Wincanton : Preliminary announcement of results for the financial year ended 31 Ma…

Word 2003 Template 9 June 2016 WINCANTON plc Preliminary Announcement of Results for the financial year ended 31 March 2016

Strong earnings growth and debt reduction delivered, dividends reintroduced

Wincanton plc ("Wincanton" or the "Group"), a leading provider of supply chain solutions in the UK and Ireland, today announces its preliminary results for the year ended 31 March 2016.

2016	2015	Change	Change (excl. WRM)
Revenue (£m)	1,147.4	1,107.4	3.6%	4.4%
Underlying EBITDA (£m)	65.4	64.1	2.0%	5.3%
Underlying operating profit (£m)	50.9	49.7	2.4%	5.4%
Underlying operating margin (%)	4.4%	4.5%
Underlying profit before tax (£m)	35.3	31.4	12.4%
Profit before tax (£m)	65.8	24.9
Underlying EPS (pence)	23.9	21.1	13.3%
Basic EPS (pence)	50.7	16.6
Closing net debt (£m)	(39.5)	(57.6)	(31.4)%
Dividend per share - final (pence)	5.5p	-

Highlights

• Revenue growth of 4.4%* with a strong performance on new business wins and additional volumes in retail general merchandise. New business wins include a five year contract to manage B&Q's distribution centres and a three year agreement for transport logistics with Halfords. Contract renewals signed with long-established customers, including HJ Heinz and Müller Milk and Ingredients (previously Dairy Crest)

• Underlying operating profit increased by 5.4%*. Pullman business trading profitably with all onerous contracts now exited

• Strong underlying EPS growth of 13.3% to 23.9 pence per share (2015: 21.1 pence per share) driven by higher underlying operating profit together with lower finance and tax charges

• Disposal of Records Management business for enterprise value of £60m and a gain on sale of £32.4m. Cash proceeds used to repay debt and make an additional £7m contribution in year to our pension scheme

• Reintroduction of dividends with a recommended final dividend of 5.5p proposed for 2015/16. Dividend policy expected to be progressive with annual growth broadly matched to growth in underlying earnings

Note: Underlying measures of performance for EBITDA, operating profit, profit before tax and earnings per share are stated before net other items of £30.5m (2015:

£(6.5)m), comprising amortisation of acquired intangibles of £(4.5)m (2015: £(6.5)m) and exceptionals of £35.0m (primarily the gain on disposal of the Records Management business) (2015: £nil). Operating profit, including these items, amounted to £81.4m (2015: £43.2m).

* on a like for like basis excluding WRM from both years.

Adrian Colman, Wincanton Chief Executive Officer commented:

"After a year of continued progress, the reintroduction of dividends is an important milestone and an indicator of the health of Wincanton. We believe that the business is on a strong foundation, having reduced debt and onerous lease obligations over the last few years, to enable it to invest for future growth as well as to meet the needs of its key stakeholders. The Group is well positioned, with a strong track record of profitable growth, to make further progress for the benefit of shareholders and all other stakeholders including the pension scheme, our customers and all colleagues in the business. We look forward to the future with confidence."

For further enquiries please contact: Wincanton plc Adrian Colman, Chief Executive Officer Tim Lawlor, Chief Financial Officer Buchanan Richard Oldworth

Tel: 020 7466 5000 today, thereafter Tel: 01249 710000 Tel: 020 7466 5000

A meeting for analysts will be held at Buchanan, 107 Cheapside, London, EC2V 6DN on 9 June 2016 commencing at 9.30am. Wincanton's Preliminary Results 2016 are available at www.wincanton.co.uk

An audio webcast of the analysts' meeting will be available from 12 noon today

http://vm.buchanan.uk.com/2016/wincanton090616/registration.htm

Chairman's statement Introduction 2015/16 proved to be a year of intense activity for Wincanton and also something of a milestone. The Records Management business (WRM), which lacked fit with the rest of the Group, was sold for an enterprise value of £60m, which represents an excellent return for shareholders. The Pullman business was stabilised and returned to profitability in the second half. The Contract logistics business continued to grow revenues and profits in a market that remains highly competitive as our customers strive to make progress across a broad cross-section of changing markets.

Whatever the sector, rising customer expectations, unprecedented information transparency, the rapid evolution of multichannel and accelerating technological change all impose intense cost efficiency and responsiveness challenges on customers' supply chains, of which Wincanton is an integral part. Our role in meeting and exceeding our customers' needs and requirements have been achieved with the utmost proficiency.

A key milestone has been the Board's decision to resume the payment of an annual dividend, starting with a recommended final dividend for the current year. Over the last four years, the Group has sought to simplify and concentrate on its UK contract logistics heartland, strengthen what was a heavily geared balance sheet and drive customer and operational focus. It is appropriate to record that shareholders have without exception been supportive and patient during this period. This has enabled the Board to address Wincanton's priorities in the appropriate order and for the long term benefit of all stakeholders.

Results

Group revenues at £1.15bn were up by 3.6% on the prior year and by 4.4% excluding the WRM disposal from both years. Underlying operating profits were up by 2.4% from £49.7m to £50.9m and by 5.4% excluding WRM again from both years.

The Contract logistics business continued to grow revenues and profits materially during the year. Although the new business pipeline provided fewer large opportunities than in the prior year, the emphasis on existing customer account growth and renewal together with delivering cost efficiencies once again underwrote financial performance. Within Specialist businesses, profits were down, due to only a part year contribution from WRM prior to disposal and increased first half losses from Pullman, prior to the successful resolution of its two onerous customer contracts in the second half.

Underlying profit before tax was up 12.4% to £35.3m, reflecting lower financing costs due to reduced average net debt and last year's refinancing. Underlying earnings per share continued to advance, up by 13.3% to 23.9p.

The focus on strengthening the balance sheet continued. Net debt at the year end was down, from £57.6m in the prior year, to

£39.5m. The net cash inflow from the WRM disposal plus the free cash flow generated within the year were in fact well in excess of this £18.1m reduction. These cash inflows were partly offset by a managed reduction in year end working capital movements which has resulted in a £37.3m reduction in our trade payables from last year. As a result of the reduced working capital volatility, average net debt and period end net debt will be more closely aligned in future.

The period end IAS 19 accounting deficit stood at £105.6m (gross of deferred tax), down from £144.2m in the prior year. However, the more meaningful actuarial deficit is significantly higher, and the Board continues to be focused on meeting the Group's ongoing obligations to this important stakeholder group.

People and the Board

There was a smooth transition of Adrian Colman into his new role of Chief Executive Officer, and I would like to thank the outgoing Chief Executive, Eric Born, for his contribution to Wincanton's recovery in his four years in the role. Following Adrian's promotion in August 2015, a search was conducted to appoint his replacement as Group Finance Director. It was a pleasure to welcome Tim Lawlor to the Board in that role, his appointment effective from the end of September 2015. Tim's extensive experience, and his ready understanding of a demanding business to business contracting environment has already proved an asset. There were no other Board changes during the period.

Most importantly, the hard work and dedication of Wincanton's 17,500 employees should once again be recognised. The Board appreciates that their commitment to safely and enthusiastically meeting the needs of our customers remains one of Wincanton's key competitive advantages. We do not take it for granted.

Dividend

The Board is proposing a final dividend of 5.5p for 2015/16 payable in August 2016. It is anticipated that in future years, the interim and final dividend split will be broadly one-third / two-thirds.

The Board's intention is to adopt a progressive dividend policy, with annual dividend growth broadly matched to the growth in underlying earnings.

Outlook

The key themes that have been the hallmark of Wincanton's recovery phase over the last four years - the strong emphasis on contract renewal and customer retention, delivering internal and customer cost efficiencies, on operational and portfolio simplification and on generating free cash flow - will remain.

Importantly, the Group now has the financial capability to also support limited scale investments in skills and technology to both protect and grow the core contract logistics business for the longer term. This will be done progressively, and in bite size chunks, to avoid raising the Group's overall risk profile.

During the coming year, the Board expects Wincanton to make continued progress.