United Carriers Grp. - Final Results
10 März 1998 - 8:32AM
UK Regulatory
RNS No 1548m
UNITED CARRIERS GROUP PLC
10th March 1998
UNITED CARRIERS GROUP PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 1997
HIGHLIGHTS
1997 1996 Change
Turnover #133.8m #136.0m -2%
Profit before tax #2.2m #2.1m +6%
Earnings per share 5.7p 5.3p +8%
Final dividend 1.8p 1.8p -
Total dividend 3.5p 3.4p +3%
Dividend cover 1.6 times 1.5 times
Gearing 39.8% 39.6%
Doug Rogers, Chairman, reports "Although 1997's profits fell well short of
our earlier expectations, we have seen further progress in our strategy to
reposition the Group and achieve realistic and lasting margins. Profits
continued to rise within our International parcels business and Carpet Express
whilst Mansped's contracts have all been secured. However, the UK parcels
business had a most disappointing final quarter after posting good results
through to September. This was due to the loss of our largest parcel
contract, combined with an unexpected reduction in the proportion of three day
traffic prior to Christmas, whilst the Parcels Network was still fundamentally
changing from a three-day carrier.
As previously indicated in our trading statement of 12 January, profit before
tax rose slightly, by 6% to #2.2 million and with strong financial controls in
place, gearing has been maintained under 40%. We are now entering the final
phase of United Carriers' recovery following its losses in 1995."
Mobile Telephones
Enquiries: Doug Rogers, Chairman 0836 512724
John Toyne, Group Managing Director 0411 492530
Bill Alexander, Group Finance Director 0411 492518
CHAIRMAN'S STATEMENT
RESULTS
Profit before tax year to 31 December 1997 was #2.2 million compared with #2.1
million for the previous year. This 6% improvement is a result of better
profits from Carpet Express, International parcels and a one-off property
revaluation of #0.6 million, offset by lower UK parcels profits and a
reorganisation provision of #0.6 million. Earnings per share increased to
5.7p compared with 5.3p in 1996 - an increase of 8%. The taxation charge of
#0.3 million equates to an effective rate of 12% following the final
utilisation of tax losses brought forward from 1995.
The Group's balance sheet benefited from a revaluation of its property
portfolio which helped to increase the assets per share to 79p. The Group's
cash flow continues to benefit from strong controls and gearing was maintained
at 39.8%. Interest payable fell again, reflecting the ongoing improvement in
the Group's cash position.
DIVIDEND
A final dividend of 1.8p per share is proposed making a total of 3.5p for the
year (1996: 3.4p). If approved, the dividend will be paid on 20 May 1998 to
shareholders on the register at 14 April 1998. Dividend cover was 1.6 x
(1996: 1.5x). As stated twelve months ago, the Board intends to continue to
restore the rate of dividends in the future, subject to performance, but it is
important to balance the dividend policy with the ongoing requirement for
investment in the business.
EMPLOYEES
Over the past two years the Group has experienced substantial change in the
organisation which has placed a burden on all of our employees during that
period. On behalf of the Board, I would like to thank all of our employees for
their efforts and commitment in achieving these results.
ANNOUNCEMENT
In an earlier announcement, we confirmed that we had received an approach
regarding a possible merger. The terms of this could not be recommended to
shareholders. The Board is still exploring whether these terms may be
improved and a further announcement will be made in due course.
PROSPECTS
With International parcels, Carpet Express and Mansped on a secure footing,
the management team remain committed to their strategy and 1998 will see
completion of the most important phase of the restructuring of the UK Parcels
business. The extent of these operational changes are outlined in the
Managing Director's Review of Operations and will have an impact on the first
half results for 1998. However, the Board remains confident that once this
phase of the programme is implemented, we will generate improving profits from
the second half onwards.
Doug Rogers
Chairman
MANAGING DIRECTOR'S REVIEW OF OPERATIONS
UK PARCELS NETWORK
The UK Parcels Network is our largest operation. Our strategy remains that of
repositioning the Network from a three-day to a next-day carrier. This will
allow us to provide the range of services demanded by the market place. As
discussed in previous reports, the proportion of next-day business has
continued to grow over the past two years and achieved levels in the third
quarter which allowed the commencement of the most important stage of our
restructuring. This work includes extending the Network from 23 to nearer 40
depots and rationalising our three-day trunking and handling. This work is
already underway and I am pleased with the support we have received from all
our staff.
After a very encouraging first nine months, the UK Parcels Network had a most
disappointing final quarter which was attributable to two factors. The first
was the loss of a major contract which was bid away from us on terms we were
unable to match; a reflection of the highly competitive market. This had an
immediate effect on revenue and profits. We also experienced a drop in the
proportion of three-day traffic prior to Christmas, whilst the Network was
still fundamentally a three-day carrier. Despite the short-term negative
impact on profit, this change in traffic mix will ultimately prove beneficial
in our drive to become a predominantly next-day carrier.
Management effort is now totally focused on completing the final stages of
changing the UK Parcels Network. Our new hub based at Wellingborough was
opened recently at minimal cost by utilising an existing property. The way we
handle parcels through our depot network will also change and a provision of
#0.6 million has been provided in the accounts for 1997 to cover
reorganisation costs.
The first of our new satellite depots is due to open in March with additional
satellite depots being opened in London and the South East region by the
commencement of the
Autumn peak. Further satellite depots will be opened at a pace governed by
our future success in obtaining premium rated business. These depots are
substantially smaller than our existing sites and will share resources from
neighbouring larger depots whilst providing better national next-day coverage.
Each of these satellite depots should be cost effective within the first
quarter of its introduction.
The changes that are currently being implemented are fundamental to ensuring
the future success of the UK Parcels Network. If margins are to be restored
to more acceptable levels, in what remains a fiercely competitive market
place, the business has to increase its presence in the more lucrative next-
day, timed delivery and same-day market places.
INTERNATIONAL PARCELS
Our International parcels business made excellent progress and profits have
continued to improve. We are currently experiencing substantial volume growth
in this strategically very important market. Our European partner, General
Parcel, is now in its sixth year and is focused on providing a high quality
service throughout Europe; achieving ISO 9001 Quality Accreditation last year
- the only organisation of its type in Europe to do so.
The partnership now contains over 600 sites, a fleet of 10,000 vehicles and
15,000 employees across 23 countries. With the recent launch of further
products and services we expect the profitability of this business to continue
to grow substantially.
CARPET EXPRESS
1997 saw Carpet Express continue to make excellent progress. By maintaining
high service levels, the business has been able to gain five new contracts and
1998 will see the first full year contribution from these. The largest of
these contracts allowed Carpet
Express to increase its network capacity by 20% with the opening of its sixth
depot which made a positive contribution from day one.
Further productivity improvements were also seen throughout the business and
1998 will see the commencement of a major investment in its handling and
delivery infrastructure. Once implemented, this investment will allow Carpet
Express to further improve service levels, productivity and efficiency,
thereby strengthening its position in the market place.
Recent indications are that the floor covering market has begun to level out.
However, Carpet Express's ability to gain new contracts whilst also
consolidating its position as the market's leading logistics company, will
ensure that the company will continue to develop.
MANSPED
During 1997 Mansped experienced lower volumes and, as a consequence, posted
lower profits than in previous years. Mansped Automotives had another
encouraging year with the number of imported cars increasing and saw its
profits rise over 1996.
As mentioned at the Half Year, 1997 was a year that saw Mansped successfully
retain its principal contract in the automotive sector for a further three
year period. The tendering process was highly competitive but the business is
now secure, although margins remain low.
INFORMATION TECHNOLOGY
The Group has undertaken an extensive review of the implications of the Year
2000 on its financial and operational systems and equipment. Planning to cope
with the impact and its implementation is at an advanced stage. Significant
systems projects to deliver business benefits are already underway in key
areas, which will also help to secure Year 2000 compliance.
John Toyne
Managing Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1997
1997 1996
#'000 #'000
Turnover 133,784 136,003
Operating Charges - normal (130,644) (132,864)
- exceptional 625 -
---------- ----------
(130,019) (132,864)
---------- ----------
Operating profit 3,765 3,139
Reorganisation costs (600) -
---------- ----------
3,165 3,139
Interest payable (978) (1,069)
---------- ----------
Profit on ordinary activities
before taxation 2,187 2,070
Taxation (256) (287)
---------- ----------
Profit for the financial year 1,931 1,783
Dividends (1,186) (1,152)
---------- ----------
Retained profit 745 631
---------- ----------
Earnings per share 5.7p 5.3p
Earnings per share before
exceptional items 5.1p 5.3p
---------- ----------
CONSOLIDATED BALANCE SHEET
at 31 December 1997
1997 1996
#'000 #'000 #'000 #'000
Fixed assets
Tangible fixed assets 26,063 24,959
Investments 41 50
---------- ----------
26,104 25,009
Current assets
Properties held for resale 368 818
Stock 795 790
Debtors 29,080 27,657
---------- ----------
30,243 29,265
Creditors
Amounts falling due
within one year (22,328) (22,913)
---------- ----------
Net current assets 7,915 6,352
---------- ----------
Total assets less current
liabilities 34,019 31,361
Creditors
Amounts falling due after more
than one year (6,200) (6,034)
Provisions of liabilities and
charges (886) (193)
---------- ----------
(7,086) (6,227)
---------- ----------
Net assets 26,933 25,134
---------- ----------
Capital and reserves
Called up share capital 1,694 1,694
Share premium account 5,791 5,791
Revaluation reserve 1,275 428
Other reserves 10,636 10,844
Profit and loss account 7,537 6,377
---------- ----------
Shareholders' funds 26,933 25,134
---------- ----------
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1997
1997 1996
#'000 #'000
Net cash inflow from operating activities 5,092 5,772
Returns on investment and servicing of
finance
Interest paid (276) (342)
Interest element of finance lease rentals (702) (723)
---------- ----------
(978) (1,065)
---------- ----------
Corporation tax (248) (308)
---------- ----------
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (2,054) (999)
Receipts from sales of property held for resale 450 -
Receipts from sale of fixed assets 510 585
Deferred acquisition costs (99) (98)
Payments to acquire investments - (14)
---------- ----------
(1,193) (526)
---------- ----------
Equity dividends paid (1,186) (1,084)
---------- ----------
Financing
Receipts from borrowings 700 -
Capital element of finance lease rentals (2,980) (2,798)
---------- ----------
(2,280) (2,798)
---------- ----------
Decrease in cash in the period (793) (9)
---------- ----------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 1997
1997 1996
#'000 #'000
Profit for the financial year 745 631
Surplus on revaluation of land and buildings 1,222 -
Currency differences on foreign currency
net investments (69) -
---------- ----------
Total recognised gains and losses for
the period 1,898 631
---------- ----------
NOTE OF HISTORICAL COST PROFITS AND LOSSES
1997 1996
#'000 #'000
Profit on ordinary activities before taxation 2,187 2,070
Realisation of revaluation gains of
previous years 440 168
Difference between historical cost
depreciation charge and depreciation
charge based on revalued amounts 44 44
Reversal of revaluation losses of previous years (625) -
---------- ----------
Historical cost profit on ordinary activities
before taxation 2,046 2,282
---------- ----------
Historical cost profit retained 604 843
---------- ----------
NOTES:
1. Basis of Preparation
The financial information for the year ended 31 December 1997 is unaudited
and has been prepared on the basis of the accounting policies set out in
the statutory accounts for the year to 31 December 1996. This financial
information does not constitute statutory accounts as defined in Section
240 of the Companies Act, 1985. The financial information for the year to
31 December 1996 is extracted from the statutory accounts for that period
which, together with an unqualified audit report, have been delivered to
the Registrar of Companies.
2. Dividends
The interim ordinary dividend of 1.7p per share was paid on 31 October
1997. A final dividend of 1.8p per share in respect of 1997 is proposed.
If approved at the Annual General Meeting on 21 April 1998 the dividend
will be paid on 20 May 1998 to shareholders on the register at 14 April
1998.
3. Earnings Per Share
Earnings per share of 5.7p (1996: 5.3p) are based on earnings of #1.931
million (1996: #1.738 million) and a number of shares of 33,879,163 in 1997
and 1996.
4. Copies of the Annual Report will be sent to shareholders in due course
and will be available to members of the public on application to the Company
Secretary at the registered office P O Box 10, Turnells Mill Lane,
Wellingborough, Northants, NN8 2QQ.
END
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