Consumer products
General merchandise
Grocery
Home and DIY
eCommerce
Service at the
heart of our success
Construction
Defence
Energy
Fleet maintenance
Transport services
Annual Report and Accounts 2017
CONTENTS
Inside this
report
The Group continues to
perform robustly and
deliver strong service
levels for customers
Adrian Colman Chief Executive
CHIEF EXECUTIVE’S STATEMENT
p16
OUR BUSINESS
RETAIL & CONSUMER p4
OUR BUSINESS
INDUSTRIAL & TRANSPORT p8
BUSINESS MODEL
p12
CORPORATE RESPONSIBILITY
REPORT p28
STRATEGIC REPORT
Group at a glance
Chairman’s review
Our business
Business model
Strategy
KPIs
Chief Executive’s statement
Financial review
Risk report
Corporate Responsibility report
GOVERNANCE
Board of Directors
Chairman’s introduction
Corporate Governance report
Nomination Committee report
Audit Committee report
1
2
4
12
14
15
16
20
24
28
34
36
37
40
41
DIRECTORS’ REMUNERATION REPORT
Committee Chairman’s Annual Statement
Annual Report on Remuneration
Directors’ Remuneration Policy
44
45
54
DIRECTORS’ REPORT
Directors’ report
Statement of Directors’ responsibilities
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
ACCOUNTS
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated balance sheet
Consolidated statement of
changes in equity
Consolidated statement of cash flows
Notes to the consolidated
financial statements
Wincanton plc Company balance sheet
Wincanton plc Company statement
of changes in equity
Notes to the Wincanton plc
Company financial statements
Additional information
Shareholder information
Directors and advisers
Glossary
60
62
64
68
69
70
71
72
73
100
101
102
104
105
106
107
STRATEGIC REPORT
Group at a glance
Service lies at the heart of what makes Wincanton special.
Whether we are ensuring safe and effective operations today
or creating the supply chain of the future, we work tirelessly
to enable great businesses to become even greater.
Across the UK and Ireland, we deliver the highest standards
of service, excellence and innovation in order to help customers
respond to changing market dynamics – and to reap the rewards
of a more agile and effective supply chain.
KEY STATISTICS (AS AT 31 MARCH 2017)
Employees
17,500
Locations
200+
Vehicles responsible for
Warehousing space
3,600
6.6m sqft
Underlying operating profit1
Underlying operating profit margin1
£52.1m
+2.4%
+7.0% (excluding WRM)
4.7%
+30bps
+40bps (excluding WRM)
FINANCIAL HIGHLIGHTS
Revenue
£1,118.1m
-2.6%
-1.3% (excluding WRM)
Net debt1
£24.3m
-38.5%
Operating profit
£56.0m
-31.2%
Underlying earnings per share1
Basic earnings per share
27.7p
+15.9%
34.2p
-32.5%
Operating profit margin
5.0%
-210bps
Dividend per share
9.1p
+65.5%
1 See page 23 for further information on the Alternative Performance Measures (APMs), including definitions and a reconciliation of APMs to statutory measures.
Wincanton plc
Annual Report and Accounts 2017
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Strong positive cash
generation enables us
to lift our final dividend
STRATEGIC REPORT
CHAIRMAN’S REVIEW
Making good
progress
Steve Marshall
Chairman
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Annual Report and Accounts 2017
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INTRODUCTION
DIVIDEND
OUTLOOK
The Group remains well positioned in its
chosen markets and continues to perform
robustly and deliver strong service levels for
customers. To date the Group has experienced
no significant impact from the Brexit vote
in June 2016, and we believe the Group can
adequately manage any future uncertainty
that arises during the Brexit process.
Robust cash generation supports limited
scale investments in skills and technology
capabilities to both protect and grow the
business for the longer term without raising
the Group’s overall risk profile.
During the coming year the Board expect
Wincanton to make continued progress.
Steve Marshall
Chairman
The year ended 31 March 2017 represented
a further year of good progress for Wincanton.
The focus of the Board and the Executive
Management Team is on positioning the Group
to deliver long term organic growth, whilst
also meeting its obligations to all stakeholders.
This will be achieved by maintaining and
deepening strong working partnerships
with our customers.
The success of an outsourcing business model
such as ours is driven by providing great
customer service and value, maintaining high
levels of contract retention and renewal and by
securing new contracts to grow the business.
RESULTS
Underlying earnings per share was up by 15.9%
over the prior year to 27.7p, and has increased
by 108.3% since the year ended 31 March 2013.
Year end net debt at £24.3m (2016: £39.5m)
was once again reduced, cumulatively a 78.8%
reduction over the same period. The Group’s
existing banking facilities were satisfactorily
extended during the year to provide an
appropriate level of maturity.
PEOPLE AND THE BOARD
Board membership was unchanged during
the year. Adrian Colman has continued to
strengthen the senior management team,
with a healthy mixture of internal promotions
and external appointments; broadening
our talent pool is fundamental to the Group
delivering on its organic growth strategy
and meeting customer expectations.
The contribution of the Group’s 17,500
employees is once again recognised.
The Group’s strong reputation for consistent
operational delivery is above all the product
of their hard work.
The Board are pleased to be recommending
an increased final dividend of 6.1p per Ordinary
Share for the year ended 31 March 2017
(2016: 5.5p). This reflects the Group’s strong
operating profits and dividend policy outlined
to shareholders last year when we resumed
dividend payments. The proposed annual
dividend is covered 3.0 times by underlying
earnings. The Board’s progressive dividend
policy is unchanged.
KEY PRIORITIES AND PROSPECTS
The Group’s overriding priority will be to
oversee further progress in the delivery of the
organic growth trading strategy, as set out in
the Chief Executive’s statement. This requires
targeted investments in people and processes,
to extend our capabilities in areas directly
relevant to customers in our existing contract
logistics heartland. The Group now has the
capacity to invest in business development,
and is actively doing so; but it remains selective
in its approach, with a risk appetite best
described as low to moderate.
The Board will also be focused on the
forthcoming triennial review of the pension
scheme and in agreeing an appropriate
future funding plan with the Scheme Trustee.
The Group still has a sizeable pension deficit,
and so the pension scheme will remain as a
significant stakeholder for many years to come.
As already noted, talent management is
already a key focus, and increasing diversity
in all its forms will be a priority for the coming
year, from the warehouse to the boardroom.
The Board will also ensure that their
stewardship obligations, not least in the areas
of operational safety, sustainability and financial
assurance, remain centre stage and in line with
best practice.
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Annual Report and Accounts 2017
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STRATEGIC REPORT
OUR BUSINESS
Retail & Consumer
Addressing over half of the supply chain spend
in the UK, our Retail & Consumer operations
seamlessly manage the flow of goods from
production through to delivery to the store
or home, for grocers and general retailers
alike. In an increasingly digitised market our
systems, people and services underpin many
multichannel operations.
58%
of Group
50%
of Group
Revenue
Underlying operating profit
£649.3m
£25.8m
WHAT WE DO
• eFulfilment. We provide a comprehensive
range of services to support today’s
multichannel retail environment.
From order management to delivery
and assembly of goods in the home we
can streamline the process and deliver
customer satisfaction.
• Asset utilisation. In a competitive
environment we work to ensure
operations are efficient and assets are
utilised. Approaches include collaborative
warehousing, shared transport options
as well as re-deploying our own assets
to support peak trading periods.
• Transformation. We continuously
improve operations and innovate and
transform them through the introduction
of new technologies and approaches.
MARKET SECTORS
RETAIL GENERAL MERCHANDISE
RETAIL GROCERY
CONSUMER PRODUCTS
Non-food retailers with store and/or
online activities requiring eFulfilment
services to meet the demands of
a multichannel market.
Customers include:
• Argos
• B&Q
• Screwfix
• wilko
Food retailers serving consumer or trade
customers requiring flexible and reliable
supply chain operations.
Customers include:
• ASDA
• Co-op
• Sainsbury’s
• Waitrose
Revenue
£315.5m
Revenue
£228.7m
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Annual Report and Accounts 2017
Manufacturers supplying the retail
market with food, or non-food products
and looking for closer supply chain
integration and new ways to serve
their markets.
Customers include:
• Britvic
• GSK
• The Kraft Heinz Company
• Nestlé
Revenue
£105.1m
Our multichannel operations
adapt quickly to changing
shopping behaviours so that
our customers can deliver the
right brand experience
CHALLENGES
Delivering the right brand experience
SALE
Both volume and value of last mile deliveries are increasing as consumers are more
confident at purchasing goods online. Retailers face the reality of placing their brands
in the hands of third parties in order to fulfil their customer orders, which requires trust
and integrity.
Cost to serve
£
Cost to serve is high on the agenda with retailers continuing to demand better value
from suppliers. Cost pressures impact all areas of the supply chain and, as margins are
squeezed, the importance of operational optimisation becomes a central focus point,
providing much needed areas of cost efficiency.
The customer journey
The ‘customer journey’ continues to be the primary focus for retailers, as the expectation
of a multichannel experience becomes increasingly embedded in habitual consumer
behaviour. The increasingly complex supply chain that is being driven as a result of this
requires pragmatic and well thought through solutions.
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HOW WE ARE RESPONDING
Delivering for our customers
We pride ourselves on fulfilling our existing
customers’ home delivery needs, alongside
building solid solutions that allow both
retailers and consumers to benefit from
the simplest and most seamless fulfilment
methods available in today’s market.
Supported by customer results and reviews
eg. TrustPilot.
Continuously improving our operations
We have a large continuous improvement
team, tasked with optimising and improving
operations. This, coupled with a pro-active
approach to collaboration, provides a
realistic and highly valuable benefit for
customers who are looking to reduce their
overall cost to serve whilst maintaining high
service levels.
Evolving our capability
We continue to work with large customers
to meet their multichannel needs by
developing smarter and more efficient ways
of working. We continue to introduce new
capabilities, for example, the implementation
of the latest platform edition of Manhattan
Associates’ Warehouse Management
System (WMS). Manhattan’s market leading
multichannel fulfilment solution will provide
Wincanton and its retail customers with
a flexible order fulfilment approach that
delivers an integrated, multichannel buying
experience for the consumer.
Wincanton plc
Annual Report and Accounts 2017
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STRATEGIC REPORT
FEATURE
Delivering a multichannel
experience
6
Wincanton plc
Annual Report and Accounts 2017
Delivering a multichannel
experience
HELPING RETAILERS STAY AHEAD
Wincanton’s skills and experience are
helping retailers rise to the multiple
challenges of today’s multichannel
environment. With our support, retailers
are able to offer faster, more flexible and
more reliable services, giving consumers
a seamless logistics supply chain, time
after time – instore, online and everywhere
in between.
We have a proud and proven track record
across every aspect of retail, supporting
household names, market leaders
and smaller specialists with a range
of technologies, services and support
facilities. Nobody matches our ability to
plan, schedule and deliver goods safely,
effectively and efficiently, no matter
the location. For example, our new
warehouse management technology
is giving retailers new capabilities
in the storage, picking, packing and
despatching of small orders in particular,
helping them grow their businesses in
new and exciting ways. Similarly, the huge
fund of knowledge we have gained in the
construction industry is helping retailers
in the DIY sector improve home deliveries
of bulky materials.
From collection at the dockside to
fulfilment, from click and collect to home
delivery with installation, across every size
of retailer in every sector, we make sure
that the consumer experience supports
the brand promise.
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Annual Report and Accounts 2017
7
STRATEGIC REPORT
OUR BUSINESS
Industrial & Transport
Addressing approximately a quarter of the
supply chain spend in the UK, our Industrial &
Transport operations smoothly handle a wide
range of industrial products through an extensive
and typically specialised network. The products
are as diverse as fuel, bricks and specialist
engineering components alongside the transport
of containers and general goods. It also includes
the maintenance of LGVs and HGVs.
42%
of Group
50%
of Group
Revenue
Underlying operating profit
£468.8m
£26.3m
WHAT WE DO
• Transport. We operate a large fleet
of general and specialist vehicles.
This includes the UK’s largest fleet of
mechanical offloaders (for bricks and
blocks), ready-mix cement mixers and fuel
tankers in addition to the more common
general haulage services.
• Compliant operations. Whether storing
or moving goods our services meet many
stringent compliance and accreditation
standards including SC21, FORS and ADR
as well as exceeding our own high targets
for health and safety performance.
• Asset optimisation. We optimise our
fleet, as well as customer fleets, through
effective support systems, increased
deployment of technology supported by
proactive maintenance via the Pullman
business to ensure performance as well
as compliance.
MARKET SECTORS
TRANSPORT SERVICES
CONSTRUCTION
OTHER
Serves all our retail, consumer and
industrial customers as well as shipping
lines and freight forwarders with general
haulage, container transport and fleet
maintenance services UK-wide.
Manufacturers of construction products
(eg. bricks, aggregates etc.) and
construction primes managing large
projects requiring timely flows of key
components (eg. cement).
Customers include:
Customers include:
• Howdens Joinery
• Lucozade Ribena Suntory
• Mediterranean Shipping Company (MSC)
• Etex
Revenue
£207.0m
• Brett
• Hanson
•
Ibstock
• Tarmac
Revenue
£134.4m
Specialist sectors including defence,
energy and food with specific compliance
and operating requirements.
Customers include:
• BAE Systems
• Müller Milk & Ingredients
• Phillips 66
• Valero
Revenue
£127.4m
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We continually develop our
services to enhance our capability
and ensure compliance as our
markets evolve
CHALLENGES
Efficient and sustainable operations
Due to persistent cost pressures, coupled with a drive for stronger corporate and
social responsibility, it is becoming increasingly common for businesses to demand
more efficient solutions, not only from fuel economy and fleet optimisation, but also
with a closer focus on sustainability.
Improved visibility and tracking
Shortened delivery timescales alongside fragmented drop locations across some sectors
is driving the need for customers to have confidence in their logistics partner to deliver
both accuracy and efficiency within their supply chains.
Health and safety
Within a transport and logistics environment health and safety has never been more
important. Driver health and safety along with the challenges of running large vehicle
fleets on the public highways are topics at the forefront of supply chain operations.
This is applicable across Retail & Consumer as well as Industrial & Transport.
HOW WE ARE RESPONDING
Deploying new developments
We work closely with our suppliers to trial,
evaluate and deploy new equipment.
Our examples are wide ranging but include
investment in new efficient vehicles,
participation in continued Government
trials of longer trailers and use of enhanced
vehicle telematics which pro-actively
track journeys to promote better
driving methods and reduce accidents.
Collectively these initiatives offer lower
emissions, better efficiency and improved
safety for our drivers and other road users.
Deploy technology to improve visibility
and customer service
Whilst our solutions may be customer
specific we are increasingly adopting a
common standard across our transport
operations. Central to this is Winsight, a
key component of our in-cab technology
platform. It allows drivers to connect with
regional planning teams, to create effective
route planning and provides transparency
within the current fleet utilisation. The result
is improved fleet optimisation and better
visibility of deliveries for customers.
Delivering safety first
We treat health and safety as our number
one priority and we are committed to
raising awareness throughout all of our
driver and warehouse teams. Our focus is
driving behavioural change where driver
and warehouse staff are continuously
developed via training methods designed
to improve individual skills, providing
improved and safer performance.
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Annual Report and Accounts 2017
9
STRATEGIC REPORT
FEATURE
Refining our
model
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Annual Report and Accounts 2017
NEW OPPORTUNITIES FROM
NEW DYNAMICS
We constantly monitor trends across
all aspects of logistics, identifying
opportunities where we can exploit
changing market dynamics.
Ours is a diverse business but although
we operate across many sectors with
many different characteristics, our
experience has revealed that supply
chains frequently have challenges in
common. While these challenges may
present difficulties, they also generate
opportunities for us to expand into new
areas. For example, changing dynamics
in the fuel sector meant that forecourts
were no longer totally dominated by
the big brands. Independent forecourt
retailers now make up a significant market
share and this has led to an increase in
demand for more flexible fuel deliveries.
Our response was the development of
EnergyLink, a Wincanton-branded flexible
nationwide fleet of fuel tankers that
serves forecourts, service stations and
airports. Customers have bought into the
strengths and services that EnergyLink
provides and recent months have seen
significant expansion.
We apply this same flexible, entrepreneurial
approach to all sectors, including
construction where we have over 70
ready-mix vehicles delivering to construction
sites and individuals across the UK and we
are currently exploring options in adjacent
markets, such as bitumen.
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STRATEGIC REPORT
BUSINESS MODEL
How we
create value
As supply chain experts we are focused on improving our
customers’ operations, whether this is to deliver better service
levels, increase customer satisfaction, reduce cost to serve
or by running safe operations. In order to do this we draw
on all our expertise and resources from across the Group.
THE RESOURCES WE NEED
WHAT WE DO
Skilled knowledge and
expertise of our people
Our people are at the heart of
Wincanton and their skills and
expertise enable our customers
to achieve their goals.
Employees
17,500
Flexible warehouse
facilities
An actively managed portfolio
of Wincanton and customer
locations, from dedicated sites
to shared user operations.
Warehousing space
6.6m sqft
Multimodal
transport operations
Owned and managed vehicles
as well as rail to deliver a flexible,
safe and efficient service.
Vehicles responsible for
3,600
Proven technology and
logistics systems
Integrated and flexible systems
providing our customers with
visibility and control.
Locations
200+
OUR SERVICES
• We design and evaluate transport
networks and find the solutions that
balance cost with service.
• We design and operate high density,
automated warehouses or high volume
pick and pack eCommerce operations.
• We create innovative solutions and
implement cutting edge technology
to drive continuous improvement
initiatives with over 500 Lean Six
Sigma trained specialists.
• We train our teams to ensure their
safety and that of others around them.
Contract type
Open book operations
60%
Contracts will typically cover our costs plus an
agreed management fee. This provides visible
earnings with modest margins, but with low
risk to the business.
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WHAT WE DO
THE VALUE WE CREATE
We do it
through our values
Excellence
Integrity
Passion
Proactivity
Togetherness
Trust
OUR CAPABILITY
• Our IT teams can specify and deploy
warehouse management systems,
manage them in‑life and migrate them
to alternative platforms.
• Our HR team can transfer employees
(in line with TUPE legislation), handle
large workforces, build effective teams,
strengthen employee engagement
and develop employees.
• Our property team can source
warehouses across the UK and Ireland,
manage leases and seek collaborative
opportunities to maximise space.
• Our environment team support the
improvement and delivery of more
sustainable operations.
Closed book operations
40%
Contracts are competitively priced and see us
own the principal financial opportunity along
with manageable and controllable risks.
Greater deployment of resources across
contracts offers improved returns.
Customer focused delivery
Whether delivering to a building
site, a distribution centre, a high
street store or end customer
our aim is to provide a leading
customer experience.
More efficient
supply chains
Through improving service,
reducing waste and maximising
capacity we look to make our
customers’ supply chains better.
Every day.
A safer environment for all
By maintaining a relentless focus
on the health and safety of our
employees, visitors and the
communities we serve.
CO2
Sustainable operations
Through driving reductions in
our emissions via investment,
awareness, training and
recognition. Enabled by
changing behaviours.
Shareholder value
Rigorous management of our
business, our costs and our risks
to generate sustainable total
shareholder returns.
Wincanton plc
Annual Report and Accounts 2017
13
Contract type
STRATEGIC REPORT
STRATEGY
Our Strategy
Our strategic focus and business performance will continue to be driven
by the following objectives:
1
Delivering improvements for our
customers in our existing operations
and retaining existing contracts.
2
Improving ‘share of wallet’ with our
existing customers and focusing
on cross selling our services.
3
Acquiring new customers through
improved prospecting process and
innovative service propositions.
TO DELIVER THIS STRATEGY WE SEEK TO:
4
Driving ongoing cost reductions
and cash generation.
Put the customer at
the centre with sector
focused strategies.
Deliver integrated and
consistent services to
optimise operations.
Differentiate market
position through
innovative solutions.
Invest in our people to
become an aspirational
organisation to work for.
READ MORE ABOUT OUR STRATEGIC PROGRESS ON PAGE 18
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Wincanton plc
Annual Report and Accounts 2017
STRATEGIC REPORT
KPIs
How we measure our performance
Revenue
£1,118.1m
‑2.6%
Underlying EBITDA1
£63.9m
‑2.3%
Underlying operating profit1
£52.1m
+2.4%
‑1.3% (excluding WRM)
+2.9% (excluding WRM)
+7.0% (excluding WRM)
2017
2016
2015
1,118.1
1,147.4
1,107.4
2017
2016
2015
63.9
65.4
64.1
2017
2016
2015
52.1
50.9
49.7
Consolidated Group revenue.
Operating profit before all amortisation and
depreciation charges and before exceptionals.
Operating profit before amortisation of acquired
intangibles and exceptionals.
Underlying operating profit margin1
4.7%
+30bps
2017
2016
2015
Underlying operating profit as a percentage
of revenue.
Underlying EPS1
27.7p
+15.9%
2017
2016
2015
4.7
4.4
4.5
27.7
23.9
21.1
Profit for the year attributable to equity shareholders
of Wincanton plc before amortisation of acquired
intangibles, exceptionals and the tax impact of those
items, as well as other exceptional tax items, divided
by the weighted average number of Ordinary Shares
in issue throughout the year.
Our KPIs
Net debt1
£24.3m
‑38.5%
2017
2016
2015
24.3
39.5
57.6
Borrowings and other financial liabilities net of cash
and cash equivalents.
Lost Time Incident Frequency Rate (LTIFR)
Employee Engagement
0.68
‑4.2%
64%
+0.0%
No. of LTIs per 100,000 hours worked
Engagement score %
2017
2016
2015
2014
Number of lost time incidents per 100,000
hours worked.
0.68
0.71
0.70
1.24
2017
2016
2015
64
64
65
The percentage of positive responses to five specific
statements within the employee survey.
1 See page 23 for further information on the Alternative
Performance Measures (APMs), including definitions and
a reconciliation of APMs to statutory measures.
Wincanton plc
Annual Report and Accounts 2017
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STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT
Successful service, organised for
growth
The Group continues to
perform robustly and
deliver strong service
levels for customers
2016
(excl. WRM)1
1,132.5
62.1
48.7
4.3%
Change
(excl. WRM)¹
(1.3)%
2.9%
7.0%
40bps
2017
1,118.1
63.9
52.1
4.7%
27.7
9.1p
(24.3)
2016
reported
1,147.4
65.4
50.9
4.4%
23.9
5.5p
(39.5)
Adrian Colman
Chief Executive
PERFORMANCE SUMMARY
Revenue (£m)
Underlying EBITDA (£m)2
Underlying operating profit (£m)²
Underlying operating margin (%)²
Underlying EPS (p)²
Dividend per share (p)
Closing net debt (£m)³
1 On a like for like basis, excluding the results of Wincanton Records Management (WRM) from the prior year which was disposed of in December 2015.
2 Page 23 provides further information on Alternative Performance Measures (APMs), including definitions and a reconciliation of APMs to statutory measures.
3 Net debt is the sum of cash and bank balances, bank loans and overdrafts and other financial liabilities. Note 25 to the financial statements provides a breakdown of net debt for the current
and prior periods.
16
Wincanton plc
Annual Report and Accounts 2017
The split of Retail & Consumer revenue by the
industry sectors it serves is as follows:
Retail general
merchandise
Retail grocery
Consumer products
2017
£m
2016
£m Change
315.5
228.7
105.1
649.3
278.2
234.7
111.5
624.4
13.4%
(2.6)%
(5.7)%
4.0%
The overall revenue increase was driven
primarily by the impact of contract wins and
strong volume growth with Home & DIY
business customers, reported within Retail
general merchandise. This growth was partly
offset by the impact of lost volumes due
to contract cessations in Retail grocery and
Consumer products.
The business successfully renewed a number
of important contracts and extended the
services with key customers, such as Co-op
providing food distribution services and
Sainsbury’s providing warehousing and
distribution services. Both of these important
renewals demonstrate the strong partnership-
based ethos with our customers and our
commitment to driving greater efficiency into
these logistics operations. In a challenging
grocery marketplace we will deliver substantial
savings into the future for our customers.
New business wins included a five year contract
with wilko, one of the UK’s fastest growing
retailers, to manage all UK transport operations,
a three year warehouse management contract
with Coca-Cola, a four year contract with IKEA
and a five year contract with Majestic Wine to
establish and operate an eCommerce National
Fulfilment Centre. For IKEA, we will provide
operational development and support for
two new distribution centres, supporting their
multichannel distribution growth strategy.
In any contracting business inevitably the new
business growth has been partially offset by
revenue reduction on contract losses and exits
due to changes in customer requirements
or transfers to alternative providers.
During the year, this included the cessation of
the Morrisons convenience store business, and
a lost contract with Nestlé both announced last
year as well as the cessation of a Tesco contract
from July 2017.
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Annual Report and Accounts 2017
17
The year ended 31 March 2017 has been
another year of good progress and strong
trading performance, securing important
renewals and winning new contracts with
new services and new customers.
Revenue in the year ended 31 March 2017 was
£1,118.1m (2016: £1,132.5m excluding WRM),
which represents a year on year decrease of
1.3%. This has been driven primarily by the full
year impact of contracts exited in the prior
year, including all closed book home shopping
contracts in Pullman, partly offset by revenue
from contract wins.
Underlying operating profit grew by 7.0%
to £52.1m (2016: £48.7m excluding WRM),
reflecting a continued strong operating and
financially disciplined performance across
the business, including an improvement in
the performance of the Pullman business
following the exit of loss-making contracts in
the prior year. As a result we have achieved
an underlying operating margin of 4.7%, up
from 4.3% (excluding WRM) in the prior year.
Underlying EPS grew a healthy 15.9% and
supports the growth in final dividend per share
to 6.1p, resulting in a total 9.1p for the year.
Group underlying EPS
Following the disposal of Wincanton Records
Management (WRM) in December 2015,
the Group has, with effect from 1 April 2016,
refocused its internal management structure
under the following two reportable segments;
Retail & Consumer and Industrial & Transport.
Segmental information for the year ended
31 March 2016 has been realigned to aid
comparability, and in line with management
reporting, the results of WRM have been
excluded from the results of the reportable
segments in the prior year.
RETAIL & CONSUMER
Revenue (£m)
Underlying
operating profit (£m)
Margin (%)
2017
649.3
2016
624.4
Change
4.0%
25.8
2.4%
25.2
4.0% 4.0% nil bps
Retail & Consumer reported revenues of
£649.3m in the year, a 4.0% year on year
increase compared with the £624.4m reported
in the year to 31 March 2016. The contractual
split of this segment between open and closed
book remains relatively constant at 87% open
book (2016: 90%).
27.7
Underlying operating profit for the year was
£25.8m, up 2.4% on the £25.2m reported
last year.
23.9
21.1
16.6
13.3
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25
20
15
10
5
0
2013
2014
2015
2016
2017
STRATEGIC REPORT
CHIEF EXECUTIVE’S STATEMENT
CONTINUED
Excellent relationships
are at the heart of our
success and we ensure
that we understand our
customers’ needs and
challenges so that we
can add value to their
business
INDUSTRIAL & TRANSPORT
STRATEGIC PROGRESS
Revenue (£m)
Underlying
operating profit
(£m)
Margin (%)
2017
468.8
2016
508.1
Change
(7.7)%
26.3
5.6%
23.5
11.9%
4.6% 100bps
Industrial & Transport reported revenues of
£468.8m in the year, down 7.7% on the £508.1m
reported in the prior year.
The underlying operating profit of £26.3m
compared to £23.5m last year, driven by the
improvement in performance of the Pullman
business together with non-recurring items
from contract cessations such as property-
related credits.
The split of Industrial & Transport revenue
by the industry sectors it serves is as follows:
Transport
services
Construction
Other
2017
£m
2016
£m
Change
207.0
134.4
127.4
468.8
234.8
138.5
134.8
508.1
(11.8)%
(3.0)%
(5.5)%
(7.7)%
The decrease in revenue compared to last year
is primarily due to the cessation of the closed
book Pullman home shopping contracts in
the second half of last year, volume pressures
in container transport operations (both within
Transport services above), the insourcing
of a construction logistics contract and
the cessation of a contract within defence
operations (included within ‘Other’) at the
half year, partially offset by growth in our
EnergyLink business and the start-up of our
ready-mix concrete offering.
With over 60 years’ experience supporting
the defence sector we received another gold
standard accreditation known as the ‘SC21’
during the year. We are the first third party
logistics company to be accredited with the
gold SC21 award. Our defence operation
was recognised for our change programme
designed to accelerate the competitiveness of
the aerospace and defence industry. This award
demonstrates our commitment to continuous
improvement and efficiency that we deliver
through our tailored innovative supply
chain solutions.
We have made good progress against our
strategic goals in both sectors as follows:
Delivering improvements for our
customers in our existing operations
and retaining existing contracts
Significant contracts were renewed during
the year including Sainsbury’s and Co-op.
Both are long standing customers of over
20 years. The renewals are based on the
strength of our relationships and a partnership
approach to their supply chain needs as well
as on our service excellence, adaptability and
dependability. As customers adapt to changing
consumer behaviour the evolution of the
supply chain is an increasingly important part
of the renewal process.
During the year, the Construction business
expanded its service offering into the
ready-mixed concrete market and has
commenced the acquisition of more than 100
ready-mix vehicles. This investment is backed
by an eight year contract with Hanson UK and
supports the Group’s view that the prospects
for the UK construction industry are positive as
evidenced by the Government’s desire to build
a million new homes by 2020 and to invest in
major infrastructure projects.
Improving ‘share of wallet’ with our
existing customers and focusing on
cross selling our services
Excellent relationships are at the heart of our
success and we ensure that we understand
our customers’ needs and challenges so that
we can add value to their business. During the
period, we have extended the services we
provide to a number of customers including
Britvic and Screwfix. With Britvic we have
extended our 19 year partnership and in
addition to the distribution centre operation
we have won a five year contract to operate
their national transport operations. We have
also extended our relationship with Screwfix
with an agreement to design and manage a
newly built warehouse.
These extended contracts demonstrate our
track record of service excellence combined
with a compelling commercial approach and
added value.
Acquiring new customers through
improved prospecting process and
innovative service propositions
We were pleased to win new contracts with
IKEA, wilko and Majestic Wine during the year.
To support IKEA’s multichannel distribution
growth strategy, we have sourced and fitted
out two warehouses in South East England
which are now in operation. The new facilities
will create an efficient and reliable operation
which will support IKEA’s future growth plans.
18
Wincanton plc
Annual Report and Accounts 2017
We were delighted to be awarded the contract
to manage all UK transport operations for
wilko, the family owned retailer. We will be
responsible for the replenishment of their
900-strong store portfolio making over 100,000
deliveries per annum.
The set up and successful Christmas operation
of a new National Fulfilment Centre (NFC)
for Majestic Wine has again proven our
eCommerce expertise. We now generate over
£250m of revenue from customers where
we help them deliver their multichannel
operations, which demonstrates great
capability in a changing retail landscape.
Driving ongoing cost reductions and
cash generation
Our track record in continuous improvement
helps our customers in terms of lowering their
cost of operations in open book contracts and
supports our margins in closed book contracts.
This continued drive to improve efficiency
of operations strongly supports our ability to
retain existing contracts with customers and
build long term partnerships.
We continued the year on year trend of strong
positive net cash flow of £15.2m (2016: £18.1m),
see cash flow table on page 22. This excellent
cash performance enables us to have the
confidence to lift our final dividend from
5.5p to 6.1p per share this year resulting in a
total dividend for the year of 9.1p per share
(2016: 5.5p per share). We also continue to
support our legacy pension scheme with
deficit recovery plan payments, net of certain
Scheme administration costs, of £14.1m in the
year (2016: £20.9m). The remainder of cash
generated reduced the level of closing net
debt to £24.3m (2016: £39.5m).
BREXIT
Following the result of the EU Referendum
in June 2016 we have closely followed
developments in our markets and assessed
the potential impact on our business. As a UK
and Ireland focused business the direct impact
to date has been negligible for Wincanton.
However, we do recognise the potential to
experience an affect as our customers’ markets
are impacted. This could be both positive
or negative dependent on factors such as
consumer confidence, construction investment
sentiment, the effect of the devaluation of
sterling currency and the availability of labour
in the UK market place.
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Wincanton is a large scale employer in the UK
and Ireland and we celebrate the diversity of
background and ethnicity. Our employee base
comprises 17,500 people with British, Irish, other
EU and non EU heritage and we recognise and
are grateful for the contribution they all make
to the Group and wider economy now and in
the future.
INNOVATION
We are serious about bringing innovative
solutions to our business and our customers
and we bring this together in Wincanton
through our W2 programme. Our W2 Ideas
Accelerator initiative is focused on finding and
implementing innovative ideas from within
Wincanton, harnessing and managing them
via an interactive platform and engaging
approach. Our W2 Labs initiative has been
established in partnership with L Marks,
innovation specialists and early-stage investors.
We are taking the Wincanton brand and certain
key logistics themes to the worldwide start-up
community to identify great ideas to trial in our
business incubator.
PEOPLE
Wincanton employs 17,500 people, who are
clearly our greatest asset. I thank them for their
continued dedication, support and focus on
our business and service to our customers.
Helping our people to develop and progress
their careers with Wincanton is a really
important element of our people strategy.
We launched the ‘Your Future’ programme
during the year as a new training programme
to help attract people into logistics. We were
delighted that a Wincanton General Manager
was recognised in the Grocer’s Top New
Talent list in 2016 for his work creating the
programme. Additionally, our HR team won
multiple awards at the HR Excellence Awards
recognising our Talent Management Strategy
and Health and Wellbeing programmes for
colleagues and the overall “HR Excellence
Gold Award”.
Our employees were also proud to be jointly
awarded the Bis Henderson Third Party
Logistics Provider of the Year at the Hermes
Retail Week Supply Chain awards. The award
in late September 2016 was awarded on the
evidence of innovation, execution of those
initiatives, a level of true collaboration with retail
clients and evidence of those solutions to our
customers, over the past 12 months.
CORPORATE RESPONSIBILITY
The health and safety of our people is our
number one priority and we were pleased
that our continued reduction in reported
incidents was maintained this year as a result
of our health and safety driver and warehouse
initiatives and training programmes.
During the year, we have also continued
to support and encourage our people
to be as happy and healthy as possible,
through our award winning health and
wellbeing campaigns to improve knowledge
and understanding of issues particular
to our industry.
We are acutely aware of our responsibilities
to minimise our environmental impact and
have ensured during the year that all sites,
depots and offices have sustainability plans in
place to minimise the environmental impact
of their activities on the local environment.
The continued reduced environmental
impact statistics detailed later in the Corporate
responsibility report on pages 28 to 31 show
how much our commitment and efforts are
paying off and we were proud to retain the
Carbon Trust Standard to March 2018 which
we have held since 2010.
Wincanton plc
Annual Report and Accounts 2017
19
STRATEGIC REPORT
FINANCIAL REVIEW
Delivering for all our
stakeholders
Tim Lawlor
Chief Financial Officer
PERFORMANCE SUMMARY
Revenue (£m)
Underlying EBITDA (£m)
Underlying operating profit (£m)
Underlying operating margin (%)
Net financing costs (£m)
Underlying profit before tax (£m)
Amortisation of acquired intangibles (£m)
Exceptionals (£m)
Profit before tax (£m)
Income tax (£m)
Profit after tax (£m)
Underlying EPS (p)
Basic EPS (p)
Dividend per share (p)
Closing net debt (£m)
Group net debt at the
year end was £24.3m
representing a net
cash inflow in the year
of £15.2m
Change
(excl. WRM)
(1.3)%
2.9%
7.0%
40bps
2017
1,118.1
63.9
52.1
4.7%
(10.6)
41.5
(2.2)
6.1
45.4
(3.4)
42.0
27.7
34.2
9.1
(24.3)
2016
1,147.4
65.4
50.9
4.4%
(15.6)
35.3
(4.5)
35.0
65.8
(4.7)
61.1
23.9
50.7
5.5
(39.5)
Change
(2.6)%
(2.3)%
2.4%
30bps
17.6%
15.9%
(38.5)%
The Directors present the results of the business on an underlying basis, excluding amortisation of acquired intangibles and exceptional items, the related tax and
exceptional tax, where applicable, from operating profit, profit before tax and EPS, as they believe this better represents the performance of the business. A reconciliation
of these measures to their statutory equivalent is shown in the table on page 23.
20
Wincanton plc
Annual Report and Accounts 2017
The Group’s revenue of £1,118.1m in the year
ended 31 March 2017 was 2.6% lower than the
prior year (2016: £1,147.4m). Excluding WRM,
which was sold in December 2015, the
decrease in revenue was 1.3%. This decrease
is principally due to contract exits, including
those from all closed book contracts providing
fleet maintenance for home delivery services
in the Pullman business. The impact of the
contract exits, together with some volume
pressure in the Containers business, has
been partly offset by new wins and volume
growth, particularly in the Retail general
merchandise business.
Group underlying operating profit (excl. WRM)
The non-cash financing items total £4.7m
(2016: £5.7m) and comprise the discounts
unwinding on the Group’s provisions for
property and insurance claims plus the
financing charge in respect of the defined
benefit deficit, lower in the year because of
a reduction in the opening pension deficit.
AMORTISATION OF ACQUIRED
INTANGIBLES
Amortisation of acquired intangibles of £2.2m
is £2.3m lower than the prior year as a result
of the intangible relating to the acquired
construction business being fully amortised at
the end of March 2016. The remaining balance
will be fully amortised by 31 March 2018.
52.1
EXCEPTIONALS
48.7
46.2
43.0
44.2
)
m
£
(
55
50
45
40
35
30
2013
2014
2015
2016
2017
Underlying operating profit grew by 2.4%
to £52.1m. Excluding WRM, which recorded
£2.2m operating profit in the year ended
31 March 2016, the Group’s underlying profit
grew by 7.0%. This growth reflected the
continued strong operating performance, the
improvement in the Pullman business, primarily
due to the exit of the loss-making home
shopping contracts and credits from end-of-
contract property settlements. As a result we
have achieved an underlying operating margin
of 4.7%, marginally up from 4.4% in the prior
year (4.3% excluding WRM).
NET FINANCING COSTS
Bank interest payable
on loans
Interest receivable
Net interest payable
Unwinding of discount
on provisions
Interest on the net defined
benefit pension liability
Net financing costs
2017
£m
6.0
(0.1)
5.9
1.2
3.5
10.6
2016
£m
10.1
(0.2)
9.9
1.3
4.4
15.6
Net financing costs were £10.6m (2016: £15.6m),
£5.0m lower year on year.
Bank interest payable on loans was £6.0m
(2016: £10.1m) due to reduced average net debt
and the repayment of the £20m balance of the
more expensive US Private Placement debt in
November 2016.
Items related to disposed
businesses
Profit recognised on the
disposal of WRM
Other items
Net exceptionals
2017
£m
2016
£m
4.6
–
1.5
6.1
2.6
32.4
–
35.0
During the year, non-cash gains of £4.6m
(2016: £2.6m) were recognised on the
remeasurement of liabilities relating to
disposed businesses. These included warranty
balances held in respect of the disposal of the
European operations and WRM.
In the prior year, exceptional profit arose on the
disposal of WRM.
Other items comprise the settlement of a claim
against a supplier, partially offset by the costs of
initiating an Enhanced Transfer Value exercise in
the pension scheme (see Pensions, below).
TAXATION
Underlying profit before
tax (£m)
Underlying tax (£m)
Tax on amortisation of
acquired intangibles (£m)
Exceptional tax (£m)
Tax as reported (£m)
Effective tax rate on
underlying profit
before tax (%)
2017
2016
41.5
7.5
(0.4)
(3.7)
3.4
35.3
6.5
(0.9)
(0.9)
4.7
18.0% 18.4%
Underlying tax of £7.5m (2016: £6.5m)
represents an effective tax rate of 18.0%
(2016: 18.4%) on underlying profit before
tax and is stated before tax credits of £0.4m
(2016: £0.9m) in respect of the amortisation
of acquired intangibles and exceptional tax
of £3.7m (2016: £0.9m).
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Exceptional tax comprises a tax credit of
£4.0m (2016: £0.9m) relating to previous years’
tax liabilities offset by a tax charge of £0.3m
(2016: £nil) on exceptional profit.
The total net deferred tax asset has reduced
to £17.2m (2016: £22.0m), primarily as a result
of the reduction in the pension deficit and the
deferred tax asset thereon.
PROFIT AFTER TAX AND EARNINGS
PER SHARE
Profit after tax for the year is £42.0m
(2016: £61.1m) with the reduction of £19.1m
due to lower exceptional profit following the
£32.4m gain on sale of WRM in the year ended
31 March 2016. The reduction arising from
the lower exceptional profit was partly offset
by improvements in underlying operating
profit, financing costs and amortisation of
acquired intangibles.
Underlying EPS, which excludes from earnings
amortisation of acquired intangibles and
exceptionals, increased by 15.9% to 27.7p
(2016: 23.9p). Basic EPS was 34.2p (2016: 50.7p)
with the decrease again being explained by
the reduction in exceptional profit.
The calculation of these EPS measures is set
out in Note 7.
DIVIDENDS
Interim
Final (proposed)
Total
2017
pence
3.0
6.1
9.1
2016
pence
–
5.5
5.5
The Group’s policy is to show dividend
growth broadly matched to growth in
underlying earnings.
In setting the dividend the Board consider a
range of factors, including the Group’s strategy
(including downside sensitivities), the current
and projected level of distributable reserves
and projected cash flows.
The Board have proposed a final dividend
of 6.1p per share relating to the year ended
31 March 2017, an increase compared to the
final dividend paid in respect of the year ended
31 March 2016.
Dividend payments of £10.4m (2016: £nil) in the
year comprised the final dividend of 5.5p per
share relating to the period ended 31 March
2016 and the 2017 interim dividend of 3.0p
per share.
Wincanton plc
Annual Report and Accounts 2017
21
STRATEGIC REPORT
FINANCIAL REVIEW
CONTINUED
FINANCIAL POSITION
The summary financial position of the Group
is set out below:
Non-current assets
Net current liabilities
(excl. net debt)
Non-current liabilities
(excl. net debt/pension
deficit)
Net debt
Pensions deficit (gross
of deferred tax)
Net liabilities
2017
£m
147.9
2016
£m
148.5
(149.8)
(150.9)
(34.8)
(24.3)
(36.8)
(39.5)
(78.4)
(139.4)
(105.6)
(184.3)
The reduction in net liabilities of £44.9m is
represented by the profit after tax of £42.0m,
the remeasurement of the pension deficit net
of deferred tax of £13.6m, less dividends paid in
the year of £(10.4)m and other movements in
equity of £(0.3)m.
CASH FLOWS AND NET DEBT
The Group’s cash flows can be summarised
in the following table:
Underlying EBITDA
Net capital expenditure
Onerous leases
Working capital
Tax
Net interest
Other items
Free cash flow
Disposal of WRM
Pension recovery payment
Dividends
Own shares acquired
Net cash flow
2017
£m
63.9
(18.7)
(2.7)
6.5
(2.6)
(6.8)
0.2
39.8
–
(14.1)
(10.4)
(0.1)
15.2
2016
£m
65.4
(6.0)
(7.7)
(51.8)
(3.1)
(9.1)
0.1
(12.2)
55.7
(20.9)
–
(4.5)
18.1
The Group generated a £15.2m (2016: £18.1m)
net cash inflow in the period, with a free cash
flow of £39.8m (2016: £(12.2)m)
Net capital expenditure was £18.7m
(2016: £6.0m), the increase being driven by
investment to support new business growth
including £10.9m for specialist vehicles and
£2.4m on the Group’s information system
infrastructure. The capital expenditure is net
of cash receipts on sale of assets of £0.5m
(2016: £4.4m), with the prior year including
£4.0m in respect of a single sale of end-of-
contract assets.
Cash outflows in respect of onerous lease
liabilities were £2.7m, a £5.0m reduction
compared to the prior year of £7.7m. This is in
line with the previously expressed view that the
Group’s cash exposure to these onerous leases
will fall materially over time.
The £6.5m inflow on working capital in the
year ended 31 March 2017 is due to favourable
timing on year end collections in the normal
course of business. The large working
capital outflow of £51.8m in the year ended
31 March 2016 was the result of a one-off
adjustment to year end working capital
management activities.
The Group paid cash tax in the current year
of £2.6m (2016: £3.1m). The cash tax payable
continues to trend below the underlying
charge due to the impact of tax relief on the
pension deficit recovery payments made
in the year and on share options exercised.
This is expected to continue going forward.
Committed facilities
)
m
£
(
200
160
120
80
40
0
166
166
166
157
142
54
24
2017
Closing net debt
2018
2019
Average net debt
2020
2021
During the year, the Group agreed an
extension of the maturity of its syndicated
facilities to October 2021.
The amount of cash interest paid, excluding
fees, of £6.8m (2016: £9.1m) reduced significantly
in the year reflecting the lower level of average
net debt compared to the prior year.
The US Private Placement debt of £20m
was redeemed from cash generated in the
year and from other existing facilities on
7 November 2016.
The Group’s facilities at 31 March 2017
comprise the following: the syndicated main
bank facility of £141.2m which amortises by
£8.8m in October 2019, with a second equal
amortisation at the four year anniversary in
October 2020; and £25m from the Prudential/
M&G UK Companies Financing Fund LP, which
amortises by £6.2m in January 2021 with the
remaining balance maturing in January 2022.
The Group maintains a mix of hedging
instruments (swaps) to give an appropriate
level of protection against changes in interest
rates. At the year end, £20m of debt was at
fixed rates and the balance at floating rates.
Wincanton operates comfortably within its
banking covenants, as summarised in the
table below:
Covenant
Ratio
Adjusted net debt: EBITDA <2.75:1
>3.5:1
Interest cover
>1.4:1
Fixed charge cover
At 31
March
2017
0.77
14.1
2.9
PENSIONS
The Group operates a number of pension
arrangements in the UK and Ireland.
Defined benefit arrangements
The Wincanton plc Pension Scheme (the
Scheme) includes defined benefit sections which
were closed to future accrual on 31 March 2014.
Free cash flow of £39.8m (2016: £(12.2)m) has
been used to maintain the pension recovery
payments of £14.1m (2016: £20.9m), to pay
equity dividends of £10.4m (2016: £nil), and
to reduce net debt by £15.2m (2016: £18.1m).
Net debt at 31 March 2017 was £24.3m
(2016: £39.5m), reflecting the net cash inflow
in the year of £15.2m.
Closing net debt
)
m
£
(
200
160
120
80
40
0
107.6
64.9
57.6
39.5
2013
2014
2015
2016
24.3
2017
The average level of net debt was reduced
by £54.0m from £108.0m in the prior year
to £54.0m in the current year from the cash
generation of the business and the impact
of the proceeds received from the disposal
of WRM.
FINANCING AND COVENANTS
The Group’s committed facilities at the year
end were £166m (2016: £215m) and the
headroom in these committed facilities to
reported net debt at 31 March 2017 was £142m
(2016: £176m). The Group also has additional
operating overdrafts which provide day to
day flexibility and amount to a further £11m in
uncommitted facilities. Sterling and Euro pools
are operated and whenever possible, surplus
cash is netted against overdrafts.
22
Wincanton plc
Annual Report and Accounts 2017
The membership data split by key categories is
as follows:
Deferred
Pensioners
2017
8,030
5,883
13,913
2016
8,525
7,125
15,650
The Scheme had an IAS 19 deficit of £78.4m
at 31 March 2017 (2016: £105.6m). The deficit
at 30 September 2016 was £169.2m.
The deficit has reduced due to an increase
in the market value of the investments, a
reduction in liabilities due to demographic
assumptions and contributions received from
the Group, being partly offset by an increase
in liabilities resulting from a fall in the discount
rate. The discount rate has fallen to 2.6%
compared with the prior year of 3.5%. Each 0.1%
increase in the rate impacts the liabilities of the
Scheme by approximately £21.5m.
The last triennial valuation of the Scheme
was undertaken as at 31 March 2014 and was
finalised in April 2015. This showed a deficit
on a technical provision basis of £195m and
a deficit recovery payment plan was agreed
with the Trustee which provided for a baseline
annual payment of £14.4m increasing by RPI
each year through the recovery period to
September 2024. The cash contribution made in
the current year to fund the deficit was £14.8m.
Certain administration costs have also been
paid directly by the Group and in line with the
agreement with the Trustee, deducted from
these contributions. The next triennial valuation
will be based on the position as at 31 March 2017.
Over recent years, the Trustee has pursued a
diversification of the investment portfolio as
part of a de-risking strategy and the programme
has continued in the year ended 31 March 2017.
As at 31 March 2017 the Scheme’s investment
was split between 56% in return-seeking assets
and 44% in defensive assets.
The Trustee has also decided to hedge the
interest and inflation rate risks facing the Scheme
and will systematically increase the level of this
hedge to 100% of the Scheme’s assets over
a period of 15 months from August 2016 to
November 2017, subject to leverage restrictions.
This increase will, as far as practicable, eliminate
changes in the funding level driven by changes
in interest or inflation rates. At 31 March 2017 the
Scheme hedged 89% of its inflation rate risk and
78% of the interest rate risk.
In conjunction with the Trustee, the Group
has also initiated an Enhanced Transfer Value
exercise, whereby deferred members
approaching retirement may choose to transfer
their assets out of the Scheme in order to access
the new flexible retirement options available.
As a result of this exercise the Group has
recognised an exceptional item of £(0.9)m, being
the costs associated with making the transfer
offer, including the provision of independent
financial advice. This exercise will conclude in
the first half of the year ended 31 March 2018
together with an associated cash outflow to
fund the enhanced transfer values and an
expected reduction in pension liabilities.
The Trustee has also written to members
with small pension pots to remind them of
the option under normal Scheme rules to
exchange their benefits for a one-off cash
sum. In response to this communication
1,566 members have taken up this option
resulting in a reduction in the liability of £3.8m.
Defined contribution arrangements
The Group’s defined contribution arrangements
include the Retirement Savings Section, Pension
Builder Plan and Auto Enrolment section in the
UK and a separate similar local scheme in Ireland.
Active membership of these schemes was 15,524
(2016: 15,437) in the year. The charge incurred for
these arrangements totals £17.9m (2016: £18.1m).
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures (APMs) are used by the Board in assessing the Group’s performance and are applied consistently from one period to
the next. They therefore provide additional useful information for shareholders on the underlying performance and position of the Group. Additionally,
underlying EPS is used as a key performance indicator for the share incentive schemes, including the Special Option Plan and Long Term Incentive Plan.
These measures are not defined by IFRS and are not intended to be a substitute for IFRS measures.
The Group presents underlying EBITDA, operating profit and EPS which are calculated as the statutory measures stated before amortisation of acquired
intangibles and exceptionals, including related tax and exceptional tax items where applicable. The table below reconciles the APMs to the statutory
reported measures.
Amortisation
of acquired
intangibles
Exceptionals1
Underlying
2017
–
2.2
2.2
0.2
–
2.2
(0.4)
1.8
–
(6.1)
(6.1)
(0.5)
–
(6.1)
(3.7)
(9.8)
1,118.1
63.9
52.1
4.7
(10.6)
41.5
(7.5)
34.0
27.7p
9.1p
(24.3)
Statutory
1,118.1
67.8
56.0
5.0
(10.6)
45.4
(3.4)
42.0
34.2p
9.1p
(24.3)
Statutory
1,147.4
95.9
81.4
7.1
(15.6)
65.8
(4.7)
61.1
50.7p
5.5p
(39.5)
Amortisation
of acquired
intangibles
Exceptionals1
Underlying
Excl. WRM²
2016
–
4.5
4.5
0.4
–
4.5
(0.9)
3.6
–
(35.0)
(35.0)
(3.1)
–
(35.0)
(0.9)
(35.9)
1,147.4
1,132.5
62.1
48.7
4.3
65.4
50.9
4.4
(15.6)
35.3
(6.5)
28.8
23.9p
5.5p
(39.5)
Revenue (£m)
EBITDA (£m)3
Operating profit (£m)
Operating margin (%)
Net financing costs (£m)
Profit before tax (£m)
Income tax (£m)
Profit after tax (£m)
Earnings per share (p)4
Dividend per share (p)
Closing net debt (£m)5
1 Note 3 to the financial statements provides further detail of exceptionals and also includes any tax releases/credits that are classed as exceptionals.
2 On a like for like basis excluding the results of Wincanton Records Management (WRM) from the prior year, which was disposed of in December 2015. Note 2 to the financial statements provides
a reconciliation to the reported results.
3 EBITDA refers to operating profit before depreciation and amortisation and is reconciled in Note 2 to the financial statements.
4 Note 7 to the financial statements provides further detail of underlying earnings per share.
5 Net debt is the sum of cash and bank balances, bank loans and overdrafts and other financial liabilities. Note 25 to the financial statements provides a breakdown of net debt for the current and
prior periods.
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Wincanton plc
Annual Report and Accounts 2017
23
STRATEGIC REPORT
RISK REPORT
of influence and empowerment to embed risk
management behaviours and implement or
change controls.
The RMC has oversight responsibility for: Group,
business and function risk registers; risk controls
and processes (such as Group policies and
business procedures); and business continuity
arrangements throughout the Group, including
disaster recovery.
The Head of Internal Audit is invited to attend
RMC meetings and provide updates on
findings of internal audit reviews to ensure
any potential concerns or actions are shared
so they can be addressed and monitored
to completion.
Risk registers
The Group has compiled and maintain a Group
risk register of the significant risks at Group
level. Risk registers specific to business unit and
support functions are maintained by senior
management responsible for those areas.
Each risk register has been compiled following
comprehensive assessment of the Group
and its competitive environment. Appropriate
responses and controls for all risks have been
determined to, where possible eliminate,
but more usually mitigate, the impact and
likelihood of the risks.
Mitigation may include the introduction of
additional controls, changes in procedures,
increased insurance cover and commercial
changes, along with other actions. The Group
risk register is reviewed and monitored at
each meeting of the RMC and if deemed
necessary any amendments are submitted
to the EMT for consideration, followed by the
Audit Committee.
PRINCIPAL RISKS
AND UNCERTAINTIES
This report, incorporated within the Strategic
Report, sets out how the Group manages risk
by explaining the controls, risk management
system and the Group’s key principal risks
and uncertainties. The key principal risks
are those risks that are considered material
and could have a significant impact on the
Group’s financial position, its operations
and/or reputation.
Risk governance
The Group faces a diverse range of risks and
uncertainties which could have an adverse
effect on its success if not managed. To address
these the Group designed and embedded
a risk management system to identify and
monitor all relevant current and potential risks
and uncertainties, and to develop mitigation
plans to reduce the likelihood and/or impact
of the risks to the lowest extent possible.
Operational oversight and application of risk
management in the Group is the responsibility
of the EMT. Independent oversight and
monitoring is undertaken by the Board’s Audit
Committee, on behalf of the Board. Both the
EMT and Audit Committee consider risk as
a routine agenda item at their respective
meetings. This ensures that sufficient time is
allocated to consideration of the effectiveness
of risk management and identification of any
areas that could be further strengthened.
The internal risk and control environment is
reviewed by Internal Audit throughout the
year, and their findings are reported to the
Audit Committee. The Audit Committee make
recommendations to the Board, or determine,
within the remit of its authority, any remedial
actions or alterations to the risk management
and control environment to ensure it remains
up-to-date and fit for purpose.
Risk responsibility and assessment
Ultimate responsibility for setting the Group’s
risk appetite and the effective management of
risk sits with the Board.
The Board believe that the risk management
system provides sufficient information and
assurance on the key risks and uncertainties
faced by the Group and facilitates informed
decision making on strategic, commercial and
financial matters.
During the year the Board considered
and confirmed the effectiveness of risk
management and internal controls.
Acting within authority delegated by the
Board, the Audit Committee has delegated
oversight of risk management and the
control environment, which is the day to day
responsibility of the EMT.
Full details of the Audit Committee’s remit can
be found in the Corporate Governance section
on pages 41 to 43.
Risk management system
The risk management system comprises three
integrated risk management components:
a working committee; risk registers at both
Group and business unit level; and a control
assessment programme.
Risk management committee
The Risk Management Committee (RMC)
is an internal working committee set up
to undertake second level assurance.
The RMC maintain an up-to-date view on the
current and prospective risks relevant to the
Group and its macro environment, monitor
the effectiveness of the control environment,
and identify improvements to controls and
processes to reduce risks to the lowest level
of acceptability.
The RMC reports to the EMT and Audit
Committee on the current risk profile of
the Group and progress on risk mitigation
towards target risk levels set. The RMC meets
at least five times per year and is comprised
of business unit leadership and heads of
support functions. This composition of senior
management represents all significant risk
areas within the Group, provides a collective
oversight of the whole Group, and has the level
24
Wincanton plc
Annual Report and Accounts 2017
Control assessment
The Group operates an annual programme
which requires all business sites to complete
an assessment on their application of controls
and processes at site level. The completed
assessments are submitted to Internal Audit
who then follow up any issues of concern
and may incorporate areas for further
investigation into the scope of their Internal
Audit assignments; and/or notify the RMC of
any issues or remedial actions that need to
be addressed and completed. Internal Audit
report on the outcome of all submitted
control assessments to each Audit Committee
meeting throughout the year.
During the year, the RMC, through a delegated
working group, reviewed the current control
assessment programme and developed
a more detailed programme, the Risk
Management Tool. Following EMT and Audit
Committee approval the Risk Management
Tool will be implemented in replacement of
the control assessment programme in the year
ended 31 March 2018.
Business continuity planning
The Group maintains detailed Business
Continuity Plans (BCP) for all sites and offices,
which are dovetailed with customers’ plans
where necessary, to ensure an immediate
and appropriate response to incidents.
The rolling review of the quality and testing of
all BCPs is undertaken at both site and Group
level. The results of the review and testing
programme are reported to the RMC, who
maintain oversight on behalf of the EMT.
During the year, the Group has continued with
its IT disaster recovery migration for business
applications and services. Scenario testing was
undertaken at disaster recovery sites and found
to be effective.
Whistleblowing
The Group has in place a whistleblowing
policy and procedure for all employees and
other entitled individuals, to report concerns.
The policy sets out the standards expected
of all those it legally applies to and a clear
procedure for raising concerns in strict
confidence. The policy emphasises that
anyone following the correct procedure and
raising concerns in good faith is protected
from recourse.
In the event of a concern employees are
encouraged to first talk to their line manager
or contact the HR team directly, if appropriate
and they feel able to. When this is not
possible or appropriate, employees can raise
concerns directly to the Whistleblowing
Officer or call an independent, external
whistleblowing hotline, provided by Expolink.
All calls to Expolink can be made on a named
or anonymous basis. Reports of concerns
are always treated in strict confidence and
investigations are overseen by the Company
Secretary, the Chief Financial Officer and the
Group HR Director. This ensures a thorough,
fair and transparent process is undertaken
and any actions are identified and addressed.
A Whistleblowing Register is maintained and
monitored, and is regularly reviewed by the
Audit Committee.
VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK
Corporate Governance Code 2014 (“Code”), the
Directors assessed the viability of the Group
over a three year period, from 1 April 2017 to
31 March 2020, taking into account: the Group’s
current position; and the potential financial
and operational impact of the principal risks
(on pages 26 to 27), in severe but plausible
scenarios. In making their assessment, the
Board carried out a robust assessment of the
principal risks facing the Group, including those
that would threaten its business model, future
performance, solvency or liquidity.
The Directors determined that a three year
period to 31 March 2020 is the appropriate
period over which to provide its viability
statement. This is the same timescale over
which the Group plan, and the budgets
and forecasts are reviewed by the Board
in its annual planning process. It is therefore
considered that this presents the Board and
readers of the Annual Report and Accounts
with a relevant and reasonable degree of
confidence over the longer term outlook.
Based on this assessment, the Board have a
reasonable expectation that the Company
and the Group will be able to continue in
operation and meet liabilities as they fall due
to 31 March 2020.
This statement was approved by the Board
on 16 May 2017.
Alison Dowling
Company Secretary
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Annual Report and Accounts 2017
25
STRATEGIC REPORT
RISK REPORT
CONTINUED
PRINCIPAL RISKS OF THE GROUP
RISK AND IMPACT
CONTROLS AND MITIGATION
Significant
changes to
market sectors
and operating
environments
The Group provides services in a competitive and complex environment, with large and sophisticated customers within
both its Industrial & Transport and its Retail & Consumer sectors. The Group faces into commercial pressures to renew and
win business with acceptable levels of margin in order to deliver sustainable growth and returns. These pressures may
stem from:
• Changes in customer appetite for outsourcing services
• Strategic or behavioural changes in the competition, which may impact market pricing
• New disruptors, in particular the emergence of new technologies
Brexit and
macro economic
factors
The UK’s decision to withdraw from the European Union has increased uncertainty in the economy and for all businesses.
The Group’s operations are predominantly in the UK and, with the exception of a small level of operations in the Republic
of Ireland, the Group is not directly exposed to European markets. The Group is, however, aware of potential for changes
to its markets and operations from factors including:
• Economic and legislative changes in the lead up to and immediately following the proposed exit in 2019
• Impacts on our customers’ business
• Changes in the movement and supply of labour for both our warehousing and transport operations
The Group closely monitors its strategic and operational performance through its KPIs (set out on page 15) and regularly reviews: market opportunities and threats,
sector strategies, the sales pipeline, business optimisation programmes, innovation and solutions development, bespoke business propositions, and the talent
development and retention strategies.
financial and operational contractual performance.
In addition to annual customer surveys, the business maintains key customer account plans to consider current and future needs, alongside the tracking of service,
As a supply chain organisation the Board, EMT, and leadership teams, are closely monitoring the emerging developments on Brexit to determine if it could impact
the market sectors the Group operates within, and any potential impact on customers and suppliers.
The Group is closely monitoring developments in the Brexit process and has performed an initial risk assessment to identify areas of potential exposure. The topic
of Brexit is a frequent area of discussion with our customers and the Group will continue to stay closely connected with our customers to identify any change in their
requirements that may arise. There has been negligible impact of the Brexit vote on the Group in the nine months since the referendum of June 2016.
Significant
health, safety or
environmental
incident
Cyber security
The Group operates in environments which have the potential to be hazardous to people or property if not actively
managed. A failure to manage these risks properly could result in injury or death of people and/or damage to property and
the environment. Should an event occur it could lead to regulatory action, fines, withdrawal of licences, site closures and
damage to the Group’s reputation. All of which have the potential to impact the Group’s ability to win and do business.
The Group has detailed health and safety procedures and processes in place and employs health and safety teams at all business locations. The local team and
operations are then monitored by a second-line central health and safety team. The Group undertakes regular training and assessment programmes, monitors
business records and completion of risk self-assessments, analyses all ‘near miss’ reporting and undertakes audits and investigations if felt necessary. Health, safety
and environmental data and reporting are provided to business management and leadership to manage and achieve target business performance.
The Group is acutely aware of the increasing prevalence of cyber security attacks in the digitalised world. Accordingly, cyber
security is considered a principal risk and receives significant focus to ensure the protection of data and systems. A cyber
attack could potentially impact the Group’s operational performance and reputation and could lead to penalties, fines
and/or regulatory action.
The nature of this risk is evolving rapidly. The Group mitigates the threats and risks through maintenance of an appropriate IS infrastructure. There are robust security
processes and protocols in place and the Group operates strict access controls. A suite of policies and procedures are in place that cover all areas of system, software,
usage, security and data protection. The Group undertakes monthly vulnerability scanning, regular audits, and an annual penetration test with follow up monthly
reviews. In addition, the Group has established an Information Security Forum to focus on data protection and security across the business.
IS infrastructure
and systems
The Group is highly dependent on a high quality IS infrastructure and IT systems to operate the business and that of its
customers. It is therefore essential to business and operational performance that key systems, software and hardware are
operational at all times. Failure of these for more than a short period could impact the ability of the Group to support its
businesses and have contractual implications which could lead to penalties or other liabilities.
To mitigate this risk, the Group maintains robust BCPs which include remote servers and a disaster recovery site with a data centre for back up of central systems.
The BCP is tested at least annually. The IS strategy contains a programme of phased refreshment of the IS estate on a priority basis and policies and procedures are
in place to facilitate early detection and escalation of issues. The Group also maintains an extensive IS team to develop solutions and maintain the stability and security
of the infrastructure.
Recruitment
and retention
The inability to recruit and retain employees, from drivers and warehouse operatives to executive talent, is considered
a principal risk. Failure to retain people with the right skills, competencies, values and behaviours needed to operate
and grow the business would impact the long term success of the Group.
Key suppliers
As a large supply chain organisation, the Group is reliant on strong and reliable relationships with key suppliers and have
obligations to comply with the Modern Slavery Act 2015. Failure to comply with regulations and have robust contractual
arrangements with its largest suppliers could have significant financial and reputational impacts on the Group and its
business performance.
The Group has a strong and extensive human resources function to monitor and maintain a high standard of recruitment and a regular appraisal process, based on
key competencies. The Group constantly review and refresh strategies and processes for recruitment and retention, such as the driver recruitment strategy which
monitors driver vacancies and pipeline. The Group also has established relationships with preferred agencies for contingency. Talent and development are monitored
and supported by a dedicated team to ensure people at all levels have access to training and development opportunities. Rewards are benchmarked to ensure they
remain competitive and an annual employee engagement survey is undertaken and tracked as a KPI. The Board and Nomination Committee closely monitor and
review the Board, executive and senior management strategies for succession planning and review the Group’s talent pool on a regular basis. The Group and the
Board are mindful of the potential impact of Brexit on current and future employees, and are closely monitoring Brexit implications for emerging clarity.
The Group mitigates these risks through well established financial and internal control processes managed by central and operational finance teams and a large
and experienced Procurement function. The Group reviews the financial stability and suitability of suppliers and requires they adhere to the Group’s policies
and ethical standards. Regular supplier account management meetings take place to review performance. As noted above any potential Brexit impact is being
Legal and
regulatory
compliance
The Group must comply with an extensive range of regulation and legislation in order to provide its services and solutions.
Failure to comply to the required standards could lead to significant legal and regulatory actions, sanctions, removal
of licences and permits, penalties and fines, and could result in reputational damage to the Group and potential harm
to its employees or property.
Policies and procedures are in place throughout all areas of the Group to ensure systems, business and central operations all comply with relevant areas of legislation
and compliance. The RMC maintain and monitor an internal legal and regulatory tracker to identify current and emerging legislation and determine any impact it
may have to the Group and its policies, controls, communications and training that may need to be provided to Group employees. Second-line testing is undertaken
by central functions to review the operation of controls and their effectiveness, including annual review of Group policies internally as well as a second review
closely monitored.
by external advisers.
Pension deficit
The Group has a significant deficit on its Defined Benefit pension scheme. The employer contribution levels required to
eliminate this deficit, and the pension deficit itself, are subject to: financial market conditions, global economic and political
matters, demographic factors, expected future investment returns and the legal and regulatory environment. Changes in
any of those factors could materially alter the deficit value and lead to a material change in cash contributions, a change to
the repayment period, regulatory intervention, or a combination thereof. These changes could impact the cash flow and
profitability of the Group and restrict its ability to invest in the business, pay dividends and repay debt.
The Group has undertaken steps to mitigate the risk exposure of financial market movements and economic and political conditions. At the end of the year ended
2014, the Defined Benefit (DB) section of the Scheme was closed to future accrual to cap the risk. During the year ended 31 March 2017, the Group and Trustee
commenced Liability Management exercises which offer alternative options to Scheme members and a potential to reduce the overall liabilities of the Scheme.
The Group maintains a strong working relationship with the Trustee, who is responsible for managing the fund and setting the investment strategy. The investment
strategy is intended to reduce the investment risk through an appropriate level of matching between assets and liabilities in the Scheme. The Group and the Trustee
engage high quality external fund managers and actuaries, and have separate legal, covenant and audit advisors to support and inform their decision making.
Contributions to the Scheme are next due to be reviewed as part of the triennial funding valuation as at 31 March 2017. If there is an increase in the pension deficit
at this point, contributions to the Scheme may have to be increased to ensure that the deficit is eliminated over a reasonable period whilst remaining at a level that
is affordable and sustainable for the Group.
26
Wincanton plc
Annual Report and Accounts 2017
RISK AND IMPACT
CONTROLS AND MITIGATION
Significant
changes to
market sectors
and operating
environments
The Group provides services in a competitive and complex environment, with large and sophisticated customers within
both its Industrial & Transport and its Retail & Consumer sectors. The Group faces into commercial pressures to renew and
win business with acceptable levels of margin in order to deliver sustainable growth and returns. These pressures may
stem from:
• Changes in customer appetite for outsourcing services
• Strategic or behavioural changes in the competition, which may impact market pricing
• New disruptors, in particular the emergence of new technologies
Brexit and
macro economic
The UK’s decision to withdraw from the European Union has increased uncertainty in the economy and for all businesses.
The Group’s operations are predominantly in the UK and, with the exception of a small level of operations in the Republic
of Ireland, the Group is not directly exposed to European markets. The Group is, however, aware of potential for changes
factors
to its markets and operations from factors including:
• Economic and legislative changes in the lead up to and immediately following the proposed exit in 2019
• Impacts on our customers’ business
• Changes in the movement and supply of labour for both our warehousing and transport operations
The Group closely monitors its strategic and operational performance through its KPIs (set out on page 15) and regularly reviews: market opportunities and threats,
sector strategies, the sales pipeline, business optimisation programmes, innovation and solutions development, bespoke business propositions, and the talent
development and retention strategies.
In addition to annual customer surveys, the business maintains key customer account plans to consider current and future needs, alongside the tracking of service,
financial and operational contractual performance.
As a supply chain organisation the Board, EMT, and leadership teams, are closely monitoring the emerging developments on Brexit to determine if it could impact
the market sectors the Group operates within, and any potential impact on customers and suppliers.
The Group is closely monitoring developments in the Brexit process and has performed an initial risk assessment to identify areas of potential exposure. The topic
of Brexit is a frequent area of discussion with our customers and the Group will continue to stay closely connected with our customers to identify any change in their
requirements that may arise. There has been negligible impact of the Brexit vote on the Group in the nine months since the referendum of June 2016.
Significant
health, safety or
environmental
incident
Cyber security
The Group operates in environments which have the potential to be hazardous to people or property if not actively
managed. A failure to manage these risks properly could result in injury or death of people and/or damage to property and
the environment. Should an event occur it could lead to regulatory action, fines, withdrawal of licences, site closures and
damage to the Group’s reputation. All of which have the potential to impact the Group’s ability to win and do business.
The Group has detailed health and safety procedures and processes in place and employs health and safety teams at all business locations. The local team and
operations are then monitored by a second-line central health and safety team. The Group undertakes regular training and assessment programmes, monitors
business records and completion of risk self-assessments, analyses all ‘near miss’ reporting and undertakes audits and investigations if felt necessary. Health, safety
and environmental data and reporting are provided to business management and leadership to manage and achieve target business performance.
The Group is acutely aware of the increasing prevalence of cyber security attacks in the digitalised world. Accordingly, cyber
security is considered a principal risk and receives significant focus to ensure the protection of data and systems. A cyber
attack could potentially impact the Group’s operational performance and reputation and could lead to penalties, fines
and/or regulatory action.
The nature of this risk is evolving rapidly. The Group mitigates the threats and risks through maintenance of an appropriate IS infrastructure. There are robust security
processes and protocols in place and the Group operates strict access controls. A suite of policies and procedures are in place that cover all areas of system, software,
usage, security and data protection. The Group undertakes monthly vulnerability scanning, regular audits, and an annual penetration test with follow up monthly
reviews. In addition, the Group has established an Information Security Forum to focus on data protection and security across the business.
IS infrastructure
and systems
The Group is highly dependent on a high quality IS infrastructure and IT systems to operate the business and that of its
customers. It is therefore essential to business and operational performance that key systems, software and hardware are
operational at all times. Failure of these for more than a short period could impact the ability of the Group to support its
businesses and have contractual implications which could lead to penalties or other liabilities.
To mitigate this risk, the Group maintains robust BCPs which include remote servers and a disaster recovery site with a data centre for back up of central systems.
The BCP is tested at least annually. The IS strategy contains a programme of phased refreshment of the IS estate on a priority basis and policies and procedures are
in place to facilitate early detection and escalation of issues. The Group also maintains an extensive IS team to develop solutions and maintain the stability and security
of the infrastructure.
Recruitment
and retention
The inability to recruit and retain employees, from drivers and warehouse operatives to executive talent, is considered
a principal risk. Failure to retain people with the right skills, competencies, values and behaviours needed to operate
and grow the business would impact the long term success of the Group.
The Group has a strong and extensive human resources function to monitor and maintain a high standard of recruitment and a regular appraisal process, based on
key competencies. The Group constantly review and refresh strategies and processes for recruitment and retention, such as the driver recruitment strategy which
monitors driver vacancies and pipeline. The Group also has established relationships with preferred agencies for contingency. Talent and development are monitored
and supported by a dedicated team to ensure people at all levels have access to training and development opportunities. Rewards are benchmarked to ensure they
remain competitive and an annual employee engagement survey is undertaken and tracked as a KPI. The Board and Nomination Committee closely monitor and
review the Board, executive and senior management strategies for succession planning and review the Group’s talent pool on a regular basis. The Group and the
Board are mindful of the potential impact of Brexit on current and future employees, and are closely monitoring Brexit implications for emerging clarity.
Key suppliers
As a large supply chain organisation, the Group is reliant on strong and reliable relationships with key suppliers and have
obligations to comply with the Modern Slavery Act 2015. Failure to comply with regulations and have robust contractual
arrangements with its largest suppliers could have significant financial and reputational impacts on the Group and its
business performance.
The Group mitigates these risks through well established financial and internal control processes managed by central and operational finance teams and a large
and experienced Procurement function. The Group reviews the financial stability and suitability of suppliers and requires they adhere to the Group’s policies
and ethical standards. Regular supplier account management meetings take place to review performance. As noted above any potential Brexit impact is being
closely monitored.
Legal and
regulatory
compliance
Pension deficit
The Group must comply with an extensive range of regulation and legislation in order to provide its services and solutions.
Failure to comply to the required standards could lead to significant legal and regulatory actions, sanctions, removal
of licences and permits, penalties and fines, and could result in reputational damage to the Group and potential harm
to its employees or property.
The Group has a significant deficit on its Defined Benefit pension scheme. The employer contribution levels required to
eliminate this deficit, and the pension deficit itself, are subject to: financial market conditions, global economic and political
matters, demographic factors, expected future investment returns and the legal and regulatory environment. Changes in
any of those factors could materially alter the deficit value and lead to a material change in cash contributions, a change to
the repayment period, regulatory intervention, or a combination thereof. These changes could impact the cash flow and
profitability of the Group and restrict its ability to invest in the business, pay dividends and repay debt.
Policies and procedures are in place throughout all areas of the Group to ensure systems, business and central operations all comply with relevant areas of legislation
and compliance. The RMC maintain and monitor an internal legal and regulatory tracker to identify current and emerging legislation and determine any impact it
may have to the Group and its policies, controls, communications and training that may need to be provided to Group employees. Second-line testing is undertaken
by central functions to review the operation of controls and their effectiveness, including annual review of Group policies internally as well as a second review
by external advisers.
The Group has undertaken steps to mitigate the risk exposure of financial market movements and economic and political conditions. At the end of the year ended
2014, the Defined Benefit (DB) section of the Scheme was closed to future accrual to cap the risk. During the year ended 31 March 2017, the Group and Trustee
commenced Liability Management exercises which offer alternative options to Scheme members and a potential to reduce the overall liabilities of the Scheme.
The Group maintains a strong working relationship with the Trustee, who is responsible for managing the fund and setting the investment strategy. The investment
strategy is intended to reduce the investment risk through an appropriate level of matching between assets and liabilities in the Scheme. The Group and the Trustee
engage high quality external fund managers and actuaries, and have separate legal, covenant and audit advisors to support and inform their decision making.
Contributions to the Scheme are next due to be reviewed as part of the triennial funding valuation as at 31 March 2017. If there is an increase in the pension deficit
at this point, contributions to the Scheme may have to be increased to ensure that the deficit is eliminated over a reasonable period whilst remaining at a level that
is affordable and sustainable for the Group.
Wincanton plc
Annual Report and Accounts 2017
27
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STRATEGIC REPORT
CORPORATE RESPONSIBILITY REPORT
Working
responsibly
PEOPLE MATTER
Our employees really matter to our business.
That is why we strive to hire the best employees
in every area of our operations. We do
everything we can to ensure our employees
represent the local communities in which
we operate.
OUR VALUES
Our values were created by our employees and
we live by them every day:
• Excellence. At every level and in every task,
we aim to be the best at what we do.
• Integrity. We do the right things for the right
reasons, to make the right call every time.
• Passion. We love logistics and work diligently
and with passion.
• Proactivity. Every day, we seek opportunities
to be one step ahead.
• Trust. We need to be able to rely on each
other in good times and bad; when the
pressure is on or when we are having fun.
• Togetherness. We work as one team:
collaboratively and politics-free. We come
together to help each other succeed.
DIVERSITY MATTERS
Wincanton is committed to employee diversity,
equality and inclusion. We work hard to ensure
employees of all backgrounds, genders and
ethnicity are valued equally. We treat each
other with respect, and ensure all employees
undertake our diversity programmes which
explain our philosophy of treating everyone
the same.
We also require the highest ethical standards
as part of our culture. This is evident across our
business – whether it is making sure employees
come to their place of work safely and in good
health – or simply supporting each other.
We talk and engage with each other with
respect to ensure we do business the right way.
DEVELOPING OUR PEOPLE
We provide a deep, broad and continual
learning and development programme
throughout every level of our organisation.
By drawing on learning and development
opportunities, we enable the Group to meet
current and future requirements.
We are also determined to play our part in
addressing the skills gaps and shortage of
graduate talent that’s affecting the supply
chain and logistics industry. That is why we
are founding sponsors of the NOVUS Trust
which is an industry-wide initiative run by the
Chartered Institute of Logistics and Transport
(CILT). The aims of the NOVUS Trust are to
bridge the skills gaps and create the supply
chain leaders of tomorrow. Participants qualify
by passing a rigorous selection process, to what
is considered to be a groundbreaking course
designed with Huddersfield University. As part
of the course they are guaranteed a mentor
and an industrial placement with a sponsor
company, such as Wincanton, and following
completion of the course a graduate level job.
Wincanton also provide a training scheme
that leads to a vocational qualification, funded
by the Skills Funding Agency, in warehousing
and transportation, which was rated ‘Good’
by Ofsted in July 2016. The programme is
designed to increase skills and knowledge in
health, safety and work practices.
In June 2016, we were honoured to be awarded
three prestigious HR awards. The awards were
in recognition of the Group’s strategies to
retain, attract and manage key talent and skills,
and for our health and wellbeing campaign.
In 2017 we are proud to have been shortlisted
for our resourcing strategy.
CONTINUOUS ENGAGEMENT
We work hard to ensure we are listening to
the views of our people.
At Wincanton we operate informal, scheduled
and annual processes for ensuring our
employees have a voice in their careers and
the wider operations of the Group.
We make listening to everyone within
Wincanton a core component of how we
operate our business. Whether it is informal
talks at depots, warehouses and office sites
or our more structured departmental and
group-wide meetings, we do all we can
to ensure that our employee’s voices and
opinions are factored into our thinking.
At the heart of our listening processes is our
‘Your Voice’ Employment Engagement Survey.
We undertake the survey on an annual basis.
For new employees that transfer into
Wincanton from one of our customers we
undertake a snapshot version of our survey
three months after the transfer date to get early
feedback during the transition period. Our aim
is to improve survey results year on year.
We take the results very seriously and seek to
provide a whole range of dedicated activities
and targeted and robust action plans at both
Group and local level, to address the feedback
shared with us.
We publicise regular commentary and we also
undertake ‘State of the Nation’ briefs, where
senior managers share business performance
results with employees on a regular basis and
provide the opportunity to ask questions.
We actively encourage employees to share
their thoughts, concerns and ideas with the
wider company through our programme of
dedicated listening groups, and as part of our
commitment to continuous improvement
we establish working parties to seek input to
drive change and improvements in the way
we work.
HEALTH AND WELLBEING
Our employees are our greatest asset and
we want to support them to be as healthy
and happy as possible.
Throughout the year ended 31 March 2017
we have focused on a wellbeing programme
and calendar of events to raise awareness of
health topics which align with national health
awareness programmes.
Our award winning ‘health and wellbeing
campaign’ is focused on improving
knowledge and understanding about health
issues particular to the logistics industry.
Campaigns have included; providing new or
more varied healthy foods at sites, wellbeing
kiosks, health assessments and exercise classes.
During the year we also launched a successful
‘Cycle to Work’ scheme and undertook a
sponsored community cycle ride from John
O’Groats to Land End, via our sites, to celebrate
Wincanton’s 90th anniversary and raise money
for charity.
28
Wincanton plc
Annual Report and Accounts 2017
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HEALTH AND SAFETY
The health and safety of our employees is our
highest priority and is at the heart of all we do.
We have a substantial team of talented drivers
who take pride in their profession. We are
equally proud of the quality of our non-driving
employees and regardless of where our
employees work within the business we invest
in equipment and training relevant to every
role to ensure we maintain our ‘best in class’
safety record.
An important KPI for us is measurement of
LTIFR, and we track this on a weekly basis.
We are pleased with the continued progress
we have made in this area of safety, which is
supported by another annual reduction in this
figure. Our progress on LTIFR is shown on our
KPIs on page 15.
We use other metrics to give us a broader and
deeper insight into safety, such as days lost
ratio and employers liability claims. These are
tracked throughout the year on a weekly basis
and we review the data to monitor the impact
of initiatives and training programmes in the
business. We were pleased to see the rates
continue to decrease in these areas.
Given the nature of our business and working
environments we track all activities closely
to identify areas for continual improvement.
We do this through ‘near miss’ reporting,
whereby we encourage all employees to
report anything they see which could be
potentially hazardous or harmful, or could be
improved. The level of reporting has continued
to rise during the year which demonstrates the
engagement and passion of our employees
to care for themselves and each other.
The safety of our drivers is a significant focus
in a logistics business. We track and monitor
driving records, incidents and drivers’ behaviour
and regularly review the results. We pay
particular attention to the measurement of
Collisions per Million Kilometres (CMK) as a
barometer for our performance in these areas.
target key risk areas. Courses are run on a regular
basis for first line managers in risk assessment
and accident investigation. In addition we
provide all mandatory training required by
regulation and legislation relevant to the
particular working environments and roles
of our employees.
Our ‘Driver’s Handbook’ is provided to ensure
all drivers have the information they need
to help them work safely and professionally.
It includes driving and handling specific
safety initiatives to keep our drivers and the
public safe, such as our initiative EVADE.
EVADE is our vulnerable road user programme
which includes information and guidance
on practices to be followed to safeguard
pedestrians and cyclists.
The Driver’s Handbook is part of our ongoing
Driver STAR programme, designed to elevate
driving standards in Wincanton. The STAR
programme focuses on driver risk assessment,
based on increasing overall road craft skills,
and linkage into risk based driver intervention
that help us to identify areas where support,
training and further information may be
required. The programme recognises driver
performance and drivers can graduate over
a five year period through bronze, silver, and
gold standard levels.
Each year we also hold a Driver of the Year
competition to celebrate the professionalism
and talent of our drivers.
Aside from driving, we provide an annual
schedule of training on health and safety
related topics, which are cascaded throughout
our business sites and offices. Regular ‘Health,
Safety and Environment’ training is provided to
our managers and we cascade new initiatives
through ‘train the trainer’ programmes to
WIDER CONTRIBUTION
At Wincanton we offer a range of rewards that
recognise the contribution our employees
make to the success of the Group, the wider
industry and the community at large.
We also provide many ways for employees
to help us improve the Group’s growth and
performance as well as expand our links with
local communities.
Every site develops a programme that
promotes and encourages links with their local
community. Activities range from school visits
to raise road awareness, to family fun days and
charity events to raise money for causes that
our employees have chosen.
Wincanton plc
Annual Report and Accounts 2017
29
STRATEGIC REPORT
CORPORATE RESPONSIBILITY REPORT
CONTINUED
OUR ENVIRONMENT STRATEGY
We are acutely aware of the environmental
impact of the logistics industry. To ensure we
keep it at the front of our minds and do all
we can to minimise environmental impact
we have a clear environmental strategy
which is cascaded throughout Wincanton.
All sites, depots and offices have plans in place
regarding their local environment and activities
which could have a detrimental environmental
impact. Progress on these plans is regularly
reported to, and monitored by, our senior
management team.
OUR ENVIRONMENTAL PRINCIPLES
We have an important part to play in
helping our customers achieve their wider
environmental goals and we know that a
well-managed supply chain plays a key role in
mitigating their impact on the environment as
well as our own. We support our customers by
identifying efficiencies, promoting collaborative
working and by offering significant expertise
and experience in managing environmentally
sustainable logistics.
EXTERNAL REPORTING
AND RECOGNITION
Our initiatives to reduce our environmental
impact and the progress we have made,
are recognised by our customers and other
stakeholder bodies.
Carbon Trust Standard
We were proud to retain the Carbon Trust
Standard, which has been awarded to March
2018. We have held the standard since 2010
and value its recognition of the continuous
and consistent reductions we have made
on our carbon footprint. This is a particularly
significant achievement as a growing
logistics organisation.
We use the following environmental principles to help us identify and manage any impact
of our business on the environment:
1 Integrate
We integrate environmental considerations into key business decisions.
2 Develop
We develop progressive products and services to assist our customers to improve their
environmental performance.
3 Management
We ensure operational excellence and legal compliance through environmental management
systems and employee training.
4 Measure
We monitor, measure and continuously improve our environmental performance.
5 Communicate
We communicate our progress to our customers, employees and investors.
6 Carbon emissions
We minimise the consumption of fossil fuels and associated emissions of carbon dioxide,
and other greenhouse gases.
7 Resources
We minimise our consumption of non-renewable and environmentally sensitive resources.
8 Waste
We minimise the amount of waste produced through prevention, reuse and recycling.
9 Pollution
We prevent ground and water pollution and minimise emissions of airborne pollutants.
10 Communication
We minimise the negative impact of our activities on local communities and engage positively
with the communities in which we operate.
30
Wincanton plc
Annual Report and Accounts 2017
CDP disclosure score
We have submitted fully collated data to the
CDP (formerly the Carbon Disclosure Project)
for the past seven years and over that period
our CDP disclosure score has risen significantly
from 56% to 95%.
The CDP is the leading international index of
climate change and carbon management
maturity for companies.
In 2016, CDP changed their scoring
methodology and we were rated at ‘B minus’.
This is consistent with the previous year’s
performance and makes us a company
‘managing carbon’. This means we have gone
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beyond completing a full disclosure and being
aware of our environmental issues, impacts
and risks. This score recognises that we are
implementing actions, policies and strategies
to address these environmental issues and our
carbon reduction figures reflect this.
CDP disclosure score
B-
2016
2015
2014
2013
2012
B-
95%
83%
75%
70%
GREENHOUSE GAS EMISSIONS
We believe that continuous improvement
and operational excellence is enhanced
by robust environmental governance and
management systems.
Responsibility for our environment programme
sits with our Health, Safety and Environment
Committee (HSE). The Committee is chaired
by our Group HSEQ Director and attended
by members of the EMT. This demonstrates
the importance we place on our
environmental strategy.
We use an ISO14001 certified environmental
management system and provide monthly
performance results across a range of indicators.
This supports our environmental policy and
principles by enabling us to take prompt
corrective actions and to identify and exploit
improvement opportunities in each of our
business sectors.
Carbon emission information is prepared
in accordance with the Carbon Disclosure
Standards Board (CDSB) Framework 1.1 and
the GHG Protocol Corporate Standard for
operational control. Carbon factors are per
Defra/DECC conversion factors for company
reporting 2016 with both electricity generation
and distribution emissions being included
as scope 2 emissions.
We also record energy and fuel use for
managed supplies, which includes all supplies
that are wholly or partially managed at
sites operated by Wincanton for itself or its
customers, irrespective of whether the fuel
and/or energy is purchased by us directly.
The sources of emissions include road transport
fuels; fuels for non-road transport uses; energy
utilities for buildings; and fuel for business travel
in Wincanton driven vehicles. We also include
consumption of fluorinated refrigerant gases as
a scope 1 emission and have not excluded any
emissions sources regardless of materiality.
We are a participant in the UK CRC Energy
Efficiency Scheme and all CRC qualifying
emissions are included in our scope 1 and 2
carbon emissions figures. We complied with
the UK Energy Saving Opportunities Scheme
(ESOS) original 2015 deadline and utilised the
costed energy saving measures in our internal
environmental targets to 2020, to derive full
value from the ESOS compliance process.
Carbon emissions table
Carbon emissions (tCO2e)
Transport (scope 1)
Non-transport (scope 1 & 2)
Total emissions
Carbon intensity (tCO2e/£m)
2016/17
282,624
72,458
355,082
320
2015/16
302,805
84,938
387,744
340
2014/15
304,747
82,631
387,378
350
2013/14
293,557
94,856
388,413
355
REDUCING THE CARBON
INTENSITY RATIO
We set internal targets for carbon emissions
reduction, which are absolute in nature
and decouple emissions performance from
business performance. However, as changes
in our business activities directly affect
emissions, we use a carbon intensity measure
to ensure we optimise the carbon efficiency
of our operations.
Our carbon intensity is defined as total scope
1 and 2 carbon emissions from managed
supplies per unit of revenue, and our carbon
intensity ratio for the year ended 31 March 2017
was 320 tonnes of carbon dioxide equivalent
(tCO2e) per £m of revenue. This is a reduction
year on year because, whilst we have seen
revenue growth, we have reduced our energy
and fuel use. There were also favourable
variances in the UK carbon factors.
Emissions from managed supplies tonnes CO2e
2
1
1 Transport (Scope 1)
2 Non-transport (Scope 1, 2)
80%
20%
CREATING A SUSTAINABLE
ENVIRONMENT FOR ALL
Our approach to Corporate Social
Responsibility contributes to growth and
shareholder value by investing in the
capabilities and wellbeing of our people,
creating value for our customers through
innovation, and contributing to the positive
future of the communities we work in and
our environment.
Wincanton plc
Annual Report and Accounts 2017
31
STRATEGIC REPORT
FEATURE
Safety in
numbers
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Annual Report and Accounts 2017
CONTINUOUSLY IMPROVING BEHAVIOURS
Safety is our number one priority.
We aim to be the safest operator in
the business in order to protect our
people, our communities and our fellow
road users.
Behavioural change is the key to
continuous improvement and we invest
in a wide range of initiatives that target
potential areas of concern and help us
take preventative action. For example,
our STAR (Standards, Training, Attitude
and Recognition) programme uses the
latest technology to constantly assess our
drivers, who are then graded according
to their behaviours. By recognising and
celebrating the safest drivers, we can
focus on improving the performance
of all.
Behavioural change is also at the heart of
our staff welfare initiatives. We promote
the value of an active lifestyle, highlight
potential health issues and provide
support across our entire workforce.
Our commitment to health and safety
extends to our local communities and
fellow road users. During the year,
we continued to provide awareness
training and advice to young cyclists,
demonstrating the potential dangers
posed by heavy goods vehicles and
offering advice on how to stay safe
on the road.
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Annual Report and Accounts 2017
33
GOVERNANCE
BOARD OF DIRECTORS
Steve Marshall
Chairman
Nomination Committee Chairman and member
of the Remuneration Committee
Steve was appointed Chairman in December 2011. Steve is also Chairman of Biffa
plc, the waste management group. He is a former Chairman of Balfour Beatty
plc, Delta plc, Torex Retail plc, and Queens’ Moat Houses plc, and was also a
Non-executive Director at Halma plc and Southern Water. His executive career
included Group Chief Executive roles at Thorn plc and at Railtrack Group plc,
having also served as Group Finance Director at each company. His earlier career
included a variety of corporate and operational roles at Grand Metropolitan plc
(now Diageo plc), Burton Group plc and Black & Decker. He is a Fellow of the
Chartered Institute of Management Accountants.
Adrian Colman
Chief Executive Officer
Nomination Committee member
Adrian was appointed Chief Executive Officer in August 2015, having been the
Group Finance Director from January 2013 to 31 July 2015. Adrian was formerly
Finance Director with Psion plc, an international technology business, through
to its acquisition by Motorola Solutions, Inc. in October 2012. Prior to joining
Psion, Adrian was Chief Financial Officer of London City Airport and before
that Financial Controller and Head of Investor Relations at QinetiQ Group plc.
Tim Lawlor
Chief Financial Officer
Tim Lawlor joined Wincanton in September 2015 as the Chief Financial Officer
and an Executive Director on the Board. Tim was previously the Director of
Finance and Strategy with Serco Group plc, the international service company,
where he also held a number of senior operational and group roles. He was
a Non-executive Director and Audit Committee Chairman of the Institute of
Directors until December 2015. Prior to Serco, Tim was Group Financial Controller
at Sea Containers Limited. Tim is a chartered accountant.
Stewart Oades
Senior Independent Director
Member of the Audit Committee, Nomination Committee
and Remuneration Committee
Stewart became a Non-executive Director of Wincanton in November 2014
and was appointed as the Senior Independent Director in July 2015. Stewart
is currently a Non-executive Director of LCV Hire Solutions and John Good &
Sons Limited and is Chairman of Dalepak Ltd. He was formerly a Non-executive
Director of Palmer & Harvey plc until January 2017 and also held the positions of
President of the Freight Transport Association (FTA) for four years until 2013, and
Non-executive Director of MW Brands until March 2016 and Clipper Group plc
until 2011. Prior to these, Stewart was Chief Executive of Christian Salvesen plc
and held a number of senior posts at Exel plc.
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Annual Report and Accounts 2017
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Paul Dean
Independent Non-executive Director
Audit Committee Chairman and member of the
Nomination Committee and Remuneration Committee
Paul became a Non-executive Director of Wincanton in February 2015 and
was appointed Chairman of the Audit Committee in July 2015. He is currently
a Non-executive Director and Audit Committee Chairman of Focusrite plc,
Porvair plc and Polypipe plc, and was appointed Senior Independent Director
of Focusrite plc in April 2014 and Polypipe plc in May 2015. Paul is a Trustee and
director of two charities, Beanstalk and The Oxford Trust. Prior to these roles
he held the position of Group Finance Director of Ultra Electronics Holdings plc
and Foseco plc. Paul is a Chartered Management Accountant.
Martin Sawkins
Independent Non-executive Director
Remuneration Committee Chairman, and member of the
Audit Committee and Nomination Committee
Martin became a Non-executive Director of Wincanton in July 2012. Martin
is also a Non-executive Director of Scapa Group plc and was appointed as a
Non-executive Director of Africa Exclusive Limited in August 2016. He previously
held the position of Group HR Director of Rentokil Initial plc until December
2015. Martin has spent his career in plc and private equity environment and has
previously been the Group HR Director at HomeServe plc and The AA Limited,
and HR Director at Centrica Home and Road Services. Prior to these roles
Martin held a number of senior positions in HR and operations at UEF Limited,
Bridon plc, British Aerospace and United Biscuits.
David Radcliffe
Independent Non-executive Director
Member of the Audit Committee, Nomination Committee
and Remuneration Committee
David became a Non-executive Director of Wincanton in July 2012. He is
currently Chief Executive of Hogg Robinson Group plc, an international
corporate services organisation, where David has spent most of his career.
Wincanton plc
Annual Report and Accounts 2017
35
GOVERNANCE
CHAIRMAN’S INTRODUCTION TO CORPORATE GOVERNANCE
Ensuring appropriate
governance and controls
are in place to support
strategic delivery
Looking into the new financial year, the Board will be monitoring
developments in governance, such as the progress and outcome of the
BEIS Select Committee’s recommendations on corporate governance,
published in April 2017, that propose changes to executive remuneration,
reporting and strengthening the consideration of broader stakeholders.
During 2017 the Board will also be focused on developments
surrounding Board and employee diversity, the new requirements on
gender pay reporting and EU general data protection regulations, as well
as anticipated clarity on Brexit, in order to determine and manage any
impact to the Group, its business sectors and its markets.
Following my introduction, in this Governance section of the Annual
Report you will find the Corporate Governance report, the Nomination
Committee report and the report from the Chairman of the Audit
Committee. The Directors’ Remuneration Report includes the report
of the Remuneration Committee Chairman.
Finally, as the Chair of the Board, I would like to remind shareholders that
the Board welcomes engagement and dialogue with its shareholders
and we look forward to seeing you at the forthcoming AGM. Alternatively,
you can get in touch with us via our Company Secretary.
Steve Marshall
Chairman
16 May 2017
During the year the Board have continued to focus on the development
and practice of good governance throughout the whole organisation
and have remained compliant with the UK Corporate Governance Code
(the Code).
The Board have reviewed and monitored the Group’s performance
to ensure: that sound internal controls and financial and regulatory
monitoring are in place; that the Group has adequate cyber and
data security in place; and that the Group leads the implementation
and promotion of vital health and safety initiatives to keep our people
and stakeholders safe.
Following several changes to the Board during the previous financial year,
this year has been a period of stability with no Board changes.
As stated in our Annual Report last year, we undertook our first external
Board evaluation this year using Condign Board Consulting Limited.
The purpose of the external evaluation was to gain independent
appraisal and insight on the effectiveness and performance of the Board,
its Committees and the Directors.
Following a comprehensive evaluation process, the review concluded
that the Board operate in a very functional, highly collegiate way which
is effective and purposeful in seeking value for shareholders and mindful
of the need to discharge its obligations to other stakeholders. All of
the members of the Board were found to challenge effectively and to
contribute to the overall performance of the Board and its Committees.
With the Executive Directors well embedded and a strengthened
management team appointed during 2016 and 2017, the Board have
been focused on the strategic direction, which included review of its
appetite for risk and ensuring appropriate governance and controls are
in place to support strategy delivery and aspirations for growth in the
business and operating environment. Good governance helps the Board
address challenges that arise internally and externally, and enables the
Board to undertake active stewardship of the Group to ensure it remains
alert, agile and prepared.
36
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Annual Report and Accounts 2017
GOVERNANCE
CORPORATE GOVERNANCE REPORT
The UK Corporate Governance Code
As a listed company on the London Stock Exchange the Company
is required to comply with the principles and provisions set out in the
Code in force at the date of this report. The Board are committed to
the principle of full compliance and are satisfied that the Company has
complied with all of the requirements of the Code during the year.
COMPLIANCE STATEMENT
Wincanton plc and its subsidiaries (together the Group) remain
committed to maintaining the highest standards of corporate
governance. All reports in the Governance section and Directors’
Remuneration Report have been prepared in accordance with the
Code that applies to this accounting period.
Throughout the year ended 31 March 2017, the Board consider they,
and the Company, have complied with all of the provisions of the Code.
BOARD LEADERSHIP
Role
The Company is led and controlled by the Board of Directors (shown
on pages 34 to 35), who are collectively responsible for the long
term success of the Company and the endorsement and application
of corporate governance.
Decision-making
The Board have a formal Schedule of Matters reserved for their
decision-making. Such matters include Group strategy and structure,
governance and regulatory compliance, financial reporting, major
capital commitments, major contracts and agreements, internal controls,
significant remuneration changes, stakeholder engagement, and material
corporate transactions (including acquisitions and disposals).
The Schedule of Matters Reserved sets out the parameters of each matter
and limitations delegated to Board Committees and a sub-committee
of the Board, the Finance Committee. The Finance Committee is an
ad-hoc executive management committee, authorised to approve
day to day operational matters within limits and restrictions determined
by the Board.
The Schedule is reviewed annually to ensure it remains fit for purpose
and sets the parameters for management and expectation for
internal controls.
Directors’ duties
The powers and duties of the Directors are determined by legislation
and the Company’s Articles of Association. Directors are required to act
in good faith in a way that they consider would be most likely to promote
the success of the Company for the benefit of shareholders as a whole.
In doing so, the Directors are required to have regard (amongst other
matters) to:
• the likely consequences of any decision in the long term;
• the interest of the Company’s employees;
• the need to foster business relationships with suppliers, customers
and others;
• the impact of the Company’s operations on the community and
the environment;
• the desirability of the Company to maintain a reputation for high
standards of business conduct; and
• the need to act fairly towards all shareholders of the Company.
In addition to their statutory duties, the Directors must ensure that the
Board as a whole focus effectively on all areas of their responsibility.
The Board consider all such areas within routine agenda matters
at each Board meeting.
Roles of Chairman and Chief Executive
The roles of the Chairman and Chief Executive are separate and
performed by different individuals. A responsibility statement for each
role has been set out and adopted by the Board.
The Chairman, Steve Marshall, is primarily responsible for the operation of
the Board and for ensuring that its strategic and supervisory role is achieved.
He is an independent Non-executive Chairman, deemed independent on
appointment and remains independent in accordance with the Code.
The Chief Executive, Adrian Colman, is responsible for the day to day
running of the business which includes implementation of the strategy,
decisions made by the Board and operational management of the Group
supported by his Executive Management Team (EMT).
Executive Management Team
The EMT comprise the senior leadership team that report directly to the
Chief Executive and have management responsibility for the business
operations and support functions. The EMT meet monthly and relevant
matters are reported to Board meetings by the Chief Executive and,
as appropriate, the Chief Financial Officer and other EMT members.
Senior Independent Director
The Senior Independent Director, Stewart Oades, is an independent
Non-executive Director of the Board. His role as the Senior Independent
Director is to act as a sounding board for the Chairman and perform an
intermediary role to other Directors, where necessary. He leads the appraisal
and review of the Chairman’s performance and makes himself available
to shareholders if they have any concerns that the Chairman and Chief
Executive have failed to resolve or it is not appropriate for them to do so.
Non-executive Directors
All of the Non-executive Directors were deemed independent on
appointment and continue to be independent in accordance with
the Code. They were each appointed on the basis of their calibre and
experience and provide diversity through their skills, background and
qualifications. Each Non-executive Director has worked at director
level in a variety of disciplines and commercial environments, similar
sized organisations and regulated environments. The Board believe
this enables them to collectively add value and provide independent
oversight and challenge across all corporate and commercial aspects
with their contributions and external perspective.
Each Non-executive Director is appointed for an initial fixed term
of three years, subject to annual re-election by shareholders.
Their appointment term may be renewed by mutual agreement with
due regard to the Code, their performance and contribution, and their
ongoing independence.
Non-executive Directors are expected to: scrutinise, measure, review
and challenge the performance of the EMT; assist in the development
of Group strategy; review the Group financial information and
performance; ensure systems of internal control and risk management
are appropriate and effective; review the relationship with the External
Auditor within the Audit Committee; and review the remuneration of,
and succession planning for, the Board.
At least twice a year, the Chairman and Non-executive Directors meet
without the Executive Directors being present.
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Wincanton plc
Annual Report and Accounts 2017
37
GOVERNANCE
CORPORATE GOVERNANCE REPORT
CONTINUED
Board Committees
There are three Committees of the Board, an Audit Committee,
Nomination Committee, and Remuneration Committee.
Each Committee have terms of reference set by the Board, which
are reviewed annually and made available on the Group’s website.
Membership of each Committee is determined by the Board on the
recommendation of the Nomination Committee and in consultation with
the appropriate Committee Chairman. The membership, role and duties
discharged in the year ended 31 March 2017 for each Committee are set
out in their respective Committee reports that follow.
Meetings attendance
During the year, and at the date of this report, there has been full
attendance at all Board and Committee meetings by all of the Directors.
It is acknowledged that there may be unforeseen circumstances from
time to time which could prevent a Director from attending. In such
circumstances the Director would be expected to review the meeting
papers and provide comments to the Chairman, Committee Chairman
or Company Secretary to ensure they are raised at the meeting.
During the 2017 financial year the Board held ten scheduled Board
meetings. The table below sets out the attendance of the Directors
at the scheduled Board meetings during the year under review:
Board
Meetings
Scheduled/
Attended
10/10
10/10
10/10
10/10
10/10
10/10
10/10
Audit
Committee
Scheduled/
Attended
–
4/4
4/4
4/4
4/4
–
–
Remuneration
Committee
Scheduled/
Attended
5/5
5/5
5/5
5/5
5/5
–
–
Nomination
Committee
Scheduled/
Attended
2/2
2/2
2/2
2/2
2/2
2/2
–
Steve Marshall
Paul Dean
Stewart Oades
David Radcliffe
Martin Sawkins
Adrian Colman
Tim Lawlor
The Directors were provided with appropriate documentation
approximately one week in advance of each Board or Committee
meeting during the year. For each Board meeting the papers include
a trading update, and reports on human resources, health and safety,
regulatory and governance matters, financial performance, and papers
where a decision or approval is required.
Members of the EMT, and in some cases direct reports of the EMT,
are invited to attend at least one Board meeting each year to present
an update on the performance and future focus areas of their respective
functions or business area.
Board changes
There were no changes to the Board during the financial year or up
to the date of this report.
In accordance with the Code all Directors, being eligible, put themselves
forward for annual re-election.
BOARD EFFECTIVENESS
Performance review
The Board, its Committees and each Director participate in an annual
performance evaluation process. In respect of the year ended 31 March
2017 the evaluation process was conducted by way of an external Board
evaluation process.
A comprehensive tender and selection process was undertaken to
appoint a firm to complete the Company’s first external board evaluation.
Following consideration, it was agreed that Condign Board Consulting
Limited be engaged to undertake the exercise.
38
Wincanton plc
Annual Report and Accounts 2017
The review consisted of reviewing all Board and Committee meeting
packs and minutes for the financial year and then one-to-one interviews
with each Director and the Company Secretary were conducted by the
external evaluator in January 2017. The interviews covered areas such as
the conduct and operating rhythm of the Board, Board and Committee
organisation and performance, the roles and contributions of Board
members, Group dynamics and engagement, Board composition, the
Board response to challenges, communications and engagement with
shareholders and other stakeholders and overall Board effectiveness.
The evaluator then observed Board and Committee meetings in
February 2017.
The findings of the evaluation were analysed and presented to the Board
by the evaluator at a Board session held on 1 March 2017. The evaluation
confirmed that the composition, interaction and experience of the Board
was highly functional and collegiate; engagement was effective and
purposeful; and the Board sought to deliver value to its shareholders and
discharge its obligations to its other stakeholders. The review also found
that the Board had achieved its objectives set on the back of the 2016
Board evaluation regarding greater non-financial performance information.
The successful achievement of this objective is demonstrated in the
inclusion of non-financial KPIs on page 15.
Board commitments
All of the Directors are fully committed to their roles and to their statutory
and fiduciary duties. Over the course of the year the Board received
briefings and presentations from key members of the management team.
The Board also held two meetings at business sites in Kettering and Sutton
Coldfield, to receive business presentations from local management
teams, and to observe and engage with colleagues working in site facilities.
The site visits enable the Board to gain a deeper insight and understanding
of the business and in particular customer contracts and operations.
Outside of meetings the Board are also given opportunities to attend
further business sites and visits are facilitated by the Company Secretary.
These additional activities help to ensure that the full Board have a sound
understanding of the business and its operations, to enable them to
provide appropriate oversight and challenge to the EMT.
Other directorships
The Chairman and Non-executive Directors hold appointments as
directors on a small number of other companies, as detailed in their
biographies on pages 34 to 35. The number of external appointments
held by the Chairman and Non-executive Directors are considered upon
changes in appointments and annually as part of their performance
reviews. Following review and full attendance at all Board and Committee
meetings and activities outside meetings during the year, it is considered
the Chairman and Non-executive Directors have sufficient time and
commitment to the Group.
The Board acknowledge that Executive Directors may wish to
undertake external non-executive director roles outside of the Group.
It is recognised that such opportunities broaden their development,
widen their commercial experience and so benefit the Group. To protect
the interests of the Group each Executive Director is restricted to one
non-executive role at any one time. During the year and to the date
of this report no Executive Director held any external appointments.
Conflicts of interest
The Board monitor and review potential conflicts of interest on
a regular basis and consider any situational conflicts at each Board
meeting. Where any conflict arises the Board consider and authorise the
reported actual or potential conflict in accordance with the provisions
contained in the Company’s Articles of Association.
Employees
On 31 March 2017 the Group employed 17,500 people in the United
Kingdom (UK) and Republic of Ireland (ROI), of which 83% are men and
17% are women. The average age of the Group’s employees is 31.93 years.
Of all management level employees, 80% are men and 20% are women.
Details of the Group’s approach to equality, fairness and diversity are set
out in the Corporate Responsibility Report on pages 28 and 29.
Stakeholder engagement
Throughout the year, the Directors and senior managers meet with a
range of external stakeholders to discuss the Group’s position on a range of
business, policy and public interest issues and to seek stakeholders’ views.
RISK MANAGEMENT
The Board are ultimately responsible for the Group’s systems of risk
management and internal control and review their effectiveness
on a regular basis throughout the year.
The Group’s systems and controls are designed to ensure that the
Group’s exposure to significant risk is reduced and mitigated to
the extent possible, with acknowledgement that not all risk can be
eliminated. Full details of the Group’s risk management systems and
processes were set out earlier, in the Risk Report on pages 24 to 27.
The Group’s Internal Audit function independently review and test the
effectiveness of the internal controls and risk management through an
annual Internal Audit programme. Full details of the Group’s Internal Audit
function and performance are set out in the Audit Committee report
starting on page 41.
ANNUAL GENERAL MEETING
The AGM provides an opportunity for shareholders to receive the financial
results for the financial year, engage with the Board, receive an update
on the current performance, and ask questions during the meeting.
Shareholders also have the opportunity at the AGM to meet the External
Auditor and the Company Secretary.
Steve Marshall
Chairman
16 May 2017
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Directors indemnity and insurance
Directors are ultimately responsible for the operation, performance
and decision-making of the Company. In doing so, they are exposed to
potentially significant personal liability under criminal or civil law and
the UK Listing, Prospectus, Disclosure Guidance and Transparency Rules,
which include penalties such as private or public censure, fines and/
or imprisonment.
In line with normal market practice, it is considered in the Company’s best
interests to protect the Directors from the consequences of innocent
errors or omissions. Accordingly, Directors’ and Officers’ liability
insurance policy is maintained at the Company’s expense and was in
place throughout the year. The policy provides indemnity to Group
employees that serve as directors or officers of any Group company,
as recommended by the Code, which includes the Board of Directors.
This insurance policy would not provide cover in the event that a Director
or officer had knowingly acted fraudulently or dishonestly.
Board support and advice
The Company provides the Directors with access to independent
professional advice at the Company’s expense, as and when required.
In addition, all Directors have unfettered access to the advice and services
of the Company Secretary.
SHAREHOLDERS AND STAKEHOLDERS
Shareholder engagement
The Company has continued throughout the year to maintain effective
dialogue with shareholders to ensure that the strategy and business
model is understood, and any queries are dealt with promptly and
constructively. Regular contact with institutional shareholders, fund
managers and analysts is conducted through meetings with the Chief
Executive and Chief Financial Officer. Brokers’ reports and analysts’
briefing notes are regularly distributed to all Directors. The Board receive
updates on feedback raised by institutional shareholders, fund managers
and analysts, to enable the Directors to form a view of the priorities
and concerns of stakeholders. In addition, the Chairman and Committee
Chairman are available to engage with major institutional shareholders
from time to time.
During the year, a shareholder engagement exercise was undertaken.
This included the Chairman of the Remuneration Committee seeking
engagement on changes to the Directors’ Remuneration Policy due
to be presented to shareholders for approval at the 2017 Annual General
Meeting (AGM). Further details on this can be found in the Directors’
Remuneration Report starting on page 44.
Communications with shareholders
The Group’s website contains up to date information for shareholders
and other stakeholders, such as share price, announcements, circulars,
press releases, current and historic Annual Report and Accounts,
corporate governance information and shareholder documentation.
Shareholders can elect how they receive Company communications
from the Company. Electronic communications are endorsed by the
Board as the most efficient communication and one which also helps
the Group reduce its environmental impact and costs. Accordingly, all
shareholders are encouraged to receive communications electronically,
by contacting the Company’s registrars, Computershare. Contact details
and telephone numbers can be found on the websites of both
Wincanton and Computershare.
Wincanton plc
Annual Report and Accounts 2017
39
GOVERNANCE
NOMINATION COMMITTEE REPORT
NOMINATION COMMITTEE REPORT
Membership
The Nomination Committee comprises the Chairman, the Chief Executive
and the four Non-executive Directors. The Chairman is the Nomination
Committee Chairman.
Attendance at the Committee’s meetings are set out on page 38.
Role of the Nomination Committee
The Board have delegated oversight of the leadership needs and
succession planning for the Board and EMT to the Nomination
Committee, to ensure the Group has the best talent to perform
effectively now and in the future.
Committee responsibilities
The Nomination Committee’s remit, which is set out in its terms
of reference, includes responsibility for:
• review of the structure, size and composition of the Board and its
Committees, and making recommendations to the Board on any
desired changes;
• review of the succession plans for the Executive Directors and EMT;
• the appointment procedure for new Directors, using
external consultants;
• recommendations for appointments of Directors;
• preparation of role specifications, including assessment of the time
commitment expected and the need for availability at short notice
for non-executive roles;
• review of the annual performance evaluation outcomes for areas
under its remit; and
• review of Directors’ external commitments and time available to
discharge their responsibilities effectively.
Before a Director is appointed, the Committee evaluate the balance of
skills, knowledge, experience and diversity of the Board to ensure that
new appointments complement or address gaps in any of these areas.
The Committee ensure the selection process is rigorous and transparent
and appoints a professional external agent. Candidates from a wide
range of backgrounds that meet the specification are considered and all
appointments are made entirely on merit, with due regard to the benefits
of diversity on the Board, which includes but is not limited to purely gender.
Activities in the year ended 31 March 2017
During the year the Committee undertook the following activities:
• reviewed financial year reporting matters and disclosures;
• reviewed the structure, size and composition of the Board and
Committees in light of the external evaluation results;
• reviewed the Company’s succession plan for the Board following
the external evaluation results;
• reviewed the Company’s succession plans for the EMT;
• appointed external recruitment firms to support the selection
processes for the Group HR Director and Chief Marketing
Officer positions;
• reviewed the time commitment and conflict of interest declarations
of the Directors; and
• reviewed and updated the Committee’s terms of reference.
As part of the external evaluation of the Board and its Committees, the
operation and performance of the Committee was assessed and it was
agreed that the Committee have continued to operate effectively and
in accordance with its remit.
on an ongoing basis to ensure there is appropriate balance and diversity
in the skills and experience of the membership and there are no gaps.
The Board consider the current membership balance of Executive
Directors and Non-executive Directors is the right blend of commercial
and governance experience, independence and challenge and the
diverse range of skills and backgrounds of the Directors prevent any
undue individual or collective influence over the Board’s decision-making.
Board diversity
The Company remains committed to diversity on the Board in
accordance with recommendations from the Davies Review (published in
2011), the Parker Review of November 2016 and the Code, and recognises
the benefits that a diverse Board can bring. The Board consider and
review diversity in the fullest sense when considering appointments
and succession planning and seek to ensure a range of skills, experience
and backgrounds are represented.
The Committee will continue to consider all diversity matters when
reviewing future Board and senior management appointments, Board
composition and the outcome of the annual evaluations.
Succession planning
A key area of focus of the Committee is the oversight of adequate
succession planning in respect of both the Board and of the EMT.
When considering Board succession planning the Committee have
considered the following areas at length:
• the Committee structure and membership;
• NED engagement with management;
• evaluation of the current skills and experience of Board and gap analysis;
• the tenure of Board members and phased review and consideration
of roles for all Board members, for planned succession and timelines;
and
• the diversity of the Board and future requirements.
For EMT succession planning the Company is committed to the
identification and development of suitable candidates. The Committee
review the Company’s succession plans including periodic phased
senior management refreshment programmes, designed to improve
bench strength in capability and talent to achieve the Group’s
strategic plan for growth and the talent pipeline for EMT and senior
management succession.
Induction of Directors
On joining the Board, all Directors receive an induction tailored to their
individual needs. The programme includes meetings with all Directors,
the EMT, the Company Secretary and heads of functions. Key site visits
are also scheduled and undertaken to meet business management and
deepen commercial awareness of the Group.
On acceptance of their appointment, Directors are provided with a
comprehensive suite of Group materials, which comprises: Group
strategic plan, financial information and trading updates, risk registers,
governance and regulatory guidance and documents, Group policies,
Group and business structure, statutory documents of the Company, and
Board and Committee papers, minutes and other reference documents
for the prior 12 month period.
Continuing professional development
As part of the Board evaluation process, the training and development
needs of individual Directors are reviewed by the Chairman.
The Company makes the necessary resources available to support
Director development.
Composition of the Board
The Committee review the composition of the Board and its Committees
Steve Marshall
Chairman of Nomination Committee
16 May 2017
40
Wincanton plc
Annual Report and Accounts 2017
GOVERNANCE
AUDIT COMMITTEE REPORT
Providing a robust and
thorough review
COMMITTEE CHAIRMAN’S ANNUAL STATEMENT
AUDIT COMMITTEE’S REPORT
I am pleased to present the Audit Committee’s report for the year ended
31 March 2017.
It has been another busy year for the Committee. During the year the key
activities have been focused on providing a robust and thorough review
of financial performance, independent challenge on the balance and
integrity of financial reporting, monitoring progress on risk management
and internal control activities towards the achievement of target risk levels
set, and monitoring of the Internal Audit and External Audit performance
and activities.
In addition to routine matters, the Committee have also undertaken
specific reviews on insurance arrangements and taxation. In respect
of insurance, the Committee considered the insurance strategy and
arrangements, which included administration, performance, premiums,
the captive insurance company and recharging, and whether these
remained appropriate and fit for purpose.
Following the UK referendum vote for Brexit, the market, economic
and regulatory impact has been kept under review by the Committee
and particularly when considering the financial results and outlook
for our future business, employees and costs, and potential impact on
customers, suppliers and our pension fund. We will continue to monitor
the developments on Brexit closely in the coming year.
The Committee welcome constructive engagement on any of the
areas under our remit and the Chairman can be contacted via the
Company Secretary.
Paul Dean
Audit Committee Chairman
16 May 2017
Membership
The Audit Committee comprise the four independent Non-executive
Directors. There were no changes to the membership of the Committee
during the year.
Each member of the Audit Committee is independent and the
membership meets the requirements of the Code. The Board are
satisfied that the Chairman, Paul Dean, has recent and relevant financial
experience in accordance with the Code.
Attendance at the Committee’s meetings are set out on page 38
in the Corporate Governance Report.
Meetings
The Group’s Chief Financial Officer, Group Financial Controller, Head of
Internal Audit and the External Auditor attend and report to each Audit
Committee meeting. The Company Chairman and the Chief Executive
also regularly attend Audit Committee meetings by invitation.
During the year, the Audit Committee met privately with the External
Auditor and separately with the Head of Internal Audit.
Role and responsibilities
The Audit Committee assist the Board on the effective review of financial
performance, internal controls, financial reporting and risk management.
The Audit Committee’s remit, which is set out in its terms of reference,
includes responsibilities for:
• the content and integrity of financial statements and any formal
announcements relating to financial performance, including review
of the significant financial reporting judgements contained therein;
• review of the Company’s internal controls and risk
management systems;
• review of the effectiveness of the Internal Audit function;
• recommendations to the Board in relation to the appointment,
reappointment and removal of the External Auditor, their remuneration
and terms of engagement;
• review and monitoring of the External Auditor’s independence
and objectivity and the effectiveness of the audit process;
• review of Group policies, including setting the policy to control
engagement of the External Auditor to supply non-audit services;
Wincanton plc
Annual Report and Accounts 2017
41
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GOVERNANCE
AUDIT COMMITTEE REPORT
CONTINUED
• reports to the Board on any matters where it considers action or
improvement is needed, including recommendation of remedial
actions; and
• report to the Board on how the Committee has discharged
its responsibilities.
The Audit Committee has unrestricted access to Company documents,
management, Internal Audit, the Company Secretary, the External
Auditor and any other advisers, as and when required.
Activities in the year ended 31 March 2017
The Audit Committee met four times during the year at scheduled
meetings. Following the year end the Committee have held one further
scheduled meeting. During those meetings the Committee covered
the following activities:
Financial statements
• review of the financial statements and narrative financial reporting
in the 2016 Annual Report and Accounts and financial statements in
respect of the half year results to 30 September 2016 with particular
reference to the reports being fair, balanced and understandable;
• consideration of reports from the External Auditor in respect of
financial reporting in the 2016 Annual Report and Accounts and the
30 September 2016 half year results;
• review of the key judgement and accounting matters, which includes
going concern, in respect of the half year and full year to 31 March 2017;
and
• review of the preliminary results and half year results in the stock
exchange announcements.
Control environment and risk management
• review of Group policies, such as Whistleblowing, Bribery, Gifts
and Entertainment, Sharedealing, Non-audit Services policies;
• review of the whistleblowing procedure that employees may,
in confidence, raise concerns about possible improprieties in matters
of financial reporting or other matters;
• review of the Risk Management Committee’s activities, including
progress on risk management and refreshment of Group and
business sector risk registers, and development of an enhanced
risk management tool to supersede the control risk self-assessment
programme in the coming financial year;
• review of the viability assessment methodology, assessment outcomes
and the statement of compliance, including determination of the
assessment period and the robustness of the scenarios tested;
• review of compliance reports from management and Internal Audit
reports on completed control risk self-assessments;
• review and agreement of the Group Internal Audit Plan for the coming
financial year;
• review and challenge of the Group’s 2017 Internal Audit programme,
including the results of key audits, significant findings, and
management’s response and resolution;
• meetings with the Head of Internal Audit without management;
• review the effectiveness of the Internal Audit function;
• review of the Group’s insurance arrangements; and
• review of the Group’s taxation approach.
42
Wincanton plc
Annual Report and Accounts 2017
External Audit/Auditors
• meetings with the External Auditor without management to consider
any potential areas of concern;
• review and consideration of the External Auditor’s findings and
recommendations and management’s response from the audit
of the year ended 31 March 2016;
• approve the terms of appointment, areas of responsibility, duties;
• scope and strategy of the 2017 external audit set out in the
engagement letter and recommend approval to the Board; and
• review of the External Auditor’s performance, independence
and objectivity.
The Committee reviewed its own terms of reference and, as part of the
external Board evaluation process, the operation of the Committee was
evaluated. The Committee and Board were satisfied that the Committee
and its members continue to operate effectively individually and
collectively and had discharged all of the duties within its remit.
Financial reporting and significant financial matters
The principal matters of judgement considered by the Committee
in relation to the accounts for the year ended 31 March 2017 and how
they were addressed:
Property provisions
The balance sheet for the year ended 31 March 2017 includes property
provisions of £16.5m.
The Committee reviewed a management report on the property
portfolio and considered the provision for onerous leases and
dilapidations, the utilisation of the provision during the year, and the
rationale for the year end provision. The Committee also considered
the External Auditor’s testing of the assumptions.
The Committee were satisfied the assumptions and disclosures in the
Annual Report were appropriate.
Pension scheme obligations
The balance sheet for the year ended 31 March 2017 includes a pension
scheme deficit of £78.4m, with gross pension obligations of £1,156.7m.
In arriving at the gross obligation figure, the Committee considered the
accounting basis of the pension scheme in the year ended 31 March
2017 and reviewed the pension items provided by management,
based on the Company Actuary’s report on the key assumptions in the
pension obligation calculation and related income statement items.
The Committee also considered the work performed by the External
Auditor to test those assumptions.
The Committee were satisfied that the assumptions used and the
disclosures in the Annual Report were appropriate.
Materiality and misstatements
The External Auditor, following discussion with the Committee, set the
materiality and notify the Committee if they identify any misstatements
through their audit. The Committee review the external auditors
approach on materiality and level of materiality applied and any
misstatements reported.
After review of management presentations and reports, including
consultation with the External Auditor, the Committee were satisfied
that the financial statements appropriately addressed the critical
judgements and key estimates in respect of the amounts reported and
the disclosures. The Committee were also satisfied that the significant
assumptions used for determining the value of assets and liabilities had
been appropriately scrutinised and challenged and on that basis the
Committee recommended the Annual Report to the Board for approval.
In addition, KPMG has put in place further independence safeguards
through professional values, communications, internal accountability,
risk management and independent reviews. KPMG regularly review the
composition of the audit team and rotate teams in accordance with the
relevant regulations; and consider the fees paid by the Company and its
related entities for professional services provided.
Any significant new engagement undertaken for the Company
is subject to acceptance procedures, requiring consultation with
Simon Haydn-Jones, the Senior Statutory Auditor.
Auditor tender
A robust and thorough audit tender was undertaken last year which
concluded with a recommendation to reappoint KPMG as the Group’s
External Auditor. The Committee are acutely aware that, despite
undertaking the tender last year, KPMG have been the Group’s External
Auditor since it listed in 2001. Therefore, although there is no requirement
to retender for some time, the performance and effectiveness of the
Auditor are rigorously considered and their length and continued
appointment is kept closely under review.
Non-audit services
The Company’s Non-audit Services Policy is intended to put in place
appropriate controls for the approval and engagement of any non-audit
assignments according to the nature and value of the work, to safeguard
audit objectivity and independence.
The APB’s Ethical Standard 5 sets out the permissible non-audit services
that external auditors can perform, and KPMG ensures that all requests
from the Company to provide non-audit services, to any KPMG office,
are considered in the context of the Company’s policy and KPMG’s
own ethical standards.
Full disclosure of audit and non-audit fees paid in the year ended
31 March 2017 are set out in Note 3 to the financial statements on
page 79.
Paul Dean
Audit Committee Chairman
16 May 2017
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Risk management
The Group’s principal risk management systems comprise:
• risk registers and reviews at both Group, business unit and support
functions level;
• periodic control risk self-assessments;
• deep dives on specific risk profiles and challenges in particular business
areas; and
• Risk Management Committee (RMC) oversight.
A full report of the Group’s risk management systems and controls,
principal risks and uncertainties; and statement following the viability
assessment are included in the Risk report on pages 24 to 27.
Internal Audit function
The Head of Internal Audit reports to the Chief Financial Officer and
has direct access to the Chief Executive and Chairman of the Audit
Committee. In addition to attendance at all Audit Committee meetings
the Head of Internal Audit reports regularly on internal audit reviews
to the EMT and RMC.
The Internal Audit function provide independent and objective review
of risks and controls and reports to the Board, Audit Committee and
senior management, to ensure the Group complies with corporate
governance and regulatory responsibilities. The audit reviews consider
the extent to which systems of internal control and risk management are
designed and operate effectively, adequately manage or mitigate key
risks, and safeguard assets and limit liabilities.
The role of Internal Audit and the scope of its works, are regularly
reviewed to ensure it remains independent, fit for purpose and addresses
business changes and regulatory requirements. The formal Audit Charter
is reviewed by the Committee annually.
During the year, the annual evaluation of the Internal Audit function
was considered by the Audit Committee. The results of the assessment
concluded that the Internal Audit function was adequately resourced
and operates effectively.
External Auditor
The Committee evaluates the effectiveness and independence of the
external audit process and External Auditor annually in respect of their
performance and conduct. The External Auditor tender undertaken in
the last financial year was scheduled to coincide with the auditor rotation.
Upon the reappointment of KPMG LLP (KPMG) as the Group’s External
Auditor Simon Haydn-Jones became the new Senior Statutory Auditor
with effect from 1 April 2016.
Auditor performance
The Committee undertakes an annual comprehensive assessment
of the External Auditor’s performance following the financial year end
annual audit, scoring the performance and effectiveness of the External
Auditor, taking on board feedback from management. The Committee
were satisfied the External Auditor had performed effectively in respect
of the external audits for the year ended 31 March 2016 and the review
of the half year to 30 September 2016.
Auditor independence
The Committee requires the External Auditor to give an annual
confirmation of the actions it has taken to ensure objectivity and
independence, including where non-audit services are provided.
For the audit of these financial statements the External Auditor,
KPMG, have confirmed compliance with the firm’s ethics and
independence policies, partner and staff compliance with their ethics
and independence manual, including prohibition on holding Company
shares. KPMG have assured the Group their ethics and independence
manual is fully consistent with the professional practice rules of the
Auditing Practices Board (APB) Ethical Standards, the auditor’s regulator.
Wincanton plc
Annual Report and Accounts 2017
43
DIRECTORS’ REMUNERATION REPORT
COMMITTEE CHAIRMAN’S ANNUAL STATEMENT
We believe that our Directors’
Remuneration Policy
continues to be appropriate
COMMITTEE CHAIRMAN’S ANNUAL STATEMENT
I am pleased to present the Directors’ Remuneration Report for the year
ended 31 March 2017.
It has been a busy year for the Committee in which we reviewed the
appropriateness of the existing Remuneration Policy, and provided
oversight and challenge to ensure that we remunerate our Directors and
senior management in a way that (a) attracts and retains the best talent
and (b) encourages high performance to achieve the Group’s strategic
targets, but do not encourage irresponsible risk taking.
Far from being a statutory driven review process, as a Committee
we continually review and monitor the Directors’ Remuneration
Policy against our business strategy, best practice and our relevant
market environment. We also actively consider any feedback we
receive from shareholders and the reports which institutional investors
and shareholder bodies issue on remuneration policy and practices.
Our intention is always to ensure reward is appropriately underpinned
by challenging performance targets that align with the Group’s strategic
goals and benefit our stakeholders in a responsible and sustainable way.
We strongly believe this approach motivates and rewards individuals
appropriately for their contribution to the Group’s performance and
aligns executives’ interests in the same way shareholders receive a return
on their investment in us.
As I referred to in my statement last year, at the forthcoming AGM we are
required to put our Directors’ Remuneration Policy before shareholders
for approval. In the context of the Group strategy we undertook a
thorough and comprehensive review during the year, to compare our
practices with new and emerging remuneration practices and market
expectations. Following this review, we believe that our Directors’
Remuneration Policy continues to be appropriate, and are therefore
proposing the policy remains broadly unchanged. In recognition of
emerging best practice, we have updated our policy to reduce the
pension contribution for new Executive Director appointments to 15% of
salary, to be in line with pension arrangements for other senior managers.
The Committee have also reviewed the flexibility under the Policy for the
Annual Bonus and Long Term Incentive Plan, to ensure the Committee
can review performance measures and weightings ahead of each award
to ensure they reinforce the business strategy.
As part of this process, we sought engagement with both our largest
shareholders and shareholder bodies. Shareholder reactions to our
relatively unchanged Directors’ Remuneration Policy were positive and
therefore no further changes were made. Further information regarding
the review we undertook, and the consultation and engagement
process, can be found on page 46. Our conclusions were that the
Company’s Directors’ Remuneration Policy, as set out on pages 54 to 59, is
fit for purpose and the most suitable way to remunerate for performance
and retention. This policy will, therefore, be presented to our shareholders
for approval at our AGM on 29 June 2017, with the intention that it will
become effective from 1 July 2017.
During the year the Committee undertook a range of duties delegated
to it by the Board. The activities included a review of fees paid to the
Chairman; and scrutiny and approval of salary increases, LTIP awards
and bonus payments to Executive Directors and senior management.
As we do each year, the Committee sought to ensure that remuneration
design rewarded only high performance, and was compliant with the
Directors’ Remuneration Policy. As in the previous year, the Committee
did not recommend a change to the Chairman’s fee and the Non-
executive Directors’ fees also remained unchanged. An increase in salary
was awarded to the Executive Directors effective 1 July 2016 that was
wholly consistent with the average employee salary increase across the
Group and the Committee have applied the same principle again for
salaries of Executive Directors effective 1 July 2017. 2016 LTIP awards,
granted in the form of nil cost options, were made to Executive Directors
contingent on the same performance conditions applied in 2015, as set
out in the policy, and were also awarded at the same level as in previous
years. The Committee thoroughly reviewed the Executive Directors’
performance reviews and bonus objectives which contained targets for
financial performance and growth, and non-financial activities linked
to the Group’s strategic objectives set out on page 14. Following strong
financial performance and significant achievement across all of their non-
financial objectives and targets, the Committee considered the award of
£477,528 (being 73% of his annual bonus entitlement) for Adrian Colman
and £276,988 (being 77% of his annual bonus entitlement) for Tim Lawlor
to be a fair and reasonable award for the year ended 31 March 2017.
The bonus awards and payments were also determined in line with the
Directors’ Remuneration Policy and will continue to operate in this way
for the year ended 31 March 2018.
Following my statement, you will find the Annual Report on
Remuneration. This report will be presented to our shareholders
for an advisory vote at the forthcoming AGM, and expands on the areas
I have summarised above. The Directors’ Remuneration Policy and
guidance notes that follow will also be presented to shareholders at the
AGM on a binding vote basis.
As a Committee we welcome engagement and constructive dialogue
with all of our shareholders on remuneration, at any time. If you would
like to contact us, please do so through our Company Secretary.
Martin Sawkins
Remuneration Committee Chairman
16 May 2017
44
Wincanton plc
Annual Report and Accounts 2017
DIRECTORS’ REMUNERATION REPORT
ANNUAL REPORT ON REMUNERATION
INTRODUCTION
The Annual Report on Remuneration sets out the Company’s
remuneration of its Directors during the year ended 31 March 2017 in
line with the Directors’ Remuneration Policy approved by shareholders
in July 2014. This section also summarises how the Committee intend to
implement the Directors’ Remuneration Policy (being submitted to our
shareholders for approval at the 2017 AGM) from 1 July 2017.
This report is subject to an advisory vote by shareholders at the
Company’s AGM on 29 June 2017.
COMPLIANCE STATEMENT
The Directors’ Remuneration Report, as a whole, has been prepared on
behalf of the Board by the Remuneration Committee in accordance with
the Code, the Listing Rules and the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013.
The Directors’ Remuneration Report comprises the Committee
Chairman’s Annual Statement, this report and the Directors’
Remuneration Policy together with the accompanying notes.
The Chairman’s Annual Statement and the Remuneration Policy are
not subject to audit. Sections of this report are subject to audit and are
highlighted accordingly.
ROLE OF THE REMUNERATION COMMITTEE
The main role of the Committee is to ensure that the remuneration
of Directors and senior management supports the delivery of the
strategic goals of the Group without encouraging undesirable risk
taking behaviour. This objective is achieved by: setting remuneration
appropriate to the industry and markets in which the Group operates;
and making a significant proportion of remuneration dependent on
delivery of demanding but achievable performance targets key to
delivering the business strategy, to reinforce development of a high
performance culture.
Meetings
Details of Committee Membership and attendance at meetings are
included in the Corporate Governance report on page 38. There were
five Committee meetings during the year and one meeting between
1 April 2017 and the date of this report.
Members of the Committee were all independent Non-executive
Directors selected to represent a broad range of backgrounds and
experience to provide balance and diversity. In addition to formal
Committee meetings, Committee members met outside of the
scheduled meetings as necessary.
The Chief Executive, Chief Financial Officer and Group HR Director attend
the Committee’s meetings by invitation to provide advice and assistance
on specific matters. However, no attendee was present when their own
remuneration was being discussed.
Committee Terms of Reference
The Terms of Reference of the Committee are reviewed annually to
ensure they reflect current regulatory and governance requirements
and duties. The Committee’s terms of reference are available on the
Group’s website at www.wincanton.co.uk/investors/board-and-
governance/board-committees.
The main responsibilities of the Committee are to:
• set and determine the Directors’ Remuneration Policy
and remuneration of the Chairman, taking into account
remuneration across the Group;
• monitor the level and structure of remuneration for the EMT;
• approve the design of, and determine targets for, relevant
performance-related pay schemes operated by the Group;
• approve the design of performance-related remuneration for Executive
Directors for approval by the Board and shareholders;
• determine whether performance targets have been met;
• oversee any major changes in employee benefit structures
at Group level;
• select and appoint consultants to provide independent advice
to the Committee; and
• ensure reporting is in line with applicable legislation and regulation.
Activities during the year ended 31 March 2017
The Company’s approach to remuneration arrangements for Directors
has not changed from the prior year and remains compliant with
the Directors’ Remuneration Policy in force.
The principal activities of the Committee during the year were to:
• review Executive Directors’ remuneration and determine remuneration
packages for the Chief Executive and Chief Financial Officer;
• consider the Chairman’s and Chief Executive’s recommendations for
remuneration for Executive Directors and the EMT, respectively;
• consider the HR strategy for the Group and compliance with the
Remuneration Policy;
• determine bonus awards to Executive Directors and senior
management for the year ended 31 March 2017 after consideration
of Group operating profit performance and achievement
of personal objectives;
• consider grants of LTIP awards, including performance conditions,
to Executive Directors and other senior management in the Group
identified with key skills and/or roles to significantly drive Group value
and performance improvement;
• determine the satisfaction of performance conditions and any vesting
of Special Option Plan (SOP) awards that were granted to Executive
Directors and senior management in 2013;
• review the Directors’ Remuneration Policy for recommendation
to shareholders at the 2017 AGM;
• review and approve the Annual Report on Remuneration;
• review the Chairman’s fee;
• measure and monitor performance for the unvested SOP and LTIP
awards on a regular basis; and
• approve exercises of vested share awards and any adjustments or lapses
for leavers.
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Wincanton plc
Annual Report and Accounts 2017
45
DIRECTORS’ REMUNERATION REPORT
ANNUAL REPORT ON REMUNERATION
CONTINUED
Remuneration consultant
Kepler (a brand of Mercer) is the Committee’s appointed Remuneration
Consultant regarding remuneration advice. Kepler is a founding
member and signatory of the Code of Conduct for Remuneration
Consultants. For more detail please refer to the website,
www.remunerationconsultantsgroup.com.
The Committee annually reviews the support and advice provided by
Kepler and was comfortable that Kepler continues to provide objective
and independent remuneration advice and has no conflicts of interest
with the Group that may impair its independence. Other than advice
on remuneration, no other services were provided by Kepler to the
Company. Mercer provides unrelated advice to the Trustee of the Pension
Scheme in relation to investments.
During the year, Kepler attended Committee meetings upon invitation
to provide advice and support to the Committee in areas such as:
reviewing the remuneration policy; performance measure selection and
calibration for long term incentives; current market practice; governance
developments; drafting the remuneration report; and relevant
comparator groups for pay and performance.
Fees payable to Kepler amounted to £48,765 (2016: £18,205), based on
attendance at meetings and advisory materials. Fees for the year ended
31 March 2017 include Kepler’s support on reviewing remuneration
policy and on implementation of the LTIP.
Directors’ Remuneration Policy in the year ended
31 March 2017
Executive Directors’ remuneration for the year ended 31 March 2017
consisted of base salary, annual bonus, long term incentives, pension
provision and taxable benefits. The bonus and long term incentives are
performance-related and conditional on the achievement of Group
performance targets and continued service to encourage retention.
Performance targets are set at the start of each financial year and are
clear, robust and objective and take into account the wider economic
environment of the Group.
The existing Directors’ Remuneration Policy, which commenced on
1 April 2015, was designed to provide clarity and transparency of
remuneration, simplify the remuneration structure and align Executive
Directors’ interests with both Company performance and shareholder
interests through generation of greater Company value over the
long term.
The Directors’ Remuneration Policy was developed following
consultation with the Company’s main shareholders and bodies that
represent shareholders and investors, who were supportive of the
principles of the policy overall.
Directors’ Remuneration Policy commencing 2018
The Company must put its Directors’ Remuneration Policy to a binding
shareholder vote at least once every three years under the current
remuneration regulations. As the last AGM at which shareholders
approved the existing Directors’ Remuneration Policy was in 2014, the
Company must submit the Directors’ Remuneration Policy for approval
to our shareholders at the 2017 AGM.
During the year the Committee reviewed the Directors’ Remuneration
Policy considering alignment with the business strategy, new and
emerging remuneration practices and market expectations and the
current political focus on remuneration. Following this review, the
Committee determined that the existing Directors’ Remuneration
Policy is fit for purpose. The Committee chose to reduce the pension
contribution for new Executive Director appointments to 15% of salary,
to be in line with pension arrangements for other senior managers, and
reviewed the flexibility under the policy for the Annual Bonus and Long
Term Incentive Plan, in line with market practice, to ensure the Committee
can review performance measures and weightings ahead of each award
to ensure they reinforce the business strategy.
In reviewing the Policy, the Company engaged with selected
shareholders and shareholder bodies, and the Committee was pleased
with the feedback received. The conclusion, after taking feedback into
account, was that the Directors’ Remuneration Policy, as set out on pages
54 to 59, be presented to shareholders for a binding vote at the AGM
on 29 June 2017, with the intention that it will become effective from
1 July 2017.
Executive Directors’ service contracts
Details of employment contracts for the Executive Directors are
summarised in the table below:
Executive
Director
Adrian
Colman
Tim
Lawlor
Date of
appointment to
the Board
7 January
Date of
current
contract
Notice
period
(Company)
Notice
period
(Director)
2013 5 July 2015 12 months 6 months
28 September
2015 6 July 2015 12 months 6 months
Unexpired
term
Rolling
12 months
Rolling
12 months
Adrian Colman was appointed as Chief Executive of the Company on
1 August 2015 and therefore his service contract was refreshed to reflect
his new role and remuneration. Both Directors’ service contracts are
compliant in all respects with the Directors’ Remuneration Policy.
The service contract for each Executive Director is available for inspection
by shareholders at the Company’s registered office and will be available
at the 2017 AGM.
46
Wincanton plc
Annual Report and Accounts 2017
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NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
The Chairman and Non-executive Directors’ terms of appointment are recorded in letters of appointment. All Directors are subject to re-election every
three years in accordance with the Company’s Articles of Association. However, in line with corporate governance best practice, all Directors currently
put themselves forward for annual re-election at each AGM.
The table sets out the appointment dates and terms for the Non-executive Directors during the year.
Non-executive Director
Steve Marshall
Paul Dean
Stewart Oades
Martin Sawkins
David Radcliffe
Date of appointment
Date of original
Effective date of current
letter of appointment
letter of appointment
14 December 2011 21 November 2011 14 December 2011
21 January 2015
30 October 2014
27 July 2015
27 July 2015
1 February 2015
1 November 2014
27 July 2012
27 July 2012
21 January 2015
30 October 2014
22 June 2012
22 June 2012
Unexpired term1
Expiry of
current term
6 months 21 November 2017
21 January 2018
8 months
30 October 2017
5 months
27 July 2018
14 months
27 July 2018
14 months
1 The unexpired terms are shown as full months from date of this report.
The Non-executive Directors’ letters of appointment are available for inspection by shareholders at the Company’s registered office and will be available
at the 2017 AGM.
EXECUTIVE DIRECTORS’ EXTERNAL APPOINTMENTS
No Executive Director held any external directorships during the year and do not hold any at the date of this report.
PERFORMANCE AND PAY
Set out below is a line graph that shows the TSR performance over an eight year period for both a holding of the Company’s shares and the FTSE
SmallCap. The latter was agreed by the Committee to be the most appropriate comparator as the Company is a constituent of the index.
Wincanton TSR vs. the FTSE SmallCap and the FTSE All-Share xIT over 8 years – Value of £100 invested on 31 March 2009 (£)
400
350
300
250
200
150
100
50
0
Mar
2009
Wincanton
Mar
2010
FTSE AllShare xIT
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2015
Mar
2016
FTSE Small Cap
Mar
2017
Source: KEPLER
An additional chart has been included below to provide context to the vesting of the Company’s 2013 SOP awards in respect of the year ended
31 March 2017, in light of the Company’s strong performance over recent years.
Wincanton TSR vs. the FTSE SmallCap and the FTSE All-Share xIT over 4 years – Value of £100 invested on 31 March 2013 (£)
700
600
500
400
300
200
100
0
Mar
2013
Mar
2014
Mar
2015
Mar
2016
Wincanton
FTSE AllShare xIT
FTSE Small Cap
Mar
2017
Source: KEPLER
The charts above further show TSR for FTSE All-Share excluding investment trusts as this is the comparator group for measuring TSR performance under
the LTIP approved by shareholders in July 2014.
Wincanton plc
Annual Report and Accounts 2017
47
DIRECTORS’ REMUNERATION REPORT
ANNUAL REPORT ON REMUNERATION
CONTINUED
The table below sets out the total remuneration and the amount vesting under Annual Bonus and Long Term Incentive Plans, as a percentage
of the maximum that could have been achieved in each year of the same period as set out in the graph above, for the Chief Executive:
Year ended 31 March
2017
2016
2016
2015
2014
2013
2012
2011
2011
2010
Chief Executive
Adrian Colman
Adrian Colman1
Eric Born1
Eric Born
Eric Born
Eric Born
Eric Born
Eric Born2
Graeme McFaull2
Graeme McFaull
Chief Executive
single figure of total
remuneration
£’000
2,008
1,653
3,750
2,051
1,264
893
710
249
397
655
Annual bonus payout
against maximum
opportunity
73%
61%3
–3
56%4
68%5
69%5
41%5
0%
0%
64%6
Long term incentive
vesting rates against
maximum opportunity
100%13
100%7
100%8
100%9
100%9
100%9,10
100%10
n/a
0%11
9%12
1 Adrian Colman was appointed 1 August 2015. Eric Born resigned on 31 July 2015. These figures contain pro rated remuneration in respect of each Director according to the period served.
2 Eric Born was appointed 14 December 2010. Graeme McFaull resigned on 14 December 2010. These figures contain pro rated remuneration in respect of each Director according to the
period served.
3 The Committee deemed that Eric Born should not receive a bonus in respect of the year ended 31 March 2016. For the purposes of this table the percentage of Adrian Colman’s bonus is the pro-
rated element attributable to the period he served as Chief Executive and not his full year bonus for the year ended 31 March 2016.
4 The maximum opportunity for ‘single figure’ purposes is 200% of salary. The Committee decided the bonus would be paid 100% in cash as the plan ended on 31 March 2015 and no performance
conditions would be applied, therefore it is not defined as a long term incentive.
5 The maximum opportunity for ‘single figure’ purposes is 200% of salary. 50% of bonus is deferred in shares which vest subject to performance and are therefore defined as a long term incentive.
6 The maximum opportunity for ‘single figure’ purposes is 25% of salary. 75% of bonus was deferred in shares which vested subject to performance and are therefore defined as a long term incentive.
7 Awards under the January 2013 SOP award vested in full.
8 Awards under the 2012 SOP award vested in full.
9 Awards under the Company’s EBP vested in full.
10 Awards under the Company’s Deferred Annual Bonus Scheme vested in full.
11 Awards under the Company’s Share Match Incentive Scheme and the Performance Share Plan all lapsed due to performance conditions not being met.
12 Awards under the Company’s Share Match Incentive Scheme and the Executive Share Option Scheme vested in full however the awards under the Executive Share Option Scheme were
‘underwater’ and are excluded from this table.
13 Award under the July 2013 SOP vested in full.
The table below sets out the percentage change in annual cash awarded to the Chief Executive between the year ended 31 March 2016 and the year
ended 31 March 2017, compared to the change in annual cash awarded to a comparator group of employees, as set out below.
Salary
Taxable benefits
Annual variable
31 March 2017
£’000
435
26
478
Chief Executive
31 March 20162
£’000
428
26
2623
Increase/
(decrease)
1.6%
–
82.4%
Average change
for the comparator
group1
1.6%
–
54.0%
1 The Comparator group is an average cost per person for all management level employees.
2 From 1 April to 31 July 2015 Eric Born served as Chief Executive. Adrian Colman was appointed Chief Executive on 1 August 2015. These figures contain pro rated remuneration in respect of each
Director according to the period served for the year ended 31 March 2016.
3 The Chief Executive’s bonus is the pro rated element attributable to the period Adrian Colman served as Chief Executive. The Committee deemed that Eric Born should not receive a bonus in
respect of the year ended 31 March 2016.
The comparator group comprises all management level employees, approximately 300 people. This group was chosen as broadly the same group of
employees that are entitled to participate in the Group’s management bonus scheme and a similar range of taxable benefits, and is consistent with the
group used as comparators for this purpose in previous financial years. Furthermore, a significant proportion of the Group’s employees are on legacy
employment arrangements as a result of having transferred into the business or are entitled to remuneration arrangements determined by customers
rather than the Group.
48
Wincanton plc
Annual Report and Accounts 2017
PAYMENTS MADE IN THE YEAR UNDER REVIEW
Single total figure of remuneration – Executive Directors (audited)
Fixed pay
Salary and fees
Taxable benefits3
Pension related benefits4
Sub total
Bonus5
Long term incentives6
Sub total
Total
Adrian Colman1
31
March
2017
£’000
435
26
96
557
478
973
1,451
2,008
31
March
2016
£’000
389
23
78
490
337
1,024
1,361
1,851
Tim Lawlor2
31
March
2017
£’000
299
16
45
360
277
–
277
637
31
March
2016
£’000
151
9
22
182
112
–
112
294
1 In the year ended 31 March 2016, Adrian Colman served as Group Finance Director from 1 April to 31 July 2015, and as Chief Executive from 1 August 2015 to 31 March 2016. The figures reflect
Adrian Colman’s aggregated remuneration during the year.
2 Tim Lawlor joined the Group from 28 September 2015 as Chief Financial Officer and therefore his remuneration for the year ended 31 March 2016 is prorated for his appointment period.
3 The taxable benefits comprise the gross value of those benefits provided to the Executive Directors, including company car allowance and healthcare. The value of company car allowance
provided during the year ending 31 March 2017 was £25,000 for Adrian Colman and £15,600 for Tim Lawlor.
4 The pension related benefits comprise the amounts contributed to the defined contribution section of the Company’s pension scheme or the salary supplement provided in lieu of such
contributions where the value exceeds the annual allowance set by HMRC.
5 The bonus paid to the Executive Directors in respect of the Annual Bonus award for the years ended 31 March 2016 and 2017 were paid 100% in cash. Further information is detailed on pages 50
to 51.
6 The value of long term incentives for the year ended 31 March 2017 includes awards vesting for performance during the financial year under the legacy 2013 SOP, calculated based on the
embedded gain between the option price and the share price on date of vest. For the July 2013 SOP award the embedded gain was £1.10 per share (based on the share price at date of vesting
of £1.78). Further details can be found on page 51.
Payments to past Directors (audited)
There have been no payments made to past Directors during the year under review.
Payments for loss of office (audited)
There have been no payments for loss of office made during the year under review.
Single total figure of remuneration – Non-executive Directors (audited)
The table below sets out the fees of the Non-executive Directors in the year. During the year, the Chairman received an annual fee of £170,000 and
the Non-executive Directors each received an annual base fee of £45,000. Additional fees of £8,000 were paid to Committee chairmen (excluding
the Nomination Committee, which is chaired by the Company Chairman). The fees will remain unchanged in the year ending 31 March 2018.
Steve Marshall
Paul Dean1
Stewart Oades
David Radcliffe
Martin Sawkins
At 31 March 2017
At 31 March 2016
Fees
£’000
170
45
45
45
45
Committee
Chair fee
£’000
–
8
–
–
8
Total
£’000
170
53
45
45
53
Fees
£’000
170
45
45
45
45
Committee
Chair fee
£’000
–
6
–
–
8
Total
£’000
170
51
45
45
53
1 Appointed as Audit Committee Chairman on 17 July 2015, therefore the fee paid in the year ended 31 March 2016 was prorated.
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Wincanton plc
Annual Report and Accounts 2017
49
DIRECTORS’ REMUNERATION REPORT
ANNUAL REPORT ON REMUNERATION
CONTINUED
EXECUTIVE DIRECTORS’ REMUNERATION
Executive Directors’ salaries
Executive Directors’ salaries are reviewed annually with any change effective from 1 July.
During the year, the Committee awarded a 1.5% increase to the Chief Executive and 1.7% increase to the Chief Financial Officer effective from 1 July
2016, aligned with the average budgeted salary increase across the Group. The salaries of the Executive Directors as at 31 March 2017 and with effect
from 1 July 2017 are set out in the following table and the increases are in line with that for the wider employee population:
Adrian Colman
Tim Lawlor
Salary as at
1 July 2017
£
440,000
305,000
Salary as at
31 March 2017
£
436,450
300,000
Change
0.8%
1.7%
Salary as at
31 March 2016
£
430,000
295,000
Change
1.5%
1.7%
Total pension scheme entitlements (audited)
Adrian Colman and Tim Lawlor are members of a defined contribution section of the Wincanton plc Pension Scheme. During the year the Company
paid an employers’ pension contribution equivalent to 22% of Adrian Colman’s pensionable salary and 15% of Tim Lawlor’s pensionable salary.
Where the individual’s pension exceeded the HMRC annual allowance in the 2016/17 tax year, the excess was paid in the form of a taxable cash
payment. Executive Director pension arrangements for year ended 31 March 2018 will be consistent with this approach.
Employment benefits
Executive Directors’ employment benefits for the year ended 31 March 2017 were provided on the same basis as for the previous incumbent of the role
in the prior financial year, and will continue to be provided in the next financial year.
The Senior Management Annual Bonus Plan for the year ending 31 March 2017 (audited)
The Senior Management Annual Bonus Plan came into effect on 1 April 2015. The Annual Bonus is normally paid in cash, however if the share
ownership guideline is yet to be achieved, any bonus earned above 100% of salary must be used by the Executive Director to purchase Wincanton
shares until the share ownership guideline is achieved. The performance conditions for the year ended 31 March 2017 were 60% weighted on Group
financial performance (underlying operating profit) and 40% weighted on performance against personal objectives. Of the personal objective
proportion, half was weighted on financial and half weighted on non-financial objectives.
The Senior Management Annual Bonus Plan performance for the year ended 31 March 2017 (audited)
Both Executive Directors were eligible for an Annual Bonus award for the year ended 31 March 2017. The maximum bonus opportunity for the year
ended 31 March 2017 for Adrian Colman was 150% of salary and for Tim Lawlor was 120% of salary.
The Annual Bonus award for the year ended 31 March 2017 was determined by the level of satisfaction of the performance conditions and of the
financial and personal objectives, as set out below.
Annual Bonus awarded based on underlying operating profit performance target for the year ended 31 March 2017
Operating profit performance
Bonus opportunity on the underlying operating profit element
Threshold
£48.7m
8%
Target
£51.0m
50%
Maximum
£53.6m
100%
Actual
£52.1m
71.6%
ABP awarded based on achievement of personal objectives for the year ended 31 March 2017
The personal financial objectives for Adrian Colman and Tim Lawlor for the year ended 31 March 2017 included: repaying and refinancing the Group’s
bank debt; working with the Pension Trustee to strengthen the pension deficit reduction strategies; development of the dividend model and policy;
delivery of Group financial performance at or above market consensus; and growth of revenue through annualised sale wins above prior year revenue.
The personal non-financial objectives for Adrian Colman and Tim Lawlor for the year ended 31 March 2017 included: talent strengthening and structural
changes; refocus of sales and marketing strategies and functions; implementation and delivery of the strategy (set out on page 14); greater engagement
with largest customers; operational improvement targets to support the strategy and growth in propositioning and innovation; continue to improve
health and safety performance; and complete the IS infrastructure programme.
The Committee considered the performance of both Executive Directors, and reviewed the level of achievement against each of their respective
objectives summarised above. Debt repayments had been made as planned and the refinancing had been completed to October 2021 at lower rates,
avoiding renewal during the Brexit negotiation timetable. A new investment strategy has been agreed and implemented in respect of the Pension
Fund aimed at minimising the financial impact of political uncertainty impacting the pension deficit, the dividend policy has been communicated
and well received by shareholders and dividends had resumed. The Group’s financial performance for the year had exceeded target and market
consensus. Annualised sales targets were just short of the numerical target but were supported with a strong pipeline and pre-pipeline for the current
and next financial years at the in year target levels set. People changes and the talent strengthening programme had been completed without business
disruption with appointments of a new Managing Director of Industrial & Transport, a new Business & Optimisation Director, Group HR Director and
Chief Marketing Officer. Delivery of the strategy has been implemented and has started to deliver the objectives intended, as detailed in the Chief
Executive’s statement on pages 16 to 19. Health and safety performance has been strong with LTIFR reduced from 0.71 to 0.68, and the IS infrastructure
programme has been completed, both mitigating principal areas of risk to the Group. Following due consideration of the evidence to support
achievement of each of the objectives, together with their overall annual performance review, the Committee concluded that both of the Executive
Directors had performed strongly in all areas of their financial and non-financial bonus objectives which had directly resulted in a strong Group
performance and a Group well positioned for growth and the future, to the benefit of all of its stakeholders.
50
Wincanton plc
Annual Report and Accounts 2017
The table below sets out the awards of bonuses for the achievement of personal objectives for the year ended 31 March 2017 determined
by the Committee:
Bonus level percentage of personal objective element (% of maximum)
Adrian Colman
Tim Lawlor
72.9%
76.9%
Following consideration of the above, the Committee awarded an annual bonus equivalent to £477,528 (being 109.4% of salary) to Adrian Colman and
£276,988 (being 92.3% of salary) to Tim Lawlor, based on their salary at the end of the year ended 31 March 2017.
Long term incentives – Special Option Plan (audited)
The SOP is the Company’s LTIP put in place under the previous remuneration policy, which ended on 31 March 2015. SOP awards were made as market
priced options, which meant that the Executive Directors would only realise value to the extent that the options vested, following satisfaction of the
performance conditions and if the share price had increased above the option price. The 2014 SOP options due to vest in July 2017 and December 2017
are the last awards made under this Plan.
Performance targets
Threshold vesting (25% of maximum) under the SOP requires average TSR growth to exceed 10% per annum. Full vesting would be achieved for
average TSR growth of 22% per annum during the three year period from date of award, with straight-line vesting between points. There is also an EPS
underpin which requires no reduction to the underlying EPS at any point during the relevant three year period. If EPS reduces at any point during the
relevant three year period, the relevant awards would lapse in full regardless of TSR growth. These performance conditions apply to all SOP awards.
Awards vesting in the year ended 31 March 2017 (audited)
The awards made under the July 2013 SOP awards all vested in full during the year ended 31 March 2017, as set out below:
Adrian Colman
Date of
award
12 July 2013²
Vest
date
12 July 2016
Option
exercise price1
£0.677
No. of
SOP awards
granted
886,262
No. of
SOP awards vesting
for performance
886,262³
No. of vested
SOP awards
exercised during
the year
–
No. of options
held under vested
SOP award
at 31 March 2017
886,262
1 The option price is calculated using the three day average share price immediately preceding the date of award.
2 For the award made on 12 July 2013, average annual TSR growth was 54% (maximum vesting at 22%) and EPS did not reduce over the three year period, therefore the awards vested in full.
3 The value of these awards for the purpose of the single figure is based on embedded gain, calculated as the difference between option price of 68p per share and the share price at date of vest.
LTIP for the year ended 31 March 2017 (audited)
From 1 April 2015 the new LTIP, approved by the Company’s shareholders at the AGM on 16 July 2014, came into force. During the year, LTIP awards were
made in accordance with the LTIP rules and the Directors’ Remuneration Policy (approved at the 2014 AGM) on 21 July 2016 and 14 November 2016.
Performance targets
Performance metrics for the 2016 LTIP award were consistent with the performance metrics applied to the 2015 LTIP awards. The two metrics are
TSR and EPS, weighted 60% on basic underlying EPS and 40% on TSR relative to the FTSE All-Share Index (excluding investment trusts). The threshold
(entry point) for 25% vesting of the TSR element requires the Company’s TSR to be equal to the TSR of the Index itself and 100% vesting requires the
Company’s TSR to be equivalent to the upper quartile of the Index which is calibrated as Index + 10% per annum (ie 33% outperformance of the Index
over the three year term of the award). EPS is measured on a point-to-point basis over the three year period in aggregate, with 25% of the EPS element
vesting at the threshold (entry point) of 6% growth per annum and 100% vesting for 11% growth per annum. There is straight-line vesting between
threshold and maximum. Both performance measures are measured over three financial years.
Awards made in the year ended 31 March 2017 (audited)
LTIP awards to the Executive Directors during the year are set out below, based on 100% of salary for both the Chief Executive and Chief Financial
Officer. The EPS and TSR performance period for the 21 July 2016 awards is 1 April 2016 to 31 March 2019.
Adrian Colman
Tim Lawlor
Date of
award
21 July 2016
21 July 2016
Vest
date
21 July 2019
21 July 2019
Option
exercise price1
Nil
Nil
No. of
nil cost options
granted
under the LTIP
246,582
169,492
Face value of award
(£)2
436,450
300,000
1 The LTIP options are awarded on a nil cost basis.
2 The award is calculated with reference to annual salary and the three day average share price immediately preceding the date of award of £1.77.
Operation of the Annual Bonus Plan and LTIP in the year ended 31 March 2018
The Group intends to operate each remuneration element in the year ended 31 March 2018, including the ABP and LTIP and their respective performance
conditions and opportunities, in broadly the same way as in the year ended 31 March 2017. For 2018, the annual bonus is based 60% on Group profit
before tax, and 40% on performance against personal objectives (of which half is weighted on financial and half weighted on non-financial targets).
The Committee considers it commercially sensitive to disclose annual bonus targets prospectively and will provide disclosure of these in the Directors’
Remuneration Report for the year ended 31 March 2018. The Committee expects performance metrics for the 2017 LTIP award will be consistent with
the performance metrics applied to the 2016 LTIP awards, and be based 60% on basic underlying EPS and 40% on TSR relative to the FTSE All-Share Index
(excluding investment trusts). The threshold (entry point) for 25% vesting of the TSR element requires the Company’s TSR to be equal to the TSR of the
Index itself and 100% vesting requires the Company’s TSR to be equivalent to the upper quartile of the Index which is calibrated as Index + 10% per
annum (i.e. 33% outperformance of the Index over the three year term of the award). EPS is measured on a point-to-point basis over the three year period
in aggregate, with 25% of the EPS element vesting at the threshold (entry point) of 6% growth per annum and 100% vesting for 11% growth per annum.
There is straight-line vesting between threshold and maximum. Both performance measures are measured over three financial years.
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Wincanton plc
Annual Report and Accounts 2017
51
DIRECTORS’ REMUNERATION REPORT
ANNUAL REPORT ON REMUNERATION
CONTINUED
SHARE OWNERSHIP
Total share interests at 31 March 2017 (audited)
Director
Adrian Colman
Tim Lawlor
Steve Marshall
Martin Sawkins
David Radcliffe
Paul Dean
Stewart Oades
Shares
Nil cost options
Options
Unvested
and subject
to continued
employment
–
–
–
–
–
–
–
Owned/vested
150,565
–
20,000
9,790
25,000
10,000
19,367
Vested but
unexercised
–
–
–
–
–
–
–
Unvested and
subject to
performance
475,427
312,004
–
–
–
–
–
Vested but
unexercised
1,945,584
–
–
–
–
–
–
Unvested and
subject to
performance
446,715
–
–
–
–
–
–
Share ownership policy
Employee share ownership is a key part of the Directors’ Remuneration Policy and is designed to help maintain long term commitment through
accountability and business understanding, and provide the opportunity to benefit from growth in Group value as shareholders. Adrian Colman
is required to build and maintain a shareholding level of 300% of salary, which he met during the year ended 31 March 2016.
Tim Lawlor joined the Company on 28 September 2015 and has not met the minimum shareholding guideline of 150% of salary that applies to new
Executive Directors under the Directors’ Remuneration Policy during the year. In accordance with the Directors’ Remuneration Policy effective from
1 April 2015, Tim Lawlor is expected to purchase shares with any bonus above 100% of salary until the shareholding guideline is achieved.
Executive Directors’ share interests as at 31 March 2017 (audited)
Adrian Colman
Tim Lawlor
Partnership Shares held under the SIP
Unrestricted shares held
Total shares held
31 March 2017
–
–
31 March 2016
–
–
31 March 2017
150,565
–
31 March 2016
41,500
–
31 March 2017
150,565
–
31 March 2016
41,500
–
There were no changes in the Directors’ personal holdings between 1 April 2017 and the date of this report.
SHARE PLAN INTERESTS
Adrian Colman
EBP Deferred shares
EBP Deferred shares
SOP
SOP
SOP
LTIP
LTIP
Tim Lawlor
LTIP
LTIP
Date of award
Vest date
12 July 20133,4
11 July 20145
29 January 2013
12 July 2013
11 July 2014
16 July 2015
21 July 2016
12 July 2014 –
12 July 2015
11 July 2015
29 January 2016
12 July 2016
11 July 2017
16 July 2018
21 July 2019
28 September 2015
21 July 2016
28 September 2018
21 July 2019
No. of
shares under
award as at
1 April 2016
Option
exercise
price1
Share price
at date
of award2
Shares
awarded
during the
year
No. of shares
lapsed
during
the year
No. of shares
exercised
during
the year
No. of
shares under
award at
31 March 2017
78,986
Nil
£0.66
–
126,798
1,059,322
886,262
446,715
228,845
–
2,826,928
142,512
–
142,512
Nil
£0.71
£0.68
£1.37
Nil
Nil
£1.40
£0.708
£0.66
£1.40
£1.88
£1.77
Nil
Nil
£2.07
£1.77
–
–
–
–
–
246,582
246,582
–
169,492
169,492
–
–
–
–
–
–
–
–
–
–
–
(78,986)
–
(126,798)
–
– 1,059,322
886,262
–
446,715
–
228,845
–
246,582
–
(205,784) 2,867,726
–
–
–
142,512
169,492
312,004
1 The option price is calculated using the three day average share price immediately preceding the date of award where relevant.
2 The Mid Market Quotation (MMQ) share price on the date of award.
3 The award was made with reference to the 30 calendar day average of the Company’s MMQ ending on 31 March 2013, which was £0.54.
4 Adrian Colman was appointed on 7 January 2013. As a result the bonus award was pro rated based on his length of service.
5 The award was made with reference to the 30 calendar day average of the Company’s MMQ ending on 31 March 2014, which was £1.28.
52
Wincanton plc
Annual Report and Accounts 2017
Non-executive Directors’ share interests as at 31 March 2017 (audited)
Steve Marshall
Paul Dean
Stewart Oades
David Radcliffe
Martin Sawkins
Opening
20,000
10,000
19,367
25,000
9,532
Purchased
–
–
–
–
258
Disposed
–
–
–
–
–
Closing
20,000
10,000
19,367
25,000
9,790
There were no changes in the Non-executive Directors’ personal holdings between 1 April 2017 and the date of this report.
Dilution limits
All share/option awards are made under plans that incorporate dilution limits consistent with the guidelines provided by the Investment Association.
These limits are 10% in any rolling 10 year period for all share plans and 5% in any rolling 10 year period for executive share plans and are in relation
to new issue shares. Estimated dilution from existing awards made over the last 10 years up to 31 March 2017 is as follows:
All employee share plans
Executive share plans
Actual
2.80%
2.30%
Limit
10%
5%
STAKEHOLDER ENGAGEMENT AND CONSULTATION
The Committee recognise the importance of engaging with stakeholders in relation to the design of executive remuneration, the creation of
a Directors’ Remuneration Policy, compliance with remuneration regulations that came into force in 2014 and continued best practice development.
During the year, at the Company’s 2016 AGM on 21 July 2016, the advisory resolution for approval of the Annual Report on Remuneration received the
following votes:
Votes for
84,495,711
%
99.3
Votes against
556,168
%
0.7
Total votes
85,051,879
% of ISC voted1
68.7
Votes withheld
36,231
1 The Issued Share Capital (ISC) of the Company as at the date of the Company’s 2016 AGM was 123,747,293 Ordinary Shares of 10p each.
At the Company’s 2014 AGM, the binding resolution for approval of the Remuneration Policy received the following votes:
Votes for
75,276,577
%
96.8
Votes against
2,456,358
%
3.2
Total votes
77,732, 935
% of ISC voted1
63.8
Votes withheld
1,345,734
1 The Issued Share Capital (ISC) of the Company as at the date of the Company’s 2014 AGM was 121,747,293 Ordinary Shares of 10p each.
Relative importance of spend on pay
The following table is intended to assist in understanding the relative importance of the remuneration in the context of the Group’s financial position
more generally.
Item
Remuneration of all employees1
Dividend or share buyback
1 This includes all personnel expenses, including Executive Directors, as set out in Note 4 to the consolidated financial statements.
2017
£m
525.8
11.2
2016
£m
526.6
6.7
Difference
£m
(0.8)
4.5
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Wincanton plc
Annual Report and Accounts 2017
53
DIRECTORS’ REMUNERATION REPORT
DIRECTORS’ REMUNERATION POLICY
The Committee regularly reviews the Directors’ Remuneration Policy
to ensure it supports shareholder interests and closely reflects business
strategy. When setting the Directors’ Remuneration Policy, the
Committee considers the following:
• business strategy;
• total remuneration levels operating in companies of a similar size and
complexity such as:
– revenue and scale of operation;
– number of employees;
– market capitalisation and enterprise value;
– customer base; and
– geographic reach;
• the responsibilities of each individual role;
• individual performance; and
• each individual’s experience.
DIRECTORS’ REMUNERATION POLICY
Following a thorough and comprehensive review, we believe that our
Remuneration Policy continues to be appropriate, and are therefore
proposing the Policy remains broadly unchanged. In recognition of
emerging best practice, we have updated our Policy to reduce the
pension contribution for new Executive Director appointments to 15% of
salary, to be in line with pension arrangements for other senior managers.
The Committee has also reviewed the flexibility under the Policy for the
Annual Bonus and Long Term Incentive Plan, in line with market practice,
in order that the Committee can review performance measures and
weightings ahead of each award to ensure they reinforce the business
strategy. The policy will be proposed to shareholders at the 2017 AGM for
approval, with the intention that it will become effective from 1 July 2017,
if approved.
Executive Directors
Salary
Purpose and link
to strategy
Operation
Salaries are set at a sufficient level to recruit and retain individuals of the necessary quality to deliver the Group’s strategy.
Base salaries are normally reviewed annually, with changes effective 1 July.
Salaries are typically set after considering:
• the responsibilities of each individual role;
• progression within role;
• individual performance;
• an individual’s experience; and
• salary levels in companies of a similar size and complexity.
Salaries may be adjusted and any increase will ordinarily be (in percentage of salary terms) in line with those
of the wider workforce.
Increases beyond those granted to the wider workforce may be awarded in certain circumstances such as:
• where there is a change in responsibility;
• progression in the role;
• material market misalignment; or
• a significant increase in the scale of the role and/or size, value and/or complexity of the Group.
Benefits
Purpose and link
to strategy
Operation
Opportunity
Where increases are awarded in excess of the wider employee population, the Committee will provide an explanation
in the relevant Annual Report on Remuneration.
The Group provides the appropriate benefits for Executive Directors in a business of this size in order to recruit and retain
individuals of the necessary quality to deliver the Group’s strategy.
Benefits include but are not limited to:
• Company car or car allowance;
• Private medical insurance for the Executive Director and their direct family;
• Personal accident and travel insurance; and
• Death in service cover.
In addition, relocation assistance is available on a case by case basis. Assistance may include, but is not limited to, facilitating
and/or meeting the costs of removal and other relocation costs, children’s education, a limited amount of family travel and tax
equalisation arrangements and may extend to facilitating and/or meeting the costs of re-establishing them to their previous
location at the end of the employment or assignment.
Benefits vary by role and individual circumstance and eligibility is reviewed periodically. Benefits are not anticipated to exceed
10% of salary per annum over the period for which this policy applies. The Committee retains the discretion to approve a
higher cost in exceptional circumstances (e.g. relocation) or in circumstances where factors outside of the Group’s control
have materially changed (eg costs of medical premiums). If this occurs, the Committee will provide details and rationale
in the relevant Annual Report on Remuneration.
54
Wincanton plc
Annual Report and Accounts 2017
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All employee share plans
Purpose and link
to strategy
Operation of all
employee share plans
Opportunity
Pension
Purpose and link
to strategy
Operation of pension
arrangements
Opportunity
Annual Bonus
Purpose and link
to strategy
Operation
Opportunity
Performance measure
Recovery provisions
The Company encourages voluntary participation in share ownership throughout the Group where share plans are
appropriate.
Under the current all employee share plan arrangements, Executive Directors are entitled to participate in the Company’s
Share Incentive Plan (SIP).
Participants make monthly contributions from their gross salary to buy Partnership Shares. The Company currently awards one
Matching Share for every four Partnership Shares acquired. In addition, any dividends paid in respect of shares held under the
SIP are used to buy Dividend Shares.
In line with HMRC limits, the rules of the Company’s SIP set out the following maximum levels, which may be amended from
time to time so that they are in line with legislation:
Free Shares – The maximum value of Free Shares per tax year is £3,600.
Partnership Shares bought by employees – The maximum pre-tax salary that can be used to buy Partnership Shares is £1,800
per annum.
Matching Shares – The Company can match employees’ Partnership Share purchases by giving them additional shares.
The maximum award of Matching Shares is two Matching Shares for each Partnership Share bought. The Company currently
awards one Matching Share for every four Partnership Shares bought.
The Group provides the appropriate pension provision for Executive Directors in a business of this size in order to recruit and
retain individuals of the necessary quality to deliver the Group’s strategy.
Executive Directors are entitled to join the defined contribution section of the Wincanton plc Pension Scheme. In certain
circumstances, for example where the annual allowance level set by HMRC is exceeded, the pension provision will be in the
form of a taxable cash supplement.
Up to 22% of pensionable salary for existing Directors, reducing to 15% of pensionable salary for appointments of Executive
Directors from 1 July 2017.
The aim of the annual bonus is to incentivise and recognise the Executive Directors annual contribution to the delivery of the
Group’s strategy by rewarding performance against stretching financial and personal objectives; and reinforce achievement
of the shareholding requirement.
Performance is measured over each financial year. Performance measure weightings and individual objectives are reviewed
prior to the start of the financial year to ensure they remain appropriate and reinforce the business strategy. Performance
targets are set annually to ensure they are appropriately stretching and reflect those strategic objectives. At the end of the
year, the Committee determines the extent to which these targets were achieved.
The annual bonus is normally settled in cash. However, if the share ownership guideline is yet to be achieved, any annual
bonus earned above 100% of salary must be used by the Executive Director to purchase Wincanton shares until the share
ownership guideline is achieved. All bonus awards are at the discretion of the Committee.
An Executive Director’s annual bonus cannot exceed 150% of salary.
A bonus of up to 25% of maximum is payable for ‘Threshold’ performance, 50% of maximum for ‘Target’ performance and
up to 100% of the bonus is earned for ‘Maximum’ performance, with straight-line vesting in between.
Annual performance is typically based on achievement of profit targets and personal objectives.
Normally, the Committee would expect the profit element to have a minimum weighting of 60% and a maximum weighting
of 80%, and achievement of personal objectives to have a minimum weighting of 20% and a maximum weighting of 40%.
However, it retains discretion to adjust weightings to align with the business plan for each year.
In exceptional circumstances, the Committee have the ability to exercise discretion to override the formulaic bonus outcome
within the limits of the plan where it believes the outcome is not truly reflective of performance and to ensure fairness to both
shareholders and participants.
Clawback and malus provisions exist in respect of misstatements and misconduct.
Wincanton plc
Annual Report and Accounts 2017
55
DIRECTORS’ REMUNERATION REPORT
DIRECTORS’ REMUNERATION POLICY
CONTINUED
Long term incentives
Purpose and link
to strategy
Operation
Opportunity
The aim of the long term incentive is to incentivise and recognise the performance of Executive Directors in respect of their
contribution to the delivery of the Group’s strategy over the longer term by rewarding strong financial performance and
sustained increase in shareholder value.
Performance is measured over a period of no less than three years.
The Committee reviews the performance measure weightings ahead of each award to ensure alignment with Wincanton’s
strategy and has discretion to adjust weightings to ensure alignment to that strategy. Performance targets are reviewed ahead
of each performance period and the Committee has discretion to adjust targets to ensure they remain appropriate and
stretching. Targets are set having regard to a number of internal and external reference points.
Awards may be granted as nil cost options or conditional share awards. Dividends or dividend equivalents may accrue
on LTIP awards and be paid in shares or cash on those shares which vest.
Maximum award levels for Executive Directors are 100% of salary. In exceptional circumstances, for example on recruitment,
individual awards may be granted up to 250% of salary.
Up to 25% of an award vests for ‘Threshold’ performance and 100% of an award vests for ‘Maximum’ performance.
Performance measures Performance measures for 2017 awards will be TSR relative to an appropriate comparator group and EPS growth, weighted
40% and 60% respectively. The Committee will review the performance measures, their weightings and performance targets
in advance of each award to ensure alignment with strategy.
In exceptional circumstances, the Committee has the ability to exercise discretion to override the formulaic performance
outcome downwards to ensure alignment of pay with the underlying performance of the business during the performance
period.
Clawback and malus provisions exist in respect of vested and unvested awards in circumstances of misstatement
and misconduct.
Recovery provisions
Shareholding guidelines
Purpose and link
to strategy
Operation
Non-executive Directors
Purpose and link to
strategy
Operation
Opportunity
Shareholding guidelines ensure alignment between Executive Directors and shareholders.
Shareholding guidelines are for any new Executive Director to accrue and then maintain a holding of shares with a value
of 150% of their salary as assessed by the Committee from time to time. For Executive Directors in place before 1 April 2015,
the shareholding guideline is 300% of salary. Any bonus achieved in excess of 100% of salary will be required to be used
to purchase shares until the shareholding guideline is met.
The Company seeks to attract and retain a high calibre Chairman and Non-executive Directors by offering market competitive
fee levels.
On the appointment of a new Chairman or Non-executive Director, the fees will be set taking into account the experience
and calibre of the individual.
Neither the Chairman nor the Non-executive Directors participate in any of the Company’s short or long term incentive
arrangements, nor do they receive benefits or pension provision. They are however, reimbursed for reasonable costs incurred
in carrying out their role.
The Chairman receives an annual fee. The Non-executive Directors receive an annual base fee and additional fees are paid
to reflect additional responsibilities, such as chairing a Board Committee.
The Chairman and Non-executive Directors receive their annual fee paid in monthly instalments. The fee of the Chairman is
set by the Committee and the fees of the Non-executive Directors are approved by the Board, on the recommendation of the
Chairman and Chief Executive.
Fee levels are reviewed on a periodic basis, and may be increased taking into account factors such as the time commitment
of the role and market levels in companies of a similar size and complexity. Fees for the Chairman and Non-executive Directors
will not exceed the limit as set out in the Company’s Articles of Association (£500,000 in aggregate as at the date of this report).
56
Wincanton plc
Annual Report and Accounts 2017
NOTES TO THE DIRECTORS’ REMUNERATION POLICY
These notes are intended to provide guidance on the Directors’
Remuneration Policy to aid understanding of its practical application
and are reviewed annually. No change to the explanations represent
a change to the Directors’ Remuneration Policy.
Incentives
For the Annual Bonus, the profit performance reflects the basis on which
the Group is managed: sustained profit performance improvement
should enable the Group to improve its balance sheet to maintain a
sound financial position and secure the long term success of the Group
for the benefit of all of its stakeholders.
For the Long Term Incentive, the Committee believes EPS provides a
good line of sight for Executive Directors, and that relative TSR aligns
Executive Director remuneration with shareholder interests and takes
into account the impact of external environment changes on Company
performance. Ahead of each performance cycle, the Committee may
review and adjust the TSR comparator group for future cycles to ensure
relevance to Wincanton. The Committee may adjust the TSR comparator
group of outstanding cycles in the event that a TSR comparator ceases
to exist, de-lists or is acquired or the Committee deems it to be no longer
a suitable comparator.
The performance measures applying to awards are reviewed ahead of
each award to ensure they continue to support shareholders’ interests
and are appropriately aligned to Wincanton’s long-term strategy.
When setting performance targets for short and long term incentives, the
Committee considers a range of internal and external reference points:
such as the Company’s strategic plan, consensus market forecasts, past
Company performance and the performance ranges for comparator
companies. The Committee then sets incentive targets that are stretching
and achievable.
By measuring the personal performance of an Executive Director,
the Committee is able to monitor performance against other key
strategic objectives.
Incentive Plan discretions
The Committee operates the Company’s incentive plans according to
their respective rules and Remuneration Policy, and in accordance with
the Listing Rules and HMRC rules where relevant.
In line with common market practice, the Committee retains discretion
as to the operation and administration of these incentive plans, including
with respect to:
• who participates;
• the timing of grant and/or payment;
• the size of an award and/or payment (within the plan limits approved
by shareholders);
• the manner in which awards are settled;
• the choice of (and adjustment of) performance measures and targets
in accordance with the Remuneration Policy set out above and the
plan rules;
• in exceptional circumstances, amendment of any performance
conditions applying to an award – provided the new performance
conditions are considered fair and reasonable, and are neither materially
more nor materially less challenging than the original performance
targets when set;
• discretion relating to the measurement of performance in the event
of a variation of share capital, change of control, special dividend,
distribution or any other corporate event which may affect the current
or future value of an award;
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• determination of a good leaver (in addition to any specified categories)
for incentive-plan purposes, based on the plan rules and the
appropriate treatment under the plan rules; and
• adjustments required in certain circumstances (eg rights issues, share
buybacks, special dividends, other corporate events, etc.).
Any use of the above discretions would, where relevant, be explained
in the Annual Report on Remuneration. As appropriate, it might also
be the subject of consultation with the Company’s major shareholders.
Minor changes
The Committee may make minor amendments to the Policy set out
above (for regulatory, exchange control, tax or administrative purposes
or to take account of a change in legislation) without requiring prior
shareholder approval for that amendment.
Payments from existing awards
Any commitment made prior to, but due to be fulfilled after 1 July 2017
(being the date on which the Policy will become effective, subject to
shareholder approval) will be honoured. Such commitments include:
• Legacy SOP awards granted under the remuneration policy which
expired on 31 March 2015. These legacy SOP awards will continue
until they vest or expire, subject to achieving stretching performance
conditions. During the year, the July 2013 SOP awards vested, and
the 2014 SOP awards for Adrian Colman are due to vest subject
to achievement of performance conditions in July 2017. After July
2017, there will be no remaining unvested executive remuneration
arrangements from this legacy remuneration policy. Further details of
bonus payments and share awards made during the year are disclosed
in this report on pages 49 to 52.
• 2015 and 2016 LTIP awards granted under the Remuneration Policy
approved by shareholders at the 2014 AGM, vesting after three years
based on EPS and TSR performance conditions. Further details of these
awards can be found on page 52.
Differences between the Remuneration Policy for Executive
Directors and employees generally
Pay mix – The Directors’ Remuneration Policy is more heavily weighted
towards variable pay than for other employees, to make a greater part
of their pay conditional on the delivery of the Company’s strategy and
performance. Wincanton’s approach to salary reviews is consistent across
the Group.
Bonus – The eligibility to participate and receive a bonus, and the level of
bonus available, is dependent on the role and level of seniority within the
business and Group structure. During the year, the Company operated
two bonus schemes for senior talent, the Annual Bonus Plan (ABP) for
executive management and a General Management Bonus Scheme.
In addition, some employees are eligible for a bonus depending on the
customer contract on which they work and for new business won under
a new Super Sales Bonus Scheme.
Long term incentives – Up to 30 senior managers in the Group, such
as the Executive Directors and other senior employees with key skills
and experience or that perform key roles which significantly drive value
in the Group, are annually awarded LTIPs. Such awards are intended
to encourage sustainable long term value generation and align senior
employees’ interests with our shareholders.
Pensions – All employees, including the Executive Directors, are eligible
to become members of one of the defined contribution sections of
the Wincanton plc Pension Scheme. The level of employers’ pension
contribution for employees is determined by their level of seniority
and/or age. The Remuneration Committee were keen to ensure the
maximum pension employer contribution was aligned between the
Executive Directors and the senior management population, being the
highest maximum level of employer pension contribution, and therefore
Wincanton plc
Annual Report and Accounts 2017
57
DIRECTORS’ REMUNERATION REPORT
DIRECTORS’ REMUNERATION POLICY
CONTINUED
reduced the maximum contribution for new Executive Directors to
the same level as senior management in the proposed Directors’
Remuneration Policy intended to become effective on 1 July 2017,
subject to shareholder approval.
Share Incentive Plan – The Company operates a tax-advantaged SIP
and actively promotes SIP participation to all employees to align their
interests to delivery of Group strategy and performance by providing
the opportunity to become shareholders in order to share in the Group’s
growth and success. Within the SIP all participants are currently eligible
to receive one matched share for every four shares purchased.
Employment conditions elsewhere in the Group
When making remuneration decisions, to ensure there is a fair and
consistent approach to remuneration, the Committee considers pay
and employment conditions across the Group, such as determination of
salary increases to Executive Directors with reference to the range of base
pay increases within the Group. The Committee also reviews base salaries,
pension provision, annual bonuses and LTIP awards for the EMT.
The Committee does not formally consult with employees on a routine
basis but does so if any significant changes to Group remuneration and
employment policies are proposed. The Committee receives information
on the annual base salary reviews across the Group and the annual bonus
and LTIP awards made to employees that report into the EMT and below.
The Committee members, as Directors, receive the annual employee
consultation results which are presented to the Board.
Consideration of shareholders’ views
The Committee considers best practice developments and publications
from institutional investors and shareholder bodies as well as any
shareholder views expressed during dialogue. The Committee is
committed to maintaining an open and consultative dialogue with
Company shareholders and shareholder bodies and intends to consult
extensively when reviewing or making substantive changes to the
Directors’ Remuneration Policy. During the year, the Remuneration
Committee wrote to its largest shareholders and selected shareholder
bodies in February 2017 to seek engagement on the largely unaltered
Directors Remuneration Policy, ahead of its presentation to shareholders
for a binding vote at the 2017 AGM in June. There were no material
comments and feedback was positive.
Remuneration on recruitment of an Executive Director
When making an appointment of a new Director, including by way
of internal promotion, remuneration packages and fees are set in
accordance with the Directors’ Remuneration Policy.
To determine the appropriate remuneration for a new Executive Director,
the Committee will consider relevant factors such as: the experience
and calibre of the individual, the quantum/nature of remuneration,
the jurisdiction from which the candidate was recruited, the role
requirements, and the market benchmark. Initial salaries may be set
below market rate and consideration given to phasing any increases over
two or three years subject to development in the role. Normal variable
pay will be subject to the maximums set out in the tables within the
Directors’ Remuneration Policy on pages 54 to 59.
The Committee may consider it is appropriate to grant one off awards
to compensate new Executive Directors in respect of incentive
arrangements forfeited when leaving a former employer. In doing so,
the Committee would consider relevant factors, including: the structure
of the awards forfeited; the strength of the performance conditions
attached to those awards; and the likelihood of those conditions
being met. To the extent that it is not possible or practical to provide
compensation within the terms of the Company’s existing incentive
plans, a bespoke arrangement could be created in accordance with
the discretion permitted to the Committee under the Listing Rules.
58
Wincanton plc
Annual Report and Accounts 2017
Compensation for forfeited awards would only be considered on a
matching fair value basis. When the Company announces an Executive
Director appointment, if applicable, it will provide an explanation of the
reasons for a compensation award being granted, and a breakdown of
that payment.
In the case of an internal promotion, any outstanding variable pay
awarded in relation to the previous role will be continued on the
original terms.
Executive Directors’ service contracts
All Executive Directors are appointed on the basis of a 12 month rolling
period in accordance with the Companies Act 2006, subject to election
and annual re-election by the Company’s shareholders at the AGM.
Under the Executive Directors’ service contracts, the Company is required
to give 12 months’ notice and the Executive Director six months’ notice
of termination.
Payments on termination and change of control
If notice is served by either party, the Executive Director can continue
to receive basic salary, taxable benefits and pension provision for the
duration of their notice period during which time the Company may
require the individual to continue to fulfil their current duties or may
assign a period of ‘garden leave’. The Committee will take account of
an Executive Director’s duty to mitigate their loss. There are no other
arrangements in place between the Company and its Directors that
provide for remuneration for loss of office following a change of control
of the Company.
In addition to the contractual provisions regarding payment on
termination, the Group’s incentive plans and share schemes contain
provisions for termination of employment, based on ‘good leaver’ and
‘bad leaver’ treatment. Good leavers are typically defined as participants
who leave early on account of injury, disability or ill health, death, a sale
of their employer or business in which they were employed, statutory
redundancy, retirement, or any other reason at the discretion of the
Committee. Bad leavers are employees that leave for any other reason.
In circumstances of termination on notice the Committee will determine
an equitable remuneration package, having regard to the particular
circumstances of the case.
For good leavers, payment of an annual bonus is normally tested on full
financial year performance and the amount payable is then pro rated
for the period worked by the Executive Director in the financial year.
There is no provision for an amount in lieu of bonus to be payable for any
part of the notice period not worked, with Committee discretion to treat
otherwise. Bad leavers lose any right to the annual bonus.
A good leaver would not forfeit long term incentive awards on cessation
of employment. The awards would continue to be held by the good
leaver until vest, on the normal vesting date or earlier at the discretion of
the Committee, subject to satisfaction of the performance conditions
of the award. Awards would be adjusted pro rata for the amount of
vesting period worked by the Executive Director, unless the Committee
determines otherwise. Bad leavers would forfeit all unvested long term
incentive awards held.
If employment is terminated by the Company, the departing Executive
Director may have a legal entitlement (under statute or otherwise)
to additional amounts which would need to be met, for example
in a redundancy situation. In addition, the Committee retains discretion
to settle any other amounts reasonably due to the Executive Director,
for example to meet the legal fees incurred by the Executive Director
in connection with the termination of employment, where the Company
wishes to enter into a settlement agreement (as provided for below)
and the individual must seek independent legal advice.
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In certain circumstances, the Committee may approve new contractual
arrangements with departing Executive Directors including, but not
limited to, settlement, confidentiality, restrictive covenants and/or
consultancy arrangements. These are intended to be used in exceptional
circumstances and only would be entered into where the Committee
believed that it was in the best interests of the Company and its
shareholders to do so.
In the event of a change of control, all unvested awards under the
long term incentive arrangements would vest to the extent that any
performance conditions attached to the relevant awards have been
achieved. The awards would, unless the Committee determines
otherwise, be pro rated for the amount of time worked by the Executive
Director prior to the change of control. Alternatively, unvested long
term incentive arrangements may not vest on a change of control
and may be replaced by an equivalent new award determined by the
acquiring Company.
Letters of appointment for Non-executive Directors
The Chairman and Non-executive Directors’ terms of appointment are
set out in their respective letters of appointment. All Directors are subject
to re-election every three years in accordance with the Company’s
Articles of Association. In line with corporate governance best practice,
all Directors currently put themselves forward for annual re-election
at each AGM. The required notice period is six months’ written notice
from either party. Non-executive Directors are not entitled to any
remuneration on loss of office.
Chief Executive
Fixed
100%
Target
56%
£564,563
33%
11%
£1,005,923
Maximum
34%
40%
26%
£1,667,963
Fixed pay
Annual bonus
LTIP
Fixed pay
Bonus
LTIP
Fixed
£
564,563
–
–
564,563
Target
£
564,563
331,020
110,340
1,005,923
Maximum
£
564,563
662,040
441,360
1,667,963
Chief Financial Officer
Fixed
100%
Target
59%
£364,901
29%
12%
£622,769
Maximum
36%
35%
29%
£1,032,326
EXTERNAL APPOINTMENTS
Fixed pay
Annual bonus
LTIP
Executive Directors are able to perform one Non-executive Directorship
outside the Company with the consent of the Board. Any fees received
may be retained by the Director.
Illustrations of application of the Remuneration Policy
The charts below set out how much the Chief Executive and Chief
Financial Officer could earn under the Remuneration Policy in the year
ending 31 March 2018.
The scenarios in these charts exclude the impact of any share price
appreciation and accrual of dividends or dividend equivalents.
Remuneration receivable for different performance scenarios
Fixed pay
Bonus
LTIP
Fixed
£
364,901
–
–
364,901
Target
£
364,901
182,025
75,844
622,769
Maximum
£
364,901
364,050
303,375
1,032,326
Fixed pay
Fixed
• Salary effective from 1 July 2017 as disclosed in the
Maximum
Target
Annual Report on Remuneration on page 50.
• Pensions and taxable benefits as provided in the single
total figure of remuneration table in the Annual Report
on Remuneration on page 49.
Annual bonus Nil payout
LTIP
Nil payout
Bonus award at 50% of
maximum opportunity
Threshold LTIP vesting
at 25% of opportunity
Payout of 100%
of award
Full LTIP vesting
Wincanton plc
Annual Report and Accounts 2017
59
Directors
The Directors during the year and to the date of this report, are:
Executive Directors
Adrian Colman, Chief Executive
Tim Lawlor, Chief Financial Officer
Non-executive Directors
Steve Marshall, Chairman
Paul Dean
Stewart Oades
David Radcliffe
Martin Sawkins
The rules governing the appointment and replacement of Directors
are set out in the Company’s Articles of Association.
At the 2017 AGM all Directors will retire and offer themselves for
re‑election to the Board in accordance with the Code. Biographical details
of all Directors are set out on pages 34 and 35.
Details of the service contracts of the Executive Directors and the letters
of appointment for the Non‑executive Directors are set out in the Annual
Report on Remuneration on pages 46 and 47.
Financial Disclosures
Going concern
After making enquiries, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue in
business for the foreseeable future. The financial statements are therefore
prepared on a going concern basis. Further details of the Group’s liquidity
position and going concern review are provided in Notes 1 and 25
respectively to the Group financial statements.
Results and dividends
The Group profit attributable to equity shareholders for the financial year
amounted to £42.0m. The Directors propose a final dividend of 6.1p per
Ordinary Share for the year ended 31 March 2017 (2016: 5.5p per Ordinary
Share). If approved by the shareholders at the 2017 AGM, this would bring
the total dividend paid for the year ended 31 March 2017 to £11.2m.
Contracts and transactions
The Company is not aware of any significant agreements to which it
is party that take effect, alter or terminate upon a change of control of
the Company following a takeover. The Company is not aware of any
contractual or other agreement, which is essential to its business and
should be disclosed in this Directors’ report.
Events after the balance sheet date
There were no reportable events after the balance sheet date.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Company
Wincanton plc is a company incorporated in England and Wales, with
company number 4178808.
Constitution
The Company’s Articles of Association may only be amended by a special
resolution at a general meeting of shareholders.
Principal activities
Wincanton plc is the ultimate parent company of the Group and trades
principally through its subsidiary undertakings. The Group is a leading
provider of logistics and supply chain solutions in the UK and Ireland.
All subsidiaries of the Company are listed in Note 11 on page 85 and 86.
Review of business and future developments
The business review and details of future developments are contained
within the Strategic Report on pages 1 to 33.
Compliance Reporting
Directors’ Report content
The Strategic Report, Corporate Governance Report and Directors’
Remuneration Report are all incorporated by reference into this report
and accordingly, should be read as part of this report.
Strategic report
The Company is required to prepare a Strategic Report to give a balanced
and fair review of the Group’s business during the year ended 31 March
2017, to enable shareholders to assess how the Directors have performed
their duty under Section 172 of the Companies Act 2006.
The information that fulfils the requirements of the Strategic Report can
be found on pages 1 to 33, and includes reviews of the business and
financial performance and the principal risks and uncertainties facing
the Group.
Within the Strategic Report, a summary review of the Group’s activities
during the financial year along with its future prospects are contained
in the Chairman’s review on page 2 to 3. Details of the Group’s business
goals, strategy and model are set out on pages 12 to 19.
Corporate Governance reporting
Details of the Company’s compliance with the Code and the disclosures
required under the Code and the UK Listing Rules can be found in
the Corporate Governance Report on pages 34 to 43. The corporate
governance statement required by Rule 7.2.1 of the FCA’s Disclosure
Guidance and Transparency Rules is set out on page 37.
Management report
For the purposes of Rule 4.1.5R(2) and Rule 4.18 of the FCA’s Disclosure
Guidance and Transparency Rules, this Directors’ Report and the Strategic
Report on pages 1 to 33 together comprise the Management report.
Accounting policies, financial instruments and risk
Details of the Group’s accounting policies, together with details of
financial instruments and financial risks are provided in Notes 1 to 26
of the Group financial statements, on pages 73 to 99.
60
Wincanton plc
Annual Report and Accounts 2017
Annual General Meeting
The Company’s sixteenth AGM will be held at 11:00am on Thursday,
29 June 2017 at the offices of Buchanan Communications, 107 Cheapside,
London EC2V 6DN. The Notice of Annual General Meeting 2017, which
contains full explanations of the business to be conducted at the AGM,
is set out in a separate AGM Notice addressed to shareholders, and can
be found on the Company’s website (www.wincanton.co.uk).
External Auditor
At the 2016 AGM, resolutions to re‑appoint KPMG LLP as the Company’s
Auditor and to authorise the Directors to fix their remuneration,
were approved by shareholders.
The Board will propose a resolution at the 2017 AGM for shareholders to
approve the re‑appointment of KPMG LLP as the Company’s Auditor for
the year ended 31 March 2018 and authority to fix their remuneration.
On behalf of the Board
Alison Dowling
Company Secretary
16 May 2017
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Equity Disclosures
Share capital
The Company’s issued share capital as the date of this report was
123,747,293 Ordinary shares of 10p each. The Company did not issue
any new shares during the financial year.
Authority to purchase shares
The Company was authorised at the 2016 AGM to purchase its own
shares within certain limits. During the year ended 31 March 2017,
the Company purchased 30,000 own shares under this authority.
All shares purchased were gifted to the Company’s Employee Benefit
Trust to satisfy future exercise of awards under the Company’s employee
incentive schemes. The Directors will seek renewal of their authority
to purchase in the market the Company’s shares at the 2017 AGM.
Shareholders’ rights
Each Ordinary Share of the Company carries one vote at general
meetings of the Company. There are no restrictions on the transfer
of Ordinary Shares in the capital of the Company other than certain
restrictions, which may from time to time be imposed by law.
In accordance with the Listing Rules of the Financial Conduct Authority,
certain employees are required to seek approval of the Company to deal
in its shares.
Employees who participate in the SIP, whose shares are held in the
Employee Benefit Trust, give directions to the trustees to vote on their
behalf by way of a Form of Direction.
The Company is not aware of any agreements between shareholders
that may result in restrictions on the transfer of securities and/or
voting rights.
Substantial shareholdings
At the date of this report, the Company has been notified of the following
major shareholdings. Both the number of shares held and the percentage
holding are stated as at the latest date of notification to the Company:
Shareholder
Threadneedle Investments
Schroder Investment Management
Aberforth Partners
River and Merchantile Asset
Management LLP
Standard Life Investment
M&G Investment Management
Wincanton Share Incentive Plan
Number of
Type of
shares held
holding
17,349,979
Indirect
Indirect
16,165,471
Indirect 13,992,464
Holding
(% of issued
share capital)
14.02
13.06
11.30
Indirect
Direct and
indirect
Indirect
Indirect
6,229,100
5,436,218
4,873,656
4,638,930
5.04
4.39
4.00
3.81
Greenhouse gas emissions
The disclosures concerning greenhouse gas emissions required by law
are included in the Corporate Responsibility Report, on page 31.
Charitable donations
During the year ended 31 March 2017, the Group contributed
£38k (2016: £nil) to charitable and community programmes.
Charitable fundraising activities, led and supported by employees,
are detailed on page 29 in the Corporate Responsibility Report.
Political donations
No political donations were made during the year (2016: nil).
Wincanton plc
Annual Report and Accounts 2017
61
DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors confirm that to the best of their knowledge:
• the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole; and
• the management report required by DTR 4.1.8R (contained in the
Strategic Report and the Directors’ Report) includes a fair review of
the development and performance of the business and the position
of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks
and uncertainties that they face.
The Directors consider the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for the shareholders to assess the Company’s performance, business
model and strategy.
The Directors approved the above responsibility statement
on 16 May 2017.
Tim Lawlor
Chief Financial Officer
Wincanton plc
Registered in England and Wales No. 4178808
The Directors are responsible for preparing the Annual Report and Group
and parent Company financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under that
law, they are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent Company financial statements
in accordance with UK Accounting Standards and applicable law
(UK Generally Accepted Accounting Practice).
Under UK company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs and profit or loss of the Group and parent Company
in respect of that financial period. In preparing each of the Group and
parent Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• for the Group financial statements, state whether they have been
prepared in accordance with IFRSs as adopted by the EU;
• for the parent Company financial statements, state whether applicable
UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the parent Company financial
statements; and
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and the parent Company
will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the parent Company’s transactions
and disclose with reasonable accuracy at any time the financial position
of the parent Company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have a general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities.
Under applicable UK law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that comply
with those laws and regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
The UK legislation governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Each of the Directors who held office at the date of approval of this
Directors’ Report confirms that, so far as each Director is aware, there is
no relevant audit information which the Company’s auditor is unaware
of, and each Director has taken all the steps they should have taken in
their duty as a Director to make themselves aware of any relevant audit
information and ensure that the Company’s auditor would be made
aware of that information.
62
Wincanton plc
Annual Report and Accounts 2017
STATEMENT ON THE MODERN SLAVERY ACT
Wincanton takes its ethical standards and conduct very seriously and
sets out its requirements for suppliers in procurement and ethics policies.
The Group are committed to requiring its supply chain understand
its standards and expectations on anti‑bribery and corruption, legal
compliance and ethical conduct.
This statement is provided in compliance with the Modern Slavery Act
2015 and sets the Group’s approach to prohibiting any form of forced
labour or slavery throughout its supply chain.
Upon commencement of the legislation in 2015, Wincanton reviewed
its employment and procurement activities in line with the new
legislative requirements and set out the following four strategic steps
it had taken or was in the process of taking to ensure compliance with
the legislation:
1. produce and communicate a Strategy Statement and Modern
Slavery Policy;
2. assessment of current suppliers;
3. embed additional due diligence within our procurement activities; and
4. review our employment practices and processes, including
the use of agencies.
Following on from the activities set out in our statement last year, there
has been continued progress and activities to deliver the four strategic
steps during the year ended 31 March 2017 as set out below:
1. Strategy statement and policy
The production of a statement and policy, together with related policy
amendments, were all undertaken and communicated, as reported last
year. During the year ended 31 March 2017 the Group’s HR function,
in conjunction with our external legal advisers, have reviewed the
Statement and Policy and related policies to ensure they remain
compliant and fit for purpose. They have also continued to oversee,
communicate and provide training on the Group’s expectations and
responsibilities of employees.
2. Assessment of current suppliers
As reported last year, the Group completed an assessment of its current
suppliers by size and risk, and all suppliers were sent a letter setting
out the Group’s requirements for their compliance with the legislation.
Those suppliers identified as being of highest risk were also requested
to provide details of their strategy and approach to compliance
with the legislation. Responses from these suppliers were reviewed
and a continued assessment of suppliers is being undertaken.
3. Procurement due diligence
The Procurement function have incorporated additional due diligence
into their pre‑qualification process, when tendering and procuring new
suppliers and undertaking renewals. All suppliers must agree and comply
with the Wincanton Modern Slavery Policy and the Procurement Code of
Ethics which encapsulate the legislative requirements, in order to provide
goods and services to the Group. Additional work has been underway
during the year to develop a Supplier Code to further drive higher ethical
standards, above and beyond compliance requirements, and this is
expected to be rolled out to all suppliers regardless of size during 2017.
4. Employment practices
The Group has assessed the impact of the legislation on Group
employment practices and processes, including Wincanton’s use of
agencies, from an HR and Procurement perspective. In conjunction
with external advice, the employment practices and processes have
been thoroughly reviewed and updated where relevant, and all
updated policies and practices have been communicated and cascaded
throughout the Group. Localised training and support has continued
to be provided to all Group employees by their designated HR teams.
In addition, the HR function are working on a Code of Conduct to
summarise the key policies and standards with the intention that this
will be rolled out within the Group during 2017. A project to consider
the use and risks specific to agencies has commenced and standards
to be applied have been agreed. Revisions to policy and practices
are in progress and will be completed and rolled out throughout the
Group and to the agency suppliers during 2017.
Delivery of the four strategic steps and ongoing compliance of practices
and processes introduced or updated, is supported by the Group’s
established governance processes. All Group policies and processes
are reviewed at least annually to ensure they remain relevant, up‑to‑date
and elevate behavioural standards and ethical conduct to reflect the
Group’s values and importance of social responsibility in our supply chain
and business, for the benefit of all of our stakeholders.
As with all other regulatory and legislative requirements, the Group
expects the nature, root causes and circumstances that lead to modern
slavery and human trafficking, in all its forms, will change and evolve
over time driven by external factors and as such new requirements,
circumstances and risks could arise. The Group will continue to be vigilant,
proactive, and closely and regularly review the four strategic steps and
influential factors to ensure Group policies and practices remain fit for
purpose and address any new or emerging risks or developments
throughout the year.
The Directors approved the above statement on 16 May 2017.
Alison Dowling
Company Secretary
Wincanton plc
Registered in England and Wales No. 4178808
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Annual Report and Accounts 2017
63
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
Independent
auditor’s report
to the members of Wincanton plc only
Opinions and conclusions
arising from our audit
1. Our opinion on the financial statements is
unmodified
We have audited the financial statements of
Wincanton plc for the year ended 31 March 2017
set out on pages 68 to 103. In our opinion:
— the financial statements give a true and fair
view of the state of the Group’s and of the
parent Company’s affairs as at 31 March 2017
and of the Group’s profit for the year then
ended;
— the Group financial statements have been
properly prepared in accordance with
International Financial Reporting Standards as
adopted by the European Union;
— the parent Company financial statements have
been properly prepared in accordance with UK
Accounting Standards, including FRS 101
Reduced Disclosure Framework; and
— the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006; and, as regards the Group
financial statements, Article 4 of the IAS
Regulation.
Overview
Materiality: Group
financial
statements as a
whole
£1.8 million (2016:£1.4 million)
4.0% of Group profit before taxation
(2016: 4.2% of Group profit before
taxation*)
* normalised to exclude the exceptional profit on disposal of
Wincanton Records Management in 2016 of £32.4 million
Coverage
100% (2016:100%) of Group profit
before tax
Risks of material misstatement
vs 2016
Recurring risks
Group pension obligation
Property provisions
◄►
◄►
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Annual Report and Accounts 2017
2. Our assessment of risks of material misstatement
In arriving at our audit opinion above on the financial statements, the risks of material misstatement that had the greatest
effect on our audit, in decreasing order of audit significance, were as follows.
We continue to perform procedures over Goodwill. However, following continued significant levels of headroom and an
insensitivity to key assumptions, we have not assessed this as one of the risks that had the greatest effect on our audit.
Therefore it is not separately identified in our report this year.
Group pension obligation
Subjective valuation
Our procedures included:
The risk
Our response
£1,156.7 million
(2016: £1,001.0 million)
Refer to page 42 (Audit
Committee Report), page 75
(accounting policy) and pages 91
to 94 (financial disclosures).
Significant estimates are made in
valuing the Group's funded pension
obligation (before deducting scheme
assets) and small changes in either the
assumptions or estimates used may
have a significant effect on the results
and financial position of the Group.
— Benchmarking assumptions: challenging,
with the support of our actuarial specialists,
the key assumptions applied, being the
discount rate, inflation rate and
mortality/life expectancy, by comparison
against externally derived data; and
— Assessing transparency: considering the
adequacy of the Group's disclosures in
respect of the sensitivity of the obligation
(and deficit) to these assumptions
Property provisions
Forecast-based valuation
Our procedures included:
£16.5 million
(2016: £15.3 million)
Refer to page 42 (Audit
Committee Report), pages 74 and
75 (accounting policy) and page
89 (financial disclosures).
The Group carries onerous lease and
dilapidation provisions in relation to
sites for which the Group is a lessee.
— Benchmarking assumptions: comparing
the key assumptions (market rent, discount
rate) used to externally derived data;
The calculation of these provisions
requires the Directors to make a
number of judgements and estimates
and requires ongoing trading conditions
and market sentiment to be reflected
as time progresses.
The key inputs to the calculation of the
provisions are the discount rate, the
forecast cash-flows and assessment of
market sentiment (void and rent-free
period assumptions).
— Assessing expert's credentials:
evaluation of competence and
independence of an external expert used
by the Group in estimating the dilapidation
provisions;
— Historical comparisons: comparing the
previously forecast cash flows to actuals to
assess the historical accuracy of
forecasting;
— Our sector experience: assessing, with
the support of our own property specialists
where relevant, significant changes in
market sentiment (market rent, void and
rent-free period assumptions) affecting the
onerous lease provisions and expected
cash outflows used in calculation of
dilapidation provisions;
— Personnel interviews: corroborating
judgements through discussions with both
finance and property teams; and
— Assessing transparency: considering the
adequacy of the Group's disclosures in
respect of the provisions.
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Annual Report and Accounts 2017
65
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
CONTINUED
3. Our application of materiality and an
overview of the scope of our audit
Group profit before taxation*
£45.4m (2016: £33.4m)
Materiality
£1.8m (2016: £1.4m)
The materiality for the financial statements as a
whole was set at £1.8 million (2016: £1.4 million)
determined with reference to a benchmark of
Group profit before taxation, of £45.4 million, of
which it represents 4.0% (2016: 4.2% of profit
before taxation normalised to exclude the
exceptional profit on disposal of Wincanton
Records Management of £32.4 million).
We report to the Audit Committee any corrected
or uncorrected identified misstatements
exceeding £0.1 million (2016: £0.1 million), in
addition to other identified misstatements that
warranted reporting on qualitative grounds.
With the exception of the Guernsey component
(Risk Underwriting (Guernsey) Limited), the Group
team performed the audit of the Group as if it
was a single aggregated set of financial
information using the materiality level set out
above.
We subjected the Guernsey component to
specified risk-focused audit procedures over
Insurance provisions. The audit of the Guernsey
component was performed by a component
auditor and the audit of the rest of the Group by
the Group team.
The Group team instructed the component
auditor as to the significant areas to be covered,
including the relevant risks detailed above and the
information to be reported back. The Group team
approved the component materiality of £1.0
million (2016: £1.0 million) having regard to the
mix of size and risk profile of the Group.
Overall, the audit of the Group covered 100%
(2016: 100%) of total Group revenue, Group profit
before tax, and total Group assets.
Telephone conference meetings were held with
the component auditor. At these meetings, the
findings reported to the Group team were
discussed in more detail, and any further work
required by the Group team was then performed
by the component auditor.
£1.8 million
Whole financial
statements materiality
(2016: £1.4m)
£1.0 million
Component materiality
(2016: £1.0 million)
£0.1 million
Identified misstatements
reported to the audit
committee (2016: £0.1m)
Group PBT
Group materiality
* In 2016, the benchmark was
normalised to exclude the
exceptional profit on disposal of
Wincanton Records Management
of £32.4 million)
Group revenue
Group profit before tax
100%
(2016 100%)
100%
(2016 100%)
Group total assets
100%
(2016 100%)
Group profit before taxation,
(normalised to exclude the
exceptional profit on disposal
of Wincanton Records
Management in 2016)
100%
(2016 100%)
Key:
Full scope for group audit purposes 2017
Full scope for group audit purposes 2016
66
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Annual Report and Accounts 2017
4. Our opinion on other matters prescribed by the
Companies Act 2006 is unmodified
In our opinion:
— the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with
the Companies Act 2006; and
— the information given in the Strategic Report and the
Directors’ Report for the financial year is consistent
with the financial statements.
— the parent Company financial statements and the part
of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and
returns; or
— certain disclosures of Directors’ remuneration specified
by law are not made; or
— we have not received all the information and
explanations we require for our audit.
Under the Listing Rules we are required to review:
Based solely on the work required to be undertaken in the
course of the audit of the financial statements and from
reading the Strategic Report and the Directors’ Report:
— the Directors’ statements, set out on pages 60 and 25,
in relation to going concern and longer-term viability;
and
— we have not identified material misstatements in those
reports; and
— in our opinion, those reports have been prepared in
accordance with the Companies Act 2006.
— the part of the Corporate Governance Report on page
37 relating to the Company’s compliance with the
eleven provisions of the 2014 UK Corporate
Governance Code specified for our review.
5. We have nothing to report on the disclosures of
principal risks
Based on the knowledge we acquired during our audit, we
have nothing material to add or draw attention to in relation
to:
— the Directors’ statement of Principal risks and
uncertainties on pages 24 to 27, concerning the
principal risks, their management, and, based on that,
the Directors’ assessment and expectations of the
Group’s continuing in operation over the three years to
31 March 2020; or
— the disclosures in Note 1 of the financial statements
concerning the use of the going concern basis of
accounting.
6. We have nothing to report in respect of the matters
on which we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to
you if, based on the knowledge we acquired during our
audit, we have identified other information in the annual
report that contains a material inconsistency with either that
knowledge or the financial statements, a material
misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
— we have identified material inconsistencies between
the knowledge we acquired during our audit and the
Directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable and provides the
information necessary for shareholders to assess the
Group’s position and performance, business model and
strategy; or
— the Audit Committee Report does not appropriately
address matters communicated by us to the Audit
Committee.
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
— adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
We have nothing to report in respect of the above
responsibilities.
Scope and responsibilities
As explained more fully in the Directors’ Responsibilities
Statement set out on page 62, the Directors are responsible for
the preparation of the financial statements and for being
satisfied that they give a true and fair view. A description of
the scope of an audit of financial statements is provided on the
Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate. This report is made solely
to the Company’s members as a body and is subject to
important explanations and disclaimers regarding our
responsibilities, published on our website at
www.kpmg.com/uk/auditscopeukco2014a, which are
incorporated into this report as if set out in full and should be
read to provide an understanding of the purpose of this report,
the work we have undertaken and the basis of our opinions.
Simon Haydn-Jones (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
16 May 2017
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Wincanton plc
Annual Report and Accounts 2017
67
ACCOUNTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2017
Revenue
Underlying operating profit
Amortisation of acquired intangibles
Exceptionals
Operating profit
Financing income
Financing cost
Net financing costs
Profit before tax
Income tax expense
Profit attributable to equity shareholders of Wincanton plc
Earnings per share
– basic
– diluted
Note
2
2
9
3
3
5
5
5
6
7
7
2017
£m
1,118.1
52.1
(2.2)
6.1
56.0
0.1
(10.7)
(10.6)
45.4
(3.4)
42.0
2016
£m
1,147.4
50.9
(4.5)
35.0
81.4
0.2
(15.8)
(15.6)
65.8
(4.7)
61.1
34.2p
33.0p
50.7p
47.4p
68
Wincanton plc
Annual Report and Accounts 2017
ACCOUNTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2017
Profit for the year
Other comprehensive income/(expense)
Items which will not subsequently be reclassified to the income statement
Remeasurements of defined benefit liability
Income tax relating to items that will not subsequently be reclassified to profit or loss
Items which are or may subsequently be reclassified to the income statement
Net foreign exchange (loss)/gain on investment in foreign subsidiaries net of hedged items
Effective portion of changes in fair value of cash flow hedges
Net change in fair value of cash flow hedges transferred to the income statement
Other comprehensive income for the year, net of income tax
Total comprehensive income attributable to equity shareholders of Wincanton plc
Note
6
5
2017
£m
42.0
17.6
(4.0)
13.6
(0.1)
0.4
0.2
0.5
14.1
56.1
2016
£m
61.1
23.0
(7.0)
16.0
0.3
(0.4)
1.3
1.2
17.2
78.3
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Wincanton plc
Annual Report and Accounts 2017
69
ACCOUNTS
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2017
Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Investments, including those equity accounted
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Income tax payable
Borrowings and other financial liabilities
Trade and other payables
Employee benefits
Provisions
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Borrowings and other financial liabilities
Employee benefits
Provisions
Deferred tax liabilities
Net liabilities
Equity
Issued share capital
Share premium
Merger reserve
Hedging reserve
Translation reserve
Retained earnings
Total equity deficit
Note
2017
£m
2016
£m
9
10
12
13
14
15
16
17
18
23
19
17
23
19
13
86.9
43.7
0.1
17.2
147.9
4.0
133.4
40.9
178.3
(6.4)
(0.2)
(265.4)
(0.2)
(15.2)
(287.4)
(109.1)
38.8
(65.0)
(78.4)
(34.8)
–
(178.2)
(139.4)
12.4
12.9
3.5
(0.1)
(0.3)
(167.8)
(139.4)
90.0
35.6
0.1
22.8
148.5
4.8
139.4
36.3
180.5
(7.3)
(20.4)
(272.1)
(0.3)
(15.4)
(315.5)
(135.0)
13.5
(55.4)
(105.6)
(36.0)
(0.8)
(197.8)
(184.3)
12.4
12.9
3.5
(0.7)
(0.2)
(212.2)
(184.3)
These financial statements were approved by the Board of Directors on 16 May 2017 and were signed on their behalf by:
A Colman
Chief Executive Officer
T Lawlor
Chief Financial Officer
70
Wincanton plc
Annual Report and Accounts 2017
ACCOUNTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2017
Balance at 1 April 2015
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based
payment transactions
Deferred tax on share based
payment transactions
Shares issued
Own shares acquired
Own shares disposed
of on exercise of options
Balance at 31 March 2016
Issued
share
capital
£m
12.2
–
–
–
–
–
–
0.2
–
–
12.4
–
–
–
–
–
–
–
–
0.1
12.9
Balance at 1 April 2016
12.4
12.9
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based
payment transactions
Deferred tax on share based
payment transactions
Own shares acquired
Own shares disposed
of on exercise of options
Dividends paid to shareholders
Balance at 31 March 2017
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12.4
–
–
12.9
–
–
–
–
–
–
–
–
–
3.5
3.5
–
–
–
–
–
–
–
–
–
3.5
Retained earnings
Share
premium
£m
12.8
Merger
reserve
£m
3.5
Hedging
reserve
£m
(1.6)
Translation
reserve
£m
(0.5)
Own
shares
£m
(14.1)
Profit and
loss
£m
(274.0)
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Total
equity
deficit
£m
(261.7)
61.1
17.2
78.3
0.9
2.2
0.5
–
(4.5)
–
0.9
0.9
–
–
–
–
–
–
0.3
0.3
–
–
–
–
–
–
(0.7)
–
(0.2)
–
–
–
–
–
–
(0.2)
(4.5)
15.7
(3.1)
61.1
16.0
77.1
0.9
2.2
0.5
–
–
(15.8)
(209.1)
–
(184.3)
(0.7)
(0.2)
(3.1)
(209.1)
(184.3)
–
0.6
0.6
–
–
–
–
–
–
(0.1)
–
(0.1)
(0.1)
–
–
–
–
–
–
(0.3)
–
–
–
–
–
–
(0.1)
2.7
–
(0.5)
42.0
13.6
55.6
0.9
1.1
(0.1)
–
42.0
14.1
56.1
0.9
1.1
(0.1)
(0.1)
(5.3)
(10.4)
(167.3)
(2.6)
(10.4)
(139.4)
Wincanton plc
Annual Report and Accounts 2017
71
ACCOUNTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2017
Operating activities
Profit before tax
Adjustments for
– depreciation and amortisation
– interest expense
– exceptionals (non cash)
– share based payments fair value charges
Decrease/(increase) in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Decrease in provisions
Increase in employee benefits before pension deficit payment
Income taxes paid
Cash generated before pension deficit payment
Pension deficit payment
Cash flows from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of computer software
Proceeds from WRM disposal
Interest received
Additions of property, plant and equipment
Additions of computer software
Cash flows from investing activities
Financing activities
Own shares acquired
Decrease in borrowings
Equity dividends paid
Interest paid
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of year
Represented by:
– cash at bank and in hand
– restricted cash, being deposits held by the Group’s insurance subsidiary
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Annual Report and Accounts 2017
2017
£m
45.4
14.0
10.6
(4.6)
0.9
66.3
6.2
0.8
(2.6)
(4.3)
0.9
(2.6)
64.7
(14.1)
50.6
0.1
0.4
–
0.1
(18.0)
(1.2)
(18.6)
(0.1)
(10.0)
(10.4)
(6.9)
(27.4)
4.6
36.3
–
40.9
33.0
7.9
40.9
2016
£m
65.8
19.0
15.6
(35.0)
0.9
66.3
(4.5)
0.8
(49.0)
(10.0)
0.9
(3.1)
1.4
(20.9)
(19.5)
4.4
–
55.7
0.2
(10.0)
(0.4)
49.9
(4.5)
(86.2)
–
(9.3)
(100.0)
(69.6)
105.8
0.1
36.3
26.3
10.0
36.3
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Statement of compliance
Wincanton plc (the Company) is a company incorporated in England and
Wales. The Company is a public company limited by shares. The address
of the Company’s registered office and its registered number are shown
on page 106. The consolidated financial statements include those of the
Company and its subsidiaries (together referred to as the Group) and the
Group’s jointly controlled entities.
The consolidated financial statements have been prepared and approved
by the Directors in accordance with International Financial Reporting
Standards (IFRS) and International Financial Reporting Interpretations
Committee (IFRIC) interpretations, as adopted by the International
Accounting Standards Board (IASB) and by the European Union (EU) and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS (Adopted IFRS).
At the date of authorisation of these financial statements, the following
Standards and Interpretations which have not been applied in these
financial statements were in issue but are either not yet effective or
have not yet been adopted by the EU:
• IFRS 9 Financial Instruments
• IFRS 15 Revenue from Contracts with Customers
• IFRS 16 Leases
• Amendments to IFRS 2 Classification and Measurement of Share-based
Payment Transactions
• Amendments to IAS 7 Disclosure Initiative
• Amendments to IAS 12 Recognition of Deferred Tax Assets for
Unrealised Losses
• Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
• Annual Improvements 2014–2016 Cycle
IFRS 9 Financial Instruments was issued by the IASB in July 2014 and
becomes effective for the Group for the year ended 31 March 2019.
Applying IFRS 9 will result in changes to the measurement and disclosure
of financial instruments and introduces a new expected loss impairment
model. The Group does not currently expect adoption of the standard to
have a significant impact on its consolidated results or financial position,
but it will result in increased disclosure.
IFRS 15 Revenue from Contracts with Customers was issued by the IASB
in May 2014 and becomes effective for the Group for the year ended
31 March 2019. Under IFRS 15 revenue is recognised when the customer
obtains control of the goods and services transferred by the Group and
the related performance obligations have been satisfied. The amount
recognised reflects the amount of consideration to which the Group
expects to be entitled in exchange for those goods and services.
The Group does not expect IFRS 15 to have a significant impact on
the total revenue recognised for customer contracts. The timing for
recognising revenue on individual contracts is expected to change in
response to variable consideration components, and the capitalisation
of costs of fulfilling a contract; the impact at Group level is not expected
to be significant.
The Group will be required to disclose separate line items for contract
assets and contract liabilities and to include further details on significant
changes in these balances, as well as judgements made in determining
which costs of fulfilling a contract can be capitalised.
The Group expects to apply IFRS 15 retrospectively, with the year ended
31 March 2018 restated as the comparative period.
IFRS 16 Leases was issued by the IASB in January 2016 and becomes
effective for the Group for the year ended 31 March 2020. Adoption
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of this standard will result in the recognition of assets and liabilities
relating to leases which are currently being accounted for as operating
leases. The Group is currently assessing the impact of adopting IFRS 16,
with a material impact anticipated on the presentation of reported assets,
liabilities and components within the income statement of the Group,
as well as extensive additional disclosures.
Other than as mentioned above, the Group does not currently expect
that adoption of the other standards and amendments listed will have
a significant effect on the consolidated results or financial position of
the Group.
The Company has elected to prepare its financial statements in
accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101); these are shown on pages 100 to 103 and present
information about the Company as a separate entity.
Basis of preparation
The Group and Company financial statements are presented in pounds
sterling, rounded to the nearest hundred thousand. They are prepared on
the historical cost basis except where assets or liabilities are required to be
stated at their fair value.
The accounting policies set out below have been applied consistently
to all periods presented in these Group financial statements with
the exception of amendments resulting from IFRS 11 Accounting
for Acquisitions of Interests in Joint Operations, IAS 16 and IAS 38
Clarification of Acceptable Methods of Depreciation and Amortisation,
IAS 1 Disclosure Initiative and Annual Improvements 2012-2014 Cycle.
The adoption of these amendments has not had an effect on the
consolidated results or financial position of the Group.
Judgements and key sources of estimation uncertainty
The preparation of Group financial statements under Adopted IFRS and
parent Company financial statements under FRS 101 requires management
to make judgements, estimates and assumptions that affect the application
of policies and the reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates and assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which
the estimate is revised and/or in future periods if applicable.
Judgements made by management in the application of Adopted IFRS
that have a significant effect on the Group financial statements and
estimates with a significant risk of material adjustment in the next year are
discussed in the relevant notes to these consolidated financial statements.
Management discusses with the Audit Committee the development,
selection, application and disclosure of the Group’s critical accounting
policies and estimates.
The areas where policy and estimate selection are most critical for the Group
are concerned with the accounting for pensions and the determination of
provisions, as discussed below.
Defined benefit pension arrangements
Details of the Group’s defined benefit arrangements are set out in Note 23
to the financial statements, including the assumptions made, risk factors
and tables showing the sensitivity of the pension scheme obligations to
changes in actuarial assumptions. The effects of changes in the actuarial and
demographic assumptions underlying the Scheme’s obligations, together
with experience gains or losses and the return on assets excluding amounts
recognised in net financing costs are classified as remeasurements in the
defined benefit liability.
Wincanton plc
Annual Report and Accounts 2017
73
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
1. ACCOUNTING POLICIES (CONTINUED)
Property provisions
Provisions are liabilities of uncertain timing or amount and therefore
judgement is applied in making a reliable estimate of the quantum and
timing. Further information about the assumptions and risk factors is given
in Note 19.
Going concern
The Group has net liabilities of £139.4m (2016: £184.3m) primarily
as a result of the pension deficit as well as previous retained losses.
The reduction in the year principally relates to the profit for the year and
reduced pension deficit offset by dividend payments.
The Group’s business activities, together with the factors likely to affect its
future development, performance and position are set out on pages 15 to
23 which also contain a review of the financial position of the Group, its
cash flows, liquidity position and borrowing facilities. In addition, Note
25 to the financial statements includes the Group’s objectives, policies
and processes for managing: its capital; its financial risk management
objectives; details of its financial instruments and hedging activities;
and its exposures to credit risk and liquidity risk.
During the year, the Group has repaid the remaining US Private
Placement (USPP) debt of £20m and agreed an extension of the
maturity of its principal bank facilities to October 2021. The Group’s
facilities comprise the following: the syndicated main bank facility of
£141.2m which amortises by £8.8m in October 2019, with a second equal
amortisation at the four year anniversary in October 2020; and £25m from
the Prudential/M&G UK Companies Financing Fund LP, which amortises
by £6.2m in January 2021 with the remaining balance maturing in
January 2022.
As part of the year end process the Directors have undertaken a going
concern review, as required by IAS 1 Presentation of Financial Statements.
This includes a review of the headroom available when the Group’s
facilities are compared to the forecast monthly cash flows for the
forthcoming financial year, sensitising the borrowing covenants to give an
indication of the headroom therein, and consideration of the assessment
undertaken for the purposes of providing the Viability statement on
page 25. Having undertaken this review the Directors have a reasonable
expectation that the Company and the Group overall have adequate
resources to continue to meet their obligations as they fall due and satisfy
their borrowing covenants for the foreseeable future. Accordingly these
financial statements have been prepared on a going concern basis.
Basis of consolidation
The consolidated Group financial statements include the financial
statements of the Company and its subsidiary undertakings made up
to the balance sheet date. When the Company acquired the Wincanton
group of companies upon demerger from the former parent in May
2001, the changes in Group structure were accounted for using the
principles of merger accounting available under UK GAAP at the time.
Businesses acquired or disposed of since then have been accounted
for using acquisition accounting principles from or up to the date that
control passed.
Subsidiaries are those entities controlled by the Group. Control is achieved
when the Company has power over the investee; is exposed to, or has
rights to, variable return from its involvement with the investee; and has
the ability to use its power to affect its returns. The Company reassesses
whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control
listed above. In assessing control, potential voting rights that presently are
exercisable or convertible are taken into account. The financial statements
of subsidiaries are included in the consolidated financial statements from
or up to the date that control passed.
74
Wincanton plc
Annual Report and Accounts 2017
The results, assets and liabilities of jointly controlled entities are
incorporated in these financial statements using the equity method of
accounting, in accordance with IFRS 11 Joint Arrangements and IAS 28
Investments in Associates and Joint Ventures. Under the equity method,
a jointly controlled entity is initially recognised in the consolidated
statement of financial position at cost and adjusted thereafter to
recognise the Group’s share of the profit or loss and other comprehensive
income of the jointly controlled entity. Intra-group balances, and any
unrealised gains and losses or income and expenses arising from intra-
group transactions, are eliminated in preparing the consolidated financial
statements. Unrealised gains arising from transactions with jointly
controlled entities are eliminated to the extent of the Group’s interest in
the entity. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
Intangible assets
Goodwill
All business combinations are accounted for by applying the acquisition
method. Goodwill represents amounts arising on acquisition of
subsidiaries and jointly controlled entities.
Goodwill is stated at cost less any impairment losses. Goodwill is allocated
to cash-generating units and is tested annually for impairment.
Other intangible assets
Intangible assets arising under a business combination (acquired
intangible assets) are capitalised at fair value as determined at the date of
acquisition and are stated at that fair value less accumulated amortisation
and impairment losses.
Amortisation is charged to the income statement on a straight-line basis
over the estimated useful lives of acquired intangible assets from the date
they are acquired as follows:
Customer relationships
6 to 10 years
The cost of computer software purchased or developed in-house which
has the capacity to generate economic benefits for a period in excess
of one year is capitalised as an intangible asset. Amortisation is charged
to the income statement on a straight-line basis over the following
estimated useful lives:
Computer software costs
3 to 5 years
Major software projects, such as the Group back office project, may be
amortised over lives of up to ten years.
Property, plant and equipment
Items of property, plant and equipment are stated at cost or deemed
cost less accumulated depreciation and impairment losses. The cost of
tangible assets includes directly attributable costs, including appropriate
commissioning costs. The cost of financing the construction of major
properties is included in their capitalised cost. The interest rate applied
represents the actual finance costs incurred on the funds borrowed
specifically to construct the asset.
Subsequent expenditure
The Group recognises in the carrying amount of an item of property,
plant and equipment the costs incurred in replacing part of such an
item if it is probable that the future economic benefits will flow to the
Group and when the cost can be measured reliably. All other such
costs, including the derecognition of the replaced part of the item,
are expensed in the income statement as incurred.
1. ACCOUNTING POLICIES (CONTINUED)
Depreciation
Depreciation is charged to the income statement on a straight-line basis
over the estimated useful life of each part of an item of property, plant
and equipment. The estimated useful lives are as follows:
Freehold and long leasehold buildings
Short leasehold improvements
Plant and equipment, furniture and fittings
Office machinery and computers
Motor vehicles
50 years
life of lease
5 to 25 years
3 to 5 years
5 to 10 years
The range of useful economic lives given reflects the fact that assets held
for specific contracts are depreciated over the lives of those contracts.
Freehold land is not depreciated. The residual value of tangible assets,
if significant, is reassessed annually.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
based on the first-in first-out principle and includes expenditure incurred
in acquiring the inventories and bringing them to their existing location
and condition. Net realisable value is the estimated selling price in the
ordinary course of business, less selling expenses.
Trade and other receivables
Trade and other receivables are stated at their fair value on initial
recognition (discounted if material) and subsequently at amortised cost,
ie less any impairment losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, restricted cash and
call deposits.
Trade and other payables
Trade and other payables are stated at their fair value on initial recognition
(discounted if material) and subsequently at amortised cost.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange
rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are
translated into sterling at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on such translation are recognised
in the income statement.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated into sterling at
the foreign exchange rates ruling at the balance sheet date. The revenues
and expenses of foreign operations are translated into sterling at rates
approximating the foreign exchange rates ruling at the dates of the
transactions. Foreign exchange differences arising on translation are
recognised directly in a separate component of other comprehensive
income. They are released into the income statement upon disposal.
Employee benefits
The Group operates both defined contribution and defined benefit
pension arrangements. The assets of these arrangements are held
in separate Trustee administered funds independent of the Group.
The investment strategy of the Trustee and Group is to maximise
investment returns, with a key area for management attention being
to seek to meet the Group’s funded defined benefit obligations.
In accordance with this strategy certain investments are designated at
fair value and are accounted for as set out below. The defined benefit
arrangements closed to future accrual with effect from 31 March 2014.
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Defined contribution arrangements
Obligations for contributions to defined contribution pension
arrangements are recognised as an expense in the income statement
as incurred.
Defined benefit arrangements
The Group’s net obligation in respect of defined benefit pension
arrangements is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in return for
their service in prior periods; that benefit is discounted to determine
the present value, and the fair value of any scheme assets is deducted.
The discount rate is the yield at the balance sheet date on AA credit rated
bonds that have maturity dates approximating the terms of the Group’s
obligations. The calculation is performed by a qualified actuary using the
projected unit method.
Where the calculation results in an asset to the Group, this is limited to
the present value of any future refunds from the scheme or reductions
in future contributions to the scheme.
Past service costs arising due to plan amendments or curtailments
are recognised in the income statement immediately.
Remeasurement gains and losses that arise in calculating the Group’s
obligation in respect of a scheme are recognised in full through other
comprehensive income in the statement of comprehensive income.
Share based payment transactions
The Group has applied the requirements of IFRS 2 Share based Payments
to the grants of options made under the Executive Share Option
Schemes, Special Option Plan, Executive Bonus Plan and Long Term
Incentive Plan.
The Group issues options under equity-settled share based incentive
schemes to certain employees which are measured at the date of grant
as the fair value of the employee services required in exchange for the
grant. The fair value determined is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of shares that
will eventually vest and adjusted for the effect of non-market based
vesting conditions.
Fair value is measured by an external valuer using the Binomial,
Monte-Carlo or scenario-modelling methods as appropriate.
The expected life assumptions used in the models have been adjusted,
based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
A number of shares in the Company are held in trust on behalf of
employees who hold options under the Group’s equity-settled share
based incentive schemes. Such shares are held by an employee benefit
trust and are treated as treasury shares and shown in the balance sheet
as a deduction from equity.
Other share schemes
Shares awarded on a matching basis to employees participating in
the Company’s Share Incentive Plan are purchased at the prevailing
market rate and charged to the income statement each period as
employees make an eligible contribution. The shares purchased are
held in a separately administered offshore trust for the benefit of the
Plan participants.
Provisions
A provision is recognised in the balance sheet when the Group has a
present legal or constructive obligation as a result of a past event and
it is probable that an outflow of economic benefits will be required to
settle the obligation. If the effect is material, provisions are determined
by discounting the expected future cash flows.
Wincanton plc
Annual Report and Accounts 2017
75
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
1. ACCOUNTING POLICIES (CONTINUED)
The Group provides for onerous property provisions on a site by site
basis due to the unique nature and location of each site. Provision is made
for the best estimate of the expected cost of empty and under-utilised
properties, including dilapidations where applicable. Dilapidations are
provided for specific individual properties where the outflow of resources
is probable and the amount of the obligation can be reliably estimated.
Where significant, amounts are discounted.
The Group provides for insurance claims on an appropriate discounted
basis depending on the expected timing of their settlement. Provision is
made for the estimated costs of claims arising from past events based on
the advice of the Group’s external insurance advisers.
Impairment
The carrying amounts of the Group’s assets, other than inventories and
deferred tax assets, are reviewed at each balance sheet date to determine
whether there is any indication of impairment. The two exceptions are
dealt with as per the separate applicable accounting policy. An asset is
considered for impairment testing if objective evidence indicates that
one or more events had a negative effect on the estimated future cash
flows of the asset. If any such indication exists the asset’s recoverable
amount is estimated. For trade receivables specific bad debts are
provided against unless the Group is satisfied that no recovery of
the amount owing is possible; at that point the amount considered
irrecoverable is written off.
A cash-generating unit is the smallest identifiable group of assets that
generates cash inflows that are largely independent of the cash inflows
from other assets or groups of assets. An impairment loss is recognised
whenever the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount. Impairment losses are recognised
in the income statement. Impairment losses recognised in respect
of cash-generating units are allocated first to reduce the amount of
goodwill allocated to the applicable cash-generating unit and then
to reduce the carrying amount of the other assets in the unit on a
pro rata basis.
Calculation of recoverable amount
The recoverable amount of the Group’s receivables carried at amortised
cost is calculated as the present value of expected future cash flows,
discounted at the original effective interest rate inherent in the asset.
Receivables with a short duration are not discounted.
The recoverable amount of other assets is the greater of their fair value
less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value. For an asset that
does not generate largely independent cash inflows, the recoverable
amount is determined for the cash generating unit to which the
asset belongs.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed. An impairment
loss in respect of a receivable carried at amortised cost is reversed only
to the extent that the carrying amount does not exceed the carrying
amount that would have been determined if no impairment loss had
been recognised and if the reversal can be related objectively to an event
occurring after the impairment was recognised.
In respect of other assets, an impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount.
76
Wincanton plc
Annual Report and Accounts 2017
Revenue recognition
Revenue from services rendered is recognised in the income statement
on the delivery of those services based on the proportion of the
total delivered that can be reliably measured at the balance sheet
date. Where payments are received in advance of revenue being
recognised they are included as deferred income. Where revenue
is recognised in advance of amounts being invoiced it is reported
as accrued income. Where a contract contains elements of variable
consideration, the Group will estimate the amount of variable
consideration to which it will be entitled under the contract.
Variable consideration can arise as a result of incentives, performance
bonuses, penalties or other similar items. Variable consideration is
recognised only to the extent that it is highly probable that the economic
benefit will transfer to the Group.
Expenses
Lease payments
Payments made under operating leases are recognised in the
income statement on a straight-line basis over the term of the lease.
Lease incentives received are recognised in the income statement
as an integral part of the total lease expense.
Net financing costs
Net financing costs comprise interest payable and other charges
less interest income.
Interest payable on borrowings is calculated using the effective interest
rate method. Other charges include bank fees, amortisation of bank
arrangement fees, unwinding of discounts, and losses on hedging
instruments that are recognised in the income statement (see hedge
accounting policy below).
Interest income includes interest receivable on funds invested and
gains on hedging instruments, and these are recognised in the income
statement as they accrue.
Net financing costs include the interest on the net defined benefit
pension liability.
Taxation
Tax on profits or losses for the year comprises current and deferred tax
and is recognised in the income statement except to the extent that it
relates to items recognised in other comprehensive income or directly
in equity, in which case it is recognised in the relevant component.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect
of previous years.
Deferred tax is provided using the balance sheet liability method,
providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill and the initial recognition
of assets or liabilities that affect neither accounting nor taxable profit.
The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable
that future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
When a hedging instrument expires or is sold, terminated or exercised,
or the entity revokes designation of the hedge relationship but the
hedged forecast transaction is still expected to occur, the cumulative gain
or loss at that point remains in equity and is recognised in accordance
with the above policy when the transaction takes place. If the hedged
transaction is no longer expected to take place, the cumulative gain
or loss is removed from equity and recognised immediately in the
income statement.
Hedge of net investment in a foreign operation
Where a foreign currency liability is used to hedge an investment in
a foreign operation, the portion of the gain or loss on the hedging
instrument that is determined to be an effective hedge shall be
recognised in other comprehensive income. The ineffective portion
shall be recognised in profit or loss.
Gains or losses on the hedging instrument relating to the effective
portion of the hedge that have been accumulated in equity are
reclassified from equity to profit or loss as a reclassification adjustment
on the disposal or partial disposal of the foreign operation.
Hedge of monetary assets and liabilities
Where a derivative financial instrument is used to economically hedge
the foreign exchange exposure of a recognised monetary asset or liability,
no hedge accounting is applied and any gain or loss on the hedging
instrument is recognised in the income statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value,
less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any
difference between cost and redemption value being recognised
in the income statement over the period of the borrowings on
an effective interest basis. Interest-bearing borrowings which are
designated hedged items in a fair value hedge arrangement are
carried at fair value (see policy above).
Dividends
Dividends are recognised in the period in which they are declared and
approved, or paid.
Alternative Performance Measures (APMs)
Underlying results are used in the day-to-day management of the Group.
They represent statutory measures adjusted for items which could
distort the understanding of performance and comparability year on
year, namely the amortisation of acquired intangibles and exceptionals,
related tax and exceptional tax items where relevant. Page 23 provides
a reconciliation between APMs and statutory IFRS measures.
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1. ACCOUNTING POLICIES (CONTINUED)
Operating segments
Operating segments are identified on the basis of information that is
provided to the Executive Management Team (EMT), which is the Group’s
chief operating decision-maker, to allocate capital and resources and to
assess performance.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to hedge its exposure
to foreign exchange and interest rate risks arising from operational,
financing and investment activities. In accordance with its treasury policy,
the Group does not hold or issue derivative financial instruments for
trading purposes. However, derivatives that do not qualify for hedge
accounting are accounted for as trading instruments.
Derivative financial instruments which are accounted for as trading
instruments are recognised initially and subsequently stated at fair
value. The gain or loss on remeasurement to fair value is recognised
immediately in the income statement. However, where derivatives qualify
for hedge accounting, recognition of any resultant gain or loss depends
on the nature of the item being hedged.
The fair value of interest rate swaps is determined by discounting
the future cash flows at rates determined by year end yield curves.
The fair value of forward exchange contracts is their quoted market
price at the balance sheet date, being the present value of the quoted
forward price.
Upon initial recognition attributable transaction costs are recognised
in the income statement when incurred.
Fair value hedges
Where a derivative financial instrument is designated as a hedge of the
variability in fair value of a recognised asset or liability or an unrecognised
firm commitment, all changes in the fair value of the derivative are
recognised immediately in the income statement. The carrying value
of the hedged item is adjusted by the change in fair value that is
attributable to the risk being hedged (even if it is normally carried at cost
or amortised cost) and any gains or losses on remeasurement are also
recognised immediately in the income statement (even if those gains
would normally be recognised directly in reserves). Hedge accounting
is discontinued when the Group revokes the hedging relationship, the
hedge instrument expires or is sold, terminated, exercised or no longer
qualifies for hedge accounting. The adjustment to the carrying amount
of the hedged item arising from the hedged risk is amortised to profit
or loss from that date.
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the
variability in cash flows of a highly probable forecast transaction, the
effective part of any gain or loss on the derivative financial instrument is
recognised directly in equity within hedging reserves. The ineffective part
of any gain or loss is recognised immediately within operating profit, or
within net financing costs in the case of interest rate swaps designated as
cash flow hedges. When the forecast transaction that was being hedged
is realised and affects profit or loss, the cumulative gain or loss on the
derivative financial instrument is removed from equity and recognised in
the income statement in the same period. When the forecast transaction
subsequently results in the recognition of a non-financial asset or
non-financial liability, the associated cumulative gain or loss is removed
from equity and included in the initial cost or other carrying amount of
the non-financial asset or non-financial liability.
Wincanton plc
Annual Report and Accounts 2017
77
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2. OPERATING SEGMENTS
Wincanton plc provides contract logistics services in the UK and Ireland. Following the disposal of Wincaton Records Management (WRM), the Group
has, from 1 April 2016, refocused its internal management structure under the following two reportable segments; Retail & Consumer (including retail
general merchandise, retail grocery and consumer products) and Industrial & Transport (including transport services, construction and other).
Segmental information for the period ended 31 March 2016 has been realigned to reflect the changes to the reportable segments.
The results of the operating segments are regularly reviewed by the Executive Management Team (EMT) to allocate resources to these segments and
to assess their performance. The Group evaluates performance of the operating segments on the basis of revenue and underlying operating profit.
Assets and liabilities are reviewed at a consolidated level only, therefore segmental information is not provided.
Revenue from external customers1
Underlying EBITDA2
Depreciation
Amortisation of software intangibles
Underlying operating profit2
Amortisation of acquired intangibles
Exceptionals
Operating profit
Net financing costs
Profit before tax
Total Group assets3
Additions to reportable segment non-current assets:
– property, plant and equipment
– computer software costs
Total Group liabilities
Retail &
Consumer
2017
£m
649.3
32.0
(5.0)
(1.2)
25.8
Industrial &
Transport
2017
£m
468.8
31.9
(4.8)
(0.8)
26.3
3.0
0.7
15.0
0.5
Note
10
9
3
5
10
9
Total
2017
£m
1,118.1
63.9
(9.8)
(2.0)
52.1
(2.2)
6.1
56.0
(10.6)
45.4
326.2
18.0
1.2
(465.6)
1 Included in segment revenue is £1,109.0m (2016: £1,134.7m) in respect of customers based in the UK.
2 Underlying EBITDA refers to underlying operating profit before depreciation and amortisation. Underlying operating profit is stated before amortisation of acquired intangibles and exceptionals.
3 Total Group assets include non-current assets of £147.9m (2016: £148.5m) in the UK.
Revenue from external customers
Underlying EBITDA
Depreciation
Amortisation of software intangibles
Underlying operating profit
Amortisation of acquired intangibles
Exceptionals
Operating profit
Net financing costs
Profit before tax
Total Group assets
Additions to reportable segment non-current assets:
– property, plant and equipment
– computer software costs
Total Group liabilities
Retail &
Consumer
2016
£m1
624.4
32.7
(5.9)
(1.6)
25.2
Industrial &
Transport
2016
£m1
508.1
29.4
(4.6)
(1.3)
23.5
Total excl.
WRM
2016
£m
1,132.5
62.1
(10.5)
(2.9)
48.7
WRM
2016
£m
14.9
3.3
(1.1)
–
2.2
2.2
0.2
6.3
0.1
8.5
0.3
1.5
0.1
Note
10
9
3
5
10
9
Total
2016
£m
1,147.4
65.4
(11.6)
(2.9)
50.9
(4.5)
35.0
81.4
(15.6)
65.8
329.0
10.0
0.4
(513.3)
1 Segmental information has been restated to reflect changes to the reportable segments.
Revenue of £201.7m (2016: £162.4m) and £143.3m (2016: n/a) arose from sales to the Group’s two largest single customers, being groups of companies
under common control, and is reported within the Retail & Consumer segment above. No other single customer or group of customers under common
control contributed 10% or more to the Group’s revenue in either the current or prior year.
78
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Annual Report and Accounts 2017
3. OPERATING PROFIT
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
2017
Amortisation and
Exceptionals2
£m
–
–
–
3.9
3.9
Underlying1
£m
1,118.1
(1,047.2)
70.9
(18.8)
52.1
Total
£m
1,118.1
(1,047.2)
70.9
(14.9)
56.0
2016
Amortisation and
Exceptionals2
£m
–
–
–
30.5
30.5
Underlying1
£m
1,147.4
(1,077.2)
70.2
(19.3)
50.9
Total
£m
1,147.4
(1,077.2)
70.2
11.2
81.4
1 Underlying operating profit is stated before amortisation of acquired intangibles and exceptionals.
2 Comprises the amortisation of acquired intangibles and exceptionals.
The following items have been charged in arriving at operating profit:
Auditor’s remuneration:
Audit fees for statutory audit services
– subsidiary undertakings
Non-audit fees
– fees paid to the auditor and its associates for assurance services
– fees paid to the auditor and its associates for other services
Depreciation and other amounts written off property, plant and equipment
Amortisation and other amounts written off software intangibles
Amortisation of acquired intangibles
Operating lease rentals
– plant and equipment
– land and buildings
Exceptionals
Exceptional income
Items related to disposed businesses
Profit recognised on the disposal of WRM
Other items
Note
2017
£m
2016
£m
10
9
0.2
0.1
–
9.8
2.0
2.2
25.7
20.1
2017
£m
4.6
–
1.5
6.1
0.2
0.1
0.1
11.6
2.9
4.5
29.8
28.1
2016
£m
2.6
32.4
–
35.0
Costs and incomes are included as exceptionals where they are non-recurring and where not to do so would distort the reported underlying profit
performance of the Group.
During the year, non-cash gains of £4.6m (2016: £2.6m) were recognised on the remeasurement of liabilities relating to disposed businesses.
These include warranty balances held in respect of the disposal of the European operations and WRM.
In the prior year, exceptional profit arose on the disposal of WRM.
Other items comprise the settlement of a claim against a supplier, partially offset by the costs of initiating an Enhanced Transfer Value exercise
in the Pension Scheme.
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Annual Report and Accounts 2017
79
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4. PERSONNEL EXPENSES, INCLUDING DIRECTORS
Wages and salaries
Share based payments (including IFRS 2 fair value charges)
Social security contributions
Contributions to defined contribution pension arrangements
Average number of persons employed by the Group (including Directors) during the year
Directors’ emoluments
Salaries
Bonus
Other benefits
Non-executive Directors’ fees
Total emoluments
Note
23
2017
£m
461.6
1.7
44.6
17.9
525.8
2016
£m
463.2
1.1
44.2
18.1
526.6
2017
17,170
2016
17,070
2017
£’000
734
755
183
366
2,038
2016
£’000
682
449
172
379
1,682
Full details of each individual Director’s emoluments, bonuses, share options and pension entitlements are given in the Annual Report on Remuneration
on pages 45 to 53.
5. NET FINANCING COSTS
Recognised in the income statement
Interest income
Interest expense
Unwinding of discount on provisions
Interest on the net defined benefit pension liability
Net financing costs
Recognised in other comprehensive income
Foreign currency translation differences for foreign operations – recognised in the translation reserve
Note
19
23
2017
£m
0.1
(6.0)
(1.2)
(3.5)
(10.7)
(10.6)
2017
£m
(0.1)
2016
£m
0.2
(10.1)
(1.3)
(4.4)
(15.8)
(15.6)
2016
£m
0.3
80
Wincanton plc
Annual Report and Accounts 2017
6. INCOME TAX EXPENSE
Recognised in the income statement
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Current year
Adjustments for prior years
Total income tax expense
Reconciliation of effective tax rate
Profit before tax
Income tax using the UK corporation tax rate of 20% (2016: 20%)
Non-deductible expenditure
Non-taxable income
Change in UK corporation tax rate
Effect of tax rate in foreign jurisdictions
Adjustments for prior years
– current tax
– deferred tax
Other
Total tax expense for the year
Recognised in other comprehensive income
Items which will not subsequently be reclassified to the Income statement:
Remeasurements of defined benefit pension liability
Recognised directly in equity
Current tax on share based payment transactions
Deferred tax on share based payments transactions
2017
£m
7.0
(4.3)
2.7
1.6
(0.9)
0.7
3.4
2017
£m
45.4
9.1
0.4
(1.0)
–
(0.1)
(4.3)
(0.9)
0.2
3.4
2017
£m
4.0
2017
£m
(1.1)
0.1
(1.0)
The main UK Corporation tax rate, which has remained at 20% since 1 April 2015, will reduce to 19% with effect from 1 April 2017 and will further
reduce to 17% with effect from 1 April 2020 and should reduce the Group’s future current tax charge accordingly.
The Group maintains a provision against tax risks, which is included within income tax payable.
The total tax expense above includes tax credits of £0.4m (2016: £0.9m) in respect of amortisation of acquired intangibles and exceptional tax
of £3.7m (2016: £0.9m).
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£m
6.7
(2.9)
3.8
0.8
0.1
0.9
4.7
2016
£m
65.8
13.2
1.2
(8.0)
(0.1)
–
(2.9)
0.1
1.2
4.7
2016
£m
7.0
2016
£m
(2.2)
(0.5)
(2.7)
Wincanton plc
Annual Report and Accounts 2017
81
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
7. EARNINGS PER SHARE
Earnings per share calculation is based on the profit attributable to the equity shareholders of Wincanton plc of £42.0m (2016: £61.1m) and the weighted
average shares in issue throughout the year as calculated below of 122.8m (2016: 120.5m). The diluted earnings per share calculation is based on there
being 4.3m (2016: 8.5m) additional shares deemed to be issued at £nil consideration under the Company’s share option schemes.
Weighted average number of Ordinary Shares (basic)
Issued Ordinary Shares at the beginning of the year
Net effect of shares issued and purchased during the year
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares at the end of the year (as above)
Effect of share options on issue
2017
millions
2016
millions
121.9
0.9
122.8
122.8
4.3
127.1
116.5
4.0
120.5
120.5
8.5
129.0
An alternative earnings per share measure is set out below, being earnings, before amortisation of acquired intangibles and exceptionals including
related tax and exceptional tax items where applicable, since the Directors consider that this provides further information on the underlying
performance of the Group:
Underlying earnings per share
– basic
– diluted
Underlying earnings are determined as follows:
Profit for the year attributable to equity shareholders of Wincanton plc
Exceptionals
Amortisation of acquired intangibles
Tax impact of above items and exceptional tax items
Underlying earnings
8. DIVIDENDS
Dividends paid in the year comprise:
Final dividend for the year ended 31 March 2016 of 5.5p per share (2015: nil)
Interim dividend for the period ended 30 September 2016 of 3.0p per share (2015: nil)
Note
3
9
2017
pence
27.7
26.8
2017
£m
42.0
(6.1)
2.2
(4.1)
34.0
2017
£m
6.7
3.7
10.4
2016
pence
23.9
22.3
2016
£m
61.1
(35.0)
4.5
(1.8)
28.8
2016
£m
–
–
–
The Directors are proposing a final dividend of 6.1p per share for the year ended 31 March 2017 (2016: 5.5p) which, if approved by shareholders, will be
paid on 4 August 2017 to shareholders on the register on 7 July 2017, an estimated total of £7.5m. The proposed final dividend is subject to approval
by shareholders at the Annual General Meeting on 29 June 2017 and in accordance with Adopted IFRS has not been included as a liability in these
financial statements.
In setting the dividend the Directors have considered a range of factors, including the Group‘s strategy (including downside sensitivities), the Group’s
net debt position, the current and projected level of distributable reserves and projected cash flows.
The Employee Benefit Trust has waived the right to receive dividends in respect of the shares it holds, see Note 20 for further detail.
82
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Annual Report and Accounts 2017
9. GOODWILL AND INTANGIBLE ASSETS
Cost
At 1 April 2015
Effect of movements in foreign exchange
Additions
At 31 March 2016
At 1 April 2016
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2017
Amortisation and impairment losses
At 1 April 2015
Charge for year
At 31 March 2016
At 1 April 2016
Charge for year
Disposals
At 31 March 2017
Carrying value
At 1 April 2015
At 31 March 2016 and 1 April 2016
At 31 March 2017
Note
Goodwill
£m
Acquired
intangibles
£m
Computer
software costs
£m
2
2
2, 3
2, 3
79.4
0.2
–
79.6
79.6
0.3
–
–
79.9
(2.5)
–
(2.5)
(2.5)
–
–
(2.5)
76.9
77.1
77.4
66.5
–
–
66.5
66.5
–
–
–
66.5
(57.5)
(4.5)
(62.0)
(62.0)
(2.2)
–
(64.2)
9.0
4.5
2.3
38.9
–
0.4
39.3
39.3
–
1.2
(0.7)
39.8
(28.0)
(2.9)
(30.9)
(30.9)
(2.0)
0.3
(32.6)
10.9
8.4
7.2
Total
£m
184.8
0.2
0.4
185.4
185.4
0.3
1.2
(0.7)
186.2
(88.0)
(7.4)
(95.4)
(95.4)
(4.2)
0.3
(99.3)
96.8
90.0
86.9
The carrying value of acquired intangibles of £2.3m (2016: £4.5m) relates entirely to customer relationships.
The total amortisation charge of £4.2m (2016: £7.4m) is recognised in the income statement with £2.0m (2016: £2.9m) of computer software amortisation
included within cost of sales and £2.2m (2016: £4.5m) of amortisation of acquired intangibles within administrative expenses.
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs) which are in line with the Group’s reported operating segments, as per the table
below. At 1 April 2016, CGUs were restructured in line with the change in the reported operating segments. Reported figures at 31 March 2016 have
been restated accordingly.
Retail & Consumer
Industrial & Transport
2017
£m
25.8
51.6
77.4
2016
restated
£m
25.5
51.6
77.1
The recoverable amount of a CGU is determined based on value in use calculations. These calculations are cash flow projections based on the financial
budgets and forecasts approved by the Board for the forthcoming financial year and 24 months beyond. The financial budgets and forecasts have
been set on a contract by contract basis, taking account of prior year results and expected developments. Cash flows beyond those 12-month and
further 24-month periods are extrapolated to perpetuity using the estimated growth rates and underlying inflation rates stated below, which do not
exceed the long term average growth and inflation rates in the specific geographical area where the CGU operates.
Key assumptions used for value in use calculations:
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Estimated growth rate
Underlying inflation rate
Discount rate
Retail &
Consumer
%
1.7
2.1
8.6
Industrial &
Transport
%
1.7
2.1
8.6
Wincanton plc
Annual Report and Accounts 2017
83
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
9. GOODWILL AND INTANGIBLE ASSETS (CONTINUED)
Management determined the growth rates and underlying inflation rates based on expectations for market development and these are consistent with
external forecasts and historical trends. The discount rates are pre-tax and reflect the relevant risks. The value in use has been determined in a similar
manner as in 2016. The key assumptions for 2017 are disclosed in the table above, in 2016 these rates were; estimated growth rate 1.9%; underlying
inflation rate 2.1%; and discount rate 8.6%.
Sensitivity to changes in assumptions
The estimated recoverable amounts for both the Retail & Consumer and the Industrial & Transport CGUs exceed their respective carrying amounts
by approximately £382m and £356m (2016: £355m and £281m respectively). The Group has conducted sensitivity analysis on the impairment
testing. Management believe no significant change in the key assumptions would cause the carrying amount to exceed the recoverable amount
for either CGU.
10. PROPERTY, PLANT AND EQUIPMENT
Note
Property
£m
Plant and
equipment
£m
Cost
At 1 April 2015
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2016
At 1 April 2016
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2017
Depreciation and impairment losses
At 1 April 2015
Effect of movements in foreign exchange
Charge for year
Disposals
At 31 March 2016
At 1 April 2016
Effect of movements in foreign exchange
Charge for year
Disposals
At 31 March 2017
Carrying amount
At 1 April 2015
At 31 March 2016 and 1 April 2016
At 31 March 2017
2
2
2, 3
2, 3
45.3
0.1
–
(2.8)
42.6
42.6
0.1
–
(0.1)
42.6
(28.8)
(0.1)
(1.3)
1.9
(28.3)
(28.3)
(0.1)
(0.6)
0.2
(28.8)
16.5
14.3
13.8
Included in the total cost of property, plant and equipment is £1.0m (2016: £1.0m) in respect of capitalised finance costs.
The carrying amount of property comprises:
Freehold
Short leasehold
84
Wincanton plc
Annual Report and Accounts 2017
168.2
(0.2)
10.0
(44.9)
133.1
133.1
0.1
18.0
(12.2)
139.0
(126.5)
–
(10.3)
25.0
(111.8)
(111.8)
(0.1)
(9.2)
12.0
(109.1)
41.7
21.3
29.9
2017
£m
10.3
3.5
13.8
Total
£m
213.5
(0.1)
10.0
(47.7)
175.7
175.7
0.2
18.0
(12.3)
181.6
(155.3)
(0.1)
(11.6)
26.9
(140.1)
(140.1)
(0.2)
(9.8)
12.2
(137.9)
58.2
35.6
43.7
2016
£m
10.4
3.9
14.3
11. INVESTMENTS IN SUBSIDIARIES
The significant subsidiaries and jointly controlled entity as at 31 March 2017 in the Wincanton group of companies, based on the scale of their activities,
are as follows:
Wincanton Holdings Limited
Wincanton Group Limited
Wincanton UK Limited4
Wincanton Ireland Limited
Risk Underwriting (Guernsey) Limited
UDS Properties Limited
C.E.L. Group Limited
Corstor Limited
Other subsidiaries and jointly controlled entity as at 31 March 2017:
Principal activity
Contract logistics services
Contract logistics services
Intermediate holding company
Contract logistics services
Insurance subsidiary
Building and letting of
specialised warehousing facilities
Intermediate holding company
Container storage and repair
% of equity held
100
100
100
100
100
100
100
50
C.E.L. (Engineering) Limited
CEL (Logistics) Limited
City Self Storage Limited
Data and Records Management Limited
East Anglia Freight Terminal (Holdings) Limited
East Anglia Freight Terminal Limited
Glass Glover Group Limited
Glass Glover Management Services Limited
Hanbury Davies Containers Limited
Hanbury Davies Limited
Hanbury Holdings Limited
House of Hill Holdings Limited
House of Hill Limited
Lane Group plc
Minmar (662) Limited
Nair Properties Limited
Product Support (Holdings) Limited
Product Support Limited
Pullman Fleet Services Limited
RDL Distribution Limited
RDL Holdings Limited
R-Log Limited
Roadtanks Limited
Storedco Limited
Swales Haulage Limited
Trans European Holdings Limited
W. Carter (Haulage) Limited
W O Bradstreet Limited
Wincanton (No. 1) Limited
Wincanton (No. 2) Limited
Wincanton (No. 3) Limited
Wincanton Air & Ocean Limited
Wincanton High Tech Limited
Wincanton Logistics Limited
Principal activity
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
% of equity held
100
100
100
100
84.5
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
Country of incorporation and
registered office
England and Wales1
England and Wales1
England and Wales1
Republic of Ireland3
Guernsey2
England and Wales1
England and Wales1
England and Wales1
Country of incorporation and
registered office
England and Wales1
England and Wales1
Republic of Ireland3
Republic of Ireland3
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
England and Wales1
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Wincanton plc
Annual Report and Accounts 2017
85
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
11. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Wincanton Pension Scheme Trustees Limited
Wincanton Records Management (Ireland) Limited
Wincanton Trans European (Ireland) Limited
Wincanton Trans European Limited
Wincanton Vehicle Rentals Limited
Principal activity
Trustee for the Wincanton plc
Pension Scheme
Dormant
Dormant
Dormant
Dormant
% of equity held
Country of incorporation and
registered office
100
100
100
100
100
England and Wales1
Republic of Ireland3
Republic of Ireland3
England and Wales1
England and Wales1
1 Registered office: Methuen Park, Chippenham, Wiltshire, SN14 0WT.
2 Registered office: Maison Trinity, Trinity Square, St Peter Port, Guernsey, GY1 4AT.
3 Registered office: Unit 1, Rosemount Business Park, Ballycoolin Road, Blanchardstown, Dublin 11.
4 Direct subsidiary of Wincanton plc.
12. INTERESTS IN JOINTLY CONTROLLED ENTITIES
Included in the consolidated financial statements of the Group are the following amounts in respect of the Group’s share of the assets and liabilities
of its joint venture:
Current assets
Aggregate carrying amount of the Group’s interest in its joint venture
13. DEFERRED TAX ASSETS AND LIABILITIES
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Equity compensation benefits
Pension provisions
Other assets
Other liabilities
Assets
Liabilities
2017
£m
2.6
1.3
13.3
0.4
(0.4)1
17.2
2016
£m
3.1
1.4
19.0
0.2
(0.9)1
22.8
2017
£m
–
–
–
–
–
–
2016
£m
–
–
–
–
(0.8)
(0.8)
1 Other tax liabilities consist primarily of deferred tax on acquired intangibles.
Unrecognised deferred tax assets and liabilities
Deferred tax asset on losses carried forward
2017
£m
0.1
0.1
Net
2017
£m
2.6
1.3
13.3
0.4
(0.4)
17.2
2017
£m
0.3
2016
£m
0.1
0.1
2016
£m
3.1
1.4
19.0
0.2
(1.7)
22.0
2016
£m
0.1
Deferred tax assets have not been recognised in respect of losses carried forward due to the uncertainty of their utilisation in the relevant companies.
Movement in deferred tax assets and liabilities during the current year
At
1 April 2016
£m
3.1
1.4
19.0
0.2
(1.7)
22.0
Recognised
in income
£m
(0.5)
–
(1.7)
0.2
1.3
(0.7)
Other
movements
£m
–
(0.1)
(4.0)
–
–
(4.1)
At
31 March 2017
£m
2.6
1.3
13.3
0.4
(0.4)
17.2
Property, plant and equipment
Equity compensation benefits
Pension provisions
Other assets
Other liabilities
86
Wincanton plc
Annual Report and Accounts 2017
14. INVENTORIES
Raw materials and consumables
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: provision for doubtful debts
Net trade receivables
Other receivables
Prepayments and accrued income
2017
£m
4.0
2017
£m
87.1
(0.8)
86.3
0.4
46.7
133.4
All receivables are due within one year, except for other receivables which include £0.2m (2016: £0.4m) in respect of amounts recoverable from
customers and others under contracts of more than one year and prepayments and accrued income which include £0.6m (2016: £0.5m).
Movement in the provision for doubtful debts
At 1 April
Impairment losses recognised on receivables
Amounts written off as unrecoverable
At 31 March
Ageing of trade receivables and the associated provision for doubtful debts at the balance sheet date
Current
1 month overdue
2 months overdue
3+ months overdue
2017
Gross
£m
79.5
5.5
0.7
1.4
87.1
Provision
£m
–
–
–
(0.8)
(0.8)
The standard period of credit on sales is up to 30 days. Interest is chargeable on overdue amounts.
16. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Restricted cash deposits held by the Group’s insurance subsidiary
Cash and cash equivalents
Details of the Group’s treasury policies are set out in Note 25.
2017
£m
0.8
0.1
(0.1)
0.8
2016
Gross
£m
83.2
7.9
1.2
1.7
94.0
2017
£m
33.0
7.9
40.9
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£m
4.8
2016
£m
94.0
(0.8)
93.2
1.0
45.2
139.4
2016
£m
0.6
0.3
(0.1)
0.8
Provision
£m
–
–
–
(0.8)
(0.8)
2016
£m
26.3
10.0
36.3
Wincanton plc
Annual Report and Accounts 2017
87
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
17. BORROWINGS AND OTHER FINANCIAL LIABILITIES
Current
Bank loans and overdrafts1
Other financial liabilities
Non-current
Bank loans
Other financial liabilities
1 Bank loans in 2016 include the US$ private placement as swapped into sterling.
The following are the contractual maturities of financial liabilities, excluding interest payments:
At 31 March 2017
2017
£m
0.1
0.1
0.2
65.0
–
65.0
2016
£m
20.1
0.3
20.4
55.0
0.4
55.4
Carrying
amount
£m
Contractual
cash flows
£m
Less than
1 year
£m
Between
1 and 5 years
£m
Over
5 years
£m
65.1
265.4
0.6
(0.5)
330.6
65.1
265.4
0.6
(0.5)
330.6
0.1
265.4
0.3
(0.2)
265.6
65.0
–
0.3
(0.3)
65.0
–
–
–
–
–
Carrying
amount
£m
Contractual
cash flows
£m
Less than
1 year
£m
Between
1 and 5 years
£m
Over
5 years
£m
55.0
22.7
272.1
(22.7)
20.1
0.8
(0.1)
347.9
55.0
22.4
272.1
(22.4)
20.1
0.8
(0.1)
347.9
–
22.4
272.1
(22.4)
20.1
0.3
–
292.5
48.8
–
–
–
–
0.5
(0.1)
49.2
2017
£m
42.2
36.6
34.3
152.3
265.4
6.2
–
–
–
–
–
–
6.2
2016
£m
47.3
36.2
48.4
140.2
272.1
Non-derivative financial liabilities
Bank loans and overdrafts
Trade and other payables
Derivative financial liabilities
Interest rate swaps
Forward foreign exchange contracts
At 31 March 2016
Non-derivative financial liabilities
Bank loans and overdrafts
Unsecured bond issues – US$ private placement1
Trade and other payables
Derivative financial liabilities
US$/GBP fixed to floating swap – asset1
US$/GBP fixed to floating swap – liability
Interest rate swaps
Forward foreign exchange contracts
1 Contractual cash flows denominated in foreign currencies are translated at the year end exchange rate. Carrying amounts are stated at fair value.
18. TRADE AND OTHER PAYABLES
Current
Trade payables
Other taxes and social security
Other payables
Accruals and deferred income
88
Wincanton plc
Annual Report and Accounts 2017
19. PROVISIONS
At 1 April 2016
Effect of movements in foreign exchange
Provisions used during the year
Unwinding of discount
Reclassification
Provisions made during the year
At 31 March 2017
Current
Non-current
Note
5
Insurance
£m
35.6
–
(9.0)
0.6
1.4
4.9
33.5
10.0
23.5
33.5
Property
£m
15.3
0.3
(2.7)
0.6
0.9
2.1
16.5
5.2
11.3
16.5
Other
provisions
£m
0.5
–
(0.5)
–
–
–
–
–
–
–
Total
£m
51.4
0.3
(12.2)
1.2
2.3
7.0
50.0
15.2
34.8
50.0
The Group owns 100% of the share capital of an insurance company which insures certain of the risks of the Group. The insurance provisions in the
above table are held in respect of outstanding insurance claims, the majority of which are expected to be paid within one to seven years. The discount
unwinding arises primarily on the employers’ liability policy which is discounted over a period of seven years at a rate based on the Group’s assessment
of a risk free rate.
The property provisions are determined on a site by site basis, as the best estimate of the expected costs of empty and under-utilised properties,
including dilapidations. Provisions made in the year comprise dilapidations made in the normal course of business. The provisions are utilised over the
relevant lease term, with the majority expected to be utilised over the next three years. Amounts have been discounted at a rate based on the Group’s
assessment of a risk free rate.
Reclassification includes amounts previously reported within creditors.
20. CAPITAL AND RESERVES
Share capital
Allotted, called up and fully paid
At 1 April
Issued during the year
In issue at 31 March
10p Ordinary Shares
2017
millions
123.7
–
123.7
2016
millions
121.7
2.0
123.7
The number of shares detailed above differs from those in Note 7 as a result of the inclusion, in the above total, of the shares held within an Employee
Benefit Trust (EBT) and also the effect of weighting for the purpose of the earnings per share calculations.
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time. At general meetings of shareholders each shareholder
(or appointed proxy) present in person is entitled to vote; on a show of hands each person has one vote, and on a poll has one vote per share. In respect
of the Company’s shares that are held by the EBT (see over), all rights are suspended until these shares are reissued.
During the year ended 31 March 2002, the Company established a Capital Redemption Reserve of £49,998 on redemption of redeemable
preference shares.
Merger reserve
The merger reserve arose from the original acquisition of the then Wincanton group of companies by Wincanton plc, on the demerger from the
previous parent in May 2001, which was accounted for under merger accounting principles.
Hedging reserve
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a highly probable forecast transaction, the effective
part of the gain or loss on the derivative is recognised directly in equity within the hedging reserve. When the forecast transaction that was being
hedged is realised the cumulative gain or loss on the derivative is recognised in the income statement in the same period.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations as well
as from any translation of liabilities that hedge the Company’s net investment in foreign subsidiaries.
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Annual Report and Accounts 2017
89
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
20. CAPITAL AND RESERVES (CONTINUED)
Own shares
The own shares reserve comprises the cost of the Company’s shares held by the EBT established in Jersey and managed on its behalf by independent
trustees. At 31 March 2017, the number of the Company’s shares held by the EBT had decreased to 295,033 (2016: 1,806,521). The EBT has waived the
right to receive dividends in respect of the shares it holds. The average cost of the shares held is 161p each (2016: 173p) and at 31 March 2017, the market
value of the shares held was £0.8m (2016: £3.0m).
All of the shares in the EBT are held in respect of the Group’s various equity compensation schemes (see Note 24) and at 31 March 2017 there were
295,033 (2016: 1,806,521) shares held in respect of vested options.
21. CAPITAL COMMITMENTS
Capital commitments for the Group at the end of the financial year for which no provision has been made, are as follows:
Contracted
22. OPERATING LEASES
2017
£m
9.7
2016
£m
1.8
Leases as lessee
The Group leases warehousing facilities, commercial vehicles and other logistics equipment for use in its operations. Typical lease periods for new
warehouse rental contracts are between three and ten years although older rental contracts are for longer periods with intervening break clauses.
The average period for vehicles and equipment is five years. The amounts charged to the income statement in the current and prior years are shown
in Note 3.
The total future minimum lease payments under non-cancellable operating leases fall due for repayment as follows:
Less than 1 year
Between 1 and 5 years
More than 5 years
2017
2016
Plant and
equipment
£m
19.0
30.9
1.2
51.1
Land and
buildings
£m
19.0
46.7
108.5
174.2
Plant and
equipment
£m
20.5
31.8
1.6
53.9
Land and
buildings
£m
19.6
46.6
108.7
174.9
Wherever possible these commitments are mitigated through contractual commitments from customers for whom the properties are occupied and/or
vehicles and plant are rented. The degree of mitigation can be banded according to the nature of the contract between the Group and its customers.
This includes ‘back-to-back’ leases which are fully underwritten by customers throughout the life of the lease and multi-user locations where, although
there is no specific matching of lease and contract terms, there are varying degrees of contract backing and therefore mitigation is spread across a
number of customers.
A summary of leases by customer contract type is shown in the following table:
Element of lease underwritten by customer contract
Element of lease where the period of the lease extends beyond the current
maturity of the customer contract
Multi-user locations where mitigation is spread across a number of customers
Leases with limited or no mitigation
Covered by property provision
2017
Plant and
equipment
£m
30.8
14.1
5.1
1.1
51.1
–
51.1
Land and
buildings
£m
30.1
8.4
120.7
7.5
166.7
7.5
174.2
2016
Plant and
equipment
£m
35.8
6.8
10.0
1.3
53.9
–
53.9
Land and
buildings
£m
34.5
15.1
107.3
8.7
165.6
9.3
174.9
90
Wincanton plc
Annual Report and Accounts 2017
23. EMPLOYEE BENEFITS
The employee benefit liabilities of the Group consist primarily of the post-retirement obligations of the Group’s pension arrangements. In addition,
frozen holiday pay obligations exist in respect of a limited number of employees. These two elements are analysed in the table below and the pension
arrangements discussed in detail:
Holiday pay
Pension schemes (see below)
These employee benefits are split as follows:
Current
Non-current
2017
£m
0.2
78.4
78.6
0.2
78.4
78.6
2016
£m
0.3
105.6
105.9
0.3
105.6
105.9
Pension schemes
Employees of Wincanton participated in funded pension arrangements in the UK and Ireland during the year ended 31 March 2017 details of which
are given below.
The principal Wincanton Scheme in the UK (the Scheme) is a funded arrangement which has three defined benefit sections and two defined
contribution sections, called the Wincanton Retirement Savings Section and the Wincanton Pension Builder Plan. The employees of Wincanton Ireland
Limited are eligible to participate in a separate defined contribution scheme. Assets of these pension arrangements are held in separate Trustee
administered funds independent of Wincanton. The weighted average duration of the funded defined benefit obligation is approximately 18 years.
In previous years, a small number of employees, who were subject to the statutory earnings cap on pensionable earnings prior to 6 April 2006, were
entitled to participate in an unfunded unapproved arrangement in addition to accruing benefits from the Scheme. There have been no active
members of this arrangement throughout the years ended 31 March 2016 and 2017.
The defined benefit sections of the Scheme were closed to future accrual on 31 March 2014. This means that no future service benefit will accrue but
pensions built up to the date of closure have been preserved.
The latest formal valuation of the Scheme was carried out as at 31 March 2014 by the Scheme actuary, Hymans Robertson. It was agreed between the
Trustee and the Group in April 2015 and submitted to the Pension Regulator. The Group, in consultation with the Trustee, agreed to leave the terms of
the cash contribution that the Group makes to the Scheme in order to address the past service deficit unchanged from that previously agreed and it
will continue to increase by RPI each year through to September 2024. In addition, it was agreed that certain administration expenses would be paid
directly by the Group and deducted from these deficit funding contributions. The expenses, which amount to £0.7m (2016: £0.6m), are not included in
the contributions below. The deficit funding contribution in the year net of these expenses was £14.1m (2016: £13.9m; £20.9m including an additional
£7.0m paid into the Scheme following the disposal of WRM). The next triennial valuation will be carried out by the Scheme actuary as at 31 March 2017.
In the year commencing 1 April 2017, the Group contributions are expected to be the deficit funding contribution of £15.2m (£14.6m after deduction
of certain administration expenses as mentioned above) which has been increased by RPI as set out in the triennial valuation as at 31 March 2014.
In addition, other administration costs of the Scheme will be borne directly by the Group, these are expected to total £0.7m.
The defined benefit sections of the Scheme expose the Group to various risks: longevity risk (members living longer than expected), inflation and
interest rate risk (higher or lower than expected), and market (investment) risk (lower returns than expected). The Trustee and Group have taken steps
to mitigate these risks through the use of:
• hedging instruments within the investment portfolio; and
• diversification of the investment portfolio.
The Group has also taken steps to reduce risk and the build-up of further liabilities and associated risk, as mentioned above, by closing the defined
benefit section to future benefit accrual and undertaking various liability management exercises. These include a pension increase exchange exercise
reducing the Group’s exposure to inflation risk; a trivial commutation exercise where, in line with the Scheme rules, members with small accrued
defined benefit pensions are able to exchange their pension for a one off cash sum; and a recently launched Enhanced Transfer Value exercise,
where deferred members approaching retirement may choose to transfer out of the Scheme in order to access the new flexible retirement options
now available.
The Group is not exposed to any unusual, entity specific or scheme specific risks.
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Wincanton plc
Annual Report and Accounts 2017
91
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
23. EMPLOYEE BENEFITS (CONTINUED)
The assets and liabilities of the defined benefit sections of the Group are calculated in accordance with IAS 19 Employee Benefits (Revised) and are set
out in the tables below.
The calculations under IAS 19 are based on actuarial assumptions which are the best estimates chosen from a range of possible assumptions about the
long term future which, unless by chance, will not necessarily be borne out in practice. The fair value of the assets, which are not intended to be realised
in the short term, may be subject to significant change before they are realised, and the present value of the liabilities are derived from cash flow
projections over long periods and are thus inherently uncertain.
Present value of unfunded defined benefit obligations
Present value of funded defined benefit obligations
Fair value of Scheme assets
Net defined benefit liability
2017
£m
(2.2)
(1,156.7)
1,080.5
(78.4)
2016
£m
(1.7)
(1,001.0)
897.1
(105.6)
The movement in the above net defined benefit liability in the year was primarily the result of an increase in the market value of the investments, a
reduction in liabilities due to demographic assumptions and contributions received from the Group, being partly offset by an increase in liabilities
resulting from a fall in the discount rate. The net defined benefit liability, after taking into account the related deferred tax asset, is £65.1m (2016: £86.6m).
Movements in the present value of the net defined benefit liability
Assets
£m
897.1
(1.7)
30.8
14.8
(57.0)
–
–
196.5
1,080.5
Assets
£m
924.8
(1.5)
29.8
21.5
(32.2)
–
–
(45.3)
897.1
31 March 2017
Opening position
Included in Income statement:
Administration costs
Interest on the net defined benefit liability
Cash:
Employer contributions
Benefits paid
Included in Other comprehensive income:
Changes in financial assumptions
Changes in demographic assumptions
Experience
Return on assets excluding amounts included
in net financing costs
Closing defined benefit liability
31 March 2016
Opening position
Included in Income statement:
Administration costs
Interest on the net defined benefit liability
Cash:
Employer contributions
Benefits paid
Included in Other comprehensive income:
Changes in financial assumptions
Experience
Return on assets excluding amounts included
in net financing costs
Closing defined benefit liability
92
Wincanton plc
Annual Report and Accounts 2017
Obligations
£m
(1,001.0)
Net liability
£m
(103.9)
Unfunded
arrangements
£m
(1.7)
Total
net liability
£m
(105.6)
–
(34.2)
–
57.0
(202.1)
24.2
(0.6)
–
(1,156.7)
Obligations
£m
(1,067.2)
–
(34.1)
–
32.2
53.3
14.8
(1.7)
(3.4)
14.8
–
(202.1)
24.2
(0.6)
196.5
(76.2)
–
(0.1)
–
–
(0.4)
–
–
–
(2.2)
Net liability
£m
(142.4)
Unfunded
arrangements
£m
(1.8)
(1.5)
(4.3)
21.5
–
53.3
14.8
–
(0.1)
–
–
0.2
–
–
(1.7)
(1.7)
(3.5)
14.8
–
(202.5)
24.2
(0.6)
196.5
(78.4)
Total
net liability
£m
(144.2)
(1.5)
(4.4)
21.5
–
53.5
14.8
(45.3)
(105.6)
–
(1,001.0)
(45.3)
(103.9)
23. EMPLOYEE BENEFITS (CONTINUED)
The amounts recognised in the income statement comprise administration costs and interest on the net defined benefit liability.
These charges are included in the following lines in the income statement:
Cost of sales
Administrative expenses
Within underlying operating profit
Financing costs
Recognised in Income statement
The market value of the Scheme assets held at the end of the year were as follows:
Equities and synthetic equities
Hedge funds
Property and other growth assets
Corporate bonds
Multi asset credits
Senior real estate and private debt
Index-linked gilts (LDI portfolio collateral)
Notional exposure for synthetic equities/LDI hedging arrangements
Other, including cash
All equities, bonds and funds have quoted prices in active markets.
Note
5
2017
£m
–
1.7
1.7
3.5
5.2
2017
£m
306.4
67.7
58.3
143.0
78.9
76.2
458.5
(170.1)
61.6
1,080.5
The synthetic equities provide exposure to the UK, North America, Europe, Asia-Pacific and Japan. The LDI portfolio currently hedges c. 89%
of the defined benefit scheme’s inflation rate risk and c. 78% of the interest rate risk (relative to Scheme assets) through holding a combination
of index-linked gilts, interest rate and inflation swaps, gilt total return swaps, gilt repos, and cash.
Liability for defined benefit obligations
The principal actuarial assumptions for the Scheme and for the UK unfunded arrangement at the balance sheet date were as follows:
Discount rate
Price inflation rate – RPI
Price inflation rate – CPI
Rate of increase of pensions in deferment
– for service to 31 March 2006
– for service from 1 April 2006
2017
%
2.60
3.15
2.15
3.05
2.15
The assumptions used for mortality rates for members of these arrangements at the expected retirement age of 65 years are as follows:
Male aged 65 today
Male aged 45 today
Female aged 65 today
Female aged 45 today
2017
Years
21.2
23.5
23.4
26.4
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£m
–
1.5
1.5
4.4
5.9
2016
£m
257.1
83.9
66.7
178.9
71.4
52.3
256.1
(134.9)
65.6
897.1
2016
%
3.50
2.95
1.95
2.90
2.10
2016
Years
21.4
23.8
23.5
26.5
Wincanton plc
Annual Report and Accounts 2017
93
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
23. EMPLOYEE BENEFITS (CONTINUED)
Sensitivity table
The sensitivity of the present value of the Scheme obligations to changes in the key actuarial assumptions are set out in the following table.
The illustrations consider the result of only a single assumption changing with the others assumed unchanged, although in reality it is more likely
that more than one assumption would change and potentially the results would offset each other. For example, a fall in interest rates will increase
the Scheme obligations, but may also trigger an offsetting increase in market value of certain Scheme assets.
Discount rate
Price inflation – RPI
Mortality rate
Change in
assumption
+0.1%
+0.1%
+ 1 year
Impact on liability
£m
(21.5)
10.9
46.3
Defined contribution schemes
The total expense relating to the Group’s defined contribution schemes in the current year was £17.9m (2016: £18.1m).
24. EQUITY COMPENSATION BENEFITS
Employees of the Group participate, subject to seniority and length of service, in the Long Term Incentive Plan (LTIP). The other schemes in existence
are the Executive Bonus Plan (EBP) and Special Option Plan (SOP), although no grants were made in respect of these schemes in the year. All of these
schemes involve the grant of options or conditional awards of shares in the Company.
Grants of options are accounted for in accordance with IFRS 2 Share-based Payments, which requires the fair value of services received in return for
share options granted to be recognised in the Income statement over the vesting period. The Group recognised total expenses of £0.9m (2016: £0.9m)
in respect of the costs of equity-settled share based payment transactions during the year. The fair value of these services is measured by reference
to the fair value of the share options granted under each scheme.
The number of options outstanding and exercisable in respect of each scheme at 31 March 2017 is as follows:
Long Term Incentive Plan
July 2015
September 2015
July 2016
November 2016
Special Option Plans
July 2012
January 2013
July 2013
July 2014
December 2014
Total number of share options
Outstanding
Exercisable
Option price
pence/share
Date normally
exercisable
656,827
142,512
724,142
45,570
1,569,051
100,000
1,059,322
1,078,064
1,492,450
137,447
3,867,283
5,436,334
–
–
–
–
–
100,000
1,059,322
1,078,064
–
–
2,237,386
2,237,386
–
–
–
–
36
71
68
137
161
2018-2025
2018-2025
2019-2026
2019-2026
2015-2022
2016-2023
2016-2023
2017-2024
2017-2024
The number and weighted average exercise price of all share options extant under the above schemes are as follows:
2017
2016
Options
9,387,507
799,458
(879,127)
(3,871,504)
5,436,334
2,237,386
Weighted average
pence
81
–
218
50
70
68
Options
22,153,583
1,017,388
(4,329,740)
(9,453,724)
9,387,507
3,542,178
Weighted average
pence
66
–
91
31
81
84
Outstanding at beginning of period
Granted during the period
Lapsed during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
94
Wincanton plc
Annual Report and Accounts 2017
24. EQUITY COMPENSATION BENEFITS (CONTINUED)
The weighted average share price at the date of exercise for share options exercised during the period was 203p (2016: 180p). The options outstanding
at 31 March 2017 had a range of exercise prices of between nil and 161p and a weighted average remaining contractual life of seven years.
The number of nil cost options awarded under the terms of the Executive Bonus Plan were calculated with reference to the 30 day average quoted
market price of the Company’s shares for the year ending 31 March of the financial year immediately preceding the date of award. Awards made under
the Special Option Plan, Executive Share Option Scheme and Long Term Incentive Plan were granted based on the average quoted market price of
the Company’s shares for a period of up to three business days immediately prior to the date of grant. Upon exercise, all options granted under these
schemes are equity-settled.
The terms and conditions of the grants to date under these schemes are as follows:
Long Term Incentive Plan
The Group introduced a Long Term Incentive Plan in 2015, which granted the Executive Directors and certain senior managers long term incentive
awards in the form of nil cost options.
Grant
date
July 2015
September 2015
July 2016
November 2016
Number of
options granted
874,876
142,512
753,888
45,570
Total
1,816,846
Vesting
conditions
3 years of service plus performance metrics weighted 60% on basic underlying EPS
growth and 40% on TSR performance relative to the FTSE All-Share Index (excluding
investment trusts) (the Index). The threshold entry point of 25% vesting for the EPS
element requires 6% growth per annum, with 100% vesting at 11% per annum. The
threshold entry point of 25% vesting for the TSR element requires performance in line
with the Index, with 100% vesting at outperformance of 10% per annum (equivalent
to 33% over the term of the option). Vesting will be on a straight-line basis between
the threshold and maximum for both elements.
Contractual
life years
10
The grant made under this Plan has EPS and TSR growth performance conditions. The EPS requirement is a non-market based performance condition
and as such is not accounted for in the fair value calculation. The TSR requirement is a market based performance condition and the fair value is
calculated using a Monte-Carlo pricing model, based on assumptions at the date of the award.
Share price at grant (p)
Exercise price (p)
Risk-free rate (%)
Expected volatility of Wincanton plc (%)
Expected volatility of Index (%)
Expected life (years)
Dividend yield (%)
Fair value per award under TSR condition (p)
Fair value per award under EPS condition (p)
November 2016
grant
207.0
–
0.8
30.5
16.0
3
4.1
101.0
183.0
July 2016
grant
180.0
–
0.2
32.0
15.2
3
4.5
76.0
157.0
September 2015
grant
208.0
–
0.8
38.0
12.9
3
3.5
107.0
187.0
July 2015
grant
187.0
–
1.0
41.2
11.9
3
3.9
97.0
167.0
Executive Bonus Plan
The Group introduced the Executive Bonus Plan during the year ended 31 March 2012. The award was made part in cash, part in deferred shares and
for the years ending 31 March 2013 and 31 March 2014 was settled 50% : 50%. For the year ended 31 March 2015 the award was settled 100% in cash.
The Plan ceased on 31 March 2015 and all awards of deferred shares vested in July 2015.
The Bonus Plan operated for a fixed four year period. At the end of that period the balance of a participants’ Plan account became payable.
Grant
date
July 2012
July 2013
July 2014
Number of
options granted
591,401
1,263,873
584,677
Total
2,439,951
Vesting
conditions
The Scheme is subject to a performance requirement based on a percentage of the
profit target. Where a forfeiture threshold operates the participant will receive no
contribution into their plan account for that Plan year and 50% of their Plan account
balance, not yet paid, will be forfeited. Additionally participants must be employed
by the Company at the point the award vests.
Contractual
life years
10
The grants made under this scheme have non-market based performance conditions. As the grant is at nil cost, the fair value is equivalent to the option
value (ie the 30 day average price of the Company’s shares for the period ending 31 March of the relevant financial year of award).
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Annual Report and Accounts 2017
95
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
24. EQUITY COMPENSATION BENEFITS (CONTINUED)
Special Option Plan
Under the Special Option Plan, the Executive Directors and certain senior managers were granted long term incentive awards.
Grant
date
September 2011
July 2012
January 2013
July 2013
September 2013
November 2013
July 2014
December 2014
Total
Number of
options granted
6,060,549
13,293,685
1,059,322
5,868,259
128,395
114,993
2,746,551
250,517
29,522,271
Vesting
conditions
3 years of service plus an EPS underpin, where the Company’s EPS must not reduce
over the 3 year vesting period, as well as a performance requirement based on
average absolute TSR growth over 3 years (the option starts to vest at >10% per
annum with 100% of the option vesting for 22% per annum).
Contractual
life years
10
The grant made under this Plan has an absolute TSR growth performance condition with an attaching EPS underpin. The EPS requirement is a non-
market based performance condition and as such is not accounted for in the fair value calculation. The TSR requirement is a market based performance
condition and the fair value is calculated by applying a discount to the option value. The discount is calculated using a Monte-Carlo pricing model and
is the expected outcome of meeting the performance condition. The fair value is determined on assumptions at the date of the award.
Share price at grant (p)
Exercise price (p)
Risk-free rate (%)
Expected volatility (%)
Expected life (years)
Dividend yield (%)
Fair value (p)
December 2014
grant
155.0
160.7
1.2
42.8
5
4.7
29.0
July 2014
grant
140.0
137.0
2.0
43.1
5
–
41.0
November 2013
grant
125.3
123.9
1.7
45.5
5
–
39.0
September 2013
grant
103.3
101.3
1.7
46.3
5
–
33.0
July 2013
grant
66.0
67.7
1.3
46.4
5
–
20.0
January 2013
grant
68.8
70.8
1.1
45.0
5
–
19.9
July 2012
grant
33.0
36.0
0.7
43.2
5
–
8.6
September 2011
grant
78.0
90.6
1.5
40.0
5
5.8
9.5
Executive Share Option Schemes
At 31 March 2017 there are no outstanding options under the Executive Share Option Schemes (ESOS) as the remaining award lapsed in full in
December 2016.
Grant
date
December 2005
December 2006
Total
Number of
options granted
3,184,581
2,925,065
6,109,646
Vesting
conditions
3 years of service plus average annual growth rate for underlying EPS of RPI + 3% in
the 3 consecutive years following the grant (starting with the year including the grant).
Contractual
life years
10
The grants made under these schemes all have non-market based performance conditions which are taken into account in the fair value calculation
using a Binomial pricing model. The contractual life of the options and the expectation of early exercises are incorporated into the model.
Expected volatility is based on a three year average of the historic share price volatility.
25. FINANCIAL INSTRUMENTS
Financial risk management and treasury policies
The Group, through its activities, is exposed to a range of financial risks. Financial risks are managed through the Group’s centralised treasury function
which acts within clearly defined policies approved by the Board. These policies are designed to reduce the financial risks faced by the Group relating
to liquidity risk, market risk (being interest rates, equity prices and currency exchange rate exposure) and credit risk. Transactions of a speculative nature
are not permitted and the treasury function does not operate as a profit centre.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s policy on funding capacity
is to ensure that there is always sufficient long term funding and short term facilities in place to meet foreseeable peak borrowing requirements.
96
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Annual Report and Accounts 2017
25. FINANCIAL INSTRUMENTS (CONTINUED)
The Group has £166m (2016: £215m) of core committed funding of which £65m was drawn at 31 March 2017 (2016: £75m), leaving headroom of £101m
(2016: £140m). The Group also has overdraft and other uncommitted facilities. Within the £166m (2016: £215m) of core committed facilities there is £25m
(2016: £45m) in the form of term loans which must be drawn. At certain points in the working capital cycle this results in the Group having cash which is
held in short term interest-bearing deposits. The Group also holds cash deposits within its insurance subsidiary; these deposits have a mix of maturities,
none of which is greater than 12 months. The Group’s net debt at the balance sheet date was:
Total borrowings and other financial liabilities
Cash and cash equivalents
Net debt
See Note 17 for further analysis of the contractual maturities of the financial liabilities.
Analysis of changes in net debt
Note
17
16
2017
£m
65.2
(40.9)
24.3
2016
£m
75.8
(36.3)
39.5
Cash and bank balances
Bank loans and overdrafts
Other financial liabilities
Net debt
1 April 2016
£m
36.3
(75.1)
(0.7)
(39.5)
Cash flow
£m
4.6
10.0
–
14.6
Net movement on
cash flow hedges
£m
–
–
0.6
0.6
Exchange
movements
£m
–
–
–
–
31 March 2017
£m
40.9
(65.1)
(0.1)
(24.3)
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the Group’s income or the value of its
holdings of financial instruments.
Interest rate risk
The Group maintains a policy of using derivatives to achieve an appropriate balance between fixed, capped, and floating interest profiles, so as to limit
the exposure to the cash cost of servicing its debt.
The majority of the Group’s drawn debt at 31 March 2017 was at floating rates. At 31 March 2017, the Group had in place a £20m five year sterling interest
rate swap (maturing 2019) with an effective rate of 2.0%. The net fair value of the financial instrument used to manage interest rates at the year end was
£(0.6)m (2016: £(0.7)m).
Sterling
Bank loans and overdrafts
Other financial liabilities
Borrowings
Cash
Net debt
Interest rate swap
Net debt/(cash)
Euro
Bank loans and overdrafts
Cash
Net debt
Total net debt/(cash)
2017
2016
Floating
rate
£m
65.0
0.1
65.1
(40.9)
24.2
(20.0)
4.2
0.1
–
0.1
4.3
Fixed
rate
£m
–
–
–
–
–
20.0
20.0
–
–
–
20.0
Total
£m
65.0
0.1
65.1
(40.9)
24.2
–
24.2
0.1
–
0.1
24.3
Floating
rate
£m
72.9
0.7
73.6
(36.3)
37.3
(45.0)
(7.7)
2.2
–
2.2
(5.5)
Fixed
rate
£m
–
–
–
–
–
45.0
45.0
–
–
–
45.0
Total
£m
72.9
0.7
73.6
(36.3)
37.3
–
37.3
2.2
–
2.2
39.5
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Annual Report and Accounts 2017
97
ACCOUNTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
25. FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate sensitivity
The following table demonstrates the sensitivity to a change in interest rates of 1% on the Group’s profit before tax and on its equity. The impact has
been calculated by applying the change in interest rates to the weighted average interest rate during the year, and applying this rate to the average
borrowings during the year, taking into account the impact of the interest rate swap of £20m. A variation of 1% represents management’s view of
a reasonably possible change in interest rates. Any impact on equity excludes the possible effect which a change in interest rates may have on the
present value of the Group’s pension obligations, the effects of which are set out in Note 23.
Sterling
1.0% increase in rates
1.0% decrease in rates
2017
Effect
on profit
before tax
£m
(0.4)
0.4
Effect
on equity
£m
(0.4)
0.4
2016
Effect
on profit
before tax
£m
(0.6)
0.6
Effect
on equity
£m
(0.6)
0.6
The methods and assumptions used to calculate the possible effect of a change in interest rates are consistent with those used in the prior year.
Currency risk and sensitivity
The Group is a largely UK based business with a small proportion of the Group’s activities denominated in euro. The only non-sterling activity
is in Ireland. In order to protect the sterling value of the balance sheet, the Group finances its investment in Ireland by borrowing in euro.
Transactional exposure is minimal as the vast majority of transactions are denominated in euro, the relevant functional currency of the operation.
Operational foreign exchange risk, where purchases or sales are made in non functional currency, is hedged on an ad hoc basis by buying or selling
the relevant currency on a forward basis if the amounts involved are material.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and arises principally from the Group’s receivables from customers.
The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Deposits are only made with pre-approved
counterparties. Credit evaluations are performed on all customers requiring credit. The Group does not generally require collateral in respect of financial
assets. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset, including derivative financial instruments, in the balance sheet of £128.9m (2016: £153.3m). See Note 15 for
further analysis of trade receivables and the associated doubtful debt provisions held.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, in order to provide optimal returns for
shareholders, and to maintain an efficient capital structure.
In doing so, the Group’s strategy is to retain appropriate levels of liquidity headroom to ensure financial stability and flexibility. To achieve this strategy
and maintain this position, the Group regularly monitors key credit metrics such as net debt to EBITDA, interest cover and fixed charge cover. In addition
the Group ensures a combination of short term liquidity headroom with a diverse long term debt maturity profile. As at the balance sheet date the
Group’s average debt maturity profile was 4.5 years.
In order to maintain or realign the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
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Annual Report and Accounts 2017
25. FINANCIAL INSTRUMENTS (CONTINUED)
Fair values
The fair values of the Group’s financial assets and liabilities, together with the carrying amounts shown in the balance sheet are given in the
following table:
Trade receivables
Other receivables
Cash and cash equivalents
US$ fixed to floating swaps
– Assets
– Liabilities
Forward exchange contracts
Interest rate swaps
Bank loans and overdrafts
Unsecured bond issues – US$ private placement
Trade and other payables
Unrecognised losses
2017
2016
Carrying amount
£m
86.3
0.4
40.9
Fair value
£m
86.3
0.4
40.9
Carrying amount
£m
93.2
1.0
36.3
–
–
0.5
(0.6)
(65.1)
–
(265.4)
–
–
0.5
(0.6)
(65.1)
–
(265.4)
–
22.7
(20.1)
0.1
(0.8)
(55.0)
(22.7)
(272.1)
Fair value
£m
93.2
1.0
36.3
22.7
(20.1)
0.1
(0.8)
(55.0)
(22.7)
(272.1)
–
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the above table.
Under the disclosure requirements of IFRS 13, all fair value measurements of financial assets and liabilities are considered to be categorised as level 2.
Derivatives
The fair value of forward exchange contracts is calculated as the contractual forward price less the current forward rate. The fair value of interest rate
swaps was determined by discounting the future cash flows at rates determined by year end yield curves.
Interest-bearing loans and borrowings and unsecured bond issues
Fair value is calculated on discounted expected future principal and interest cash flows at market interest rates.
26. RELATED PARTIES
Identity of related parties
The Group has a controlling related party relationship with its parent Company Wincanton plc. In addition the Group has related party relationships
with its Executive and Non-executive Directors and with its subsidiaries and jointly controlled entity.
Transactions with Executive and Non-executive Directors
The interests of the Executive and Non-executive Directors in the share capital of the Company, plus full details of the individual Directors’ emoluments,
bonuses deferred in shares, share options and pension entitlements are given in the Annual Report on Remuneration on pages 45 to 53.
The total of short term employee remuneration and benefits receivable by the Directors is set out in Note 4.
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99
ACCOUNTS
WINCANTON PLC COMPANY BALANCE SHEET
AT 31 MARCH 2017
Fixed assets
Investment in subsidiaries
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Hedging reserve
Profit and loss account
Equity shareholders’ funds
Note
2
3
4
5
7
2017
£m
108.9
108.9
84.5
2.3
86.8
(12.8)
74.0
182.9
(65.0)
117.9
12.4
12.9
(0.1)
92.7
117.9
2016
£m
108.9
108.9
58.5
15.7
74.2
(24.8)
49.4
158.3
(55.4)
102.9
12.4
12.9
(0.8)
78.4
102.9
The Company reported a profit for the year ended 31 March 2017 of £24.0m (2016: £17.6m).
The financial statements were approved by the Board of Directors and authorised for issue on 16 May 2017 and were signed on their behalf by:
A Colman
Chief Executive Officer
Company Registration
Number: 4178808
T Lawlor
Chief Financial Officer
100
Wincanton plc
Annual Report and Accounts 2017
ACCOUNTS
WINCANTON PLC COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2017
Balance at 1 April 2015
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based payment transactions
Deferred tax on share based payment transactions
Shares issued
Own shares acquired
Own shares disposed of on exercise of options
Dividends received
Balance at 31 March 2016
Profit and loss account
Share
capital
£m
12.2
Share
premium
£m
12.8
Hedging
reserve
£m
(1.7)
Reserve for
own shares
£m
(14.1)
Retained
earnings
£m
26.9
–
–
–
–
–
–
0.2
–
–
–
12.4
–
–
–
–
–
–
–
–
0.1
–
12.9
–
0.9
0.9
–
–
–
–
–
–
–
(0.8)
–
–
–
–
–
–
(0.2)
(4.5)
15.7
–
(3.1)
17.6
(0.8)
16.8
0.9
2.2
0.5
–
–
(15.8)
50.0
81.5
Total
equity
£m
36.1
17.6
0.1
17.7
0.9
2.2
0.5
–
(4.5)
–
50.0
102.9
Balance at 1 April 2016
12.4
12.9
(0.8)
(3.1)
81.5
102.9
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based payment transactions
Deferred tax on share based payment transactions
Own shares acquired
Own shares disposed of on exercise of options
Dividends received
Dividends paid to shareholders
Balance at 31 March 2017
–
–
–
–
–
–
–
–
–
–
12.4
–
–
–
–
–
–
–
–
–
–
12.9
–
0.7
0.7
–
–
–
–
–
–
–
(0.1)
–
–
–
–
–
–
(0.1)
2.7
–
–
(0.5)
24.0
–
24.0
0.9
1.1
(0.1)
–
(5.3)
1.5
(10.4)
93.2
24.0
0.7
24.7
0.9
1.1
(0.1)
(0.1)
(2.6)
1.5
(10.4)
117.9
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Wincanton plc
Annual Report and Accounts 2017
101
ACCOUNTS
NOTES TO THE WINCANTON PLC COMPANY FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company’s
financial statements.
Basis of preparation
The separate financial statements of the Company are presented as required by the Companies Act 2006. The Company meets the definition of
a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial Reporting Council. Accordingly, the financial statements
have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101).
Under Section 408(4) of the Companies Act 2006, the Company is exempt from the requirement to present its own profit and loss account. The profit
attributable to the Company is disclosed in the footnote to the Company’s balance sheet.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share based
payments, financial instruments, capital management, presentation of comparative information in respect of certain assets, presentation of a cash flow
statement and certain related party transactions. Where required, equivalent disclosures are given in the consolidated financial statements.
The financial statements have been prepared on the historical cost basis except for the remeasurement of certain financial instruments to fair value.
The principal accounting policies adopted are the same as those set out in Note 1 to the consolidated financial statements except as noted below.
Investments
Investments in subsidiaries are stated at cost and reviewed for impairment if there are indications that the carrying values may not be recoverable.
2. INVESTMENT IN SUBSIDIARIES
Shares in Group undertakings
Cost at beginning and end of year
A list of the subsidiaries of Wincanton plc is given in Note 11 to the consolidated financial statements.
3. DEBTORS
Amounts owed by Group undertakings
Group tax relief receivable
Prepayments and accrued income
Deferred tax
All debtors are due within one year, except prepayments and accrued income of £0.6m (2016: £0.5m).
4. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans and overdrafts
Other financial liabilities
Accruals and deferred income
Details of bank loans and overdrafts are given in Note 17 to the consolidated financial statements.
2017
£m
108.9
2016
£m
108.9
2017
£m
82.4
–
0.8
1.3
84.5
2017
£m
0.1
0.1
12.6
12.8
2016
£m
54.8
1.5
0.8
1.4
58.5
2016
£m
20.1
0.3
4.4
24.8
102
Wincanton plc
Annual Report and Accounts 2017
5. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank loans
Other financial liabilities
Details of bank loans are given in Note 17 to the consolidated financial statements.
6. CAPITAL AND RESERVES
Allotted, called up and fully paid
At 1 April
Issued during the year
In issue at 31 March
2017
£m
65.0
–
65.0
10p Ordinary Shares
2017
millions
123.7
–
123.7
2016
£m
55.0
0.4
55.4
2016
millions
121.7
2.0
123.7
Details of the Company’s own shares, held within an Employee Benefit Trust, are given in Note 20 to the consolidated financial statements.
Details of the Company’s equity compensation benefits are given in Note 24 to the consolidated financial statements.
During the year ended 31 March 2002, the Company established a Capital Redemption Reserve of £49,998 on redemption of redeemable
preference shares.
As permitted by Section 408 (4) of the Companies Act 2006, the Company has not presented its own profit and loss account. The Directors’
remuneration as disclosed in Note 4 to the consolidated financial statements is incurred by Wincanton plc. The Company has taken the exemption
not to disclose non-audit fees incurred as these are included in Note 3 to the consolidated financial statements.
7. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
Profit for the year
Dividends received
Dividends paid to shareholders
Other recognised gains and losses relating to the year
Current tax on share based payment transactions
Deferred tax on share based payment transactions
Share based payment transactions
Own shares acquired
Own shares disposed of on exercise of options
Net increase in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
2017
£m
24.0
1.5
(10.4)
0.7
1.1
(0.1)
0.9
(0.1)
(2.6)
15.0
102.9
117.9
2016
£m
16.8
50.0
–
0.9
2.2
0.5
0.9
(4.5)
–
66.8
36.1
102.9
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Wincanton plc
Annual Report and Accounts 2017
103
ADDITIONAL INFORMATION
GROUP FIVE YEAR RECORD
AS REPORTED UNDER ADOPTED IFRS
Revenue
Underlying operating profit3
Operating profit
Net financing costs
Underlying profit before tax3
Profit before tax
Underlying profit after tax for the year3
Underlying earnings per share3
Basic earnings per share
Dividend per share
Net debt
2017
£m
1,118.1
52.1
56.0
(10.6)
41.5
45.4
34.0
27.7p
34.2p
9.1p
(24.3)
2016
£m
1,147.4
50.9
81.4
(15.6)
35.3
65.8
28.8
23.9p
50.7p
5.5p
(39.5)
2015
£m
1,107.4
49.7
43.2
(18.3)
31.4
24.9
24.5
21.1p
16.6p
–
(57.6)
2014
restated1
£m
1,098.0
48.0
57.3
(22.4)
25.6
34.9
19.3
16.6p
23.6p
–
(64.9)
2013
restated2
£m
1,086.8
45.3
38.0
(24.0)
21.3
14.0
15.4
13.3p
8.7p
–
(107.6)
1 Where applicable, amounts have been restated for the change in accounting for joint ventures.
2 Where applicable, amounts have been restated for the adoption of IAS 19 Employee Benefits (Revised).
3 Operating profit, and hence profit before and after tax are reported on an underlying basis, ie including, where applicable, share of results of associates but before amortisation of acquired
intangibles, any impairment of goodwill and acquired intangibles, exceptionals, tax relating to these items and exceptional tax. Underlying earnings per share is calculated on the same basis.
104
Wincanton plc
Annual Report and Accounts 2017
ADDITIONAL INFORMATION
SHAREHOLDER INFORMATION
FINANCIAL CALENDAR
Annual General Meeting
To be held on 29 June 2017 at the offices of
Buchanan Communications, 107 Cheapside,
London EC2V 6DN at 11am
Interim results for 2017/18 Interim announcement November 2017
Full year results for 2017/18 Preliminary announcement May 2018
Annual Report
Posted to shareholders in May 2018
Annual Report
Copies can be obtained from the Company’s address below.
Shareholder enquiries
The Company’s Registrar is Computershare. If you have any questions
about your holding or wish to notify any change in your details, please
contact the Registrar at:
Computershare Investor Services plc
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ
Telephone: 0370 702 0000.
Whenever you contact the Registrar, please quote the full name(s)
in which your shares are held.
Dividends
Dividends are normally paid twice per year. The final dividend in respect
of year ended 31 March 2017 will be payable, if approved, on 4 August
2017 to those shareholders on the register on 7 July 2017.
The Company encourages its shareholders to have dividends paid
directly into their bank or building society account. To set this up for
the shares you hold, you should contact the Registrar for a dividend
mandate form.
Share dealing service
Wincanton shares may be dealt through the Company’s brokers.
If you would like further information, you may contact the brokers at:
Corporate Broking, Numis Securities Ltd, the London Stock Exchange
Building, 10 Paternoster Square, London, EC4M 7LT. Telephone number
020 7260 1000. Alternatively please contact your bank, building society
or stockbroker who will be able to assist you in dealing in your shares.
Share price quotation
The Company’s share price is quoted via the Wincanton website, where
it is regularly updated through the day.
Shareholders’ enquiries
If you have an enquiry about the Company’s business or about
something affecting you as a shareholder (other than queries regarding
shareholdings which are dealt with by Computershare) you are invited
to contact the Company at the address below.
Unsolicited mail
The Company is obliged to make its Register available to other
organisations. Shareholders wishing to limit the amount of unsolicited
mail they may receive as a result should contact the Mailing Preference
Service at:
DMA House, 70 Margaret Street, London W1W 8SS
or online at www.mpsonline.org.uk
Unsolicited investment advice
Shareholders are advised to be wary of unsolicited mail or telephone
calls offering free advice, to buy shares at a discount or offering free
company reports.
If you receive any unsolicited investment advice:
• make sure you confirm the correct name of the person and organisation
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• check that they are properly authorised by the FCA by calling
0800 111 6768 or by visiting www.fca.org.uk/register, and
then contacting the firm using the details on the register
• report the matter to the FCA either by calling 0800 111 6768 or visiting
www.fca.org.uk/consumers
• report suspected fraud and internet crime to the police through
Action Fraud, which you can contact on 0300 123 2040 or visiting
www.actionfraud.police.uk
• if the calls persist, hang up
• inform Computershare’s Compliance Department
If you deal with an unauthorised firm, you will not be eligible to receive
payments under the Financial Services Compensation Scheme. If you
have already paid money to share fraudsters, you should contact Action
Fraud on 0300 123 2040.
More detailed information on this or similar activity can be found
on the FCA website www.fca.org.uk/consumers/scams
ShareGift
If you hold only a few shares and feel that it would be uneconomical
or simply not worthwhile to sell them, you could consider donating
your shares to charity through ShareGift (registered charity 1052686).
Donated shares are aggregated and sold by ShareGift, the proceeds
being passed on to a wide range of UK charities. To find out more
visit www.sharegift.org or call 020 7930 3737. Alternatively contact the
Company’s Registrar who can help arrange the transfer of your shares.
Wincanton plc website
The Wincanton website at www.wincanton.co.uk provides news and
information about the services offered by Wincanton as well as useful
information for investors.
Forward-looking statements
These Annual Report and Accounts and Wincanton’s website
may contain certain ‘forward-looking statements’ with respect to
Wincanton plc and the Group’s financial condition, results of operations
and business, and certain of Wincanton plc’s and the Group’s plans,
objectives, goals and expectations with respect to these items.
Forward-looking statements are sometimes, but not always, identified by
their use of a date in the future or such words as ‘anticipates’, ‘aims’, ‘due’,
‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘targets’, ‘goal’ or
‘estimates’. By their very nature forward-looking statements are inherently
unpredictable, speculative and involve risk and uncertainty because
they relate to events and depend on circumstances that will occur in
the future. Many of these assumptions, risks and uncertainties relate to
factors that are beyond the Group’s ability to control or estimate precisely.
There are a number of such factors that could cause actual results and
developments to differ materially from those expressed or implied by
these forward-looking statements. These factors include, but are not
limited to, changes in the economies and markets in which the Group
operates; changes in the legal, regulatory and competition frameworks in
which the Group operates; changes in the markets from which the Group
raises finance; the impact of legal or other proceedings against or which
affect the Group; changes in accounting practices and interpretation
of accounting standards under IFRS, and changes in interest and
exchange rates.
Any written or verbal forward-looking statements, made in our Annual
Report and Accounts or on Wincanton’s website or made subsequently,
which are attributable to Wincanton plc or any other member of the
Group or persons acting on their behalf are expressly qualified in their
entirety by the factors referred to above. Each forward-looking statement
speaks only as of the date of our Annual Report and Accounts, or on the
date the forward-looking statement is made. Wincanton plc does not
intend to update any forward-looking statements.
Wincanton plc
Annual Report and Accounts 2017
105
ADDITIONAL INFORMATION
DIRECTORS AND ADVISERS
BOARD OF DIRECTORS AND ADVISERS
Non-Executive Directors
Steve Marshall (Chairman)
Stewart Oades (Senior Independent Director)
Paul Dean
David Radcliffe
Martin Sawkins
Executive Directors
Adrian Colman (Chief Executive)
Tim Lawlor (Chief Financial Officer)
Secretary and registered office
A Dowling
Wincanton plc
Methuen Park
Chippenham
Wiltshire
SN14 0WT
Tel +44 (0)1249 71 00 00
Registered in England & Wales under No. 4178808
Auditors
KPMG LLP
66 Queen Square
Bristol
BS1 4BE
Brokers
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
Company’s Legal Advisers
DWF
Registered office:
1 Scott Place
2 Hardman Street
Manchester
M3 3AA
Registered number: OC328794
Eversheds
Registered office:
1 Wood Street
London
EC2V 7WS
Registered number: OC304065
Clarks Legal
Registered office:
One Forbury Square
The Forbury
Reading
Berkshire
RG1 3EB
Registered number: OC308349
Clyde and Co
Registered office:
The St. Botolph Building
138 Houndsditch
London
EC3A 7AR
Registered number: OC326539
Share registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
106
Wincanton plc
Annual Report and Accounts 2017
ADDITIONAL INFORMATION
GLOSSARY
Term
3PL
ADR
AGM
APMs
BCP
Back to back leases
Board
CDP
CGU
CILT
CMK
Code
CRC
DTR
EBITDA
EBT
EMT
EPS
FCA
FORS
FRS
Group
HGV
IAS
IASB
IFRIC
IFRS
LGV
Listing Rules
LTIFR
LTIP
Multichannel environment
Multimodel transport operations
NFC
RMC
SC21
Scheme
SIP
SOP
TSR
UKGAAP
USPP
W2 Labs
WMS
Definition
Third party logistics provider
European Treaty on the international transport of hazardous substances on the road
Annual General Meeting
Alternative Performance Measures
Business Continuity Plan
Leases which are fully underwritten by customers throughout the life of the lease and multi-user locations where
mitigation is spread across a number of customers
The Executive and Non-executive Directors of the Group as listed on pages 34 and 35
Leading international index of climate change and carbon management maturity for companies
Cash Generating Unit
Chartered Institute of Logistics and Transport
Collisions per million kilometres
UK Corporate Governance Code
CRC Energy Efficiency Scheme (formerly known as the ‘Carbon Reduction Commitment’)
FCA’s Disclosure Guidance and Transparency Rules
Earnings before interest, tax, depreciation and amortisation
Employee Benefit Trust
Executive Management Team
Earnings Per Share
Financial Conduct Authority
Fleet Operator Recognition Scheme
Financial Reporting Standards
Wincanton plc is a company incorporated in England and Wales with company number 4178808
Heavy Goods Vehicle
International Accounting Standards
International Accounting Standards Board
International Financial Reporting Interpretations Committee
International Financial Reporting Standards
Large Goods Vehicle
Financial Conduct Authority’s Listing Rules
Lost Time Incident Frequency Rate
Long Term Incentive Plan
A logistics supply chain from point of sale through to final delivery whether online or in store.
Owned and managed vehicles as well as rail to deliver a flexible, safe and efficient service.
National Fulfilment Centre
Risk Management Committee
Gold standard accreditation designed to increase the performance of suppliers and supply chains in the UK
aerospace, security and defence industries
Wincanton plc pension scheme
Share Incentive Plan
Special Option Plan
Total Shareholder Return
UK Generally Accepted Accounting Practice
US Private Placement
The Group’s business incubator program
Warehouse Management System
Design and production
Radley Yeldar www.ry.com
Printing
CPI Colour
This report is printed on material, which is made from a mixture of recycled
and virgin fibres, sourced from well managed forests according to the rules
of the Forest Stewardship Council®.
Wincanton plc
Annual Report and Accounts 2017
107
WINCANTON.CO.UK
Wincanton plc
Methuen Park
Chippenham
Wiltshire SN14 0WT
United Kingdom
Registered in England &
Wales under No. 4178808
Tel +44 (0)1249 71 00 00
Fax +44 (0)1249 71 00 01
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