TIDMWIN
RNS Number : 1101A
Wincanton PLC
22 May 2023
22 May 2023
LEI: 213800Z5WTW8QKOHWQ82
Wincanton plc
Preliminary announcement of results for the financial year ended
31 March 2023
Profitable growth and strategic progress amid a challenging
external environment
Wincanton plc ('Wincanton' or the 'Group'), a leading supply
chain partner for UK business, today announces its preliminary
results for the year ended 31 March 2023.
Key financial measures
2023 2022 Change
---------------------------------------- -------- -------- --------
Revenue (GBPm) 1,462.0 1,421.4 2.9%
Underlying EBITDA (GBPm)(2) 121.9 108.3 12.6%
Underlying profit before tax (GBPm)(2) 62.1 58.1 6.9%
Underlying basic EPS(2) 42.5p 40.8p 4.2%
Free cash flow (GBPm)(2) 48.6 54.0 (10.0)%
Net cash (GBPm)(2) 13.2 3.7
Dividend per share 13.2p 12.0p 10.0%
Statutory results
----------------------------------------- -------- -------- --------
Profit before tax (GBPm) 38.2 54.8 (30.3)%
Basic EPS 26.9p 38.6p (30.3)%
Financial highlights
-- Full year revenue up 2.9% to GBP1,462.0m
-- Underlying EBITDA of GBP121.9m, an increase of 12.6% (2022:
GBP108.3m) and underlying profit before tax up 6.9% to GBP62.1m
(2022: GBP58.1m)
-- Headwinds detailed at H1 continued through H2; lower customer
volumes impacted performance in H2
-- Managed inflationary pressures throughout the year; steps
taken to pass through costs in open book contracts and control
costs in closed book contracts
-- Group remains highly cash-generative, with strong free cash
flow generated from operating activities
-- Focused cash management reinforced the financial position;
closing net cash of GBP13.2m (2022: net cash of GBP3.7m)
-- Final dividend of 8.8p recommended (2022: 8.0p); full year
dividend up 10% to 13.2p per share (2022: 12.0p)
-- Pension accounting surplus of GBP114.7m (2022: GBP114.5m),
triennial review underway to determine lower funding
commitments
Operational highlights
-- New business momentum sustained with major customer wins
secured across the Group's four sectors. Contract renewals agreed
with long-standing customers including Sainsbury's, Waitrose &
Partners, Wickes, Co-op and Halfords
-- Consumer spending trends impacted retail volumes in Grocery
& Consumer, General Merchandise and eFulfilment
-- Public & Industrial revenue boosted in year by expanded
contract wins with DHSC and Defra, together with growth in defence
through new work with BAE Systems
-- Strategic investments through the year in robotics and
automation technologies. Successful deployment of Autonomous Mobile
Robots at the Group's Cygnia facility
-- Group Transport operations reorganised to create more
efficient, profitable, digitally enabled service offering,
resulting in restructuring and associated impairment charges of
GBP19.5m
Outlook
-- Wincanton continues to forecast results for FY24 in line with
expectations, which as previously indicated, reflect the
challenging external economic environment
-- The Board is confident in the Group's long term growth strategy, underpinned by the highly cash-generative business model and ability to deploy capital in its most profitable sectors. Management remains focused on delivering excellent customer service, driving efficiencies for both Wincanton and its customers and delivering growth from its pipeline of new business opportunities
James Wroath, Chief Executive Officer, said:
"Our strategy delivered a strong result in FY23 despite the
prevailing macro-economic challenges, particularly with regard to
retail volumes and inflation. We continue to invest in technology
as the route to deliver competitive advantage in the industry.
Significant opportunities remain for warehouse automation across
our Group, both in the foundation sectors and strategic growth
markets. Furthermore, our transport operations have had a shift in
focus with technology at the heart of our new market proposition. I
am thankful to the Wincanton team who has delivered excellent
performance in a difficult economy. Their determination and
innovation will continue to be essential, as we expect volumes to
remain under pressure into FY24 due to the macro-economic
environment."
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: 0203 805 4822
Henry Wallers
Analyst presentation:
A presentation for analysts and investors will be held at
09:30am today, Monday 22 May 2023. The presentation will be
followed by a Q&A with James Wroath and Tom Hinton.
The live webcast can be found at:
https://stream.brrmedia.co.uk/broadcast/644bcf7366990ceeb71b3f72
Alternatively, should you wish to dial in by telephone a
conference line is available through the following details:
UK-Wide: +44 (0) 33 0551 0200
UK Toll Free: 0808 109 0700
Password (if prompted): Quote Wincanton - Preliminary
Results
The presentation and Q&A will be made available to watch on
demand shortly after it finishes. This will be hosted on
Wincanton's website:
https://www.wincanton.co.uk/investors/results-reports-and-presentations/
Notes
1. Certain comparatives have been restated due to an error
identified in relation to right-of-use assets and associated lease
liabilities, as explained in Note 1 to the accompanying financial
statements.
2. The section on Alternative Performance Measures (APMs) below
and Note 2 to the accompanying financial statements provide further
information on underlying measures, including definitions and a
reconciliation of APMs to statutory measures .
Group performance review
Financial performance for the year ending 31 March 2023 was
excellent. Our full year underlying profit before tax increased by
6.9% versus last year to deliver a record result. Public sector
performance was a highlight with HMRC and Defra contracts enhancing
the Group's profitability. Despite continuing inflationary
pressures and lower volumes, our foundation sectors performed
consistently, with open book contracts providing substantial
protection. Closed book warehouse services in high volume
eFulfilment, as well as transport operations for two-person home
delivery, consumer products and construction materials, were all
impacted by the broader market pressures experienced in the current
economic environment. Revenue increased by 2.9% versus last year
with strong performances from our core customers in all sectors.
This was offset by a reduction in our transport operations and
lower customer volumes in the second half of the year.
Service performance remains a key strength for the business. On
the back of this, we delivered several key contract renewals such
as those with Asda and Halfords, as well as organic growth from
existing customers with awards of new areas of activity. Doubling
our business with both IKEA and Wickes were also highlights.
Our industry-leading safety programme remains a clear priority
for Wincanton. Once again, a year on year improvement has been made
in our safety performance. The Lost Time Incident Frequency Rate
performance indicator improved again from 0.33 last year to 0.31
this year.
Sector performance
eFulfilment
Despite challenging macro-economic headwinds in eCommerce
markets, our eFulfilment sector continued to progress this year
with growth of 13.8% and revenue passing the GBP250m mark;
excluding the impact of the Cygnia acquisition, revenue was up
7.6%. Core customer volumes, particularly in Cygnia, have however
seen declines in line with the market and we have seen customers
insourcing if they have capacity elsewhere in their network.
Winning new contracts from insourced customers has similarly become
more difficult for the same reason.
In high volume eFulfilment we successfully delivered our first
peak period for The White Company ahead of their move this year
into The WEB, our automated facility in Rockingham. Elsewhere in
this area we won business with Nkuku, Neal's Yard Remedies, Huda
Beauty, City Electrical Factors and C Brewers, as well as growing
our partnership with Sephora. The loss of the Moonpig contract, as
they insourced our activities, was a negative reflecting the
general downturn in customer volumes in this sector.
This area of the business is also an important test bed for our
automation ambitions. Our Autonomous Mobile Robot (AMR) deployment
in Cygnia was the first to market for a shared-user robotics
deployment in the UK. The system, working for customers such as
Molton Brown and Whittard of Chelsea, has so far facilitated the
picking of more than one million items and is over-delivering on
our productivity expectations.
We had a fantastic year developing our partnership with IKEA.
Firstly, we were chosen to run their new London area customer
distribution centre at Dartford. The 450k sq ft purpose-built
facility opened in May 2023. Additionally, we have extended our
final mile home delivery services out of the new location, doubling
our current final mile activity. Excitingly, the new contract also
commits us to work collaboratively on a full electric vehicle
operation by 2025. Finally, we will also be setting up IKEA's first
customer distribution centre for the Irish market in 2024. In doing
so, we are taking on new property in Dublin that has capacity to
support Wincanton's growth in Ireland. These three new contracts
underline the trust that IKEA has in Wincanton and the value that
we bring to the partnership.
Wickes is another success story for our ability to develop new
business with existing accounts. We delivered a new contract,
spanning warehouse and transport operations, which sees us become
the sole supply chain partner for Wickes' kitchen and bathroom
business in the UK. Wincanton has worked with Wickes since 2017,
gradually expanding its services over time to cover the management
of 50% of Wickes' kitchen and bathroom transport operations. The
new contract increases this to 100% of kitchen and bathroom
deliveries.
We delivered contract extensions with both Loaf and DFS, built
on our reputation for continued service performance excellence,
despite the challenges brought about by global supply issues. We
also extended our partnership with DFS with the addition of a new
service overseeing the end-to-end management of all customer orders
through multiple suppliers, known as "drop-ship vending".
Lastly, we successfully launched our new two-person home
delivery fulfilment site in Harlow which is strategically located
to support further growth. This underlines our commitment to this
value-adding service and provides an important gateway to new
opportunities.
Public & Industrial
Public & Industrial had an exceptional year for
non-transport operations with Defence, Infrastructure and the
Public Sector being particularly strong. Revenue growth year on
year was 0.4%.
We supplemented our continued management of Border Controls for
both HMRC and Defra with the provision of critical services to UK
Government in healthcare for the pandemic response, PPE storage and
recycling activities. Whilst the loss of one material HMRC contract
was disappointing, we remain confident that the pipeline will
provide growth in the future through both outsourcing and
consulting opportunities.
Elsewhere, we secured account growth with key strategic clients
including Alstom and BAE Systems as well as further provision of
consulting services to EDF. We also secured a ten-year contract
with British Salt, a Tata Group subsidiary, to provide UK
warehousing and Transport Control Tower services.
Sector performance in our Public & Industrial transport
markets was much more challenging. In both our bulk tanker and
construction businesses, we experienced lower core volumes and a
shift from customers towards both their own fleets and more use of
spot market haulage.
Grocery & Consumer
Our Grocery & Consumer sector saw the impact of lower
customer volumes in the year due to consumer spending pressures,
resulting in a year on year decline of 1%. This impact was felt
particularly in transport volumes, where supply has also risen due
to actions taken across the industry during the driver shortage of
2021.
We maintained strong operational performance throughout the
year, despite a challenging labour market, and delivered an
excellent peak for our customers during their key trading period
which was elongated by the winter World Cup. We agreed a five-year
renewal with Asda on the back of this service record.
The award of a five-year contract to manage the whole of the
Sainsbury's and Argos transport network was a major milestone for
the Group's repositioned transport strategy. Our proven ability to
manage large teams across multiple sites, coupled with investments
in planning and execution technology, makes us an ideal outsource
partner. The combination of managing substantial open book
transport fleets and providing digitally enabled sub-contraction
services is especially relevant for both grocery and consumer
products customers.
Our strong relationship with Waitrose continued with a five-year
renewal of our Greenford bonded drinks operation. Alongside our
dark store, this extends a more than 20-year relationship with
Waitrose, delivering over 13 million cases of wine each year.
Furthermore, the Grocery & Consumer team are a big part of
our strategic drive for further automation in our foundation
sectors, co-developing new technology with one of our Grocery
customers with the potential to transform warehousing in the
sector. The delivery of major automation projects for both Britvic
and Suntory was clear evidence of the team's ability to be agile
and to thrive in complex operational situations.
General Merchandise
General Merchandise continues to provide a solid foundation for
the Group but also saw the impact of reduced customer volumes,
particularly in the second half of the year. Overall revenue for
the year was up 3.5% on last year reflecting new business won in
the prior year with Primark and MGA Entertainment.
We were pleased to announce the renewal of our national
transport contract with Halfords for a further five years and the
successful go-live of a new distribution centre for Screwfix. Both
reflect our strong partnership with our existing customers.
We continue to broaden our customer base with a new three-year
contract award from New Look for national transport to their
stores, following an excellent start-up for a similar operation
with Primark. This win includes the deployment of our Winsight
transport technology. We also launched the distribution of solar
panels on behalf of City Electrical Factors from our shared-user
fulfilment centre.
Delivering on our strategy
The Executive Management Team remain focused on Wincanton's
vision of being "Great people delivering sustainable supply chain
value". We are committed to increasing the amount of technology we
bring to our customers alongside our experienced and talented
teams, with two clear focus areas.
Firstly, we continue to develop robotics and automation
solutions, particularly to increase the productivity of picking
operations. Our AMRs in Cygnia are a proven success and we have
identified further use cases for this solution. We are working on
further opportunities for robotics across the network.
Secondly, we have invested in technology for our transport
proposition. Our strategy is based on being the best partner to
both manage dedicated fleets and to provide efficient and reliable
subcontracted services. Our technology delivers flawless execution
of plans, optimised networks, and seamless integration with
sub-contracted partners. Data reporting tools enable better control
of operations and inform longer term strategic choices.
From a sector perspective, Grocery & Consumer and General
Merchandise remain the foundation of our business, providing scale
as well as demonstrating capability in the highest pace supply
chain environments. They also provide the best opportunities for
both our new technology focus areas.
Our strategic growth sectors remain unchanged, despite
challenges this year. High volume eFulfilment volumes have been
suppressed as retail spending has declined, however, we still
firmly believe in the volume and profit growth opportunities
afforded by a shared-user offer. The market remains underserved by
logistics partners of scale and with the capability to invest in
transformational automation and robotic solutions. Similarly, our
premium two-person home delivery network remains a key
differentiator for Wincanton in the eFulfilment sector.
In the Public & Industrial sector, whilst the loss of the
HMRC contract was disappointing, we still believe that Wincanton
has an important role to play as a partner to Government for supply
chain services. We see a significant number of opportunities both
from direct and indirect Government spending (such as defence and
major infrastructure) and believe that we maintain a good
reputation for delivery. Important lessons have been learned to
inform our future value proposition.
ESG
ESG and "The Wincanton Way" remain a priority for the
business.
For the environment, our premium home delivery service has been
carbon neutral since 2022 and we consider this to be our first
major milestone delivery. We have built further milestones in our
net zero roadmap that give us tangible goals for 2025, 2026 and
2030.
We have continued to present carbon reduction programmes to our
customers throughout the year. Notably, to support our continued
growth with IKEA, Wincanton is making a multi-million pound
investment in electric vehicle technology to enable IKEA's goal of
reaching 100% zero emission last mile deliveries by 2025. The new
fleet is expected to save 1,000 tonnes of carbon emissions each
year, across over 10,000 journeys. We have also successfully
trialled HVO (hydrotreated vegetable oil) as a replacement fuel for
diesel in our mission to create a sustainable supply chain for the
future.
In the Social value space, we launched our 'Million Hours
Mission' made up of four key commitments: to look after ourselves
and others, to embed an inclusive culture, to enrich our
communities and to strengthen our social value partnerships. We
have committed to delivery of this target by 2025. The target
captures several initiatives under our broad banner of 'culture of
care'. We have received several external awards recognising our
inclusive culture and have undertaken work in the local communities
through engagement events, volunteer work and charitable
partnerships. We also heavily focus on training, apprenticeship and
graduate programmes. We are tracking our target and will report
further successes in future years.
Finally, we have set out a Governance strategy to ensure our
structures, systems and controls remain business focused and agile.
Our ESG Committee, which I chair, is up and running and supported
by an ESG champion who sits on the main Board.
Succession planning - Non-executive Director (NED)
recruitment
Stewart Oades, Senior Independent Director (SID), completes his
third three-year term as a director of Wincanton in October 2023.
He will retire from the Board at the conclusion of the meeting
scheduled to be held on 5 October 2023. Ms Gill Barr will become
the SID when Mr Oades steps down. Ms Barr is an experienced NED and
has had considerable interaction with shareholders in her role as
Chair of the Remuneration Committee of Wincanton and other listed
companies.
Ms Debbie Lentz will replace Ms Barr as Chair of the
Remuneration Committee, having served on the Committee since
2019.
The Nomination Committee is currently engaged in the process of
recruiting a new NED to replace Mr Oades.
Outlook and market environment
The Group expects the macro-economic environment, particularly
regarding consumer spending, to remain challenging for the next 12
months and therefore the Group remains highly focused on short term
delivery. Wincanton remains a resilient business with a
well-articulated strategy for growth, focusing on our market
reputation for excellent operational capability at scale with
investment in innovation and technology to deliver greater supply
chain value for customers.
We are accelerating our automation and robotics plans, investing
in resources to deliver more solutions to customers. As a result,
FY24 will be the year where Wincanton first monetises technology
delivery. We will also focus on our re-positioned transport
offering whereby we will prioritise customers with large managed
fleets or those looking to bring more technology to their
sub-contracting arrangements.
The Group remains confident in its strategy to continue
delivering for shareholders and is well positioned to benefit from
any improvement in market sentiment.
Financial review
The Group's revenue of GBP1,462.0m in the year ended 31 March
2023 was 2.9% higher than the prior year (2022: GBP1,421.4m). This
is a strong achievement against a challenging economic environment
and in particular compares to the prior year that saw strong
volumes across our Grocery & Consumer sector. The Group
continued to secure high value new business, although this new
revenue was offset by a number of contract losses, particularly
within our book of standalone transport contracts. Revenue
increased across all sectors with the exception of Grocery &
Consumer, however, this sector secured a significant five-year
Sainsbury's contract which is expected to contribute to future
growth.
Despite macro-economic headwinds and the inflationary pressures
noted in the first half of the year, the Group delivered growth of
6.9% to achieve a record level underlying profit before tax of
GBP62.1m (2022 GBP58.1m). It was also able to improve its
underlying profit margin by 10bps to 4.2% (2022: 4.1%).
Positive cash flow performance is reflected in net cash of
GBP13.2m (2022: net cash GBP3.7m). The net pension asset has
increased to GBP114.7m (2022: GBP114.5m) with net assets at
GBP59.1m (2022: GBP63.6m). We have also successfully extended our
revolving credit facility (RCF) for a further year to March
2027.
The key financial aspects are outlined below with the results
presented on an underlying basis, excluding non-underlying items,
to provide a better understanding of the performance.
Reconciliations to statutory numbers are set out in the Alternative
Performance Measures section at the end of this review and Note 2
to the accompanying financial statements which also includes
details of the items reported as non-underlying in the current and
prior year.
Financial performance summary
2023 2022
GBPm GBPm Change
------------------------------------------- ------------------- ------- -------
Revenue 1,462.0 1,421.4 2.9%
-------------------------------------------- ------------------- ------- -------
Underlying EBITDA(1) 121.9 108.3 12.6%
-------------------------------------------- ------------------- ------- -------
Underlying EBITDA margin (%)(1) 8.3% 7.6% 70bps
Net financing costs (8.7) (6.6) (31.8)%
-------------------------------------------- ------------------- ------- -------
Underlying profit before tax(1) 62.1 58.1 6.9%
Underlying profit before tax margin (%)(1) 4.2% 4.1% 10bps
Non-underlying items(2) (23.9) (3.3) (624%)
-------------------------------------------- ------------------- ------- -------
Profit before tax 38.2 54.8 (30.3)%
Income tax (5.0) (6.9) 27.5%
-------------------------------------------- ------------------- ------- -------
Profit after tax 33.2 47.9 (30.7)%
-------------------------------------------- ------------------- ------- -------
Underlying EPS 42.5p 40.8p 4.2%
Basic EPS 26.9p 38.6p (30.3)%
Closing net cash (GBPm) 13.2 3.7
Dividend per share(3) 13.2p 12.0p 10%
-------------------------------------------- ------------------- ------- -------
1 The section on Alternative Performance Measures (APMs) below
and Note 2 to the accompanying financial statements provide further
information on these underlying measures, including definitions and
a reconciliation of APMs to statutory measures.
2 Details of items reported as non-underlying in the current and
prior year are included in the section headed non-underlying items
below and in Note 2 to the accompanying financial statements.
3 The final dividend for FY23 is proposed and subject to
shareholder approval.
The Group delivered revenue of GBP1,462.0m (2022: GBP1,421.4m)
for the year ended 31 March 2023 achieving growth of 2.9%, which
was a solid performance.
The Group achieved its highest ever underlying profit before tax
of GBP62.1m despite a challenging macro-economic environment. The
Group's underlying profit margin has strengthened to 4.2% (2022:
4.1%) despite headwinds of labour and fuel costs, and other
inflationary pressures, which are mostly mitigated across our
business model and strategy. Revenue from open book contracts which
provide protection from price increases was 73.5% (2022: 72.1%) of
our total revenue. Furthermore, for the majority of our closed book
contracts, contract renegotiations have been completed in the year
with price increases agreed at an average of 6%.
Statutory profit before tax of GBP38.2m (2022: GBP54.8m) is
impacted by non-underlying items primarily reflecting a strategic
transport reorganisation and cloud computing configuration and
customisation costs. Profit after tax for the year on a statutory
basis decreased to GBP33.2m (2022: GBP47.9m), a reduction of
30.7%.
Underlying EPS, which excludes earnings from non-underlying
items, increased by 4.2% to 42.5p (2022: 40.8p), reflecting
increased profits. Basic EPS decreased by 30.3% to 26.9p (2022:
38.6p).
Sector revenue
2023 2022 Change
GBPm GBPm %
-------------------- -------- -------- ------
eFulfilment 254.1 223.2 13.8%
Public & Industrial 285.2 284.2 0.4%
Grocery & Consumer 512.5 517.6 (1.0)%
General Merchandise 410.2 396.4 3.5%
Total 1,462.0 1,421.4 2.9%
--------------------- -------- -------- ------
As a key strategic sector, eFulfilment grew 13.8% (7.6%
excluding the full year trading for Cygnia). The organic growth
includes the new business with The White Company and the extension
of the Group's relationship with Wickes. This growth is offset by
the softening in core eFulfilment volumes, in line with the
well-publicised decline in consumer demand. The sales pipeline has
presented some good prospects for continued growth.
The Public & Industrial sector delivered flat full year
revenue year on year. The sector had growth from public sector
contracts with Defra for border checks and clearance, and the DHSC
contract which started at the end of the last financial year. Share
of wallet growth with long term customers such as BAE and Howdens
also contributed to the sector's performance. This growth in
non-transport activity is offset by the volume reduction in
construction transport, with customers moving towards more in-house
fleet and spot market haulage.
The net reduction in Grocery & Consumer reflects the
softening in consumer demand, impacting both warehouse and retail
transport activity levels, against a particularly strong
comparator. General Merchandise grew 3.5% primarily from the wins
from prior year with Primark and MGA Entertainment. Similarly, the
sector also saw a reduction in core volumes from lower consumer
demand.
The contractual split of open to closed book business remains
relatively unchanged with 73.5% under open book terms compared to
72.1% in the prior year. The Group continues to seek to balance the
relative risks and opportunities presented under the different
contractual arrangements. From a transport perspective, the Group
will focus on its 4PL offering, together with supporting open book
dedicated networks. This refocused transport offering necessitates
a move away from closed book arrangements, where we have no
protection, as the risk is unduly balanced towards Wincanton's
balance sheet.
Net financing costs
2023 2022 Change
GBPm GBPm GBPm
-------------------------------------------------- ------ ------ ------
Interest income 0.2 - 0.2
Interest on the net defined benefit pension asset 3.4 1.1 2.3
Interest expense (5.5) (2.1) (3.4)
Unwinding of discount on provisions (0.6) (0.4) (0.2)
Interest on lease liabilities (6.2) (5.2) (1.0)
-------------------------------------------------- ------ ------ ------
Net financing costs (8.7) (6.6) (2.1)
-------------------------------------------------- ------ ------ ------
Net financing costs were GBP8.7m (2022: GBP6.6m), GBP2.1m higher
year on year. Interest expense relates primarily to bank interest
payable under the Group's Revolving Credit Facility (RCF) which has
increased by GBP3.4m to GBP5.5m, primarily reflecting increased
bank base rate seen over the last 12 months but also indicates
higher utilisation of the Group's RCF following the Cygnia
acquisition made in the prior year. The total amount also includes
higher amortisation of commitment and arrangement fees of GBP1.3m
(2022: GBP0.7m) following the renegotiation of the facility in
March 2022.
Interest on lease liabilities has also increased by GBP1.0m to
GBP6.2m which also reflects higher incremental borrowing rates on
new leased assets.
Non-cash net interest income of GBP3.4m (2022: GBP1.1m) relates
to the net defined benefit pension asset which is significantly
higher in the year due to a higher opening asset surplus at 31
March 2022.
Non-underlying items
2023 2022 Change
GBPm GBPm GBPm
-------------------------------------------------- -------- ------- --------
Restructure and impairment of transport
related assets (19.5) - (19.5)
Cloud computing configuration and customisation
costs (3.2) (4.1) 0.9
Acquisition related costs (0.5) (1.0) 0.5
Amortisation of acquired intangibles (1.1) (0.6) (0.5)
Release of warranty provision - 1.0 (1.0)
Gain on disposal of businesses 0.4 0.9 (0.5)
Net profit on disposal of assets and
freehold property - 0.5 (0.5)
Total (23.9) (3.3) (20.6)
--------------------------------------------------- -------- ------- --------
During the year, the Group has undertaken a strategic
restructure of its transport operations recognising a restructuring
charge of GBP19.5m to the income statement (2022: GBPnil). The
Group is seeking to move to a digitally enabled transport system
and this restructure triggered the Group to reconsider its current
cash generating units (CGUs) from an impairment perspective. The
Group has recorded an impairment of GBP19.1m relating to both
right-of-use assets and computer software used primarily around
closed book contracts. The restructuring charge also includes
GBP0.4m of redundancy related costs as the Group seeks to exit
closed book contracts.
Cloud computing configuration and customisation costs relate to
a major systems implementation which initially went live in July
2021. Additional costs have been incurred as the Group implemented
Phase 2 which was the migration of its payroll from an outsourced
provider to the in-house Oracle Fusion platform. The payroll
implementation started in October 2022 and has been carefully
managed around peak periods, albeit some challenges have been
presented. The payroll team continues to work with an integration
partner to progress system defects and rationalise processes
further. Additional costs are expected in FY24 relating to the
implementation of additional modules and associated restructuring
considered critical to maximise the benefits of the new system. A
further cash cost of approximately GBP4m is expected to be charged
to non-underlying items relating to the completion of the project
over the next 12 months.
The Group has incurred acquisition related costs which are
primarily professional fees totalling GBP0.5m in relation to
M&A activities. The prior year amount of GBP1.0m relates to the
acquisition of Cygnia.
The Group has recognised a gain of GBP0.4m (2022: GBP0.9m)
arising from contingent consideration recognised on the Group's
disposal of its Containers business in October 2020. The contract
terms allow for further sums to be received until January 2024.
Also in the prior year, gains relating to the disposal of a
number of specialist vehicles, not required for ongoing operations,
and a release of a warranty provision, where the claim was
considered to be remote, were treated as non-underlying.
Taxation
2023 2022 Change
GBPm GBPm GBPm
--------------------------------------------------- ----- ----- --------
Underlying profit before tax(1) 62.1 58.1 4.0
--------------------------------------------------- ----- ----- --------
Underlying tax charge (9.7) (7.5) (2.2)
Non-underlying tax 4.7 0.6 4.1
--------------------------------------------------- ----- ----- --------
Tax charge as reported (5.0) (6.9) 1.9
--------------------------------------------------- ----- ----- --------
Effective tax rate on underlying profit before tax 15.6% 12.9% (270bps)
--------------------------------------------------- ----- ----- --------
1 Refer to the Alternative Performance Measures section at the
end of this review and Note 2 to the accompanying financial
statements.
The underlying tax charge of GBP9.7m (2022: GBP7.5m) represents
an underlying effective tax rate (ETR) of 15.6% (2022: 12.9%) on
underlying profit before tax and is stated before net tax credits
of GBP4.7m (2022: GBP0.6m) in respect of non-underlying items.
Corporation tax paid in the year was GBP8.8m (2022: GBP3.3m).
The ETR is lower than the statutory rate of 19.0%, in part due
to the Government incentive of the super capital allowance scheme
of 130% on qualifying assets up to 31 March 2023. The benefit of
this deduction has reduced underlying tax by GBP1.9m resulting from
the permanent deduction of 30% on qualifying capital spend. In
addition, the Group has optimised the use of tax losses and will
accelerate tax payments to benefit from the change in tax rates
from 19% to 25% from 1 April 2023, as well as recognising tax
losses that were previously unrecognised benefiting the underlying
tax by GBP0.9m and GBP0.4m respectively. The Group expects to use
further tax losses in FY24 to reduce the cash tax payments as the
tax rate increases to 25% from 1 April 2023.
Profit after tax and earnings per share
Underlying profit before tax for the year increased by 6.9% to
GBP62.1m (2022: GBP58.1m) due to the increased revenue as outlined
above. There was also a smaller contribution to underlying profits
resulting from improved margins across the Group, following the
implementation of cost control measures and contract renegotiations
completed in the year. This increase was partially offset by
increased net financing costs, principally due to higher interest
payable on leases and the Group's external borrowings.
Underlying profit after tax for the year is GBP52.4m (2022:
GBP50.6m). The increase of 3.6% reflects the increase in underlying
profit before tax offset by an increase in the underlying effective
tax rate from 12.9% to 15.6% as explained above.
Profit after tax for the year on a statutory basis decreased to
GBP33.2m (2022: GBP47.9m) which is as a result of the increased
non-underlying costs following the review of the Group's transport
business model and customer proposition. Non-underlying credits
relate to the consequential gains on business disposals.
Underlying EPS, which excludes earnings from non-underlying
items, increased by 4.2% to 42.5p (2022: 40.8p). Basic EPS
decreased by 30.3% to 26.9p (2022: 38.6p).
The calculation of these EPS measures is set out in Note 5 to
the accompanying financial statements. The weighted average number
of shares used in the calculation of basic EPS is impacted by
shares issued and purchased during the year related to share
options, and for diluted EPS, by share options in issue not yet
exercised.
Dividends and dividend policy
2023 2022
pence pence
--------- ------ ------
Interim 4.4 4.0
Final(1) 8.8 8.0
--------- ------ ------
Total 13.2 12.0
--------- ------ ------
1 The final dividend for FY23 is proposed and subject to
shareholder approval.
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.
The Board is proposing a final dividend of 8.8p per share (2022:
8.0p), which, together with the interim dividend of 4.4p per share
(2022: 4.0p), will result in a total dividend per share for 2023 of
13.2p per share (2022: 12.0p). The proposed final dividend is
subject to approval by shareholders at the Annual General Meeting
on 12 July 2023 and if approved by shareholders, will be paid on 11
August 2023 to shareholders on the register on 14 July 2023. The
estimated final dividend amount to be paid is GBP11m and in
accordance with Adopted IFRS has not been included as a liability
in these statements.
Dividend payments in the year total GBP15.3m (2022:
GBP14.3m).
Financial position
The summary financial position of the Group is set out
below:
2022
2023 Restated(1) Change
GBPm GBPm GBPm
----------------------------------------------------------------------- -------- ------------ -------
Non-current assets (excluding pension assets) (1) 310.4 329.2 (18.8)
Net current liabilities (excluding net cash) (161.4) (156.9) (4.5)
Non-current liabilities (excluding pension liabilities and borrowings) (217.8) (226.9) 9.1
Net cash (excluding lease liabilities) 13.2 3.7 9.5
Net pension asset (excluding deferred tax) 114.7 114.5 0.2
----------------------------------------------------------------------- -------- ------------ -------
Net assets 59.1 63.6 (4.5)
----------------------------------------------------------------------- -------- ------------ -------
1 The comparative for non-current assets has been restated
following an error in relation to right-of-use assets and
associated lease liabilities, as explained in Note 1 to the
accompanying financial statements.
The decrease in net assets of GBP4.5m since 31 March 2022
relates primarily to the movement on the right-of-use asset value
which has decreased by GBP16.4m to GBP176.2m (2022: GBP192.6m) and
a reduction in intangible assets by GBP5.3m, primarily due to the
restructure of the Group transport and the impairment of transport
related assets as explained in the non-underlying section above.
The decrease is in part offset by a reduction non-current
liabilities and an increase in net cash.
Revenue growth and good cash management have led to the Group
reporting a net cash position of GBP13.2m at 31 March 2023 (2022:
GBP3.7m net cash).
Cash flow and net debt/cash
Net cash at 31 March 2023 was GBP13.2m (2022: net cash GBP3.7m),
reflecting a net cash inflow of GBP9.5m over the intervening 12
months. Free cash flow, defined as the movement in net debt/cash
before acquisitions, pension payments, dividends and the purchase
of own shares, was an inflow of GBP48.6m (2022: GBP54.0m).
2023 2022 Change
GBPm GBPm GBPm
-------------------------------------- ------ ------ ------
Underlying EBITDA(1) 121.9 108.3 13.6
Working capital 4.1 6.0 (1.9)
Tax (8.8) (3.3) (5.5)
Net interest (5.7) (5.2) (0.5)
Other items 0.3 (2.7) 3.0
Repayment of obligations under leases (48.7) (40.8) (7.9)
Capital expenditure (16.5) (11.2) (5.3)
Proceeds from asset disposals 2.0 2.9 (0.9)
Free cash flow 48.6 54.0 (5.4)
Pension payments (20.1) (18.5) (1.6)
Dividends (15.3) (14.3) (1.0)
Own shares acquired (3.7) (1.8) (1.9)
Acquisition:
- Consideration - (23.9) 23.9
- Additional net assets acquired - (3.7) 3.7
Increase/ (decrease) in net cash 9.5 (8.2) 17.7
-------------------------------------- ------ ------ ------
1 Refer to the Alternative Performance Measures section at the
end of this review and Note 2 to the accompanying financial
statements.
Working capital movement in the year resulted in an inflow of
GBP4.1m (2022: GBP6.0m) driven mainly by good cash management, the
mix of revenue growth from both new and existing customers on
favourable terms, and a timing difference on payables supporting
growth.
The Group paid cash tax in the year of GBP8.8m, benefiting from
super capital allowances together with tax deductions received on
pension contributions. This amount includes additional tax of
GBP3.9m, paid in April 2022, in relation to FY22 as a consequence
of group tax losses being deferred until future years to benefit
from the higher rate of tax of 25% from 1 April 2023.
Net interest costs have increased reflecting the increased bank
base rate seen over the last 12 months but also due to higher
utilisation of the Group's RCF following the Cygnia acquisition
made in the prior year. The amount also includes higher commitment
and arrangements fees totalling GBP1.3m under the Group's RCF
renegotiated in March 2022 and extended for a further one year to
2027 in March 2023.
Other items of GBP0.3m (2022: GBP2.7m) comprise non-cash items
relating to net movements on provisions and share-based payment
charges in the year. It also includes cash costs relating to the
upgrade of our finance and HR systems and acquisition related
expenses, offset by contingent consideration from a historic
disposal.
Capital expenditure of GBP16.5m (2022: GBP11.2m) relates
predominantly to mobilising and expanding contracts for customers.
Examples include Primark and BAE, and further investment in
automation and innovation in our eFulfilment sector primarily at
The Web, in Rockingham, and Cygnia. The Group also invested in the
expansion of its two-person home delivery network through the new
facility at Harlow.
Net proceeds from asset disposals of GBP2.0m relate to the
disposal of sundry vehicles. In the prior year, the net proceeds of
GBP2.9m primarily relate to the sale of a number of specialist
vehicles and other assets previously recorded as held for sale.
The cash contributions to fund the pension deficit in the
current year to 31 March 2023 were GBP20.1m (31 March 2022:
GBP18.5m) net of administration costs of GBP0.6m (2022:
GBP0.7m).
Equity dividends of GBP15.3m (2022: GBP14.3m) were paid in the
year . As noted above, the recommended final dividend for the year
ended 31 March 2023 will result in an estimated cash outflow of
GBP11m in the first half of the year ended 31 March 2024.
The Group acquired one million of its own shares for GBP3.7m
(2022: 500,000 shares for GBP1.8m) to provide shares for the
Employee Benefit Trust in respect of its long-term incentive plan
commitments.
Financing and covenants
The Group has a GBP175.0m (2022: GBP175.0m) committed RCF which
has been extended by one year on the same terms as the existing
facility and now matures in March 2027. The headroom in these
committed facilities in addition to net cash of GBP13.2m at 31
March 2023 was GBP175.0m (2022: GBP150.0m) and is used to provide
liquidity during uncertain macro-economic times as well as being
available to support profit and cash flow enhancing opportunities
in the medium term. The Group also has a receivables purchase
facility (RPF) and operating overdrafts which provide day to day
flexibility, amounting to a further capacity of up to GBP50m and
GBP7.5m respectively in uncommitted facilities. At 31 March 2023,
utilisation of the Group's non-recourse RPF was GBP4.3m (2022:
GBP4.1m).
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
Covenant Ratio At 31 March 2023 At 31 March 2022
------------------- ------- ---------------- ----------------
Leverage ratio <3.0:1 0.5 0.7
Interest cover >3.5:1 17.1 38.8
Fixed charge cover >1.4:1 2.6 2.7
------------------- ------- ---------------- ----------------
The calculation of these covenants and reconciliations to
reported numbers are included in Note 10 to the accompanying
financial statements.
Pensions
The Group operates a number of pension arrangements in the UK
and Ireland.
Defined benefit arrangements
The Wincanton plc Pension Scheme (the Scheme) includes defined
benefit sections which were closed to future accrual on 31 March
2014.
The Group has reported an IAS 19 net asset of GBP114.7m
(GBP86.0m net of deferred tax) at 31 March 2023 (2022: GBP114.5m,
GBP85.9m net of deferred tax).
GBPm 31 March 2023 30 September 2022 At 31 March 2022
------------------ ------------- ----------------- ----------------
Assets 891.1 1,256.4 1,208.3
Liabilities (776.4) (1,188.8) (1,093.8)
------------------ ------------- ----------------- ----------------
Net pension asset 114.7 67.6 114.5
------------------ ------------- ----------------- ----------------
Discount rate (%) 4.75% 2.0% 2.7%
------------------ ------------- ----------------- ----------------
The movement in the net defined benefit asset in the year was
primarily the result of the impact of external market factors. The
reduction in liabilities in the year is driven by the increase in
the discount rate which has been consistently calculated using high
yield corporate bond rates. The assets have had a corresponding
decrease as they are 98% hedged to movements in the liability. The
deficit funding contribution in the year, net of expenses, was
GBP20.1m (2022: GBP18.5m).
The estimated actuarial deficit on a technical provision basis
has reduced to GBP11.9m at 31 March 2023, compared to GBP37m at 31
March 2022. At 31 March 2023, 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
valuation.
The sensitivities of the present value of the Scheme obligations
to changes in the key actuarial assumptions have been assessed; a
decrease of 1.0% in the discount rate has been estimated to
increase the surplus by GBP35m.
Defined contribution arrangements
The Group's defined contribution arrangements include the
Retirement Savings Section, including the Auto Enrolment section,
and the Pension Builder Plan in the UK, a separate similar local
scheme in Ireland and Cygnia contributions to a Master Trust. The
charge incurred for these arrangements total GBP38.6m (2022:
GBP36.7m).
Contingent liabilities
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 an outflow of economic
benefit is not probable, no provision is made.
In the prior year, the Group had received notification of a
potential claim from a former customer and remains 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.
Going concern
The financial statements have been prepared on a going concern
basis. Having considered the ability of the Company and the Group
to operate within its existing facilities and meet its debt
covenants, the Directors have a reasonable expectation that the
Company and the Group 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 principal risks and
uncertainties, likely to affect its future 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 and modelled the following sensitivities in
considering the Group's ability to continue as a going concern:
-- a deterioration in trading performance together with a delay
in receipts and a major customer going into administration;
-- an increased competitive environment, leading to lower contractual wins and higher losses;
-- an outflow in relation to a commercial dispute; and
-- an increase in finance charges resulting from an increase in
the base rate as well as the withdrawal of the Group's RPF
facility.
The Board has also considered a base case and a severe downside
case which includes the impact of the above sensitivities. 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 30 September 2024.
Further details are provided in Note 1 'Accounting policies' in
the accompanying 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 considers 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 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.
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.
In addition, the Group will always disclose the items below as
non-underlying items:
-- amortisation charges relating to acquired intangible assets;
-- profits or losses arising on the disposal of continuing or discontinued operations;
-- adjustments to amounts previously reported as non-underlying; and
-- the tax impact of non-underlying items.
Further details of underlying results and the definition of
non-underlying items can be found in Note 2 to the accompanying
financial statements.
EBITDA refers to earnings (operating profit) before interest,
tax, depreciation of property, plant and equipment and right-of-use
assets and amortisation of finite-lived intangible assets. This
measure also excludes the impact of impairment of non-current
assets.
Other APMs used which relate to cash flow are net debt/cash and
free cash flow. Net debt/cash is the sum of cash and bank balances,
bank loans and overdrafts and other financial liabilities excluding
lease liabilities. Note 7 to the accompanying financial statements
provides a breakdown of net debt/cash for the current and prior
year. 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.
2023 2022
------------------------------------- ------------------------------------- -------------------------------------
Underlying Non-underlying Statutory Underlying Non-underlying Statutory
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
Revenue 1,462.0 - 1,462.0 1,421.4 - 1,421.4
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
EBITDA 121.9 (3.7) 118.2 108.3 (2.7) 105.6
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
EBITDA margin (%) 8.3% - 8.1% 7.6% - 7.4%
Depreciation, amortisation and
impairments (51.1) (20.2) (71.3) (43.6) (0.6) (44.2)
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
Operating profit 70.8 (23.9) 46.9 64.7 (3.3) 61.4
Net financing costs (8.7) - (8.7) (6.6) - (6.6)
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
Profit before tax 62.1 (23.9) 38.2 58.1 (3.3) 54.8
Income tax (9.7) 4.7 (5.0) (7.5) 0.6 (6.9)
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
Profit after tax 52.4 (19.2) 33.2 50.6 (2.7) 47.9
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
Earnings per share(1) 42.5 26.9 40.8p 38.6p
Dividend per share 13.2p 13.2p 12.0p 12.0p
Net cash excluding lease liabilities 13.2 13.2 3.7 3.7
-------------------------------------- ---------- -------------- --------- ---------- -------------- ---------
1 Refer to Notes 2 and 5 to the accompanying financial
statements.
Cautionary statement
This announcement has been prepared to provide the Company's
shareholders with a fair review of the business of the Group and a
description of the principal risks and uncertainties facing it. It
may not be relied upon by anyone, including the Company's
shareholders, for any other purpose.
This announcement contains forward-looking statements that are
subject to risk factors including the economic and business
circumstances occurring from time to time in markets in which the
Group operates and risk factors associated with the Group's broad
industry sectors. By their nature, forward-looking statements
involve a number of risks, uncertainties and assumptions because
they relate to events and/or depend on circumstances that may or
may not occur in the future and could cause actual results and
outcomes to differ materially from those expressed in or implied by
the forward-looking statements. No assurance can be given that the
forward-looking statements in this announcement will be realised.
Statements about the Directors' expectations, beliefs, hopes,
plans, intentions and strategies are inherently subject to change
and they are based on expectations and assumptions as to future
events, circumstances and other factors which are in some cases
outside the Group's control. Actual results could differ materially
from the Group's current expectations.
Forward-looking statements in this announcement include, but are
not limited to, statements about the Group's future financial and
operational performance, management's ability to successfully
execute its strategy, and the ability of the Group to respond to
the changes in the macro-economic environment. It is believed that
the expectations set out in these forward-looking statements are
reasonable, but they may be affected by a wide range of variables
which could cause actual results or trends to differ
materially.
The Company's shareholders are cautioned not to place undue
reliance on the forward-looking statements. This announcement has
not been audited or otherwise independently verified. The
information contained in this announcement has been prepared on the
basis of the knowledge and information available to Directors at
the date of its preparation and the Company does not undertake any
obligation to update or revise this announcement during the
financial year ahead.
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MARCH 2023
2023 2022
-------------------------------- ---- ---------- -------------- --------- ---------- -------------- ---------
Underlying Non-underlying Total Underlying Non-underlying Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ---- ---------- -------------- --------- ---------- -------------- ---------
Revenue 1,462.0 - 1,462.0 1,421.4 - 1,421.4
Net operating costs (1,391.2) (23.9) (1,415.1) (1,356.7) (3.3) (1,360.0)
Operating profit 70.8 (23.9) 46.9 64.7 (3.3) 61.4
Financing income 3 3.6 - 3.6 1.1 - 1.1
Financing cost 3 (12.3) - (12.3) (7.7) - (7.7)
-------------------------------- ---- ---------- -------------- --------- ---------- -------------- ---------
Profit/(loss) before tax 62.1 (23.9) 38.2 58.1 (3.3) 54.8
Income tax expense 4 (9.7) 4.7 (5.0) (7.5) 0.6 (6.9)
-------------------------------- ---- ---------- -------------- --------- ---------- -------------- ---------
Profit/(loss) attributable to
equity shareholders of
Wincanton plc 52.4 (19.2) 33.2 50.6 (2.7) 47.9
-------------------------------- ---- ---------- -------------- --------- ---------- -------------- ---------
Earnings per share
- basic 5 42.5p 26.9p 40.8p 38.6p
- diluted 5 42.4p 26.9p 40.3p 38.2p
-------------------------------- ---- ---------- -------------- --------- ---------- -------------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2023
2023 2022
Note GBPm GBPm
------------------------------------------------------------------------------------------ ---- ------ ------
Profit for the year 33.2 47.9
------------------------------------------------------------------------------------------ ---- ------ ------
Other comprehensive income/(loss)
Items which will not subsequently be reclassified to the income statement
Remeasurements of net defined benefit asset 9 (22.4) 47.6
Income tax relating to items that will not subsequently be reclassified to profit or loss 4 4.2 (14.7)
------------------------------------------------------------------------------------------ ---- ------ ------
(18.2) 32.9
------------------------------------------------------------------------------------------ ---- ------ ------
Items which are or may subsequently be reclassified to the income statement
Net foreign exchange gain / (loss) on investment in foreign subsidiaries 0.2 (0.1)
0.2 (0.1)
------------------------------------------------------------------------------------------ ---- ------ ------
Total other comprehensive income/(loss) for the year, net of income tax (18.0) 32.8
------------------------------------------------------------------------------------------ ---- ------ ------
Total comprehensive income/(loss) attributable to equity shareholders of Wincanton plc 15.2 80.7
------------------------------------------------------------------------------------------ ---- ------ ------
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2023
2022
2023 (Restated)(1)
Note GBPm GBPm
------------------------------------------- ---- -------- ---------------
Non-current assets
Goodwill and intangible assets 105.4 110.7
Property, plant, equipment and vehicles 28.8 25.9
Right-of-use assets 176.2 192.6
Employee benefits 9 116.6 117.0
------------------------------------------- ---- -------- ---------------
Total non-current assets 427.0 446.2
------------------------------------------- ---- -------- ---------------
Current assets
Inventories 1.8 2.6
Trade and other receivables 170.6 207.4
Income tax receivable 4.6 -
Cash at bank and in hand 7 13.2 28.7
------------------------------------------- ---- -------- ---------------
Total current assets 190.2 238.7
Total assets 617.2 684.9
------------------------------------------- ---- -------- ---------------
Current liabilities
Income tax payable - (3.3)
Lease liabilities (37.5) (27 .3 )
Trade and other payables (289.6) (323.6)
Provisions 8 (11.3) (12.7)
------------------------------------------- ---- -------- ---------------
Total current liabilities (338.4) (366.9)
------------------------------------------- ---- -------- ---------------
Net current liabilities (148.2) (128 .2 )
------------------------------------------- ---- -------- ---------------
Total assets less current liabilities 278.8 318 .0
------------------------------------------- ---- -------- ---------------
Non-current liabilities
Borrowings and other financial liabilities 7 - (25.0)
Lease liabilities (168.9) (179.4)
Employee benefits 9 (1.9) (2.5)
Provisions 8 (32.0) (30.6)
Deferred tax liabilities (16.9) (16.9)
T otal non-current liabilities (219.7) (254.4)
------------------------------------------- ---- -------- ---------------
Net assets 59.1 63.6
------------------------------------------- ---- -------- ---------------
Equity
Issued share capital 12.5 12.5
Share premium 12.9 12.9
Merger reserve 3.5 3.5
Translation reserve (0.3) (0.5)
Own shares (5.6) (2.2)
Retained profits/(losses) 36.1 37.4
------------------------------------------- ---- -------- ---------------
Total equity/(deficit) 59.1 63.6
------------------------------------------- ---- -------- ---------------
(1) Certain comparatives have been restated due to prior year
adjustment as explained in Note 1 'Accounting policies'.
These financial statements were approved by the Board of
Directors on 19 May 2023 and were signed on their behalf by:
Tom Hinton
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2023
Issued Total
share Share Merger Translation Own Retained (losses)/ equity/
capital premium reserve reserve shares earnings (deficit)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
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 loss - - - (0.1) - 32.9 32.8
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Total comprehensive
income/(loss) - - - (0.1) - 80.8 80.7
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Share based payment
transactions - - - - (1.2) (0.3) (1.5)
Tax on share based payment
transactions (note 4) - - - - - 0.4 0.4
Dividends paid to
shareholders (note 6) - - - - - (14.3) (14.3)
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Balance at 31 March 2022 12.5 12.9 3.5 (0.5) (2.2) 37.4 63.6
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Balance as at 1 April 2022 12.5 12.9 3.5 (0.5) (2.2) 37.4 63.6
Profit for the year - - - - - 33.2 33.2
Other comprehensive
income/(loss) - - - 0.2 - (18.2) (18.0)
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Total comprehensive income - - - 0.2 - 15.0 15.2
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Share based payment
transactions - - - - (3.4) (0.7) (4.1)
Tax on share based payment
transactions (note 4) - - - - - (0.3) (0.3)
Dividends paid to
shareholders (note 6) - - - - - (15.3) (15.3)
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
Balance at 31 March 2023 12.5 12.9 3.5 (0.3) (5.6) 36.1 59.1
-------------------------- -------- -------- -------- ----------- ------- -------------------------- ----------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2023
2023 2022
Note GBPm GBPm
---------------------------------------------------------------- ---- ------- ------
Operating activities
Profit before tax 38.2 54.8
Adjustments for
- depreciation and amortisation 52.2 43.8
- research and development expenditure credit (0.2) (0.6)
- net financing costs 3 8.7 6.6
- impairments 19.1 0.4
- profit on disposal of property, plant, equipment and vehicles 1.9 (0.1)
- loss on derecognition of lease liabilities 2.4 1.2
- profit on disposal of businesses (0.4) (0.9)
- share based payment transactions (0.4) 0.3
---------------------------------------------------------------- ---- ------- ------
121.5 105.5
(Increase)/decrease in trade and other receivables 37.2 (7.9)
(Increase)/decrease in inventories 0.8 (1.1)
Increase/(decrease) in trade and other payables (33.5) 15.9
Decrease in provisions (0.6) (1.7)
Increase in employee benefits before pension deficit payment 0.9 0.9
Income taxes paid (8.8) (3.3)
---------------------------------------------------------------- ---- ------- ------
Cash generated before pension deficit payment 117.5 108.3
Pension deficit payment 9 (20.1) (18.5)
---------------------------------------------------------------- ---- ------- ------
Cash flows from operating activities 97.4 89.8
---------------------------------------------------------------- ---- ------- ------
Investing activities
Proceeds from sale of property, plant and equipment 2.0 2.9
Purchase of business, net of cash acquired - (13.6)
Additions of property, plant and equipment (14.7) (10.7)
Additions of computer software (1.8) (0.5)
---------------------------------------------------------------- ---- ------- ------
Cash flows from investing activities (14.5) (21.9)
---------------------------------------------------------------- ---- ------- ------
Financing activities
Increase/(decrease) in borrowings 7 (25.0) 9.9
Repayment of borrowings acquired - (14.0)
Own shares acquired (3.7) (1.8)
Repayment of amounts relating to lease liabilities (48.7) (42.9)
Equity dividends paid 6 (15.3) (14.3)
Interest paid on borrowings (5.7) (3.1)
Cash flows from financing activities (98.4) (66.2)
---------------------------------------------------------------------- ------- ------
Net increase/(decrease) in cash and cash equivalents (15.5) 1.7
Cash and cash equivalents at beginning of the year 28.7 27.0
---------------------------------------------------------------------- ------- ------
Cash and cash equivalents at end of the year 13.2 28.7
---------------------------------------------------------------------- ------- ------
Represented by:
- cash at bank and in hand 10.4 25.9
- restricted cash, being deposits held by the Group's captive insurer 2.8 2.8
13.2 28.7
---------------------------------------------------------------------- ------- ------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting policies
The financial information set out in this preliminary
announcement does not constitute Wincanton plc's statutory accounts
for the years ended 31 March 2023 and 31 March 2022. Statutory
accounts for the year ended 31 March 2023 will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. The Auditor has reported on those accounts; their report
was unqualified, did not draw attention by way of emphasis, and did
not contain a statement under Section 498 (2) or (3) of the
Companies Act 2006. Statutory accounts for the year ended 31 March
2022 have been delivered to the Registrar of Companies. The Auditor
has reported on those accounts; their report was unqualified, did
not draw attention by way of emphasis, and did not contain a
statement under Section 498 (2) or (3) of the Companies Act
2006.
The financial information contained in this results announcement
has been prepared on the basis of the accounting policies set out
in the statutory financial statements for the year ended 31 March
2023. Whilst the financial information included in this
announcement has been computed in accordance with the recognition
and measurement requirements of UK-adopted International Accounting
Standards (Adopted IFRS), as applicable to companies reporting
under those standards, this announcement does not itself contain
sufficient disclosures to comply with Adopted IFRS.
Standards, amendments and interpretations effective or adopted
or issued in the year
Amendments to accounting standards issued by the IASB and
adopted in the year ended 31 March 2023 did not have a material
impact on the results or financial position of the Group.
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 March 2023 reporting periods and have not been
early adopted by the Group. These standards, amendments and
interpretations are not expected to have a material impact on the
results or financial position of the Group in future reporting
periods.
Prior year restatement
During the preparation of the 2023 Annual Report and Accounts an
error was identified in relation to right of use assets and
associated lease liabilities that should have been recognised in
earlier reporting periods. The error arose as a result of the Group
taking control of certain non-property assets in periods prior to
the year ended 31 March 2023 but which were not identified by
management until the current accounting period. The impact is to
increase right-of-use assets by GBP3.6m and increase lease
liabilities by GBP3.6m, with the latter split as an increase of
GBP0.7m in current lease liabilities and increase of GBP2.9m in
non-current lease liabilities. There is no material impact on the
Income Statement for the year ended 31 March 2022 and no material
impact on reported equity as at 1 April 2021. Earnings per share
for the year ended 31 March 2022 are unaffected as a result of this
correction.
Going concern
The Directors have concluded that it is reasonable to adopt a
going concern basis in preparing the consolidated year end
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 full 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 30 September 2024.
The Group has reported an underlying profit before tax of GBP62.1m
for the twelve months ended 31 March 2023 (31 March 2022:
GBP58.1m), has net current liabilities of GBP148.2m (31 March 2022:
GBP128.2m) and net assets of GBP59.1m (31 March 2022:
GBP63.6m).
The Group's committed facilities at 31 March 2023 comprise a
syndicated revolving credit facility (RCF) of GBP175.0m, which
matures in March 2027. The Group had GBP175.0m of undrawn amounts
against the RCF facility as at 31 March 2023. The RCF requires the
Group to comply with the following three financial covenants at 30
September and 31 March each financial year:
-- leverage ratio: consolidated total net borrowings of no more
than 3.0 times consolidated EBITDA for the preceding 12 month
period;
-- interest cover: consolidated EBITDA for the preceding 12
month period is not less than 3.5 times higher than consolidated
net finance charges for the preceding 12 month period; and
-- fixed charge cover: consolidated EBITDA plus operating lease
costs for the preceding 12 month period is not less than 1.4 times
higher than consolidated net finance charges plus operating lease
costs for the preceding 12 month period.
See Note 10 for the covenant assessment as at 31 March 2023
which shows we have significant headroom across all of the
covenants.
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.
The Directors have reviewed the financial forecasts across a
range of scenarios. The severe downside case assumes a
deterioration in trading performance as a result of weaker economic
conditions and a more competitive trading environment, as well as a
major customer going into administration. Overall, the impact of
this severe downside case reduces forecast underlying profit before
tax by over 60%. This scenario also assumes a deterioration in
working capital performance compared to the base case as a result
of delayed cash receipts, together with a further material
unplanned cash outflow linked to a general commercial dispute. On
top of these downsides, the impact of an increase to base interest
rates and the removal of the Group's Receivables Purchasing
Framework facility were also modelled.
These downsides would be partly offset by the application of
mitigating actions to the extent they are under management's
control, including deferrals of capital and other discretionary
expenditure, as well as management bonus payment deferral and
claiming against insurance cover to offset any commercial
dispute.
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 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.
The Directors have also 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.
Since performing their assessment, there have been no subsequent
changes in facts and circumstances relevant to the Directors'
assessment of going concern.
2. Alternative performance measures (APMs)
The alternative performance measures (APMs) or underlying
results reported in this Annual Report and Accounts represent
statutory measures adjusted for items which management considers
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 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.
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.
In addition, the Group will always disclose the items below as
'non-underlying items' for the following reasons:
-- amortisation charges relating to acquired intangible assets.
This relates to an acquisition event and therefore irregular in
nature. The intangible assets identified are primarily customer
contracts and relationships which are not recognised other than
through an acquisition. In order for the profitability of the
contracts acquired to be treated consistently with those of the
existing business, the amortisation charges are presented as
non-underlying
-- profits or losses arising on the disposal of continuing or
discontinued operations. These items are by their nature irregular.
There are likely to be gross impacts that are material even if the
net impact is not
-- adjustments to amounts previously reported as non-underlying.
Where an amount has been initially presented as non-underlying any
adjustment to this amount is also reported as non-underlying
-- the tax impact of non-underlying items. The tax impact may
not be material on an item, however it is appropriate for the tax
treatment to follow the treatment of the item as
non-underlying.
EBITDA refers to earnings (operating profit) before interest,
tax, depreciation of property, plant and equipment and right-of-use
assets 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. Free cash flow is defined as the
movement in net debt before acquisitions, pension payments,
dividends and purchase of own shares.
A reconciliation between statutory IFRS operating profit and
underlying operating profit is given below. Details of underlying
EPS can be found in Note 5.
2023 2022
Non- Non-
Underlying underlying Total Underlying underlying Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 1,462.0 - 1,462.0 1,421.4 - 1,421.4
Cost of sales (1,368.9) - (1,368.9) (1,339.5) - (1,339.5)
-------------------------- ---------- ----------- ---------- ---------- ----------- ---------
Gross profit 93.1 - 93.1 81.9 - 81.9
Other income and gains on
disposal of assets 6.2 0.4 6.6 4.1 1.4 5.5
Administrative expenses (28.5) (24.3) (52.8) (21.3) (4.7) (26.0)
Operating profit 70.8 (23.9) 46.9 64.7 (3.3) 61.4
-------------------------- ---------- ----------- ---------- ---------- ----------- ---------
Non-underlying items
Non-underlying items are as follows:
2023 2022
GBPm GBPm
Restructure and impairment of transport related assets (19.5) -
Cloud computing configuration and customisation costs (3.2) (4.1)
Acquisition related costs (0.5) (1.0)
Amortisation of acquired intangibles (1.1) (0.6)
Gain on disposal of businesses 0.4 0.9
Release of warranty provision - 1.0
Net profit on disposal of assets including freehold
property - 0.5
(23.9) (3.3)
------------------------------------------------------- ------ -----
1 Comparatives have been restated due to a required change in
accounting policy as explained in Note 1 'Accounting policies'.
a) Restructure and impairment of transport related assets
During the year, the Group has undertaken a strategic
restructure of its transport operations recognising a restructuring
charge of GBP19.5m to the income statement (FY22: GBPnil). The
Group is seeking to move to a digitally enabled transport system
and this restructure triggered the Group to reconsider its current
Cash Generating Units from an impairment perspective. The Group has
recorded an impairment of GBP19.1m relating to both right of use
assets and computer software used primarily around closed book
contracts. The restructuring charge also includes an amount GBP0.4m
of redundancy related costs as the Group seeks to exit closed book
contracts .
b) Cloud computing configuration and customisation costs
The Group is undertaking a major systems implementation for new
cloud computing software, resulting in costs of GBP3.2m (2022:
GBP4.1m) being recognised as an expense. The project is ongoing
with further implementation of modules and an associated
restructuring expected in the year ending 31 March 2024, with an
associated cost of GBP4m.
Due to the size and nature of these costs they are presented as
a non-underlying item as they are not reflective of underlying
performance.
c) Acquisition related costs
A balance related to estimated costs of M&A activities has
been recognised in non-underlying in the financial year.
In the prior year, as part of the acquisition of Cygnia, the
Group incurred acquisition related costs, professional fees and
integration costs of GBP1.0m which have been recognised as an
expense as required by IFRS 3 Business Combinations.
d) Amortisation of acquired intangibles
As part of the acquisition of Cygnia the Group has recorded
finite-life intangible assets identified as part of the purchase
price allocation accounting in line with IFRS 3 Business
combinations. The amortisation of these finite-life intangibles is
presented in non-underlying with a total expense in the period of
GBP1.1m (2022: GBP0.6m).
e) Gain on disposal of businesses
In the year ended 31 March 2023, GBP0.4m (2022: GBP0.9m) of
contingent consideration was recognised related to the Group's
disposal of its Containers business in October 2020, which has been
recognised as non-underlying consistent with the presentation of
the profit on disposal recognised in the prior year. The contract
terms allow for further sums to be received until January 2024.
f) Release of warranty provision
In the prior year the Group released the value of a potential
claim under a historical warranty provision, dating back to 2015,
as any outflow of economic benefits is now considered to be remote.
As the original provision was recognised as a non-underlying item,
the write-back has been recognised in a consistent manner.
g) Net profit on disposal of assets including freehold
property
Profits and losses arising on the disposal of significant assets
are considered non-underlying as these transactions are only
incidentally related to the trading activities of the Group. During
the current and prior year the Group disposed of a number of
specialist vehicles that were not required for ongoing operations.
In the prior year a profit on disposal of GBP0.5m was
recognised.
3. Net financing costs
2023 2022
Note GBPm GBPm
-------------------------------------------- ---- ------- -----
Interest income 0.2 -
Interest on the net defined benefit pension 9 3.4 1.1
-------------------------------------------- ---- ------- -----
3.6 1.1
-------------------------------------------- ---- ------- -----
Interest expense (5.5) (2.1)
Interest on lease liabilities (6.2) (5.2)
Unwinding of discount on provisions 8 (0.6) (0.4)
(12.3) (7.7)
-------------------------------------------- ---- ------- -----
Net financing costs (8.7) (6.6)
-------------------------------------------- ---- ------- -----
4. Income tax expense
Recognised in the income statement
2023 2022
GBPm GBPm
---------------------------- ------ -----
Current tax expense
Current year 4.8 3.6
Adjustments for prior years - 4.5
---------------------------- ------ -----
4.8 8.1
---------------------------- ------ -----
Deferred tax expense
Current year 0.4 3.7
Adjustments for prior years (0.2) (4.9)
---------------------------- ------ -----
0.2 (1.2)
---------------------------- ------ -----
Total income tax expense 5.0 6.9
---------------------------- ------ -----
Reconciliation of total income tax expense
2023 2022
GBPm GBPm
---------------------------------------------------------------- ----- -----
Profit before tax 38.2 54.8
---------------------------------------------------------------- ----- -----
Income tax using the UK corporation tax rate of 19% (2022: 19%) 7.3 10.4
Non-deductible expenditure 0.1 0.1
Recognition of tax losses (0.4) -
Non-taxable income included in non-underlying items 0.1 -
Tax incentives - super capital allowances (1.9) (1.4)
Change in UK corporation tax rate - (1.8)
Adjustments for prior years
- current tax - 4.5
- deferred tax (0.2) (4.9)
---------------------------------------------------------------- ----- -----
Total tax expense for the year 5.0 6.9
---------------------------------------------------------------- ----- -----
Recognised in other comprehensive income
2023 2022
GBPm GBPm
--------------------------------------------------------------------------- ------ -----
Items which will not subsequently be reclassified to the income statement:
Remeasurements of defined benefit pension liability (2.0) 11.8
Impact of change in UK corporation tax rate 1.4 2.9
Current tax on contributions on defined benefit pension schemes (3.6) -
--------------------------------------------------------------------------- ------ -----
Total recognised in other comprehensive income (4.2) 14.7
--------------------------------------------------------------------------- ------ -----
Recognised directly in equity
2023 2022
GBPm GBPm
------------------------------------------------- ------ -----
Current tax on share based payment transactions (0.1) (0.3)
Deferred tax on share based payment transactions 0.4 (0.1)
------------------------------------------------- ------ -----
0.3 (0.4)
------------------------------------------------- ------ -----
The main UK corporation tax rate remained at 19% (2022: 19%).
The Finance Bill 2021 increases the corporation tax rate to 25% as
from 1 April 2023. This Bill was substantively enacted on 24 May
2021 and therefore has been incorporated into the deferred tax
balance at 31 March 2023.
The Group maintains an immaterial provision against tax risks,
which is included within income tax payable.
The total tax expense above includes a tax credit on
non-underlying items of GBP4.7m (2022: GBP0.6m).
5. Earnings per share
The basic earnings per share of 26.9p (2022: 38.6p) is
calculated based on the profit attributable to the equity
shareholders of Wincanton plc of GBP33.2m (2022: GBP47.9m) and the
weighted average shares in issue excluding those held within an
Employee Benefit Trust throughout the year as calculated below of
123.2m (2022: 124.1m). The diluted earnings per share calculation
is based on there being 0.3m (2022: 1.4m) additional shares deemed
to be issued at GBPnil consideration under the Company's share
option schemes.
2023 2022
millions millions
------------------------------------------------------------------- --------- ---------
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the year(1) 123.9 124.1
Net effect of shares issued and purchased during the year (0.7) -
------------------------------------------------------------------- --------- ---------
123.2 124.1
------------------------------------------------------------------- --------- ---------
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares for the year (as above) 123.2 124.1
Effect of share options in issue 0.3 1.4
------------------------------------------------------------------- --------- ---------
123.5 125.5
------------------------------------------------------------------- --------- ---------
1 The number of shares excludes 1.6m Ordinary Shares (2022:
0.7m) being the weighted average number of the Company's own shares
held within an Employee Benefit Trust.
An alternative earnings per share measure is set out below,
being earnings before non-underlying items, including exceptional
items, amortisation of acquired intangibles and related tax where
applicable, since the Directors consider that this provides further
information on the underlying performance of the Group:
2023 2022
pence pence
------------------------------ ------ ------
Underlying earnings per share
- basic 42.5 40.8
- diluted 42.4 40.3
------------------------------ ------ ------
Underlying earnings are determined as follows:
2023 2022
Note GBPm GBPm
------------------------------------------------------------------------- ---- ------ -----
Profit for the year attributable to equity shareholders of Wincanton plc 33.2 47.9
Non-underlying items 2 23.9 3.3
Tax impact of non-underlying items (4.7) (0.6)
------------------------------------------------------------------------- ---- ------ -----
Underlying earnings 52.4 50.6
------------------------------------------------------------------------- ---- ------ -----
6. Dividend
Dividends paid in the year comprise:
2023 2022
GBPm GBPm
----------------------------------------------------------------------------------- ----- -----
Final dividend for the year ended 31 March 2022 of 8.00p per share (2021: 7.50p) 9.9 9.4
Interim dividend for the year ended 31 March 2023 of 4.40p per share (2022: 4.00p) 5.4 4.9
----------------------------------------------------------------------------------- ----- -----
15.3 14.3
----------------------------------------------------------------------------------- ----- -----
The Directors are proposing a final dividend of 8.80p per share
for the year ended 31 March 2023 (2022: 8.00p) which, if approved
by shareholders, will be paid on 11 August 2023 to shareholders on
the register on 14 July 2023, an estimated total of GBP10.9m. The
proposed final dividend is subject to approval by shareholders at
the Annual General Meeting on 12 July 2023 and in accordance with
accounting standards has not been included as a liability in these
financial statements.
The Employee Benefit Trust has waived the right to receive
dividends in respect of the shares it holds.
7. Analysis of changes in net debt
31 March 2022
(Restated)(1) Cash flow Non-cash movements 31 March 2023
GBPm GBPm GBPm GBPm
------------------------------------------------------- --------------- --------- ------------------ -------------
Bank loans and overdrafts (25.0) 25.0 - -
------------------------------------------------------- --------------- --------- ------------------ -------------
Financial liabilities arising from financing activities (25.0) 25.0 - -
Cash at bank and in hand 28.7 (15.5) - 13.2
Bank overdrafts classed as cash equivalents - - - -
------------------------------------------------------- --------------- --------- ------------------ -------------
Net cash excluding lease liabilities 3.7 9.5 - 13.2
Lease liabilities (206.7) 48.7 (48.4) (206.4)
------------------------------------------------------- --------------- --------- ------------------ -------------
Net debt including lease liabilities (203.0) 58.2 (48.4) (193.2)
------------------------------------------------------- --------------- --------- ------------------ -------------
(1) Certain comparatives have been restated due to prior year
adjustment as explained in Note 1 'Accounting policies'.
8. Provisions
Insurance Property Other provisions Total
Note GBPm GBPm GBPm GBPm
---------------------- ---- ----------- ---------- ---------------- -------
At 1 April 2022 24.1 14.8 4.4 43.3
Created 9.4 0.7 2.5 12.6
Utilised (6.2) (0.3) (0.3) (6.8)
Released (5.1) (0.7) (0.6) (6.4)
Unwinding of discount 3 0.4 0.2 - 0.6
---------------------- ---- ----------- ---------- ---------------- -------
At 31 March 2023 22.6 14.7 6.0 43.3
---------------------- ---- ----------- ---------- ---------------- -------
Current 5.1 1.5 4.7 11.3
Non-current 17.5 13.2 1.3 32.0
---------------------- ---- ----------- ---------- ---------------- -------
22.6 14.7 6.0 43.3
---------------------- ---- ----------- ---------- ---------------- -------
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 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. The
dilapidation provisions are expected to be utilised at the end of
the lease term. Estimated costs have been discounted at a rate
based on the Group's assessment of a risk-free rate, with any
estimated income being discounted at a rate reflecting an
appropriate level of risk.
Other provisions include the estimated costs of the warranties
and indemnities provided on disposal of businesses, together with
provision for sundry claims and settlements where the outcome is
uncertain.
9. Employee benefits
Pension schemes
Employees of Wincanton participated in funded pension
arrangements in the UK and Ireland during the year ended 31 March
2023, details of which are given below.
The principal Wincanton scheme in the UK (the Scheme) is a
funded arrangement which has two defined benefit sections and two
defined contribution sections, called the Wincanton Retirement
Savings Section and the Wincanton Pension Builder Plan. The
employees of Wincanton Ireland Limited are eligible to participate
in a separate defined contribution scheme. Assets of these pension
arrangements are held in separate Trustee administered funds
independent of Wincanton. The weighted average duration of the
funded defined benefit obligation is approximately 13 years.
Contributions
The deficit funding contribution in the year, net of
administration expenses, was GBP20.1m (2022: GBP18.5m).
A formal valuation of the scheme has begun as at 31 March 2023
and will assist in determining the future company contributions
schedule. The previous agreement from September 2020 will continue
until a new agreement is in place. Under the existing agreement
Group is expecting to make deficit funding contributions of
GBP22.7m, being the annual deficit contribution of GBP23.6m less
certain administration expenses mentioned above. In addition, other
administration costs of the Scheme will be borne directly by the
Group; these are expected to total GBP1.1m.
Net defined benefit asset
The assets and liabilities of the defined benefit sections of
the Group are calculated in accordance with IAS 19 Employee
Benefits (Revised) and are set out in the tables below.
The calculations under IAS 19 are based on actuarial assumptions
which are the best estimates chosen from a range of possible
assumptions about the long term future which, unless by chance,
will not necessarily be borne out in practice. The fair value of
the assets, which are not intended to be realised in the short
term, may be subject to significant change before they are
realised, and the present value of the liabilities is derived from
cash flow projections over long periods and is thus inherently
uncertain.
2023 2022
GBPm GBPm
------------------------------------------------------ ------- ---------
Present value of unfunded defined benefit obligations (1.9) (2.5)
Present value of funded defined benefit obligations (774.5) (1,091.3)
Fair value of Scheme assets 891.1 1,208.3
------------------------------------------------------ ------- ---------
Net defined benefit asset 114.7 114.5
------------------------------------------------------ ------- ---------
The reduction in obligations in the year is driven by the
increase in the discount rate which has been impacted by external
market factors. The discount rate has been consistently calculated
using high yield corporate bond rates. The asset has moved in line
with the asset balance given the balance being hedged to the
liability.
The net defined benefit asset, after taking into account the
related deferred tax liability, is GBP86.0m (2022: GBP85.9m).
Deferred tax is recognised at 25% (2022: 25%) as the Group expects
the surplus to reduce over time, rather than obtained as a refund
of the surplus on winding up.
Actuarial assumptions
The principal actuarial assumptions for the Scheme and for the
UK unfunded arrangement at the balance sheet date were as
follows:
2023 2022
% %
--------------------------------------------- --------- ---------
Discount rate 4.75 2.70
Price inflation rate - RPI 3.25 3.85
Price inflation rate - CPI 2.50 3.25
Rate of increase of pensions in deferment(1) 2.50-2.50 2.50-3.25
Rate of increase of pensions in payment (1) 1.90-3.15 2.20-3.65
--------------------------------------------- --------- ---------
1 A range of assumed rates exist due to the application of
annual caps and floors to certain elements of service.
The assumptions used for mortality rates for members of these
arrangements at the expected retirement age of 65 years are as
follows:
2023 2022
Years Years
--------------------- ------ ------
Male aged 65 today 20.4 20.7
Male aged 45 today 21.6 22.1
Female aged 65 today 22.8 23.1
Female aged 45 today 25.4 25.5
--------------------- ------ ------
10. Financial Covenants
The Group has a GBP175.0m (2022: GBP175.0m) committed syndicated
bank facility which matures in March 2027. The RCF requires the
Group to comply with three financial covenants at 30 September and
31 March each financial year and the Group operates comfortably
within these covenants:
Covenant Calculation Ratio 2023 2022
------------------- ---------------------------------------------------------------------------- ------- ---- ----
Leverage ratio Consolidated net borrowings(A)/Consolidated EBITDA (B) <3.0:1 0.5 0.7
Interest cover Consolidated EBITDA (B)/Consolidated net finance charges (C) >3.5:1 17.1 38.8
Consolidated EBITDA (B) plus operating lease costs (D) /Consolidated net
finance charges (C)
Fixed charge cover plus operating lease costs (D) >1.4:1 2.6 2.7
------------------- ---------------------------------------------------------------------------- ------- ---- ----
A reconciliation of these terms to the reported amounts is as
follows:
2023 2022
------------------------------------------------------- ------ -----
Reported net cash (13.2) (3.7)
Finance lease liability under IAS 17 17.8 15.6
Cash held by captive insurer 3.9 9.2
Guarantees provided 28.9 25.9
-------------------------------------------------------- ------ -----
Consolidated net borrowings for covenant reporting (A) 37.4 47.0
-------------------------------------------------------- ------ -----
2023 2022
----------------------------------------------- ------ ------
Underlying operating profit 70.8 64.7
Depreciation, amortisation and impairments 51.1 43.6
------------------------------------------------ ------ ------
Underlying EBITDA 121.9 108.3
Adjustment to frozen GAAP (IFRS 16 to IAS 17) (48.7) (42.9)
Share based payment charges 0.4 0.5
Consolidated EBITDA for covenant reporting (B) 73.6 65.9
------------------------------------------------ ------ ------
2023 2022
---------------------------------------------------- ----- -----
Net interest payable 8.7 6.6
Adjustment to frozen GAAP (remove IFRS 16 interest) (6.2) (5.2)
RPF interest (0.5) (0.2)
Arrangement fees (0.5) (0.2)
Interest on net defined benefit asset 3.4 1.1
Other discount unwinding (0.6) (0.4)
----------------------------------------------------- ----- -----
Covenant net finance charges (C) 4.3 1.7
----------------------------------------------------- ----- -----
2023 2022
------------------------------------------------- ---- ----
Operating lease costs for covenant reporting (D) 39.5 35.9
-------------------------------------------------- ---- ----
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