REG - Wincanton PLC - Half Year Results
15/11/2022 07:01
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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 (£m) 753.6 690.3 9.2%
Underlying EBITDA (£m) (1) 57.4 50.8 13.0%
Underlying profit before tax (£m) (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 (£m) (1) 17.7 17.9
Net debt (£m) (1) (2.2) (16.4)
Statutory results
Profit before tax (£m) 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 £753.6m up by 9.2% (6.9%
excluding Cygnia Logistics acquisition impact)
● Underlying EBITDA of £57.4m, a year-on-year increase of 13.0% (H1 21/22:
£50.8m)
● Underlying profit before tax of £28.0m up 2.6% (H1 21/22: £27.3m); 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 £17.7m with robust cash management resulting in
an improved H1 net debt of position of £2.2m (H1 21/22 £16.4m)
● 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 (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 £753.6m (H1 21/22: £690.3m), 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 £28.0m (H1 21/22: £27.3m),
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 £2.2m (H1 21/22: £16.4m) 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
Sector revenue H1 22/23 H1 21/22 Change
£m £m
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 £57.4m (HY 21/22: £50.8m). 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 £28.0m (H1 21/22: £27.3m). 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 £m
£m
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 £4.2m (H1 21/22: £2.5m), £1.7m higher
than the comparative period.
Bank interest payable on loans of £2.6m (H1 21/22: £1.2m) 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 £3.0m in respect of the interest on lease liabilities
was driven by additional property leases supporting the Group's growth (H1
21/22: £1.7m).
The non-cash interest income on the net defined benefit pension asset in the
period of £1.7m (H1 21/22: £0.6m) 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
£m £m
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 £4.8m (H1 21/22: £4.7m) 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 £4.7m (H1 21/22: £1.8m) of
which £3.8m 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 £43m that it expects to utilise in future periods
reducing future tax payments.
Profit after tax and EPS
Profit after tax for the period was £21.5m (H1 21/22: £21.0m) 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
£m
£m £m
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 £6.8m since 31 March 2022 to £70.4m.
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 £12.1m 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 £10m 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 £2.2m (H1 21/22: net debt of £16.4m, 31
March 2022: net cash of £3.7m), reflecting a net cash inflow of £14.2m over
the intervening 12 months and a net cash outflow of £5.9m 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
£m £m 2022
£m
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 £5.9m since 31 March 2022 (H1 21/22:
£28.3m increase) with a free cash inflow of £17.7m (H1 21/22: £17.9m).
Working capital movement in the period resulted in an outflow of £1.9m (H1
21/22: outflow of £10.6m), 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 £4.7m corporation tax in the period (H1 21/22: £1.8m). 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 £5.4m (H1 21/22: £2.9m) 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 £0.5m comprise non-cash items relating mainly to net movements
on provisions.
Capital expenditure was £7.6m (H1 21/22: £2.3m 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 £1.2m
from proceeds from the disposal of fleet.
Cash outflow from non-underlying items of £1.7m (H1 21/22: £3.2m) relates to
phase two implementation costs for the new upgraded finance and HR systems in
the period offset by £0.2m of contingent consideration received from a
disposed business.
Defined recovery contributions paid to the Group's defined benefit pension
scheme in the period were £10.0m (H1 21/22: £9.2m), which is net of
administration costs of £0.2m paid directly by the Group.
The final dividend paid in the period was £9.9m (H1 21/22: £9.4m). The
interim cash dividend payment in the second half of the year is expected to be
c.£5.4m 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 £3.7m 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 £175.0m (H1 21/22:
£141.2m). The headroom in the committed facilities compared to net debt of
£2.2m at H1 22/23 was £172.8m (H1 21/22: £124.8m). 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 £50m
and £5m respectively in uncommitted facilities. At H1 22/23, utilisation of
the Group's non-recourse RPF was £9.5m (H1 21/22: £8.4m)
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 £124.5m (£93.7m net of
deferred tax) at H1 22/23 (H1 21/22: £67.6m, 31 March 2022: £114.5m) as set
out in the following table:
£m 30 September 30 September 31 March
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 £333.0m 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 £10.0m have been paid.
The estimated actuarial deficit at H1 22/23 has reduced to £35m, compared to
£37m 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
£m Underlying Non-underlying items Statutory Underlying Non-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 £2.2m (H1
21/22: £2.2m) 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 £m £m £m £m £m £m
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 2021
2022 £m
£m
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 0.3 -
items
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 20.2 25.7
plc
Consolidated balance sheet
at 30 September 2022 (unaudited)
30 Sept 30 Sept 31 March
2022 2021 2022
Note £m £m £m
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 Merger Translation Own shares Profit and loss Total
share
premium
reserve
reserve
equity
capital
£m
£m
£m £m £m
£m £m
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 Six Year
months months ended
to 30 Sept to 30 Sept 31 March
2022 2021 2022
£m £m £m
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 £25.8m for the six months ended 30 September
2022 (30 September 2021: £25.1m), has net current liabilities of £133.1m (30
September 2021: £126.9m, 31 March 2022: £127.5m) and net assets of £70.4m
(30 September 2021: £15.0m, 31 March 2022: £63.6m).
The Group's committed facilities at 30 September 2022 comprise a syndicated
Revolving Credit Facility (RCF) of £175.0m, which matures in March 2026. The
Group had £145.0m 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:
Covenant Ratio 30 Sept 30 Sept 31 March
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 £5m and a £30m Receivable Purchase Facility
(RPF), of which £9.5m 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 £m £m
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 £541.8m (30 September 2021:
£491.1m) and from closed book contracts £211.8m (30 September 2021:
£199.2m).
Revenue of £159.9m (30 September 2021: £155.6m) and £80.5m (30 September
2021: £82.1m) 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:
Note Six months to 30 Sept 2022 Six months to 30 Sept 2021
£m £m
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 £0.7m 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 Six months to 30 Sept 2021
30 Sept 2022 £m
£m
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
Recognised in the income statement Six months to Six months to
30 Sept 2021
30 Sept 2022
£m
£m
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 £21.5m (30 September 2021: £21.0m) 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 £nil 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 £23.2m (30 September 2021: £22.6m) 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 £5.4m.
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 £0.3m (30 September 2021: £0.5m recognised on a business
combination). Intangible assets with a carrying amount of £0.1m were disposed
of in the period (30 September 2021: £nil).
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 £7.9m (30 September 2021: £2.3m plus £3.7m recognised
on a business combination). Assets with a carrying amount of £0.5m were
disposed of during the half year to 30 September 2022 (30 September 2021:
£0.3m).
Capital commitments
At 30 September 2022 the Group had entered into contracts to purchase
property, plant and equipment for £1.0m (30 September 2021: £0.1m); 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 £12.1m (30 September 2021: £11.2m, plus £29.6m
recognised on a business combination). Right-of-use assets with a carrying
amount of £2.0m were disposed of during the period to 30 September 2022 (30
September 2021: £7.7m).
Lease liabilities
During the period to 30 September 2022, the Group recognised lease liabilities
with a value of £12.1m (30 September 2021: £11.2m, plus £29.6m recognised
on a business combination). Lease liabilities of £2.6m were derecognised
during the period to 30 September 2022 (30 September 2021: £8.0m).
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 Cash flow Non-cash movements 30 Sept
£m
2022 £m 2022
£m
£m
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 Cash flow Non-cash movements 30 Sept
£m
2021 £m 2021
£m
£m
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 Cash flow Non-cash movements 31 Mar
£m
2021 £m 2022
£m
£m
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 £2.8m (30 September 2021: £2.8m, 31 March
2022: £2.8m).
Notes to the consolidated half year financial statements (continued)
for the six months to 30 September 2022 (unaudited)
12 Provisions
Other provisions
Insurance Property £m Total
£m £m £m
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 £19.7m (31 March 2022:
£19.7m).
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 £124.5m at
30 September 2022 (31 March 2022: £114.5m). 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 2022 30 September 2021 31 March
£m £m 2022
£m
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 30 Sept 2021 31 March
%
2022 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.
Change in assumption (Increase)/ Increase/ Increase/ (decrease) in surplus
decrease in liability (decrease) in assets £m
£m £m
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.
INDEPENDENT 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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