Interim Results - Part 2
July 28 2003 - 3:02AM
UK Regulatory
Group profit and loss account (unaudited)
Note Half Half year Year
year
ended ended
ended 30.6.02
30.6.03 31.12.02
(restated)
�m (restated)
�m
�m
Turnover
Continuing operations 2,382.6 2,230.9 4,679.4
Acquisitions 7.9 - -
2,390.5 2,230.9 4,679.4
Discontinued operations - 30.9 41.2
Group and share of joint ventures' turnover 5 2,390.5 2,261.8 4,720.6
Less: share of joint ventures' turnover (37.6) (13.9) (77.6)
Group turnover 2,352.9 2,247.9 4,643.0
Operating profit
Continuing operations 58.8 61.2 122.7
Acquisitions (0.5) - -
58.3 61.2 122.7
Discontinued operations - (0.3) (0.2)
Continuing operations before goodwill 71.7 73.0 148.3
Discontinued operations before goodwill - (0.3) (0.2)
Goodwill amortisation (13.4) (11.8) (25.6)
Total operating profit 5 58.3 60.9 122.5
Exceptional items 6 0.9 0.8 0.9
Profit on ordinary activities before 59.2 61.7 123.4
interest
Net interest (4.7) (7.2) (12.8)
Other finance income - FRS 17 15.2 30.2 60.5
Underlying profit before tax 1 67.0 65.5 135.3
Goodwill amortisation (13.4) (11.8) (25.6)
Exceptional items 0.9 0.8 0.9
Other finance income - FRS 17 15.2 30.2 60.5
Profit on ordinary activities before 69.7 84.7 171.1
taxation
Tax on profit on ordinary activities 7 (22.9) (27.1) (54.5)
Profit on ordinary activities after taxation 46.8 57.6 116.6
Equity minority interests (2.6) (3.2) (6.4)
Profit for the financial period 44.2 54.4 110.2
Dividends 8 (23.2) (22.3) (67.5)
Transferred to reserves 10 21.0 32.1 42.7
Pence Pence Pence
Basic earnings per share
On profit for the financial period 9 15.0 18.4 37.3
On underlying profit1 for the period - 9 19.0 21.6 44.9
including other finance income
On underlying profit1 for the period 9 15.4 14.4 30.6
Diluted earnings per share
On profit for the financial period 9 14.9 18.3 37.1
On underlying profit1 for the period - 9 18.8 21.4 44.7
including other finance income
On underlying profit1 for the period 9 15.3 14.3 30.5
1 Underlying profit is reported before goodwill amortisation, exceptional
items, other finance income - FRS 17 and related tax, where applicable.
Group cash flow statement (unaudited)
Half Half year Year
year
ended ended
ended 30.6.02
30.6.03 31.12.02
(restated)
�m (restated)
�m
�m
Net cash inflow from operating activities 107.9 132.9 333.7
Dividends received from joint ventures and 0.2 1.2 2.8
associates
Net cash outflow for returns on investments (8.5) (12.2) (19.1)
and servicing of finance
Taxation (25.3) (16.6) (34.2)
Capital expenditure and financial investment
Purchase of tangible fixed assets (49.4) (53.8) (136.5)
Purchase of investments (10.5) (0.3) (0.5)
Sale of tangible fixed assets and investments 13.6 9.7 31.6
Net cash outflow for capital expenditure and (46.3) (44.4) (105.4)
financial investment
Free cash flow 28.0 60.9 177.8
Acquisitions and disposals
Acquisitions (14.2) (13.6) (71.4)
Disposals 0.1 - -
Net cash outflow for acquisitions and (14.1) (13.6) (71.4)
disposals
Equity dividends paid (45.2) (42.2) (64.5)
Net cash (outflow)/inflow before the use of liquid (31.3) 5.1 41.9
resources and financing
Net cash inflow/(outflow) from management of 15.4 2.3 (14.0)
liquid resources
Net cash (outflow)/inflow from financing (0.4) (10.2) 19.0
(Decrease)/increase in cash (16.3) (2.8) 46.9
Reconciliation of operating profit to operating cash flow
(unaudited)
Operating profit 58.3 60.9 122.5
Share of profit of joint ventures and (1.7) (2.3) (4.2)
associates
Group operating profit 56.6 58.6 118.3
Depreciation and amortisation 64.4 58.8 125.8
Loss on sale of tangible fixed assets 0.4 - 2.3
Pension service costs - non cash 20.0 16.7 33.7
Movements in provisions 3.0 6.3 6.2
Movements in working capital (36.3) (1.0) 55.6
108.1 139.4 341.9
Costs of reorganisation in continuing (0.2) (6.5) (8.2)
operations
Net cash inflow from operating activities 107.9 132.9 333.7
Reconciliation of net cash flow to movement in net debt
(unaudited)
(Decrease)/increase in cash (16.3) (2.8) 46.9
Cash outflow from change in debt 5.6 11.5 19.6
Cash (inflow)/outflow from change in liquid (15.4) (2.3) 14.0
resources
Change in net debt resulting from cash flows (26.1) 6.4 80.5
Arising on acquisitions - - (1.6)
Non-cash movements 2.1 5.1 (12.8)
Movement in net debt (24.0) 11.5 66.1
Net debt at 1 January (153.7) (219.8) (219.8)
Net debt at end of period (177.7) (208.3) (153.7)
Analysis of net debt 30.06.03 30.06.02 31.12.02
�m �m �m
Cash at bank and in hand 127.3 113.1 149.7
Overdrafts (15.6) (10.7) (24.5)
Loans (275.7) (296.0) (280.1)
Finance leases (19.1) (19.9) (19.6)
Current asset investments 5.4 5.2 20.8
(177.7) (208.3) (153.7)
Group balance sheet (unaudited)
Note 30.6.03 30.6.02 31.12.02
�m (restated) (restated)
�m �m
Fixed assets
Intangible assets - goodwill 399.3 378.7 415.8
Tangible assets 572.5 566.3 576.2
Investments 57.7 51.5 49.2
1,029.5 996.5 1,041.2
Current assets
Stocks 8.2 9.0 9.2
Debtors
Amounts falling due within one year 896.9 883.1 874.8
Amounts falling due after more than one 24.1 17.8 17.6
year
Current asset investments 5.4 5.2 20.8
Cash at bank and in hand 127.3 113.1 149.7
1,061.9 1,028.2 1,072.1
Creditors: amounts falling due within one
year
Short-term borrowings (35.4) (37.0) (50.4)
Other creditors (973.3) (884.5) (1,008.5)
Net current assets 53.2 106.7 13.2
Total assets less current liabilities 1,082.7 1,103.2 1,054.4
Creditors: amounts falling due after more
than one year
Long-term borrowings (275.0) (289.6) (273.8)
Other creditors (4.5) (30.4) (7.9)
Provisions for liabilities and charges (116.7) (112.9) (110.0)
Total net assets excluding pension assets 686.5 670.3 662.7
and liabilities
Net pension assets and liabilities 38.0 353.1 41.3
724.5 1,023.4 704.0
Equity shareholders' funds 10 704.8 1,003.2 687.2
Equity minority interests 19.7 20.2 16.8
724.5 1,023.4 704.0
Net debt (177.7) (208.3) (153.7)
Gearing 25.2% 20.8% 22.4%
Gearing - excluding net pension assets and 26.6% 32.0% 23.8%
liabilities
Group statement of total recognised gains and losses
(unaudited)
Half year Half year Half year
ended ended ended
30.6.03 30.6.02 31.12.02
�m (restated) (restated)
�m �m
Profit for the financial period 44.2 54.4 110.2
Actuarial loss recognised on the pension - - (459.1)
schemes
Deferred tax relating to actuarial loss on
the pension schemes
UK - - 135.5
Overseas - - 2.2
Exchange differences (3.6) (7.1) (12.6)
Total recognised gains and losses relating 40.6 47.3 (223.8)
to the period
Prior year adjustment - FRS 17 (211.4)
Total gains and losses recognised since last (170.8)
annual report
Notes to the interim report
(unaudited)
1 The interim report
The interim report was approved by the Board on 25 July 2003. The financial
information set out in the interim report is unaudited but has been reviewed
by the Auditors and their report to the Company is set out on page *.
2 Accounting policies
The interim financial statements have been prepared on the basis of the
accounting policies set out in the 2002 financial statements of Exel plc,
except for the adoption of FRS 17 `Retirement benefits'. The taxation charge
is based on the estimated effective rate for the full year.
The adoption of FRS 17 has resulted in the following restatements to prior
period results:
a. an increase in the pension charge, within operating profit, of �34.8m in
the half year ended 30 June 2002 (year ended 31 December 2002: �70.0m),
b. the inclusion of other finance income of �30.2m in the half year to 30
June 2002 (year ended 31 December 2002: �60.5m),
c. a decrease in the tax charge of �1.3m in the half year to 30 June 2002
(year ended 31 December 2002: �2.9m),
d. a decrease in the profit for the period of �3.3m in the half year to 30
June 2002 (year ended 31 December 2002: �6.6m),
e. a decrease in the recognised gains and losses of �3.2m in the half year
to 30 June 2002, being primarily the decrease in the profit for the
period, (year ended 31 December 2002: �328.0m), and
f. an increase in reserves of �113.4m at 30 June 2002 (31 December 2002: a
decrease of �211.4m).
3 Statutory group financial
statements
The accounts for the year ended 31 December 2002 set out within this report
are not the Group's statutory financial statements. Statutory group
financial statements for Exel plc for the year ended 31 December 2002, on
which the Auditors gave an unqualified report (which made no statement under
sections 237 (2) or (3) of the Companies Act 1985), have been filed with the
Registrar of Companies.
4 Exchange rates
The significant exchange rates relative to � sterling used in the preparation
of these financial statements are as follows:
Average Period end
Half Half Year 30.6.03 30.6.02 31.12.02
year year ended
ended ended 31.12.02
30.6.03 30.6.02
US dollar 1.61 1.45 1.50 1.66 1.52 1.60
Euro 1.47 1.61 1.59 1.45 1.55 1.54
Singapore dollar 2.82 2.64 2.69 2.91 2.69 2.78
Notes to the interim report (unaudited) continued
5 Segmental information
Analysis of change in turnover
Restatements
and
Half New Increment movement in Half
year year
ended acquisitions on 2002 discontinued ended
30.6.02 Exchange 2003 acquisitions operations Organic 30.06.03
change
�m �m �m �m �m �m % �m
Europe, Middle East &
Africa
Contract logistics
UK & Ireland 579.6 2.6 - - - 49.8 8.6 % 632.0
Continental Europe & 162.6 15.4 - - - 14.4 8.1 % 192.4
Africa
742.2 18.0 - - - 64.2 8.4 % 824.4
Freight management
UK & Ireland 121.0 1.2 - - - (12.4) (10.1) % 109.8
Continental Europe & 236.2 20.2 7.9 - - 10.9 4.3 % 275.2
Africa
357.2 21.4 7.9 - - (1.5) (0.4) % 385.0
Europe, Middle East & 1,099.4 39.4 7.9 - - 62.7 5.5 % 1,209.4
Africa
Americas
Contract logistics 341.4 (37.1) - 43.9 - 54.1 17.8 % 402.3
Freight management 439.4 (45.0) - 0.1 - (7.4) (1.9) % 387.1
780.8 (82.1) - 44.0 - 46.7 6.7 % 789.4
Asia Pacific
Contract logistics 41.0 (0.9) - - 0.7 8.1 20.2 % 48.9
Freight management 259.2 (20.4) - 3.5 18.3 24.2 10.1 % 284.8
300.2 (21.3) - 3.5 19.0 32.3 11.6 % 333.7
Total Logistics
Contract logistics 1,124.6 (20.0) - 43.9 0.7 126.4 11.4 % 1,275.6
Freight management 1,055.8 (44.0) 7.9 3.6 18.3 15.3 1.5 % 1,056.9
2,180.4 (64.0) 7.9 47.5 19.0 141.7 6.7 % 2,332.5
Environmental 50.5 - - - - 7.5 14.9 % 58.0
Continuing operations 2,230.9 (64.0) 7.9 47.5 19.0 149.2 6.9 % 2,390.5
Discontinued 30.9 2.6 - - (33.5) - - -
operations
Total 2,261.8 (61.4) 7.9 47.5 (14.5) 149.2 6.8 % 2,390.5
Description of Exel's segmental analysis
Exel's segmental analysis splits logistics activities between contract
logistics and freight management.
Contract logistics includes ground-based supply chain management services, such
as integrated warehousing and transportation, just in time services,
sub-assembly and other value added activities.
Freight management includes airfreight and seafreight forwarding, customs
broking, transportation management (including US road and rail) and specialist
mail and express services.
Due to the comprehensive range of services provided to customers within
individual contracts there are some cross-overs between these two segments but
these are relatively small.
The restatements of Asia Pacific contract logistics and freight management
represent the incremental results of Exel-Sinotrans, following the
reclassification of the Group's investment in the company as a joint venture;
previously Exel-Sinotrans was included in the Group's results as an associated
undertaking. The impact of the restatements on the Group's results is an
increase in turnover of �20.7m compared to the half year ended 30 June 2002.
There was no change to the Group's profit for the financial period due to this
reclassification.
Discontinued operations are BRS Taskforce which was sold in 2003, and the
German chilled food logistics business which was closed in 2002.
Notes to the interim report (unaudited) continued
5 Segmental information continued
Analysis of change in operating profit before goodwill
Half year
ended New Increment Movement in Half
year
30.6.02 acquisitions on 2002 discontinued ended
(restated) Exchange 2003 acquisitions operations Organic change 30.6.03
�m �m �m �m �m �m % �m
Europe, Middle East
& Africa
Contract logistics
UK & Ireland 15.2 0.2 - - - 0.8 5.2 % 16.2
Continental Europe - 0.4 - - - 1.2 300.0 % 1.6
& Africa
15.2 0.6 - - - 2.0 12.7 % 17.8
Freight management
UK & Ireland 1.1 0.1 - - - 0.2 16.7 % 1.4
Continental Europe 5.8 1.1 0.2 - - (4.2) (60.9) % 2.9
& Africa
6.9 1.2 0.2 - - (4.0) (49.4) % 4.3
Europe, Middle East 22.1 1.8 0.2 - - (2.0) (8.4) % 22.1
& Africa
Americas
Contract logistics 17.2 (2.0) - 2.8 - 4.2 27.6 % 22.2
Freight management 7.0 (0.8) - - - (4.0) (64.5) % 2.2
24.2 (2.8) - 2.8 - 0.2 0.9 % 24.4
Asia Pacific
Contract logistics 1.7 - - - - - - % 1.7
Freight management 17.6 (1.5) - - - 0.7 4.3 % 16.8
19.3 (1.5) - - - 0.7 3.9 % 18.5
Total Logistics
Contract logistics 34.1 (1.4) - 2.8 - 6.2 19.0 % 41.7
Freight management 31.5 (1.1) 0.2 - - (7.3) (24.0) % 23.3
65.6 (2.5) 0.2 2.8 - (1.1) (1.7) % 65.0
Environmental 7.4 - - - - (0.7) (9.5) % 6.7
Continuing 73.0 (2.5) 0.2 2.8 - (1.8) (2.6) % 71.7
operations
Discontinued (0.3) - - - 0.3 - - -
operations
Goodwill (11.8) 0.7 (0.7) (1.6) - - - (13.4)
amortisation
Total 60.9 (1.8) (0.5) 1.2 0.3 (1.8) (3.0) % 58.3
The FRS 17 defined benefit pension service costs included within the segmental
analysis in the half year ended 30 June 2003 are �20.2m (half year ended 30
June 2002 �16.7m).
Notes to the interim report (unaudited) continued
5 Segmental information continued
By business sector
Turnover Operating profit before
goodwill
Half year Year
Half Half Year Half ended ended
year year year
ended ended ended ended 30.6.02 31.12.02
30.6.03 30.6.02 31.12.02 30.6.03 (restated) (restated)
�m �m �m �m �m �m
Europe, Middle East &
Africa
Contract logistics
UK & Ireland 632.0 579.6 1,211.3 16.2 15.2 31.1
Continental Europe & 192.4 162.6 341.9 1.6 - 0.6
Africa
824.4 742.2 1,553.2 17.8 15.2 31.7
Freight management
UK & Ireland 109.8 121.0 223.6 1.4 1.1 2.6
Continental Europe & 275.2 236.2 472.2 2.9 5.8 11.7
Africa
385.0 357.2 695.8 4.3 6.9 14.3
Europe, Middle East & 1,209.4 1,099.4 2,249.0 22.1 22.1 46.0
Africa
Americas
Contract logistics 402.3 341.4 707.4 22.2 17.2 34.5
Freight management 387.1 439.4 903.9 2.2 7.0 17.6
789.4 780.8 1,611.3 24.4 24.2 52.1
Asia Pacific
Contract logistics 48.9 41.0 89.2 1.7 1.7 2.7
Freight management 284.8 259.2 625.6 16.8 17.6 33.3
333.7 300.2 714.8 18.5 19.3 36.0
Total Logistics
Contract logistics 1,275.6 1,124.6 2,349.8 41.7 34.1 68.9
Freight management 1,056.9 1,055.8 2,225.3 23.3 31.5 65.2
2,332.5 2,180.4 4,575.1 65.0 65.6 134.1
Environmental 58.0 50.5 104.3 6.7 7.4 14.2
Continuing operations 2,390.5 2,230.9 4,679.4 71.7 73.0 148.3
before goodwill
Discontinued operations - 30.9 41.2 - (0.3) (0.2)
Goodwill amortisation - - - (13.4) (11.8) (25.6)
Total 2,390.5 2,261.8 4,720.6 58.3 60.9 122.5
Notes to the interim report (unaudited) continued
6 Exceptional items
Half year Half year Year
ended
30.6.03 ended ended
31.12.02
�m 30.6.02
�m
�m
Profit on disposals of fixed assets 1.5 0.8 0.9
Loss on termination and disposals of
discontinued operations
Loss on termination of German chilled food - (7.2) (9.0)
logistics business
Less 2001 provision - 7.2 9.0
Other disposals (0.6) - -
(0.6) - -
Total exceptional items 0.9 0.8 0.9
7 Tax on profit on ordinary activities
Half Half year Year
year
ended ended ended
30.6.03 30.6.02 31.12.02
�m (restated) (restated)
�m �m
UK tax 9.9 14.9 31.0
Foreign tax 13.0 12.2 23.5
Tax on profit on ordinary activities 22.9 27.1 54.5
The tax charge is analysed as follows:
On ordinary activities before exceptional 23.6 28.8 56.6
items
On exceptional items (0.7) (1.7) (2.1)
22.9 27.1 54.5
8 Dividends
Half year Half year Year
ended ended
30.6.03 ended
30.6.02 31.12.02
pence
pence pence
Dividend per share
Interim 7.9 7.5 7.5
Final - - 15.3
7.9 7.5 22.8
Notes to the interim report (unaudited) continued
9 Earnings per share
Half Half year Year
year ended
ended 30.6.02 ended
30.6.03 31.12.02
(restated)
�m (restated)
�m
�m
Profit for the financial period 44.2 54.4 110.2
Add back
Amortisation of goodwill 13.4 11.8 25.6
Exceptional items (0.9) (0.8) (0.9)
Tax on exceptional items (0.7) (1.7) (2.1)
Other finance income - FRS 17 (15.2) (30.2) (60.5)
Tax on other finance income - FRS 17 4.6 9.1 18.2
Underlying profit for the period 45.4 42.6 90.5
Weighted average number of shares (millions)
Basic average number of shares 295.3 295.3 295.5
Dilutive potential ordinary shares 1.8 2.6 1.7
Diluted average number of shares 297.1 297.9 297.2
10 Movements in shareholders' funds
Half Half year Year
year ended
ended 30.6.02 ended
30.6.03 31.12.02
(restated)
�m (restated)
�m
�m
Profit for the financial period 44.2 54.4 110.2
Dividends (23.2) (22.3) (67.5)
21.0 32.1 42.7
Shares allotted 0.2 1.3 1.6
Actuarial loss recognised on the pension - - (459.1)
schemes
Deferred tax relating to actuarial loss on - - 137.7
the pension schemes
Exchange differences (3.6) (7.1) (12.6)
Movements in shareholders' funds 17.6 26.3 (289.7)
At 1 January (originally �898.6m before 687.2 976.9 976.9
deducting prior
year adjustment of �211.4m)
Shareholders' funds at end of period 704.8 1,003.2 687.2
Independent review report to Exel plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2003 which comprises the group profit and loss
account, group cash flow statement, reconciliation of operating profit to
operating cash flow, reconciliation of net cash flow to movement in net debt,
group balance sheet, group statement of total recognised gains and losses, and
the related notes 1 to 10. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by the law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4 'Review of interim financial information' issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Ernst & Young LLP
London
25 July 2003
END
