Wincanton plc, the largest British third-party logistics company, today issues the following trading update ahead of its half year results for the six months ended 30 September 2020.
The performance of the Group was resilient during the period despite the challenging external environment. The Digital and eFulfilment business continues to benefit from increased demand for online retail, while performance and the level of new business wins across the rest of the Group has been encouraging.
During the period, Wincanton secured notable contracts including:
- A dark store and online home delivery service for Waitrose
- eFulfilment operations with Dwell, Loaf, The White Company and Wickes
- Additional transport services with Morrisons
- A new distribution centre to support further Screwfix growth
- A renewed contract for all Asda operations
- A significant PPE storage solution to support the NHS.
The Group is expected to have a net cash position of approximately £60m at 30 September 2020 (net debt at 30 September 2019: £14.8m).
On 9 September 2020, the Group updated the market that the Board expected results for the current year to be materially ahead of market expectations at that time; this guidance remains unchanged.
Wincanton plc Pension Scheme 2020 Triennial Valuation
The Group has reached an agreement with the Trustee of the Wincanton Pension Scheme (the ‘Scheme’) on the 2020 triennial valuation (the ‘2020 valuation’) and recovery plan. The key elements of the 2020 valuation and recovery plan are set out below.
The end date of the deficit recovery plan is unchanged from the 2017 valuation and the recovery plan will run to 31 March 2027. The annual deficit contributions, excluding deferred amounts from the current year, are as follows:
- £18.2m p.a. (£18.9m p.a. gross less £0.7m pension administration expenses as currently incurred by the Group) from April 2021 through to March 2024, the net amount increasing annually from April 2021 in line with the Retail Prices Index
- £21.3m p.a. (£22m p.a. gross less £0.7m pension administration expenses incurred by the Group) from April 2024 to March 2027, increasing annually from April 2024 in line with the Retail Prices Index
- The annual cash contributions are c.£6m p.a. lower than proposed for the period from April 2021 to March 2027 under the 2017 valuation due to positive investment returns and longevity experience since the 2017 valuation was agreed
- To provide further protection to the Scheme in the event of severe adverse Scheme experience and Group default, a letter of credit of £3m p.a. will be provided by the Group as a contingent asset.
The payments are deductible for corporation tax purposes.
The actuarial deficit at 31 March 2020 was £154m (31 March 2017: £221m). The deficit at this date was impacted by market volatility in relation to the Covid-19 uncertainty. The estimated actuarial deficit at 30 June 2020 had reduced to £105m. Following this improvement and as part of the overall Triennial agreement, the Trustees and the Group agreed to a substantial acceleration of the planned de-risking of the Scheme’s investment strategy to lock in the lower deficit position. This will reduce the probability of future volatility in the deficit. The change to investment strategy has largely been implemented.
No material changes were made to other provisions with the Scheme agreed with the 2017 valuation.
Interim results
The Group will announce its interim results for the six months ended 30 September 2020 on Thursday, 5 November 2020.
Following the review of the Group’s strategy announced earlier this year, Wincanton reorganised its customer-facing sectors and simplified its operating model to create greater focus on growth in its key markets and to drive collaboration across the business. Wincanton will be introducing reporting of the new sectors at the interim results.
James Wroath, Chief Executive Officer of Wincanton plc, said:
“I continue to be extremely proud of how our people are responding to the demands placed on them by the coronavirus pandemic. When we outlined our strategy earlier this year, we stated our commitment to focus our business on opportunities in growth markets. The new contracts we have secured are clear evidence that this strategy is being implemented and is working.
“The agreement reached with the Trustees of our pension scheme provides greater certainty and lower risk for both the Group and the Scheme and we welcome the reduction in the deficit and the revision to cash payments for the remainder of the recovery period.”
