Delivering innovation now
Driving next generation thinking
Annual Report and Accounts 2018
Contents
INSIDE THIS REPORT
The Group has made
good progress against its
strategic objectives as it
adds capability to meet
the changing needs of
our customers
Adrian Colman Chief Executive
OUR BUSINESS
INDUSTRIAL & TRANSPORT p6
CHIEF EXECUTIVE’S
STATEMENT p12
OUR BUSINESS
RETAIL & CONSUMER p4
BUSINESS
MODEL p8
CORPORATE RESPONSIBILITY
REPORT p20
STRATEGIC REPORT
Introduction
Financial highlights
Interim Chairman’s review
Retail & Consumer
Industrial & Transport
Business model
Our strategy
How we measure performance
Chief Executive’s statement
Delivering innovation now
Driving next generation thinking
Corporate responsibility report
Financial review
Risk report
1
2
3
4
6
8
10
11
12
16
18
20
24
28
GOVERNANCE
The Board
Interim Chairman’s introduction
Corporate Governance report
Nomination Committee report
Audit Committee report
DIRECTORS’ REMUNERATION REPORT
Committee Chairman’s
Annual Statement
Annual Report on Remuneration
Directors’ Remuneration Policy
DIRECTORS’ REPORT
Directors’ report
Statement of Directors’ responsibilities
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
32
34
36
39
40
43
44
52
59
60
62
68
69
70
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
73
Wincanton plc Company balance sheet 100
Wincanton plc Company statement
of changes in equity
Notes to the Wincanton plc
Company financial statements
Group five year record
Shareholder information
Directors and advisers
102
104
105
106
71
72
101
Strategic report
INTRODUCTION
Every day, Wincanton provides the vital services that help
businesses thrive.
We manage orders, make deliveries and assemble goods
in consumers’ homes... we integrate warehousing and
transport, getting the best out of our assets and those
of our customers... we’re responsible for storing, picking
and delivering every product you can imagine, as well as
many that you probably can’t... and we do it all effectively,
efficiently and with a rare mix of high quality service and
the latest technology.
During our history, we’ve seen changing consumer
expectations transform our industry. ‘Next week’ has
become ‘next day’ has become ‘next few hours’. And,
as our eFulfilment capability continues to develop, it’s only
a matter of time before ‘now’ becomes the new norm.
But whatever the future brings, we’ll deliver innovation
now while driving next generation thinking.
Delivering
innovation now
Driving next
generation thinking
FOR MORE INFORMATION SEE PAGE 16
FOR MORE INFORMATION SEE PAGE 18
1
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 FINANCIAL HIGHLIGHTS
We delivered strong organic growth
in the period and made good
progress against our strategy.
Stewart Oades
Interim Chairman
Revenue
£1,171.9m
+4.8%
Net debt1
£29.5m
+21.4%
£52.9m
+1.5%
Operating profit
£44.4m
-20.7%
Underlying earnings per share1
Basic earnings per share
30.8p
+11.2%
25.2p
-26.3%
4.5%
-20bps
Operating profit margin
3.8%
-120bps
Dividend per share
9.9p
+8.8%
Underlying operating profit1
Underlying operating profit margin1
FOR CHIEF EXECUTIVE’S STATEMENT SEE PAGE 12
1 See page 27 for further information on the Alternative Performance Measures (APMs), including definitions and a reconciliation of APMs to statutory measures.
2
Strategic reportWincanton plc Annual Report and Accounts 2018 INTERIM CHAIRMAN’S REVIEW
INTRODUCTION
We have delivered a solid performance this
year with the Group remaining focused on
driving long term organic growth from the
logistics sectors in which it has chosen to focus.
During the year Wincanton has materially
enhanced its eFulfilment logistics offering
to ensure it brings cutting edge capability
to this growing channel to market. We have
successfully grown our two-man home
delivery services where we enjoy a market
leading position. In more traditional sectors,
the Group continues to innovate its services
such as the Construction sector where it has
invested in the development of on-site logistics
services to enhance the control and flow of
materials into major build programmes for
customers. This area of investment, coupled
with good coverage across most of the major
elements of the UK and Ireland’s physical
goods economy and combined with a diverse
customer portfolio means that the business
provides a reliable and predictable revenue and
earnings stream generating cash and returns
for all our stakeholders.
RESULTS
The Group delivered strong revenue growth in
the year of approximately 5%, taking revenue to
a six year high of £1,171.9m. This was delivered
from a combination of organic growth from
existing customers with cross selling of
other services and the on-boarding of new
customers to the Group. Underlying earnings
per share was up by 11.2% over the prior year
to 30.8p and by 131.6% over a five year period.
Our cash generation remains strong enabling
us to invest in our organic growth strategy
as well as satisfying the needs of our other
material stakeholders in the Group such as our
pension scheme and our shareholders.
PEOPLE AND THE BOARD
Very sadly, the Group’s Chairman, Steve Marshall,
passed away unexpectedly in September and
I have taken on the role of Interim Chairman
whilst the Board conducts a search for a
permanent Chairman. An appointment is
expected to be made by late summer.
In September 2017 Gill Barr joined the Board
as a Non-executive Director. Her background
in retail and technology businesses as well as
her broad marketing experience is a strong
addition to the Board.
I would like to personally thank the Group’s
17,700 employees for their contribution to the
progress made and the results delivered during
the year. Their commitment, focus and hard
work is the cornerstone of what drives our
strong reputation for operational delivery,
a safe working environment and the delivery
of excellent results throughout the year.
We published our first gender pay report in
March and were pleased to report a median
gender pay gap below the national average
at 7%. Wincanton is committed to ensuring
colleagues in similar roles are paid equitably
and we are committed to narrowing the
gender pay gap through increasing the
proportion of women in certain roles that
attract higher pay such as HGV drivers.
We were also delighted that during the year
three of our colleagues were shortlisted for the
Everywoman in Transport & Logistics awards to
celebrate the most inspirational women within
the transport and logistics sector.
DIVIDEND
The Board is pleased to be recommending an
increased final dividend of 6.63p per Ordinary
Share for the year ended 31 March 2018
(2017: 6.1p) bringing the total dividend for the
year to 9.9p per Ordinary Share (2017: 9.1p).
This reflects the Group’s growth in operating
profit and its progressive dividend policy.
The Board’s dividend policy remains 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.
During the year we made significant progress
by launching our enhanced propositions
to cover the growing eFulfilment needs of
customers. Additionally, we have brought
new business development talent into the
organisation to support our objective to drive
future revenue growth. We continue to invest
in the capabilities and resources to deliver our
organic growth strategy, with our risk appetite
remaining low to moderate. We continue to
monitor the risks and opportunities that may
arise from the Brexit process and to date the
Group has experienced no material impact
from the process.
The 2017 triennial review of the pension
scheme continues and the Board seeks to
agree an appropriate future plan with the
Scheme Trustee whilst ensuring we take
account of our commitment to the wider
stakeholder group. The Group still has a
sizeable pension deficit when measured on the
more prudent Technical Provisions basis used
for the triennial review, and so the pension
scheme remains a significant stakeholder in
the Group.
OUTLOOK
The Group remains well positioned in its
chosen markets and continues to deliver strong
service levels for customers. The action taken
during the past year to reduce costs where
necessary ensures we remain competitive
for our customers and has been important
in order to position the Group for the future.
Robust cash generation supports our ability
to invest in skills and technology capabilities
to both protect and grow the business for
the longer term. During the coming year the
Board expects Wincanton to make continued
strategic and operational progress.
Stewart Oades
Interim Chairman
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Strategic report
RETAIL & CONSUMER
Our Retail & Consumer operations are
essential every day to the businesses
of grocers and general retailers alike –
seamlessly managing the flow of goods
from production through to store or
home delivery and returns management.
With digital technology driving an abundance
of opportunities for improved service,
we’ll continue to be the partner of choice
for many of the UK’s leading companies.
59%
of Group
56%
of Group
Revenue
Underlying operating profit
£691.7m
£29.7m
WHAT WE DO
eFulfilment
Asset utilisation
Transformation
Our comprehensive range of services supports
today’s multichannel retail environment.
From order management and delivery to
assembly of goods in the home and the
efficient management of returns, we streamline
processes and deliver customer satisfaction.
We sharpen our customers’ competitive
edge by ensuring more efficient utilisation
of their assets. We do this through a range
of approaches including collaborative
warehousing and shared transport options
as well as re-deploying our own assets
to support peak trading periods.
Our investment in innovation delivers
continuous improvement, transforming
the way we and our customers work by
introducing new technologies and processes.
MARKET SECTORS
Retail general merchandise
Retail grocery
Consumer products
Our industry-leading eFulfilment services
enable non-food retailers with store and/or
online activities to rise to the challenges
of a multichannel market.
Our flexible and reliable supply chain
operations help food retailers serve
consumer and trade customers efficiently
and cost-effectively.
We integrate supply chains and create
new, more efficient ways of working
for manufacturers supplying the retail
market with food or non-food products.
Customers include:
Customers include:
• Argos
• B&Q
• Screwfix
• wilko
Revenue
£384.2m
• ASDA
• Co-op
• Sainsbury’s
• Waitrose
Revenue
£197.8m
READ MORE ABOUT OUR STRATEGIC PROGRESS ON PAGE 14
4
Customers include:
• GSK
• Lucozade Ribena Suntory
• The Kraft Heinz Company
• Nestlé
Revenue
£109.7m
Wincanton plc Annual Report and Accounts 2018 Our eFulfilment operations
adapt quickly to changing
shopping behaviours so that
our customers can deliver
the right brand experience.
CHALLENGES
HOW WE ARE RESPONDING
Delivering the right brand experience
As online purchases rise, the volume and value of last mile deliveries
continue to increase. Retailers understand the risks associated with
placing their brands in the hands of third parties and are looking for
relationships based on trust and integrity.
Cost to serve
With retailers demanding increased value from suppliers in a bid to
counter squeezed margins, ‘cost to serve’ is a key issue that applies
across all areas of the supply chain.
The customer journey
The ‘customer journey’ continues to be the primary focus for retailers.
Today, consumers expect a seamless eCommerce experience, despite
the challenges associated with increasingly complex supply chains.
Delivering for our customers
We pride ourselves on our home delivery expertise, and
handle our customers’ reputation with as much care as
we handle their goods. Our solutions enable retailers
and consumers alike to benefit from the simplest and
most seamless fulfilment methods in the industry –
and our success is evidenced by customer results and
independent reviews.
Continuously improving our operations
Our dedicated continuous improvement team is tasked
with relentlessly optimising and improving operations.
We work closely with our customers, tailoring our services
to reduce the overall cost to serve while maintaining the
highest service levels.
Evolving our capability
We work with a diverse range of major customers,
developing smarter and more efficient ways of working
to meet their multichannel needs. New technology and
our never-ending drive for greater efficiency fuel a pipeline
of initiatives – including the latest iteration of Manhattan
Associates’ Warehouse Management System (WMS).
This market-leading eCommerce solution gives us and our
retail customers a flexible order fulfilment approach that
delivers an integrated, multichannel buying experience for
the consumer.
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Strategic report
INDUSTRIAL & TRANSPORT
Our Industrial & Transport operations
deploy an extensive and specialised
network to handle a wide range of
industrial products – from fuel, bricks
and engineering components to containers
and general goods. Our operation teams
also maintain fleets of LGVs and HGVs
on behalf of customers.
41%
of Group
44%
of Group
Revenue
Underlying operating profit
£480.2m
£23.2m
WHAT WE DO
Transport
Compliant operations
Asset optimisation
We operate a large number 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 general haulage vehicles.
In addition to consistently surpassing our
own high targets for health and safety
performance, we meet stringent compliance
and accreditation standards including SC21,
FORS and ADR.
We optimise our fleet, as well as the fleets of
our customers. We do this through effective
support systems and an ever-increasing
use of technology, supported by proactive
maintenance, via the Pullman business, to
ensure performance as well as compliance.
MARKET SECTORS
Transport services
Construction
Other
We provide general haulage, container
transport and fleet maintenance services
across the UK to retail, consumer and industrial
customers as well as shipping lines and
freight forwarders.
We ensure reliable delivery of construction
materials including bricks and aggregates
to sites UK-wide, with a proven ability to
manage the timely flow of key products such
as cement.
Customers include:
Customers include:
• Howdens Joinery
• Lucozade Ribena Suntory
• Mediterranean Shipping Company (MSC)
• Etex
Revenue
£210.3m
• Brett
• Hanson
• Ibstock
• Tarmac
Revenue
£150.6m
READ MORE ABOUT OUR STRATEGIC PROGRESS ON PAGE 14
We meet the most demanding compliance
and operating requirements of specialist
sectors including defence, energy and food.
Customers include:
• BAE Systems
• Müller Milk & Ingredients
• Phillips 66
• Valero
Revenue
£119.3m
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Wincanton plc Annual Report and Accounts 2018 We continually develop our services
to enhance our capability and ensure
compliance as our markets evolve.
CHALLENGES
HOW WE ARE RESPONDING
Efficient and sustainable operations
Persistent cost pressures, coupled with a drive for stronger corporate and
social responsibility, have led to businesses demanding greater efficiency
– not only in terms of fuel economy and fleet optimisation, but also via
a closer focus on sustainability.
Visibility and tracking
Shortened delivery timescales, together with fragmented drop locations
across some sectors, mean that customers want to be confident that
their logistics partner can deliver both accuracy and efficiency.
Health and safety
Health and safety is a key issue for our industry, reflecting concerns
around driver wellbeing and the challenges of running large vehicles
on public highways.
Deploying new developments
We work closely with our suppliers to trial, evaluate and
deploy new equipment. Our examples are wide ranging
– from investing in new efficient vehicles to participating
in Government trials of longer trailers. We’re also at the
forefront of enhanced vehicle telematics which proactively
track journeys to promote better driving methods and
reduce accidents. Collectively, these initiatives deliver lower
emissions, better efficiency and improved safety for our
drivers and other road users.
Deploy technology to improve visibility
and customer service
While our solutions are customer specific, we are
increasingly deploying common technologies across our
transport operations. For example, our Winsight in-cab
technology improves fleet optimisation and delivery
visibility by connecting our drivers with regional planning
teams, creating effective route planning and providing
fleet transparency.
Delivering safety first
Health and safety is our top priority, and we are committed
to raising awareness of its importance across all our driver
and warehouse teams. We focus on behavioural change,
and use specific training modules and approaches to
engage drivers and warehouse staff – improving their
individual skills and underpinning an enhanced and
safer performance.
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Strategic report
BUSINESS MODEL
We use our supply chain expertise to transform our customers’ operations
by improving service, increasing customer satisfaction, reducing cost to serve
and ensuring greater safety. In order to do this we draw on the following
resources from across the Group:
THE RESOURCES WE NEED
WHAT WE DO
WE DO IT
THROUGH OUR VALUES
Excellence
Integrity
Passion
Proactivity
Togetherness
Trust
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.
• With over 500 Lean Six Sigma
specialists we create innovative
solutions and implement
cutting edge technology to
drive continuous improvement.
• We train our teams to ensure
their safety and that of others
around them.
CONTRACT TYPE
Open book operations
59%
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.
Skilled knowledge and expertise
of our people
Our people are the engine for our
competitive advantage. Their skills
and expertise enable our customers
to succeed.
Employees
17,700
Flexible warehouse facilities
An actively managed portfolio of
Wincanton and customer locations,
from dedicated sites to shared
user operations.
Warehousing space
7.6m sqft
Multimodal transport operations
Owned and managed vehicles deliver
a flexible, safe and efficient service.
Vehicles responsible for
3,600
Proven technology and
logistics systems
Integrated and flexible systems provide
customers with visibility and control.
Locations
200+
8
Wincanton plc Annual Report and Accounts 2018 WHAT WE DO
CONTRACT TYPE
OUR CAPABILITY
• Our IT team 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, recruit and retain
employees through our strong
talent pipeline, 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 supports
the improvement and delivery
of more sustainable operations.
Closed book operations
41%
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.
THE VALUE WE CREATE
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
By improving service, reducing waste
and maximising capacity, we look to
make our customers’ supply chains
better – every day.
A safer environment for all
We maintain a relentless focus on the
health and safety of our employees,
visitors and the communities we serve.
Sustainable operations
We drive reductions in our emissions
via investment, awareness, training
and recognition – all enabled by
changing behaviours.
Shareholder value
We rigorously manage our business,
our costs and our risks to generate
sustainable total shareholder returns.
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 OUR STRATEGY
Our strategic business performance will continue
to be driven by the following strategic pillars:
Drive efficient operations...
...through integrated and
consistent services
Differentiate
our position...
...by delivering
innovation,
collaboration and
safe, sustainable
operations
Growth
By putting customers
at the centre of
what we do
Be an
organisation
that people
aspire to...
...work for
and with
READ MORE ABOUT OUR STRATEGIC PROGRESS ON PAGE 14
10
Strategic reportWincanton plc Annual Report and Accounts 2018 HOW WE MEASURE PERFORMANCE
Revenue
£1,171.9m
+4.8%
2018
2017
2016
Underlying EBITDA1
£64.8m
+1.4%
Underlying operating profit1
£52.9m
+1.5%
1,171.9
2018
1,118.1
2017
1,147.4
2016
64.8
63.9
65.4
2018
2017
2016
52.9
52.1
50.9
Consolidated Group revenue.
Operating profit before all amortisation and
depreciation charges and before exceptional items.
Operating profit before amortisation of acquired
intangibles and exceptional items.
Underlying operating profit margin1
4.5%
‑20bps
2018
2017
2016
4.5
4.7
4.4
Our KPIs
Net debt1
£29.5m
+21.4%
2018
2017
2016
29.5
24.3
39.5
Underlying operating profit as a percentage
of revenue.
Borrowings and other financial liabilities net of cash
and cash equivalents.
Lost Time Incident Frequency Rate (LTIFR)
Employee Engagement Score
Underlying EPS1
30.8p
+11.2%
2018
2017
2016
0.62
‑8.8%
30.8
27.7
23.9
2018
2017
2016
Profit for the year attributable to equity shareholders
of Wincanton plc before amortisation of acquired
intangibles, exceptional items 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.
Number of lost time incidents per 100,000
2015
hours worked.
66%
+2.0%
2018
2017
2016
66
64
64
The percentage of positive responses to five specific
statements within the employee survey.
1 See page 27 for further information on the Alternative
Performance Measures (APMs), including definitions and
a reconciliation of APMs to statutory measures.
0.62
0.68
0.71
0.70
11
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Strategic report
CHIEF EXECUTIVE’S STATEMENT
The Group has made
good progress against
its strategic objectives
as it adds capability to
meet the changing
needs of our customers.
Adrian Colman
Chief Executive
PERFORMANCE SUMMARY
Revenue (£m)
Underlying EBITDA (£m)1
Underlying operating profit (£m)1
Underlying operating margin (%)1
Underlying EPS (p)1
Dividend per share (p)
Closing net debt (£m)2
2018
1,171.9
64.8
52.9
4.5%
30.8
9.9
(29.5)
2017
1,118.1
63.9
52.1
4.7%
27.7
9.1
(24.3)
Change
4.8%
1.4%
1.5%
(20)bps
1 Page 27 provides further information on Alternative Performance Measures (APMs), including definitions and a reconciliation of APMs to statutory measures.
2 Net debt is the sum of cash and bank balances, bank loans and overdrafts and other financial liabilities. Note 26 to the financial statements provides a breakdown
0of net debt for the current and prior periods.
12
Wincanton plc Annual Report and Accounts 2018 During the year ended 31 March 2018 the
Group has delivered a positive set of results
underpinned by consistent operational
performance. The Group has also made good
progress against its strategic objectives during
the year as it adds capability to meet the
changing needs of our customers.
Revenue in the year ended 31 March 2018 was
£1,171.9m (2017: £1,118.1m), which represents
a year on year increase of 4.8%. This has been
driven primarily by revenue from contract wins
including IKEA, Hanson, wilko and Wickes.
Underlying operating profit increased by 1.5%
to £52.9m (2017: £52.1m). A strong performance
in our Retail & Consumer business was partly
offset by a more challenging year for our
Industrial & Transport business. As a result, the
underlying operating margin of 4.5% is slightly
lower than the 4.7% achieved in the prior year.
The Group took action during the year to
reposition its cost base and capacity in
certain areas to mitigate the weaker than
expected performance in the Industrial &
Transport sector. The implementation of these
cost saving initiatives has resulted in a net
exceptional charge of £6.2m and helps position
the business so that it remains competitive and
effective for future years.
Strong underlying EPS growth of 11.2% reflects
the growth in operating profit and lower net
financing costs as we reduced the average cost
of debt utilised during the year. This growth in
underlying earnings enables us to also increase
our recommended final dividend per share
to 6.63p, resulting in a total dividend per share
of 9.9p for the year.
Group underlying EPS
2018
2017
2016
2015
2014
30.8
27.7
23.9
21.1
16.6
0
5
10
15
20
25
30
Pence
RETAIL & CONSUMER
2018
Revenue (£m)
Underlying
operating profit (£m)
Margin (%)
691.7 649.3
2017 Change
6.5%
25.8 15.1%
29.7
4.3% 4.0% 30 bps
Retail & Consumer reported revenues of
£691.7m in the year, a 6.5% year on year increase
compared with the £649.3m reported in the
year to 31 March 2017. The contractual split of
this segment between open and closed book
remains relatively unchanged with 85% under
open book terms (2017: 87%).
Underlying operating profit for the year was
£29.7m, up 15.1% on the £25.8m reported last
year as a result of new business wins together
with increased volume predominantly in Retail
general merchandise.
The split of Retail & Consumer revenue by the
industry sectors it serves is as follows:
new technology and fleet to support their
multichannel strategy; and a three year
contract with Argos to manage and support
a network reorganisation.
Retail general merchandise has also further
expanded its relationship with IKEA with the
award of a three year contract to provide
two‑man home delivery services in the
South East of England.
The business also successfully renewed a
number of important contracts with key
customers, such as KraftHeinz and Argos.
All of these important renewals demonstrate
the strong partnership‑based ethos with
our customers and our commitment
to driving greater efficiency into these
logistics operations.
Overall sector growth was partially offset by
a contract loss in Retail grocery with Tesco
who took back the operation of a warehouse
in‑house.
2018
£m
2017
£m Change
INDUSTRIAL & TRANSPORT
Retail general
merchandise
Retail grocery
Consumer products 109.7
384.2 315.5 21.8%
197.8 228.7 (13.5)%
4.4%
105.1
6.5%
691.7 649.3
The overall revenue increase was driven
primarily by strong wins and volume growth
in Retail general merchandise. Our strong
eFulfilment proposition continues to drive
revenue growth, especially in Home & DIY
markets, where our market leading two‑man
home delivery service helps our customers
improve their customers’ experience.
Several significant new contracts commenced
operations during the period, including a four
year contract with IKEA to set up and operate
two new distribution centres to support their
multichannel distribution growth strategy; a
five year contract with wilko managing all UK
transport operations from store replenishment
to yard management and backhaul; a three
year contract with Wickes to operate home
delivery of building products implementing
Revenue (£m)
Underlying
operating profit
(£m)
Margin (%)
2018
480.2
2017
468.8
Change
2.4%
23.2
4.8%
26.3
(11.8)%
5.6% (80)bps
Industrial & Transport reported revenues of
£480.2m in the year, up 2.4% on the £468.8m
reported in the prior year.
The underlying operating profit of £23.2m
compared to £26.3m last year was driven
by weaker than expected operational and
financial performance from certain transport‑
related activities and a contract cessation
realising property‑related credits in the
prior year.
The split of Industrial & Transport revenue
by the activities undertaken is as follows:
Transport
services
Construction
Other
2018
£m
2017
£m
Change
210.3
150.6
119.3
480.2
207.0
134.4
127.4
468.8
1.6%
12.1%
(6.4)%
2.4%
The increase in revenue compared to last
year is primarily due to new contracts within
Construction including several contract wins
for our new ready‑mix cement proposition as it
gains traction in the market place. The growth
in Construction was partly offset, however,
by lower than expected volumes in our final
quarter, in part attributable to the poor weather
and the year‑on‑year impact of the cessation of
a contract within our defence operations in the
prior year.
13
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 CHIEF EXECUTIVE’S STATEMENT CONTINUED
During the year the markets for our Transport
Services activities, which comprise General
Haulage, Container Logistics and Pullman Fleet
Services, have all been extremely competitive
with customers seeking lowest cost service
provision to help mitigate other cost challenges
that they face. As a result, we have seen
significant change in the contract profile and
mix of work in this area through a number of
contract wins and losses that have broadly left
revenue flat year‑on‑year.
The level of change in the contract portfolio
and mix of work across the sector, particularly
in Transport Services, impacted the balance of
activities and operational effectiveness across
our networks, adversely affecting the operating
profit performance for the year. This required
the Group to take significant action to
rebalance costs and capacity across our
networks to improve performance. The costs
of this reorganisation are included within the
exceptional charge for the year noted above.
The business also successfully renewed a
number of contracts during the year including
those with Phillips 66 and Pernod Ricard.
STRATEGIC PROGRESS
We continue to focus on growing the Group
organically and aim to deliver a resilient,
predictable cash and profit stream and a
growing return for all our stakeholders. We do
this through the following strategic pillars:
1. Differentiate our position in the logistics
industry through delivering innovation,
collaboration and safe, sustainable operations
2. Grow by putting customers at the centre
of what we do
3. Drive efficient operations through integrated
and consistent services
4. Be an organisation that people aspire to work
for and with
We have set out our progress against these
pillars below:
power of Wincanton with our colleagues,
or our customers or our partners. During the
year we sought to generate and capture great
ideas and convert these into new propositions
to take to our customers through a variety of
programmes under the W2 umbrella.
• W2 Labs
We ran a W2 Labs initiative, to identify and
work with a number of start‑up businesses
from around the globe that had the
potential to add value to our business.
This programme helped us enhance our
eFulfilment proposition, by partnering with
two companies who brought capability
and differentiation, and enabled us to get
to market faster than if we had built these
capabilities in‑house.
• W2 Partner Network
We launched the W2 Partner Network,
which will help us add more partners to
collaborate with and to grow the business
by widening our offering and working with
companies whose reach opens up new areas
of mutual opportunity.
• W2 Ideas Accelerator
We launched an internal programme
supported by a social media platform
that allows colleagues to pose challenges
and problems and seek ideas, solutions
and comments from across the business.
This helps us ensure that great ideas
from colleagues are shared across the
organisation, recognised, rewarded and
where possible commercialised into
propositions that we can take to our
customers to enhance our services to them.
We seek to position our business at the
leading edge of thought leadership around
the challenges that our industry and our
customers will face over the medium term.
This was embodied in ‘The Wincanton Guide
to the Digitised Supply Chain’. We are gearing
up for our role in the digitised supply chain
by developing a deep understanding of
what our customer needs are and how they
are developing their own unique approach
to robotics, autonomous vehicles, artificial
intelligence, machine learning and so on.
It is essential for us to be recognised as a
leading logistics business where digitisation is
a central component of our highly compelling,
differentiated, offering to the market.
COLLABORATION
Wincanton operates across a wide cross
section of the physical goods economy.
As such its operations deal with all of the
cyclicality of its customers’ businesses on a
daily, weekly and annual basis. Uniquely we
aim to analyse and interpret this data to provide
the flexible solutions that enable our customers
to meet their seasonal peaks in their demand
for logistics services by smart deployment of
capability and assets from other sectors when
they are in quieter periods. Bringing this to life
we provided over 1,450 extra peak transport
shifts into the Retail sector across the Christmas
peak period, many of which were provided
from within the talent pool of drivers and the
vehicle assets from our Construction business
which typically is coming out of its autumnal
peak cycle at that time. This benefits our
customers as they are able to access flexible
resources when they need them rather than
having to commit to resource levels across a
full year at the peak level, and thereby reducing
costs to their organisation.
SAFETY AND SUSTAINABILITY
Behaving as a responsible business is central
to everything we do at Wincanton.
Our people and their health, safety and
wellbeing come first in every decision we
make. The safety of colleagues is a non‑
negotiable commitment and we believe
that this is achieved through ensuring strong
cultural engagement around behavioural
approach to health and safety as well as
technical training and robust processes.
This is highlighted in our Your Pulse colleague
engagement survey where scores on health
and safety awareness and responsibilities
continue to be the highest scoring areas
amongst our colleagues. In the last 12 months
we saw a continued reduction in reported
safety incidents and a continued improvement
in our Lost Time Incident Frequency Rate
performance indicator from 0.68 last year to
1. Differentiate our position
in the logistics industry
INNOVATION
We make innovation a central theme internally,
in our engagement with colleagues and
externally in our everyday engagement with
customers. Our W2 programme is the linking
theme for innovation at Wincanton. W2 is
all about the power of two, the combined
14
Strategic reportWincanton plc Annual Report and Accounts 2018 0.62 this year. We were also recognised for our
performance with safety awards during the
year from external bodies such as Chartered
Institute for Logistics and Transport (CILT)
and the Royal Society for the Prevention of
Accidents (RoSPA). This confirms the value
of our approach, focus and ongoing training
programmes with our people.
During the year we again worked hard to
minimise our impact on the environment.
We were very pleased to take delivery of
our first fully electric trucks from Daimler.
The Group will initially deploy the 7.5 tonne
vehicles for use in inner city logistics, where
the challenges of emissions, noise and
congestion are greatest. These vehicles will be
rolled out as part of our home delivery fleet.
The environmental challenges of delivery in
urban areas, particularly in ‘the last mile’, are
significant and growing. As a business, we are
committed to addressing these issues, to find
cost‑effective and sustainable solutions for
our customers.
The introduction of production‑level electric
vehicles to our fleet means we can operate
more efficiently, more quietly and without
locally emitted CO2. When we are delivering
in towns and cities, we know that this really
does matter, right down to the door step.
These vehicles are a key part of our innovation
roadmap, and our growth plan for the future
of urban distribution transport at Wincanton.
2. Grow
We aim to grow the Group into a full service
contract logistics provider, putting the
customer at the centre and driving efficient
operations. During the period we grew
revenue by 4.8%, achieving this through a
combination of extending the services we
provide to existing customers as well as
acquiring new customers.
We have expanded our relationship with
IKEA with the award of a three year contract
to provide two‑man home delivery services
in the South East of England. This builds on
Wincanton’s strength as a leading provider of
high quality consumer experience for our retail
customers and enhances the range of services
we provide to IKEA to add to the warehouse
operations that we established for them in the
previous year. For Aggregate Industries we have
expanded the range of services we provide to
them through the introduction of ready‑mix
cement services which we have been rolling
out to the construction sector to offer a new
level of service resilience and consistency to
the industry.
We were also delighted to commence
partnering with new customers such as Wickes
and Thales during the year. For Wickes, part
of the Travis Perkins Group, we have started
to manage the collation and delivery of bulky
goods, such as bricks, tiles and paving, to
customers. This solution draws on our expertise
in customer service from our market leading
two‑man home delivery service together
with the technical knowledge and expertise
from our Construction business in handling
and delivering such products. With Thales
we are pleased to have been awarded a five
year warehousing and distribution contract
in which Wincanton will become sole logistics
provider, supporting the simplification and
increased efficiency of Thales’ supply chain to
operate national distribution and warehousing
of their critical component supply chain.
3. Drive efficient operations
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.
During the year we successfully renewed and
extended contracts with existing customers
including Argos, Phillips 66, Pernod Ricard and
Ibstock. We also responded to the needs of
the competitive market place we operate in
and the challenges in our Industrial & Transport
business with a restructuring of the capabilities
in this sector in order to reposition the business
to remain competitive in future years.
4. Be an organisation that people
aspire to work for and with
Our people are central to the great operational
delivery that Wincanton prides itself on,
working to make our customers’ businesses
better every day. Without their support, we
have no business to run so their engagement
is a key priority. I would like to thank them
for their dedication and performance during
the year.
Developing a pipeline of talent is a high
priority for the Group to ensure that we nurture
and develop talent for the maintenance of
existing activities and drive the delivery of our
ambitious growth targets. During the year
Wincanton ran 45 apprenticeship programmes
as part of this commitment to develop logistics
talent inside our organisation.
In the UK economy over the past year we
have seen very high levels of employment
and we are focused on ensuring that we
recruit and retain people into our business to
deliver great customer service and to help us
grow. We have continued our specific focus
on driver resourcing. Our ability to attract
drivers to our business is a real strength of the
Group and presents a compelling proposition
to customers who recognise the scarcity
of qualified and talented drivers in the UK.
We source drivers from as wide a pool as
possible, conduct and support driver training
and licence acquisition and do all that we
can to ensure we retain our driving talent by
recognising their skills through such events as
the Wincanton Driver of the Year competition.
Our Warehouse to Wheels driver programme
supports talented colleagues from non‑driving
roles to train to be drivers in our business and
we see this as a great advantage as part of our
focus on recruiting and retaining talent.
15
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Delivering
innovation now
Technology has driven a huge shift in what consumers expect from
logistics operations. Put simply, we all want it now. And we want
it faster, better and cheaper than ever before.
At Wincanton, we’re the enablers underpinning this transformation.
In this section, we share some of the developments that are delivering
innovation now – and driving next generation thinking.
W2 LABS
We are not alone
In 2017, we launched a new initiative to work
with a number of start-ups from around the
world in developing innovative solutions to
some of the challenges faced by our industry.
W2 Labs is a process that brings together
talented teams from our business, paired
with carefully selected start-up businesses to
accelerate the application of new, innovative
products and services, to drive digitisation
across the supply chain.
Over the course of the year, we evaluated
92 applications from 12 countries before
settling on a shortlist of 24 start-ups that were
invited to pitch. Six companies were identified
as having the greatest potential and these
progressed to a ten week development stage
that saw them work with our business experts
to hone their ideas and prove their concepts
in the context of our day-to-day operations.
The final six also engaged in trials with some of
our major customers, using real business data
to refine and streamline their propositions.
In September, we held a demo day where each
start-up presented its concepts to a range of
our key stakeholders. We’re currently working
closely with these start-ups and two have
already made it into the eFulfilment service
which we announced in the year. Another
start-up based proposition is likely to be
launched in the year ahead.
We can see how the W2 Labs programme
can help us lead improvements in areas such
as safety, shortened supply chains, robotics,
the Internet of Things (IoT) and increased
digitisation – all to improve the customer
experience and support our growth ambitions.
16
W2 PARTNER NETWORK
Shaping the future, together
Through the W2 Partner Network, we aim
to explore how innovative technologies will
impact the evolution of the supply chain in
the near future and beyond.
Partners will work alongside our own teams,
combining the very latest innovations,
expertise and knowledge. The outcome will be
commercial opportunities that draw on a wide
range of technologies, such as AI, Blockchain
and Internet of Things (IoT) – to address the
current and future needs of our customers and
support our own operations.
W2 Labs pitch day
and demo day
W2 Labs pitch day, held
at CodeNode, London
and demo day held at
Wincanton Worksop.
92
W2 Labs received
92 applications
from 12 countries
Strategic reportWincanton plc Annual Report and Accounts 2018 ELECTRIC TRUCKS
The quiet revolution
The environmental challenges of delivery in
urban areas, particularly in ‘the last mile’, are
significant and growing. We’re committed
to investing in cost-effective and sustainable
solutions that minimise our impact on society
– and early in 2018 we were proud to become
the first UK 3PL to introduce production-level
electric vehicles to its fleet.
We’re initially deploying the five 7.5t Daimler
Trucks’ FUSO eCanter vehicles on a trial for
inner city logistics, where the challenges of
emissions, noise and congestion are greatest.
In our view, this is game-changing technology
that can make a real difference to the quality of
life of people across the UK – and our ambition
is to roll-out these vehicles as part of our home
delivery fleet.
Layer picking
Productive picking
of layer quantities by
robotic layer picking
technology.
97%
automated handling
of product lines
Electric vehicles
Wincanton’s Daimler
Trucks’ FUSO eCanter
vehicle on launch day.
5
new electric vehicles
start their trials
with Wincanton
AUTOMATION
57 options, and counting...
With consumer expectations rapidly changing,
it’s not surprising that some warehouse and
system infrastructures are struggling to keep
pace. So when KraftHeinz wanted to introduce
a fully-automated system to replace ageing
technology, a high degree of flexibility was
one of the company’s key requirements.
Because we collaborate with a wide range of
equipment and technology providers, we’re
able to tailor an automation solution to meet
their specific needs. In the case of KraftHeinz,
this meant drawing on all our 13 years of
automated layer picking experience to specify
a solution that would drive efficiency by
automating the handling of over 97% of the
company’s product lines.
EFULFILMENT
Delivering excellence, from orders
to returns
When consumers buy online, the delivery
service is often the most tangible manifestation
of a customer’s brand. And we work very
hard to enhance that brand through our full
eFulfilment solution.
We collaborate with leading technology
providers to deliver customer satisfaction
and cost-efficiency around the complete
eFulfilment cycle, from multichannel
warehousing, carrier management and
a range of delivery options through
to returns management and back to
eCommerce warehousing.
FOR MORE INFORMATION ON WINCANTON’S
VISION FOR THE FUTURE VISIT:
W W W.WINCANTON.CO.UK /INNOVATION
17
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Driving next
generation thinking
As a business, we have to be scanning the horizon for all kinds
of relevant technology, so that we understand how best to
deploy it for, and with, our customers.
Here, we look at four areas of rapid development and promise,
each of which could have a tangible impact on the Supply
Chain. These are topics which come to us through our work
with the W2 Partner Network, W2 Labs and our support of
a number of collaborative groups, such as the Digital Supply
Chain Leaders Network.
ROBOTICS
The robots are helping
We were one of the pioneers of warehouse
automation and we’re already working on how
next generation robotic technology can help
our customers grow their business.
AUTONOMOUS TRUCKS
In the fast lane of the
connected highway
Today, even mid-range family cars can
park themselves. In the not-too-distant
future, vehicles including trucks will be
entirely autonomous.
The advent of autonomous vehicles will
be made possible by a broad range of new
technology, coupled with current tools such as
telematics. Allied to the ongoing development
of the connected highway and smart cities,
where vehicles communicate with each other
as well as with roads and infrastructure.
The benefits will not just be felt in financial
terms: autonomous vehicles should remove
human error from the road network, reducing
congestion and saving lives. In fact, on-board
systems can react in less than 0.1 seconds,
compared to human reaction time of
1.4 seconds.
Wincanton is already working with its main
vehicle suppliers to understand what this
means for our business, our customers, road
safety and how our service proposition
develops, as part of our long term planning.
For picking and packing, robots are more agile
and able to work in tighter spaces. That means
warehouses can be packed with more goods,
boosting efficiency. Similarly, robot truck
loaders and unloaders can navigate inside
a trailer, sensing their surroundings right
down to the shapes and sizes of packages.
Drones can carry out inventory checks
frequently and accurately, both inside and
outside of the warehouse, while autonomous
vehicles shift pallets to and from their storage
locations. Wincanton has been an early adopter
of robotic technology and has over a decade
of experience already, but now we’re focused
on the next generation of high-intensity,
super-dense warehouse systems where
integrated robotics and automation moves
into the mainstream.
18
90%
of goods in global trade are
carried by the ocean shipping
industry each year. A new
blockchain solution from IBM and
Maersk will help manage and track
the paper trail of tens of millions
of shipping containers across the
world by digitising the supply
chain process.2
87%
of UK manufacturers
are ready to invest in
productivity-enhancing
digital technologies.4
BLOCKCHAIN
Connecting the links in the
supply chain
As the technology that underpins the
cryptocurrency Bitcoin, Blockchain’s strength
lies in its ability to maintain unalterable records
of each asset in a transaction that means it can
build and support an environment of trust.
For many of our customers, Blockchain
has the potential to provide a new and
immutable level of traceability throughout
the supply chain.
Strategic reportWincanton plc Annual Report and Accounts 2018 69%
The percentage of online visits via mobile
devices continues its upwards trend, now
representing 69% of all visits.1
+50%
In 2016 UK digital tech investment
reached £6.8 billion, that’s 50% higher
than any other European country.3
DIGITISATION
Some of our food retailer customers are already
trialling Blockchain and have successfully
used it to track products from farm to shelf
in a matter of seconds instead of days or
even months.
Obstacles remain before we expect to see large
scale adoption of Blockchain, but this is an area
we’re monitoring closely because Wincanton’s
role will be to ensure that the chain is not only
unbroken but also augmented with relevant
data at key points in the journey, either to site
or store.
THE INTERNET OF TRUCKS
Track and trace, but not
as we know it
The Internet of Things (IoT) doesn’t just mean
that your home fridge can order more milk
when supplies run low, it’s also providing the
momentum for the shift towards connected
logistics and, specifically, what we at Wincanton
have coined as the ‘Internet of Trucks’.
With technology convergence such as this,
our ability to proactively drive KPIs for our 3PL
customers, moves us into the thought leader
position. Equally, there is a direct connection
between the usual Internet of Things and
everything we do within our W2 Labs
programme, the W2 Partner Network and
how we create compelling, differentiated
propositions for our customers.
Sources
IMRG quarterly benchmarking report, Q4 2017/18
1
2
IBM press release
3 Tech Nation 2017
4 The Manufacturer – Manufacturing 2020 Report
19
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 that we have the right people in the right
positions at the right time in order to effectively
deliver the strategy. We believe strongly in
rewarding great performance and recognise
outstanding achievements with bonus
payments and our ‘Colleague of the Month’
and ‘Driver of the Year’ awards.
Our Wincanton learning and development
activities include a wide range of
different initiatives.
For example, we operate an apprenticeship
programme across all areas of the business,
from warehousing and driving to support
functions, team leaders and management.
We’re proud that our team currently includes
over 350 apprentices and that we’re finalists in
the Bristol & Bath Apprenticeship Awards 2018.
Talent and management development is
the key to a sustainable future, and here we
provide a comprehensive range of training
programmes which aim to fast-track our high
potential people, ensuring that we get the
best out of them and that they enjoy full and
rewarding careers. Our well-established model
captures employee performance and potential,
which are the cornerstones for a structured
approach to succession planning. This in
turn provides a framework that enables us to
develop a strong talent pipeline. Our talent
pipeline ensures we can create the best teams
for our customers and that we can effectively
deliver operational excellence over the years
to come.
In terms of operational efficiency, we follow
a Lean Sigma programme – an internationally-
respected methodology that improves
productivity and cuts costs by eliminating
Strategic report
CORPORATE RESPONSIBILITY REPORT
Playing our part to the full
We aim to be a positive influence at all times, not only
on the lives of our people, but also on the communities
where we work as well as on the environment.
...AND DELIVERED BY A GREAT,
DIVERSE TEAM
Diversity isn’t just a nice-to-have, it’s essential to
creating a well-balanced team that reflects our
society, the communities where we live and
our customer base.
At Wincanton, we’re committed to employee
diversity, equality and inclusion. We work hard
to ensure that employees of all backgrounds,
genders and ethnicity are valued equally
and that we treat each other with respect.
We expect every single employee to take part
in our diversity programmes, which endorse
these expectations.
Our culture also demands the highest
ethical standards. We do the right thing and
always support each other – whether that
means making sure everybody is safe and
healthy, or creating a collaborative, respectful
working environment across the business.
DEVELOPING OUR PEOPLE
We help our people be the best they can be.
That’s not just good for our business, it’s good
for their self-respect and career opportunities.
For example, we provide a deep, broad
and continual learning and development
programme at every level of Wincanton.
This programme plays a key role in ensuring
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 in which we operate,
as well as our natural environment.
OUR PEOPLE: THE WINCANTON
DIFFERENCE
As a people-powered business, our people
are ultimately what makes us stand out.
Dedicated teams are at the heart of what we
aim to deliver to our customers to ensure great
customer service, success and the long-term
sustainability of our business.
We’re committed to recruiting the very best
talent, and provide opportunities for all
colleagues to develop and grow across every
area of our operations. It’s important to us that
our people are happy in their work, that they
go home safely at the end of every day and
that they represent the local communities in
which we operate.
GREAT PERFORMANCE IS
UNDERPINNED BY GREAT VALUES...
Created by our employees, our values express
how we work with colleagues and customers.
Every person at Wincanton, from boardroom
to warehouse floor, lives these values 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 rely on each other in good times
and bad, whether the pressure is on or we’re
just having fun.
• Togetherness. We work as one team,
collaboratively and without hidden
agendas. We come together to help each
other succeed.
20
Wincanton plc Annual Report and Accounts 2018 waste, defects and deviations. We supplement
theoretical training programmes with real
live projects in order to encourage practical
understanding of the main issues, and ensure
that leadership teams invest sufficient time to
properly define and review the entire process.
Our rigorous driver training and assessment
programme provides exceptional
opportunities to improve the skills of our
drivers. Our training programmes and modules
are fully documented and have been classed
by JAUPT (Joint Approvals Unit for Periodic
Training) as approved courses for compliance
with the LGV DCPC (Driver Certificate of
Professional Competence) . This means that all
our sites used for driver training, as well as our
166 authorised driver trainers and assessors,
are able to provide internal and external
training, in-line with the EU Statutory Training
Directive. Each driver undertakes an annual,
comprehensive planned driving assessment
supplemented by further assessments if the
driver is involved in a safety incident during
the year.
During the year we began trialling a new
programme designed to bring people with
potential into our business and develop
them into logistics professionals. #YourFuture
was pioneered and implemented by the
Wincanton team at our Nestlé Purina operation
in Hams Hall. Although still in its infancy, this
two to three year apprenticeship scheme
programme is already proving a sustainable
way to learn while gaining practical experience.
It mixes hands-on experience with learning
delivered by external training providers.
Our industry suffers from a deficit of skills and
graduate talent. To address this situation, we
helped found the NOVUS Trust – an industry-
wide initiative run by the Chartered Institute
of Logistics and Transport (CILT). The trust aims
to bridge the skills gaps and create the supply
chain leaders of tomorrow. Those successful
in passing a rigorous selection process are able
to join a ground-breaking course designed
with Huddersfield University. Admission to
the course guarantees participants a mentor
and an industrial placement with a sponsor
company, including Wincanton – then,
following completion of the course, a graduate
level job.
LISTENING IS MORE IMPORTANT
THAN TALKING
Listening to our employees is the starting point
for the way in which we create and deliver our
people-facing programmes.
We use a range of approaches to capture
what our people think about their careers and
our business activities. For example, we hold
listening group meetings with all our major
employee stakeholders at depots, warehouses
and offices. This year, we also introduced
new steering groups for other key colleagues,
including general managers and drivers.
These informal meetings complement our
more structured regular departmental and
group-wide meetings.
Towards the end of the financial year, we
launched our new ‘Your Pulse’ employee
engagement survey, which doubles the
frequency at which we ask for the opinions
of our staff. By replacing our annual survey
with this more frequent, online approach, we
are effectively shortening the time between
capturing colleagues’ feedback and taking
action. We achieved a 66% response rate,
an improvement of 2% on the previous year.
The findings from each survey are reviewed
at all levels Wincanton and help shape strategy
across the business.
In addition to informal meetings and our
engagement surveys, we organise regular
business briefings to ensure that our managers
are fully informed about our progress. These
‘State of the Nation’ briefings are hosted by
the Executive Management Team (EMT) and
involve the sharing of business performance,
in-depth Q&A sessions, new innovations and
real-world case studies. We also offer expert
sessions from around the Group about the key
challenges and opportunities we face.
Taken together, these approaches to listening
and acting on feedback from colleagues
enable us to deliver positive changes as part
of our continuous improvement agenda.
PROMOTING HEALTH
AND WELLBEING
Our employees are our greatest asset and
we want to help them to be as healthy and
happy as possible. Our health and wellbeing
campaign focuses on improving our
employees’ knowledge and understanding
of health issues particular to the logistics
industry that align with national health
awareness campaigns.
SAFETY: NO ROOM FOR
COMPROMISE OR COMPLACENCY
The health and safety of our employees is
paramount. It’s our top priority at all times –
and our commitment to it is non-negotiable
and absolute.
Tracked weekly, Lost Time Incident Frequency
Rate (LTIFR) is a key measure of our safety
performance. Our LTIFR for the year is shown
on page 11 – while we’re pleased with our
progress, we recognise that there’s no room
for complacency.
We also use other metrics to give us a broader
and deeper insight into safety, such as days lost
ratio and employer liability claims. Again, these
are tracked weekly and regularly reviewed to
monitor the impact of initiatives and training
programmes. Both rates fell during the year.
Regular tracking helps us identify areas where
we’re doing well and also where we can do
better, supporting our objective of continual
improvement. For example, we encourage
all employees to report anything they see
which could be potentially hazardous or
harmful, or could be improved. These incidents
are reported as near-misses. The degree of
reporting continued to rise during the year,
demonstrating a good level of employee
engagement and highlighting the passion
that our people have to care for themselves
and each other.
Drivers make up a significant percentage of
our workforce. These are dedicated and skilled
individuals and we work hard to keep them
safe. We track and monitor driving records,
incidents and behaviours and regularly review
the results – and we pay particular attention
to the Collisions per Million Kilometres (CMK)
metric as a measurement of our performance
in these areas.
21
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 and career development. It is an opportune
way to use and develop the skills of our
talented colleagues, while enhancing local
links and gaining a sense of giving back to the
communities in which they live and work.
PROTECTING OUR ENVIRONMENT
We’re acutely aware of the impact our industry
can have on the environment and we do all
we can to minimise that impact.
Our environmental policy is supported by
an environmental management system
which is cascaded throughout Wincanton,
ensuring that all employees are fully aware
of their roles and responsibilities. We have
comprehensive sustainability plans in place for
all our sites, depots and offices. These plans
include projects designed to mitigate our
environmental impact and ensure that
we continue to move towards achieving
our sustainability targets and our senior
management team receives regular reports
on progress.
A well-managed supply chain can play a key
role in mitigating the impact of our customers’
activities as well as our own. So we share
our knowledge and experience along the
supply chain, for example, by identifying
efficiencies, promoting collaborative working
and by offering significant expertise and
experience in managing environmentally
sustainable logistics.
EXTERNAL REPORTING
AND RECOGNITION
Safety award, CILT Annual award 2017
We won the 2017 Safety Award at the
prestigious CILT Annual Awards. The CILT
Annual Awards recognise achievement and
reward the highest industry standards across
Logistics and Transport. Our win in the Safety
Award category highlights the achievements of
our business and, more specifically, the success
of our Sherburn site.
CORPORATE RESPONSIBILITY REPORT CONTINUED
Each driver is provided with a Wincanton
Driver’s Handbook, which lays out all the
information they need to work safely and
professionally. It includes specific safety
initiatives around driving and handling
that we’ve created to keep our drivers and
the public safe at all times. These include
details on our EVADE vulnerable road user
programme which provides important
guidance on safeguarding pedestrians
and cyclists.
We’re equally proud of our non-driving
colleagues. In our view, it’s essential to invest
in equipment and training for all, regardless
of role, to ensure we maintain our ‘best in class’
safety record. That means going further than
providing the training required by regulation
and legislation.
Away from the cab, we provide an annual
schedule of training on health and safety
related topics, which is cascaded throughout
our business sites and offices. We deliver
regular Health, Safety and Environment training
to our managers and implement initiatives
through our Train the Trainer scheme to target
key risk areas, with 1,775 trainers trained in the
year. We also provide regular courses in risk
assessment and accident investigation for first
line managers.
SUPPORTING OUR PEOPLE
AND THEIR COMMUNITIES
Recognition is a key theme at Wincanton.
We offer a range of rewards that reflect
the contribution our employees make to
the success of the Group, our industry and
society in general. We provide many ways for
employees to help us improve our business
and performance, and to ensure we’re good
neighbours by strengthening our links with
local communities.
At every site we develop programmes
that promote and encourage these links.
Throughout the year we’ve organised a wide
range of community-based activities from
charity events to family fun days, each raising
money for the range of good causes chosen
by our employees.
We believe that being active in the community
and sharing our expertise is integral to growing
awareness of the logistics industry. Our
colleagues enjoy volunteering their time as
part of our school activity with young people
across the UK, which consists of a tailored
education programme of presentations and
interactive sessions with students and staff.
The programme also provides mentoring,
road safety information, work experience
OUR ENVIRONMENTAL PRINCIPLES
We use ten 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 them.
22
Strategic reportWincanton plc Annual Report and Accounts 2018
Haulier of the year, motor
transport awards 2017
The Motor Transport Awards is an annual event
which celebrates outstanding achievement in
the road transport industry. Wincanton’s win in
the ‘Haulier of the Year’ category acknowledges
our recent successes as well as the outstanding
quality of service in providing agile logistics
solutions in the UK and Ireland.
Our environmental initiatives and the progress
we’ve made in reducing our impact have
been recognised by our customers and other
stakeholder bodies.
Carbon Trust Standard
We’re proud to have held the Carbon Trust
Standard since 2010 and value its recognition
of the continuous and consistent reductions
we’ve made to our carbon footprint. This is
a particularly significant achievement in the
context of our continuing growth.
CDP disclosure score
For 2017, we were again rated at ‘B minus’,
indicating that we’re a company ‘managing
carbon’. This score underlines the fact
that we’ve gone beyond completing a
full disclosure and being aware of our
environmental issues, impacts and risks.
It recognises that we’re implementing actions,
policies and strategies to address these issues
and have achieved carbon reduction figures
that reflect this.
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). This is chaired by our Group
HSEQ Director and attended by members
of the Executive Management Team (EMT) –
demonstrating the importance we place on
our environmental strategy.
Our environmental management system
was reviewed and revised during 2017 and
maintained its external certification, upgraded
to the new ISO14001:2015 standard.
The system provides monthly operational
emissions performance across a range of
indicators – enabling us to take prompt
corrective actions and to identify and exploit
improvement opportunities in each of our
business sectors.
From an emissions reduction perspective, we
launched or implemented a number of key
projects, including: completing upgrades to
LED lighting at five sites; introducing a new
fleet with enhanced cruise control, economy
drive and predictive power train control
features; and committing to our first electric
vehicles on our two-man home delivery fleet.
We’re also trialling 100% bio-diesel from waste
and plan to introduce further natural gas
vehicles during 2018.
Carbon emission information is prepared with
reference to 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
2017, with both electricity generation and
distribution emissions included as scope 2
emissions. For all UK mainland operations
where we have the supply contract, we
purchase ‘green’ tariff electricity which
complies with the market-based scope 2
reporting requirements of the GHG protocol.
However, we have reported electricity use
at UK grid average for the purposes of this
annual report.
We record energy and fuel use for managed
supplies, which includes all supplies that are
wholly or partially managed at sites operated
by our teams, either for ourselves or our
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 participate 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.
REDUCING OUR CARBON
INTENSITY RATIO
We set absolute internal targets for carbon
emissions reduction, and decouple emissions
performance from business performance.
However, as changes in our business activities
directly affect our emissions, we use a carbon
intensity measure to ensure we optimise our
carbon efficiency.
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 2018
was 315 tonnes of carbon dioxide equivalent
(tCO2e) per £m of revenue. This is a reduction
year on year because, while we’ve seen
revenue growth, we’ve also reduced our
energy and fuel use. There were also favourable
variances in the UK carbon factors.
Emissions from managed
supplies tonnes CO2e
2
Carbon emissions table
Carbon emissions (tCO2e)
Transport (scope 1)
Non-transport (scope 1 & 2)
Total emissions
Carbon intensity (tCO2e/£m)
2017/181
308,227
58,874
367,101
315
2016/172
287,020
72,458
359,478
320
2015/162
308,352
84,938
393,290
345
2014/15
304,747
82,631
387,378
350
2013/14
293,557
94,856
388,413
355
1
1 Transport (Scope 1)
2 Non-transport (Scope 1, 2)
80%
20%
1 Figures correct as at the date of this report.
2 Figures restated to adjust for re-verified data from previous years.
23
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 FINANCIAL REVIEW
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)
Exceptional items (£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)
The Group has delivered
strong revenue growth
through a combination
of new business wins
and organic growth.
Tim Lawlor
Chief Financial Officer
2018
1,171.9
64.8
52.9
4.5
(6.5)
46.4
(2.3)
(6.2)
37.9
(6.7)
31.2
30.8
25.2
9.9
(29.5)
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)
Change
4.8%
1.4%
1.5%
(20)bps
11.8%
11.2%
21.4%
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 items, from operating profit, profit before tax and EPS where applicable, 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 27.
24
Strategic reportWincanton plc Annual Report and Accounts 2018 The Group’s revenue of £1,171.9m in the year
ended 31 March 2018 was 4.8% higher than
the prior year (2017: £1,118.1m). This strong
level of growth reflects the impact of new
business commencing in the year as well as
strong organic growth, particularly in Retail
general merchandise within the Retail &
Consumer sector.
Group underlying operating profit
2018
2017
2016
2015
2014
52.9
52.1
48.7*
46.2*
44.2*
30
35
40
45
50
55
(£m)
* Excluding the results of Wincanton Records Management,
which was disposed of in 2015/16.
Underlying operating profit grew by 1.5% to
£52.9m, as a result of a strong performance
in Retail & Consumer partly offset by weaker
performance within certain transport related
areas in Industrial & Transport and property-
related credits arising at the end of contract
terms in the prior year. As a result, the
underlying operating margin has reduced
to 4.5% (2017: 4.7%).
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
2018
£m
2017
£m
4.1
–
4.1
0.6
1.8
6.5
6.0
(0.1)
5.9
1.2
3.5
10.6
Net financing costs were £6.5m (2017: £10.6m),
£4.1m lower year on year.
Bank interest payable on loans was £4.1m
(2017: £6.0m), a reduction of £1.9m reflecting
the maturity of the US Private Placement in
November 2016, the repayment of the £25m
Prudential/M&G UK Companies Financing Fund
LP facility in July 2017 and the lower average
borrowing rate on the remaining facilities.
The non-cash financing items total £2.4m
(2017: £4.7m) and comprise the discount
unwinding on the Group’s provisions for
property and insurance claims, which has
reduced primarily due to a change in the
discount rate used for the property provision;
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 £2.3m
is consistent with the prior year of £2.2m and
relates to the intangible asset recognised on
the acquisition of a defence business in 2008.
This asset has now been amortised in full.
EXCEPTIONAL ITEMS
Restructuring costs
Pension scheme liability
management exercise
Other items
Net exceptional items
2018
£m
(8.2)
2.0
–
(6.2)
2017
£m
–
(0.9)
7.0
6.1
The Group has undertaken a restructuring
programme in the year to ensure that the
business is competitively positioned for the
future. A charge of £8.2m is included as an
exceptional charge for the year comprising
principally of costs in relation to the exit of
people and associated property costs.
The conclusion of the pension scheme liability
management exercise initiated at the end of
last year has resulted in a settlement gain of
£1.8m together with a release of £0.2m due
to actual costs of the exercise being lower
than expected.
Other items in the prior year of £7.0m comprise
non-cash gains of £4.6m recognised on
the remeasurement of liabilities relating to
disposed businesses; and the settlement
of a claim against a supplier.
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 (%)
2018
2017
46.4
8.3
(0.4)
(1.2)
6.7
41.5
7.5
(0.4)
(3.7)
3.4
18.0% 18.0%
Underlying tax of £8.3m (2017: £7.5m)
represents an effective tax rate of 18.0%
(2017: 18.0%) on underlying profit before
tax and is stated before tax credits of £0.4m
(2017: £0.4m) in respect of the amortisation
of acquired intangibles and exceptional tax
of £1.2m (2017: £3.7m, comprising a £4.0m
tax credit relating to previous years’ tax
liabilities, offset by a tax charge of £0.3m
on exceptional profit).
The total net deferred tax asset has reduced
to £11.5m (2017: £17.2m), 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 £31.2m
(2017: £42.0m), the reduction of £10.8m due
to exceptional items, a charge in the current
year compared to a gain in the prior year,
partly offset by improvements in underlying
operating profit and financing costs.
Underlying EPS, which excludes from earnings
amortisation of acquired intangibles and
exceptional items, increased by 11.2% to 30.8p
(2017: 27.7p). Basic EPS was 25.2p (2017: 34.2p)
with the decrease again being explained by
the exceptional items.
The calculation of these EPS measures is set out
in Note 7 to the financial statements.
DIVIDENDS
Interim
Final (proposed)
Total
2018
pence
3.27
6.63
9.90
2017
pence
3.00
6.10
9.10
The Group’s policy is to show dividend
growth broadly matched to the growth in
underlying earnings.
In setting the dividend the Board considers
a range of factors, including the Group’s
strategy (including downside sensitivities),
the current and projected level of distributable
reserves and projected cash flows including
cash payments to the pension scheme.
The Board has proposed a final dividend of
6.63p per share relating to the year ended
31 March 2018, an increase of 8.7% compared
to the final dividend paid in respect of the year
ended 31 March 2017.
Dividend payments of £11.6m (2017: £10.4m)
in the year comprised the final dividend of
6.1p per share relating to the period ended
31 March 2017 and the 2018 interim dividend
of 3.27p per share.
25
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018
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
2018
£m
136.0
2017
£m
147.9
(136.4)
(149.8)
(33.1)
(29.5)
(34.8)
(24.3)
(49.5)
(112.5)
(78.4)
(139.4)
The reduction in net liabilities of £26.9m is
represented by the profit after tax of £31.2m,
the remeasurement of the pension deficit net
of deferred tax of £11.4m, less dividends paid
in the year of £(11.6)m and other movements
in equity of £(4.1)m.
CASH FLOWS
The Group’s cash flows can be summarised
in the following table:
Underlying EBITDA
Net capital expenditure
Working capital
Tax
Net interest
Other items
Free cash flow
Pension recovery
payment
Pension liability
management exercise
Dividends
Own shares acquired
Net cash flow
2018
£m
64.8
(14.0)
(8.3)
(4.0)
(4.1)
(9.4)
25.0
2017
£m
63.9
(18.7)
6.5
(2.6)
(6.8)
(2.5)
39.8
(14.6)
(14.1)
(2.2)
(11.6)
(1.8)
(5.2)
–
(10.4)
(0.1)
15.2
The Group incurred a £(5.2)m net cash outflow
(2017: £15.2m inflow) in the period, with a free
cash inflow of £25.0m (2017: £39.8m), defined
as the movement in net debt, before pension
payments, dividends and the acquisition of
own shares.
Net capital expenditure was £14.0m
(2017: £18.7m), reflecting our investment to
support new business growth including £6.2m
for specialist vehicles, £4.7m for warehouse
fit out and £3.0m for new fleet on start-up
contracts or renewals. The capital expenditure
is net of cash receipts on sale of assets of £0.5m
(2017: £0.5m).
The £8.3m outflow (2017: £6.5m outflow) on
working capital in the year ended 31 March
2018 is primarily due to working capital
investment in mobilising new contracts
started in the year.
26
The Group paid cash tax in the current year
of £4.0m (2017: £2.6m). 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.
The amount of cash interest paid, excluding
fees, of £4.1m (2017: £6.8m) reduced in the
year reflecting the lower average cost of debt
following the repayment of two tranches of
more expensive debt: the US Private Placement
debt of £20m which matured in November
2016; and the final element of the M&G debt
of £25m which was repaid in July 2017.
Other cash outflows include payments in
respect of exceptional charges, property
provisions and share based payments.
Approximately £4m was paid in respect of
restructuring costs in the year. A cash outflow
in respect of property provisions of £3.9m,
compared to the prior year of £2.7m, the
increase due to the settlement of a dilapidation
claim in the second half.
Free cash flow of £25.0m (2017: £39.8m) has
been used to maintain the annual pension
recovery payments of £14.6m (2017: £14.1m)
and to pay equity dividends of £11.6m
(2017: £10.4m). In addition, total payments of
£2.2m were incurred in respect of the pension
liability management exercise, including the
transfer payments to the Scheme and the cost
of running the exercise. The Group acquired
850,000 shares during the year for a total
payment of £1.8m to provide shares for the
Employee Benefit Trust in respect of long term
incentive plan commitments.
FINANCING AND COVENANTS
Closing net debt
2018
2017
2016
2015
2014
0
29.5
24.3
39.5
57.6
64.9
25
45
65
(£m)
The Group’s committed facilities at the end
of the year were £141m (2017: £166m) and the
headroom in these committed facilities to
reported net debt at 31 March 2018 was £112m
(2017: £142m). The Group also has additional
operating overdrafts which provide day to
day flexibility and amount to a further £8m
in uncommitted facilities.
In March 2018 the Group agreed an
uncommitted £50m Receivables Purchase
Facility with Santander UK Plc. This will allow
the Group to access funds held within debtors
earlier which will provide a flexible tool to
manage working capital fluctuations.
Sterling and Euro pools are operated and
whenever possible, surplus cash is netted
against overdrafts.
Committed facilities
124
132
141
141
2021
2020
2019
2018
40
80
120
160
30
0
Closing net debt
(£m)
The Group’s facilities at 31 March 2018 comprise
the syndicated main bank facility of £141m
which amortises by £8.8m in October 2019,
with a second equal amortisation at the four
year anniversary in October 2020 before
maturing in October 2021. The £25m facility
with Prudential/M&G UK Companies Financing
Fund LP was prepaid without penalty on
14 July 2017 from cash generated in the period
and from other facilities.
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
Adjusted net debt:
EBITDA
Interest cover
Fixed charge cover
At 31
March
2018
0.81
17.8
2.5
Ratio
<2.75:1
>3.5:1
>1.4:1
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.
The membership data split by key categories
is as follows:
Deferred
Pensioners
2018
7,404
5,810
13,214
2017
8,030
5,883
13,913
At 31 March 2018, the Group is reporting an
IAS 19 deficit of £49.5m (2017: £78.4m).
Strategic reportWincanton plc Annual Report and Accounts 2018
The deficit has reduced due to a reduction in
liabilities due to demographic assumptions, an
increase in the market value of the investments
and contributions received from the Group,
being partly offset by an increase in liabilities
due to an increase in the inflation rate
assumption. The discount rate has remained
at 2.6% in line with the prior year. On an IAS 19
basis of measurement, each 0.1% increase in
the rate decreases the liabilities of the Scheme
by approximately £22m, however, due to the
hedging in place, assets would also decrease
by approximately £24m.
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 2018. As at 31 March 2018
the Scheme’s investment was split between
42.4% in return-seeking assets and 57.6% in
defensive assets.
The interest and inflation rate risks facing
the Scheme are hedged and the Trustee has
increased the level of this hedge during the
year to 100% of the Scheme’s assets.
In conjunction with the Trustee, the Group
also initiated a liability management exercise
in the form of an Enhanced Transfer Value,
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 credit of £2.0m,
being a settlement gain of £1.8m generated on
completion of the exercise and £0.2m release
due to a reduction in the costs associated
with the exercise; together with an associated
cash outflow to fund the enhanced transfer
values; and a reduction in the pension liabilities
(2017: exceptional cost of £(0.9)m, being the
costs associated with making the transfer
offer, including the provision of independent
financial advice). As part of the exercise the
Group paid top up payments to the Scheme
of £1.5m resulting in a reduction in the deficit
on an IAS 19 basis of £3.3m. The impact of the
exercise on the assets, liabilities and deficit is
shown in the table below:
Cash Equivalent Transfer Value
Liabilities extinguished
Deficit reduction
Group top up
Net gain on settlement
IAS 19
(24.3)
27.6
3.3
(1.5)
1.8
Discussions with the Trustee in respect of
the triennial valuation as at 31 March 2017
are continuing. These discussions are based
on a Technical Provisions valuation (the “TP
deficit”), which uses a more prudent set of
assumptions than those used for the purpose
of the IAS 19 balance sheet valuation. As a
result the TP deficit is higher than the balance
sheet deficit (the 31 March 2014 TP deficit
was £195m compared with the balance sheet
deficit of £110.9m) and the movements in the
deficits over time may not be proportionate
due to the different basis of calculation.
The objective of the triennial process is to agree
the valuation, an investment strategy for the
Scheme assets, the Company’s annual deficit
funding contribution, the recovery period for
these payments and contingent protections
for the Scheme. We expect to conclude the
discussions with Trustees during the calendar
year 2018.
The last triennial valuation of the Scheme,
undertaken as at 31 March 2014, resulted in a
deficit recovery payment plan with 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
£14.6m which is after the deduction of certain
administration costs paid directly by the Group
as agreed with the Trustee.
Defined contribution arrangements
The Group’s defined contribution
arrangements include the Retirement Savings
Section including the Auto Enrolment section,
and the Pension Builder Plan in the UK and
a separate similar local scheme in Ireland.
Active membership of these schemes was
15,728 (2017: 15,524) in the year. The charge
incurred for these arrangements totals £19.0m
(2017: £17.9m).
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 exceptional items, including related tax and exceptional tax items where applicable. The table below reconciles the APMs
to the statutory reported measures.
Revenue (£m)
EBITDA (£m)2
Operating profit (£m)
Operating margin (%)
Net financing costs (£m)
Profit before tax (£m)
Income tax (£m)
Profit after tax (£m)
Earnings per share (p)3
Dividend per share (p)
Closing net debt (£m)4
Amortisation
of acquired
intangibles
Exceptional
items1 Underlying
Statutory
Amortisation
of acquired
intangibles
Exceptional
items1
2018
–
–
2.3
0.2
–
2.3
(0.4)
1.9
–
6.2
6.2
0.5
–
6.2
(1.2)
5.0
1,171.9
1,118.1
64.8
52.9
4.5
(6.5)
46.4
(8.3)
38.1
30.8
9.9
(29.5)
70.0
56.0
5.0
(10.6)
45.4
(3.4)
42.0
34.2
9.1
–
–
2.2
0.2
–
2.2
(0.4)
1.8
–
(6.1)
(6.1)
(0.5)
–
(6.1)
(3.7)
(9.8)
Statutory
1,171.9
58.6
44.4
3.8
(6.5)
37.9
(6.7)
31.2
25.2
9.9
1 Note 3 and 6 to the financial statements provide further detail of exceptional items and also includes any tax releases/credits that are classed as exceptional.
2 EBITDA refers to operating profit before depreciation and amortisation and is reconciled in Note 2 to the financial statements.
3 Note 7 to the financial statements provides further detail of underlying earnings per share.
4 Net debt is the sum of cash and bank balances, bank loans and overdrafts and other financial liabilities. Note 26 to the financial statements provides a breakdown of net debt
for the current and prior periods.
2017
Underlying
1,118.1
63.9
52.1
4.7
(10.6)
41.5
(7.5)
34.0
27.7
9.1
(24.3)
27
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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
maintains an up-to-date view on the current
and prospective risks relevant to the Group
and its macro environment, monitors the
effectiveness of the control environment,
and identifies 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 seeks to meet
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 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 reviews by Internal Audit to ensure
any potential concerns or actions are shared
so they can be addressed and monitored
to completion.
During the course of the year there was a
process to review the activities of the RMC.
This process involved receiving the Audit
Committee’s guidance on the scope of
the RMC’s remit and an internal process to
review the Group’s external legal contracts.
To continue to enhance its role, further activity
is planned during the course of the 2018/19
financial year to develop the mechanisms to
respond to adjustments in the Group’s priorities
and business transformation.
Risk registers
The Group has compiled and maintains 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.
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.
The RMC has continued to use the Risk
Management Tool, which was implemented
at the start of the financial year, to enable
the business to assess and measure areas
of risk. The RMC has further developed the
Risk Management Tool to allow areas of best
practice to be recognised which the business
areas and operations, in turn, are encouraged
to implement. The Risk Management Tool
involves an element of peer review. This is seen
as a key strength of the Risk Management
Tool to enable multiple concurrent benefits:
development of internal review skills within the
Group; spread of knowledge of the Group’s
business activities; and a further degree of
independent measurement to support the
Internal Audit function.
Strategic report
RISK REPORT
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 activities.
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 Executive Management Team (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 makes
recommendations to the Board, or determines,
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 believes 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.
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 40 to 42.
28
Wincanton plc Annual Report and Accounts 2018 VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK Corporate Governance Code 2014, the Directors
have assessed the viability of the Group over a three year period to 31 March 2021, taking
into account the Group’s current position and the potential financial and operational impact
of the principal risks documented on pages 30 and 31 of the Annual Report, 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.
Scenarios tested include those impacting:
• business continuity, including supplier failure and failure of an IT system;
• growth and retention, including losses of rolling contracts and fixed contracts up for
renewal, as well as a reduction in new wins;
• operational performance, including contracts becoming onerous and labour costs
increasing; and
• an increase in the pension deficit recovery payments.
Reverse stress testing, involving sensitivity matrices, has also been performed. In severe but
plausible scenarios, mitigating actions such as tighter cost controls or a reduction in dividend
payments would need to be introduced.
The Directors have determined that a three year period to 31 March 2021 is an appropriate
period over which to provide its Viability Statement. This is the period reviewed by the
Board in our annual planning process, and for which forecasting assumptions are used.
We believe that this presents the Board and readers of the Annual Report and Accounts
with a reasonable degree of confidence over the longer term outlook.
Based on this assessment, the Board has 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 2021.
This statement was approved by the Board on 16 May 2018.
On behalf of the Board
Raj Sharma
Company Secretary
16 May 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, if appropriate, 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.
29
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 RISK REPORT CONTINUED
PRINCIPAL RISKS OF THE GROUP
RISK AND IMPACT
CONTROLS AND MITIGATION
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.
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. In the past two years,
the level of hedging has been increased to significantly reduce the
impact of inflation and interest rate movements. 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.
The Group and the Trustee have run liability management exercises
to reduce the overall liability risk in the Scheme, including the
Enhanced Transfer Value exercise concluded during the year ended
31 March 2018. Further liability management exercises will be
considered in future years.
The triennial valuation of the Scheme as at 31 March 2017 was
commenced during the year ended 31 March 2018. The Group
and the Trustee are ascertaining the appropriate recovery period
and the level of annual contributions to the Scheme together with
contingency plans to protect the Scheme in the event of adverse
developments. The objective is to ensure the deficit is eliminated
over a reasonable period whilst remaining at a level that is affordable
and sustainable for the Group.
The Group has a strong and highly capable human resources
function to monitor and maintain a high standard of recruitment
and a regular appraisal process, based on key competencies.
The Group constantly reviews and refreshes 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 to provide
additional contingency. Talent and development are monitored
and supported by a dedicated team to ensure people at all levels
have access to our comprehensive training programme 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 closely monitors its strategic and operational
performance through its KPIs (set out on page 11) 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.
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.
Significant adverse 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.
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.
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.
30
Strategic reportWincanton plc Annual Report and Accounts 2018 Cyber security
IS infrastructure
and systems
Legal and
regulatory compliance
Key suppliers
Significant health, safety
or environmental
incident
RISK AND IMPACT
CONTROLS AND MITIGATION
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 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.
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 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.
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.
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.
As a large supply chain organisation, the Group
is reliant on strong and reliable relationships with
key suppliers and has 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.
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.
31
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 THE BOARD
Stewart Oades
Adrian Colman
Interim Chairman
Interim Chairman of the Nomination Committee, Member of the
Audit Committee and Remuneration Committee
Stewart became a Non-executive Director of Wincanton in November 2014.
He was appointed as the Senior Independent Director in July 2015 and became
the Interim Chairman in September 2017 following the sudden death of Steve
Marshall. Stewart is currently a Non-executive Director of LCV Hire Solutions
and John Good & Sons Limited and is Chairman of Cygnia Logistics 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, Non-executive Director of MW Brands until March 2016
and Clipper Group plc until 2011. Prior to these appointments, Stewart was Chief
Executive of Christian Salvesen plc and held a number of senior posts at Exel plc.
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.
32
GovernanceWincanton plc Annual Report and Accounts 2018 Martin Sawkins
Paul Dean
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 environments 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.
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.
David Radcliffe
Gill Barr
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.
Independent Non-executive Director
Member of the Audit Committee, Nomination Committee
and Remuneration Committee
Gill became a Non-executive Director of Wincanton in September 2017. Gill is
currently a Non-executive Director of PayPoint plc and N Brown Group plc,
a Trustee Director of Willis Towers Watson’s master trust, Lifesight Ltd. She was
previously a Non-executive Director of Morgan Sindall plc from 2004 to 2012.
She was Group Marketing Director of The Co-operative Group from 2011 to
2014, and was previously Marketing Director of John Lewis. Gill spent seven
years at Kingfisher plc where she held a variety of senior marketing, business
development and strategy roles.
33
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 INTERIM CHAIRMAN’S INTRODUCTION TO CORPORATE GOVERNANCE
Ensuring appropriate governance
and controls are in place to support
strategic delivery
During the year the Board has continued to
focus on the development and practice of
good governance throughout the whole
organisation and has remained compliant with
the UK Corporate Governance Code (the Code).
The Board has reviewed and monitored the
Group’s performance to ensure that:
• sound internal controls and financial
and regulatory monitoring are in place;
• the Group has adequate cyber and data
security in place given the implementation
of General Data Protection Regulations
(GDPR); and
• the Group leads the implementation
and promotion of vital health and
safety initiatives to keep our people and
stakeholders safe.
There have been two main changes in
board personnel this year with more change
expected in the near future. Following the
sudden and unexpected death of Steve
Marshall, I have been appointed Interim
Chairman whilst a process is completed to
appoint a permanent successor. In September
2017, the Board welcomed the appointment
of Gill Barr as a Non-executive Director.
Her biography can be found on page 33.
As stated in our Annual Report last year, we
undertook our first external Board evaluation
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. The review
concluded that the Board operates in a very
functional, highly collegiate way which is
effective. This year, the Board has sought to
make incremental progress to enhance its
functioning in a year which has seen change
in its membership.
With the Executive Directors well embedded
and a strengthened management team
appointed during 2016 and 2017, the Board
has been focused on 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.
Looking into the new financial year, the
Board will be monitoring developments in
governance that propose changes to executive
remuneration, reporting and strengthening
the consideration of broader stakeholders.
As stated in our Annual Report last year,
the Board has reviewed and authorised the
publication of our gender pay reporting which
is now available on our website.
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.
Stewart Oades
Interim Chairman
16 May 2018
34
GovernanceWincanton plc Annual Report and Accounts 2018 The Board encourages a culture of strong
governance across the business, and continues
to adopt the principles of good governance and
adhere to the requirements of the UK Corporate
Governance Code.
The Board is collectively responsible to the Company’s
shareholders for creating and preserving the long
term success and performance of the business.
The key Principles of the Code are outlined below:
LEADERSHIP
The Board provides leadership either directly or through
the operation of its Committees. The Board sets the
strategic objectives of the Company and actively monitors
the Company’s progress.
READ MORE ON PAGE 36
EFFECTIVENESS
ACCOUNTABILITY
The Board and its Committees have the appropriate balance
of skills, experience, independence and knowledge of the
Company to enable them to discharge their respective duties
and responsibilities effectively.
The Board should present a fair, balanced and
understandable assessment of the Company’s position
and its prospects. The Board is responsible for determining
the Company’s risk appetite.
READ MORE ON PAGE 37
READ MORE ON PAGE 40
REMUNERATION
RELATIONS WITH SHAREHOLDERS
The Board is responsible for a formal and transparent
procedure for developing policy on executive remuneration.
The Board as a whole has responsibility for ensuring that
a satisfactory dialogue with shareholders takes place.
READ MORE ON PAGE 43
READ MORE ON PAGE 38
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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 is committed to the principle of full
compliance and is satisfied that the Company
has complied with all of the requirements of
the Code during the year.
COMPLIANCE STATEMENT
The Group remains 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 2018, the
Board considers 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 32 to
33), who are collectively responsible for
the long term success of the Company
and the endorsement and application of
corporate governance.
Decision-making
The Board has 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 focuses effectively on all areas of their
responsibility. The Board considers all such
areas within routine agenda matters at each
Board meeting.
Roles of Chairman and
Chief Executive Officer
The roles of the Chairman and Chief Executive
Officer are separate and performed by different
individuals. A responsibility statement for
each role has been set out and adopted by
the Board.
The Interim Chairman, Stewart Oades, 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 Interim Chairman,
deemed independent on appointment and
remains independent in accordance with
the Code.
The Chief Executive Officer, 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 (EMT)
The EMT comprise the senior leadership team
that report directly to the Chief Executive
Officer 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 Officer and, as appropriate,
the Chief Financial Officer and other
EMT members.
Senior Independent Director
The position of Senior Independent Director
has been temporarily vacated as Stewart
Oades was appointed to the position of
Interim Chairman following the sudden
death of Steve Marshall in September 2017.
Following the completion of the process
to appoint a permanent Chairman, it is the
Board’s intention that the position of Senior
Independent Director is then to be fulfilled by
an independent Non-executive Director of
the Board. The role of the Senior Independent
Director is to act as a sounding board for the
Chairman and perform an intermediary role to
other Directors, where necessary. The role leads
the appraisal and review of the Chairman’s
performance and is available to shareholders
if they have reason for concern that contact
through the normal channels of the Chairman
and Chief Executive Officer has failed to resolve.
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 believes
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.
Last year, the Chairman and Non-executive
Directors met once without the Executive
Directors being present.
36
GovernanceWincanton plc Annual Report and Accounts 2018 Board Committees
There are three Committees of the
Board, an Audit Committee, Nomination
Committee, and Remuneration Committee.
Each Committee has terms of reference
set by the Board, which are reviewed
annually and made available on the Group’s
website (https://www.wincanton.co.uk/
investors/governance/board-committees/).
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 2018 for each
Committee are set out in their respective
Committee reports that follow.
Meetings attendance
The attendance of the Directors is recorded
in the table below. 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 2018 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:
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 two changes to the Board this
year. Steve Marshall’s sudden death resulted in
the appointment of Stewart Oades as Interim
Chairman on 1 October 2017. A selection
process for a permanent Chairman is being
undertaken by the Company.
On 15 September 2017 the Board was pleased
to welcome the appointment of Gill Barr as a
Non-executive Director and member of the
Audit Committee, Remuneration Committee
and Nomination Committee. Her biography
is available on page 33.
Board Meetings
Attended/Scheduled
5/5
10/10
10/10
10/10
10/10
3/4
10/10
10/10
Audit Committee
Attended/Scheduled
–
3/3
3/3
3/3
3/3
0/2
–
–
Remuneration
Committee
Attended/Scheduled
2/2
5/5
5/5
5/5
5/5
1/2
–
–
Nomination
Committee
Attended/Scheduled
3/3
6/6
5/6
6/6
6/6
3/3
6/6
–
Steve Marshall1
Paul Dean
Stewart Oades
David Radcliffe
Martin Sawkins
Gill Barr2
Adrian Colman
Tim Lawlor
1 Steve Marshall’s appointment as Chairman legally ended on 29 September 2017 following his sudden death.
2 Gill Barr was appointed as a Non-executive director on 15 September 2017.
In accordance with the Code six of the
Directors, being eligible, will put themselves
forward for annual re-election at the
Company’s AGM on 28 June 2018. Gill Barr will
put herself forward for election as a Non-
executive Director following her appointment
on 15 September 2017.
BOARD EFFECTIVENESS
Performance review
In the normal course of the Board’s operation,
its Committees and each Director participate
in an annual performance evaluation process.
In respect of the year ended 31 March 2018 the
evaluation process could not be completed
due to the sudden death of Steve Marshall. It is
the Board’s intention that, on the appointment
of a permanent successor, the process of
annual performance evaluation process be
re-established.
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 Wigan and
Sheffield, 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 members 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 has a sound understanding of
the business and its operations, to enable it to
provide appropriate oversight and challenge
to the EMT.
Other directorships
The Interim Chairman and Non-executive
Directors hold appointments as directors
on a small number of other companies, as
detailed in their biographies on pages 32 to
33. It is considered the Interim Chairman and
Non-executive Directors allocate sufficient
time and commitment to fulfil their duties
to the Company.
The Board acknowledges that Executive
Directors may wish to undertake external
non-executive director roles outside of
the Company. It is recognised that such
opportunities broaden their development,
widen their commercial experience and so
benefit the Company. To protect the interests
of the Company 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.
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018
RISK MANAGEMENT
The Board is ultimately responsible for the
Group’s systems of risk management and
internal control and reviews 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 28 to 31.
The Group’s Internal Audit function
independently reviews and tests 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 40.
ANNUAL GENERAL MEETING
The AGM, scheduled this year for 28 June 2018,
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 Auditor
and the Company Secretary.
Stewart Oades
Interim Chairman
16 May 2018
CORPORATE GOVERNANCE REPORT CONTINUED
Conflicts of interest
The Board monitors and reviews potential
conflicts of interest on a regular basis and
considers any situational conflicts at each Board
meeting. Where any conflict arises the Board
considers and authorises the reported actual
or potential conflict in accordance with the
provisions contained in the Company’s Articles
of Association.
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, a
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
Officer and Chief Financial Officer. Brokers’
reports and analysts’ briefing notes are
regularly distributed to all Directors. The Board
receives 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.
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
communications from the Company.
Electronic communications are endorsed by
the Board as the most efficient communication
method 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 Company’s
website (https://www.wincanton.co.uk/
investors/shareholder-information).
Employees
On 31 March 2018 the Group employed 17,726
people in the United Kingdom (UK) and
Republic of Ireland (ROI), of which 14,628 are
men and 3,098 are women. The average age
of the Group’s employees is 42.6 years. Of all
2,571 management level employees, 1,967 are
men and 604 are women.
Details of the Group’s approach to equality,
fairness and diversity are set out in the
Corporate Responsibility Report on pages
20 to 23.
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.
38
GovernanceWincanton plc Annual Report and Accounts 2018 NOMINATION COMMITTEE REPORT
NOMINATION COMMITTEE REPORT
Membership
The Nomination Committee comprises
the Interim Chairman, the Chief Executive
Officer and the four Non-executive Directors.
The Interim Chairman is the Interim
Nomination Committee Chairman.
Attendance at the Committee’s meetings are
set out on page 37.
Role of the Nomination Committee
The Board has 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
evaluates 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 ensures 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 gender.
Activities in the year ended
31 March 2018
During the year the Committee undertook
the following activities:
• reviewed financial year reporting matters
and disclosures;
• reviewed the Company’s succession
plan for the Board following the external
evaluation results;
• reviewed the Company’s succession plans
for the EMT;
• appointed an external recruitment firm to
support the selection processes for a Non-
executive Director and recommended the
appointment of Gill Barr to the Board;
• appointed an external recruitment firm
to support the selection processes for a
permanent Chairman;
• reviewed the time commitment and conflict
of interest declarations of the Directors; and
• reviewed 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 has
continued to operate effectively and in
accordance with its remit.
Composition of the Board
The Committee reviews the composition of
the Board and its Committees 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 considers 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 achieve.
The Board considers and reviews diversity
in the fullest sense when considering
appointments and succession planning and
seeks 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 has considered the following
areas at length:
• the Committee structure and membership;
• Non-executive Director engagement
with management;
• evaluation of the current skills and experience
of the 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 reviews 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.
Stewart Oades
Interim Chairman of Nomination Committee
16 May 2018
39
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 AUDIT COMMITTEE REPORT
Supporting the Board
in matters relating to
financial reporting,
internal control and risk
management.
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 welcomes 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 2018
AUDIT COMMITTEE CHAIRMAN’S
ANNUAL STATEMENT
I am pleased to present the Audit Committee’s
report for the year ended 31 March 2018.
The Committee has continued to play a key
role to support the Board in matters relating
to financial reporting, internal control and risk
management. We have had another busy year
undertaking our principal responsibilities which
are set out in this report. Some of this year’s
highlights include the following:
• overseeing the continued adherence to the
Company’s risk management and internal
controls framework (including financial
controls) to further align and embed the risk
management culture across the Company;
• in-depth review of the Company’s IT general
controls and information security risks and
the ongoing implementation of controls on
data, specifically with regard to the General
Data Protection Regulation (GDPR);
• review and consideration of tax regulations,
disclosures and new reporting requirements;
and
• assessment of the going concern and
viability statements and the underlying
models and assumptions, prior to
consideration by the Board.
AUDIT COMMITTEE’S REPORT
Membership
As at 31 March 2018, the membership of the
Audit Committee is comprised of the five
independent Non-executive Directors. I am
pleased to welcome Gill Barr as a member of
the Committee this year, her biography is set
out on page 33.
Each member of the Audit Committee is
independent and the membership meets the
requirements of the Code. The Board is 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 37 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 Officer 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 assists the Board on
the effective review of financial performance,
internal controls, financial reporting and
risk management.
40
GovernanceWincanton plc Annual Report and Accounts 2018 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;
• reporting to the Board on any matters where
it considers action or improvement is needed,
including recommendation of remedial
actions; and
• reporting 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 2018
The Audit Committee met three times during
the year at scheduled meetings. Following the
year end the Committee has 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 2017
Annual Report and Accounts and financial
statements in respect of the half year results
to 30 September 2017 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
2017 Annual Report and Accounts and the
half year results to 30 September 2017;
• review of the key judgements and
accounting matters, which includes going
concern, in respect of the half year and full
year to 31 March 2018;
• review of the preliminary results and
half year results in the stock exchange
announcements; and
• review of updates from management on
the progress of the projects for the adoption
of IFRS 15 ‘Revenue from contracts with
customers’ and IFRS 16 ‘Leases’ together with
proposed disclosures in the Annual Report
and Accounts for the year ended 31 March
2017 and 2018 and the half year results to
30 September 2017.
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;
• 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 2018
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; and
• review the effectiveness of the Internal
Audit function.
External Audit/Auditor
• 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 2017;
• approve the terms of appointment, areas
of responsibility and duties;
• scope and strategy of the 2018 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 which are considered to be
satisfactory. 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 2018 and how
they were addressed:
Pension scheme obligations
The balance sheet for the year ended 31 March
2018 includes a pension scheme deficit of
£49.5m, with gross pension obligations of
£1,125.4m.
In arriving at the gross obligation figure, the
Committee considered the accounting basis
of the pension scheme in the year ended
31 March 2018 and reviewed the pension
items provided by management, based
on the Scheme 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 was satisfied that the
assumptions used and the disclosures in the
Annual Report were appropriate.
Provisions
The balance sheet for the year ended 31 March
2018 includes provisions of £50.9m.
The Committee reviewed management
reports on the provisions, including the
property provision, insurance provision
and other provisions. The reports cover the
provisions made in the year, provisions released
in the year, utilisation and the rationale for
the year end provision. The Committee also
considered the External Auditor’s testing of
the assumptions and methodology used in
determining the level of provisioning.
The Committee was satisfied the assumptions
and 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 reviews the External Auditor’s
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 was satisfied
that the financial statements appropriately
addressed the critical judgements and key
estimates in respect of the amounts reported
and the disclosures. The Committee was 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.
41
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Auditor tender
A robust and thorough audit tender was
undertaken in 2016 which concluded with
a recommendation to reappoint KPMG as
the Group’s External Auditor. The Committee
is acutely aware that, despite undertaking
the tender in 2016, KPMG has 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 of service 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 FRC Ethical Standard 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 2018 are set out in
Note 3 to the financial statements on page 79.
Paul Dean
Audit Committee Chairman
16 May 2018
AUDIT COMMITTEE REPORT CONTINUED
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 28 to 31.
Internal Audit function
The Head of Internal Audit reports to the Chief
Financial Officer and has direct access to the
Chief Executive Officer 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 provides
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 reports produced consider the
extent to which systems of internal control
and risk management are designed, operate
effectively, manage or mitigate key risks, and
safeguard assets or limit liabilities.
The role of Internal Audit and the scope of
its work, 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 the External Auditor, KPMG,
annually in respect of their performance and
conduct. Simon Haydn-Jones remains the
Senior Statutory Auditor since 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 was satisfied the External
Auditor had performed effectively in respect
of the external audits for the year ended
31 March 2017 and the review of the half year
to 30 September 2017.
The Committee also considered the findings
contained in a report issued following an
inspection of KPMG’s audit for the year ended
31 March 2017 by the Financial Reporting
Council’s Audit Quality Review Team.
The Committee discussed the findings of this
external report and the actions undertaken
by KPMG to address the matters raised as part
of the 2017 audit. It agreed that the audit was
effective overall and that any identified areas
for further improvement had been addressed
or had appropriate action plans in place.
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 has 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 has assured the Group their ethics and
independence manual is fully consistent with
the professional practice rules of the Financial
Reporting Council (FRC), the auditor’s regulator.
In addition, KPMG has put in place further
independence safeguards through professional
values, communications, internal accountability,
risk management and independent reviews.
KPMG regularly reviews the composition of the
audit team and rotates teams in accordance
with the relevant regulations; and considers
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.
42
GovernanceWincanton plc Annual Report and Accounts 2018 REMUNERATION COMMITTEE CHAIRMAN’S ANNUAL STATEMENT
We continue to believe that
the Remuneration Policy
supports delivery of the
Group’s strategic targets.
REMUNERATION COMMITTEE
CHAIRMAN’S ANNUAL STATEMENT
I am pleased to present the Directors’
Remuneration report for the year ended
31 March 2018.
Following approval by shareholders at the
2017 AGM, the Group’s current Remuneration
Policy became effective from 1 July 2017
and is expected to remain in effect until the
2020 AGM. The key aspects of the policy are
summarised on pages 52 to 58. We continue
to believe that the Policy supports delivery
of the Group’s strategic targets, motivates
individuals to deliver high performance and
enables us to recruit and retain the most
appropriate Directors and senior management
for Wincanton.
During the year the Committee undertook
a range of duties delegated to it by the
Board and applied the Policy to executive
remuneration. These activities included
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 rewards
high performance consistent with the
Remuneration Policy. In line with 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 2017
that was broadly consistent with the average
employee salary increase across the Group.
The Committee has applied the same principle
again for salaries of Executive Directors
effective 1 July 2018. 2017 LTIP awards, granted
in the form of nil cost options, were made to
Executive Directors contingent on the same
performance conditions applied in 2016, and
the Committee considers the performance
metrics continue to reinforce stretching
business performance. The LTIP awards were
also granted at the same level as in previous
years. The Committee thoroughly reviewed
the Executive Directors’ performance 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 46.
The Committee agreed that the profit measure
for the Senior Management Annual Bonus Plan
and General Management Bonus Plan for the
financial year ended 31 March 2018 would be
changed to underlying profit before tax (PBT),
from underlying operating profit, to further
incentivise appropriate management of debt
by additionally capturing our financing costs.
Following a solid financial performance
consistent with our strategy of cost control
and top line growth in key sectors and
achievement across all of their non-financial
objectives and targets, the Committee
considered the award of £369,004 (being
55.9% of his annual bonus entitlement) for
Adrian Colman and £219,269 (being 59.9% of
his annual bonus entitlement) for Tim Lawlor
to be a fair and reasonable award for the year
ended 31 March 2018. 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 2019. Further details regarding
specific variable elements of pay received
by the Executive Directors, to recognise their
continued strong performance delivered for
shareholders in pursuit of sustained growth,
can be found in the Directors’ Remuneration
report on pages 45 to 47. All aspects of variable
and non variable pay are in line with the
approved Remuneration Policy.
The Committee considers executive pay in light
of the remuneration approach for the broader
employee population, and further details can
be found on page 49. The Committee also
continues to monitor all senior management
changes, below the Executive Directors, and
reviews amendments to pay and conditions,
as well as approves any bonus payments.
Pay increases were awarded with an average
rise across the Group of 1.0%.
There were two Non-executive Director
changes during the year. It was with deep
regret that the Committee learned of the
sudden death of Steve Marshall, a member of
the Committee, who served as Chairman for six
years since his appointment in 2011. A search
has been commissioned and is progressing
appropriately. In the meantime the Board
appointed Stewart Oades as Interim Chairman.
After consideration by the Committee it was
agreed that Stewart’s fees for the interim period
should reflect those of the prior Chairman’s to
take into account the additional requirements
and responsibilities of the role.
I am delighted that Gill Barr joined the Committee
in September 2017 as a Non-executive Director.
Her full biography is available on page 33.
Gill was appointed on terms consistent with
the remaining Non-executive Directors.
Finally, 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. As a Committee
we welcome engagement and constructive
dialogue and if you would like to contact us
please do so through the Company Secretary.
Martin Sawkins
Remuneration Committee Chairman
16 May 2018
43
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsDirectors’ remuneration reportWincanton plc Annual Report and Accounts 2018 ANNUAL REPORT ON REMUNERATION
The Chief Executive Officer, 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.
• review and approve incentive outcomes for
Executive Directors and senior management
for the prior year, i.e. annual bonus for the
year ended 31 March 2017 and vesting of
Special Option Plan (SOP) awards granted
in July 2014;
• 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;
• review and approve the Annual Report
on Remuneration for the year ended
31 March 2017;
• 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.
Remuneration consultant
Mercer Kepler (part of MMC Group LP) is
the Committee’s appointed Remuneration
Consultant regarding remuneration
advice. Mercer Kepler is a founding
member of and signatory to 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 Mercer Kepler and
is comfortable that Mercer 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, the MMC Group of companies
also provides unrelated advice in relation to
investment strategy.
During the year, Mercer Kepler attended
Committee meetings upon invitation
to provide advice and support to the
Committee in areas such as: implementing
the remuneration policy; current market
practice; governance developments; drafting
the remuneration report; and performance
updates for the Long Term Incentive Plan.
Fees payable to Mercer Kepler amounted to
£24,455 (2017: £48,765), based on attendance
at meetings and advisory materials. Fees for
the year ended 31 March 2018 include Mercer
Kepler’s support on reviewing remuneration
policy and on implementation of the LTIP.
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/
governance/board-committees.
The main responsibilities of the Committee
are to:
• set and determine the Directors’
Remuneration Policy and consider
remuneration policy across the Group;
• set and determine the Executive Directors’
remuneration arrangements and fees for
the Chairman;
• approve the design of performance-related
remuneration for Executive Directors;
• monitor the level and structure of
remuneration for senior management;
• approve the design of, and determine
targets for, relevant performance-related pay
schemes operated by the Group;
• determine whether and the extent to which
performance targets have been met for the
Senior Management Annual Bonus Plan and
for the Group’s long term incentives;
• 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 2018
The Company’s approach to remuneration
arrangements for Directors is in line with 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 Officer and Chief
Financial Officer;
• consider the Chairman’s and Chief Executive
Officer’s recommendations for remuneration
for Executive Directors and the EMT,
respectively;
• consider the HR strategy for the Group and
compliance with the Remuneration Policy;
INTRODUCTION
The Annual Report on Remuneration sets
out the Company’s remuneration of its
Directors during the year ended 31 March
2018 in line with the Directors’ Remuneration
Policy approved by shareholders at the
Company’s 2017 AGM, and how it intends
the Remuneration Policy to apply for the year
ended 31 March 2019.
This report is subject to an advisory vote
by shareholders at the Company’s AGM on
28 June 2018.
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
37. There were five scheduled Committee
meetings during the year and one additional
meeting between 1 April 2018 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.
44
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018 STATEMENT OF SHAREHOLDER VOTING
The Committee recognises 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 AGM on 29 June 2017, the advisory resolution for approval of the Annual Report on Remuneration received the
following votes:
Votes for
84,214,956
%
99.75
Votes against
210,748
%
0.25
Total votes
84,425,704
% of ISC voted1
67.79
Votes withheld
138,240
1 The Issued Share Capital (ISC) of the Company as at the date of the Company’s 2017 AGM was 124,543,670 Ordinary Shares of 10p each.
At the Company’s 2017 AGM, the binding resolution for approval of the Remuneration Policy received the following votes:
Votes for
84,198,079
%
99.67
Votes against
274,712
%
0.33
Total votes
84,472,791
% of ISC voted1
67.83
Votes withheld
56,154
1 The Issued Share Capital (ISC) of the Company as at the date of the Company’s 2017 AGM was 124,543,670 Ordinary Shares of 10p each.
SINGLE TOTAL FIGURE OF REMUNERATION – EXECUTIVE DIRECTORS (AUDITED)
Fixed pay
Salary and fees
Taxable benefits1
Pension related benefits2
Sub total
Bonus3
Long term incentives4
Sub total
Total
Adrian Colman
Tim Lawlor
31 March 2018
£’000
31 March 2017
£’000
31 March 2018
£’000
31 March 2017
£’000
439
26
97
562
369
903
1,272
1,834
435
26
96
557
478
973
1,451
2,008
304
17
46
367
219
298
517
884
299
16
45
360
277
–
277
637
1 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 2018 was £25,000 for Adrian Colman and £15,600 for Tim Lawlor.
2 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.
3 Annual Bonus award payments made to the Executive Directors for the years ended 31 March 2017 and 2018 were paid 100% in cash. Further information is detailed on page 46.
4 The value of long term incentives for the year ended 31 March 2018 includes awards vesting for performance during the financial year under the legacy 2014 SOP and 2015 LTIP. The 2014 SOP
is valued based on the embedded gain between the option price and the share price on date of vest; the embedded gain was £0.95 per share (based on the share price at date of vesting
on 11 July 2017 of £2.32). The 2015 LTIP is valued based on the three-month average share price to year-end of £2.23, as the share price on date of vesting (16 July 2018) is not yet known.
Further details can be found on pages 46 and 47.
IMPLEMENTATION OF REMUNERATION POLICY FOR THE YEAR ENDED 31 MARCH 2018
Salaries
Executive Directors’ salaries are reviewed annually with any change effective from 1 July.
During the year, the Committee awarded a 0.8% increase to Adrian Colman and 1.7% increase to Tim Lawlor effective from 1 July 2017, aligned with
the average budgeted salary increase across the Group. The salaries of the Executive Directors as at 31 March 2018 and with effect from 1 July 2018
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 2018
£
446,600
311,100
Salary as at
31 March 2018
£
440,000
305,000
Change
1.5%
2.0%
Salary as at
31 March 2017
£
436,450
300,000
Change
0.8%
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 2017/18 tax year, the excess was paid in the form of a taxable cash
payment. Executive Director pension arrangements for the year ended 31 March 2019 will be consistent with the approach for 2017/18.
45
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 ANNUAL REPORT ON REMUNERATION CONTINUED
The Senior Management Annual Bonus Plan for the year ending 31 March 2018 (audited)
For the year ended 31 March 2018, both Executive Directors were eligible to participate in the Senior Management Annual Bonus Plan (ABP).
The maximum opportunities for the year were 150% of salary and 120% of salary for Adrian Colman and Tim Lawlor, respectively. The ABP 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 2018 were 60% weighted on Group financial performance as measured through underlying
profit before tax (PBT), and 40% weighted on performance against personal objectives. Of the personal objectives element, half was weighted on
financial and half weighted on non-financial objectives.
ABP: underlying profit before tax element
Underlying PBT performance
Bonus opportunity on the underlying PBT element
Threshold
£44.2m
25%
Target
£46.5m
50%
Maximum
£48.8m
100%
Actual
£46.4m
47.9%
ABP: personal objectives element
The personal financial objectives for Adrian Colman and Tim Lawlor for the year ended 31 March 2018 included: making material progress in the
triennial pension negotiations balancing the needs of all stakeholders; delivering market expectations for the Group across all key metrics; and
delivering revenue growth in excess of prior year growth. The personal non-financial objectives for Adrian Colman and Tim Lawlor for the year ended
31 March 2018 included: building and enhancing the sales and senior management teams; making further progress on the implementation of the
Group’s strategy; continued strong engagement with the Group’s top 20 customers; building the Wincanton brand; improving operational delivery;
and, achieving focus on labour cost challenges.
The Committee considered the performance of both Executive Directors, and reviewed the performance against each of their respective objectives.
Pension discussions are progressing in a challenging and complex macro environment; the Group has met or beaten all market expectations across all
key financial metrics despite a number of challenges faced, particularly in the Industrial & Transport sector during the year which required early senior
management intervention; although revenue growth was achieved this was below the target levels of growth the objectives required despite real
progress in building the business capability in this area. The business has achieved good progress in building the bench strength of both the sales and
wider senior management teams in the year: the Board has been kept fully informed on progress with regard to the business strategy implementation
and progress continues to be made; excellent progress has been made to innovate and position the business for the emerging impact of the digital
economy. Following due consideration of the evidence to support achievements of each of the objectives, together with their overall annual
performance review, the Committee concluded that both of the Executive Directors have performed well in their financial and non-financial bonus
objectives which had directly resulted in a strong Group performance and with the Group well positioned for growth and to support stakeholders’
future needs.
The table below sets out the awards of bonuses for the achievement of personal objectives for the year ended 31 March 2018 determined by
the Committee:
Bonus level percentage of personal objective element (% of maximum)
Adrian Colman
68.0%
Tim Lawlor
78.0%
Following consideration of the above, the Committee awarded an annual bonus equivalent to £369,004 (being 83.9% of salary) to Adrian Colman and
£219,269 (being 71.9% of salary) to Tim Lawlor, based on their salary at the end of the year ended 31 March 2018.
Long term incentives – vesting of 2014 Special Option Plan awards (audited)
The Special Option Plan (SOP) is a legacy long term incentive plan which expired 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 final awards made to Executive Directors under the SOP were granted
in July 2014 and vested in July 2017.
For SOP awards made in July 2014, threshold vesting (25% of maximum) required average TSR to exceed 10% per annum over the three-year period
to July 2017, and full vesting required average TSR of 22% per annum. There was also an EPS underpin which required no reduction to the underlying
EPS at any point during the relevant three year period. If EPS reduced at any point during the relevant three year period, the relevant awards would
lapse in full regardless of TSR performance.
In terms of actual performance, average TSR to July 2017 was 25% per annum, and there was no reduction in EPS over the period. This resulted
in a vesting outcome of 100% of maximum. The performance outcomes above have resulted in the following SOP vesting levels:
Adrian Colman
Date of award
11 July 2014
Vest date
11 July 2017
Option exercise
price1
£1.37
No. of SOP awards
granted
446,715
No. of SOP
awards vesting for
performance
446,7152
1 The option price is calculated using the three day average share price immediately preceding the date of award.
2 The value of this award for the purpose of the single figure is based on embedded gain, calculated as the difference between option price of 137p per share and the share price at date of vest.
46
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018
Long term incentives – 2015 Long Term Incentive Plan awards (audited)
The Company reviewed its long term incentive arrangements in 2014, and a new Long Term Incentive Plan (LTIP) was approved by shareholders
at the 2014 AGM. In July and September 2015, awards of 100% of salary were made under the LTIP to Adrian Colman and Tim Lawlor, respectively.
Vesting of the awards was based 60% on basic underlying EPS growth, and 40% on TSR relative to the FTSE All-Share Index (excluding investment
trusts). EPS growth is measured on a point-to-point basis over the three year period to the year ended 31 March 2018, with 25% of the element vesting
for 6% growth per annum and 100% vesting for 11% growth per annum. The TSR element is also measured over the three year period to 31 March
2018; 25% vests if the Company’s TSR is equal to the TSR of the Index itself and 100% vests if TSR is equal to Index + 10% per annum. There is straight-
line vesting between threshold and maximum for both the EPS and TSR elements.
In respect of the EPS element, growth over the period was 15% per annum, resulting in a vesting outcome of 100% for the element. In respect of the
TSR element, TSR over the period was equal to Index + 7.9% per annum, resulting in a vesting outcome of 84.6% for the element. The Committee is
satisfied the EPS growth and TSR performance outcomes reflect the underlying performance of the Company. The total amount that will vest in July
2018 will therefore be 93.8% of the total award.
The performance outcomes above have resulted in the following LTIP vesting levels:
Adrian Colman
Tim Lawlor
Date of award
16 July 2015
Vest date
16 July 2018
28 September 20151 28 September 2018
No. of LTIP
awards granted
228,845
142,512
No. of LTIP awards
to vest for performance2
214,771
133,747
1 Tim Lawlor was appointed on 28 September 2015 and received an award under the LTIP on his appointment.
2 Awards will vest in July and September 2018, subject to the individuals’ continued employment on the respective vesting dates.
LTIP awards made in the year ended 31 March 2018 (audited)
LTIP awards made to the Executive Directors during the year are set out below, based on 100% of salary for both Adrian Colman and Tim Lawlor.
The EPS and TSR performance period for the 18 July 2017 awards is 1 April 2017 to 31 March 2020.
Vesting of the awards will be based 60% on basic underlying EPS and 40% on TSR relative to the FTSE All-Share Index (excluding investment trusts).
Under the EPS element, 25% of the element vesting for 6% growth per annum and 100% vesting for 11% growth per annum. Under the TSR element,
25% vests if the Company’s TSR is equal to the TSR of the Index itself and 100% vests if TSR is equal to Index + 10% per annum (calibrated to be
equivalent to upper quartile TSR). There is straight-line vesting between threshold and maximum for both elements.
Adrian Colman
Tim Lawlor
1 Average share price over the three business days preceding the date of grant.
Date of award
18 July 2017
18 July 2017
Vest date
18 July 2020
18 July 2020
Share price1
£2.51
£2.51
No. of nil cost
options granted
under the LTIP
175,299
121,514
Face value
of award (£)
440,000
305,000
IMPLEMENTATION OF REMUNERATION POLICY FOR THE YEAR ENDED 31 MARCH 2019
Salaries
The Committee determined to award a 1.5% increase to the Chief Executive Officer and a 2.0% increase to the Chief Financial Officer, effective from
1 July 2018. This is in line with the salary increase awarded across the Group which averaged 1.5%.
ABP and LTIP
The Group intends to operate the ABP and the LTIP in the year ended 31 March 2019, including their respective performance conditions and
opportunities, in line with the approach in the year ended 31 March 2018.
The ABP opportunities will remain 150% of salary and 120% of salary for Adrian Colman and Tim Lawlor, respectively, and will be based 60% on Group
underlying profit before tax, and 40% on performance against personal objectives (of which half is weighted on financial and half weighted on non-
financial targets). As in previous years, any bonus earned above 100% of salary must be used to purchase Wincanton shares until the share ownership
guideline is achieved. 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 2019.
The Committee expects the 2018 LTIP award to be based 60% on basic underlying EPS growth and 40% on TSR relative to the FTSE All-Share Index
(excluding investment trusts), measured over three years. It is anticipated that the performance ranges will also be consistent with those applied in
2017. For the EPS element, 25% will vest for 6% growth per annum with 100% vesting for 11% growth per annum and, for the TSR element, 25% will
vest for Wincanton TSR equal to the Index TSR with 100% vesting for Wincanton TSR equal to Index + 10% per annum, and with straight-line vesting
in between. LTIP opportunities are also expected to remain in line with the approach for 2017 LTIP awards, with opportunities of up to 100% of salary.
47
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 ANNUAL REPORT ON REMUNERATION CONTINUED
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 role of 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 Chairman). The fees will remain unchanged in the year ending 31 March 2019.
Steve Marshall1
Paul Dean
Stewart Oades1
David Radcliffe
Martin Sawkins
Gill Barr2
At 31 March 2018
Committee
Chair fee £’000
–
8
–
–
8
–
Fees £’000
85
45
108
45
45
24
Total £’000
85
53
108
45
53
24
At 31 March 2017
Committee
Chair fee £’000
–
8
–
–
8
–
Fees £’000
170
45
45
45
45
–
Total £’000
170
53
45
45
53
–
1 Steve Marshall acted as Chairman until his death was announced by the Company on 29 September 2017. The Board appointed Stewart Oades as interim Chairman on 1 October 2017, and after
consideration by the Committee it was agreed that Stewart’s fees for the interim period should reflect those of the prior Chairman for the year ended 31 March 2018.
2 Gill Barr was appointed on 15 September 2017 and therefore the fee paid in the year ended 31 March 2018 was prorated accordingly. The fee was agreed by the Committee and is consistent
with other Non-executive Directors.
PERFORMANCE AND PAY
Set out below is a line graph that shows the TSR performance over a nine year period for both a holding of the Company’s shares and of the FTSE
SmallCap Index. The latter was agreed by the Committee to be the most appropriate comparator as the Company is a constituent of the index.
The chart further shows TSR for FTSE All-Share excluding investment trusts as this is the comparator group for measuring TSR performance under
the LTIP.
Wincanton TSR vs. the FTSE SmallCap and the FTSE All-Share xIT over 9 years – Value of £100 invested on 31 March 2009 (£)
450
400
350
300
250
200
150
100
50
0
Mar
2009
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2015
Mar
2016
Wincanton
FTSE AllShare xIT
FTSE Small Cap
Mar
2017
Mar
2018
Source: MERCER KEPLER
48
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018 The table below sets out the total remuneration and the amount vesting under ABP 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 Chief Executive
2018
2017
2016
2016
2015
2014
2013
2012
2011
2011
2010
Adrian Colman
Adrian Colman
Adrian Colman3
Eric Born3
Eric Born
Eric Born
Eric Born
Eric Born
Eric Born11
Graeme McFaull11
Graeme McFaull
Chief Executive
single figure of total
remuneration £’000
1,834
2,008
1,653
3,750
2,051
1,264
893
710
249
397
655
Annual bonus payout
against maximum
opportunity
55.9%
73%
61%4
–4
56%7
68%9
69%9
41%9
0%
0%
64%13
Long term incentive
vesting rates
against maximum
opportunity
97.9%1
100%2
100%5
100%6
100%8
100%8
100%8,10
100%10
n/a
0%12
9%14
1 Awards under the July 2014 SOP vested in full. Awards under the July 2015 LTIP will vest at 93.8% on 16 July 2018 as associated performance conditions have been partially met in the year
to 31 March 2018.
2 Awards under the July 2013 SOP vested in full.
3 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.
4 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.
5 Awards under the January 2013 SOP award vested in full.
6 Awards under the 2012 SOP award vested in full.
7 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.
8 Awards under the Company’s EBP vested in full.
9 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.
10 Awards under the Company’s Deferred Annual Bonus Scheme vested in full.
11 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.
12 Awards under the Company’s Share Match Incentive Scheme and the Performance Share Plan all lapsed due to performance conditions not being met.
13 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.
14 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.
CHANGE IN THE REMUNERATION OF THE CHIEF EXECUTIVE OFFICER AND COMPARATOR EMPLOYEES
The table below sets out the percentage change in annual cash awarded to the Chief Executive between the year ended 31 March 2017 and the year
ended 31 March 2018, 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 2018
£’000
439
26
369
Chief Executive
31 March 2017
£’000
435
26
478
Increase/
(decrease)
1.0%
–
(22.8)%
Average change for the
comparator group1
2.6%
–
(12.2)%
1 The comparator group is an average cost per person for all management level employees.
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.
Executive Directors’ external appointments
No Executive Directors held any external directorships during the year and do not hold any at the date of this report.
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.
49
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 ANNUAL REPORT ON REMUNERATION CONTINUED
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
31 March 2018
£m
542.0
12.3
31 March 2017
£m
525.8
11.2
Difference
£m
16.2
1.1
1 This includes all personnel expenses, including Executive Directors, as set out in Note 4 to the consolidated financial statements.
The Directors are proposing a final dividend in respect of the financial year ended 31 March 2018 of 6.63p per share (31 March 2017: 6.1p).
SHARE OWNERSHIP
Total share interests at 31 March 2018 (audited)
Director
Adrian Colman
Tim Lawlor
Martin Sawkins
David Radcliffe
Paul Dean
Stewart Oades
Gill Barr
Shares
Nil cost options
Options
Unvested
and subject
to continued
employment
–
–
–
–
–
–
–
Owned/vested
946,942
–
9,790
25,000
10,000
19,367
–
Vested but
unexercised
–
–
–
–
–
–
–
Unvested and
subject to
performance
650,726
433,518
–
–
–
–
–
Vested but
unexercised
446,715
–
–
–
–
–
–
Unvested and
subject to
performance
–
–
–
–
–
–
–
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 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 and continues to maintain at the date of this report.
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, 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 2018 (audited)
Adrian Colman
Tim Lawlor
Partnership Shares held under the SIP
Unrestricted shares held
Total shares held
31 March 2018
–
–
31 March 2017
–
–
31 March 2018
946,942
–
31 March 2017
150,565
–
31 March 2018
946,942
–
31 March 2017
150,565
–
There were no changes in the Directors’ personal holdings between 1 April 2018 and the date of this report.
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Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018
Share plan interests
Adrian Colman
SOP
SOP
SOP
LTIP
LTIP
LTIP
Tim Lawlor
LTIP
LTIP
LTIP
Date of award
Vest date
Option
exercise
price1
Share
price
at date
of award2
No. of
shares under
award as at
1 April 2017
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 2018
29 January 2013
12 July 2013
11 July 2014
16 July 2015
21 July 2016
18 July 2017
29 January 2016
12 July 2016
11 July 2017
16 July 2018
21 July 2019
18 July 2020
£0.71
£0.68
£1.37
Nil
Nil
Nil
£0.708
£0.66
£1.40
£1.88
£1.77
£2.51
28 September 2015
21 July 2016
18 July 2017
28 September 2018
21 July 2019
18 July 2020
Nil
Nil
Nil
£2.07
£1.77
£2.51
1,059,322
886,262
446,715
228,845
246,582
–
2,867,726
142,512
169,492
–
312,004
–
–
–
–
–
175,299
175,299
–
–
121,514
121,514
–
–
–
–
–
–
–
–
–
–
(1,059,322)
(886,262)
–
–
–
–
–
–
446,715
228,845
246,582
175,299
(1,945,584) 1,097,441
–
–
–
142,512
169,492
121,514
433,518
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.
Non-executive Directors’ share interests as at 31 March 2018 (audited)
Steve Marshall
Paul Dean
Stewart Oades
David Radcliffe
Martin Sawkins
Gill Barr
Opening
20,000
10,000
19,367
25,000
9,790
–
Purchased
–
–
–
–
–
–
Disposed
–
–
–
–
–
–
Closing
20,0001
10,000
19,367
25,000
9,790
–
1 Steve Marshall’s closing share interests are provided as at the date of his resignation, which is deemed to be 29 September 2017 following his death.
There were no changes in the Non-executive Directors’ personal holdings between 1 April 2018 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 2018 is as follows:
All employee share plans
Executive share plans
Actual
2.6%
2.5%
Limit
10%
5%
51
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 DIRECTORS’ REMUNERATION POLICY
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.
The Directors’ Remuneration Policy was
approved by a binding shareholder vote
at the 2017 AGM and took effect from
1 July 2017. This section presents the full
Policy, for ease of reference. The sections
presented are as disclosed in the 2016/17
Directors’ Remuneration Report, save the
following changes:
• References to financial years have been
updated where appropriate;
• Pay scenario charts have been updated
to reflect the latest salaries; and
• Details of current Non-Executive Directors’
letters of appointment.
DIRECTORS’ REMUNERATION POLICY
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.
Where increases are awarded in excess of the wider employee population, the Committee will provide an explanation
in the relevant Annual Report on Remuneration.
Benefits
Purpose and link
to strategy
Operation
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 (eg 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.
Opportunity
52
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018 All employee share plans
Purpose and link
to strategy
Operation of all
employee share plans
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).
Opportunity
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.
Pension
Purpose and link
to strategy
Operation of
pension arrangements
Opportunity
Annual Bonus
Purpose and link
to strategy
Operation
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.
Opportunity
Performance measure
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.
Recovery provisions
53
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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 2018 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.
Recovery provisions
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.
Shareholding guidelines
Purpose and link
to strategy
Operation
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.
Non-executive Directors
Purpose and link
to strategy
Operation
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).
Opportunity
54
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018 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;
• 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 became effective) will
be honoured.
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 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 has ensured the maximum
pension employer contribution is aligned
between the Executive Directors and the
senior management population, being the
highest maximum level of employer pension
contribution, by reducing the maximum
contribution for new Executive Directors to
the same level as senior management in the
Directors’ Remuneration Policy which became
effective from 1 July 2017.
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.
55
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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.
DIRECTORS’ REMUNERATION POLICY CONTINUED
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.
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 page 58.
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.
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.
56
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018 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 2013
28 September 2015
Date of current contract
5 July 2015
6 July 2015
Notice period (Company)
12 months
12 months
Notice period (Director)
6 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 2018 AGM.
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
Gill Barr
Paul Dean
Stewart Oades
Martin Sawkins
David Radcliffe
Date of appointment
15 September 2017
1 February 2015
1 November 2014
27 July 2012
27 July 2012
Date of original letter
of appointment
12 September 2017
21 January 2015
30 October 2014
22 June 2012
22 June 2012
Effective date of current letter
of appointment
12 September 2017
21 January 2015
30 October 2014
27 July 2015
27 July 2015
Unexpired term1
28 months
1 month
1 month
2 months
2 months
Expiry of current term
15 September 2020
28 June 2018
28 June 2018
27 July 2018
27 July 2018
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 2018 AGM.
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.
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.
57
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 DIRECTORS’ REMUNERATION POLICY CONTINUED
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.
EXTERNAL APPOINTMENTS
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 2019.
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
Fixed
• Salary effective from 1 July 2018 as disclosed in the Annual Report on Remuneration on page 45.
• Pensions per Remuneration Policy and taxable benefits as provided in the single total figure of remuneration
Maximum
Target
table in the Annual Report on Remuneration on page 45.
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
Chief Executive
Fixed
100%
Target
56%
£568,851
33%
11%
£1,013,802
Fixed pay
Bonus
LTIP
Maximum
34%
40%
26%
£1,681,226
Fixed pay
Annual bonus
LTIP
Chief Financial Officer
Fixed
100%
Target
59%
£372,876
29%
12%
£636,015
Fixed pay
Bonus
LTIP
Maximum
36%
35%
29%
£1,053,941
Fixed pay
Annual bonus
LTIP
Fixed
£
568,851
–
–
568,851
Fixed
£
372,876
–
–
372,876
Target
£
568,851
333,713
111,238
1,013,802
Target
£
372,876
185,745
77,394
636,015
Maximum
£
568,851
667,425
444,950
1,681,226
Maximum
£
372,876
371,490
309,575
1,053,941
58
Directors’ remuneration reportWincanton plc Annual Report and Accounts 2018 DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Company
Wincanton plc is a company incorporated
in England and Wales, with company
number 04178808.
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 pages
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 31.
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 2018, 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 31, 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 Interim Chairman’s review on
page 3. Details of the Group’s business goals,
strategy and model are set out on pages 8
to 10.
Corporate Governance reporting
Details of the Company’s compliance with the
Code, the disclosures required under the Code
and the UK Listing Rules can be found in the
Annual Report on Remuneration on page 44.
The corporate governance statement required
by Rule 7.2.1 of the FCA’s Disclosure Guidance
and Transparency Rules is set out on page 36.
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 59 to 61 and 1 to
31 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 Note 26 of
the Group financial statements, on pages 96
to 99.
Directors
The Directors during the year and to the date
of this report, are:
Executive Directors
Adrian Colman, Chief Executive Officer
Tim Lawlor, Chief Financial Officer
Non-executive Directors
Stewart Oades, Interim Chairman
Paul Dean
David Radcliffe
Martin Sawkins
Gill Barr
The rules governing the appointment and
replacement of Directors are set out in the
Company’s Articles of Association.
At the 2018 AGM, six of the Directors will retire
and offer themselves for re-election and Gill
Barr is proposed for election to the Board in
accordance with the Code. Biographical details
of all Directors are set out on pages 32 and 33.
Details of the service contracts of the Executive
Directors and the letters of appointment for
the Non-executive Directors are set out in the
Directors’ Remuneration Policy on page 57.
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 26 and 1
respectively to the Group financial statements.
Results and dividends
The Group profit attributable to equity
shareholders for the financial year amounted to
£31.2m. The Directors propose a final dividend
of 6.63p per Ordinary Share for the year ended
31 March 2018 (2017: 6.1p per Ordinary Share).
If approved by the shareholders at the 2018
AGM, this would bring the total dividend paid
for the year ended 31 March 2018 to £12.3m.
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.
Equity Disclosures
Share capital
The Company issued 796,377 Ordinary shares
of 10p each in the year ending 31 March 2018.
The Company’s issued share capital as the date
of this report was 124,543,670 Ordinary shares
of 10p each.
Authority to purchase shares
The Company was authorised at the 2017 AGM
to purchase its own shares within certain limits.
During the year ended 31 March 2018, the
Company purchased 850,000 of its 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 2018 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.
59
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsDirectors’ reportWincanton plc Annual Report and Accounts 2018 DIRECTORS’ REPORT CONTINUED
Shareholder
Aberforth Partners
Columbia Threadneedle Investments
Schroder Investment Management
Unicorn Asset Management
M&G Investment Management
Polar Capital
Tellworth Investments
Substantial shareholdings
At the date of this report, the Company has
been notified of the major shareholdings set
out in the table above. Both the number of
shares held and the percentage holding are
stated as at the latest date of notification to
the Company.
Greenhouse gas emissions
The disclosures concerning greenhouse gas
emissions required by law are included in the
Corporate Responsibility Report, on page 23.
Charitable donations
During the year ended 31 March 2018,
the Group contributed £nil (2017: £38k) to
charitable and community programmes.
Political donations
No political donations were made during the
year (2017: nil).
Annual General Meeting
The Company’s seventeenth AGM will be held
at 11:00am on Thursday, 28 June 2018 at the
offices of Buchanan Communications, 107
Cheapside, London EC2V 6DN. The Notice
of Annual General Meeting 2018, 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 2017 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
2018 AGM for shareholders to approve the
re-appointment of KPMG LLP as the Company’s
Auditor for the year ended 31 March 2019 and
authority to fix their remuneration.
60
Type of
holding
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Number of
shares held
21,223,767
19,801,055
11,214,447
5,500,000
4,839,992
4,580,893
4,063,001
Holding
(% of issued
share capital)
17.04
15.90
9.00
4.42
3.89
3.68
3.26
Employee Disclosures
Wincanton is an inclusive and equal
opportunities employer. The Group is
committed to ensuring that disabled persons
are treated with dignity and respect and
that we act in accordance with the Equality
Act 2010. Wincanton gives full and fair
consideration to applications for employment
by disabled persons and provides the
necessary support to colleagues in our
employment with a disability. Training, career
development and promotion are equally
applied regardless of disability or any other
individual attribute.
On behalf of the Board
Raj Sharma
Company Secretary
16 May 2018
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
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
International Financial Reporting Standards
as adopted by the European Union (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, including FRS 101
Reduced Disclosure Framework.
Under 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 of the Group and parent
Company and of their profit or loss for that
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, relevant, reliable 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;
• assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related to
going concern; and
• use the going concern basis of accounting
unless they either intend to liquidate the
Group or the parent Company or to cease
operations, or have no realistic alternative
but to do so.
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 are responsible for such internal control
as they determine is necessary to enable the
preparation of financial statements that are free
from material misstatement, whether due to
fraud or error, and have 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.
Directors’ reportWincanton plc Annual Report and Accounts 2018 Under applicable 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
that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation in the UK
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the
Directors in respect of the annual
financial report
We confirm that to the best of our 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 Strategic Report and the Directors’
Report include a fair review of the
development and performance of the
business and the position of the issuer
and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Accounts,
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.
The Directors approved the above
responsibility statement on 16 May 2018.
Tim Lawlor
Chief Financial Officer
Wincanton plc
Registered in England and Wales No. 04178808
STATEMENT ON THE MODERN
SLAVERY ACT
Wincanton is committed to the highest
possible ethical standards and corporate
conduct and we expect our suppliers to adhere
to these same standards. The Group requires
companies across our extended supply chain
to understand and meet our expectations on
anti-bribery, corruption, legal compliance and
ethical conduct.
To this end, the following statement is offered
in compliance with the Modern Slavery Act
2015 and sets out the Group’s approach to
the prohibition of any form of forced labour or
slavery within our supply chain.
Once the law came into effect in 2015,
Wincanton carefully reviewed its employment
and procurement practices to ensure they
were in line with the new legal requirements.
The Group laid down four strategic measures
that the Company had taken or was in the
process of taking to meet the requirements of
the new law, specifically:
1. produce and communicate a Modern
Slavery Strategy Statement and Policy;
2. carry out a compliance assessment of
current suppliers;
3. embed additional due diligence into our
procurement activities; and
4. review our Group-wide 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
2018 as set out below:
1. Strategy statement and policy
During the year ended 31 March 2018 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
During the 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
This year saw the launch of the Supplier Code,
designed to drive higher ethical standards,
above and beyond compliance requirements
as Wincanton have chosen to apply the
standard to all suppliers regardless of size.
All suppliers must comply with the Supplier
Code in order to provide goods and services
to the Company, and it is now a standard part
of Wincanton’s supply contracts and terms
of purchase (as issued on all purchase orders).
The Supplier Code can be downloaded on the
Group’s website.
In addition, the Procurement function
continues to incorporate due diligence into
its pre-qualification process, when tendering
and procuring new suppliers and undertaking
renewals of all types and sizes. Supply areas
identified as specifically high risk are continually
assessed with suppliers asked to provide details
of their policies to ensure compliance with
the legislation.
4. Employment practices
The Group’s employment practices and
processes have been thoroughly reviewed and
updated where necessary with the support of
external legal advice. These updated policies
and practices have been communicated
and cascaded throughout the Group.
The designated HR teams have also provided
localised training and support to all Group
employees. In addition, the Group HR function
is currently working on an enhanced Code
of Conduct that will summarise all of the
Company’s key policies and standards with
the intention of delivering a Group-wide roll
out of the new Code in 2018. The Group has
also started a project to consider the specific
risks associated with the use of agencies and
new standards in this area have been agreed.
Further revisions to the Group’s employment
policies and practices are underway and
the work will be completed and rolled out
throughout the Group and its network of
agency suppliers in 2018.
The delivery of these four strategic measures
is a core component of the ongoing legal
compliance of our practices and processes.
These measures are also underpinned by the
Group’s established processes for corporate
governance. The Group reviews its policies
and process at least annually, to ensure they
remain relevant, up-to-date and compliant
with prevailing legislation. Moreover, all of
our policies and procedures are designed to
recognise and further elevate the importance
of the highest behavioural standards and
ethical conduct for all of our stakeholders,
as a reflection of the Group’s values and the
prominence of social responsibility within our
business and our extended supply chain.
In common with all other regulatory and legal
requirements, as a Group, we expect and are
prepared for the fact that the nature, root
causes and circumstances that cause instances
of modern slavery and human trafficking will
change over time. The Group will continue to
be vigilant and proactive in this area and will
closely monitor and regularly review the four
strategic measures and any influencing factors,
to ensure our Group policies and practices
remain fit for purpose and address any new
risks that may emerge.
The Directors approved the above statement
on 16 May 2018.
Raj Sharma
Company Secretary
Wincanton plc
Registered in England and Wales No. 04178808
61
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 INDEPENDENT AUDITOR’S REPORT
Independent
auditor’s report
to the members of Wincanton plc
1. Our opinion is unmodified
We have audited the financial statements of
Wincanton plc for the year ended 31 March 2018
which comprise the consolidated income statement,
consolidated statement of comprehensive income,
consolidated and company balance sheet,
consolidated and company statement of changes in
equity, consolidated statement of cash flows and the
related notes, including the accounting policies in
note 1 to the consolidated financial statements, and
note 1 to the parent company financial statements.
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 2018 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.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our
report to the audit committee.
We were appointed as auditor by the Directors in March
2001. The period of total uninterrupted engagement is for
the 18 financial years ended 31 March 2018. We have
fulfilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as
applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
Overview`
Materiality:
Group financial
statements as a
whole
£2.0 million (2017:£1.8 million)
4.5% of Group profit before
taxation* (2017: 4.0% of Group
profit before taxation)
* Normalised to exclude exceptional items as disclosed in
Note 3
Coverage
100% (2017:100%) of Group profit
before tax
Risks of material misstatement vs 2017
Recurring risks
Group pension obligation
◄►
Revenue recognition
Recoverability of Parent
Company’s investment in
subsidiaries
◄►
◄►
62
Independent auditor’s reportWincanton plc Annual Report and Accounts 2018 2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit
significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These matters were addressed, and our results are
based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a
whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate
opinion on these matters.
Group pension obligation
Subjective valuation
Our procedures included:
The risk
Our response
£1,123.1 million
(2017: £1,156.7 million)
Refer to page 41 (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 Group’s
net pension deficit.
— 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.
— Assessing transparency: considering the
adequacy of the Group's disclosures in
respect of the sensitivity of the obligation
to these assumptions.
Our results:
— We found the valuation of the pension
obligation to be acceptable (2017 result:
acceptable).
Revenue recognition
2018/2019 sales
Our procedures included:
£1,171.9 million
(2017: £1,118.1 million)
Refer to page 76 (accounting
policy) and pages 78 and 79
(financial disclosures).
Wincanton issue invoices based on the
accounting period of its customers
which are not necessarily co-terminus
with that of Wincanton.
— Controls design: assessing the design and
implementation of key controls over the
accuracy of accrued and deferred income
amounts.
There is a risk that revenues could be
recognised in the incorrect accounting
period due to the relative complexity
arising from the interaction of
Wincanton’s accounting period and
those of its customers around the year-
end. We have included this risk within
our report due to the significant levels
of work performed throughout the
audit.
— Enquiry of customers: obtaining a sample
of customer confirmations of invoiced
amounts and service delivery for activity
before and after the year end as a basis for
recalculating revenue recognition for the
period based on customer accounting
calendars.
— Test of details: recalculating a sample of
accrued and deferred income amounts
using customer confirmations and their
respective accounting calendars.
Our results:
— We found the Group’s assessment of
revenue recognition to be acceptable (2017
result: acceptable).
63
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 INDEPENDENT AUDITOR’S REPORT CONTINUED
2. Key audit matters: our assessment of risks of material misstatement (continued)
Recoverability of parent
company’s investment in
subsidiaries
£108.9 million
(2017: £108.9 million)
Refer to page 102 (accounting
policy and financial disclosures).
The risk
Our response
Low risk, high value
Our procedures included:
The carrying amount of the parent
company’s investments in subsidiaries
represents 54% (2017: 56%) of the
company’s total assets. Their
recoverability is not at a high risk of
significant misstatement or subject to
significant judgement. However, due
to their materiality in the context of the
parent company financial statements,
this is considered to be the area that
had the greatest effect on our overall
parent company audit.
— Tests of detail: Comparing the carrying
amount of 100% of investments with
the relevant subsidiaries’ balance sheet
to identify whether their net assets,
being an approximation of their
minimum recoverable amount, were in
excess of their carrying amount and
assessing whether those subsidiaries
have historically been profit-making.
— Assessing subsidiary audits:
Assessing the evidence obtained during
our audit of components, as part of the
Group audit, and considering the results
of that work on their profits and net
assets.
Our results:
— We found the group’s assessment of
the recoverability of the investment in
subsidiaries to be acceptable (2017
result: acceptable).
We continue to perform procedures over the property provision. However, following a continued reduction in remaining lease
periods and the number of properties affected, we have not assessed this as one of the most significant risks in our current
year audit and, therefore, it is not separately identified in our report this year.
64
Independent auditor’s reportWincanton plc Annual Report and Accounts 2018 2. Key audit matters: our assessment of risks of material misstatement (continued)
3. Our application of materiality and an
overview of the scope of our audit
The risk
Group profit before taxation*
£44.1m (2017: £45.4m)
Our response
Group materiality
£2.0m (2017: £1.8m)
Low risk, high value
The materiality for the Group financial statements
Recoverability of parent
as a whole was set at £2.0 million (2017: £1.8
company’s investment in
million) determined with reference to a
subsidiaries
benchmark of Group profit before taxation,
normalised in 2018 to exclude one-off exceptional
£108.9 million
items as disclosed in note 3 to the financial
(2017: £108.9 million)
statements, of which it represents 4.5% (2017:
Refer to page 102 (accounting
4.0% of group profit before taxation).
policy and financial disclosures).
Materiality for the parent company financial
statements as a whole was set at £1.0 million
(2017: £1.0 million) by reference to component
materiality. This is lower than the materiality we
would otherwise have determined by reference
to total assets, and represents 0.5% of the
Company's total assets (2017: 0.5%).
The carrying amount of the parent
company’s investments in subsidiaries
represents 54% (2017: 56%) of the
company’s total assets. Their
recoverability is not at a high risk of
significant misstatement or subject to
significant judgement. However, due
to their materiality in the context of the
parent company financial statements,
this is considered to be the area that
had the greatest effect on our overall
parent company audit.
We agreed to report to the Audit Committee any
corrected or uncorrected identified
misstatements exceeding £0.1 million (2017: £0.1
million), in addition to other identified
misstatements that warranted reporting on
qualitative grounds.
Normalised Group PBT
Group materiality
*normalised to exclude one-off
exceptional items of £6.2 million
(2017: nil)
Our results:
Our procedures included:
— Tests of detail: Comparing the carrying
£2.0 million
Whole financial
statements materiality
(2017: £1.8m)
amount of 100% of investments with
the relevant subsidiaries’ balance sheet
£1.0 million
to identify whether their net assets,
Component materiality
being an approximation of their
(2017: £1.0 million)
minimum recoverable amount, were in
excess of their carrying amount and
assessing whether those subsidiaries
have historically been profit-making.
— Assessing subsidiary audits:
Assessing the evidence obtained during
£0.1 million
our audit of components, as part of the
Identified misstatements
Group audit, and considering the results
reported to the audit
of that work on their profits and net
committee (2017: £0.1m)
assets.
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
We continue to perform procedures over the property provision. However, following a continued reduction in remaining lease
above. The audit of the parent company was
periods and the number of properties affected, we have not assessed this as one of the most significant risks in our current
conducted by the Group team.
year audit and, therefore, it is not separately identified in our report this year.
Group profit before tax
Group revenue
— We found the group’s assessment of
the recoverability of the investment in
subsidiaries to be acceptable (2017
result: acceptable).
100%
(2017 100%)
100%
(2017 100%)
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 (2017: £1.0 million) having regard to the
mix of size and risk profile of the Group.
Overall, the audit of the Group covered 100%
(2017: 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.
Group total assets
Group profit before
exceptional items and tax
100%
(2017 100%)
100%
(2017 100%)
Key:
Full scope for group audit purposes 2018
Full scope for group audit purposes 2017
65
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 INDEPENDENT AUDITOR’S REPORT CONTINUED
4. We have nothing to report on going concern
Disclosures of principal risks and longer-term viability
We are required to report to you if:
— we have anything material to add or draw attention to
in relation to the Directors’ statement in Note 1 to the
financial statements on the use of the going concern
basis of accounting with no material uncertainties that
may cast significant doubt over the Group and
Company’s use of that basis for a period of at least
twelve months from the date of approval of the
financial statements; or
— if the related statement under the Listing Rules set out
on page 59 is materially inconsistent with our audit
knowledge.
We have nothing to report in these respects.
5. We have nothing to report on the other information
in the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have
not identified material misstatements in the other
information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
Strategic report and the Directors’ report;
— in our opinion the information given in those reports for
the financial year is consistent with the financial
statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
attention to in relation to:
— the Directors’ confirmation within the Viability Statement
on page 29 that they have carried out a robust
assessment of the principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency and liquidity;
— the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated;
and
— the Directors’ explanation in the Viability Statement of
how they have assessed the prospects of the Group,
over what period they have done so and why they
considered that period to be appropriate, and their
statement as to whether they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
period of their assessment, including any related
disclosures drawing attention to any necessary
qualifications or assumptions.
Under the Listing Rules we are required to review the
Viability Statement. We have nothing to report in this
respect.
Corporate governance disclosures
We are required to report to you if:
— we have identified material inconsistencies between the
knowledge we acquired during our financial statements
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 section of the annual report describing the work of
the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
We are required to report to you if the Corporate
Governance Statement does not properly disclose a
departure from the eleven provisions of the UK Corporate
Governance Code specified by the Listing Rules for our
review.
We have nothing to report in these respects.
66
Independent auditor’s reportWincanton plc Annual Report and Accounts 2018 6. We have nothing to report on the other matters on
which we are required to report by exception
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
— 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.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on pages
60 and 61, the Directors are responsible for: the preparation
of the financial statements including being satisfied that
they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of
financial statements that are free from material
misstatement, whether due to fraud or error; assessing the
Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using the going concern basis of accounting
unless they either intend to liquidate the Group or the
parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
irregularities (see below), or error, and to issue our opinion
in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can
arise from fraud, other irregularities or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the
financial statements from our sector experience, through
discussion with the Directors and other management (as
required by auditing standards).
We had regard to laws and regulations in areas that directly
affect the financial statements including financial reporting
(including related company legislation) and taxation
legislation. We considered the extent of compliance with
those laws and regulations as part of our procedures on the
related financial statement items.
In addition we considered the impact of laws and
regulations in the specific area of health and safety,
recognising the nature of the Group’s activities. With the
exception of any known or possible non-compliance, and as
required by auditing standards, our work in respect of this
was limited to enquiry of the Directors and other
management and inspection of regulatory and legal
correspondence. We considered the effect of any known or
possible non-compliance in these areas as part of our
procedures on the related financial statement items.
We communicated identified laws and regulations
throughout our team and remained alert to any indications
of non-compliance throughout the audit. This included
communication from the group to the component audit
team of relevant laws and regulations identified at group
level, with a request to report on any indications of potential
existence of non-compliance with relevant laws and
regulations (irregularities) in these areas, or other areas
directly identified by the component team.
As with any audit, there remained a higher risk of non-
detection of irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal controls.
8. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
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 2018
67
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Accounts
FOR THE YEAR ENDED 31 MARCH 2018
CONSOLIDATED INCOME STATEMENT
Revenue
Underlying operating profit
Amortisation of acquired intangibles
Exceptional items
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
2018
£m
1,171.9
52.9
(2.3)
(6.2)
44.4
–
(6.5)
(6.5)
37.9
(6.7)
31.2
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
25.2p
24.8p
34.2p
33.0p
68
Wincanton plc Annual Report and Accounts 2018
Accounts
FOR THE YEAR ENDED 31 MARCH 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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 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
24
6
5
2018
£m
31.2
13.8
(2.4)
11.4
–
(0.1)
0.1
–
11.4
42.6
2017
£m
42.0
17.6
(4.0)
13.6
(0.1)
0.4
0.2
0.5
14.1
56.1
69
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Accounts
AT 31 MARCH 2018
CONSOLIDATED BALANCE SHEET
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
Assets classified as held for sale
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
Net liabilities
Equity
Issued share capital
Share premium
Merger reserve
Hedging reserve
Translation reserve
Retained earnings
Total equity deficit
Note
2018
£m
2017
£m
9
10
12
13
14
15
16
17
18
19
24
20
18
24
20
82.7
41.7
0.1
11.5
136.0
4.4
140.7
6.1
17.6
168.8
(5.7)
–
(264.1)
–
(17.8)
(287.6)
(118.8)
17.2
(47.1)
(49.5)
(33.1)
(129.7)
(112.5)
12.5
12.9
3.5
(0.1)
(0.3)
(141.0)
(112.5)
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)
These financial statements were approved by the Board of Directors on 16 May 2018 and were signed on their behalf by:
A Colman
Chief Executive Officer
T Lawlor
Chief Financial Officer
70
Wincanton plc Annual Report and Accounts 2018 Accounts
FOR THE YEAR ENDED 31 MARCH 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Balance at 1 April 2016
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
Dividends paid to shareholders
Balance at 31 March 2017
Issued
share
capital
£m
12.4
–
–
–
–
–
–
–
–
12.4
–
–
–
–
–
–
–
–
12.9
Balance at 1 April 2017
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
Shares issued
Own shares acquired
Dividends paid to shareholders
Balance at 31 March 2018
–
–
–
–
–
–
0.1
–
–
12.5
–
–
–
–
–
–
–
–
–
12.9
–
–
–
–
–
–
–
–
3.5
3.5
–
–
–
–
–
–
–
–
–
3.5
Retained earnings
Share
premium
£m
12.9
Merger
reserve
£m
3.5
Hedging
reserve
£m
(0.7)
Translation
reserve
£m
(0.2)
Own
shares
£m
(3.1)
Profit and
loss
£m
(209.1)
Total
equity
deficit
£m
(184.3)
42.0
14.1
56.1
(1.7)
1.1
(0.1)
(0.1)
(10.4)
(139.4)
–
0.6
0.6
–
–
–
–
–
(0.1)
–
(0.1)
(0.1)
–
–
–
–
–
(0.3)
–
–
–
2.7
–
–
(0.1)
–
(0.5)
42.0
13.6
55.6
(4.4)
1.1
(0.1)
–
(10.4)
(167.3)
(0.1)
(0.3)
(0.5)
(167.3)
(139.4)
–
–
–
–
–
–
–
–
–
(0.1)
–
–
–
–
–
–
–
–
–
(0.3)
–
–
–
0.7
–
31.2
11.4
42.6
(2.8)
31.2
11.4
42.6
(2.1)
0.1
0.1
–
(0.1)
(2.1)
–
(2.0)
–
–
–
(11.6)
(139.0)
–
–
(2.1)
(11.6)
(112.5)
71
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Accounts
FOR THE YEAR ENDED 31 MARCH 2018
CONSOLIDATED STATEMENT OF CASH FLOWS
Operating activities
Profit before tax
Adjustments for
– depreciation and amortisation
– interest expense
– exceptional items (non cash)
– share based payments
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Decrease in trade and other payables
Increase/(decrease) in provisions
(Decrease)/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
Interest received
Additions of property, plant and equipment
Additions of computer software
Cash flows from investing activities
Financing activities
Own shares acquired
Borrowings repaid
Increase in borrowings
Equity dividends paid
Interest paid
Cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
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
72
2018
£m
37.9
14.2
6.5
–
(2.1)
56.5
(7.2)
(0.4)
(1.6)
0.2
(2.6)
(4.0)
40.9
(14.6)
26.3
0.4
0.1
–
(14.5)
–
(14.0)
(1.8)
(25.0)
6.9
(11.6)
(4.1)
(35.6)
(23.3)
40.9
17.6
11.7
5.9
17.6
2017
£m
45.4
14.0
10.6
(4.6)
(1.7)
63.7
6.2
0.8
–
(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)
(20.1)
10.1
(10.4)
(6.9)
(27.4)
4.6
36.3
40.9
33.0
7.9
40.9
Wincanton plc Annual Report and Accounts 2018 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
• IFRS 17 Insurance Contracts
• Amendments to IFRS 2 Classification and Measurement of Share-based
Payment Transactions
• Annual Improvements 2014–2016 Cycle (apart from the amendment
to IFRS 12 effective in the current year)
• Annual Improvements 2015–2017 Cycle
IFRS 9 Financial Instruments was issued by the IASB in July 2014 and is
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 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 that the Group expects
to be entitled to in exchange for those goods and services.
Whilst the Group project is still ongoing, the anticipated effects of IFRS 15
include changes in the timing of revenue recognition for: costs to fulfil a
contract; deferred management fees; and revenue linked to performance
measures such as Key Performance Indicators and gain-share
mechanisms. The Group currently estimates the adjustment to equity
at 1 April 2018 to be minimal, with capitalisation of costs of fulfilling a
contract expected to offset a reduction in accrued income. For the year
ending 31 March 2019, an adjustment to revenue of less than £0.5m is
anticipated with minimal operating profit impact. Actual amounts in
the 31 March 2019 financial statements may differ, owing to changes
in contracts held or different economic conditions.
The Group will be required to present separate line items for contract
assets and contract liabilities and to disclose further details on significant
changes in these balances, as well as judgements made in determining
which costs of fulfilling a contract can be capitalised.
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
of this standard will result in the recognition on balance sheet of assets
and liabilities relating to leases which are currently being accounted
for as operating leases. The Group continues to assess the impact of
adopting IFRS 16, with a significant impact anticipated on the reported
assets, liabilities, and 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.
Critical accounting 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.
Management discusses with the Audit Committee the development,
selection, application and disclosure of the Group’s critical accounting
policies and estimates.
Critical judgements in applying the Group’s accounting policies
The following are critical judgements that the Directors have made
in the process of applying the Group’s accounting policies and that
have the most significant effect on the amounts recognised in the
financial statements.
Defined benefit pension arrangements
Details of the Group’s defined benefit arrangements are set out in
Note 24 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.
73
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES (CONTINUED)
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 20.
Key sources of estimation uncertainty
The Group does not have any other key assumptions concerning the
future, or other key sources of estimation uncertainty in the reporting
period that may have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year.
Going concern
The Group has net liabilities of £112.5m (2017: £139.4m) 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
11 to 15 and 24 to 27 which also contain a review of the financial position
of the Group, its cash flows, liquidity position and borrowing facilities.
In addition, Note 26 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.
The Group’s committed facilities at 31 March 2018 comprise 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 before maturing in October 2021. A £25m
facility with Prudential/M&G UK Companies Financing Fund LP was
prepaid without penalty on 14 July 2017 from cash generated in the
period and from other facilities.
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 29. 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 at least the next twelve months
and 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
74
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.
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.
AccountsWincanton plc Annual Report and Accounts 2018 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.
Assets held for sale
Non-current assets are classified as held for sale if their carrying amount
will be recovered through a sale transaction rather than through
continuing use. This condition is met only when: the sale is highly
probable; the asset is available for immediate sale in its present condition;
and management are committed to the sale which is expected to
complete within one year from the date of classification. Assets held for
sale are measured at the lower of carrying amount and fair value less
costs to sell.
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.
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 Special Option 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.
75
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES (CONTINUED)
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.
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.
Other provisions include those for restructuring, onerous contracts,
sundry claims and settlements. A restructuring provision is recognised
only when a constructive obligation exists, with the amount recognised
based on the estimated liability. An onerous contract provision is
recognised when the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be
received. Unavoidable costs are only those costs that are incremental in
fulfilling the contract and exclude depreciation and central recharges.
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
76
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.
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, including recoverable costs
of fulfilling a contract, 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, including revenue linked to performance such as
Key Performance Indicators and gain-share mechanisms, is recognised
only to the extent that it is highly probable that the economic benefit
will transfer to the Group. Deferred management fees are recognised
over the contract term if the transfer of economic benefits to the Group
is highly probable.
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.
AccountsWincanton plc Annual Report and Accounts 2018 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 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.
Exceptional items
Exceptional items are those items of income or expenditure which,
due to their nature or size, the Directors consider should be disclosed
separately on the face of the income statement. The Directors present
the results of the business on an underlying basis, as they believe this
better represents the performance of the business.
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 exceptional
items, related tax and exceptional tax items where relevant. Page 27
provides a reconciliation between APMs and statutory IFRS measures.
1. ACCOUNTING POLICIES (CONTINUED)
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.
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.
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2. OPERATING SEGMENTS
Wincanton plc provides contract logistics services in the UK and Ireland. The Group manages its operations in two distinct operating segments;
Retail & Consumer (including retail general merchandise, retail grocery and consumer products) and Industrial & Transport (including transport
services, construction and other).
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 the 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
Exceptional items
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
2018
£m
691.7
36.4
(5.6)
(1.1)
29.7
Industrial &
Transport
2018
£m
480.2
28.4
(4.4)
(0.8)
23.2
3.7
–
10.8
–
Note
10
9
3
5
10
9
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
Total
2018
£m
1,171.9
64.8
(10.0)
(1.9)
52.9
(2.3)
(6.2)
44.4
(6.5)
37.9
304.8
14.5
–
(417.3)
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 £1,160.4m (2017: £1,109.0m) 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
exceptional items.
3 Total Group assets include non-current assets of £136.0m, of which £135.9m (2017: £147.9m) are held in the UK.
Revenue of £212.5m (2017: £201.7m) and £145.7m (2017: £143.3m) 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.
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AccountsWincanton plc Annual Report and Accounts 2018 3. OPERATING PROFIT
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
2018
Amortisation and
Exceptional items2
£m
–
(5.2)
(5.2)
(3.3)
(8.5)
Underlying1
£m
1,171.9
(1,101.7)
70.2
(17.3)
52.9
Total
£m
1,171.9
(1,106.9)
65.0
(20.6)
44.4
2017
Amortisation and
Exceptional items2
£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
1 Underlying operating profit is stated before amortisation of acquired intangibles and exceptional items.
2 Comprises the amortisation of acquired intangibles and exceptional items.
The following items have been charged in arriving at operating profit:
Auditor’s remuneration:
Audit fees for statutory audit services
– parent company
– subsidiary undertakings
Non-audit fees
– fees paid to the auditor and its associates for assurance 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
Exceptional items
Restructuring costs
Pension liability management exercise
Other items
Note
2018
£m
2017
£m
10
9
9
0.1
0.2
0.1
10.0
1.9
2.3
29.2
21.0
2018
£m
(8.2)
2.0
–
(6.2)
–
0.2
0.1
9.8
2.0
2.2
25.7
20.1
2017
£m
–
(0.9)
7.0
6.1
The Group has undertaken a restructuring programme in the year, within the Industrial & Transport sector and the Group’s support functions, to
ensure that the business is competitively positioned for the future. A charge of £8.2m is included as exceptional for the year comprising primarily
of the costs of exit of people and associated property costs.
The Group initiated a pension scheme liability management exercise in conjunction with the Trustee at the end of last year. The estimated costs
of the exercise were accrued in the prior year, with the settlement gains and adjustment to the estimated costs being recognised in the current year.
Other items in the prior year of £7.0m comprise non-cash gains of £4.6m which were recognised on the remeasurement of liabilities relating to
disposed businesses, including warranty balances held in respect of the disposal of the European operations and WRM; and the settlement of
a claim against a supplier.
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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
Note
24
2018
£m
473.0
1.3
48.7
19.0
542.0
2017
£m
461.6
1.7
44.6
17.9
525.8
2018
17,500
2017
17,170
Directors’ emoluments
Salaries
Bonus
Other benefits
Non-executive Directors’ fees
Total emoluments
2018
£’000
743
588
186
368
1,885
Full details of each individual Director’s emoluments, bonuses, share options and pension entitlements are given in the Annual Report on
Remuneration on pages 43 to 51.
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
20
24
2018
£m
–
(4.1)
(0.6)
(1.8)
(6.5)
(6.5)
2018
£m
–
2017
£’000
734
755
183
366
2,038
2017
£m
0.1
(6.0)
(1.2)
(3.5)
(10.7)
(10.6)
2017
£m
(0.1)
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AccountsWincanton plc Annual Report and Accounts 2018
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 19% (2017: 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
2018
£m
4.2
(0.8)
3.4
3.0
0.3
3.3
6.7
2018
£m
37.9
7.2
0.3
–
(0.3)
–
(0.8)
0.3
–
6.7
2018
£m
2.4
2018
£m
(0.1)
–
(0.1)
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 reduced to 19% with effect from 1 April 2017 (20% prior to 1 April 2017) and will further reduce to 17% with effect
from 1 April 2020 which 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 (2017: £0.4m) in respect of amortisation of acquired intangibles and exceptional tax
of £1.2m (2017: £3.7m).
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018
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 £31.2m (2017: £42.0m) and the
weighted average shares in issue throughout the year as calculated below of 123.8m (2017: 122.8m). The diluted earnings per share calculation is based
on there being 2.1m (2017: 4.3m) 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 for the year (as above)
Effect of share options on issue
2018
millions
2017
millions
123.5
0.3
123.8
123.8
2.1
125.9
121.9
0.9
122.8
122.8
4.3
127.1
An alternative earnings per share measure is set out below, being earnings before amortisation of acquired intangibles and exceptional items,
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
Exceptional items
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 2017 of 6.1p per share (2016: 5.5p)
Interim dividend for the period ended 30 September 2017 of 3.27p per share (2016: 3.0p)
Note
3
9
2018
pence
30.8
30.3
2018
£m
31.2
6.2
2.3
(1.6)
38.1
2018
£m
7.6
4.0
11.6
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
The Directors are proposing a final dividend of 6.63p per share for the year ended 31 March 2018 (2017: 6.1p) which, if approved by shareholders, will be
paid on 3 August 2018 to shareholders on the register on 6 July 2018, an estimated total of £8.2m. The proposed final dividend is subject to approval
by shareholders at the Annual General Meeting on 28 June 2018 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 21 for further detail.
82
AccountsWincanton plc Annual Report and Accounts 2018 9. GOODWILL AND INTANGIBLE ASSETS
Cost
At 1 April 2016
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2017
At 1 April 2017
Effect of movements in foreign exchange
Disposals
At 31 March 2018
Amortisation and impairment losses
At 1 April 2016
Charge for year
Disposals
At 31 March 2017
At 1 April 2017
Charge for year
Disposals
At 31 March 2018
Carrying value
At 1 April 2016
At 31 March 2017 and 1 April 2017
At 31 March 2018
Note
Goodwill
£m
Acquired
intangibles
£m
Computer
software costs
£m
2
2, 3
2, 3
79.6
0.3
–
–
79.9
79.9
0.1
–
80.0
(2.5)
–
–
(2.5)
(2.5)
–
–
(2.5)
77.1
77.4
77.5
66.5
–
–
–
66.5
66.5
–
–
66.5
(62.0)
(2.2)
–
(64.2)
(64.2)
(2.3)
–
(66.5)
4.5
2.3
–
39.3
–
1.2
(0.7)
39.8
39.8
–
(0.6)
39.2
(30.9)
(2.0)
0.3
(32.6)
(32.6)
(1.9)
0.5
(34.0)
8.4
7.2
5.2
Total
£m
185.4
0.3
1.2
(0.7)
186.2
186.2
0.1
(0.6)
185.7
(95.4)
(4.2)
0.3
(99.3)
(99.3)
(4.2)
0.5
(103.0)
90.0
86.9
82.7
The carrying value of acquired intangibles at 31 March 2017 and 1 April 2016 related entirely to customer relationships.
The total amortisation charge of £4.2m (2017: £4.2m) is recognised in the income statement with £1.9m (2017: £2.0m) of computer software
amortisation included within cost of sales and £2.3m (2017: £2.2m) 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.
Retail & Consumer
Industrial & Transport
2018
£m
25.8
51.7
77.5
2017
£m
25.8
51.6
77.4
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:
Estimated growth rate
Underlying inflation rate
Discount rate
2018
2017
Retail &
Consumer
%
1.6
2.2
12.3
Industrial &
Transport
%
1.6
2.2
12.4
Retail &
Consumer
%
1.7
2.1
8.6
Industrial &
Transport
%
1.7
2.1
8.6
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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 methodology for determining the pre-tax discount rates has been updated in the current year to
reflect relevant risks specific to the individual CGUs.
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 £300m and £96m (2017: £382m and £356m 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 2016
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2017
At 1 April 2017
Additions
Disposals
Reclassified as assets held for sale
At 31 March 2018
Depreciation and impairment losses
At 1 April 2016
Effect of movements in foreign exchange
Charge for year
Disposals
At 31 March 2017
At 1 April 2017
Charge for year
Disposals
Reclassified as assets held for sale
At 31 March 2018
Carrying amount
At 1 April 2016
At 31 March 2017 and 1 April 2017
At 31 March 2018
2
2
2, 3
2, 3
42.6
0.1
–
(0.1)
42.6
42.6
0.6
(0.9)
(10.5)
31.8
(28.3)
(0.1)
(0.6)
0.2
(28.8)
(28.8)
(0.7)
0.8
4.7
(24.0)
14.3
13.8
7.8
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
133.1
0.1
18.0
(12.2)
139.0
139.0
13.9
(12.0)
(0.3)
140.6
(111.8)
(0.1)
(9.2)
12.0
(109.1)
(109.1)
(9.3)
11.7
–
(106.7)
21.3
29.9
33.9
2018
£m
3.8
4.0
7.8
Total
£m
175.7
0.2
18.0
(12.3)
181.6
181.6
14.5
(12.9)
(10.8)
172.4
(140.1)
(0.2)
(9.8)
12.2
(137.9)
(137.9)
(10.0)
12.5
4.7
(130.7)
35.6
43.7
41.7
2017
£m
10.3
3.5
13.8
AccountsWincanton plc Annual Report and Accounts 2018 11. INVESTMENTS IN SUBSIDIARIES
The significant subsidiaries and jointly controlled entity as at 31 March 2018 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
Wincanton Pullman Fleet Services Limited
UDS Properties Limited
C.E.L. Group Limited
Corstor Limited
Principal activity % of equity held5
100
100
100
100
100
100
Contract logistics services
Contract logistics services
Intermediate holding company
Contract logistics services
Insurance subsidiary
Maintenance and repair of motor vehicles
Building and letting of specialised
warehousing facilities
Intermediate holding company
Container storage and repair
Country of incorporation and
registered office
England and Wales1
England and Wales1
England and Wales1
Republic of Ireland3
Guernsey2
England and Wales1
100
100
50
England and Wales1
England and Wales1
England and Wales1
Other subsidiaries and jointly controlled entity as at 31 March 2018:
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 % of equity held5
100
100
100
100
84.56
100
100
1007
100
100
100
100
100
100
100
100
1008
100
100
100
100
50
100
100
100
100
100
100
100
100
100
1009
10010
100
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
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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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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
Trustee for the Wincanton plc
Pension Scheme
Dormant
Dormant
Dormant
Dormant
100
100
100
100
100
England and Wales1
Republic of Ireland3
Republic of Ireland3
England and Wales1
England and Wales1
Principal activity % of equity held5
Country of incorporation and
registered office
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.
5 All holdings are of Ordinary Shares except where noted.
6 3 ordinary shares and 84,500 B shares.
7 14,762,245 ordinary shares and 10,000,000 6½% cumulative convertible redeemable preference shares.
8 13,600,000 ordinary shares and 409,164 preference shares.
9 19,393,774 ordinary shares and 19,372,074 deferred shares.
10 100 ordinary shares and 1,699,900 redeemable ordinary shares.
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
2018
£m
2.3
0.6
8.4
0.3
(0.1)
11.5
2017
£m
2.6
1.3
13.3
0.4
(0.4)1
17.2
2018
£m
–
–
–
–
–
–
2017
£m
–
–
–
–
–
–
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
2018
£m
0.1
0.1
Net
2018
£m
2.3
0.6
8.4
0.3
(0.1)
11.5
2018
£m
0.3
2017
£m
0.1
0.1
2017
£m
2.6
1.3
13.3
0.4
(0.4)
17.2
2017
£m
0.3
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
Property, plant and equipment
Equity compensation benefits
Pension provisions
Other assets
Other liabilities
86
At
1 April 2017
£m
2.6
1.3
13.3
0.4
(0.4)
17.2
Recognised
in income
£m
(0.3)
(0.7)
(2.5)
(0.1)
0.3
(3.3)
Other
movements
£m
–
–
(2.4)
–
–
(2.4)
At
31 March 2018
£m
2.3
0.6
8.4
0.3
(0.1)
11.5
AccountsWincanton plc Annual Report and Accounts 2018 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
2018
£m
4.4
2018
£m
81.1
(0.8)
80.3
0.4
60.0
140.7
All receivables are due within one year, except for other receivables which include £0.4m (2017: £0.2m) in respect of amounts recoverable from
customers and others under contracts of more than one year and prepayments and accrued income which include £0.2m (2017: £0.6m).
Movement in the provision for doubtful debts
At 1 April
Impairment losses recognised on receivables
Amounts written off as unrecoverable
At 31 March
2018
£m
0.8
0.1
(0.1)
0.8
Ageing of trade receivables and the associated provision for doubtful debts at the balance sheet date
2017
£m
4.0
2017
£m
87.1
(0.8)
86.3
0.4
46.7
133.4
2017
£m
0.8
0.1
(0.1)
0.8
Current
1 month overdue
2 months overdue
3+ months overdue
2018
Gross
£m
79.1
0.7
0.1
1.2
81.1
Provision
£m
–
–
–
(0.8)
(0.8)
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. The Group only provides for doubtful debt
where, in the opinion of management, the amount is no longer recoverable. The amount of the provision is management’s estimate of the
irrecoverable amount.
16. ASSETS CLASSIFIED AS HELD FOR SALE
At 31 March 2018 the Group has exchanged contracts for the disposal of a property with a carrying value of £6.1m. Completion of the disposal
is conditional on the property being in an acceptable condition and is expected to take place on 31 May 2018. The net proceeds of disposal are
expected to exceed the carrying value and accordingly no impairment loss has been recognised on reclassification. The property is currently held
within Retail & Consumer.
17. 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 26.
2018
£m
11.7
5.9
17.6
2017
£m
33.0
7.9
40.9
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
18. BORROWINGS AND OTHER FINANCIAL LIABILITIES
Current
Bank loans and overdrafts
Other financial liabilities
Non-current
Bank loans
Other financial liabilities
The following are the contractual maturities of financial liabilities, excluding interest payments:
At 31 March 2018
2018
£m
–
–
–
47.0
0.1
47.1
2017
£m
0.1
0.1
0.2
65.0
–
65.0
Carrying
amount
£m
Contractual
cash flows
£m
Less than
1 year
£m
Between
1 and 5 years
£m
Over
5 years
£m
47.0
264.1
0.2
(0.1)
311.2
47.0
264.1
0.2
(0.1)
311.2
–
264.1
0.1
(0.1)
264.1
47.0
–
0.1
–
47.1
–
–
–
–
–
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
2018
£m
54.8
39.9
27.5
141.9
264.1
–
–
–
–
–
2017
£m
42.2
36.6
34.3
152.3
265.4
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 2017
Non-derivative financial liabilities
Bank loans and overdrafts
Trade and other payables
Derivative financial liabilities
Interest rate swaps
Forward foreign exchange contracts
19. TRADE AND OTHER PAYABLES
Current
Trade payables
Other taxes and social security
Other payables
Accruals and deferred income
88
AccountsWincanton plc Annual Report and Accounts 2018 20. PROVISIONS
At 1 April 2017
Provisions made during the year
Provisions used during the year
Provisions released during the year
Unwinding of discount
Effect of movements in foreign exchange
At 31 March 2018
Current
Non-current
Note
5
Insurance
£m
33.5
9.2
(7.9)
(7.1)
0.4
–
28.1
7.7
20.4
28.1
Property
£m
16.5
7.2
(3.9)
(2.1)
0.2
0.1
18.0
5.9
12.1
18.0
Other
provisions
£m
–
8.7
(3.9)
–
–
–
4.8
4.2
0.6
4.8
Total
£m
50.0
25.1
(15.7)
(9.2)
0.6
0.1
50.9
17.8
33.1
50.9
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.
Provisions are released when the obligation no longer exists or there is a reduction in management’s estimate of the liability. 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 and comprise both provisions for onerous leases and dilapidations. The onerous lease
provision is the Group’s best estimate of the expected costs of empty and under-utilised properties. Dilapidation provisions comprise dilapidation
estimates made in the normal course of business. During the year we have refined our methodology for providing for dilapidations which has resulted
in a small increase in the liability and some grossing up of movements previously reported net. Provisions are released when the obligation no longer
exists or there is a reduction in the estimate. The onerous lease provisions are utilised over the relevant lease term, with the majority expected to
be utilised over the next three years. Estimated costs have been discounted at a rate based on the Group’s assessment of a risk free rate, with any
estimated revenue being discounted at a rate reflecting an appropriate level of risk.
Other provisions include the estimated costs of the restructuring programme together with provision for sundry claims and settlements where the
outcome is uncertain.
21. 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
2018
millions
123.7
0.8
124.5
2017
millions
123.7
–
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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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
21. 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 2018, the number of the Company’s shares held by the EBT had increased to 804,950 (2017: 295,033). The EBT has waived the right
to receive dividends in respect of the shares it holds. The average cost of the shares held is 245p each (2017: 161p) and at 31 March 2018, the market
value of the shares held was £1.8m (2017: £0.8m).
All of the shares in the EBT are held in respect of the Group’s various equity compensation schemes (see Note 25) and at 31 March 2018 there were
589,367 (2017: 295,033) shares held in respect of vested options.
22. 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
23. OPERATING LEASES
2018
£m
0.3
2017
£m
9.7
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
2018
2017
Plant and
equipment
£m
24.9
48.2
1.7
74.8
Land and
buildings
£m
18.1
39.2
101.8
159.1
Plant and
equipment
£m
19.0
30.9
1.2
51.1
Land and
buildings
£m
19.0
46.7
108.5
174.2
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
2018
Plant and
equipment
£m
63.0
4.9
6.0
0.9
74.8
–
74.8
Land and
buildings
£m
19.9
8.8
119.7
4.2
152.6
6.5
159.1
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
90
AccountsWincanton plc Annual Report and Accounts 2018 24. EMPLOYEE BENEFITS
The employee benefit liabilities of the Group comprise the post-retirement obligations of the Group’s pension arrangements, which are discussed in
detail below:
Holiday pay
Pension schemes (see below)
These employee benefits are split as follows:
Current
Non-current
2018
£m
–
49.5
49.5
–
49.5
49.5
2017
£m
0.2
78.4
78.6
0.2
78.4
78.6
Pension schemes
Employees of Wincanton participated in funded pension arrangements in the UK and Ireland during the year ended 31 March 2018 details of which
are given below.
The principal Wincanton Scheme in the UK (the Scheme) is a funded arrangement which has two 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
20 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 2017 and 2018.
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, and was agreed with
the Trustee in 2015. In addition, it was agreed that certain administration expenses would be paid directly by the Group and deducted from the
deficit funding contributions. The expenses, which amount to £0.7m (2017: £0.7m), are not included in the contributions below. The deficit funding
contribution in the year net of these expenses was £14.6m (2017: £14.1m) with a further £1.5m top up payment to the Scheme as a result of an
enhanced transfer value exercise. Discussions are ongoing with the Trustee in respect of the triennial valuation of the Scheme. The future deficit
funding contributions are subject to the outcome of these discussions which we expect to conclude in 2018.
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 is not exposed to any unusual, entity specific or scheme specific risks.
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24. 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
2018
£m
(2.3)
(1,123.1)
1,075.9
(49.5)
2017
£m
(2.2)
(1,156.7)
1,080.5
(78.4)
The movement in the above net defined benefit liability in the year was primarily the result of a reduction in liabilities due to demographic
assumptions, an increase in the market value of the investments and contributions received from the Group, being partly offset by an increase in
liabilities resulting from an increase in the inflation rate assumption. The net defined benefit liability, after taking into account the related deferred tax
asset, is £41.1m (2017: £65.1m).
Movements in the present value of the net defined benefit liability
Assets
£m
1,080.5
Obligations
£m
(1,156.7)
Net liability
£m
(76.2)
Unfunded
arrangements
£m
(2.2)
Total
net liability
£m
(78.4)
(1.7)
(25.8)
27.3
16.8
(39.5)
–
–
–
18.3
1,075.9
Assets
£m
897.1
(1.7)
30.8
14.8
(57.0)
–
–
196.5
1,080.5
–
27.6
(29.1)
–
39.5
(33.4)
23.8
5.2
–
(1,123.1)
Obligations
£m
(1,001.0)
–
(34.2)
–
57.0
(202.1)
24.2
(0.6)
–
(1,156.7)
(1.7)
1.8
(1.8)
16.8
–
(33.4)
23.8
5.2
18.3
(47.2)
–
–
–
–
–
(0.1)
–
–
–
(2.3)
(1.7)
1.8
(1.8)
16.8
–
(33.5)
23.8
5.2
18.3
(49.5)
Net liability
£m
(103.9)
Unfunded
arrangements
£m
(1.7)
Total
net liability
£m
(105.6)
(1.7)
(3.4)
14.8
–
(202.1)
24.2
(0.6)
196.5
(76.2)
–
(0.1)
–
–
(0.4)
–
–
–
(2.2)
(1.7)
(3.5)
14.8
–
(202.5)
24.2
(0.6)
196.5
(78.4)
31 March 2018
Opening position
Included in Income statement:
Administration costs
Effect of settlements
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 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
92
AccountsWincanton plc Annual Report and Accounts 2018
24. EMPLOYEE BENEFITS (CONTINUED)
The amounts recognised in the income statement comprise administration costs, the effect of settlements and interest on the net defined benefit
liability. These charges are included in the following lines in the income statement:
Within underlying operating profit:
Administrative expenses
Within exceptional items:
Effect of settlements
Within finance costs:
Interest on the net defined benefit liability
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
Note
5
2018
£m
(1.7)
1.8
(1.8)
(1.7)
2018
£m
214.5
51.1
16.3
118.0
82.6
98.9
576.9
(109.7)
27.3
1,075.9
2017
£m
(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
All equities, LDI portfolio collateral, corporate bonds and funds have quoted prices in active markets. The senior real estate and private debt along
with the property assets are illiquid assets and trade on a less regular basis.
The synthetic equities provide exposure to the UK, North America, Europe, Asia-Pacific and Japan. The LDI portfolio currently hedges 100%
of the defined benefit scheme’s inflation rate risk and 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. The Scheme does not directly hold any financial instruments issued by
the Company.
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
Rate of increase of pensions in payment1
2018
%
2.60
3.35
2.35
2.35
1.85-3.25
2017
%
2.60
3.15
2.15
2.15
1.75-3.05
1 A range of assumed rates exist due to the application of annual caps and floors to certain elements of service.
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
2018
Years
21.1
23.0
22.9
25.4
2017
Years
21.2
23.5
23.4
26.4
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Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
24. 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 and includes the impact of the interest
rate and inflation rate hedging. 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
Increase/(decrease)
in liability
£m
(22.0)
14.0
44.9
Increase/(decrease)
in assets
£m
(24.0)
13.0
–
Defined contribution schemes
The total expense relating to the Group’s defined contribution schemes in the current year was £19.0m (2017: £17.9m).
25. EQUITY COMPENSATION BENEFITS
Employees of the Group participate, subject to seniority and length of service, in the Long Term Incentive Plan (LTIP). The other scheme in existence is
the Special Option Plan (SOP), although no grants were made in respect of this scheme in the year. Both 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 £1.0m (2017: £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 2018 is as follows:
Long Term Incentive Plan
July 2015
September 2015
July 2016
November 2016
July 2017
Special Option Plan
July 2014
Total number of share options
Outstanding
Exercisable
Option price
pence/share
Date normally
exercisable
656,827
142,512
705,215
45,570
710,691
2,260,815
589,367
2,850,182
–
–
–
–
–
–
2018-2025
2018-2025
2019-2026
2019-2026
2020-2027
–
–
–
–
–
–
589,367
589,367
137
2017-2024
The number and weighted average exercise price of all share options extant under the above schemes are as follows:
2018
2017
Options
5,436,334
710,691
(18,927)
(3,277,916)
2,850,182
589,367
Weighted average
pence
70
–
–
91
28
137
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
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
AccountsWincanton plc Annual Report and Accounts 2018 25. EQUITY COMPENSATION BENEFITS (CONTINUED)
The weighted average share price at the date of exercise for share options exercised during the period was 287p (2017: 203p). The options outstanding
at 31 March 2018 had a range of exercise prices of between nil and 137p and a weighted average remaining contractual life of eight years.
Awards made under the Special Option Plan 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
July 2017
Number of
options granted
874,876
142,512
753,888
45,570
710,691
Total
2,527,537
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 grants made under this Plan have 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)
July 2017
grant
250.0
–
0.3
30.9
15.0
3
4.1
120.0
221.0
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
95
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
25. 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
26. 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
AccountsWincanton plc Annual Report and Accounts 2018 26. FINANCIAL INSTRUMENTS (CONTINUED)
The Group has £141m (2017: £166m) of core committed funding of which £47m was drawn at 31 March 2018 (2017: £65m), leaving headroom of £94m
(2017: £101m). The Group also has overdraft and other uncommitted facilities. Within the £141m (2017: £166m) of core committed facilities there are no
term loans which must be drawn (2017: £25m). At certain points in the working capital cycle this had resulted in the Group having cash 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 18 for further analysis of the contractual maturities of the financial liabilities.
Analysis of changes in net debt
Cash and bank balances
Bank loans and overdrafts
Other financial liabilities
Net debt
Note
18
17
2018
£m
(47.1)
17.6
(29.5)
2017
£m
(65.2)
40.9
(24.3)
1 April 2017
£m
40.9
(65.1)
(0.1)
(24.3)
Cash flow
£m
(23.3)
18.1
–
(5.2)
31 March 2018
£m
17.6
(47.0)
(0.1)
(29.5)
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 2018 was at floating rates. At 31 March 2018, 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 £(0.2)m (2017: £(0.6)m).
2018
2017
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)
Floating
rate
£m
47.0
0.1
47.1
(16.5)
30.6
(20.0)
10.6
–
(1.1)
(1.1)
9.5
Fixed
rate
£m
–
–
–
–
–
20.0
20.0
–
–
–
20.0
Total
£m
47.0
0.1
47.1
(16.5)
30.6
–
30.6
–
(1.1)
(1.1)
29.5
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
97
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
26. 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 24.
Sterling
1.0% increase in rates
1.0% decrease in rates
2018
Effect
on profit
before tax
£m
(0.6)
0.6
Effect
on equity
£m
(0.6)
0.6
2017
Effect
on profit
before tax
£m
(0.4)
0.4
Effect
on equity
£m
(0.4)
0.4
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 £98.4m (2017: £128.1m).
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. The capital structure of the Group consists of net debt (as shown above) and equity of the
Group (issued share capital, reserves and retained earnings).
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.
98
AccountsWincanton plc Annual Report and Accounts 2018 26. 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
Forward exchange contracts
Interest rate swaps
Bank loans and overdrafts
Trade and other payables
Unrecognised losses
2018
2017
Carrying amount
£m
80.3
0.4
17.6
0.1
(0.2)
(47.0)
(183.9)
Fair value
£m
80.3
0.4
17.6
0.1
(0.2)
(47.0)
(183.9)
–
Carrying amount
£m
86.3
0.4
40.9
0.5
(0.6)
(65.1)
(188.3)
Fair value
£m
86.3
0.4
40.9
0.5
(0.6)
(65.1)
(188.3)
–
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.
27. 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 entities.
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 44 to 51.
The total of short term employee remuneration and benefits receivable by the Directors is set out in Note 4.
99
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 Accounts
AT 31 MARCH 2018
WINCANTON PLC COMPANY BALANCE SHEET
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
2018
£m
108.9
108.9
85.8
8.6
94.4
(31.2)
63.2
172.1
(47.1)
125.0
12.5
12.9
(0.1)
99.7
125.0
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
The Company reported a profit for the year ended 31 March 2018 of £22.8m (2017: £24.0m).
The financial statements were approved by the Board of Directors and authorised for issue on 16 May 2018 and were signed on their behalf by:
A Colman
Chief Executive Officer
Company Registration
Number: 04178808
T Lawlor
Chief Financial Officer
100
Wincanton plc Annual Report and Accounts 2018 Accounts
FOR THE YEAR ENDED 31 MARCH 2018
WINCANTON PLC COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 1 April 2016
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
Dividends received
Dividends paid to shareholders
Balance at 31 March 2017
Profit and loss account
Share
capital
£m
12.4
Share
premium
£m
12.9
Hedging
reserve
£m
(0.8)
Reserve for
own shares
£m
(3.1)
Retained
earnings
£m
81.5
–
–
–
–
–
–
–
–
–
12.4
–
–
–
–
–
–
–
–
–
12.9
–
0.7
0.7
–
–
–
–
–
–
(0.1)
–
–
–
2.7
–
–
(0.1)
–
–
(0.5)
24.0
–
24.0
(4.4)
1.1
(0.1)
–
1.5
(10.4)
93.2
Total
equity
£m
102.9
24.0
0.7
24.7
(1.7)
1.1
(0.1)
(0.1)
1.5
(10.4)
117.9
Balance at 1 April 2017
12.4
12.9
(0.1)
(0.5)
93.2
117.9
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based payment transactions
Shares issued
Own shares acquired
Dividends paid to shareholders
Balance at 31 March 2018
–
–
–
–
–
0.1
–
–
12.5
–
–
–
–
–
–
–
–
12.9
–
–
–
–
–
–
–
–
(0.1)
–
–
–
0.7
–
(0.1)
(2.1)
–
(2.0)
22.8
–
22.8
(2.8)
0.1
–
–
(11.6)
101.7
22.8
–
22.8
(2.1)
0.1
–
(2.1)
(11.6)
125.0
101
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 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
Prepayments and accrued income
Deferred tax
All debtors are due within one year, except prepayments and accrued income of £0.2m (2017: £0.6m).
4. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans and overdrafts
Amounts owed to Group undertakings
Other financial liabilities
Accruals and deferred income
Details of bank loans and overdrafts are given in Note 18 to the consolidated financial statements.
2018
£m
108.9
2017
£m
108.9
2018
£m
84.7
0.5
0.6
85.8
2018
£m
18.5
6.4
--
6.3
31.2
2017
£m
82.4
0.8
1.3
84.5
2017
£m
0.1
7.2
0.1
5.4
12.8
102
AccountsWincanton plc Annual Report and Accounts 2018 5. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Bank loans
Other financial liabilities
Details of bank loans and other financial liabilities are given in Note 18 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
2018
£m
47.0
0.1
47.1
10p Ordinary Shares
2018
millions
123.7
0.8
124.5
2017
£m
65.0
–
65.0
2017
millions
123.7
–
123.7
Details of the Company’s own shares, held within an Employee Benefit Trust, are given in Note 21 to the consolidated financial statements.
Details of the Company’s equity compensation benefits are given in Note 25 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
Net increase in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
2018
£m
22.8
–
(11.6)
–
0.1
–
(2.1)
(2.1)
7.1
117.9
125.0
2017
£m
24.0
1.5
(10.4)
0.7
1.1
(0.1)
(1.7)
(0.1)
15.0
102.9
117.9
103
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2018 GROUP FIVE YEAR RECORD
AS REPORTED UNDER ADOPTED IFRS
Revenue
Underlying operating profit2
Operating profit
Net financing costs
Underlying profit before tax2
Profit before tax
Underlying profit after tax for the year2
Underlying earnings per share2
Basic earnings per share
Dividend per share
Net debt
2018
£m
1,171.9
52.9
44.4
(6.5)
46.4
37.9
38.1
30.8p
25.2p
9.9p
(29.5)
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)
1 Where applicable, amounts have been restated for the change in accounting for joint ventures.
2 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, exceptional items, tax relating to these items and exceptional tax. Underlying earnings per share
is calculated on the same basis.
104
Additional informationWincanton plc Annual Report and Accounts 2018 SHAREHOLDER INFORMATION
FINANCIAL CALENDAR
Annual General Meeting
To be held on 28 June 2018 at the offices of
Buchanan Communications, 107 Cheapside,
London EC2V 6DN at 11am
Interim results for 2018/19 Interim announcement November 2018
Full year results for 2018/19 Preliminary announcement May 2019
Annual Report
Posted to shareholders in May 2019
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 2018 will be payable, if approved, on 3 August
2018 to those shareholders on the register on 6 July 2018.
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
• 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.
105
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsAdditional informationWincanton plc Annual Report and Accounts 2018 DIRECTORS AND ADVISERS
BOARD OF DIRECTORS AND ADVISERS
Non-executive Directors
Stewart Oades (Interim Chairman)
Paul Dean
David Radcliffe
Martin Sawkins
Gill Barr
Executive Directors
Adrian Colman (Chief Executive Officer)
Tim Lawlor (Chief Financial Officer)
Secretary and registered office
R Sharma
Wincanton plc
Methuen Park
Chippenham
Wiltshire
SN14 0WT
Tel +44 (0)1249 71 00 00
Registered in England & Wales under No. 04178808
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
Additional informationWincanton plc Annual Report and Accounts 2018 Design and production
Radley Yeldar www.ry.com
The paper used in this report is produced using virgin wood fibre from well‑managed forests with FSC© certification.
All pulps used are elemental chlorine free and manufactured at a mill that has been awarded the ISO 14001 and
EMAS certificates for environmental management. The use of the FSC© logo identifies products which contain
wood from well‑managed forests certified in accordance with the rules of the Forest Stewardship Council.
Printed by CPI Colour, an FSC© and ISO 14001 accredited company, who is committed to all round excellence
and improving environmental performance as an important part of this strategy.
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