calculated based on
the underlying profit attributable to the equity shareholders of
Wincanton plc of GBP23.2m (30 September 2021: GBP22.6m) and diluted
underlying EPS is 18.7p (30 September 2021: 17.9p). The weighted
average number of shares used in these calculations are as
described above.
At 30 September 2022, 1,568,833 (31 March 2022: 665,812)
ordinary shares were held by the Employee Benefit Trust in respect
of the Group's various equity compensation schemes. 1,000,000
shares (30 September 2021: nil) shares were purchased by the
Employee Benefit Trust in the period.
7 Dividends
During the period a final dividend of 8.0p per share was paid,
relating to the year ended 31 March 2022 (2021: 7.5p per
share).
The Board has declared an interim dividend of 4.4p per share for
the period ended 30 September 2022 (30 September 2021: 4.0p per
share) which will be paid on 30 December 2022 to shareholders on
the register on 2 December 2022, an estimated total payment of
GBP5.4m.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
8 Goodwill and intangible assets
Additions and disposals
During the half year to 30 September 2022 the Group acquired
intangible assets with a cost of GBP0.3m (30 September 2021:
GBP0.5m recognised on a business combination). Intangible assets
with a carrying amount of GBP0.1m were disposed of in the period
(30 September 2021: GBPnil).
9 Property, plant, equipment and vehicles
Additions and disposals
During the half year to 30 September 2022 the Group acquired
tangible fixed assets with a cost of GBP7.9m (30 September 2021:
GBP2.3m plus GBP3.7m recognised on a business combination). Assets
with a carrying amount of GBP0.5m were disposed of during the half
year to 30 September 2022 (30 September 2021: GBP0.3m).
Capital commitments
At 30 September 2022 the Group had entered into contracts to
purchase property, plant and equipment for GBP1.0m (30 September
2021: GBP0.1m); delivery is expected in the second half of the year
to 31 March 2023.
10 Leases
Right of use assets
During the period to 30 September 2022, the Group recognised
right-of-use assets with a value of GBP12.1m (30 September 2021:
GBP11.2m, plus GBP29.6m recognised on a business combination).
Right-of-use assets with a carrying amount of GBP2.0m were disposed
of during the period to 30 September 2022 (30 September 2021:
GBP7.7m).
Lease liabilities
During the period to 30 September 2022, the Group recognised
lease liabilities with a value of GBP12.1m (30 September 2021:
GBP11.2m, plus GBP29.6m recognised on a business combination).
Lease liabilities of GBP2.6m were derecognised during the period to
30 September 2022 (30 September 2021: GBP8.0m).
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
11 Analysis of changes in net debt
1 April 30 Sept
2022 Cash flow Non-cash movements 2022
GBPm GBPm GBPm GBPm
--------------------------------------------------------- -------- ---------- ------------------- --------
Bank loans (25.0) (5.0) - (30.0)
--------------------------------------------------------- -------- ---------- ------------------- --------
Financial liabilities arising from financing activities (25.0) (5.0) - (30.0)
Cash and bank balances 28.7 (0.9) - 27.8
Net cash/(debt) excluding lease liabilities 3.7 (5.9) - (2.2)
--------------------------------------------------------- -------- ---------- ------------------- --------
Lease liabilities (203.1) 21.9 (12.5) (193.7)
--------------------------------------------------------- -------- ---------- ------------------- --------
Net debt including lease liabilities (199.4) 16.0 (12.5) (195.9)
--------------------------------------------------------- -------- ---------- ------------------- --------
1 April 30 Sept
2021 Cash flow Non-cash movements 2021
GBPm GBPm GBPm GBPm
--------------------------------------------------------- -------- ---------- ------------------- --------
Bank loans and overdrafts (15.1) (24.9) - (40.0)
--------------------------------------------------------- -------- ---------- ------------------- --------
Financial liabilities arising from financing activities (15.1) (24.9) - (40.0)
Cash and bank balances 30.6 (7.0) - 23.6
Bank overdrafts classified as cash equivalents (3.6) 3.6 - -
Net cash/(debt) excluding lease liabilities 11.9 (28.3) - (16.4)
--------------------------------------------------------- -------- ---------- ------------------- --------
Lease liabilities (145.7) (13.9) (17.1) (176.7)
--------------------------------------------------------- -------- ---------- ------------------- --------
Net debt including lease liabilities (133.8) (42.2) (17.1) (193.1)
--------------------------------------------------------- -------- ---------- ------------------- --------
1 April Non-cash movements 31 Mar
2021 Cash flow GBPm 2022
GBPm GBPm GBPm
--------------------------------------------------------- -------- ---------- ------------------- --------
Bank loans and overdrafts (15.1) (9.9) - (25.0)
--------------------------------------------------------- -------- ---------- ------------------- --------
Financial liabilities arising from financing activities (15.1) (9.9) - (25.0)
Cash and bank balances 30.6 (1.9) - 28.7
Bank overdrafts classified as cash equivalents (3.6) 3.6 - -
Net cash/(debt) excluding lease liabilities 11.9 (8.2) - 3.7
--------------------------------------------------------- -------- ---------- ------------------- --------
Lease liabilities (145.7) 42.9 (100.3) (203.1)
--------------------------------------------------------- -------- ---------- ------------------- --------
Net debt including lease liabilities (133.8) 34.7 (100.3) (199.4)
--------------------------------------------------------- -------- ---------- ------------------- --------
Cash and bank balances include restricted cash, being deposits
held by the Group's insurance subsidiary of GBP2.8m (30 September
2021: GBP2.8m, 31 March 2022: GBP2.8m).
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
12 Provisions
Other
Insurance Property provisions Total
GBPm GBPm GBPm GBPm
---------------------------- ------------ ----------- ------------ --------
At 1 April 2022 24.1 14.8 4.4 43.3
Provisions made during the
period 4.4 0.3 - 4.7
Provisions used during the
period (1.9) (0.2) (0.3) (2.4)
Provisions released during
the period (0.7) (0.4) (0.6) (1.7)
Unwinding of discount 0.2 0.1 - 0.3
At 30 September 2022 26.1 14.6 3.5 44.2
---------------------------- ------------ ----------- ------------ --------
Current 6.7 1.5 2.2 10.4
Non-current 19.4 13.1 1.3 33.8
---------------------------- ------------ ----------- ------------ --------
26.1 14.6 3.5 44.2
---------------------------- ------------ ----------- ------------ --------
The Group owns 100% of the share capital of an insurance company
which insures certain 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. Provisions are released when the obligation no longer
exists or there is a reduction in management's estimate of the
liability. 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 Group provides standby letters of credit to the
fronting insurer for employers' liability and motor third party
claims totalling GBP19.7m (31 March 2022: GBP19.7m).
The property provisions are determined on a site by site basis
and comprise primarily provisions for dilapidations. Dilapidation
provisions comprise dilapidation estimates made in the normal
course of business. Provisions are released when the obligation no
longer exists or there is a reduction in the estimate. They are
expected to be utilised at the end of the lease term.
Other provisions include the estimated costs of warranties and
indemnities provided on disposal of businesses together with
provision for sundry claims and settlements where the outcome is
uncertain.
13 Employee benefits
The Group operates a funded pension scheme with a net surplus of
GBP124.5m at 30 September 2022 (31 March 2022: GBP114.5m). The
movement in the pension asset and liability position was driven by
external market factors increasing the discount rate offset by a
reduction in credit spreads.
The values of scheme assets and liabilities are shown below.
30 September 30 September 31 March
2022 2021 2022
GBPm GBPm GBPm
--------------------------- ------------- ------------- ----------
Assets 880.8 1,256.4 1,208.3
Liabilities (756.3) (1,188.8) (1,093.8)
--------------------------- ------------- ------------- ----------
Net defined benefit asset 124.5 67.6 114.5
Presented as:
Non-current asset 126.1 70.2 117.0
Non-current liability (1.6) (2.6) (2.5)
124.5 67.6 114.5
--------------------------- ------------- ------------- ----------
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
13 Employee benefits (continued)
The principal actuarial assumptions for the Scheme and for the
UK unfunded arrangement at the balance sheet date were as
follows:
30 Sept 31 March
2022 30 Sept 2021 2022
% % %
--------------------------------------------- --------- ------------ ---------
Discount rate 5.15 2.00 2.70
Price inflation rate - RPI 3.55 3.55 3.85
Price inflation rate - CPI 2.95 2.95 3.25
Rate of increase of pensions in deferment(1) 2.50-2.95 2.50-2.95 2.50-3.25
Rate of increase of pensions in payment(1) 2.10-3.40 2.10-3.40 2.20-3.65
--------------------------------------------- --------- ------------ ---------
(1) A range of assumed rates exists due to the application of
annual caps and floors to certain elements of service.
Sensitivity to changes in assumptions
The sensitivity of the present value of the Scheme's liabilities
and, due to hedging, the fair value of its assets, to changes in
key actuarial assumptions are set out in the following table.
(Increase)/ Increase/ Increase/ (decrease) in
decrease in liability (decrease) in assets surplus
Change in assumption GBPm GBPm GBPm
------------------------ -------------------- ---------------------- --------------------- -----------------------
Discount rate + 1.00% 95.0 (123.0) (28.0)
Discount rate - 1.00% (108.0) 157.0 49.0
Credit spread + 0.25% 23.0 (5.0) 18.0
Price inflation rate -
RPI + 0.25% (15.0) 20.0 5.0
Mortality rate + 1 year (23.0) - (23.0)
------------------------ -------------------- ---------------------- --------------------- -----------------------
The illustrations consider the results of only a single
assumption changing with the others assumed unchanged and includes
the impact of the interest rate and inflation rate hedging. In
reality, it is more likely that more than one assumption would
change and potentially the results would offset each other.
14 Contingent liability
From time to time, the Group is notified of legal claims in
respect of work carried out and the potential exposure can be
material. Where management believes we are in a strong position to
defend these claims and the likelihood of outflow of economic
benefit is not probable, no provision is made.
The Group has received notification of a potential claim from a
former customer and is in the early stages of defending this claim.
At this time, the Group considers that it is not probable that any
claim will result in an outflow of economic benefit. The Group is
actively seeking further information to substantiate the
allegations made. Given the early stage of the legal and commercial
process it is not practicable to make an estimate of the potential
financial impact. In parallel, the Group continues to work with its
insurance providers to confirm coverage if required.
Notes to the consolidated half year financial statements
(continued)
for the six months to 30 September 2022 (unaudited)
15 Related parties
Related party relationships exist with the Group's subsidiaries,
key management personnel, pension schemes and employee benefit
trust. A full explanation of the Group's related party
relationships is provided on page 142 of the Annual Report and
Accounts 2022.
There are no material transactions with related parties or
changes in the related party transactions described in the last
annual report that have had, or are expected to have, a material
effect on the financial performance or position of the Group in the
six month period ended 30 September 2022.
INDEPENT REVIEW REPORT TO WINCANTON PLC
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2022 which comprises the primary
financial statements and the related explanatory notes that have
been reviewed.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
INDEPENDENT REVIEW REPORT TO WINCANTON PLC (continued)
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London, UK
14 November 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Shareholders' enquiries
All administrative enquiries relating to shareholdings should,
in the first instance, be directed to the Registrar at the
following address:
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone: +44 (0) 371 384 2272
Email: customer@equiniti.com
Website: www.shareview.co.uk
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END
IR USUKRUUUAAAA
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