TIDMUKM
RNS Number : 3506P
UK Mail Group PLC
17 November 2016
17(th) November 2016
UK MAIL GROUP plc
UNAUDITED INTERIM RESULTS
For the 6 months ended 30 September 2016
'Strong momentum leading into peak trading period'
Results highlights
-- Group revenues down 3.2% to GBP230.2m (2015: GBP237.6m)
-- Group profit before tax (pre-exceptional) up 16.9% to GBP5.8m (2015: GBP4.9m)
-- Group profit before tax (post-exceptional) up 158.4% to GBP5.8m (2015: GBP2.2m) *
-- Net debt at period end of GBP5.7m (2015: GBP12.7m)
-- Interim dividend of 5.5p (2015: 5.5p) per share
* 2015 interim results included net exceptional costs of
GBP2.7m, primarily relating to the cost of relocating the central
hub
Recommended offer from Deutsche Post AG ("Deutsche Post
DHL")
-- On 28 September 2016, Deutsche Post DHL and UK Mail announced
the terms of a recommended cash offer by Deutsche Post DHL of 440p
per share
-- Deutsche Post DHL currently has received irrevocable
undertakings to vote in favour of the offer representing, in
aggregate, 62.6% of UK Mail's ordinary share capital
-- The offer is conditional on, amongst other things, UK Mail
shareholder approval at a General Meeting and a Court Meeting
convened for 18 November 2016, Court sanction at a hearing expected
to be on 20 December 2016, and European Commission ('EC') merger
control clearance.
Peter Kane, Chairman of UK Mail, said:-
"Today's results are further evidence of the good strategic
progress we have made in recent years. Our operations are
consistently delivering strong service levels while our new
automated hub continues to perform very well and is starting to
achieve the targeted efficiency levels. We are also creating the
capacity for future growth with the further development of our site
network and have recently won a number of major new customers.
Given this positive momentum in our business, we are confident
heading into our peak trading period.
"However, the Board believes that UK Mail will benefit
significantly from becoming part of Deutsche Post DHL, and will be
better positioned to continue to develop our parcels and mail
businesses with the benefit of their greater financial and
operational resources. Furthermore, the Offer provides shareholders
with the opportunity to realise their investment for cash at a
significant premium to the levels at which the share price has
traded in the recent months before announcement of the offer."
For further information, please contact:
UK Mail Group plc
Steven Glew, Group Finance
Director 0175 370 6070
MHP Communications
John Olsen
Giles Robinson
Gina Bell 0203 128 8100
Introduction
The results for the first half are in line with the Board's
expectations.
With our operations consistently delivering strong service
levels to customers and our new automated hub continuing to perform
very well, the focus in the half year has been on improving
efficiency to eliminate excess costs and improve the profitability
of the business.
The new hub is now starting to achieve the required efficiency
levels, and we are also creating the capacity for future growth
with the further development of our site network. With this
positive momentum, we are confident that the Group is well
positioned ahead of our peak trading period
Reported Group revenues for the first half decreased by 3.2%
compared to the same period last year. Group profit before tax and
exceptional items increased by 16.9%, or GBP0.9m, to GBP5.8m (2015:
GBP4.9m). Results for the first half of last year included net
exceptional costs of GBP2.7m, primarily relating to the cost of
relocating the central hub, whereas there were net exceptional
items of GBPnil in the first half of this year. Group profit before
tax and post-exceptional items increased by 158.4% to GBP5.8m
(2015: GBP2.2m).
In our Parcels business (53% of group revenues) revenues reduced
by 1.2%, partially due to average daily volumes being down by 2.1%.
This decline reflects the exceptionally strong growth in the first
half of last year, when volumes were up some 9% on the prior year,
largely due to the volumes taken on from City Link in the first
quarter, some of which were short-term in nature. Parcels operating
costs have reduced compared to the first half of last year as our
operations are now starting to achieve the targeted efficiency
levels. This has meant that the Parcels operating margin has
increased to 7.2% (2015: 6.3%), and the operating profit has
increased to GBP8.8m (2015: GBP7.9m).
Revenues in our Mail business (47% of group revenues) reduced by
5.3%. Our daily mail volumes reduced by 0.4% in the half year. The
slight volume decline is compared to an overall mail market volume
decline of some 4.0%. We continue to offset the market decline with
new customer wins and strong customer retention. The mail market
remains highly competitive and the resultant revenue decline has
meant that the operating profit decreased by 16.0% to GBP4.3m
(2015: GBP5.1m) with the operating margin reducing to 4.0% (2015:
4.5%). We continue to see good progress from imail and related new
product innovations.
The Group remains in a sound financial position. Net debt at the
period end was GBP5.7m (2015: net debt GBP12.7m).
The Board has declared an Interim Dividend of 5.5p per share
(2015: 5.5p), payable on 2 December 2016 to shareholders on the
register on 25 November 2016.
RECOMMED OFFER FROM DEUTSCHE POST DHL
On 28 September 2016, the Boards of Deutsche Post DHL and UK
Mail announced the terms of a recommended cash offer (the "Offer")
of 440p per share by Deutsche Post DHL for the entire issued and to
be issued ordinary share capital of UK Mail. Deutsche Post DHL
currently has received irrevocable undertakings to vote in favour
of the offer in respect of c.62.6% of UK Mail's ordinary share
capital.
This offer represents a premium of approximately 43.1% to the
closing price on 27 September 2016 (being the date before
announcement of the Offer), and of approximately 43.2% to the
volume-weighted average price for the previous three-month period
ended on that date.
We have made good strategic progress in recent years,
establishing leading positions in our key markets of parcels and
mail, investing in additional capacity in our operations and in IT
and product and service innovation. Today's results represent
further evidence of that progress.
However, the Board believes that UK Mail will benefit
significantly from becoming part of Deutsche Post DHL for the
reasons stated in the Scheme Document posted to UK Mail
shareholders on 26 October 2016, and will be better positioned to
continue to develop our parcels and mail businesses with the
benefit of their greater financial and operational resources.
Furthermore, the Offer provides our shareholders with the
opportunity to realise their investment for cash at a significant
premium to the levels at which the share price has traded in recent
months.
The Offer remains conditional on, amongst other things, UK Mail
shareholder approval at a General Meeting and a Court Meeting
convened for 18 November 2016, Court sanction at a hearing expected
to be held on 20 December 2016, and European Commission merger
control clearance.
Results
The results can be summarised as follows:
Six months ended 30(th)
September
Continuing operations Unaudited Unaudited Inc/(Dec)
2016 2015 %
GBPm GBPm
Group revenue 230.2 237.6 (3.2)%
========== ========== ==========
Operating profit (before
exceptional items) 6.0 5.2 15.0%
Net finance costs (0.2) (0.3) 16.1%
---------- ---------- ----------
Profit before tax (before
exceptional items) 5.8 4.9 16.9%
Net exceptional items - (2.7) -
---------- ---------- ----------
Profit before tax (after
exceptional items) 5.8 2.2 158.4%
Taxation (1.6) (0.5) 203.5%
---------- ---------- ----------
Profit after taxation 4.2 1.7 144.3%
========== ========== ==========
Basic earnings per share
- continuing operations 7.6p 3.1p 146.0%
Underlying basic earnings
per share * - continuing
operations 7.6p 7.1p 6.4%
* - excludes exceptional items
Revenue and operating profit (before exceptional items) are
analysed as follows:
Revenue Operating Profit
(before exceptional
items)
Inc/ Inc/
2016 2015 (Dec) (Dec)
2016 2015
GBPm GBPm % GBPm GBPm %
Parcels 122.5 124.0 (1.2)% 8.8 7.9 12.6%
Mail 107.7 113.6 (5.3)% 4.3 5.1 (16.0)%
Total 230.2 237.6 (3.2)% 13.1 13.0 1.3%
======= ======= ============
Central costs (7.1) (7.8) 7.9%
------ ------ ----------
Operating profit before exceptional
items 6.0 5.2 15.0%
====== ====== ==========
Parcels
Revenues in Parcels, which comprises the Group's
business-to-business (B2B), business-to-consumer (B2C)
international parcel delivery service and courier operations, were
down 1.2% to GBP122.5m (2015: GBP124.0m).
Parcels average daily volumes decreased by 2.1% compared to last
year. This decline reflects the exceptionally strong growth in the
first half of last year, when volumes were up some 9% on the prior
year, largely due to the volumes taken on from City Link in the
first quarter, some of which were short-term in nature. We continue
to see an on-going volume mix change towards the lower margin B2C
segment however there has been strong momentum in recent weeks with
a number of significant contract wins.
The Parcels operating margin for the period increased to 7.2%
(2015: 6.3%), resulting in operating profit for the period
increasing to GBP8.8m (2015: GBP7.9m).
Our Parcels operations are now starting to achieve the targeted
efficiency levels under the direction of Peter Fuller who joined as
Operations Director in April 2016. The automated sortation
equipment is operating efficiently, and service levels are the
highest we have achieved in our recent history. The focus has been
on maintaining these performance levels whilst driving operating
efficiencies, eliminating the excess costs experienced last year
and starting to achieve the expected benefits from our investment
in automation. These are now being delivered with further
improvements planned for the second half year.
We are also increasing our capacity through improved operating
methods at our central hub combined with developing our delivery
networks. Both our Dartford and Basildon sites will see significant
capacity increases in the second half of the year.
The re-engineering of our linehaul template to fully align it
with the efficiency of the new hub is now complete. We have
introduced a new computerised model to optimise the planning of our
linehaul routing, with the new routing being rolled out during the
second half of the year. This is expected to deliver improvements
in trunk vehicle utilisation levels and therefore a reduction in
overall linehaul costs.
Key to our parcels market position is the provision of value
added services that customers increasingly demand. A key current
focus is the provision of parcel drop-off and collection points. We
are making good progress in this area following the successful
trial with a multi-site retailer.
Mail
Mail revenues decreased by 5.3% to GBP107.7m (2015:
GBP113.6m).
The Mail market remains highly competitive, and operating
profits decreased by 16.0% to GBP4.3m (2015: GBP5.1m). The
operating margin decreased to 4.0% (2015: 4.5%).
Our daily Mail volumes decreased by 0.4% compared to the same
period last year, while the overall UK mail market has seen a
decline in transactional volumes of some 4% per annum,
demonstrating further market share gains.
This has been achieved through our continued product innovation.
imail, our web-to-print postal service, continues to show good
revenue and profit growth. We continue to invest to increase our
capacity and provide additional services. 'imailprint' has now been
successfully launched, providing a specialist printing service
which, rather than being purely mail-related as with our current
service, can produce printed documents for general usage. We see
this as a medium-term low risk growth opportunity using our
existing infrastructure.
A key growth element of the Mail market is the rising popularity
of packets; a market we estimate to be worth some GBP1.2bn. We have
a clear plan in place to grow our market share, and have recently
opened our new dedicated packets sortation centre in Leeds. This
centre allows us to process all our packet volumes in the same
location, ensuring we can provide a very efficient process and
offer a service that fully meets our customers' requirements. We
have increased the size of our sales team to support this new
capability and are gaining good traction with customers. We
continue to believe that this area will be key to growing our Mail
revenues and profitability in the future.
In July 2015 Ofcom published a Discussion Paper on the review of
the regulation of Royal Mail. We responded to this, making clear
the need for Ofcom to protect and promote competition; to require
Royal Mail to improve its efficiency, with possible price capping,
for the benefit of mail customers; and to require service and
product equivalence between Royal Mail Retail and Wholesale.
Ofcom then published a more detailed Consultation Document in
May 2016. The proposals were generally positive for UK Mail but did
not, in our view, go far enough in requiring Royal Mail to become
more efficient nor in promoting competition. We have responded
accordingly, with more detail and further evidence, and will
continue to press our case ahead of Ofcom's final position being
announced in March 2017.
UK Mail remains a market leader with an operational template
ideally suited to the evolving demands of the mail market. We
remain focussed on growing our business by handling additional mail
for existing customers and winning volumes from other Downstream
Access operators. We continue to invest for the future, and see
substantial growth opportunities for the medium and longer
term.
Central costs
Central costs for the period reduced by 7.9% to GBP7.1m (2015:
GBP7.8m). We continue to invest in I.T., although this spend has
been more than offset by savings in other areas.
Net Finance cost
Net finance cost for the period was GBP0.2m (2015: GBP0.3m). The
investment in our new hub and automation is now completed and debt
levels have reduced since last year.
Financial Position
The Group's financial position remains sound. Net debt at the
end of the period was GBP5.7m (2015: GBP12.7m).
Net cash inflow from operations totalled GBP2.7m (2015:
GBP5.7m), including GBP2.7m (2015: GBP5.3m) from continuing
operations.
The total consolidated net cash outflow for the period was
GBP2.2m (2015: inflow GBP1.9m) which included GBP8.1m consumed in
working capital (2015: GBP4.2m), and a net GBP4.1m expended on
capital additions (2015: GBP5.7m).
The Group paid GBP6.0m (2015: GBP7.9m) in dividends during the
period.
Capital Additions
Capital additions for the period were as follows:
This can be summarised as follows:
6 months to 30 Year to
September 31 March
2016 2015 2016
GBPm GBPm GBPm
Underlying capital
additions 3.5 4.1 10.2
Investment in new
hub - 1.3 1.5
Investment in automation - 1.5 1.5
-------- ------- ----------
Total gross capital
additions 3.5 6.9 13.2
Compensation from
DfT and HS2 - (5.4) (5.4)
-------- ------- ----------
Net capital additions 3.5 1.5 7.8
-------- ------- ----------
The underlying capital addition includes GBP2.6m on I.T. as we
continue to develop our system infrastructure, and GBP0.9m on our
network.
Exceptional items
Details of exceptional items are provided in note 7.
Earnings per share
Underlying basic earnings per share increased by 6.4% to 7.6p
(2015: 7.1p). Basic earnings per share increased 161% to 7.6p
(2015: 2.9p).
Dividend
The Board has declared an Interim Dividend of 5.5p per share
(2015: 5.5p), payable on 2 December 2016 to shareholders on the
register on 25 November 2016.
CURRENT TRADING AND OUTLOOK
Trading in the initial weeks of the second half, and overall
trends within our individual businesses, have been in line with the
Board's expectations.
Our operations are consistently delivering strong service levels
while our new automated hub continues to perform very well and is
starting to achieve the targeted efficiency levels. We are also
creating the capacity for future growth with the further
development of our site network and have recently won a number of
major new customers. Given this positive momentum in our business,
we are confident heading into our peak trading period.
Peter Kane
Chairman
ADDITIONAL DISCLOSURES
Principal risks and uncertainties facing the business
UK Mail's business and share price may be affected by a number
of risks, not all of which are within our control. The process UK
Mail has in place for identifying, assessing and managing risks is
set out in the Corporate Governance Report on page 27 of the 2016
Annual Report and Accounts. The specific principal risks and
uncertainties that may affect the Group's performance, together
with relevant mitigating factors as identified by the Group's risk
management process were discussed on page 28 of the Group's 2016
Annual Report and Accounts. These included risks relating to
operational plan failure, loss of key management, IT systems,
competition, business continuity, physical theft and security, and
legislation and regulation, in addition to financial risks (details
of which can be found in note 25 of the 2016 Annual Report and
Accounts) including credit risk. It is considered that these still
remain the most likely areas of potential risk and uncertainty,
with the position unchanged from that set out in the 2016 Annual
Report and Accounts.
Cautionary statement
This interim announcement contains certain forward-looking
statements, which have been made by the directors in good faith
based on the information available to them up to the time of the
approval of this report and such information should be treated with
caution due to the inherent uncertainties, including both economic
and business risk factors, underlying any such forward-looking
information. Nothing in this report should be construed as a profit
forecast.
Going concern
As stated in note 2 to the condensed consolidated interim
financial statements, the Directors are satisfied that the Group
has sufficient resources to continue in operation. Accordingly,
they continue to adopt the going concern basis in preparing the
condensed consolidated interim financial statements.
Related-party transactions
As stated in note 18 to the condensed consolidated interim
financial statements, there were no transactions with related
parties during the six months ended 30 September 2016 which have
had a material effect on the results or the financial position of
the Group. The nature of the related party transactions has not
changed from those described in the Group's 2016 Annual Report and
Accounts.
Consolidated Statement of Comprehensive
Income
for the six months ended
30 September 2016
Unaudited Unaudited Audited
Six months Six months Year
to 30 to 30 to
September September 31 March
2016 2015 2016
Continuing operations Note GBPm GBPm GBPm
Revenue 6 230.2 237.6 481.0
Cost of sales (204.9) (213.2) (431.6)
------------
Gross profit 25.3 24.4 49.4
Administrative expenses (19.3) (19.2) (38.2)
------------ ------------ ----------
Operating profit before
exceptional items 6.0 5.2 11.2
Profit on sale of
national hub 7 - 1.1 1.1
HS2 compensation 7 0.3 6.8 16.5
Cost of automation
implementation 7 - (0.7) (0.6)
National hub relocation
costs 7 - (6.7) (7.1)
Impairment of intangible
assets 7 - (3.2) (3.8)
Impairment of tangible
assets 7 - - (1.0)
Management reorganisation 7 (0.3) - (1.4)
Net exceptional items
- (cost)/income - (2.7) 3.7
Operating profit after
exceptional items 6.0 2.5 14.9
Finance costs (0.2) (0.3) (0.5)
------------ ------------ ----------
Profit before taxation 5.8 2.2 14.4
Taxation - on profit
before exceptional
items 13 (1.6) (1.1) (2.2)
Taxation - on exceptional
items - 0.6 (0.3)
------------ ------------ ----------
Total taxation 13 (1.6) (0.5) (2.5)
------------ ------------ ----------
Profit for the period
from continuing operations 4.2 1.7 11.9
Loss for the period from
discontinued operations - (0.1) -
------------ ------------ ----------
Profit for the period 4.2 1.6 11.9
------------ ------------ ----------
Total comprehensive income
attributable to:
- Continuing operations 4.2 1.7 11.9
- Discontinued operations - (0.1) -
------------ ------------ ----------
Total comprehensive income
attributable to equity
holders of the company 4.2 1.6 11.9
------------ ------------ ----------
Earnings/(loss) per share
from continuing and discontinued
operations
Basic earnings per share
From continuing operations 14 7.6p 3.1p 21.6p
From discontinued
operations 14 - (0.2)p -
------------ ------------ ----------
Total basic earnings per
share 7.6p 2.9p 21.6p
------------ ------------ ----------
Diluted earnings per share
From continuing operations 14 7.6p 3.1p 21.6p
From discontinued
operations 14 - (0.2)p -
------------ ------------ ----------
Total diluted earnings
per share 7.6p 2.9p 21.6p
------------ ------------ ----------
The notes on the following pages form an
integral part of these condensed consolidated
interim financial statements.
Consolidated Balance Sheet
as at 30 September
2016
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
Note GBPm GBPm GBPm
Assets
Non-current assets
Goodwill 9 1.6 1.6 1.6
Intangible assets 9 9.7 7.7 8.9
Investment properties 9 - 1.7 1.7
Property, plant
and equipment 9 73.1 74.4 73.4
Deferred tax assets 0.1 0.6 0.3
84.5 86.0 85.9
-------------- -------------- ------------
Current assets
Inventories 0.3 0.2 0.2
Trade and other
receivables 60.9 70.5 64.3
Cash and cash equivalents 11 4.6 6.5 6.8
Current tax assets - 0.1 -
-------------- -------------- ------------
65.8 77.3 71.3
-------------- -------------- ------------
Liabilities
Current liabilities
Borrowings 11 (6.2) (14.6) (0.2)
Trade and other
payables (68.2) (79.5) (80.1)
Current tax liabilities (1.6) - (0.5)
Provisions 12 (1.4) (0.8) (1.2)
(77.4) (94.9) (82.0)
-------------- -------------- ------------
Net current liabilities (11.6) (17.6) (10.7)
-------------- -------------- ------------
Non-current liabilities
Borrowings 11 (4.1) (4.6) (4.4)
Deferred tax liabilities (2.7) (2.9) (2.8)
Provisions 12 (0.6) (0.7) (0.8)
(7.4) (8.2) (8.0)
-------------- -------------- ------------
Net assets 65.5 60.2 67.2
============== ============== ============
Shareholders' equity
Ordinary shares 10 5.5 5.5 5.5
Share premium 10 15.7 15.6 15.7
Retained earnings 44.3 39.1 46.0
Total shareholders'
equity 65.5 60.2 67.2
============== ============== ============
Consolidated Cash Flow Statement
for the six months ended 30
September 2016
Unaudited Unaudited Audited
31
30 September 30 September March
2016 2015 2016
Continuing operations Note GBPm GBPm GBPm
Profit for the period 4.2 1.7 11.9
Adjustments for:
Net exceptional items 7 - 2.7 5.1
Depreciation and amortisation 9 4.6 4.4 9.0
Share-based payment expense 0.1 0.2 (0.1)
Loss on sale of property,
plant and equipment 0.1 0.1 0.1
Finance costs 0.2 0.3 0.5
Taxation 13 1.6 0.5 2.5
------------- ------------- --------
Operating profit before
changes in working capital 10.8 9.9 29.0
------------- ------------- --------
Decrease/(increase) in
trade and other receivables 3.4 4.1 10.4
(Decrease)/increase in
trade and other payables (11.4) (8.4) (8.1)
(Decrease)/increase in
provisions (0.1) (0.3) (0.3)
------------- ------------- --------
Total cash flow from changes
in working capital - continuing
operations (8.1) (4.6) 2.0
------------- ------------- --------
Cash generated from continuing
operations 2.7 5.3 31.0
------------- ------------- --------
Discontinued operations
(Loss)/profit for the year - (0.1) -
Adjustments for:
Exceptional items 7 - 0.1 -
Operating profit before
changes in working capital
- discontinued operations - - -
------------- ------------- --------
Decrease/(increase) in
trade and other receivables - 1.4 1.4
(Decrease)/increase in
trade and other payables - (0.7) (0.4)
(Decrease)/increase in
provisions - (0.3) (0.7)
------------- ------------- --------
Total cash flow from working
capital - discontinued
operations - 0.4 0.3
------------- ------------- --------
Cash generated from continuing
operations 2.7 5.3 31.0
Cash generated from discontinued
operations - 0.4 0.3
------------- ------------- --------
Total cash generated from
operations 2.7 5.7 31.3
------------- ------------- --------
Income taxes paid (0.3) (0.5) (0.4)
Finance costs paid (0.2) (0.2) (1.8)
Net cash flow from continuing
operating activities 2.2 4.6 28.8
Net cash flow from discontinued
operating activities - 0.4 0.3
------------- ------------- --------
Total net cash flow from
operating activities 2.2 5.0 29.1
------------- ------------- --------
Investing activities
Purchase of property, plant
and equipment (1.0) (8.5) (11.9)
Purchase of intangible
assets (3.1) (2.6) (4.7)
Deferred compensation - 5.4 5.4
Proceeds from sale of property,
plant and equipment - 0.8 -
Net cash flow from investing
activities - continuing
operations (4.1) (4.9) (11.2)
------ ------ -------
Net cash flow from investing
activities - discontinued
operations - - -
------ ------ -------
Total net cash flow from
investing activities (4.1) (4.9) (11.2)
------ ------ -------
Financing activities
Proceeds from re-financing
under finance leases - 13.7 13.7
Repayment of finance leases (0.2) (8.7) (8.9)
Dividends paid to shareholders 15 (6.0) (7.9) (11.0)
Net proceeds from issue
of ordinary share capital - 0.3 0.4
Draw down/(repayment) of
revolving credit facility 5.9 4.4 (9.9)
Net cash flow from financing
activities - continuing
operations (0.3) 1.8 (15.7)
Net cash flow from financing
activities - discontinued
operations - - -
------ ------ -------
Total net cash flow from
financing activities (0.3) 1.8 (15.7)
------ ------ -------
Net (decrease)/increase
in cash and cash equivalents (2.2) 1.9 2.2
Cash and cash equivalents
at the beginning of the
period 6.8 4.6 4.6
Cash and cash equivalents
at the end of the period 11 4.6 6.5 6.8
------ ------ -------
Consolidated Statement of Changes in Equity (unaudited)
for the six months ended 30 September 2016
Attributable to equity holders
of the company
Ordinary Share Retained Total
shares premium earnings equity
Note GBPm GBPm GBPm GBPm
Balance as at 1 April
2016 5.5 15.7 46.0 67.2
Profit for the period - - 4.2 4.2
------------------------ --------- ---------- --------
Total comprehensive income
for the period - - 4.2 4.2
------------------------ --------- ---------- --------
Dividends paid to
shareholders 15 - - (6.0) (6.0)
Employees' share option
scheme:
- share-based payments - - 0.1 0.1
Total transactions
with shareholders
recorded
directly in equity - - (5.9) (5.9)
------------------------ --------- ---------- --------
Balance as at 30
September
2016 5.5 15.7 44.3 65.5
------------------------ --------- ---------- --------
Balance as at 1 April
2015 5.5 15.3 45.3 66.1
Profit for the period - - 1.6 1.6
------------------------ --------- ---------- --------
Total comprehensive income
for the period - - 1.6 1.6
------------------------ --------- ---------- --------
Dividends paid to
shareholders 15 - - (7.9) (7.9)
Employees' share option
scheme:
- share-based payments - - 0.2 0.2
- exercise of share
options - 0.3 - 0.3
- tax charged directly
to equity - - (0.1) (0.1)
------------------------ --------- ---------- --------
Total transactions with
shareholders recorded
directly in equity - 0.3 (7.8) (7.5)
------------------------ --------- ---------- --------
Balance as at 30
September
2015 5.5 15.6 39.1 60.2
------------------------ --------- ---------- --------
Balance as at 1 April
2015 5.5 15.3 45.3 66.1
Profit for the year - - 11.9 11.9
------------------------ --------- ---------- --------
Total comprehensive income
for the year - - 11.9 11.9
------------------------ --------- ---------- --------
Dividends paid to
shareholders 15 - - (11.0) (11.0)
Employees' share option
scheme:
- net proceeds from
issue of ordinary share
capital 0.4 - 0.4
- share-based payments - - (0.1) (0.1)
- tax charged directly
to equity - - (0.1) (0.1)
Total transactions with
shareholders recorded
directly in equity - 0.4 (11.2) (10.8)
------------------------ --------- ---------- --------
Balance as at 31 March
2016 5.5 15.7 46.0 67.2
------------------------ --------- ---------- --------
Notes to condensed consolidated interim financial
statements
1 General information
UK Mail Group Plc ('the Company') and its subsidiaries
(together 'the Group') are engaged in the provision
of parcels, mail and logistical service solutions.
The Company (registration 02800218) is a public
limited company incorporated and domiciled in
England. The address of its registered office
is 120 Buckingham Avenue, Slough, SL1 4LZ. The
Company is listed on the London Stock Exchange
(LSE: UKM).
The condensed consolidated interim financial
statements were approved for issue on 16 November
2016.
The condensed consolidated interim financial
statements do not comprise statutory accounts
within the meaning of Section 434 of the Companies
Act 2006. Within the notes to these financial
statements, the half year periods to 30 September
2016 and 2015 are unaudited. Statutory accounts
for the year ended 31 March 2016 were approved
by the Board of directors on 23 May 2016 and
delivered to the Registrar of Companies. The
report of the auditors on those accounts was
unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement
under Section 498(2) or (3) of the Companies
Act 2006.
2 Basis of preparation
The condensed consolidated interim financial
statements for the half year ended 30 September
2016 have been prepared in accordance with the
Disclosure and Transparency Rules ('DTR') of
the Financial Conduct Authority and with IAS
34, 'Interim financial reporting' as adopted
by the European Union. They do not include all
of the information and disclosures required
for full annual financial statements, and should
be read in conjunction with the consolidated
annual financial statements of the Group as
at and for the year ended 31 March 2016, which
were prepared in accordance with IFRSs as adopted
by the European Union.
The consolidated financial statements of the
Group as at and for the year ended 31 March
2016 are available upon request from the Company's
registered office at 120 Buckingham Avenue,
Slough, SL1 4LZ or at www.ukmail.com.
The condensed consolidated interim financial
statements are presented in Sterling.
After making enquiries, the directors have a
reasonable expectation that the Company and
the Group have adequate resources to continue
in operational existence. The Group meets its
day to day working capital requirements through
operating cash flows, with borrowings to fund
acquisitions and capital expenditure, as necessary.
Movements in the Group's overall net (debt)/funds
position are shown in note 11. The Group has
committed bank facilities in place, comprising
of a five year GBP25m revolving credit facility
available until 31 May 2019, and a GBP10m overdraft
facility available until 31 May 2017. Accordingly
they continue to adopt the going concern basis
in preparing the condensed consolidated interim
financial statements.
3 Accounting policies
The accounting policies applied by the Group
in these condensed consolidated interim financial
statements are consistent with those applied
and disclosed by the Group in its consolidated
annual financial statements as at and for the
year ended 31 March 2016.
Adoption of new standards, and amendments to
standards or interpretations, which are mandatory
for the first time for the financial year beginning
1 April 2016, have had no material impact on
the financial position and performance of the
Group.
4 Changes in accounting estimates
The preparation of the condensed consolidated
interim financial statements requires management
to make judgements, estimates and assumptions
that affect the application of accounting policies
and the reported amounts of assets and liabilities,
income and expense. Actual results may differ
from these estimates.
In preparing these condensed consolidated interim
financial statements, the significant judgements
made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty
were the same as those applied to the consolidated
financial statements as at and for the year ended
31 March 2016.
There have been no material changes in contingent
liabilities during the current interim period.
5 Financial instruments
The activities of the Group exposes it to a number
of financial risks, including credit risk, market
risk, price risk, interest risk, liquidity risk
and capital risk.
These condensed consolidated interim financial
statements do not include all of the financial
risk management information and disclosures required
in the annual financial statements, and should
be read in conjunction with the Group's 2016
Annual Report and Accounts.
There have been no changes in the Group's financial
risk management policies since the year end 31
March 2016.
6 Segmental information
Management has determined the operating segments
based on reports that are reviewed by the Board
for making strategic decisions. These reports
reflect the Group's defined management structure,
whereby distinct managers are accountable to
the Board for the results and activities of their
identified segments and the different markets
in which they operate. The Board, which is the
Group's chief operating decision maker, considers
that the Group has two reportable operating segments
being the Parcels and Mail segments, following
the integration of the Courier operations into
Parcels and the cessation of trading of UK Pallets
Ltd in March 2015.
The Group manages its business segments on a
national basis, with all its operations in the
UK, as are nearly all of the customers.
Inter-company transactions, (which are conducted
on an arm's length basis), balances and unrealised
gains on transactions between segments are eliminated.
Unrealised losses are also eliminated.
No individual customer accounted for more than
7% of revenue in the periods included in these
condensed consolidated interim financial statements.
Six months ended 30
September 2016 (unaudited)
Continuing
operations
Parcels Mail Central Total
GBPm GBPm GBPm GBPm
Segmental revenue 122.5 107.7 - 230.2
Operating profit/(loss)
before exceptional items 8.8 4.3 (7.1) 6.0
Exceptional items -
administrative expenses (0.3) 0.2 0.1 -
-------- ------ -------- -------
Operating profit 8.5 4.5 (7.0) 6.0
Finance costs (0.2)
-------
Profit before taxation 5.8
Taxation (1.6)
-------
Profit attributable
to equity shareholders 4.2
-------
Intangible assets 0.2 2.8 8.3 11.3
Property, plant and
equipment 67.4 2.3 3.4 73.1
Deferred tax assets - - 0.1 0.1
Inventories 0.3 - - 0.3
Cash and cash equivalents (1.8) 1.5 4.9 4.6
Trade and other receivables 34.0 34.0 12.5 80.5
Intercompany eliminations - (8.3) (11.3) (19.6)
-------- ------ -------- -------
Total assets 100.1 32.3 17.9 150.3
-------- ------ -------- -------
Six months ended 30
September 2015 (unaudited)
Continuing
operations
Parcels Mail Central Total
GBPm GBPm GBPm GBPm
Segmental revenue 124.0 113.6 - 237.6
Operating profit/(loss)
before exceptional items 7.9 5.1 (7.8) 5.2
Exceptional items -
administrative expenses 0.9 (0.2) (3.4) (2.7)
-------- ------ -------- ------
Operating profit 8.8 4.9 (11.2) 2.5
Finance costs (0.3)
------
Profit before taxation 2.2
Taxation (0.5)
------
Profit attributable
to equity shareholders 1.7
------
Intangible assets 0.2 2.0 7.1 9.3
Property, plant and
equipment 68.2 3.0 4.9 76.1
Deferred tax assets - - 0.5 0.5
Inventories 0.2 - - 0.2
Cash and cash equivalents 0.2 2.5 3.8 6.5
Current tax assets - - 0.1 0.1
Trade and other receivables 34.6 39.7 1.1 75.4
Intercompany eliminations - (4.9) - (4.9)
-------- ------ -------- ------
Total assets 103.4 42.3 17.5 163.2
-------- ------ -------- ------
Year ended 31 March Continuing
2016 (audited) operations
Parcels Mail Central Total
GBPm GBPm GBPm GBPm
Segmental revenue 247.9 233.1 - 481.0
Operating profit/(loss)
before exceptional items 15.9 10.1 (14.8) 11.2
Exceptional items -
administrative expenses 11.6 (1.6) (6.3) 3.7
-------- ------- -------- -------
Operating profit 27.5 8.5 (21.1) 14.9
Finance costs (0.5)
-------
Profit before taxation 14.4
Taxation (2.5)
-------
Profit attributable
to equity shareholders 11.9
-------
Intangible assets 0.2 2.6 7.7 10.5
Property, plant and
equipment 67.3 3.1 5.3 75.7
Deferred tax assets - - 0.3 0.3
Inventories 0.2 - - 0.2
Cash and cash equivalents 0.6 2.8 3.4 6.8
Trade and other receivables 32.5 44.7 15.2 92.4
Intercompany eliminations - (14.0) (14.1) (28.1)
-------- ------- -------- -------
Total assets 100.8 39.2 17.8 157.8
-------- ------- -------- -------
Unaudited Unaudited Audited
30 September 30 September 31 March
7 Exceptional items - income/(cost) 2016 2015 2016
GBPm GBPm GBPm
Profit on sale of national
hub - 1.1 1.1
HS2 compensation 0.3 6.8 16.5
Exceptional income - continuing
items 0.3 7.9 17.6
-------------- -------------- ----------
Cost of automation implementation - (0.7) (0.6)
National hub relocation
costs - (6.7) (7.1)
Impairment of intangible
assets - (3.2) (3.8)
Impairment of tangible
assets - - (1.0)
Management reorganisation (0.3) - (1.4)
Exceptional costs - continuing
operations (0.3) (10.6) (13.9)
-------------- -------------- ----------
Net exceptional (costs)/income
- continuing operations
(*) - (2.7) 3.7
-------------- -------------- ----------
Impairment charges (including
goodwill) - - -
Closure costs - (0.1) -
Exceptional costs - discontinued
operations (**) - (0.1) -
-------------- -------------- ----------
Net exceptional items - (2.8) 3.7
-------------- -------------- ----------
* Presented on the face of the Income Statement
** Presented within the loss for the period from discontinued
operations
Profit on sale of national hub
This represents the profit on sale following the compulsory acquisition of the National hub
and offices at Birmingham by the DfT and HS2 Ltd, as a result of the proposed High Speed Two
('HS2') railway.
HS2 compensation
HS2 compensation comprises of disturbance and other costs reimbursed from the Department of
Transport ('DfT') and HS2 Ltd under the Compensation Code.
Cost of automation implementation
The cost of automation implementation represents the costs incurred largely in the March to
April 2015 period as the Group moved towards the implementation and roll-out of new automation
equipment. These costs largely comprise of asset write-offs and contract termination costs.
National hub relocation costs
These comprise of disturbance costs (including recruitment and redundancy costs), dual running
costs (largely property costs relating to running two sites whilst relocating), compensation
paid to customers following a temporary deterioration in service performance and the loss
of profit resulting from the delay in increasing the hub's extended capacity.
Impairment of intangible assets
The Group undertook a comprehensive strategic review in 2016 of its I.T. systems which identified
a number of software assets that did not fit within the medium- and long-term strategic goals
of the Group, and which therefore offered no future economic value to the Group. As a result
an impairment charge was recognised.
Management reorganisation
The management reorganisation costs, which principally relate to the reorganisation of the
Board, include the contractually agreed payments to departing directors on termination, following
mitigation, and the appointment costs of new directors.
Discontinued operations - closure costs
As detailed in the 2015 Annual Report and Accounts, a decision was taken to close the business
of UK Pallets in January 2015, and consequently GBP1.4m of closure costs were recognised in
the financial statements to 31 March 2015. A further GBP0.1m of costs were recognised in the
six month period to 30 September 2015 as the Group administered the company's voluntary liquidation.
Unaudited Unaudited Audited
30 September 30 September 31 March
8 Discontinued operations 2016 2015 2016
GBPm GBPm GBPm
The results of discontinued
operations were as follows:
Revenue - - -
Cost of sales - - -
-------------- -------------- ----------
Gross profit - - -
Administrative expenses - - -
-------------- -------------- ----------
Operating (loss)/profit
before exceptional items - - -
Exceptional items - (0.1) -
-------------- -------------- ----------
Operating (loss)/profit - (0.1) -
Taxation on (loss)/profit
before exceptional items - - -
Taxation on exceptional
items - - -
-------------- -------------- ----------
Total taxation - - -
(Loss)/profit for the
period - (0.1) -
-------------- -------------- ----------
These represent the results of UK Pallets Ltd which ceased
trading in March 2015.
Property, plant and equipment, intangible assets,
9 goodwill and investment properties
Six months ended 30 September 2016 Unaudited
GBPm
Opening net book value at 1 April
2016 85.6
Additions 3.5
Disposals (0.1)
Depreciation and amortisation (4.6)
----------
Closing net book value at 30 September
2016 84.4
----------
Unaudited
Six months ended 30 September 2015 GBPm
Opening net book value at 1 April
2015 100.3
Additions 6.9
Disposals (12.0)
HS2 Compensation (5.4)
Depreciation and amortisation (4.4)
----------
Closing net book value at 30 September
2015 85.4
----------
Audited
Year ended 31 March 2016 GBPm
Opening net book value at 1 April
2015 100.3
Additions 13.2
Disposals (13.2)
HS2 Compensation (5.4)
Depreciation and amortisation* (9.3)
Closing net book value at 31 March
2016 85.6
--------
* includes GBP0.3m reported as exceptional costs
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
Total segment capital
expenditure 1.5 3.9 21.0
Central capital expenditure 2.0 3.0 5.9
HS2 compensation - (5.4) (5.4)
-------------- -------------- ----------
Total capital expenditure 3.5 1.5 21.5
-------------- -------------- ----------
Total segment depreciation
and amortisation 2.8 2.8 5.7
Central depreciation
and amortisation 1.8 1.6 3.3
Total depreciation
and amortisation 4.6 4.4 9.0
-------------- -------------- ----------
10 Share capital
Number
of Ordinary Share Unaudited
ordinary shares premium Total
Capital shares GBPm GBPm GBPm
At 1 April 2016 55,151,254 5.5 15.7 21.2
Allotted under SAYE
schemes 2,293 - - -
--------------- ----------- --------- -----------
At 30 September
2016 55,153,547 5.5 15.7 21.2
--------------- ----------- --------- -----------
At 1 April 2015 54,740,618 5.5 15.3 20.8
Allotted under SAYE
schemes 174,199 - 0.3 0.3
--------------- ----------- --------- -----------
At 30 September
2015 54,914,817 5.5 15.6 21.1
--------------- ----------- --------- -----------
The Company's Employee Share Ownership Trust
('ESOT') holds shares in the Company for subsequent
transfer to employees under its incentive scheme
awards. Shares held by the ESOT are not voted
at shareholder meetings and do not accrue dividends.
At 30 September 2016 the trust held a total of
1,325 shares (30 September 2015: 6,801 shares
and 31 March 2016: 1,325 shares)
11 Analysis of net cash/(debt)
Audited Unaudited
1 April Cash 30 September
2016 flow Other 2016
GBPm GBPm GBPm GBPm
Cash at bank and
in hand 6.8 (2.2) - 4.6
Total cash 6.8 (2.2) - 4.6
--------- ------ ------ --------------
Revolving credit
facility - (5.9) - (5.9)
RCF arrangement
fee 0.2 - (0.1) 0.1
Finance leases
due within one
year (0.4) 0.2 (0.2) (0.4)
Finance leases
due after more
than one year (4.4) - 0.3 (4.1)
Total debt (4.6) (5.7) - (10.3)
--------- ------ ------ --------------
Net cash/(debt) 2.2 (7.9) - (5.7)
--------- ------ ------ --------------
Audited Unaudited
1 April Cash 30 September
2015 flow Other 2015
GBPm GBPm GBPm GBPm
Cash at bank and
in hand 4.6 1.9 - 6.5
Total cash 4.6 1.9 - 6.5
--------- ------ ------ --------------
Revolving credit
facility (10.0) (4.4) - (14.4)
RCF arrangement
fee 0.2 - - 0.2
Finance leases due
within one year - (0.4) - (0.4)
Finance leases due
after more than
one year - (4.6) - (4.6)
Total debt (9.8) (9.4) - (19.2)
--------- ------ ------ --------------
Net (debt) (5.2) (7.5) - (12.7)
--------- ------ ------ --------------
Audited
Audited 31
1 April Cash Non-cash March
2015 flow movement 2016
GBPm GBPm GBPm GBPm
Cash at bank and
in hand 4.6 2.2 - 6.8
------ ----------
Total cash 4.6 2.2 - 6.8
--------- ------ ---------- --------
Revolving credit
facility (10.0) 10.0 - -
RCF arrangement
fee 0.2 - - 0.2
Finance leases - (4.8) - (4.8)
Total debt (9.8) 5.2 - (4.6)
--------- ------ ---------- --------
Net (debt)/cash (5.2) 7.4 - 2.2
--------- ------ ---------- --------
12 Provisions
Unaudited Unaudited Unaudited Unaudited
Management Total
Lease dilapidations Restructuring reorganisation Provisions
Six months ended
30 September 2016 GBPm GBPm GBPm GBPm
At 1 April 2016 1.3 0.1 0.6 2.0
Provided in the
year 0.1 - 0.3 0.4
Utilised during
the period - (0.1) (0.3) (0.4)
------------------------ -------------- ---------------- ------------
At 30 September
2016 1.4 - 0.6 2.0
------------------------ -------------- ---------------- ------------
Unaudited Unaudited Unaudited Unaudited Unaudited
Closure Lease Total
Automation costs dilapidations Restructuring Provisions
Six months
ended 30
September
2015 GBPm GBPm GBPm GBPm GBPm
At 1 April
2015 0.2 0.3 1.5 0.2 2.2
Provided
in the year - - 0.1 - 0.1
Utilised
during the
period (0.2) (0.3) (0.2) (0.1) (0.8)
----------- ---------- --------------- -------------- ----------------
At 30 September
2015 - - 1.4 0.1 1.5
----------- ---------- --------------- -------------- ----------------
Audited Audited Audited Audited Audited Audited
Closure Lease Management Total
Automation costs dilapidations Restructuring reorganisation Provisions
Year ended
31 March
2016 GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2015 0.2 0.3 1.5 0.2 - 2.2
Provided
during the
period - - 0.3 - 0.6 0.9
Utilised
during the
period (0.2) (0.3) (0.5) (0.1) - (1.1)
-----------
At 31 March
2016 - - 1.3 0.1 0.6 2.0
----------- ---------- --------------- -------------- ---------------- ------------
Lease dilapidations represent the anticipated
expenditure resulting from the Group's contractual
obligations to make good properties prior to
reversion of the building to the landlord in
respect of leases expiring within one year and
up to 14 years. The timing of outflows is variable,
and is dependent not only on property lease expiry
dates, and opportunities to surrender leases,
but repair programmes and the results of negotiation.
Restructuring relates to provisions arising following
a change programme initiated in the financial
year ended 31 March 2012 and relates to onerous
property lease costs.
Management reorganisation provisions largely
relate to the Board changes during the year ended
31 March 2016, including the exit costs in respect
of the previous Group Operations Director and
the appointment costs for both the new CEO and
Group Operations Director.
13 Taxation
Taxation is provided based on management's best
estimate of the effective tax rate expected for
the full financial year. The estimated annual
tax rate (pre-exceptional items) used for the
six months to 30 September 2016 is 21.4% (Six
months to 30 September 2015: 21.7%).
A reduction in the UK corporation tax rate from
21% to 20% (effective from 1 April 2015) was substantively
enacted on 2 July 2013. Further reductions to
19% (effective from 1 April 2017) and to 18% (effective
1 April 2020) were substantively enacted on 26
October 2015, and an additional reduction to 17%
(effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the company's
future current tax charge accordingly. The deferred
tax balances at 30 September 2016 have been calculated
based on these rates.
14 Earnings per share
The basic, diluted and underlying earnings per
share are calculated based on the following data:
Unaudited Unaudited Audited
Six months Six months
to to 30 Year to
30 September September 31 March
2016 2015 2016
(restated)
GBPm GBPm GBPm
Profit after taxation -
continuing operations 4.2 1.7 11.9
(Loss)/profit after taxation
- discontinued operations - (0.1) -
-------------- ----------- -----------
4.2 1.6 11.9
-------------- ----------- -----------
The weighted average number of shares used in
the calculations are as follows;
No. of No. of No. of
shares shares shares
Weighted average number
of shares in issue 55,151,070 54,762,072 54,888,887
Dilutive effect of options 4,420 335,533 12,848
-------------- ----------- -----------
Diluted weighted average
number of shares 55,155,490 55,097,605 54,901,735
-------------- ----------- -----------
The Group has two classes of dilutive potential
ordinary shares: those share options granted to
employees where the exercise price is less than
the average market price of the Company's ordinary
shares during the year, and the contingency issuable
shares under the Group's Long Term Incentive Plan.
Unaudited Unaudited Audited
Six months Six months
to to 30 Year to
30 September September 31 March
2016 2015 2016
(restated)
Basic earnings per share
- continuing operations 7.6p 3.1p 21.6p
Basic (loss)/earnings per
share - discontinued operations - (0.2)p -
-------------- ----------- -----------
Basic earnings per share 7.6p 2.9p 21.6p
-------------- ----------- -----------
Basic earnings per share is calculated by dividing
the profit for the year (the 'earnings') attributable
to ordinary shareholders by the weighted average
number of ordinary shares during the year, excluding
those held in the ESOT (note 10), which are treated
as cancelled.
Diluted earnings per share
- continuing operations 7.6p 3.1p 21.6p
Diluted (loss)/earnings
per share - discontinued
operations - (0.2)p -
------- -------- -------
Diluted earnings per share 7.6p 2.9p 21.6p
------- -------- -------
For diluted earnings per share, the weighted average
number of shares is adjusted to assume conversion
of all dilutive potential ordinary shares.
Underlying earnings
per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
(restated)
GBPm GBPm GBPm
Profit before taxation
- continuing operations 5.8 2.2 14.4
Adjustments:
Exceptional administrative
items - continuing
operations - 2.7 (3.7)
-------------- -------------- ----------
Underlying profit before
taxation - continuing
operations 5.8 4.9 10.7
Taxation - continuing
operations (1.6) (1.1) (2.2)
-------------- -------------- ----------
Underlying profit after
taxation - continuing
operations 4.2 3.8 8.5
Underlying earnings
per share
Basic 7.6p 7.1p 15.4p
Diluted 7.6p 7.1p 15.4p
The directors consider that the underlying EPS
better reflects the underlying performance of
the business by excluding the impact of exceptional
items.
15 Dividends
The final dividend for the year ended 31 March
2016 of 10.9p per share (2015: 14.5p) was paid
on 25 August 2016. The GBP6.0m distribution (2015:
GBP7.9m) is reflected in the financial statements
for the six months ended 30 September 2016.
In addition, the Directors propose an interim
dividend of 5.5p per share (2015: 5.5p per share)
payable on 2 December 2016 to shareholders who
are on the register at 25 November 2016. This
interim dividend, amounting to GBP3.0m (2015:
GBP3.0m) has not been recognised as a liability
in these condensed consolidated interim financial
statements.
16 Commitments and contingencies
The Company has guaranteed bank and other borrowings
of subsidiary undertakings in a cross-guarantee
agreement of an undrawn Group borrowing facility
amounting to GBP10.0m (2015: GBP20m).
As reported in the 2016 Annual Report and Accounts,
the Group has further contingent liabilities in
respect of bank guarantees and documentary credit
facilities entered into during the normal course
of business, and is subject to litigation from
time to time as a result of its activities, in
respect of which no material loss is expected.
Group capital expenditure committed, for the purchase
of property, software, plant and equipment, but
not provided for in these financial statements
amounted to GBP0.4m (2015: GBP1.4m).
17 Events occurring after the reporting period
On 28 September 2016, the Boards of Deutsche Post
DHL and UK Mail Group plc. announced the terms
of a recommended cash offer of 440p per share
by Deutsche Post DHL for the entire issued and
to be issued ordinary share capital of UK Mail
Group plc.
On 26 October 2016, the Board of UK Mail Group
plc. posted a circular in relation to the offer
(the 'Scheme document') setting out amongst other
things, the full terms and conditions of the Scheme,
an expected timetable of principal events and
notices of the Court Meeting and General Meeting,
copies of which are available on the Group's website.
As at 16 November 2016, Deutsche Post DHL had
received irrevocable undertakings to vote in favour
of the offer in respect of approximately 62.6%
of UK Mail Group's ordinary share capital.
Additionally, note 15 provides detail of an interim
dividend of 5.5p per share (the 'Agreed Dividend')
which is intended to be paid on 2 December 2016.
The offer provides that if any dividend or other
distribution is authorised, declared, made or
paid in respect of UK Mail Shares during the Offer
Period other than the Agreed Dividend, or in excess
of the Agreed Dividend, Deutsche Post DHL reserves
the right to reduce the Offer Price by the amount
of all or part of any such excess, in the case
of a dividend or other distribution in excess
of the Agreed Dividend, or otherwise by the amount
of any such dividend or other distribution.
18 Related-party transactions
The nature of the related party transactions of
the Group has not changed from those described
in the Groups' 2016 Annual Report and Accounts.
There were no transactions with related parties
during the six months ended 30 September 2016
which have had a material effect on the results
or the financial position of the Group.
Transactions between the Company and its subsidiaries,
which are related parties, have been eliminated
on consolidation and are not disclosed in this
note.
19 Risks and uncertainties
The specific principal risks and uncertainties
that may affect the Group's performance, together
with relevant mitigating factors as identified
by the Group's risk management process were discussed
on page 27 of the Group's 2016 Annual Report and
Accounts. These included risks relating to operational
plan failure, loss of key management, I.T. systems,
competition, business continuity, physical theft
and security and legislation and regulation, in
addition to financial risks (details of which
can be found in Note 25 of the 2016 Annual Report
and Accounts) including credit risk. It is considered
that these still remain the most likely areas
of potential risk and uncertainty, with the position
unchanged from that set out in the 2016 Annual
Report and Accounts.
20 Seasonality
Historically, the Group experiences marginally
greater demand for its parcel collection and delivery
services in the second half of the year, as consignments
increase in advance of the Christmas season. Such
trends are not discernible within the mail market.
Statement of directors' responsibilities
The Interim report is the responsibility of,
and has been approved by, the directors of UK
Mail Group plc. The directors are responsible
for preparing the Interim report in accordance
with the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
The Disclosure and Transparency Rules require
that the accounting policies and presentation
applied to the half-yearly figures must be consistent
with those applied in the latest published annual
accounts, except where the accounting policies
and presentation are to be changed in the subsequent
annual accounts, in which case the new accounting
policies and presentation should be followed,
and the changes and the reasons for the changes
should be disclosed in the Interim report, unless
the United Kingdom Financial Conduct Authority
agrees otherwise.
The directors confirm that these condensed consolidated
interim financial statements have been prepared
in accordance with IAS 34, 'Interim financial
reporting', as adopted by the European Union,
and that the interim management report includes
a fair review of:
-- the important events that have occurred during
the first six months and their impact on the
condensed consolidated interim financial statements,
and a description of the principal risks and
uncertainties for the remaining six months
of the financial year as required by DTR 4.2.7;
and
-- related-party transactions that have taken
place in the first six months of the current
financial year and changes in the related-party
transactions described in the last annual report
that have materially affected the financial
position or performance of the group during
the first six months of the current financial
year as required by DTR 4.2.8.
The directors of UK Mail Group plc are as those
listed in the UK Mail Group Annual Report for
the year ended 31 March 2016. A list of current
directors is maintained on the UK Mail Group
website: www.ukmail.com.
By order of the Board
Steven Glew, Group
Peter Kane, Chairman Finance Director
16 November
2016 16 November 2016
Independent review report to UK Mail Group Plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed UK Mail Group Plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the interim results of UK Mail Group Plc for the 6 month period
ended 30 September 2016. Based on our review, nothing has come to
our attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Consolidated Balance Sheet as at 30 September 2016;
-- the Consolidated Statement of Comprehensive Income for the period then ended;
-- the Consolidated Cash flow Statement for the period then ended;
-- the Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Rules and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim results in
accordance with the Disclosure Rules and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
16 November 2016
a) The maintenance and integrity of the UK Mail Group Plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFWFEMFMSEFF
(END) Dow Jones Newswires
November 17, 2016 02:00 ET (07:00 GMT)
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