Transforming
Logistics...
Annual Report and Accounts 2020
Strategic report
Introduction
Chairman’s review
Our business today
Our marketplace
Technology driving innovation
Business model
Chief Executive statement
How we measure performance
Investing in our people
Corporate responsibility report
Financial review
Risk report
1
2
4
5
6
8
10
14
16
18
24
32
Governance
36
Introduction from the Chairman
The Board
38
Board leadership and Company purpose 40
46
Nomination Committee report
48
Audit Committee report
Directors’ remuneration report
Committee Chair Introduction
At a glance
Report on remuneration
Directors’ Remuneration Policy
Directors’ report
Directors’ report
Statement of Directors’ responsibilities
Independent auditor’s report
Independent auditor’s report
52
56
58
65
72
74
76
84
85
86
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
89
Wincanton plc Company balance sheet 126
Wincanton plc Company statement
of changes in equity
Notes to the Wincanton plc
Company financial statements
Group five year record
Shareholder information
Board of Directors and advisers
128
130
131
132
87
88
127
Strategic reportINSIDE THIS REPORT Delivering sustainable supply chain
value, expertise and solutions to
some of the world’s most admired
brands, Wincanton is the largest
British third party logistics (3PL)
company in the UK.
Our success is born out of our strengths in working
closely with our customers, collaborating across the
industry and tailoring our services to today’s needs while
anticipating those of tomorrow. Our drive to continually
evolve better ways of working means we put innovation
and technology at the forefront of all we do.
And by building a high-performance culture where
our people are valued, respected and enabled to deliver
excellence, we have become experts across a diverse
range of sectors, from grocery to consumer goods,
construction to energy, putting safety at the heart of
our business.
This report outlines our progress over the last 12 months.
Facts and figures
Revenue
£1.2bn
Locations
200+
FOR MORE INFORMATION ON
OUR BUSINESS TODAY SEE PAGE 4
Colleagues
19,100
Drivers
5,500
Warehousing space
Vehicles responsible for
14m sqft
3,500
Wincanton plc Annual Report and Accounts 2020
1
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsINTRODUCTION We made solid progress in the year. COVID-19
creates major short term uncertainties but
looking beyond the current crisis, we see
excellent opportunities for Wincanton.
Dr. Martin Read CBE
Chairman
Financial highlights
Revenue
£1,201.2m
+5.2%
Underlying earnings per share1
35.8p
+6.9%
Underlying profit before tax1
Basic earnings per share
£52.9m
+7.3%
31.1p
-9.9%
Underlying profit before tax margin1
Net debt1
4.4%
+10bps
Profit before tax
£43.8m
-9.9%
£10.1m
-47.7%
Net assets/(liabilities)
£14.7m
+£81.8m
1 The Directors present the results of the business on an underlying basis as they believe this better represents
the performance of the business. In order to aid comparison with the prior year, these numbers have also
been presented on an IAS 17 basis. See page 31 for further information on these alternative performance
measures (APMs) including definitions and a reconciliation of APMs to statutory measures. The definition of
non-underlying items can be found in Note 4 to the consolidated financial statements on page 98.
2
Wincanton plc Annual Report and Accounts 2020
Results
I am pleased to report a year of solid progress
for Wincanton with revenue up 5.2%
and underlying profit before tax up 7.3%.
Reassuringly, the Group has delivered revenue
growth on the back of some significant new
contracts. Net debt at the year-end fell 47.7%
from £19.3m to £10.1m despite increased
dividend payments of £13.8m and a £17.8m top
up to our pension scheme.
As we closed the financial year, our balance
sheet was strong and our cash flow healthy.
In normal circumstances, this would provide
strong reassurance to our various stakeholders,
enable us to deliver progressive dividends
and put us in a good position to develop our
business. However, these are far from normal
circumstances. COVID-19 has impacted our
business significantly and there remains
considerable uncertainty regarding the
levels of demand and business interruption
for the remainder of the year.
Strong operational performance
The commitment of our people to doing
things well has again been evident in high
levels of customer satisfaction and the Group’s
impressive health and safety record. It has also
been manifest in the way our workforce has
responded to the effects of COVID-19 and
the needs of our customers. This very much
reflects the Group’s culture which we seek to
nurture and maintain. For example, we have
recently launched a new purpose statement
and Code of Conduct, ‘the Wincanton Way’, for
our employees. James Wroath provides more
details in his Chief Executive Statement.
During the year, we secured some valuable
contract wins and retained many long standing
contracts. Encouragingly, we experienced no
significant contract losses. We are grateful to our
customers for trusting us to be a key part of their
supply chain and to our suppliers for supporting
us in meeting our customer needs.
We have continued our investment in
innovation and in fast-moving technologies to
support our business. Our OneVAST warehouse,
one of the outputs from our W2 Labs initiative, is
Strategic reportCHAIRMAN’S REVIEW now fully operational. It brings buyers and sellers
of space together online by offering a cloud-
based, virtual warehouse. Also of note is our
work with MiX Telematics, our Winsight in-cab
technology, our wearable ‘ProGlove’ device and
‘Soter Spine’ which enables our operatives to lift
items with reduced risk of injury. Further details
are provided on page 7 of this report.
Further tangible progress was made during the
year on reducing our carbon emissions which
has also helped us to reduce our operating costs.
You can read about how we are minimising
our impact on the environment and focusing
on sustainable business on pages 21 and 23
of this report.
Board changes
The financial year saw the appointment of our
new Chief Executive, James Wroath. James was
Chief Operating Officer of North America for
LSG Sky Chefs from 2015 until he joined us
in September 2019. He has deep experience
in logistics and the broader business services
environment and is focused on exploiting
Wincanton’s respected market position, its
extensive national coverage and its strong
operational base to deliver profitable growth.
James has now played himself into his new role
and made some significant structural changes
to take the business forward. This is discussed
further in his Chief Executive Statement.
Other Board changes were the previously
announced arrival of Debbie Lentz who joined
the Board on 1 June 2019 and the appointment
of Mihiri Jayaweera on 7 April 2020. Debbie is
currently President of Global Supply Chain and
a member of the Senior Management Team
of Electrocomponents plc, the FTSE 250
global multi-channel provider of industrial and
electronic products and solutions. She has a
strong track record in digital and supply chain
management, both of which are highly relevant
to the further development of Wincanton’s
eCommerce propositions. Mihiri was, until
October 2019, Group Head of Strategy and a
member of the Group Executive Committee
of TP ICAP Group, the FTSE 250 professional
intermediaries firm, operating in financial, energy
and commodities markets internationally. She has
a deep understanding of investment banking
and financial analysis. With the appointment of
these two Non-executive Directors, we now have
a balanced Board in place with wide ranging
experience and broad diversity of thought.
I should like to thank our previous Chief Executive,
Adrian Colman for his efforts at Wincanton.
He joined the business in January 2013 as Chief
Financial Officer, was appointed Chief Executive
in August 2015 and played a major role in turning
around the Group over those years. We wish
him well in his retirement. I should also like to pay
tribute to David Radcliffe who retired as a Non-
executive Director in December after seven and
a half years’ service. David brought deep
experience and insight to our deliberations.
We completed an external Board evaluation in
the year. Overall, it was very encouraging but,
as always, we have identified some actions to
be followed through. The Board evaluation is
discussed further on page 45.
Our people
My thanks, as always, go to our 19,100 colleagues
who provide the consistently high levels of
service required to help us win and retain
business. Our people are the cornerstone of our
impressive and still improving health and safety
record which is an important differentiator for
the Wincanton brand. I am particularly grateful
to them for the way they have responded
to the effects of COVID-19 which has been
exceptional in all parts of our business.
Stewart Oades, our Senior Independent
Director, has been appointed as our employee
representative Non-executive Director and has
visited a number of our sites to hold consultations
with our workforce. This exercise has provided
valuable feedback for the Board. Further details
are given in the Board Leadership section of
this report.
We have a strong focus on diversity and
inclusion within our people strategy. We are
also working to narrow our gender pay gap.
Our current remuneration policy has been in
place for three years and we are presenting a
new policy for approval at our Annual General
Meeting. The changes reflect current regulations
and are in line with the policies applying to our
wider workforce. We have been encouraged by
the support our proposals have received during
consultations with our major investors. Given the
particular circumstances arising from COVID-19,
we are also modifying short term remuneration
arrangements. Full details can be found in the
Remuneration section of this report at pages
52 to 71. We hope you will support the changes
we are recommending which align executive
incentives to the overall objectives of the Group
and the interests of all our stakeholders.
Dividends
Given the uncertainties regarding the effects of
COVID-19, the Board wishes to retain as much
cash as possible in the Group. The measures we
have taken include agreeing the rescheduling
of payments to the pension scheme and
implementing a temporary 20% pay reduction
for the Board and senior management.
We have also announced that the final dividend,
which would ordinarily be paid in July, will
be suspended. Whilst the Board very much
recognises the importance of the dividend
to our shareholders, we consider it prudent
to hold as much cash as possible until we can
fully assess the financial implications of the
COVID-19 crisis on the Group’s business. We will
keep dividend payments under review as the
year progresses with a view to recommencing
payments as soon as it is prudent to do so.
Strategic development
Wincanton is a much respected brand with
extensive national coverage and strong
operational performance. Our new management
team has been focusing on how we can use
these strengths to grow our business profitably,
shifting it towards more value added activities to
deliver benefits to our customers and to improve
our margins. This is discussed further in the Chief
Executive Statement. We had anticipated that
the first benefits of our new initiatives would
become evident during the course of the new
financial year but are mindful that the current
COVID-19 crisis is likely to slow our progress.
As well as a focus on market facing development
and innovation, we had also planned to
direct significant investment at improving
the efficiency of our operational and support
functions this coming year. Again, COVID-19
is likely to necessitate an extension to our
original timetable.
Despite the short term challenges, we continue
to remain alert to opportunities in our industry.
In this context, I should mention the work we put
into evaluating the potential acquisition of Eddie
Stobart Logistics plc (‘Eddie Stobart’) last autumn.
We saw this as a major opportunity to increase
our scale and the breadth of our offerings and
to deliver major cost synergies. We therefore
devoted considerable time and effort to
reviewing this business. However, we concluded
that the underlying profitability of Eddie Stobart
and the ongoing liquidity concerns would
not enhance Wincanton’s shareholder value.
We therefore aborted the project. Having spent
a number of years getting our own business
back onto a sound financial footing, we did not
want to take disproportionate risks with its future.
We will continue to look for opportunities to
grow our business inorganically but only where
we feel that the balance of risk and reward
makes sense.
Outlook
Given the effects of COVID-19, it is difficult to
provide a reliable outlook statement for the
coming year. However, logistics are crucial for
most of our customers and for the country in
general so we do not expect persistent and
widespread major falls in the demand for our
services. We are highly conscious of the need
to manage cash carefully and have taken a
number of measures to maintain liquidity
within the business. All that said, in the medium
to long term, we continue to see excellent
opportunities for Wincanton.
Dr. Martin Read CBE
Chairman
16 June 2020
Wincanton plc Annual Report and Accounts 2020
3
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts What we do – Retail & Consumer
This is the part of our business that makes up an essential link in the major
supply chains delivering to supermarkets, high streets and retail parks.
We deliver eCommerce solutions that ensure goods flow smoothly from
online orders to the consumer’s front door. Our Retail & Consumer teams
are important factors in the whole shopping experience – enhancing
our customers’ brands and delivering on their promises.
– eFulfilment and multichannel – From click-and-collect to bricks-
and-mortar retail operation, we streamline processes and enhance
the customer experience.
– Collaboration – We bring our customers and partners together
to create synergies and share people, space and fleet.
– Transformation – We constantly search for new and innovative
technologies that can support our customers’ changing needs.
Key Market Sectors
Retail General Merchandise
Customers include:
– Argos
– B&Q
– Loaf.com
– M&S
– Screwfix
Retail Grocery
Customers include:
– Asda
– Co-op
– Morrisons
– Sainsbury’s
– Waitrose & Partners
Consumer Products
Customers include:
– Husqvarna
– Lucozade Ribena Suntory
– Nestlé Purina
– The Kraft Heinz Company
– The Weetabix Food Company
What we do – Industrial & Transport
Our Industrial & Transport business stores and moves the products that
UK industry and manufacturing rely on, providing the services that keep
them competitive. Whether we’re handling fuel or bricks, engineering
components or milk, we deliver the same high quality customer
experience. We have the third largest Large Goods Vehicle (LGV) fleet in
the country and also maintain Light Commercial Vehicles (LCV) and LGVs
on behalf of customers.
– Transport – The Wincanton fleet includes mechanical off-loaders,
bulk cement and fuel tankers as well as general vehicles.
– Asset optimisation – We work our assets – and those of our
customers – hard, using support systems and new technologies
to create and sharpen a competitive edge.
– Compliant operations – We comply with the strictest standards
in the industry, including SC21, FORS and ADR.
Key Market Sectors
Transport Services
Customers include:
– adidas
– British Sugar
– DCS
– Hapag-Lloyd
– HMRC
– Mediterranean Shipping
Company (MSC)
Construction
Customers include:
– Aggregate Industries
– Breedon
– Brett
– EDF Energy
– Ibstock
Other
Customers include:
– Alstom
– BAE Systems
– Müller Milk & Ingredients
– Rolls Royce
– Thales
– Valero
Operational Split
65%
of Group
Revenue
£782.3m
64%
of Group
Underlying operating profit1
£36.4m
Operational Split
35%
of Group
Revenue
£418.9m
36%
of Group
Underlying operating profit1
£20.9m
1 The Directors present the results of the business on an underlying basis as they believe this better represents the performance of the business. In order to aid comparison with the prior year,
these numbers have also been presented on an IAS 17 basis. See page 31 for further information on these alternative performance measures (APMs) including definitions and a reconciliation
of APMs to statutory measures. The definition of non-underlying items can be found in Note 4 to the consolidated financial statements on page 98.
4
Wincanton plc Annual Report and Accounts 2020
Strategic reportOUR BUSINESS TODAY Key Drivers
Rising expectations
Changing demands
From retail to industry, every UK business is feeling
the relentless drive to ramp up service to meet
ever-increasing levels of expectation. This is why,
at Wincanton, we are driven to work alongside our
customers to get closer than ever before to the
end user or consumer.
Customers are demanding greater visibility,
better communications, shorter lead times,
higher productivity, more sustainable options –
all accompanied by lower costs. At Wincanton
we innovate and collaborate to ensure we offer
both high performance and value.
Enablers
New technologies
New Partnerships
New ways of working
Technology development and adoption has reached
a momentum across every industry. This pace is
already transforming how Wincanton provides
solutions for our customers – and there’s much
more to come.
For more information go to page 7.
Businesses don’t see working together as causing
competitive disadvantage, but as creating
opportunities. New collaborative ways of working
are enabling greater agility throughout the
supply chain. As collaboration is second nature at
Wincanton, we’re embracing these opportunities
more than ever before.
Customers are hungry for innovation – but that
doesn’t always mean relying on technology alone.
True innovation can also be about attitude and
approach – enabling process improvements and
change projects to future-proof the business.
Fundamentals
Health and safety
Sustainability
Cost
Keeping people safe is, and always will be, our
marketplace’s number one priority. Customers and
society at large insist on best-in-class health and
safety performance as the fundamental basis
for a strong and successful supply chain.
For more information go to page 19.
Gone are the days when sustainability was about
coffee cups and green-wash. Supply chains
everywhere are under pressure to become more
responsible – producing less waste, less CO2, and
using more renewable resources and innovation
to benefit the environment.
For more information go to page 21.
This is about value, not price. And while budgets may
continue to be increasingly challenging, customers
recognise that the race to the bottom is one that
nobody wins. Instead, they want a sharp focus
on great quality and value-for-money.
Wincanton plc Annual Report and Accounts 2020
5
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsOUR MARKETPLACE Technology
driving innovation...
6
Wincanton plc Annual Report and Accounts 2020
Strategic report We continually invest in the latest technology in order
to work smarter, faster and more cost effectively for our
customers. This year saw several innovations transform
the way in which we meet customer needs.
OneVASTwarehouse
A cloud-based virtual warehouse,
oneVASTwarehouse brings buyers and sellers of
space together online. Already offering 46.2 million
sq ft of space on a total of 340+ sites nationwide
and growing fast, oneVASTwarehouse is unlocking
the storage space in the UK. Please visit
oneVASTwarehouse.com for more details.
MiX Telematics
Our work with MiX Telematics won the Fleet Safety
Partnership Award in 2019. The MiX solutions include
integrated camera technology, a behavioural change
programme and real-time debriefing – all aimed at
developing our drivers and enabling them to be the
safest on the roads.
ProGlove
A wearable alternative to the traditional handheld
scanner, ProGlove allows warehouse teams to use
both hands to pick items. Early results show that
the ProGlove generates a return on investment in
just 30 days, saves an average of four seconds per
scan and reduces errors by up to 33%.
Winsight
Winsight is our established in-cab technology that
gives us real-time visibility of deliveries. Over the
last 12 months, updates have included a ‘scan
genie’ that sends delivery information direct to
the customer, as well as a sub-contractor mode
that has extended the app’s coverage to include
every Wincanton delivery. Updates scheduled for
2020 include giving sub-contractors the ability
to track drivers and work opportunities.
Soter Spine
Wearable technology, Soter Spine helps reduce
the risk of musculoskeletal injury by monitoring the
movement and technique of our teams working in
manual jobs, including in our warehouses. It uses
data to give the user real-time warnings about
hazardous actions and creates personalised training
plans that can be accessed via a mobile app.
Wincanton plc Annual Report and Accounts 2020
7
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Our market sectors
Our services
Construction
Consumer
goods
Defence
Energy
Food & Drink
General
merchandise
Grocery
Home
& DIY
Milk
Water
Flexible warehousing
Efficient operations
We own and manage a portfolio
of warehouse facilities across
the UK. In addition, our new
oneVASTwarehouse matches
buyers and sellers of space to each
other, ensuring that everybody has
access to the space they need.
We own one of the country’s
largest fleets – and manage
many other vehicles on behalf of
our customers. No matter what
the requirements or the sector,
we can provide the appropriate
transport solution, via the most
beneficial contract.
Technology systems
Innovative thinking
Our IT specialists work alongside
our customers to implement
solutions that meet their specific
needs. While the answer could
be an off-the-shelf solution,
we can also develop a more
bespoke approach.
Our people never stop thinking
how we can do things differently
to help customers be even more
competitive. We complement our
own ideas by constantly seeking
out brilliant thinking from across
the industry as well as identifying
ideas from elsewhere that we
can adapt.
Contract type
Open book operations (64%) – a management fee is charged for services,
This provides visible earnings with modest margins, but with low risk to the business.
Closed book operations (36%) – the Group retains the principal business
return opportunity and risk in the contract. The greater deployment of resources
across contracts offer the Group improved returns.
Fundamental to our operations
Sustainability
A positive culture
We aim to minimise our impact by driving fewer miles, with
fuller vehicles, using less fuel and investing in a cleaner fleet.
We engage with our people and promote a high-performance
culture that’s also inclusive, responsible and ethical.
FOR MORE INFORMATION SEE PAGE 23
FOR MORE INFORMATION SEE PAGE 17
8
Wincanton plc Annual Report and Accounts 2020
Strategic reportBUSINESS MODEL Sources of competitive advantage
Engaging with our stakeholders
FOR MORE
INFORMATION
Health and Safety
This is the foundation which underpins
every other aspect of Wincanton.
Health and safety is embedded throughout
our operations, at every level and at all times.
Efficiency
New technologies, new ways of
working, new warehousing or transport.
Whatever we do, the goal is always the
same: greater cost-efficiency.
Collaboration
We never do things in isolation. Instead,
we build great relationships with customers,
suppliers and others in the supply chain.
Property expertise
Our deep understanding of the property
market enables us to locate the best solutions,
explore opportunities to collaborate and
manage leases more effectively.
Great ideas
Our W² initiative harvests the best ideas
from within Wincanton (via the W² Ideas
Accelerator) and combines them with
innovation from across all industries
(via W² Labs).
Contract flexibility
We operate both open and closed book
contracts. This gives us a balance between
visible but low risk earnings, and improved
returns that are accompanied by greater risk.
Customers
We partner with our customers to deliver the best service and achieve
the highest levels of satisfaction.
How we engage: Daily contact with customers through our Business
Unit management teams ensures we provide the service customers
need, this is supplemented by contractual arrangements and service level
agreements, where appropriate. Conversations with customers around
future needs feed into our strategic discussions at Board level. The Board
are kept up to date with customer views and feedback through monthly
CEO and operational reports.
DETAILS OF THE SERVICES
WE PROVIDE AND OUR
CUSTOMERS ARE SHOWN
ON PAGE 4 OF THIS REPORT.
OUR INVESTMENT IN
TECHNOLOGY TO SUPPORT
OUR CUSTOMERS IS
SHOWN ON PAGE 7.
Colleagues
We work hard to improve the lives of our people and that means an
unrelenting focus on health and safety, as well as ensuring a workplace
where people are treated fairly and with respect.
How we engage: See page 17 in the section entitled ‘Listening, Responding
and Improving’ for details of how we engage with our workforce including
the work of our Senior Independent Director, Stewart Oades. We monitor
the employee engagement score as one of our KPIs.
INVESTMENT IN OUR
PEOPLE IS EXPLAINED
ON PAGES 17 AND 18.
OUR APPROACH TO
ENSURING WE OPERATE
A SAFE WORKPLACE IS
DETAILED ON PAGE 19.
Suppliers
We build partnerships with our suppliers ensuring they are responsible and
capable of delivering our business needs.
How we engage: Our Finance and Procurement teams review the financial
stability and suitability of our suppliers in line with our policies and ethical
standards. Regular supplier account management meetings take place
to review performance.
OUR STATEMENT ON ANTI-
MODERN SLAVERY CAN BE
FOUND ON PAGE 75.
The economy and society
We contribute to the economy by helping businesses to be successful.
We also provide valuable employment, support local communities and
strive to minimise our impact on the environment.
How we engage: Our brokers provide views on the economy and how
our strategy should be adapted to respond to the economic landscape.
Every Wincanton location has a sustainability plan that includes
community engagement.
SUPPORTING OUR
COMMUNITIES SECTION
ON PAGE 20 HIGHLIGHTS
THE WORK WE DO IN OUR
LOCAL COMMUNITIES.
Shareholders
We aim to deliver long term sustainable value to shareholders.
How we engage: We engage with our larger investors on a one to one
basis, through Corporate roadshows and personal contact with the Executive
Directors and the Chairman. For the smaller investors, there is an opportunity
to meet the Board at the AGM.
OUR SHAREHOLDER
ENGAGEMENT SECTION
ON PAGE 43 GIVES
FURTHER DETAIL.
The Board’s statement on compliance with s172 of the Companies Act 2006:
Taking account of the views of key stakeholders in our business
By understanding the views of our key stakeholders, we factor into Boardroom discussions the potential impact of our decisions
on each stakeholder group and consider their needs and concerns. This is evident in our discussions on strategic direction,
investment in technology and back office systems, policies and practices, training and in our people strategy.
Strong corporate governance
Our Board reflects a diverse mix of skill,
capability and experience.
Effective risk management
We have a framework and robust processes in place
to mitigate the key risks faced by our business.
FOR MORE INFORMATION SEE PAGES 38 AND 39
FOR MORE INFORMATION SEE PAGES 32-35
Wincanton plc Annual Report and Accounts 2020
9
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts I intend to build on the excellent financial
foundations that have been set to unlock
the potential for growth.
James Wroath
Chief Executive Officer
I have certainly had an interesting time since joining
Wincanton in September of last year. This is a strong
business at a fascinating time for the industry.
I would like to thank Adrian Colman and
Tim Lawlor for the work they have done to
put our business on its firm financial footing,
I am excited to work with an excellent team
on the next steps of our journey.
The potential acquisition of Eddie Stobart,
coming so early in my tenure, gave me a great
opportunity to review the UK market and the
strategic direction of our organisation. I was
also able to engage in substantive discussions
with our shareholders. Ultimately the risks
associated with that transaction proved to be
too great, but the lessons I learned about our
business were very useful in determining our
next steps.
More recently, the challenges we have faced
from COVID-19 have demonstrated the
resilience Wincanton has both in the calibre
of our people and the diversity of our trading
sectors. I would like to pay tribute to all our
great people who have worked tirelessly
throughout the crisis. They are delivering not
only for our customers and our business, but
also for the country. I am proud to lead such
a committed and talented group of logistics
professionals. The impact of this global
pandemic is covered in more detail elsewhere
in this report, but it should not overshadow a
successful year for the Group.
Business reflections
The impression I had of the business before
joining was a positive one. I saw a well led
business with a strong balance sheet, reliable
dividends and longstanding customer
relationships. The reality has been even better
than I expected as I have found all those things
plus a great team delivering value for our
customers every day. I have been fortunate
enough to visit a good number of our locations
across several diverse sectors in both business
to business (‘B2B’) and business to consumer
(‘B2C’). We have in-built resilience as a result
of our diversity of activity, managing supply
chains for everything from bricks to wine.
Throughout my visits I have been really impressed
with the depth and breadth of our people’s
expertise, adding value to our customers through
being a true extension of their own business.
We have a strong spirit embedded in impressive
tenure of both our colleagues and our customer
relationships. The quality of our operations shines
through and our regular renewals are evidence
of our customers’ appreciation for what we do
for them.
I intend to build on the excellent financial
foundations to unlock the potential for growth
of the business. This potential exists in the
range and scope of expertise we have; it
exists in the passion and experience within
our teams; and it exists in the strength of
our customer showcases and our market
leading technologies.
Financial and business
performance overview
In the year ended 31 March 2020 we delivered
another period of improving financial
performance. Revenue grew by over 5% on
the back of significant new business secured
in the previous year and several wins in early
2019. Our underlying profit before tax on an
IAS 17 basis grew by 7.3%, due to the new
business and a strong operating performance,
particularly in Retail & Consumer (‘R&C’).
Despite the arrival of COVID-19 before the
end of the year, we were able to record a year
end net debt of £10.1m, down £9.2m from the
prior year.
At a sector level, R&C delivered strong volumes
and profit performance driven by both new
customer wins and core business growth.
There remains active interest in our services
and I am confident that we can continue to be
successful across the sector. Our largest win
was with Morrisons to operate three transport
locations and five fleet maintenance units for
them. The contract is for five years and we are
delighted to add their impressive brand to our
retail business sector.
It was also a good year for our home
delivery service team. We gained multi-year
contracts with Sofa Club, Dwell, Homebase,
Cormar Carpets and Wickes (Kitchen and
Bathrooms) for a range of technology enabled
one and two-person home deliveries.
This is a strong sector for Wincanton with
high levels of measurable consumer and
customer satisfaction.
Other notable R&C wins were with
Stuffstr, an innovative apparel recirculation
platform and with Fentimans, the brewer of
botanical beverages.
Conversely, our Industrial & Transport (‘I&T’)
sector experienced some pressure in the
second half of the year which contributed
to a decline in revenue. The fall in revenue
also included the impact of the exit of the
underperforming Britvic general haulage
contract in the prior year.
Pullman Fleet Services (‘PFS’) has faced an
increasingly competitive market including
increased competition from vehicle
manufacturers (‘OEMs’) offering repair and
maintenance deals with vehicle purchases.
We also elected to exit a contract for a home
delivery fleet rather than convert from an
open book to a closed book arrangement.
We have incurred restructuring costs in PFS in
the second half of the year to re-shape the cost
base and rationalise our workshop network.
Market conditions for our containers business
also remain tough and these have been
exacerbated by the global COVID-19 situation
and its impact on international container traffic.
10
Wincanton plc Annual Report and Accounts 2020
Strategic reportCHIEF EXECUTIVE STATEMENT I have outlined
our new purpose
and key priorities
over the next
two pages...
Considering the uncertainty surrounding
these businesses as a result of COVID-19 and
the impact this has had on their forecasts it
has been necessary to take an impairment of
assets in these businesses as part of the year
end process.
Other areas within the sector had broadly flat
volumes except for defence which benefitted
from previously awarded new business flowing
through. The start up of new business wins
in Construction compensated for lower core
volumes. Plans to enhance profitability in this
area have been severely impacted by COVID-19
and the temporary shutdown of many UK
construction sites.
Nevertheless, I&T does have some of our
most attractive opportunities and there
were notable wins and renewals in the year.
We won a major piece of business with
Hapag Lloyd supplying dedicated contract
vehicles for containers and we expanded
our energy business with a contract for arctic
tanking services for Watson Fuels. We also saw
continued growth in our relationship with EDF
Energy, supporting the construction of the new
Hinkley Point power plant, with task orders for
a range of technology and fulfilment services.
This engagement is a fantastic opportunity for
us to showcase our logistics capabilities in the
major infrastructure construction sector.
The high profile renewals in the year included
Müller Milk and Phillips 66 in tanking; Kingfisher
in containers; Monier and Wienerberger in
Construction; and adidas in our haulage
business and General Dynamics in defence.
Strong service performance and relationship
management are a key feature in our successful
retention of customers for the long term. In this
context, it is worth highlighting that our Müller
contract for milk distribution, in various guises,
goes back almost 100 years!
The service performance of our operations
was again excellent, underlining Wincanton’s
reputation for delivering quality on a large
scale. The Black Friday and Christmas
peaks were notable for the consistency of
performance and a clear reflection of the skill
and commitment of our exceptional teams.
This even included five new sites in our grocery
network that delivered outstanding first
peak seasons.
Our COVID-19 response has reflected the
core strength of the operational capability
of the business, reacting with agility to the
volatile demand patterns we have seen in
recent months.
Safety and sustainability
Safety is a clear priority within this business.
The prioritisation of the safety of each
member of our team is clear in every site
visit I have made and in all my interactions
with our people. I am pleased to say that this
passionate focus is apparent in the results
that are delivered. Once again, a clear year
on year improvement has been made in our
safety performance. While the pursuit of a
safe environment for our colleagues is a never
ending goal, this is an achievement that the
team is rightly proud to celebrate. The Lost
Time Incident Frequency Rate performance
indicator improved again from 0.51 last year to
0.41 this year, a reduction of a third in two years.
Although there are unique challenges from
COVID-19 to our ways of working, safety has
continued to be paramount in our business
as we have played our vital role in keeping the
country moving.
From an environmental sustainability
perspective, I am pleased to see that our
carbon intensity ratio decreased again year on
year. To maintain the critical focus in this area,
we will publish a new Sustainability Strategy in
2020. Vehicle emissions is where our operations
have the greatest impact on the environment
and so this will continue to be our highest
focus area. We will continue to utilise the latest
vehicle and planning technologies to drive
them further downwards.
Colleague engagement
We continued with our process of ‘pulse’
engagement surveys across the Group, with
two conducted in the year. Over the last
12 months, engagement has risen by 2% to
69% group wide, reflecting the good levels
of commitment to the business that have
been apparent on my site visits. Key strengths
include Health and Safety, Autonomy, and Line
Management Support with steady increases in
all such areas.
The launch of ‘The Wincanton Way’ in January
was also very well received. This new Code
of Conduct sets out what we stand for as a
business. It is underpinned by a corporate
governance structure and robust risk, controls,
and compliance programme. The Code enables
our colleagues to make the right choices and
demonstrate the highest standards of integrity
and ethical behaviour, in everything that we
do. Our comprehensive framework of policies
and standards is applied across our business
regardless of location or level. ‘The Wincanton
Way’ will bring our Mission, Vision and Values
together and deliver a resultant increase in
engagement to the Group.
Our colleagues are at the heart of everything
we do in Wincanton, so we are investing in
diversity and inclusion. This can be viewed
as a traditional, male dominated industry
and there is a real opportunity for us to
outperform by continuing to widen the
talent pool. This purpose has been chosen to
reflect the high quality and commitment of
our Wincanton people being at the forefront
of everything we do. It also recognises the
importance of seeing opportunities for our
services throughout the supply chain. Finally,
we must continue to deliver ongoing value to
our customers and to do so in a sustainable
way – ethically, safely, environmentally
and financially.
Wincanton plc Annual Report and Accounts 2020
11
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Great people delivering sustainable supply chain value
Our markets
Deliberately chosen markets for
for organic and inorganic
growth, leveraging our
capabilities and expertise
Our markets
Deliberately chosen markets for
investment that offer the potential
for organic and inorganic growth,
leveraging both our capabilities and
our expertise.
Our people
Our people
An inclusive culture supporting
performance and growth for
An inclusive culture supporting
our colleagues, developing the
performance and growth for our
best teams that attract and
retain the most talented people
colleagues, developing the best
in the industry
teams that attract and retain the most
talented people in the industry.
Our products
and services
Customer propositions that
deliver sustainable value and
innovation throughout the
supply chain, meeting changing
market demands and harnessing
the best technologies
Our products and services
Customer propositions that deliver
sustainable value and innovation
throughout the supply chain, meeting
changing market demands and
harnessing the best technologies.
Our operating
model
Our operating model
A disciplined and efficient operating
model that is agile and easy for our
customers and our people to engage
with; and enables economies of scale.
operating model that is agile
and easy for our customers and
our people to engage with; and
enables economies of scale
The Wincanton Way
Our commitment to how we work and live our values, connecting and delivering with our colleagues, customers, communities and suppliers
Building on the strong foundations that Wincanton has, the
Executive Management Team and I have defined our direction
as follows: ‘Great people delivering sustainable supply
chain value’.
Our strategy
The business already has a good track record
of success, but I’m certain the quality of our
offering will attract more opportunities in
the market.
To support this, we will ensure the business is
focused primarily on four key areas:
1. Our people
An inclusive culture supporting
performance and growth for our
colleagues; developing the best
teams that attract and retain the
most talented people in the industry
Our business has great people and has
consistently championed several leading
development initiatives such as the growing
Apprenticeship scheme and our ‘Warehouse
to Wheels’ programme. We have also
had for many years the ‘Driver of the Year’
competition which I had the honour of
attending for the first time in 2019. It is a hard
fought day where our best 16 drivers and 16
warehouse operatives battle it out in tasks
focused on safe and expert driving skills.
We are increasingly able to identify our best
drivers with our extensive vehicle telematics
systems that provide data on all aspects of
driving performance.
We recognise the ever increasing battle for
talent and so we will leverage our position
as the largest British owned 3PL company to
ensure that we continue to attract the best
people, creating engaging opportunities and
careers with us. We will put more investment
into training academies to grow our own
talent, develop our colleagues and to make
sure that we have the skills our customers
need. We will also invest in our systems so that
when our people need to engage with us on
pay or holidays or any other practical issue, the
process is easy, instantaneous and accurate.
In our industry, where it is often so important
to be an extension of our customer’s business
and for our people to understand and be
part of their culture, it can be difficult to form
a true Wincanton identity with our people.
Safety is an impressive example of where
we have succeeded in doing this, new and
prospective customers recognise it when they
interact with our people, and I have noticed it
in every operation I have visited. Our people
understand and engage with the Wincanton
safety programme and that is why we deliver
market leading performance in this area.
Our challenge is to drive more of this, without
undermining our commitment to engage
seamlessly with our customers. We will seek to
harmonise policies and conditions wherever
possible, make more use of recognition
initiatives and internally branded development
and career pathway programmes to drive a
greater ‘one company’ feel to the organisation.
We will also use our new Code of Conduct
– ‘The Wincanton Way’ to underpin our
whole business.
2. Our products and services
Customer propositions that deliver
sustainable value and innovation
throughout the supply chain, meeting
changing market demands and
harnessing the best technologies
The W² programme has placed Wincanton
in a leading position when it comes to
innovation in the supply chain and logistics
industry. The oneVASTwarehouse platform,
a digital marketplace that is revolutionising
the procurement of flexible and short term
warehousing space, is just one example of
how W² can place Wincanton at the forefront
of supply chain innovation. An innovative
approach to solutions for our customers
will continue to be a central component of
our strategy.
As operators of some of the country’s most
sophisticated automated facilities, such as
for Screwfix and for Nestlé Purina, we also
intend to make investments to be ahead
of the curve in the development of both
automation and robotics solutions. We will use
the expertise in our teams to play a critical role
in ensuring that ‘substance’ in the use of such
technology is prioritised over ‘style’, delivering
genuine supply chain value to our current and
future customers.
IT technology will also continue to play
an important part in our products and
services offering. This is particularly true
in our infrastructure operations where
we will leverage the investment that we
have made in a state-of-the-art Logistics
Management System (LMS). This software
provides customers with a true control tower.
IT capability in this area has been instrumental
in our growing relationship with EDF Energy
as we support them with the construction of
Hinckley Point C.
12
Wincanton plc Annual Report and Accounts 2020
Strategic reportCHIEF EXECUTIVE STATEMENT CONTINUED The investment case
Differentiated,
market-leading offering
– High quality earnings and visibility
underpinned by multi-year, open book contracts
and diversified customer portfolio
– Continued focus on operational excellence
delivering contract and organic growth while
driving margin improvement
– Market leading position as a trusted partner
with enduring customer relationships
– Innovation at the heart of the service
proposition; continually evolving the offering
to stay agile versus competition
Significant & sustainable
organic growth prospects
– Disciplined growth through analytical
and selective targeting of new business
– Positioned to take share in growing higher
margin markets through increasing exposure
to multichannel/eFulfilment/consumer
and construction
– Flexibility of cost base makes Wincanton
well placed in a competitive environment
and rapidly changing market dynamics;
– Visibility over customers’ supply chains
providing insight and ability to offer
innovative solutions, e.g. oneVAST
Robust financial profile
generating shareholder value
– Strong cash generation and clear capital
allocation policy to continually invest in
growth and maintain shareholder dividends
– Experienced management team with
a track record of delivering growth and long-
term value for shareholders
– Consistent EPS growth supports
progressive dividend policy, offering
an attractive and secure yield
– Strong financial profile facilitates
complementary, earnings
accretive acquisitions
Another key area of future opportunity is for
us to leverage our scale for customers when it
comes to financing new supply chain projects.
We will work with our financial partners to
identify projects that can add real value to
the industry.
3. Our markets
Deliberately chosen markets for
investment that offer the potential
for organic and inorganic growth,
leveraging both our capabilities
and our expertise
Our business is active in an impressively
wide range of sectors and industries and
will continue to be so. We want to focus our
growth plans on those where we can increase
both our top and bottom line. We will do this
by leveraging our existing experience either
directly in the markets we operate in today or in
adjacent ones.
The markets we focus on will necessarily evolve
but to begin with we will be most focused
on major infrastructure projects, eCommerce
fulfilment and opportunities to be deeper
into retailer supply chains. The COVID-19 crisis
has underlined the need to focus in these
areas with a marked shift to online shopping
and an expectation of economic stimulation
through infrastructure investment.
We believe there are significant organic
opportunities if we invest into the right
business development and key account
management resources, but we will also
consider strategic acquisitions where
they can be synergistic from a revenue
or efficiency perspective.
4. Our operating model
A disciplined and efficient operating
model that is agile and easy for our
customers and our people to engage
with; and enables economies of scale
In this highly competitive marketplace
agility is a key attribute. Much of the time
the competition we face for new business
is from large organisations headquartered
outside the UK. As the largest British based
3PL company, we have a clear opportunity
to provide our customers and teams with an
empowered environment. Decisions can be
made in the right timeframe for us to deliver
more successfully than the competition.
Customers can meet and have strategic
discussions with the decision makers in
our business and together we can add
transformational supply chain value.
From a practical perspective, Wincanton is
also a large organisation with considerable
scale in both customer relationships and
numbers of people. There is an absolute
requirement of continuously improving to be
as lean and efficient as possible throughout
our administration processes. There are a wide
range of customer engagements that can
make consistency in this area difficult. However,
economies of scale are essential for us to be
successful and we will focus our efforts on
ensuring that we increase the harmonisation of
our processes wherever possible.
The nature of many of our customer contracts
means that it is also critical that our Operating
Model can engage effectively with our partners
to provide the data they need to run their own
businesses. We will invest in upgrading our IT
systems to deliver this and we will review our
processes to ensure that they can seamlessly
interface with our customers and our people.
New organisation structure
As CEO, I believe that one of my most
important tasks is to ensure that we have an
organisation structure that really supports our
people to deliver for our customers and our
shareholders and makes Wincanton the best
place it can possibly be to come to enjoy work
and be safe. It is also important that we are set
up in a way that positions us to successfully
grow in our chosen markets, a key task for the
Group moving forward. Following a review
of the business I have made changes to the
Executive Management Team in pursuit
of this goal.
To drive greater collaboration across our entire
business unit structure, we will move to a single
Chief Operating Officer (‘COO’) reporting line.
Supplementing this team will be a Business
Development Director taking responsibility for
pulling together our growth focused resources
into a single team. Furthermore, we will have
a Group Operations Director who will lead
the functions that deliver across our customer
facing business units – Health and Safety;
Transport Operations; Project Management;
Implementation; Operations Excellence;
and Sustainability.
The position of Strategy Director is also created
reporting to me, recognising the importance of
the Group having a single focus and ensuring
that our plans are programme managed
through to successful delivery.
These changes will facilitate delivery
of our future growth strategy.
Wincanton plc Annual Report and Accounts 2020
13
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Our KPIs
Revenue
£1,201.2m
+5.2%
.
4
7
4
1
1
,
.
1
8
1
1
1
,
.
9
1
7
1
1
,
.
5
1
4
1
1
,
.
2
1
0
2
1
,
Underlying EBITDA1
Underlying operating profit1
£68.9m
+3.3%
£57.3m
+3.6%
.
4
5
6
.
9
3
6
.
8
4
6
.
7
6
6
.
9
8
6
.
9
0
5
.
1
2
5
.
9
2
5
.
3
5
5
.
3
7
5
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Consolidated Group revenue.
Operating profit before all amortisation and
depreciation charges and non-underlying items.
Operating profit before non-underlying items.
Underlying operating profit margin1
Net debt1
4.8%
+00bps
£10.1m
-47.7%
Underlying EPS1
35.8p
+6.9%
4
4
.
7
4
.
5
4
.
8
4
.
8
4
.
.
5
9
3
.
3
4
2
.
5
9
2
.
3
9
1
.
1
0
1
.
9
3
2
.
7
7
2
.
8
0
3
.
5
3
3
.
8
5
3
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
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
0.41
-19.6%
69%
+2%
1
7
0
.
8
6
0
.
2
6
0
.
1
5
0
.
1
4
0
.
4
6
4
6
6
6
7
6
9
6
Profit for the year attributable to equity shareholders
of Wincanton plc before non-underlying items
and the tax impact of those items divided by the
weighted average number of Ordinary Shares in
issue throughout the year.
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Number of lost time incidents per 100,000
hours worked.
The percentage of positive responses to five
specific statements within the employee survey.
14
Wincanton plc Annual Report and Accounts 2020
1 The Directors present the results of the business on an
underlying basis as they believe this better represents the
performance of the business. In order to aid comparison
with the prior year, these numbers have also been
presented on an IAS 17 basis. See page 31 for further
information on these alternative performance measures
(APMs) including definitions and a reconciliation of APMs
to statutory measures. The definition of non-underlying
items can be found in Note 4 to the consolidated financial
statements on page 98.
HOW WE MEASURE PERFORMANCEStrategic report COVID-19: Our agile
and rapid response
COVID-19 has highlighted the importance of the services
Wincanton provides to the nation both practically and
economically. Our people have shown remarkable
agility in their response to working in hugely challenging
circumstances and have embraced the changes
required, without ever compromising on the safety
principles that are at the heart of ‘The Wincanton Way.’
The business remains robust and resilient with
trading through the crisis reflecting the diversity
of our customer base. We have seen the full range
of market reactions, from record volumes in Retail
Grocery in March 2020 to a complete shutdown in
our two-person home delivery network during April.
This diversity is a strength in a multi-paced economy,
but we have taken substantial hits to our business in
areas such as Construction that do negatively impact
our financial position.
In response to this, we have put in place all the
necessary measures for Wincanton to be in the best
position to navigate the short term and to thrive
in the longer run. Cash management has been
prioritised with additional banking facilities secured;
VAT and pension payments delayed; and dividend
payments suspended. In terms of our cost base,
the variable elements have been fully leveraged
with close management of subcontractor and
agency resource. We have also limited our labour
costs by utilising the Government’s Coronavirus Job
Retention Scheme to furlough employees and by
implementing temporary action on executive and
management compensation.
In taking these actions, we are demonstrating our
clear intent to emerge from COVID-19 in a stronger
position than our competition. This will allow us
to maximise the growth opportunities that will be
generated from the higher profile of the value of the
outsourced physical and digital supply chain services
we provide.
Our refocused strategic direction is even more
relevant in a post COVID-19 UK economy, we will
ensure that Wincanton plays our full part with
“Great people delivering sustainable
supply chain value”.
James Wroath
Chief Executive Officer
Wincanton plc Annual Report and Accounts 2020
15
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Investing in
our people...
16
Wincanton plc Annual Report and Accounts 2020
OUR PEOPLEStrategic report Technology drives improvement, financial resources
support growth, assets underpin customer service…
however it’s our people, above all else, that are absolutely
fundamental to our success. Only with our people on
our side – striving, learning, growing and developing
– can we enhance and sustain our position as the UK’s
largest logistics firm. So we invest regularly and significantly
in order to attract and retain the talent we need.
Behaviours make a difference
Our behaviours are guided by our values as well
as our newly-introduced code of conduct – ‘The
Wincanton Way’, which sets out the standards we
expect our people to reach.
Instead of being imposed in a top-down fashion,
our Values were co-created by our people to reflect
the realities of working with Wincanton. Excellence,
Integrity, Passion, Proactivity and Trust are the key
aspirations we all work towards. Our final value
– Togetherness – encapsulates the Wincanton
difference. We work as one team, collaboratively
and without hidden agendas, and we come
together to help each other succeed.
Listening, responding, improving
Listening to each other lies at the heart of inclusivity
and togetherness. During 2019, we continued to
deploy a wide range of approaches in order to
capture the thoughts of our people.
For example, every location is encouraged to
hold listening group meetings involving major
stakeholders such as our people, our customers and
our communities. Through our General Manager
(GM) listening group, our GMs share ideas to achieve
meaningful operational changes. In addition,
our Senior Independent Director has facilitated a
number of employee listening groups, providing the
Board with direct feedback from the workforce.
Industry recognition
The efforts of our HR teams to build and underpin
our reputation as an employer of choice continue
to be widely recognised. During the year, we
won a series of top industry awards, including the
Brake Fleet Safety Partnership Award, the Logistics
Award and the Training Team of the Year – while
our apprenticeship programme was a finalist in the
Investors in People and National Apprenticeship
awards. We were also proud to run our 13th
consecutive Driver of the Year award in 2019,
which recognised several of our team members
for their commitment to safety and the highest
driving standards.
Celebrating diversity
We aspire to develop a culture where our people feel
valued and are inspired to contribute to their fullest
potential. During the year we again put forward a
number of our female leaders for the ‘Everywoman’
awards, which recognise the role that inclusivity and
diversity play in attracting the best talent.
Building a diverse workforce takes real investment
and commitment, and we offer several different
programmes to help our people shape their
careers. For example, our apprenticeship scheme
supported Team Leader Hollie Ridley in achieving
her professional HGV driving qualification. Hollie’s
success is breaking down the gender barrier and
encouraging more women to join the transport
sector. In addition, the Warehouse to Wheels
programme enables people from other parts of
Wincanton to become drivers – giving them great
careers while at the same time helping us to meet
the growing demand for drivers.
Wincanton plc Annual Report and Accounts 2020
17
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Raising our capabilities by...
Supporting our people
The skills, capabilities and experience of our workforce are what make
Wincanton different. So we do everything we can to give our people
opportunities that not only raise their own capabilities, but ours as well.
Female Graduates
61% female
11%
Unconscious bias
1,750
managers trained
Mental health first aiders
200 fully trained
across the business
Apprenticeships
45% female
apprenticeships over 40
different programmes
During the year we continued to focus on creating an environment
that works for all – one where people from diverse backgrounds
are trained, developed and supported to fulfil their potential and
release ours.
Levelling the playing field
We aim to tackle some of the long-ingrained
biases that operate in our industry, and to offer
a working environment that’s fair to everybody
and makes us attractive for people who want
an interesting and diverse career.
We wholly recognise the benefits for
celebrating diversity and inclusion across
Wincanton. Over the last 12 months we actively
took steps to reduce inequality and support
our people in what has traditionally been
a male-dominated industry.
While there remains much to do, it was
nevertheless pleasing to see that 61% of the
2019 graduate intake were female, up by 11%
over the previous year, while 45% of our current
apprentices are female. We’re continuing to
work on narrowing the gender pay gap – for
2019/20, this was a median of 9% and mean of
6%, a year on year improvement of 1% and 2%
respectively. Our bonus pay gap has improved
– with the median now at 0% – while the
proportion of women in the upper quartiles
of pay increased year on year.
Unconscious bias can deter the excellent,
high-performing individuals we need to
thrive as a business from making progress
or even applying to join us. All line managers
are now required to take part in unconscious
bias training and although this initiative only
started in 2019, by the end of the financial year
we had already trained over 1,750 managers.
In addition, we now remove gender
bias – whether male or female – from our
recruitment communications.
Training and developing our teams
Our aim is to give great people every
opportunity to professionalise the work
they love.
For management, our LEAD programme helps
our new and existing leaders excel by providing
them with the fundamentals of leadership and
operational management. At the same time,
our active succession programme opens up
opportunities for people to grow their talents
or try new roles. In addition, we launched our
‘First Line Manager’ essential skills guide and
training in 2019, to support our managers
in areas such as recruitment and inclusion.
We also carried out a programme of leadership
training which provided feedback to our senior
team following 360° reviews.
Apprentices are increasingly important to
us, and we currently offer over 40 different
programmes, funded by the Apprenticeship
Levy. In 2019 we launched our Degree
Apprenticeship programme (our own Earn as
you Learn scheme) and have welcomed six
degree apprentices into different parts of the
business. Entry talent remains vital to our talent
pipeline – and in 2019, 13 graduates and five
one-year placement students joined across a
wide variety of roles.
Health and wellbeing is another key area of
focus, and during the year we refreshed our
occupational health initiatives so that they
embrace mental as well as physical health.
We now have 200 mental health first aiders
across the business.
18
Wincanton plc Annual Report and Accounts 2020
Strategic reportCORPORATE RESPONSIBILITY REPORT Looking after our people by...
Ensuring a safe workplace
Everybody has the right to go home safe after a day’s work.
The health and safety of our teams and of the general public
sit at the very top of our priorities, at all times.
Lost Time Incident Frequency
Rate (LTIFR)
0.41 total
19.6%
2
6
0
.
1
5
0
.
1
4
0
.
8
1
0
2
9
1
0
2
0
2
0
2
Number of lost time incidents
per 100,000 hours worked
Collisions per Million Kilometres
9.29 total
3%
Inhouse courses held
379 courses
Colleagues trained in H&S
over 4,000
colleagues upskilled
We’ve made good progress on our health and safety agenda
in recent years. But safety is a never-ending challenge and we’ll
never be complacent.
Lost Time Incident Frequency
Rate (LTIFR)
During the year we have ensured that our
LTIFR measure has remained a key focus area.
Our target of 0.52 has been surpassed and we
have achieved our best ever performance at
0.41, further reducing the number of lost time
incidents by 29.
Every driving record, behaviour and incident is
tracked, monitored and regularly reviewed.
We also focus on collisions per million
kilometres which has also reduced in the
year from 9.51 to 9.29. This reduced further
to 7.96, once the non-blameworthy collisions
were removed.
As always, the aim is to do everything we can
to minimise the impact of our activities on our
employees, other road users and members of
the public.
Commitment to continuous
improvement
For drivers, we’ve continued to deliver schemes
to promote the safety of our own people
and the public. For example, The Wincanton
Driver’s Handbook sets out specific guidelines
on driving and handling including details on
the EVADE programme, which aims to improve
awareness of the dangers that HGVs can pose
to vulnerable road users, particularly cyclists.
Our employees’ health and safety capabilities
are topped up by regular courses. During 2019,
we held 379 such courses which were
attended by over 4,000 people. Our innovative
approach to health and wellbeing continues
to be both popular and effective. We ran a
portfolio of more than 50 courses across the
year, including a series of workshops designed
to target the root cause of mental health issues
and accidents.
Bringing innovation to health
and safety
Our reputation for exploring how technology
can help improve the way we work also
extends into the health and safety arena.
In 2019, the W2 Labs programme developed
and launched SoterSpine, a wearable device
which coaches employees to self-correct
movements to help prevent ergonomic injuries
while performing manual handling tasks.
We also introduced virtual reality (VR) fire safety
training this year within various operational
settings, using the next generation headset
and software. By using VR technology, our
colleagues are able to learn about and train
for emergency situations at virtual recreations
of working sites, preparing them for potential
real-life scenarios.
We are now approved by ROSPA to deliver the
course as a level 2 qualification, achieving the
highest inspection score possible.
Please see page 7 for more information.
Wincanton plc Annual Report and Accounts 2020
19
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Putting something back by...
Supporting our communities
Our 200 locations are more than just sources of employment
– they play an important role in everyday life in communities
up and down the country.
Redhouse in Doncaster helped
give a local school for severe
learning difficulties a makeover...
” It’s been the biggest
project we as a site
have ever taken on.
Everyone involved has
done such a fantastic job,
without them it wouldn’t
have been possible”
Bob Meechan, Facilities manager
“ We are so grateful
to the Hoo Hikers for
completing their Harlow
to Medway walk.”
£5,000 raised
for Demelza Hospice Care for Children
Charity event at IKEA Harlow
£1,000 raised
for Movember
A charity wing walk from
B&Q Doncaster
£2,000 raised
for We Wish Upon a Star
We rely on local people for their skills and hard work and do all we can
to make sure that we’re good neighbours and a positive influence in
our communities. That means giving our colleagues every opportunity
to play their part in activities that can make a real difference to the lives
of their families, friends and neighbours.
Focusing on local needs
Every Wincanton location has a sustainability
plan which includes community engagement
and fundraising projects. Our people have
the freedom to choose the activities they
want to support. At company level, our role
is to provide them with whatever help they
might need – whether that’s offering the use
of Wincanton resources such as equipment or
vehicles, or donating the cash that’s sometimes
required in order to turn a bright idea into a
brilliant reality.
Over the last 12 months, our teams took part in
hundreds of different activities, from small-
scale individual charity fundraisers to national
environmental campaigns.
In November, for example, our B&Q teams in
Doncaster and Worksop pulled out all the stops
to help local people who had been impacted
by flooding. We delivered items to help with
the clean-up to a British Red Cross collection
point, while our on-site canteens donated
food packages.
During the early stages of the COVID-19 crisis in
March, we supported some of our customers
with vital PPE deliveries, and donations from
our consumer goods sector to support NHS
key workers with refreshments.
Colleague CPR training
We partnered with the British Heart Foundation
(BHF) who trained 100 CPR champions and, to
date, our champions have run events to make
over 400 more colleagues CPR aware.
Embracing our values our colleagues also
supported the BHF in general fund raising with
activities across the business.
Keeping children safe
Not surprisingly, road safety is a key concern
of our people. Every year, we support
initiatives that encourage young people to be
aware of the dangers that large vehicles can
present. Every month, health and safety and
management teams from across Wincanton
contracts visit primary and secondary schools
around the UK and Ireland to hold roadshows
taking over the playground and explaining
how to be safe around roads and vehicles.
Other activities ranged from helping children
build ‘bug hotels’ and collecting Christmas
trees for recycling, to taking part in the Keep
Britain Tidy spring clean and raising money for
a mountain rescue team.
20
Wincanton plc Annual Report and Accounts 2020
Strategic reportCORPORATE RESPONSIBILITY REPORT CONTINUED Minimising our impact by...
Protecting the environment
The logistics sector can have a significant impact on the environment.
We aim to minimise that impact by driving fewer miles, with fuller
vehicles, using less fuel and investing in a cleaner fleet.
Responsibility for our environment programme sits with our
Head of Sustainability.
‘Sustainability Plans’, typically developed in
collaboration with the customer, are in place
and cover each of our contract operating
locations. These plans include projects
designed to reduce our environmental impacts
and ensure that we continue to move towards
achieving our sustainability targets. Our EMT
reviews monthly reports on progress from each
business unit as well as performance against
headline targets.
In addition to promoting sustainable logistics,
we’ve developed a rigorous environmental
policy which is supported by an environmental
management system (EMS) certified to
ISO14001 and available throughout Wincanton.
Our EMS documents a range of indicators
enabling us to take prompt corrective actions
and to identify and exploit improvement
opportunities wherever they arise.
Greenhouse gas emissions
and energy use
We’ve been a Carbon Trust Standard bearer
since 2010, underlining the continuous and
consistent reductions we’ve made in our
carbon emissions.
For 2019, our climate risk disclosure and
emissions performance were again rated ‘B’ by
CDP. Our rating indicates that we’re a company
‘managing carbon’ and demonstrates
that we’re implementing actions, policies
and strategies to address climate risks and
opportunities and have achieved carbon
reduction figures that demonstrate this.
We complied with the 2019 UK Energy Saving
Opportunities Scheme (ESOS) requirements.
The costed energy (fuel) saving measures
identified were used to develop an energy
reduction plan which underpins our carbon
emissions reduction programme and informs
our internal environmental targets from
2020 onwards.
The ESOS energy reduction measures identified
included further deployment of advanced
transport management systems and enhanced
telematics; low rolling resistance (‘green’) tyres;
enhanced aerodynamics; and ‘mirrorless’ trucks.
Continued deployment of LED lighting and a
recognition of the need to prepare for vehicle
electrification within our building energy
systems were also included. Minimum estimated
energy savings are 4.5% within five years.
Our 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 2019, with both electricity generation
and distribution emissions included as scope
2 emissions. For all UK mainland operations
where we have the supply contract, we
continue to purchase ‘green tariff’ electricity
which complies with the market-based scope
two reporting requirements of the GHG
protocol. However, we have reported electricity
use at UK grid average emissions 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.
Energy figures are provided on the same scope
1 and 2 basis as carbon emissions.
Carbon emissions table
We also include consumption of fluorinated
refrigerant gases as a scope 1 emission and
have not excluded any emission sources
regardless of materiality.
We set absolute internal targets for carbon
emissions reduction and strive to decouple
emissions performance from business
performance. However, as changes in our
business activities continue to directly affect
our emissions, we use a carbon intensity
measure to manage 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 2020
was 290 tonnes of carbon dioxide equivalent
(tCO2e) per £m revenue. This is a reduction year
on year because, while our revenue increased,
our carbon emissions increased less because
of continued focus on transport fuel efficiency
and reductions in UK carbon factors.
Energy use table
Energy use (scope 1 & 2) (MWh)
Transport (scope 1)
Non-transport (scope 1 & 2)
TOTAL (MWh)
2019/20
1,214,429
195,851
1,410,280
Carbon emissions (tCO2e)
Transport (scope 1)
Non-transport (scope 1 & 2)
Total emissions
Carbon intensity (tCO2e/£m)
2019/201
295,547
52,092
347,639
290
2018/19
290,470
45,327
335,797
295
2017/18
308,227
58,874
367,101
315
2016/17
287,020
72,458
359,478
320
2015/16
308,352
84,938
393,290
345
1 Figures correct as at the date of this report.
Wincanton plc Annual Report and Accounts 2020
21
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Focusing on
a sustainable
business...
22
Wincanton plc Annual Report and Accounts 2020
Strategic reportCORPORATE RESPONSIBILITY REPORT CONTINUED We’ve cut our emissions under management by
13% over the last five years, retained our Carbon Trust
Standard bearer status since 2010, and achieved our
zero waste to landfill target ahead of schedule.
Over this time, we’ve developed sustainability plans for each
location, engaging colleagues and customers in our drive to improve
environmental performance while supporting local communities.
During 2020, we’ll publish our new sustainability strategy and goals
and we need to identify what ‘net-zero carbon’ logistics means for
our customers and when it can be achieved.
Environmentally-sound practices
When it comes to changing working practices to
improve environmental performance, and provide
cost reductions, we know that we need to do more
– and we need to do it at speed. We must develop
more ‘circular’ resource models which minimise
consumption and keep materials out of waste
streams. This will mean engaging with suppliers
and customers to create new packaging and
develop technology enabled logistics processes for
recovering and reusing materials. We must engage
our colleagues to be the best advocates of our
sustainability programme and to take action both
personally and in the workplace to further enhance
our environment performance.
Diesel optimisation
We will continue to need diesel fuel for some
time to come but we will minimise the volume
we use through continued deployment of our
new transport management systems; enhanced
telematics; ‘green’ tyres; enhanced aerodynamics;
and continued investment in a modern fleet with
the latest vehicle technologies.
When appropriate, and it will vary by sector, we will
utilise alternative fuels to replace diesel and achieve
step changes in our emissions performance.
Alternative fuels
We’ve trialled liquid natural gas (LNG) vehicles as
a replacement for diesel in heavier trucks and we
anticipate that biomethane will offer the necessary
emissions reductions in the right applications.
Liquid biofuels such as Hydrotreated Vegetable Oil
(HVO) also have great emissions reduction potential
when available at scale and will allow us to utilise
our existing fleet.
Our fleet has already evolved to include battery-
electric vehicles (BEVs). Coupled with our
commitment to green tariff electricity, BEVs open-up
opportunities for zero-emission urban delivery
solutions. Our ultimate goal is to transition to
zero-emission technologies across all sectors
once the technologies, such as hydrogen fuel cells,
are available at scale.
Infrastructure
We recognise that the use of alternative fuels
and electrification requires the development of
infrastructure. We are already making investments
in electric vehicle (EV) charging and identifying
solutions for flexible power management, battery
storage and smart monitoring to optimise our
charging speeds, grid connections and capacity
use and position ourselves for the future.
Emissions offsetting
We are exploring if and how offsetting, particularly
reforestation, can help our customers achieve
‘net-zero carbon’ logistics before the required
lower carbon technologies are available and
without compromising our emissions reduction
momentum. Any carbon offsetting we embark on
will be certified authentic by a third party and will
be part of a considered carbon reduction strategy.
Wincanton plc Annual Report and Accounts 2020
23
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Continued growth built on
market leading propositions.
Tim Lawlor
Chief Financial Officer
The Directors present the results of the business on an underlying basis,
excluding non-underlying items, for operating profit, profit before tax
and EPS, as they believe this better represents the performance of the
business. The definition of non-underlying items and details of the items
reported as non-underlying in the current and prior years are included
in Note 4 to the consolidated financial statements on page 98. IFRS 16
Leases was adopted with effect from 1 April 2019 – to aid comparison
with the prior year, the alternative performance measures for the year
ended 31 March 2020 set out below are also provided on an IAS 17
basis. These measures have been used by the Board for evaluating
performance of the sectors during the year.
A reconciliation of these measures to their statutory equivalent is shown
in the Alternative Performance Measures table on page 31.
Performance summary
Revenue (£m)
1,201.2 1,201.2 1,141.5
2020
IFRS 161
2020
IAS 171
2019
IAS 171 Change
5.2%
Revenue in the year ended 31 March 2020 increased 5.2% to £1,201.2m
(2019: £1,141.5m). Growth was particularly strong in Grocery due to a
major new contract with Morrisons in the year and the full year benefit
of new contracts with the Co-op and Sainsbury’s won towards the end
of last year. Revenue growth was also helped by a combination of new
business in Construction, and Other services, principally in Defence and
Energy, and account growth across the business.
The increase in revenue was despite some market pressures driven by
Brexit uncertainty, particularly around the end of 2019 which impacted
volumes in both our Construction and Transport Services businesses.
Transport Services was the only business to see a revenue decline in the
year, partly driven by lower volumes and also due to the full year effects
of contracts exited during the prior year.
The Group’s underlying operating profit margin was maintained at 4.8%,
on an IAS17 basis, benefitting from increased operational efficiency
and scale benefits in our Retail & Consumer sector which offset some
adverse volume mix movements which reduced the margin in Industrial
& Transport sector.
Underlying EBITDA (£m)2
104.1
68.9
66.7
3.3%
Group underlying operating profit
2020
2019
2018
2017
2016
57.3
55.3
52.9
52.1
48.7*
0
10
20
30
40
50
60
(£m)
* Excluding the results of Wincanton Records Management which was disposed of in 2015/16.
Underlying operating profit (£m)3
Underlying operating margin (%)3
Net financing costs (£m)
Underlying profit before tax (£m)
Non-underlying items (£m)⁴
Profit before tax (£m)
Income tax (£m)
Profit after tax (£m)
Underlying EPS (pence)
Basic EPS (pence)
Dividend per share
Closing net debt (£m)
61.0
5.1%
(8.2)
52.8
(9.0)
43.8
(5.3)
38.5
36.1p
31.1p
3.9p
(10.1)
57.3
55.3
4.8% 4.8%
3.6%
0bps
(6.0) (26.7)%
7.3%
49.3
(0.7)
48.6
(5.8)
42.8 (11.0)%
(9.7)%
(4.4)
52.9
(9.0)
43.9
(5.8)
38.1
35.8p
30.8p
33.5p
6.9%
34.5p (10.7)%
3.9p 10.89p
(19.3)
(10.1)
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
2 Underlying EBITDA refers to underlying operating profit before depreciation and
amortisation and is reconciled in Note 3 to the financial statements.
3 Further information on Alternative Performance Measures (APMs), including definitions
and a reconciliation of APMs to statutory measures are provided on page 31.
4 The definition of non-underlying items and the details of items reported as non-underlying
in the current and prior year are included in Note 4 to the consolidated financial statements
on page 98.
24
Wincanton plc Annual Report and Accounts 2020
Strategic reportFINANCIAL REVIEW COVID-19
The circumstances resulting from COVID-19 have created
unprecedented levels of uncertainty for the UK and beyond.
The Group’s first priority throughout has been to safeguard the health
and wellbeing of our employees and their families, whilst continuing
to provide our essential logistics services to customers and playing a
key role in helping the nation to function. In so doing, Wincanton has
implemented measures in line with Government advice the financial
impacts of which are described in more detail below.
Financial position
The Group’s balance sheet has been strengthened over recent years,
with a reduction in net debt and the pension deficit. Net debt at the
year end reduced to £10.1m (2019: £19.3m) and the pension moved
into a substantial surplus on an IAS 19 basis at 31 March 2020 (£94.4m
surplus compared to a prior year net pension deficit of £7.1m), although
this surplus will reduce as financial markets settle down.
The Group has a £141.2m Revolving Credit Facility (RCF) with a
syndicate of five banks which matures in late 2023. In early May the
facility with the syndicate banks was extended by a further £40m for
one year under a pre-existing accordion facility. The Group also has an
uncommitted £7.5m overdraft facility.
The Group has had productive discussions with its Pension Trustee
regarding the timing of pension recovery payments and agreed
an amended Schedule of Contributions over the next 12 months
which will improve the Group’s liquidity by approximately £6m.
The agreement contains provisions for accelerated payment of
deferred contributions if dividends are paid within the deferral period.
As previously announced, management has taken a number of
measures to maximise liquidity during the period of uncertainty,
including ceasing all discretionary and non business-critical
expenditure, suspending cash bonus payments, introducing pay
reductions of 20% for the Board and executive management and
taking lease payment holidays where possible. The Group has taken
advantage of government initiatives including the deferral of VAT
payments and in accordance with the Government’s Job Retention
Scheme, a peak of c2,500 employees (c15% of the workforce) were
‘furloughed’.
The Board is not proposing a final dividend and will review the
ongoing payment of dividends when there is greater visibility of the
long term impact of COVID-19.
Impact on results for the year ended 31 March 2020
Underlying trading in the year ended 31 March 2020 was not materially
impacted by COVID-19 and underlying operating profit was in line with
expectations. Since the year end COVID-19 has significantly affected
economic activity and disrupted the business operations of many of
Wincanton’s customers. In response to this, and in line with guidance
from the Financial Reporting Council, the Group has reviewed all Cash
Generating Units to determine whether any of the assets related to
these operations are impaired.
These reviews are performed by comparing the estimated future cash
flows to be generated under a contract with the carrying value of
the assets generating those cash flows. Forecasting future cash flows
inevitably involves a degree of estimation given the uncertainties
inherent in operating in a COVID-19 environment.
As a result of these reviews, non-current assets and inventories within
Transport Services (related to the containers and fleet maintenance
services businesses) and Construction in the Industrial & Transport
segment have been impaired – a non-cash impairment charge of
£9.3m has therefore been recognised as a non-underlying item in the
Income statement. Of the total charge, £8.0m of the impairment has
been taken on non-current assets and £1.3m on inventory. The degree
of the downturn causing the impairment is unprecedented and the
Directors therefore believe it is appropriate to disclose the impairment
separately in the Income statement as a non-underlying item.
Retail & Consumer
Revenue (£m)
Underlying operating profit (£m)²
Underlying Margin (%)
2020
IFRS 161
782.3
39.0
5.0%
2020
IAS 171
782.3
36.4
4.7%
2019
IAS 171
Change
10.4%
708.9
31.2
16.7%
4.4% 30bps
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in Note
31 to the consolidated financial statements.
2 Further information on Alternative Performance Measures (APMs), including definitions and a
reconciliation of APMs to statutory measures are provided on page 31.
Retail & Consumer reported revenue of £782.3m for the year, an increase
of 10.4% on previous year. Underlying operating profit margin on an
IAS 17 basis increased due to scale efficiencies being realised across the
business and, when combined with the top line growth, the enhanced
margins resulted in a 16.7% increase in underlying operating profit for the
year to £36.4m (2019: £31.2m).
The split of Retail & Consumer revenue by the industry sectors it serves
is as follows:
Retail General Merchandise
Retail Grocery
Consumer Products
2020
£m
448.2
227.8
106.3
782.3
2019
£m Change
5.8%
26.0%
1.9%
10.4%
423.8
180.8
104.3
708.9
Retail Grocery performed particularly strongly with a 26.0% increase
in revenue to £227.8m (2019: £180.8m). The growth included the full
year benefit from contracts won in the prior year, including Co-op and
Sainsbury’s and a new five year contract won in the year with Morrisons.
The Morrisons contract sees Wincanton provide transportation, planning
and operational services for three Morrisons sites, and also includes the
provision of vehicle maintenance services. Wincanton’s ability to provide
holistic services and innovative solutions to the Grocery sector was key
in securing this contract.
Wincanton plc Annual Report and Accounts 2020
25
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Retail General Merchandise recorded solid growth of 5.8% to £448.2m
(2019: £423.8m) driven by organic growth within our core customer base
including Kingfisher, with whom we have a longstanding relationship,
and new business with Jollyes and Roper Rhodes. Our continued growth
within this area highlights our proven capabilities in the multichannel
eFulfilment arena, where we excel in areas such as services to the Home
& DIY marketplace, including our market-leading two person home
delivery service proposition. During the year we won a home delivery
contract with Wickes for kitchen and bathroom products and in the
final quarter we won a three year contract with Sofa Club for a complete
supply chain and eFulfilment solution, including its bespoke two person
home delivery service.
Consumer Products achieved growth of 1.9% to £106.3m (2019: £104.3m)
with the full year benefit of the new contract with The Weetabix
Food Company secured last year being offset in part by some smaller
contract losses.
Wincanton prides itself on customer service and the continual
development of solutions to meet the requirements of both our
customers and their end consumers – key customer renewals are
an endorsement of the benefits our services deliver in practice.
Key renewals in the year included a three year extension of dedicated
transport and warehousing services for Sainsbury’s in West London,
extending our relationship to over twenty-five years; the extension
of our bonded warehousing and transport services for Waitrose &
Partners, continuing a partnership which has been in place for more
than a decade; and the renewal of our warehousing and transportation
contract with high-end furnishings specialist Williams Sonoma for
another four years.
Industrial & Transport
Revenue (£m)
Underlying operating profit (£m)²
Underlying Margin (%)
2020
IAS 171
418.9
20.9
2019
2020
IFRS 161
Change
IAS 17
432.6
(3.2)%
418.9
22.0
24.1 (13.3)%
5.3% 5.0% 5.6% (60)bps
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
2 Further information on Alternative Performance Measures (APMs), including definitions
and a reconciliation of APMs to statutory measures are provided on page 31.
Revenue fell in our Industrial & Transport sector by 3.2%, mainly due to
prior year contract exits and lower activity levels in some of our transport
network, partly attributable to the delay of projects amid the general
election uncertainty in late 2019 and the early impact of COVID-19 on
the containers business. These reductions were partly offset by new
business revenue in our Energylink business and new contracts with
Aggregate Industries and HMRC.
Underlying operating profit decreased to £20.9m (2019: £24.1m),
impacted by the decline in volumes and lower utilisation levels.
Underlying operating profit was also impacted by a downturn in
our Pullman Fleet Services business, notably due to an open book
contract servicing a home delivery fleet which we chose to exit
rather than transfer to a higher risk closed book arrangement, and
some restructuring costs in connection with the rationalisation
of the workshop network.
The split of Industrial & Transport revenue by the activities undertaken is
as follows:
Transport Services
Construction
Other
2020
£m
150.6
138.2
130.1
418.9
2019
£m Change
171.4 (12.1)%
1.1%
136.7
4.5%
124.5
(3.2)%
432.6
Our Transport Services activity includes general haulage, containers and
Pullman Fleet Services. Revenue declined by 12.1% in this area of the
business to £150.6m (2019: £171.4m). Lost revenue included the full year
effects of the exit from underperforming general haulage contracts
during the prior year and some contract losses in Pullman. Our containers
business was the earliest area of our business to feel the effects of the
COVID-19 pandemic due to the slowdown in Far East container traffic
in early 2020. The revenue reduction decrease was offset in part by the
Weetabix transport and DCS contract wins which became operational at
the end of last year.
While underlying trading in the last quarter of this year was not
significantly impacted by the economic effects of COVID-19, the revised
forecasts for our containers and fleet maintenance businesses used in
our year-end analysis indicated a significant downturn. As a result, certain
assets used in these businesses have been impaired with this impairment
being reported as a non-underlying cost at the year end.
Our Construction business recorded 1.1% revenue growth to £138.2m
(2019: £136.7m) due to the expansion of our relationship with Aggregate
Industries and the commencement of the EDF Energy contract at
Hinkley Point more than offsetting prior period contract losses and
subdued volumes due to Brexit-related uncertainty throughout the
second half of the year.
Other services grew revenue by 4.5% to £130.1m (2019: £124.5m).
This growth was due to the full year benefit of the contract win with
HMRC, where we have been providing logistics services to support air
and sea freight inspections as part of a five year agreement and new
business in our Energylink fuel tanker network.
The Industrial & Transport business was also successful in renewing all
major contracts up for renewal during the year. These included a further
three year extension to our long standing partnership with Müller Milk, a
three year extension to the warehouse and transport services agreement
with Lucozade Ribena Suntory that will take this relationship beyond 25
years, and a two year extension of our transportation agreement with
Monier, the roofing specialists.
Net financing costs
Net interest payable
Interest payable on leases
Unwinding of discount on provisions
Interest on the net defined benefit
pension asset/(liability)
Net financing costs
2020
IFRS 161
£m
3.9
3.8
0.5
2020
IAS 171
£m
3.9
–
0.5
2019
IAS 171
£m
4.2
–
0.8
–
8.2
–
4.4
1.0
6.0
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
26
Wincanton plc Annual Report and Accounts 2020
Strategic reportFINANCIAL REVIEW CONTINUED Net financing costs were £4.4m (2019: £6.0m), £1.6m lower year on year.
Interest payable was £3.9m (2019: £4.2m), a decrease of £0.3m due to
more efficient use of the syndicated loan facility and interest rate swaps
expiring early in the year.
Non-cash financing items totalled £0.5m (2019: £1.8m). Interest on the
defined benefit pension charge in the period was £nil (2019: £1.0m) due
to the elimination of the pension deficit and cash contributions paid into
the Scheme during the year. The unwinding of discounts on provisions
of £0.5m (2019: £0.8m) has decreased in line with the movement in
insurance and property provisions during the year.
On an IFRS 16 basis, a financing charge of £3.8m has been recognised
for the first time this year in respect of the interest on lease liabilities.
Non-underlying items
Net profit on disposal of freehold property
Professional fees in relation to M&A activities
COVID-19 related impairments
Pension Scheme – Guaranteed Minimum
Pension (GMP)
Revision to property provisions previously
recognised through exceptional items
Net non-underlying items²
2020
IFRS 161
£m
2.3
(2.0)
(9.3)
2020
IAS 171
£m
2.3
(2.0)
(9.3)
2019
IAS 17
£m
6.0
–
–
–
–
(8.2)
–
(9.0)
–
(9.0)
1.5
(0.7)
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
2 The definition of non-underlying items is included in Note 4 to the consolidated financial
statements on page 98.
During the year we completed the disposal of two freehold properties
receiving gross sales proceeds of £5.5m and incurring disposal costs
of £0.8m. The combined carrying value of the properties was £2.4m,
generating a net profit on disposal of £2.3m. In the prior year we
completed the disposal of a freehold property receiving gross sales
proceeds of £14.5m and incurring costs of disposal and transitioning
operations to another site of £1.2m and £0.5m respectively. The carrying
value of the property was £6.8m, which generated a net profit on
disposal of £6.0m.
Professional fees associated with M&A activity have been recognised
within non-underlying items. The principal activity was an extensive
evaluation of a potential bid for Eddie Stobart Logistics plc.
Underlying trading in the year ended 31 March 2020 was not materially
impacted by COVID-19 and underlying operating profit was in line with
expectations. However, since the year end COVID-19 has significantly
affected economic activity and disrupted the business operations of
many of Wincanton’s customers. In response to this, and in line with
guidance from the Financial Reporting Council, the Group has reviewed
all Cash Generating Units to determine whether any of the assets related
to these operations are impaired. As a result of these reviews, non-
current assets and inventories within Transport Services (related to the
containers and fleet maintenance services businesses) and Construction
in the Industrial & Transport segment have been impaired – a non-cash
impairment charge of £9.3m has therefore been recognised as a non-
underlying item in the Income statement. Of the total charge, £8.0m
of the impairment has been taken on non-current assets and £1.3m
on inventory.
In the prior year, the High Court of Justice of England and Wales issued
a judgement relating to Lloyds Banking Group requiring equality of
treatment of historic pension benefits for men and women. This resulted
in the recognition of a non-cash past service cost of £8.2m in the year.
Also in the prior year, the Group negotiated an exit from a long-standing
onerous property lease in Dublin on favourable terms. The full novation
of this lease, partly offset by an increase in provision for another long
standing lease, resulted in a net exceptional credit of £1.5m.
Taxation
Underlying profit before tax (£m)²
Underlying tax (£m)
Non-underlying tax (£m)
Tax as reported (£m)
Effective tax rate on underlying
profit before tax (%)
2020
IFRS 161
52.8
(8.1)
2.8
(5.3)
2020
IAS 171
52.9
(8.6)
2.8
(5.8)
2019
IAS 171
49.3
(7.8)
2.0
(5.8)
15.3% 16.3% 15.9%
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
2 Further information on Alternative Performance Measures (APMs) including definitions and a
reconciliation of APMs to statutory measures are provided on page 31.
Underlying tax of £8.6m (2019: £7.8m) represents an effective tax rate of
16.3% (2019: 15.9%) on underlying profit before tax and is stated before
net tax credits in respect of non-underlying items of £2.8m (2019: £2.0m).
The capital gain for tax purposes on the non-underlying property
disposal is nil and therefore no tax charge arises.
Underlying tax on an IFRS 16 basis of £8.1m represents an effective tax
rate of 15.3%, the difference being primarily due to the impact of the rate
change on the deferred tax asset recognised on transition to IFRS 16.
The effective tax rate is lower than the statutory rate of 19.0% due to
adjustments arising from finalising prior year positions and recognising
the rate change on the opening deferred tax assets. The non-underlying
tax credit in the prior year of £2.0m arose principally on recognition of a
deferred tax asset in relation to the exceptional GMP charge.
The total net deferred tax balance is a liability at year end of £13.8m
(2019: £4.2m asset), with the change versus the prior year primarily due
to the defined benefit pension deficit moving into an asset position.
Profit after tax and earnings per share
Underlying profit before tax for the year increased to £52.9m on an
IAS 17 basis (2019: £49.3m) due to the growth in revenue while holding
margins flat leading to an increase in underlying operating profit.
This was combined with reduced net financing costs, principally
due to the elimination of the pension deficit.
Underlying profit after tax for the year is £44.3m (2019: £41.5m) on an IAS
17 basis. The increase of £2.8m is due to the improved underlying profit
before tax, offset in part by an increase in the effective tax rate to 16.3%
(2019: 15.9%).
Profit after tax for the year on a statutory basis is £38.5m (2019: £42.8m),
the reduction of £4.3m being primarily due to net non-underlying
items of (£9.0)m, partly offset by the improvements in underlying profit
after tax of £3.2m. This improvement includes the impact of IFRS 16 of
£0.4m which is mainly due to the tax impact of £0.5m explained above.
Non-underlying items including their related tax impact total £(6.2)m, an
additional charge of £7.5m from the prior year (2019: £1.3m).
Underlying EPS, which excludes earnings from non-underlying items,
increased by 6.9% to 35.8p (2019: 33.5p). Basic EPS decreased by 9.9%
to 31.1p (2019: 34.5p).
The calculation of these EPS measures is set out in Note 8 to the
consolidated financial statements.
Wincanton plc Annual Report and Accounts 2020
27
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Dividends
Interim
Final (proposed)
Total
Cash flows and net debt
The Group delivered a £9.2m reduction in net debt (2019: £10.2m inflow)
in the year, with free cash flow before capital expenditure of £44.6m
(2019: £52.9m) and a free cash flow of £40.8m (2019: £57.0m). Free cash
flow is defined as the movement in net debt, before pension payments,
dividends and the acquisition of own shares.
2020
pence
3.90
–
3.90
2019
pence
3.60
7.29
10.89
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.
In light of the economic impacts of the COVID-19 pandemic, including
the cost-efficiency and liquidity measures taken to safeguard the long
term viability of the business, and in order to retain near term flexibility,
the Board has determined that the final dividend for the year ended
31 March 2020, which would ordinarily be paid in July, should be
suspended (2019: 7.29p per share). The Board recognises the importance
of the dividend to our shareholders and will keep dividend payments
under review as the year progresses with a view to return to payments
as soon as appropriate.
Dividend payments of £13.8m (2019: £12.7m) in the year comprised the
final dividend of 7.29p per share for the period ended 31 March 2019
and the 2020 interim dividend of 3.90p per share.
Financial position
The summary financial position of the Group is set out below:
Non-current assets (excl. pension asset)
Net current liabilities (excl. net debt)
Non-current liabilities (excl. net debt/
pension deficit)
Net debt
Net pension asset/(deficit) (excl. deferred tax)
Net assets/(liabilities)
2020
IFRS 161
£m
226.6
(162.3)
2020
IAS 171
£m
113.8
(129.6)
2019
IAS 17
£m
122.9
(133.2)
(133.9)
(10.1)
94.4
14.7
(43.0)
(10.1)
94.4
25.5
(30.4)
(19.3)
(7.1)
(67.1)
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
The £92.6m movement from a net liabilities position to a net assets
position prior to the transition to IFRS 16 is primarily due to the
underlying profit after tax of £44.3m and the improvement in the
pension position net of deferred tax of £68.2m, which have been partly
offset by the non-underlying items net of tax of £(6.2)m. A significant part
of the improvement in the pension position is due to market uncertainty
and is likely to reverse when markets stabilise, this is explained in more
detail in the Pension section below.
A reconciliation of the numbers to an IFRS 16 basis is presented in
Note 31 to these consolidated financial statements.
Underlying EBITDA²
Working capital
Tax
Net interest
Other items
Free cash flow before capital
expenditure
Repayment of obligations under leases
Capital expenditure
Net proceeds from asset disposals
Free cash flow
Pension recovery payment
Dividends
Own shares acquired
Reduction in net debt
2020
IFRS 161
£m
104.1
(4.0)
(7.0)
(7.8)
(5.0)
80.3
(35.7)
(9.3)
5.5
40.8
(17.8)
(13.8)
–
9.2
2020
IAS 171
£m
68.9
(8.3)
(7.0)
(4.0)
(5.0)
44.6
–
(9.3)
5.5
40.8
(17.8)
(13.8)
–
9.2
2019
IAS 17
£m
66.7
0.8
(1.5)
(4.2)
(8.9)
52.9
–
(9.7)
13.8
57.0
(32.3)
(12.7)
(1.8)
10.2
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without
restating prior year figures. As a result, the discussion of results is based on an IAS 17 basis,
unless otherwise stated. Information on the impact of adopting IFRS 16 is presented in
Note 31 to the consolidated financial statements.
2 Further information on Alternative Performance Measures (APMs) including definitions
and a reconciliation of APMs to statutory measures are provided on page 31.
The working capital outflow of £8.3m for the year (2019: £0.8m inflow)
arose due to investments in mobilising new contracts and the timing of
payment runs just before the year end.
The Group paid cash tax in the current year of £7.0m (2019: £1.5m) with
the increase on the prior year driven by changes in HMRC rules for the
timing of payments on account and tax benefits in the prior year from
a £15.0m one-off contribution to the pension scheme. The cash tax
payable continues to trend below the underlying charge primarily due to
the impact of tax relief on the pension deficit recovery payments made
in the year.
The amount of cash net interest paid, excluding fees, of £4.0m
(2019: £4.2m) decreased marginally, reflecting lower fees being incurred
from more efficient use of the syndicated loan facility and interest rate
swaps expiring early in the year.
Other items of £5.0m are £3.9m lower than last year due to lower cash
restructuring costs and lower property provision spend in the year.
Capital expenditure of £9.3m (2019: £9.7m) arose on continued
investment in IT systems, including the enhancement of our
transport management system and warehouse management
system implementations.
28
Wincanton plc Annual Report and Accounts 2020
Strategic reportFINANCIAL REVIEW CONTINUED Net proceeds from asset disposals comprise the disposal of two under-
utilised freehold properties, which were disposed of for gross proceeds
of £5.5m, with costs of disposal of £0.8m. In the prior year, an under-
utilised property was disposed of for gross proceeds of £14.5m, with
costs of disposal and transition of £1.7m. Net proceeds from other asset
disposals were £0.8m (2019: £1.0m).
The cash contribution to fund the pension deficit on a technical
provisions basis of £17.8m comprises £18.5m of annual deficit
contributions, less £0.7m of administrative expenses incurred by the
Company. Contributions for the year ended 31 March 2021 were
scheduled to be £18.2m, being the annual deficit contribution of £18.9m
less the administrative costs incurred directly by the Company but,
in response to the COVID-19 situation, agreement has been reached
with the Scheme Trustee to defer £6.1m of these contributions into the
following financial year, subject to the level of cash dividends paid in
the year.
Equity dividends of £13.8m (2019: £12.7m) were paid in the year up 8.7%
from the prior year.
The Group did not acquire any of its own shares during the year (2019:
a cash outflow of £1.8m). The policy of purchasing own shares is for the
purpose of the Employee Benefit Trust in respect of long term incentive
plan commitments. The level of shares required to fulfil these obligations
are reviewed periodically, with the assessment made during the year that
the level of shares held in the Employee Benefit Trust was sufficient, and
no further purchase was required.
Closing net debt
2020
2019
2018
2017
2016
10.1
19.3
29.5
24.3
39.5
0
10
20
(£m)
30
40
Financing and covenants
The Group has a committed syndicated bank facility of £141m as at
31 March 2020 (2019: £141m) and the headroom between this facility and
reported net debt at 31 March 2020 was £131m (2019: £122m). The Group
also has operating overdrafts and a Receivables Purchase Facility with
Santander UK plc which provide day to day flexibility, amounting to a
further £8m and £30m respectively in uncommitted facilities. £15.5m
of the Receivables Purchase Facility was utilised as at 31 March 2020.
Wincanton operates comfortably within its banking covenants, as
summarised in the table below:
Covenant
Adjusted net debt: EBITDA
Interest cover
Fixed charge cover
Ratio At 31 March 2020
0.5
19.3
3.1
<2.75:1
>3.5:1
>1.4:1
The Board has considered in detail the impact of the COVID-19
pandemic on the Group and, as described above, in May 2020 we
extended our committed facilities by £40m for a period of 12 months.
Details of the areas considered, scenarios tested and the impact on the
Group’s ability to meet its covenant requirements are provided within
the going concern section of the Accounting Policies note (Note 1 to
the consolidated financial statements).
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
2020
6,805
6,006
12,811
2019
7,102
5,887
12,989
At 31 March 2020, the Group has reported a net IAS 19 surplus of £94.4m
(2019: deficit of £(7.1)m).
The movement from deficit to a significant surplus is primarily due to
market uncertainty as a result of the COVID-19 pandemic and the impact
of the hedging in the Scheme. The valuation of Scheme liabilities is
calculated using a discount rate based on high quality corporate bond
yields while Scheme assets are hedged against movements in gilt yields.
Credit spreads on corporate bonds increased due to market uncertainty
resulting in a reduction in the liabilities which was not matched with
a corresponding fall in assets as at 31 March 2020. The difference is
expected to reverse in the post year end period, as a result of which the
size of the surplus is expected to be significantly reduced.
Other movements primarily relate to cash contributions of £18.9m in
the year, including the agreed annual payment of £18.5m. The Company
reached an agreement with the Trustee on the 2017 triennial valuation
and recovery plan in the prior year. The net annual deficit contributions
have been agreed at £17.3m per annum increasing by RPI over the three
years to March 2021 and £24.3m per annum from April 2021 increasing
by RPI to March 2027. These payments are deductible for UK corporation
tax purposes in the year they are paid and therefore materially reduce
the net cash impact of the contributions to the Group.
Since the year end we have agreed an amended Schedule of
Contributions delaying £6.1m of contributions due in the year ended
31 March 2021 to the following year.
The Company has commenced discussions with the Trustee on the 2020
Triennial valuation and is hopeful to conclude these discussions before
the end of the financial year.
The interest and inflation rate risks facing the Scheme are hedged and
the Trustee has maintained the level of this hedge during the year to
100% of the Scheme’s assets. The discount rate for calculating liabilities
has reduced by 0.1% compared to the prior year and on the IAS 19 basis
of measurement. At 31 March 2019, a 0.1% reduction in the rate would
increase the liabilities of the Scheme by approximately £22m, while the
hedging in place meant assets would have increased by approximately
£24m. Due to volatility in the financial markets caused by COVID-19 at
31 March 2020, a 0.1% reduction in the rate would increase the liabilities
of the Scheme by approximately £18m, while the hedging would cause
the Scheme assets, the valuation of which was less impacted by the
volatility, would increase by approximately £24m. This difference in the
hedging movements is expected to reduce as stability returns to the
financial markets.
Wincanton plc Annual Report and Accounts 2020
29
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts – Most of our existing contracts have provisions which allow for
inflationary and other adjustments (eg fuel price movements, tariffs on
imported vehicles) to be charged to our customers and approximately
60% of our contracts are open book contracts in which we do not
bear the direct impact of increasing costs.
– Should the UK’s exit from the EU at the end of 2020 result in a ‘hard’
Brexit without a transition period and/or an orderly withdrawal may
cause regulatory and compliance uncertainty on some contracts that
require performance under EU regulation, bodies and/or standards;
however, we believe such uncertainties will be addressed under
proposed new UK regulations following any withdrawal.
– We have reviewed our supply chain and are broadly comfortable
with our key suppliers’ ability to maintain the provision of goods
and services on key contracts.
IFRS 16
IFRS 16 Leases was issued by the IASB in January 2016 and became
effective for the Group for the year ended 31 March 2020. IFRS 16 sets
out the principles for the recognition, measurement, presentation and
disclosure of leases for both lessees and lessors. The Group applied
IFRS 16 on 1 April 2019 using the modified retrospective approach; the
cumulative effect of initial adoption being recognised as an adjustment
to the opening balance of retained earnings as at 1 April 2019 with no
restatement of comparative information. The Group recognised right-
of-use assets of £117.6m and lease liabilities of £137.4m on 1 April 2019,
together with a deferred tax asset of £2.0m and a charge to reserves
of £11.2m. There is no cash impact of adopting IFRS 16.
Further information on the impact of adopting IFRS 16 in the year
is set out in Note 31 to the financial statements.
Over recent years, the Trustee has pursued a diversification of the
investment portfolio as part of a de-risking strategy, and this programme
continued in the year ended 31 March 2020. As at 31 March 2020 the
Scheme’s investments were split between 30% in return-seeking
assets and 70% in defensive assets.
The Scheme currently holds unquoted assets valued at approximately
£96.9m the latest valuations of which precede the negative impact
of COVID-19 on the financial markets. We have therefore applied an
estimated adjustment by reference to market indices to the valuations
of these assets provided by the portfolio investment manager.
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 16,502 (2019: 15,661) in
the year. The charge incurred for these arrangements totals £33.7m
(2019: £24.6m).
Brexit
Although there remains uncertainty on the nature and timing of
the UK’s proposed withdrawal from the European Union (Brexit), our
understanding of potential risks and impacts are regularly reviewed
and assessed.
We have, for example, reviewed the potential impact of Brexit, including
adverse economic consequences, on our existing contract base,
workforce, bidding activities and supply chain.
We continue to believe that Wincanton will not be materially affected
by the UK withdrawing from the European Union, which is currently
scheduled to occur at the end of December 2020. This is based on
the following key points:
– Our operations are generally delivered locally in country and are
not critically dependent on a cross-border supply chain or workforce.
Wincanton’s operations in Ireland are not a significant part of the
Group and represent c.1% of Group revenue.
– As a British focused 3PL business there is potential for additional
demand for our services under most Brexit scenarios, including
demand for warehouse space and management, management of
bonded goods and supply of container storage and transportation.
30
Wincanton plc Annual Report and Accounts 2020
Strategic reportFINANCIAL REVIEW CONTINUED Alternative Performance Measures
Alternative performance measures (APMs) are used by the Board to assess 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 profit before tax is used in determining annual bonus payments and underlying EPS is used as a key performance indicator
for the 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, profit before tax and EPS which are calculated as the statutory measures stated before
non-underlying items, including exceptional items, amortisation of acquired intangibles, related tax and exceptional tax items where applicable.
The definition of non-underlying items can be found in Note 4. The table below reconciles the APMs to the statutory reported measures.
Revenue (£m)
EBITDA (£m)3
Operating profit (£m)
Operating margin (%)
Net financing costs (£m)
Profit before tax (£m)
Income tax (£m)
Profit after tax (£m)
Earnings per share4
Dividend per share
Net debt excluding lease liabilities (£m)5
Non-
underlying
Items1
–
1.0
9.0
–
–
9.0
(2.8)
6.2
Statutory
IFRS 16
1,201.2
103.1
52.0
4.3
(8.2)
43.8
(5.3)
38.5
31.1p
3.9p
Underlying
IFRS 16
1,201.2
104.1
61.0
5.1
(8.2)
52.8
(8.1)
44.7
36.1p
3.9p
(10.1)
IFRS 16
Impact2
–
(35.2)
(3.7)
–
3.8
0.1
(0.5)
(0.4)
2020
Underlying
IAS 17
1,201.2
68.9
57.3
4.8
(4.4)
52.9
(8.6)
44.3
35.8p
3.9p
(10.1)
2019
Statutory
IAS 17
1,141.5
Exceptional
Items1
–
Underlying
IAS 17
1,141.5
66.0
54.6
4.8
(6.0)
48.6
(5.8)
42.8
34.5p
10.89p
0.7
0.7
–
–
0.7
(2.0)
(1.3)
66.7
55.3
4.8
(6.0)
49.3
(7.8)
41.5
33.5p
10.89p
(19.3)
1 Note 4 to the consolidated financial statements provides the definition of non-underlying items and details of the items reported as non-underlying in the current and prior year.
2 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without restating prior year figures. Consequently, the results for the year ended 31 March 2020 are not
directly comparable with prior periods and therefore they have also been presented on an IAS 17 basis.
3 EBITDA refers to operating profit before depreciation, amortisation and impairment of non-current assets and is reconciled in Note 2 to the consolidated financial statements.
4 Note 8 to the consolidated financial statements provides further detail of underlying earnings per share.
5 Net debt is the sum of cash and bank balances, bank loans and overdrafts and other financial liabilities excluding lease liabilities. Note 28 to the consolidated financial statements provides
a breakdown of net debt for the current and prior periods.
Wincanton plc Annual Report and Accounts 2020
31
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Principal risks and uncertainties
Wincanton’s risk management systems have been
tested in response to the COVID-19 crisis and have
responded well.
Principal risks and uncertainties
This report, incorporated within the Strategic
report, sets out how the Group manages risk by
explaining the governance 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 effect on its
success if not managed. To address these the
Group operates a risk management system to
identify and monitor all relevant current and
potential risks and uncertainties, and mitigation
plans to reduce the likelihood and/or impact of
the risks to an acceptable level.
Operational oversight and application of risk
management in the Group is the responsibility
of the Executive Management Team (EMT).
The EMT is supported by the Risk Management
Committee (RMC) which maintains oversight
of risk management across the Group and
ensures that the requirements of the Corporate
Governance Code (the Code) are satisfied.
A number of sub-committees support the
management of the principal risks including,
but not limited to, financial assurance
and cyber security. The purpose of these
committees is to actively manage the risks
specific to their functional or operational
areas. This enables the RMC to take on a
role of guidance and oversight governance
for both strategic and operational risk.
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 the Internal Audit department
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 to facilitates informed
decision-making on strategic, commercial
and financial matters.
Acting within authority delegated by the
Board, the Audit Committee has oversight
of risk management systems. The control
environment and mitigating actions 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 48 to 51.
Risk management system
The risk management system comprises three
integrated risk management components:
a committee; risk registers at both Group
and business unit level; and a controls
assessment programme.
Risk Management Committee
The RMC is an internal committee set up
to oversee the Enterprise Risk Management
(ERM) capabilities of the Group. 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.
32
Wincanton plc Annual Report and Accounts 2020
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 EMT representation,
business unit leadership and heads of
support functions, including Internal Audit.
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
attends RMC meetings and provides updates
on findings of reviews by the Internal Audit
department 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 programme
of work to ensure that the Group meets
the requirements of the Code. This process
involved minor modifications to improve the
existing Enterprise Risk Management (ERM)
structure. The RMC also conducted in depth
reviews of each of the functional risk areas,
reporting outcomes of each assessment
directly to the EMT and Audit Committee.
A Contract Management Tool (CMT) was also
implemented during the year which enables
operations to conduct self risk assessment
checks and, where appropriate, develop
action plans to address areas of opportunity
or share best practice.
Response to the COVID-19 risk
The start of 2020 saw the emergence of a
new pandemic, COVID-19 and its potential
impact on the business quickly became
apparent, testing our abilities in terms of
our resilience and contingency planning.
We set up a COVID-19 response team to
deal with immediate actions, such as:
– undertaking a forensic review of costs
across our operations;
– adapting our working processes to
ensure a safe working environment for
our people and continued service to
our customers; and
– addressing operational risks as we
closed down and scaled up operations
as we react to customer needs.
Strategic reportRISK REPORT 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 is then submitted,
along with any proposed amendments,
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
financial controls and processes at site level.
The completed assessments are submitted to
the financial controls team who then follow
up any issues of concern and may incorporate
areas for further investigation into the scope of
their assurance reviews and/or notify the RMC
of any issues or remedial actions that need to
be addressed and completed.
The RMC has continued to use the Contract
Management Tool, which was introduced at
the start of the financial year, to enable the
business to assess and measure areas of risk.
The RMC has further developed the Contract
Management Tool to allow areas of best
practice to be recognised which the business
areas and operations, in turn, are encouraged
to implement. The Tool involves an element of
peer review. This is a key strength and enables
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.
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.
COVID-19 provided a real-life test to our plans
with the EMT holding regular meetings to
assess and respond to the impact. Some of
the actions are noted in the response to the
COVID-19 risk on page 32.
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 via an independent, external
whistleblowing system, provided by Navex.
All contact via the system 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 and the Head of
Internal Audit. 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.
Data Protection Regulations
Wincanton has a data protection competency
centre which is underpinned by robust
governance and processes and supported
by policies and procedures that are compliant
with data protection rules and regulations.
The data protection team led by our Data
Protection Officer, undertakes training of
all Wincanton employees, administration of
policies and procedures, supplier compliance
and the management and oversight of
requests for information, data subject requests,
data protection impact assessments and data
protection incidents.
This strategic report was approved by the
Board on 16 June 2020.
On behalf of the Board
Lyn Colloff
Company Secretary
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 2023, taking
into account the Group’s current position and
the potential financial and operational impact
of the principal risks documented on pages
34 and 35 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.
The Directors have determined that a three year
period to 31 March 2023 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.
Scenarios tested include those impacting:
– the impact of COVID-19 on the business,
including a second lockdown scenario
occurring from October to December 2020;
– business continuity, including supplier failure
and failure of an IT system;
– growth and retention, including losses
of a major customer, 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.
In severe but plausible scenarios, mitigating
actions such as tighter cost controls over
and above those already taken in response
to COVID-19 would need to be introduced.
Management have completed this scenario
testing and concluded that none would impact
the Group’s ability to meet its liabilities as they
fall due. In the second lockdown scenario only
the Group exceeds the leverage ratio covenant
at 31 March 2021 giving rise to a material
uncertainty around going concern – further
details are provided in the Basis of Preparation
note in Note 1 Accounting Policies in the
financial statements. In this scenario the Board
would expect to negotiate with the syndicate
banks to temporarily amend the leverage ratio
covenant so that it would not be breached.
The other scenarios do not impact compliance
with the Group’s financial covenants.
Based on this assessment, the Directors have a
reasonable expectation that the Company and
the Group will be able to continue in operation
and meet liabilities as they fall due over the
period to 31 March 2023.
This statement was approved by the Board
on 16 June 2020.
On behalf of the Board
Lyn Colloff
Company Secretary
Wincanton plc Annual Report and Accounts 2020
33
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Principal risks and uncertainties of the Group
Risk and impact
Controls and mitigations
Pandemics and
other worldwide
events
Significant
health, safety or
environmental
incident
Significant changes
to market sectors
and operating
environments
Key suppliers
Since the beginning of the COVID-19 crisis,
the Group has been committed to keeping
everyone – our customers, colleagues and
communities – as safe as possible, while
continuing to play our vital role in delivering
essential goods throughout the UK. There
remains a risk of further COVID-19 outbreaks
and lockdowns as well as other global
pandemics and events.
Risks to our operations include:
– labour shortages due to illness and
other absence;
– inability to deliver contracted services due to
regulatory or safety requirements;
– loss of revenue and profit due to business
interruption, reductions in customer
volumes or customer failure;
– cost pressures due to additional process
steps, increased staffing costs, lost
economies of scale etc.; and
– liquidity pressure due to delayed receipts,
potential customer failure and availability
of financing.
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 provides services in a competitive
and complex environment, with large and
sophisticated customers. The Group faces
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; and
– new disruptors, in particular the emergence
of new technologies.
As a large supply chain organisation, the
Group is reliant on strong and reliable
relationships with key suppliers. Failure to
have robust contractual arrangements with
its largest suppliers and failure to comply with
regulations could have significant financial
and reputational impacts on the Group
and its business performance.
The Group operates a strong programme office which enables rapid,
controlled responses to be implemented to the changing landscape.
Business continuity plans are in place across all areas of the business.
These plans identify the requirements that may be needed for each
area of the business to function under a wide range of scenarios. The
plans are mobilised as the situation evolves and include:
– the introduction of additional health and safety measures;
– close liaison with customers to adapt processes and requirements
to ensure continuity of service;
– the redeployment of staff and resources across business areas;
– interaction with Government/Industry bodies to ensure regulatory
requirements are understood and best practice is being adopted;
– expense control and elimination of cost, where possible;
– strong focus on cash management and close relationship with
financial stakeholders; and
– extensive impact analysis and downside scenario testing, please
refer to the viability statement on page 33 and the Basis of
Preparation note in Note 1 Accounting Policies in the financial
statements on pages 90 and 91.
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,
undertakes routine audits and performs investigations if felt necessary.
Health, safety and environmental data and reporting are provided to
business management and leadership to manage and achieve target
business performance.
The Group closely monitors its strategic and operational performance
through its KPIs (set out on page 14) 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.
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.
34
Wincanton plc Annual Report and Accounts 2020
Strategic reportRISK REPORT CONTINUED Risk and impact
Controls and mitigations
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.
Cyber security
Legacy IT solutions
Pension
The Group is aware of the increasing
prevalence of cyber security attacks targeted
at business. A cyber-incident could potentially
impact the Group’s operational performance
and reputation through the application of
penalties, fines and/or regulatory action.
The Group relies upon secure and highly-
available IT solutions to operate the business
and that of its customers. The potential loss
of IT solution availability and increased risk
of data breach through using outdated
legacy technologies could have contractual
implications leading to penalties, fines and/
or regulatory action.
The Group has a significant Defined Benefit
pension scheme. The employer contribution
levels required and the value of the pension
fund 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 value and lead to a material change
in cash contributions, a change to the
repayment period, regulatory intervention, or
a combination thereof. These changes could
impact the cash flow and profitability of the
Group and restrict its ability to invest in the
business, pay dividends and repay debt.
The Group has 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. Regular engagement
surveys are completed to ensure we get feedback from our people
and we monitor the score as one of our KPI’s. Our Senior Independent
Director visits sites to bring employee feedback into the Boardroom.
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 routinely assesses the cyber risk landscape and has
established layered proactive and reactive information security
controls to mitigate common threats. Controls including information
and process assurance, vulnerability management, penetration
testing, regular audits, routine access reviews and risk management
are defined, established and mature as overseen by the Information
Security Committee.
The Group has a developed IT strategy and obtained the investment
needed for the phased refreshment of critical IT solutions. The Group
will be investing significantly in a Finance and HR replacement system
via an established software technology provider to retain and drive
competitive advantage.
The Group has undertaken steps to mitigate the risk exposure of
financial market movements and economic and political conditions.
The Defined Benefit (DB) section of the Scheme was closed to future
accrual in 2014, 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. The
level of hedging is under constant review to ensure it mitigates 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 advisers to support and
inform their decision-making. The Group and the Trustee have agreed
an appropriate level of annual contributions to the Scheme together
with contingency plans to protect the Scheme in the event of adverse
developments. The objective remains to ensure that the Group meets
its commitments to pensioners and the Scheme and that the recovery
contributions are affordable and sustainable for the Group.
Legal and
regulatory
compliance
The Group must comply with an extensive
range of regulation and legislation in order
to provide its services and solutions. Failure
to comply to the required standards could
lead to significant legal and regulatory
actions, sanctions, removal of licences and
permits, penalties and fines, and could result
in reputational damage to the Group and
potential harm to its employees or property.
Policies and procedures are in place throughout all areas of the
Group to ensure systems, operations and central functions all comply
with relevant areas of legislation. The RMC monitors emerging
legislation and determines any potential impact to the Group and
its policies, controls, communications and training that may need to
be provided to Group employees. Second-line oversight by central
functions reviews the operation of controls and their effectiveness,
including annual review of Group policies. External advice is sought
as appropriate.
Wincanton plc Annual Report and Accounts 2020
35
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Corporate Governance remains a key focus for
the Board and we continue to strengthen our
systems and processes both to improve the
performance of the Company and to comply
with the UK’s standards of governance.
Dear Shareholder
On behalf of the Board, I am pleased to
introduce the Group’s Corporate Governance
Statement for 2020. In the reports that follow,
we set out our activities during the year, explain
our governance arrangements and detail
how we have applied the relevant provisions
of the UK Corporate Governance Code 2018
(the ‘Code’).
Governance
During the year ended 31 March 2020,
we spent considerable time ensuring our
continued compliance with the principles
and provisions of good governance. We have
also taken account of the additional direction
contained in the Guidance on Board
Effectiveness published by the Financial
Reporting Council (‘FRC’).
Further information on the Code can be found
on the FRC’s website at www.frc.org.uk.
Remuneration Policy
This year, we propose to shareholders our
revised Policy on Remuneration which you can
read on pages 65 to 71 and in the Notice of
Annual General Meeting (the ‘AGM’). This Policy
is subject to a binding vote by shareholders
and focuses on policies and practices designed
to support our strategy and promote long term
sustainable success.
Dr. Martin Read CBE
Chairman
Board evaluation
As a Board, we continually monitor and seek
to improve our performance. This is promoted
through open channels of communication
between members with the support of the
senior management team and the Company
Secretary. This year, we have undertaken
an external evaluation of the Board and its
Committees to help assess performance
objectively and assist in improving our
effectiveness. The outcomes of this review
can be found on page 45.
Board balance and composition
The Nomination Committee conducts a
continuous and proactive process of planning
and assessment around Board composition,
recruitment and refreshing the skills of the
Board. Discussions are focused on ensuring
that membership of the Board reflects a
diverse mix of skill, capability and experience.
The backgrounds of our Directors are
provided on pages 38 and 39.
Changes to the Board
This year, we welcomed the appointment of
James Wroath as the Group’s Chief Executive
Officer and Debbie Lentz who joined the Board
as a Non-Executive Director. After seven years
of service, David Radcliffe retired from the
Board on 18 December 2019 and we recently
announced his successor Mihiri Jayaweera,
who joined us as a Non-Executive Director on
7 April 2020. The Board warmly welcomes the
new Directors appointed during the year.
I should like to thank our previous Chief
Executive Officer, Adrian Colman. We wish him
well in his retirement.
Our stakeholders
The Board takes seriously its responsibility for
ensuring the Group can deliver on its strategy
and is operating in the best interests of our
stakeholders over the long term. Changes in
legislation emphasise this. On page 43 you can
read how we ensure that the interests of all
our stakeholders are considered and how we
engage with them.
Our people continue to be key to our future.
Last year we advised that Stewart Oades our
Senior Independent Director, would lead our
new employee engagement programme
to support the Board’s relationship with the
workforce. On page 43 you can read about the
work undertaken as part of this programme.
AGM
Unfortunately this year, the restrictions arising
from the COVID-19 pandemic mean we are
unable to hold our AGM on 22 July 2020 as
a face to face meeting. However, we will still
provide an opportunity for our shareholders
to ask questions of the Board. Details are given
in the AGM Notice.
Dr. Martin Read CBE
Chairman
16 June 2020
36
Wincanton plc Annual Report and Accounts 2020
GovernanceINTRODUCTION FROM THE CHAIRMAN Our compliance with the 2018 Code
In accordance with the Listing Rules of the UK Listing Authority, the Board believes that the
Company has complied with the Principles (A-R) and Provisions (1-41) set out in the 2018 UK
Corporate Governance Code. The Board continues to be committed to emphasising the
importance of good governance as part of ensuring the Company’s long term sustainable success.
In the following sections we describe how the Board and its Committees, as part of their work,
have applied the Principles of the Code. To ensure a coherent and clear approach to our reporting,
and only where we consider it appropriate, we cross-refer readers to other parts of this Annual
Report or to the Investor section on the Company’s website.
Audit, risk and
internal control
The Audit Committee leads on audit,
risk and internal control to ensure that
the Board presents a fair, balanced
and understandable assessment of
Wincanton’s position and prospects.
This is underpinned by processes to
help with independent and effective
internal and external auditing.
MORE INFORMATION ON AUDIT,
RISK AND INTERNAL CONTROL CAN
BE FOUND ON PAGES 48 TO 51
Remuneration
Our remuneration policies have
been designed to support strategy
and promote long term sustainable
success. This includes consideration
of wider workforce remuneration
and related policies as well as the
alignment of incentives and rewards
with our culture.
MORE INFORMATION ON
REMUNER ATION CAN BE FOUND
ON PAGES 52 TO 71
Leadership
and purpose
The Company’s purpose, values and
strategy are monitored by the Board
to ensure culturally we remain aligned
as well as ensuring that our policies,
practices and behaviours continue
to promote the long term success
of the business.
MORE INFORMATION ON BOARD
LEADERSHIP AND COMPANY PURPOSE
CAN BE FOUND ON PAGES 40 TO 44
Division of
responsibilities
The overall effectiveness of the
Board in directing the Company is
the responsibility of the Chairman.
A good balance of Executive and
Non-executive Directors ensures there
is healthy discussion and challenge
for effective decision-making.
MORE INFORMATION ON DIVISION OF
RESPONSIBILITIES CAN BE FOUND ON
PAGE 44
Composition, succession
and evaluation
A rigorous Board evaluation process
and effective succession planning
ensures that the right combination
of skills, experience and knowledge
is represented on the Board. As part
of a formal induction programme,
new Directors meet key employees
across business.
MORE INFORMATION ON COMPOSITION,
SUCCESSION AND E VALUATION CAN BE
FOUND ON PAGES 45 TO 47
Wincanton plc Annual Report and Accounts 2020
37
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsOUR GOVERNANCE FRAMEWORK Dr. Martin Read CBE
Chairman
Chairman of the Nomination Committee and
Member of the Remuneration Committee
Martin joined Wincanton as Chairman in August 2018. He is
also chairman of the UK Government’s Senior Salaries Review
Body. Martin is a former chairman of Laird plc, the Low Carbon
Contracts Company, the Electricity Settlements Company and the
Remuneration Consultants Group. He has served on the Boards of
Lloyd’s, Invensys, Aegis Group, British Airways, Siemens Holdings,
Boots, ASDA and the UK Government Efficiency and Reform Board.
He was Chief Executive of Logica from 1993 to 2007.
James Wroath
Chief Executive Officer
James was appointed Chief Executive Officer in September 2019.
He was formerly Head of North America with LSG Sky Chefs, the
airline catering division of Lufthansa AG, best known as one of the
world’s largest airline and rail catering and hospitality companies.
Before joining LSG in 2015, James worked for Kuehne + Nagel
as the Senior Vice-President in North America for both Contract
Logistics and Overland Transportation, as well as Managing
Director in the UK for their Drinks Logistics business. Prior to this, he
was Head of Distribution for Scottish & Newcastle plc.
Tim Lawlor
Chief Financial Officer
Tim 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.
Gill Barr
Independent Non-executive Director
Remuneration Committee Chairman
and Member of the Nomination Committee
Gill became a Non-executive Director of Wincanton in September
2017. Gill is currently a Non-executive Director of PayPoint plc,
N Brown Group plc and McCarthy & Stone plc. 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.
38
Wincanton plc Annual Report and Accounts 2020
GovernanceTHE BOARD Stewart Oades
Senior Independent Director
Member of the Audit Committee
Stewart became a Non-executive Director of Wincanton in
November 2014 and was appointed as the Senior Independent
Director in July 2015. Stewart is currently Chair of both Reflex
Vehicle Hire Limited and of John Good & Sons Limited. He is also a
Non-executive Director of Forth Ports Limited. 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.
Paul Dean
Independent Non-executive Director
Audit Committee Chairman and Member
of the Nomination 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 and Polypipe plc for which
he is also Senior Independent Director. Paul was recently appointed
to the Board of RM plc having served on the Board of Porvair from
2012 until 2020. Paul is a Trustee and director of The Oxford Trust
Charity. 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.
Debbie Lentz
Independent Non-executive Director
Member of the Remuneration Committee
and Nomination Committee
Debbie became a Non-executive Director of Wincanton in
June 2019. She is currently President of Global Supply Chain
and a member of the Executive Management Team at
Electrocomponents plc, a global multi-channel provider of
industrial and electronic products and solutions. Debbie was
formerly Chief Supply Chain Officer at Toys ‘R’ Us from 2014 to
2017. Prior to that role, she held senior management positions
in customer service, logistics, product supply, procurement,
manufacturing and IT at Kraft Foods Group, in both North
America and Europe as well as at Nabisco Food Company.
Mihiri Jayaweera
Independent Non-executive Director
Member of the Audit Committee
and Nomination Committee
Mihiri joined the Board as a Non-executive Director on 7 April 2020.
Until October 2019, she was Group Head of Strategy and a member
of the Group Executive Committee of TP ICAP Group, the FTSE
250 professional intermediaries’ firm, operating in financial, energy
and commodities markets internationally. She was previously
a consultant at Trivedi Capital, a private equity investment
advisory firm based in London. Between 1993 and 2009, she
held positions at Nomura International, Lehman Brothers and
UBS Investment Bank.
Wincanton plc Annual Report and Accounts 2020
39
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Our governance framework
Shareholders
As owners of the Company, the shareholders appoint the Directors and delegate to them collectively the responsibility for
the long term sustainable success of the Company within a framework of good governance.
The Board
The Board’s role is to provide effective leadership and guide the business towards achieving its strategy and objectives
taking account of the risks and opportunities. It also ensures the business is focused on building and maintaining healthy
relationships with its stakeholders. It is ultimately responsible for endorsing and applying a robust corporate governance
structure. To assist in discharging its duties, some areas of responsibility are delegated to the Committees of the Board.
MORE INFORMATION ON THE AC TIVITIES OF THE BOARD CAN BE FOUND ON PAGE 41
The Nomination
Committee
The Nomination Committee leads on
the Board succession planning; the
recruitment of new members; and
evaluating composition and diversity
to ensure Board effectiveness.
MORE INFORMATION ON THE AC TIVITIES
OF THE NOMINATION COMMIT TEE CAN
BE FOUND ON PAGES 46 TO 47
The Audit
Committee
The Audit Committee leads on reviewing
the Group’s external and internal audits,
the risk management process and the
effectiveness of the Group’s systems
of internal control:
The Committee is supported by the;
– Risk Management Committee
– Financial Assurance Committee
MORE INFORMATION ON THE AC TIVITIES
OF THE AUDIT COMMIT TEE CAN BE FOUND
ON PAGES 48 TO 51
The Remuneration
Committee
The Remuneration Committee
leads on designing remuneration
policy, determining Board and senior
management remuneration and the
review of the wider workforce pay
and associated policies.
MORE INFORMATION ON THE AC TIVITIES
OF THE REMUNER ATION COMMIT TEE CAN
BE FOUND ON PAGE 55
The Executive Management Team (EMT)
The EMT meet regularly, and led by the Chief Executive, comprises senior leadership who have management responsibility
for the operations of the business and the central support functions.
THE MAT TERS RESERVED TO THE BOARD AND
COMMIT TEE TERMS OF REFERENCE CAN BE
VIEWED ON THE COMPANY’S WEBSITE.
40
Wincanton plc Annual Report and Accounts 2020
GovernanceBOARD LEADERSHIP AND COMPANY PURPOSE Members and meetings at a glance
Number of meetings between 1 April 2019 and 31 March 2020
Board
15 Meetings*
Dr Martin Read CBE
James Wroath1
Adrian Colman2
Tim Lawlor
Stewart Oades
Gill Barr
Paul Dean
Debbie Lentz3
David Radcliffe4
Role
Chairman
CEO
CEO
CFO
NED
NED
NED
NED
NED
Status
Independent**
–
–
–
Independent
Independent
Independent
Independent
Independent
Date of appointment
01/08/2018
02/09/2019
–
28/09/2015
01/11/2014
15/09/2017
01/02/2015
01/06/2019
–
Attendance
15/15
10/15
4/5
15/15
14/15
15/15
15/15
12/12
11/11
* During the year there were eight scheduled meetings and seven unscheduled meetings held by the Board.
** Independent on appointment.
Nomination Committee
3 meetings
Dr Martin Read CBE
Stewart Oades
Gill Barr
Paul Dean
Debbie Lentz3
David Radcliffe4
Chair
NED
NED
NED
NED
NED
3/3
2/3
3/3
3/3
2/2
2/2
Audit Committee
3 meetings
Paul Dean
Stewart Oades
Gill Barr
Debbie Lentz3
David Radcliffe4
Remuneration Committee
8 meetings
Chair
NED
NED
NED
NED
3/3
3/3
3/3
2/2
2/2
Gill Barr
Dr Martin Read CBE
Stewart Oades
Paul Dean
Debbie Lentz3
David Radcliffe4
Chair
NED
NED
NED
NED
NED
8/8
8/8
7/8
8/8
4/4
4/5
1 James Wroath joined the Board on 2 September 2019.
2 Adrian Colman resigned from the Board on 2 September 2019.
3 Debbie Lentz joined the Board and became a member of the Audit, Remuneration and Nomination Committee on 1 June 2019.
4 David Radcliffe resigned from the Board and each of the Committees on 18 December 2019.
The Board revisited the operations of its Committees and made changes to the membership of each Committee apart from the Nomination Committee effective from 3 March 2020.
Key activities of the Board
Apr ‘19 May ‘19
June ‘19
July ‘19
Aug ‘19
Sept ‘19
Oct ‘19
Nov ‘19
Dec ‘19
Jan ‘20
Feb ‘20 Mar ‘20
Board activities
Financial results/dividends
2021 budget review and approval
Strategic planning/reviews
Mergers & acquisitions
Sector reviews
People reviews
Major contract approvals
CSR/Health & Safety updates
Governance framework approvals
Director appointment
External Board evaluation
Shareholder engagement
Analysts’ presentation
Investor roadshow
Preliminary results
Annual General Meeting
Consultation on remuneration
Interim results
Wincanton plc Annual Report and Accounts 2020
41
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts The role of the Board
The Company is led and controlled by the Board and is responsible for
providing effective leadership to promote the long term sustainable
success of the Company, generating value not only for its shareholders
but also contributing value for its wider stakeholders.
To do this effectively, the Board, its Committees,
and the Executive Management Team, work
together to ensure that the Group achieves
its purpose, the reasons for which it exists.
Performance is contingent on embedding
clear and understood values and expected
behaviours. This is important to shape and
promote a healthy culture of engagement
and a connection to purpose, to which all
our people feel aligned.
Board changes during the year
As at the date of this report, the majority of
members on the Board are Non-executive.
There are two Executive Directors and six
Non-executive Directors. James Wroath was
appointed Chief Executive Officer on the
2 September 2019 and David Radcliffe stepped
down from the Board on the 18 December
2019. On the 14 February 2020, we announced
the appointment of a further Non-executive
to join the Board and we welcomed Mihiri
Jayaweera on the 7 April 2020. Mihiri will
also become a member of the Audit and
Nomination Committees.
Board committees
There are three Committees of the Board:
an Audit Committee, a Nomination
Committee, and a Remuneration Committee.
Each Committee has terms of reference
set by the Board, which are reviewed
annually by the Committee and the Board.
These are 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 Chair.
The membership, role and duties discharged
in the year ended 31 March 2020 for each
Committee are set out in their respective
Committee reports in this Report.
In addition, the business has also established
two supporting committees: the Finance
Assurance Committee and the Risk
Management Committee. These are executive
management committees, authorised to
approve day to day operational matters within
the limits and restrictions determined by
the Board.
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
and having considered the views of the wider
stakeholders of the Company. In doing so, the
Directors are required to have regard (amongst
other matters) to:
1. the likely consequences of any decision
in the long term;
2. the interests of the Company’s employees;
3. the need to foster business relationships
with suppliers, customers and others;
4. the impact of the Company’s operations
on the community and the environment;
5. the need of the Company to maintain a
reputation for high standards of business
conduct; and
6. the need to act fairly towards all
shareholders of the Company.
Decision-making
The Board factors the needs and concerns of
the Company’s stakeholders into its discussions
and decisions in accordance with s.172 of the
Companies Act 2006. These are described in
greater detail on pages 8 to 9.
The Board has a formal Schedule of Matters
Reserved for the Board, which details the
matters to be dealt with exclusively by the
Board. These feed into the annual programme
of Board activities and includes: strategy,
corporate structure, governance and regulatory
compliance, financial reporting, major
capital commitments and contracts, internal
controls, significant remuneration changes,
stakeholder engagement, and material
corporate transactions (including acquisitions
and disposals).
The Schedule of Matters Reserved is reviewed
annually to ensure it remains fit for purpose
and sets the parameters for management.
Where appropriate, the Board receives
recommendations in relation to matters
delegated to the Committees of the Board
which conduct their work in accordance
with their respective terms of reference.
Board activities
The Board held eight meetings during the year
at which it considered all matters of a routine
nature, structured through clear agenda
setting, written reports and presentations
from both internal members of staff as well as
external advisers and consultants. In addition,
there were seven ad hoc meetings of the
Board to deal with non-routine business.
Meeting management
and engagement
Attendance
Directors are expected to attend all scheduled
meetings and their attendance during the 2020
financial year is set out on page 41.
Information
The Directors were provided with appropriate
documentation approximately one week in
advance of each Board or Committee meeting.
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.
Engagement
Over the course of the year, members of the
EMT, and in some cases direct reports of the
EMT, are invited to attend at least one Board
meeting to present an update on the current
performance and future focus areas of their
areas of responsibility.
As a discipline, the Board also holds meetings
on operational sites. This year the Board held
two meetings at business sites, in Lichfield
and Wellingborough, which provided the
Board with an opportunity to engage with
employees and gain deeper insight into
customer operations.
42
Wincanton plc Annual Report and Accounts 2020
GovernanceBOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED Outside of meetings, the Board members
are also given opportunities to attend
operational 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.
Stakeholder engagement
The Board recognises that to meet its
responsibilities to shareholders and
stakeholders, it is important to ensure
effective engagement with, and encourage
participation from, these parties. The way
in which the Board factors the needs and
concerns of the Company’s stakeholders into
its discussions and decisions in accordance
with s.172 of the Companies Act 2006 is
described in greater detail on pages 8 to 9.
The Group’s website contains up-to-
date information, such as share price,
announcements, circulars, press releases,
current and historic Annual Reports and
Accounts, corporate governance information
and shareholder documentation.
Engagement with our shareholders
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.
There are regular meetings between
management and institutional shareholders,
fund managers and analysts. 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
the Remuneration Committee Chair have met
with larger shareholders during the year.
Annual General Meeting
The AGM, scheduled this year for 22 July 2020,
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. This year, due to
the COVID-19 situation, the meeting will be
held via a conference facility.
Electronic communications
Whilst hard copy communications are
available, all shareholders are encouraged to
elect to receive electronic communications
from the Company. Endorsed by the
Board, this is the most efficient method
of communication, helping the Group
reduce its impact on the environment and
reduce the associated costs. To elect to
receive communications from the Company
electronically, shareholders should contact
the Company’s registrars, Computershare.
Their contact details and telephone numbers
can be found on the Company’s website
(https://www.wincanton.co.uk/investors/
shareholder-information).
Engagement with our employees
To help meet the requirements of the Code,
during 2019 we appointed Stewart Oades as
our designated Non-executive Director for
workforce engagement. Stewart conducted
a series of sessions during the year in order to
establish the views of the Wincanton workforce
before reporting to the Board in December.
Having identified four key sites – Chippenham
Head Office; ASDA Doncaster; B&Q Worksop;
and BAE Systems Salmesbury – Stewart met
with 64 colleagues from a range of disciplines
(First Line Managers; Admin Clerks; HGV Drivers;
Pickers; Packers; LGV; IT; HR and Facilities).
Key issues reported back to the Board
included requests for:
– Greater balance between the demands
made by customers and the demands
made by the Company.;
– Agency workers to be fewer in number,
but better trained;
– New and advanced learning and
development opportunities.;
– More supervisory and junior management
roles to be filled internally;
– Investment in office and site-based
systems to improve efficiency and ensure
continued compliance with our high
health and safety standards; and
– More consistent communications to
include greater visibility across Group.
For 2020, our objective is to provide greater
insight and capture an increased variety of
discussion points by incorporating a wider
geographical coverage as well as input from
multiple sites and roles.
Wincanton plc Annual Report and Accounts 2020
43
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Division of responsibilities
The roles of the Chairman and the Chief Executive Officer
The Chairman
The Chief Executive Officer
The Chairman, Dr Martin Read CBE, is responsible for the overall
effectiveness of the Board in directing the Company. This includes
ensuring its strategic objectives and supervisory role is achieved.
There is open debate based on accurate, clear and timely
information. He is Non-executive Chairman, deemed independent
on appointment.
The Chief Executive Officer, James Wroath, 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).
The EMT comprises 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.
Board independence
Non-executive Directors
Senior Independent Director
External directorships
The Code requires there to be an appropriate
combination of Executive and Non-executives;
in particular, independent Non-executive
Directors on the Board.
All of the Non-executive Directors on
appointment were deemed to be and
continue to be independent. They were each
appointed on the basis of their capabilities,
skills, experience and backgrounds thereby
providing enriched diversity to support the
discussions on the Board. Collectively they
add value and provide independent oversight
and challenge across all corporate and
commercial aspects with their contributions
and external perspective. Non-executive
Directors challenge management and hold
them to account; they assist and guide in the
development of Group strategy; offer advice
and engage with the wider business and its
employees as appropriate. Each Non-executive
Director is appointed for an initial fixed term
of three years, subject to annual re-election by
shareholders at the AGM. Their appointment
term may be renewed by mutual agreement
with due regard to the Code, their
performance, contribution, and their ongoing
independence. They are expected to dedicate
sufficient time to their role to discharge their
obligations effectively.
During the year, the Chairman and Non-
executive Directors met once without the
Executive Directors being present.
Stewart Oades is the Senior Independent
Director on the Board. His role 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 he
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.
Board support and the role of the
Company Secretary
In addition, all the Directors have unfettered
access to the advice and services of the
Company Secretary.
The Board and its Committees are supported
by the Company Secretary who ensures
that the Directors are able to discharge their
duties and responsibilities in an effective and
efficient manner. This means ensuring there
are robust and clear Board policies, processes,
information, time and resource allocated, with
efficient meeting management and clear
flows in communication within the Board and
its Committees and between the Board and
senior members of Wincanton’s team.
The Company Secretary keeps Board members
briefed on corporate governance and assists
with driving efficiency in the decisions required
as part of matters reserved.
In addition, the Company provides the
Directors with access to independent
professional advice at the Company’s
expense, as and when required.
The Chairman and Non-executive Directors
hold appointments as directors on a small
number of other companies, as detailed
in their biographies on pages 38 to 39.
It is considered that the 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 external appointments were held
by either of the Executive Directors.
Conflicts of interest
Directors are required to notify the Company
of any situation that could give rise to a
conflict or potential conflict of interest and
compromise independent and objective
decision-making. The Board regularly
monitors, and reviews all notifications
recorded in the register and considers any
situational conflicts at each Board meeting.
Where any conflict arises, the Board
determines whether or not a Director can vote
or be a party to discussions in accordance with
the Company’s Articles of Association.
The Board is satisfied that potential conflicts
have been effectively managed throughout
the year.
A FULL DESCRIPTION OF THE DIVISION OF
RESPONSIBILITIES BE T WEEN THE BOARD, ITS
COMMIT TEES AND MANAGEMENT IS AVAIL ABLE ON
THE INVESTOR SEC TION OF THE COMPANY’S WEBSITE.
44
Wincanton plc Annual Report and Accounts 2020
GovernanceBOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED The Nomination Committee supports the Board by leading the process for
the appointment of Board members and senior management, ensuring
that such appointments are in line with the Company’s succession plans.
Further information on the work of the Nomination Committee can be
found on pages 46 to 47.
Board composition
and appointments
Appointments to the Board of Wincanton
are made on the recommendation of
the Nomination Committee with due
consideration given to the outcomes of
the annual Board evaluation, the review of
skills, experience and diversity and informed
succession planning.
Board evaluation
The Board evaluation is carried out annually.
In accordance with good practice, the Board
carries out an externally facilitated evaluation
at least every three years.
This year, the Board selected and instructed
Condign Board Consulting (Condign) to
undertake the external evaluation of the
performance of the Board, its Committees
and individual Directors.
The Chairman and the Senior Independent
Director scoped the approach of the review
with Condign, which included consideration
of the outcomes of previous evaluations. This is
the second time that the Board of Wincanton
has engaged Condign to facilitate a review
of its effectiveness. All participants were sent
a discussion guide in advance of individual
meetings. In these meetings, each Director
was asked a series of questions designed to
elucidate responses to the topics covered, to
highlight areas of importance to the particular
individual and their role, and to comment
on any significant issues that may have been
mentioned by their colleagues.
All of the Directors were interviewed at length,
with the addition of Adrian Colman as the
former Chief Executive who stepped down in
September 2019. A review of the Board papers
and attendance at the Company’s November
Board meeting were all part of the process.
The review considered the future
organisation of the Board; its operations
and communications; Director involvement
and engagement; Board composition and
succession planning; communications with
shareholders and other stakeholders; and,
overall effectiveness.
Condign presented its findings at the
Company’s March 2020 Board meeting.
Annual re-election of Directors
In accordance with the Code and the
Company’s Articles of Association, all Directors
are subject to election or re-election by
shareholders at the AGM. Six of the Directors,
being eligible, will put themselves forward
for annual re-election at the Company’s AGM
and both James Wroath and Mihiri Jayaweera
will be put forward for election following their
initial appointment to the Board.
FURTHER INFORMATION ON THE WORK OF
THE NOMINATION COMMIT TEE CAN BE FOUND
ON PAGES 46 TO 47.
Key outcomes of the 2020 review were as follows:
Area of focus
Board agendas
Strategic oversight
Board visibility in the business
Feedback and recommendations
The people strategy will continue to be a focus through the year, with twice yearly
reports to the Board.
More external input will be fed into Board deliberations.
Learnings from the Eddie Stobart exercise will be built into future acquisition strategy.
Strategy discussions are scheduled in the Board calendar. A rolling approach to strategic
development will be adopted through 2020/21.
There are three site visits in the annual Board calendar for 2020/21. However, these may be
curtailed due to the current COVID-19 pandemic.
Wincanton plc Annual Report and Accounts 2020
45
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsCOMPOSITION, SUCCESSION AND EVALUATION Nomination Committee Report
The Company recognises the benefits of a
diverse Board and places particular emphasis
on diversity of thought and experience.
Dr. Martin Read CBE
Chairman
Chairman’s statement
I am pleased to present the report of the
Nomination Committee (the Committee)
for the year ended 31 March 2020.
Role of the Committee
The Nomination Committee is delegated
oversight from the Board of the leadership
needs and succession planning for the Board
and senior managers of the business. It has the
responsibility of ensuring the Group attracts,
retains and incentivises the best talent to
support its strategy and long term vision for
sustainable success.
The framework of its duties and responsibilities
is set out in its terms of reference, which are
reviewed annually by the Committee and the
Board. These terms of reference can be viewed
on the Company’s website. The work carried
out by the Committee during the year is set out
below. The Committee reports to the Board on
all items of business considered at its meetings.
Committee membership
and meetings
Membership and composition
The table, above right, sets out the Committee
membership as at 31 March 2020. It shows
the role and independence of the members,
the date they were appointed to the
Committee and how many meetings they
attended. Appointments to the Committee
are made for a term of three years and may
be renewed for a further two terms.
Meetings
During the year, the Committee held two
scheduled meetings and one ad hoc meeting
to deal with procedural matters as required.
The Committee’s composition meets the requirements of the Code.
Member*
Dr. Martin Read CBE
Stewart Oades
Gill Barr
Paul Dean
Debbie Lentz
Status
Independent
Independent
Independent
Independent
Independent
Role
Chairman
NED
NED
NED
NED
Appointment date
1 August 2018
1 November 2014
15 September 2017
1 February 2015
1 June 2019
Attendance
3/3
3/3
3/3
3/3
2/2
* David Radcliffe left the Committee on his retirement from the Board on the 18 December 2019.
Recruitment and
appointment of Directors
The Committee follows a formal, rigorous and
transparent procedure for the appointment of
new Directors to the Board. Appointments and
succession plans are based on merit and
objective criteria and take account of diversity
of thought; gender; social and ethnic
backgrounds; and cognitive and personal
strengths. The Board’s annual evaluation also
considers its composition, diversity and how
effectively members work together to achieve
the Company’s objectives.
Board balance and composition,
skills and experience
At least once a year and as part of succession
planning, the Committee reviews the
balance of skills, knowledge, experience and
diversity of the Board to ensure that any new
appointments complement or address gaps
in any of these areas.
The Board considers the current balance of
Executive Directors and Non-executive Directors
to confirm there is the right blend of commercial
and governance experience, independence
and challenge, skills and backgrounds, and
that there is no undue individual or collective
influence over the Board’s decision-making.
Consideration is also given to the length
of service of the Board as a whole and
membership is refreshed as appropriate.
Board diversity
The Company recognises the benefits of a
diverse Board and places particular emphasis
on diversity of thought and experience.
It remains committed to diversity in accordance
with recommendations from the Davies
Review (published in 2011), the Parker Review
of November 2016 and the Code. The Board
considers and reviews diversity in the fullest
sense when considering appointments and
succession planning and seeks to ensure an
appropriate range of skills, experience and
backgrounds is represented.
The Committee will continue to consider
diversity when reviewing future Board
and senior management appointments,
Board composition and the outcome
of the annual evaluations.
Engaging external consultants
and selection processes
The Committee ensures any selection process
is rigorous and transparent and appoints a
professional external consultant as necessary.
Candidates from a wide range of backgrounds
who meet the specifications are considered
and all appointments are made entirely on
merit, with due regard to the benefits of
diversity, which includes but is not limited
to gender. Particular attention is focused on
ensuring diversity of thought on the Board.
46
Wincanton plc Annual Report and Accounts 2020
GovernanceCOMPOSITION, SUCCESSION AND EVALUATION CONTINUED The work of the Nomination Committee
Key duties and responsibilities
Reviewing the structure, size and
composition of the Board and
its Committees (including their
skills, knowledge, independence,
experience and diversity), and making
recommendations to the Board on
any proposed changes.
Reviewing the succession plans
for the Executive Directors and
senior management.
Leading on the process for the
appointment of new Directors and the
use of external consultants and making
recommendations for the appointment
of Directors.
Preparing role specifications, including
assessment of the time commitment
expected and the need for availability
at short notice for Non-executive roles.
Reviewing the annual performance
evaluation outcomes for areas under
its remit. Reviewing Directors’ external
commitments and time available to
discharge their responsibilities effectively.
Reviewing disclosures in the Company’s
Annual Report and recommendations to
the Board on the re-election of Directors.
Activities in the year ended 31 March 2020
– As part of standing Committee business, members
reviewed the structure, size and composition of
the Board. Such reviews always precede any search
and recruitment process for the appointment
of a new Director to join the Board.
– The Committee reviewed the Company’s
succession plan. The review also includes
consideration of the senior managers forming
part of the EMT.
– In preparation for the resignation of David
Radcliffe, the Committee led the process for the
search and selection of a new Non-executive
Director. The Company appointed an external
search agency, MWM Consulting (MWM), to
undertake a search to find a new independent
Director. The Committee worked with the agency
to prepare an appropriate role specification.
The shortlisted candidates were interviewed by
all Board members. In February, the Committee
recommended the appointment of new Non-
executive Director Mihiri Jayaweera, effective
7 April 2020.
– MWM has not undertaken any other work for
the Board or the Company.
– The Chair fed back key areas of the Board
evaluation that the Committee is required to
consider as part of its responsibilities on reviewing
skills and succession planning. In addition, the
Committee reviews the balance of Directors
on the Board, their independence, any potential
conflicts that have been declared and time
commitments. The outcomes of the Board
evaluation process feeds into the discussions
around succession planning.
– The Committee reviewed the items required
as part of disclosures in the Annual Report
including the Corporate Governance Statement
and Nomination Committee Report as part of its
financial year reporting matters and disclosure.
– The tenure of the Non-executive Directors has
been reviewed during the year. Appointments to
the Board are generally made for an initial three
year term and are ordinarily limited to three
consecutive terms, subject to annual re-election at
the AGM.
Induction of new 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
undertaken to meet the managers in the
business and deepen commercial awareness
of the Group.
On acceptance of their appointment, Directors
are provided with a comprehensive suite of
Group materials, which comprise: the 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.
Succession planning
A large part of the Committee’s work centres
on the oversight of succession planning.
Board succession planning includes discussion
and consideration of the following:
– The tenure of Board members and
timelines for planned succession;
– Board and Committee structure
and membership;
– The evaluation of the current skills
and experience on the Board and
the identification of any gaps; and
– The diversity of the Board and its
future requirements.
For EMT succession planning, the Company
is committed to the identification and
development of suitable candidates.
The Board reviews the Company’s succession
plans, including periodic and phased senior
management refreshment programmes,
designed to improve bench strength in
capability and talent.
Continuing professional
development
As part of the Board evaluation process, the
training and development needs of individual
Directors are reviewed by the Chairman,
supported by the Company Secretary.
The Company makes the necessary resources
available to support Director development.
I would like to thank the members of the
Committee and those who attended
and supported the Committee for their
contributions during the last financial year.
Dr. Martin Read CBE
Nomination Committee Chairman
16 June 2020
Wincanton plc Annual Report and Accounts 2020
47
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Audit Committee report
The Board has established formal
and transparent policies and
procedures relating to external and
internal audit functions and the
management of risk. The Board is
assisted by the Audit Committee to,
amongst other things, ensure that
the Board presents a fair, balanced
and understandable assessment
of the Company’s position and
prospects. The work of the Audit
Committee is set out in its report
on pages 48 to 51.
Systems of internal control
and 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 exposure to
significant risk is reduced and mitigated
to the fullest 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 32 to 33.
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
on page 51.
Dear Shareholder
I am pleased to present the Audit Committee’s
(the Committee) report for the year ended
31 March 2020.
The Committee continues to assist the Board
in fulfilling its oversight responsibilities by
monitoring and reviewing the integrity of the
Company’s financial reporting, internal and
external controls, risk management framework
and the quality of the internal and external
audit processes.
The framework of its duties and responsibilities
is set out in its terms of reference, which are
reviewed annually by the Committee and the
Board. The terms of reference can be viewed
on the Company’s website. The work carried
out by the Committee in line with its terms of
reference is set out below.
The Committee reports to the Board
which includes reporting on any matters
where it considers action or improvement
is needed, including recommendation
of remedial actions.
48
Wincanton plc Annual Report and Accounts 2020
Oversight and
challenge of financial
reporting and risk
management remains
paramount.
Paul Dean
Audit Committee Chairman
Key areas of focus
Key areas for the Committee for the financial
year 2020, have focused on:
– The detailed review of services provided
by the External Auditor. We decided to
proceed with a formal tender process
and were pleased to announce that the
Board approved the appointment of the
Company’s new external auditor BDO LLP,
subject to shareholder approval at the
AGM on the 22 July 2020.
– A review of the initial disclosures for IFRS 16,
leases and related briefings on the impact on
the financial statements. Further information
on IFRS 16 is provided in Note 1 and Note 31
to the Group accounts on pages 89 and 121
to 125 respectively.
Since the year end, we have also considered
the judgements made and areas of estimation
uncertainty in evaluating the impact of
COVID-19 on the financial statements,
especially with regards to going concern,
principal risks and uncertainties, testing of
assets for impairment and valuation of the
pension scheme assets together with the
relevant disclosures. We remain focused on
ensuring internal controls continue to be
applied whilst at the same time addressing
the efficiency of operations and delivery
of service to our customers.
Further engagement
The Committee welcomes constructive
engagement on any of the areas under
its remit and the Chairman will be available
at the AGM and can be contacted through
the Company Secretary.
Paul Dean
Audit Committee Chairman
16 June 2020
GovernanceAUDIT, RISK AND INTERNAL AUDIT Committee membership and meetings
The Committee’s composition meets the requirements of the Code.
Member*
Paul Dean
Stewart Oades
Role
Chairman
NED
Status
Independent
Independent
Appointment
Throughout the financial year
Throughout the financial year
Attendance
3/3
3/3
* Mihiri Jayaweera joined the Committee on 7 April 2020.
The above table shows the membership
as at 31 March 2020. It shows the role
and independence of the members, and
how many meetings they have attended.
Appointments to the Committee are made for
a term of three years and may be renewed for a
further two terms.
We welcomed Debbie Lentz as member
of the Committee on the 1 June 2019
and Mihiri Jayaweera on the 7 April 2020.
David Radcliffe left the Committee at the end
of 2019 on his retirement from the Board and
I would like to thank him for his contribution.
Following a review of the membership across
all the Committees of the Board, Gill Barr
and Debbie Lentz stepped down from the
Committee on 3 March 2020.
Meetings
During the year, the Committee held three
scheduled meetings to deal with procedural
matters as required. 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 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.
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.
Impairment testing
The Committee has reviewed management’s
approach to impairment reviews, including
the key estimates and judgements used,
and the results of these reviews.
The Committee concluded that the
presentation of the resulting impairment
of certain Cash Generating Units within non-
underlying results is appropriate.
Materiality and misstatements
The External Auditor, following discussion
with the Committee, set the materiality and
notify the Committee if they identify any
misstatements above a certain threshold
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.
Going concern and viability statement
The Committee has considered management’s
forecasts, the available committed facilities and
the associated financial covenants.
The Committee has given particular attention
to the risk and uncertainty caused by the
COVID-19 outbreak and assessed the disclosure
quality of the going concern statement,
particularly with regard to the description in
Note 1 to the consolidated financial statements.
Significant judgements and areas
of estimation uncertainty
The principal matters of judgement and
areas of estimation uncertainty considered
by the Committee in relation to the accounts
for the year ended 31 March 2020 and how
they were addressed are set out in the
following paragraphs:
Pension scheme assets and obligations
The balance sheet for the year ended 31 March
2020 includes a net pension scheme surplus
of £94.4m, with gross pension obligations
of £1,063.1m and assets of £1,157.5m. In arriving
at the gross obligation figure, the Committee
considered the accounting basis of the pension
scheme in the year ended 31 March 2020
and reviewed the pension data provided by
management. This was 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.
In arriving at the pension assets valuation,
the Committee considered updates to the
valuation of certain unquoted pension assets
to reflect the impact of COVID-19.
The Committee was satisfied that the
judgements used and the disclosures in
the Annual Report were appropriate.
Provisions
The balance sheet for the year ended
31 March 2020 includes provisions of £37.0m.
The Committee reviewed management
reports on the provisions, including the
property provision, insurance provision
and other provisions. The reports cover the
provisions made and released in the year,
utilisation and the rationale for the year end
provisions. 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.
Wincanton plc Annual Report and Accounts 2020
49
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Audit Committee report continued
The work of the Audit Committee
The Audit Committee assists the Board on the effective review of financial performance, internal controls, financial reporting and risk management.
Area of focus
Financial
Statements
and narrative
reporting
Key duties and responsibilities
To review 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.
Going concern
and viability
Key judgements
and accounting
matters
To consider whether it is appropriate
to adopt the going concern basis of
accounting and identify any material
uncertainties that could affect the
Company’s ability to continue to do so.
To review the findings of the audit with
the External Auditor in relation to the key
accounting and audit judgements.
Risk management
& internal controls
To review the Company’s internal controls
and risk management systems.
Activities in the year ended 31 March 2020
– review of the financial statements and narrative reporting in the Annual Report and
Accounts for 2019 and 2020 and in the Half Year results to 30 September 2019, with
particular reference to the reports being fair, balanced and understandable;
– review of the Stock Exchange announcements for the preliminary results for the financial
years ended 31 March 2019 and 31 March 2020 and the Half Year results to 30 September
2019; and
– consideration of reports from the External Auditor in respect of the Annual Report and
Accounts for 2019 and 2020 and the Half Year results to 30 September 2019.
– review of the going concern and viability assessments including methodology, assessment
outcomes and the statement of compliance, determination of the assessment period and
the robustness of the scenarios tested.
– review of key judgements and accounting matters, including going concern, in the Annual
Report and Accounts for 2019 and 2020 and in the Half Year results to 30 September 2019;
– review of updates from management on the progress of the implementation projects for
the adoption of IFRS 16 ‘Leases’ together with proposed disclosures in the Annual Report
and Accounts for 2019 and 2020 and in the Half Year results to 30 September 2019; and
– review of impairments as a result of the COVID-19 impact on trading.
– continued focus on the work of the Risk Management Committee’s activities, including
those of the, newly formed, Financial Assurance Committee including:
– Development of the Group’s risk management framework; and
– Progress of the Group’s cyber security programme.
Policy
To review Group policies.
– review of Group policies, such as Whistleblowing, Bribery, Gifts and Entertainment,
Internal Audit
To review the effectiveness of the Internal
Audit function.
External Auditor
tender
Review of
External Auditor
To make recommendations to the
Board in relation to the appointment,
reappointment and removal of the External
Auditor, their remuneration and terms
of engagement.
To review and monitor the External
Auditor’s independence and objectivity
and the effectiveness of the audit process;
To review the policy to control
engagement of the External Auditor to
supply non-audit services.
Terms of Reference
and performance
To report to the Board on how
the Committee has discharged
its responsibilities.
Sharedealing, and Non-Audit Services policies; and
– review of the whistleblowing procedure whereby employees may, in confidence, raise
concerns about possible improprieties in matters of financial reporting or other matters.
– 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;
– 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 2019/20 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 of the effectiveness of the Internal Audit function.
– oversight of the external audit tender process as described on page 51.
– approval of the strategy for the 2019/20 external audit to ensure the audit is adopting a risk
based approach consistent with the Committee’s understanding of risk in the business;
– 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 2019;
– approval of the terms of appointment, areas of responsibility and duties; and
– review of the External Auditor’s performance, independence and objectivity.
– review of its own terms of reference and consideration of compliance with the Code; and
– as part of the evaluation process, both 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.
50
Wincanton plc Annual Report and Accounts 2020
GovernanceAUDIT, RISK AND INTERNAL AUDIT CONTINUED The Committee invited EY, PwC LLP, Mazars
and BDO LLP to tender for the Group’s external
audit. As part of a tender process, panel
interviews were held with the Committee
and presentations were compared with a
proposal received from KPMG for continuing
as auditors of the Company. PwC and Mazars
declined to submit a tender citing resourcing
and time constraints. The presentations
and panel interviews were led by the
Committee Chairman, with the support
and attendance of the Chief Financial Officer,
the Group Financial Controller and the Head
of Corporate Reporting. The proposals were
evaluated considering a number of factors
including people (partner and audit team),
engagement, proposed audit and transition
approach, quality of proposal document and
presentation, knowledge of the business,
and fees.
Following the robust and thorough tender
process the Committee recommended to
the Board that BDO LLP be appointed as
External Auditor and recommended their
proposed annual audit remuneration fee.
The Board considered and approved the
recommendation to appoint BDO LLP as
the External Auditor and will recommend
their reappointment to shareholders at the
2020 AGM.
Paul Dean
Audit Committee Chairman
16 June 2020
Risk management and systems
of internal control
A full report of the Group’s principal risks and
uncertainties, its systems for risk management
and control, and statement following the
viability assessment are set out on pages 32
to 35 of the Strategic Report.
The Audit Committee receives regular updates
from the Group’s Transformation and Risk
Director on the development and operation of
the Risk Management Framework and, during
the year, received reports from the subject
matter experts who manage the control
environment in areas such as cyber security,
financial assurance and data protection.
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 the Risk
Management Committee.
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.
External Auditor
The Committee evaluates the effectiveness
and independence of the external audit
process and the External Auditor, KPMG
LLP (KPMG), annually in respect of their
performance and conduct. This evaluation
reviews whether, in the Committee’s
opinion, KPMG has adequately challenged
management through the audit process.
During the year, KPMG appointed Michael
Froom as the Senior Statutory Auditor. He took
on the relationship in September 2019 and
will continue until KPMG’s resignation as
External Auditor.
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.
Any significant new engagement undertaken
for the Company is subject to acceptance
procedures, requiring consultation with the
Senior Statutory Auditor.
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 2020 are set out in
Note 4 to the financial statements on page 98.
Auditor tender and appointment of
new Auditor BDO LLP at the AGM
Under the Committee’s terms of reference, the
Committee is responsible for recommending
the appointment, reappointment and removal
of the External Auditor to the Board.
The External Audit was tendered in 2016, which
concluded in a recommendation to re-appoint
KPMG LLP as the Group’s External Auditor.
The FRC’s Guidance for Audit Committees,
and regulations regarding the maximum
tenure of external audit partners and firms
and requirement for audit tenders, apply
to the Company.
Wincanton plc Annual Report and Accounts 2020
51
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Remuneration Committee report
The Remuneration Committee’s report set
out on pages 52 to 71 provides detailed
explanation of its delegated responsibilities
and its work during the year. Such policies
ensure that the Company’s remuneration
structure remain appropriate and have
been designed to support strategy as well
as promote long term sustainable success.
Contents
Committee Chair introduction
At a glance – Policy Implementation
Report on Remuneration
Proposed Remuneration Policy 2020
52
56
58
65
Dear Shareholder
I am pleased to present the Remuneration
Committee (the Committee) report for the
financial year ended 31 March 2020 on behalf
of the Board. This report has been written in
the midst of unprecedented market conditions
as a result of the global COVID-19 pandemic
which has posed challenges for determining
executive remuneration.
We reviewed our policy earlier this year
and undertook a consultation with a large
proportion of our shareholders in February.
Our new policy is focused on the introduction
of good practice features.
Following the change in market conditions as
a result of the global COVID-19 pandemic, the
Committee considered carefully the impact
on executive remuneration, both in terms of
the FY20 outcomes as well as looking ahead
for FY21. As described later, Executive Directors
volunteered a temporary reduction in salary
of 20% applying from 1 April and we have
deferred all bonus payments.
This year there were changes to the Committee’s
membership. On the 1 June 2019, we welcomed
Debbie Lentz as a member of the Committee.
David Radcliffe left the Committee at the
end of 2019 on his retirement from the Board.
Following a review of the membership across
all the committees of the Board, both Paul
Dean and Stewart Oades stepped down from
the Committee on 3 March 2020. I would
like to thank David, Paul and Stewart for their
contribution to the Committee.
Our remuneration
policies have been
designed to promote
long term sustainable
success.
Gill Barr
Remuneration Committee Chair
Remuneration and its
strategic context
Wincanton remains committed in its chosen
markets to delivering strong service levels to
its customers. Despite COVID-19, the business
continues to focus on driving profitability and
sustainable growth.
The Committee seeks to ensure a clear link
between Executive Directors’ pay, the delivery
of Group strategy and enhancement of
shareholder value.
COVID-19 – workforce
As we continue to manage the impact of
COVID-19, our first priority is to safeguard the
health and wellbeing of our employees and their
families. We have adopted working practices to
minimise the risk of contagion across sites and
our wider workforce.
Approximately 15% of our workforce
(c.2,500 employees) were furloughed under
the Government’s Job Retention Scheme.
Around 1,000 of these employees have now
been taken off the Government’s scheme
and returned to work.
Director salaries
Executive Directors volunteered a temporary
reduction in salary of 20% applying from
1 April 2020. The Non-executive Directors,
including the Chairman, did the same.
In February, before COVID-19, we consulted
with shareholders on a proposed salary increase
for our CFO, to reflect his experience and
track record at Wincanton and his increased
strategic role following the appointment of
our CEO. We received strong support from our
shareholders during this consultation. However,
taking into account COVID-19, the Committee
decided it would not be appropriate, at this
time, to proceed with the salary increase,
and the salary review will be deferred.
Executive Directors will receive no salary
increase for the year.
Incentives for FY20 and FY21
in the context of COVID-19
We reported a year of solid progress for
Wincanton with revenue up 5.2% and
underlying profit before tax up 7.3%.
We delivered revenue growth on the back of
some significant new orders. Net debt fell 47.7%
to £10.1m.
Our balance sheet has been strengthened
very considerably over recent years, particularly
in terms of net debt reduction and pension
deficit improvements. However despite this
headroom, COVID-19 brought a key focus on
cash management. The Board considered that
it was prudent to hold as much cash as possible
in the business, and in this context the Board
suspended the final dividend for the year.
We considered the annual bonus outcomes
for FY20 against a background of solid financial
performance. Annual bonus outcomes
measured against the targets set at the
beginning of the year were 56% and 64% for
the CEO and CFO respectively. LTIP vesting
for the FY17 award was 59%, with TSR out-
performance of 3% against the Index, and
EPS growth of 9% per annum, reflecting the
significant progress the business has made
over the last three years.
We considered the amounts carefully in the
context of the Group’s performance, and the
current environment, and determined that the
amounts were a fair reflection of performance
in this past financial year. The approach
was applied consistently across our wider
management population. The Committee
considered that it was important to align bonus
payments for Executive Directors with the
suspension of dividends for our shareholders
and therefore determined that 100% of the
bonus earned would be deferred, with no cash
payments during FY21. We also considered the
way in which we should respond to COVID-19
in the operation of our incentives for FY21.
52
Wincanton plc Annual Report and Accounts 2020
Directors’ remuneration reportREMUNERATION COMMITTEE REPORT The annual bonus plan opportunity
for Executive Directors for FY21 will be
substantially reduced taking into account the
expected impact of COVID-19 during FY21.
The expectation is that the maximum bonus
opportunity will be c.50% lower than in a
normal year.
Given the COVID-19 uncertainty, the
Committee delayed consideration of the FY21
annual bonus targets. These will be finalised
early in the second quarter.
Our intention is for TSR to make up 100% of
the performance condition for the FY20 LTIP
award. Our view is that TSR is a well-established
and stretching performance condition that is
fully aligned to the shareholder experience,
and that this is the simplest approach given the
uncertainty around earnings growth as a result
of COVID-19.
As a direct result of shareholder feedback
during consultation we have changed our TSR
methodology so that it is now on the more
normal ranked basis.
Our intention is to grant LTIP awards following
approval of the new policy at the AGM.
Mindful of shareholder views, the Committee
will consider the share price at the point of
grant when considering the level of award to
be granted. LTIP awards will contain a good
practice discretionary underpin to guard
against windfall gains.
Recruitment remuneration
arrangements for CEO
We were delighted to welcome James Wroath
to the Board as our new CEO on 2 September
2019. As highlighted in my statement in the
2019 Annual Report and Accounts, as part
of his recruitment the Committee took the
opportunity last year to make a number
of positive changes to our approach to
remuneration for the CEO, in particular:
– Salary was set at a lower level than the
previous incumbent;
– Pension contribution was set at 3% of salary in
line with the majority of the workforce; and
– The incentive package was rebalanced from
the short-term to the long-term.
James Wroath relocated from the United
States and the Committee agreed to provide a
capped amount of relocation benefits to cover
some of the relocation expenses.
No buyout payments have been made.
Retiring CEO
We reported last year on our approach to
remuneration for the retiring CEO. He received
a pro-rata annual bonus and LTIP vesting.
In recognition of the Company's focus on cash
management, Mr Colman volunteered to defer
50% of his pro-rata annual bonus payment
to July 2021. No payment in lieu of notice
was made.
New Remuneration Policy
After three years of operation of the current
Remuneration Policy, Wincanton is required
to submit a revised Remuneration Policy to
shareholders at the 2020 AGM. The Committee
undertook a full review of the approach to
remuneration during the year, building upon
and codifying best practice changes made
in FY20 and ensuring it is aligned with our
strategy and investor expectations.
We reached out to our top 25 shareholders,
(representing over 75% of Wincanton's share
capital), to gather their views on the proposed
amendments to the Remuneration Policy
and its implementation for the forthcoming
financial year. I want to thank shareholders for
engaging in this process.
Our new policy is focused on the introduction
of good practice features, including:
– Formalising our rebalanced incentive
framework, introduced last year for our
new CEO, and which will apply for any
new executive director hires in the future.
The maximum annual bonus has been
reduced and the LTIP has been increased,
keeping the overall maximum incentive
opportunity the same. The Committee
considered it was reasonable to keep the
incumbent CFO’s incentives unchanged at
120% Annual Bonus and 100% LTIP. Under the
new Policy the incentive rebalance would
apply for any new appointment.
– Introduction of compulsory deferral
on our annual bonus.
– Pension levels for new hires and the current
CEO will be set at the workforce rate.
– Formalising the holding periods
on LTIP awards.
– The introduction of a post-cessation
shareholding requirement.
Shareholding guidelines
The incumbent shareholding requirement
has been strengthened from a guideline to
a requirement, such that Executive Directors
will be expected to achieve their required
shareholding within five years.
Resolutions proposed at the AGM
The revised Remuneration Policy will be
presented to shareholders for a binding
vote at the forthcoming AGM. To support
our new Policy of rebalanced incentives we
are also seeking shareholder approval for an
amendment to our LTIP rules.
The Annual Report on Remuneration will be
presented for an advisory vote.
I hope that our shareholders will support the
changes we have made.
Gill Barr
Remuneration Committee Chair
16 June 2020
Consideration of wider
workforce pay and conditions
Wincanton is a people-powered business,
with dedicated teams at the heart of
the service we aim to deliver to our
customers. We are therefore committed
to ensuring the pay and conditions of our
workforce allow our colleagues to achieve
their full potential and provide a great
customer experience.
Remuneration below the Board
– Salary levels are set in line with market
requirements and the workforce salary
environment is taken into consideration
when reviewing salary increases for EDs
and the EMT.
– All employees are eligible to participate
in the Wincanton plc Pension Scheme.
– The Company provides a range of
benefits for employees, these are
accessed online through a benefits
and communication platform that
also keeps colleagues updated with
need to know company information.
The number of employees using this
platform has increased by 38% in the
past 12 months.
– Strong individual, business line and
Company performance is incentivised
and recognised through our annual
bonus schemes and, for our most
senior employees, the LTIP.
– Recognition of great performance and
outstanding achievements through our
‘Colleague of the Month’ and ‘Driver
of the Year’ awards. The Driver of the
Year competition is a highly celebrated
annual event that recognises the very
best skill, talent, professionalism and
knowledge from drivers across the
business. Last year, over six months,
200 drivers battled it out undertaking
practical skills tasks showcasing ability,
anticipation, and awareness to be
crowned LGV Driver of the Year; MHE
Driver of the Year and Newcomer of
the Year, each winning a share of the
prize fund.
– Employee ownership in the Company
and alignment with the delivery of the
Group strategy is encouraged through
participation in the SIP.
53
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 Pay ratio
The CEO pay ratio table shows the ratio of pay between the CEO of Wincanton and
Wincanton's UK employees. The ratio compares the total remuneration of the CEO against
the total remuneration of the median UK employee and those who sit at the 25th and
75th percentiles.
Year
2019
2020
Method
Option B
Option B
25th percentile pay ratio
72:1
63:1
Employees
Salary
Total pay and benefits
25th percentile pay ratio
£19,476
£21,027
Median pay ratio
59:1
49:1
Median pay ratio
£26,102
£26,797
75th percentile pay ratio
45:1
41:1
75th percentile pay ratio
£30,157
£32,126
Wincanton's CEO pay ratios have been calculated using Option B, based on the availability
of data at the time the Annual Report was published. This uses the most recent gender
pay data to identify the three employees that represent our 25th, 50th and 75th percentile
employees. The total remuneration for these individuals has then been calculated based on
all components of pay for 2019/20, including base salary, performance-based pay, pension
and benefits. The Committee considers that this provides an outcome that is representative
of the employees at these pay levels.
Where an identified employee was part-time, their figures have been converted to a
full-time equivalent. No other adjustments were necessary and no elements of employee
remuneration have been excluded from the pay ratio calculation.
The day by reference to which the Company determined the 25th, 50th and 75th percentile
employees was 31st March 2020. The CEO pay data reflects the combined remuneration paid
to James Wroath and Adrian Colman during their respective times as CEO.
The year on year decrease in the pay ratio reflects both that Executive Directors have a greater
proportion of their total remuneration paid subject to performance and James Wroath’s
salary is less than his predecessor.
Gender pay
Hourly rate of pay
Bonus pay
Median
2019/20: 6% (2018/19: 8%) 2019/20: 9% (2018/19: 10%)
2019/20: 0% (2018/19: 3%)
2019/20: 33% (2018/19: 47%)
Mean
In this year our mean and median gender pay gaps of 6% and 9% respectively show a year
on year improvement (8% & 10% in 2018/19). The mean gender pay gap is lower than the
national figure published by the Office for National Statistics, in October 2019, of 8.9%.
Our bonus pay gap has also improved in comparison to 2018/19 with the mean gap at 33%
and the median bonus gap at 0% (47% & 3% in 2018/19). The mean bonus gender pay gap
is driven by the bonus opportunities for senior positions where the proportion of men
continues to be greater. Our median gender pay gap better reflects the approach to bonus
across the organisation.
Another positive has been that while the overall number of women in the business has
remained stable in 2019/20, the proportion of women in the upper quartiles of pay have
increased year on year.
Workforce engagement
Stewart Oades is the Group’s designated
Non-executive Director to the workforce.
An explanation of the key outcomes from
his engagement is set out on page 43 in the
Governance section.
We have a number of initiatives in place to
allow us to listen to the views of our staff and
act upon them to ensure Wincanton is a great
place to work, including:
– Operation of our biannual ‘Your Pulse’
employee engagement survey. The findings
are reviewed at all levels of the Group and
help to shape the ongoing strategy across
the business.
– Listening group meetings with all major
employee stakeholders and steering
groups for other key colleagues including
general managers and drivers, in addition
to our regular departmental and Group-
wide meetings.
– The EMT host regular business briefings to
update managers on the Group’s business
performance and new innovations, as well
as providing opportunities for managers to
raise questions through our Q&A sessions.
Not all about pay
At Wincanton, we place great importance on
providing development opportunities for our
employees to build their careers and enhance
their skills through a portfolio of apprenticeship
and development programmes.
We support and invest in individuals to achieve
their potential across the business, as well
as developing our Talent pipelines, such as
Graduates, to fulfil future skills requirements.
We are committed to making Wincanton
a great place to work. We encourage and
embrace employee diversity, equality and
inclusion, and encourage our people to live our
values. We work hard to ensure that employees
of all backgrounds, genders and ethnicities are
valued equally and that we treat each other
with respect. We expect every employee to
take part in our diversity programmes, which
endorse these expectations.
54
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report Key Committee activities
in the year
Pay and reporting
– Consider pay recommendations for
Executive Directors and Executive
Management Team
– Approve incentive outcomes for
Executive Directors and Executive
Management Team
– Consider incentive grants to Executive
Directors and other senior management,
including performance measures
and targets
– Monitor performance for unvested
LTIP awards
– Approve exercises of vested share awards
and leaver treatment
– Review Chairman’s fee
– Review all-employee reward, pay
and practice
Governance, reporting, stakeholders
– Review of Executive Director
remuneration arrangements against
governance changes and good practice
– Consider the Group HR strategy and
compliance with Policy
– External review of remuneration reporting
– Annual review of Committee’s terms
of reference
– Shareholder engagement
UK Corporate Governance Code: Provision 40
When developing the revised Remuneration Policy and considering its proposed operation for
FY21, the Committee was mindful of, and feels it has appropriately addressed, the following factors
set out in the Code:
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment
to culture
The Committee welcomes open and frequent dialogue with shareholders on the
approach to remuneration.
In the 2019 Directors’ Remuneration Report, we refreshed and simplified our approach to
remuneration disclosure.
Our remuneration arrangements for Executive Directors, as well as those throughout
the organisation, are simple in nature and well understood by both participants
and shareholders.
The Committee considers that the structure of incentive arrangements do not
encourage inappropriate risk-taking.
Under the Annual Bonus and LTIP, discretion may be applied where formulaic outturns
are not considered reflective of underlying Company or individual performance.
Annual Bonus deferral, the LTIP holding period and our shareholding requirement,
including post-cessation shareholding requirement, provide a clear link to the ongoing
performance of the business and the experience of our shareholders.
Malus and clawback provisions apply to both the Annual Bonus and LTIP.
Our Remuneration Policy contains details of threshold, target and maximum opportunity
levels under our Annual Bonus and LTIP, with actual outcomes dependent on
performance achieved against predetermined measures and target ranges.
This is illustrated by the charts on page 71.
Discretion provisions under the Annual Bonus and LTIP allow the Committee to adjust
the formulaic outcomes where considered appropriate, including where the outcome
is not considered appropriate in the context of circumstances that were unexpected or
unforeseen at the start of the relevant period.
The Committee’s ability to apply discretion ensures appropriate outturns in the context
of long-term Company performance.
The rebalancing of the incentive package to the long-term, the recent introduction
of holdings periods, and the strengthening of our bonus deferral all provide greater
alignment between Executive Directors’ remuneration outcomes and long-term
Company performance.
Our performance measures and target ranges under the Annual Bonus and LTIP are
aligned to Company strategy.
Wincanton is a people-powered business, with dedicated teams at the heart of the
service we aim to deliver to our customers. Consideration of the pay and conditions of
our workforce is therefore an important perspective for considering executive pay.
All employees are entitled to participate in the pension scheme, The pension level for the
CEO and new Executive Director appointments has been set at the rate provided to the
wider workforce.
Strong individual, business line and Company performance is incentivised and
recognised through our Annual Bonus schemes and, for our most senior employees,
the LTIP.
Committee responsibilities
and composition
The Committee is responsible for ensuring
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 is achieved through
the Committee approving all aspects
of Executive Director and Executive
Management Team remuneration, and
monitoring pay arrangements for the
wider workforce.
The Terms of Reference set out the full
responsibilities of the Committee, and
are available on the Group’s website at
www.wincanton.co.uk
The Committee comprises three
members including Gill Barr as Committee
Chairman, Dr. Martin Read CBE, and
Debbie Lentz. Debbie Lentz joined the
Committee on appointment to the Board
in June 2019. David Radcliffe stepped
down from the Committee in December
2019 on his retirement from the Board
and both Paul Dean and Stewart Oades
stepped down following a review of
Committee members in March 2020.
There were five scheduled Committee
meetings during the year and three out
of sequence meetings held.
During the year, all members of the
Committee are independent Non-
executive Directors, and were selected to
represent a broad range of backgrounds
and experience to provide balance and
diversity. The Chief Executive Officer,
Chief Financial Officer and Group HR
Director may attend the Committee’s
meetings by invitation to provide advice
and assistance on specific matters.
The Company Secretary acts as Secretary
to the Committee. No attendee is
present when their own remuneration is
being discussed.
Further details of Committee membership
and attendance at meetings are shown
in the Corporate Governance report on
page 41.
55
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 ‘At a glance’ – Year ended 31 March 2020 outturns
Element
Salary
Year ended 31 March 2020 outturn
– Salaries effective 1 July 2019:
CEO
CFO
Former CEO
1 CEO with effect from 2 September 2019.
£425,000¹
£315,767
£446,600
Pension and
benefits
– Pension contribution of 3% of salary for the CEO, James Wroath (22% of salary for the former CEO, Adrian Colman); and 15% of
salary for the CFO, Tim Lawlor.
– Benefits provided in line with approved policy.
Annual
Bonus
For the year ended 31 March 2020, 100% of the bonuses will be deferred for the CEO and CFO and 50% for the former CEO.
Profit before tax (75%):
Strategic objectives and achievements (25%):
Strategic objectives
Underlying PBT
£m
51.0
52.5
55.5
52.9
Achievement
CEO: 12% / 25%
CFO: 20% / 25%
Former CEO: 14% / 25%
Threshold
Target
Maximum
Actual
– CEO outturn: 56% of maximum
– CFO outturn: 64% of maximum
– Former CEO outturn: 58% of maximum
For the CEO and the CFO the bonus will be 100% deferred (50% as cash deferral and 50% as share deferral). The Former CEO will
receive 50% of his bonus in cash in July 2020 and has voluntarily deferred the remaining 50% to July 2021. The cash bonus will be
deferred until July 2021 (subject to the dividend being reinstated) or March 2022 at the latest. The share element will be deferred
until March 2022 (or when the dividend is reinstated if later).
LTIP
Single total
figure of
remuneration
Index + 3%
Minimum
vesting
TSR in line
with Index
6% p.a.
growth
TSR
EPS
Wincanton Outturn
Total vesting: 59% of maximum
Maximum
vesting
Index
+10% p.a.
11% p.a.
growth
9% p.a. growth
£’000
Salary
Pension & benefits
Relocation benefits
Annual bonus
LTIP
Total
James Wroath
(CEO)
Adrian Colman
(Former CEO)
Tim Lawlor
Year ended
31 March 2020
248
22
212
139
–
621
Year ended
31 March 2019
–
–
–
–
–
–
Year ended
31 March 2020
261
73
–
227
214
775
Year ended
31 March 2019
445
124
–
438
534
1,541
Year ended
31 March 2020
315
64
–
242
195
816
Year ended
31 March 2019
310
63
–
248
367
988
56
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report ‘At a glance’ – Implementation for the year ended 31 March 2021
Element
Salary
Summary of implementation for the year ended 31 March 2021
– Executive directors have volunteered a temporary reduction in salary of 20% applying from 1 April 2020.
The Non-executive Directors, including the Chairman, have done the same.
– No salary increases are being made for the year. Current salaries (pre-reduction) are shown below:
James Wroath
Tim Lawlor
Salary (pre-reduction) from
1 July 2020
£425,000
£315,767
Increase
0%
0%
Pension and
benefits
– Pension contribution of 3% of salary for James Wroath and 15% of salary for Tim Lawlor.
– The pension contribution for James Wroath is aligned with the contributions provided to the majority of the
wider workforce.
– Benefits include company car or car allowance and private medical insurance.
Annual
Bonus
– Normal maximum opportunities:
– CEO: 100% of salary.
– CFO: 120% of salary.
– The annual bonus plan opportunity for executive directors for FY21 will be very substantially reduced taking into
account the expected impact of COVID-19 during FY21. The expectation is that the bonus maximum opportunity
will be c.50% lower than in a normal year.
– The annual bonus framework will continue as 75% based on financial measures and 25% based on non-financial.
Given the uncertainty in the first quarter of the financial year, the Committee delayed consideration of the annual
bonus framework for FY21. The expectation is that targets will be finalised early in the second quarter, with
retrospective disclosure provided in the FY21 DRR as normal.
– In line with the new Policy, 50% of any bonus earned above 50% of maximum will be deferred into Company
shares for two years, regardless of whether the shareholding requirement is met.
– The Committee retains the ability to operate discretion to override the formulaic bonus outcome where it is not
reflective of underlying Company performance.
– Malus and clawback provisions apply.
LTIP
– Given the COVID-19 uncertainty, this year TSR will make up 100% of the performance condition for the FY20 award.
Weighting
100%
Threshold (25% of max)
Median
Maximum
Upper quartile or above
Relative TSR vs. FTSE All-Share excluding
investment trusts
– Normal maximum opportunities:
– CEO: 150% of salary.
– CFO: 100% of salary.
– Our intention is to grant LTIP awards following approval of the new policy at the AGM. The Committee will
consider the share price at the point of grant when considering the level of award to be granted, mindful of
shareholder views. LTIP awards will contain a good practice discretionary underpin to guard against windfall gains.
– Awards vesting will be subject to a two-year post-vesting holding period.
– Malus and clawback provisions apply.
Shareholding requirements
– CEO: 200% of salary.
– CFO: 150% of salary.
– Executive Directors are required to hold full incumbent shareholding requirement (or actual shareholding on
departure if lower) for one year post departure.
– This requirement applies to shares acquired from incentives vesting from the adoption of the revised policy.
57
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 The following pages 58 to 64 provides details of how Wincanton’s remuneration policy was implemented during the financial year ending 31 March
2020 and how it will be implemented in 2020/21.
Single total figure of remuneration – Executive Directors (audited)
The following audited table sets out the single total figure of remuneration for Executive Directors for the years ended 31 March 2020
and 31 March 2019.
Salary
Relocation benefits2
Taxable benefits
Pension-related benefits
Annual Bonus
LTIP3
Total
James Wroath
Adrian Colman¹
Tim Lawlor
31 March 2020
£’000
248
212
15
7
139
–
621
31 March 2019
£’000
–
–
–
–
–
–
–
31 March 2020
£’000
261
–
15
58
227
214
775
31 March 2019
£’000
445
–
26
98
438
534
1,541
31 March 2020
£’000
315
–
17
47
242
195
816
31 March 2019
£’000
310
–
17
46
248
367
988
1 The figures shown above for salary, taxable benefits and pension-related benefits for Adrian Colman include amounts in respect of his continued employment to 31 October 2019 following
stepping down as CEO on 2 September 2019.
2 Includes reimbursement of relocation expenses, as set out in further detail below.
3 The 2017 LTIP is due to vest on 21 July 2020. The value included in the single figure for the year ended 31 March 2020 follows the regulation methodology which prescribes that it should be
based on an estimate based on the average share price over the last quarter of FY20 (£2.70). Using this methodology, £23,088 and £25,381 of the value, for Tim Lawlor and Adrian Colman
respectively, was due to share price growth. However taking into account the current share price, the value of the LTIP vesting is significantly lower. Based on the closing share price at 29 May
2020 (£1.875) the value of the LTIP for Tim Lawlor and Adrian Colman is £135,336 and £148,779 respectively. For the year ended 31 March 2019, the LTIP figure has been updated for the actual
share price on the date of vesting of the 2016 LTIP.
Salaries
Executive Directors volunteered a temporary reduction in salary of 20% applying from 1 April 2020.
Prior to COVID-19 the Committee consulted with shareholders on a salary adjustment of c.6% for the CFO. The proposed salary adjustment was to
reflect that Mr Lawlor is now an experienced and established CFO with an exceptional track record at Wincanton, including his contribution to the
very considerably strengthened net debt position and the significant improvement of the defined benefit pension scheme liability. Following the
appointment of James Wroath, and an organisation redesign, his role will now include an increased strategic focus. During our consultation in
February many of our shareholders were supportive of the proposal. However, following COVID-19, the Committee decided it would not be
appropriate, at this time, to proceed with the salary increase, and decided to defer the salary review.
No salary increases are being made for the year. Current salaries (pre-reduction) are shown below:
James Wroath
Tim Lawlor
Salary as at
31 March 2019
–
£311,100
Salary from
1 July 2019 /
appointment
£425,000
£315,767
Increase
–
1.5%
Increase
0%
0%
Salary from
1 July 2020
£425,000
£315,767
Taxable benefits and pension-related benefits
Benefits include company car allowance and healthcare. The value of company car allowance provided during the year was £25,000 for James Wroath
and Adrian Colman (pro-rated for the proportion of the year served), and £15,600 for Tim Lawlor.
The Company contributes to the pension scheme on behalf of Executive Directors, and provides a salary supplement in lieu of such contributions
where the value exceeds the HMRC annual allowance. During the year, the Company paid a contribution equivalent to 3% of salary for James Wroath,
22% for Adrian Colman and 15% for Tim Lawlor.
As reported last year, given James Wroath relocated from the United States the Committee agreed to provide for an amount of relocation expenses
(capped at a net amount of £120,000), including removal costs, a portion of realtor expenses on sale of property, stamp duty and transaction costs on
purchase of new property, economy flights for family and other expenses considered reasonable. The taxable benefits for James Wroath in the single
figure table includes the gross value, £212,000, of these net relocation expenses.
Incentive outturns
Year ended 31 March 2020 Annual Bonus
Under the Annual Bonus, the maximum opportunities for the year were 100% of salary for James Wroath, 150% of salary for Adrian Colman and 120%
of salary for Tim Lawlor (pro-rated for the proportion of the year served for Mr Wroath and Mr Colman). The performance measures were underlying
profit before tax (PBT) and delivery of strategic objectives and achievements as detailed below.
Underlying PBT performance (75% of Annual Bonus):
Underlying PBT target
Proportion of maximum payable
Threshold
£51.0m
25%
Target
£52.5m
50%
Maximum
£55.5m
100%
Actual
£52.9m
58%
58
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report Strategic objectives and achievements for Tim Lawlor (25% of Annual Bonus):
Objective
Health and safety
Revenue growth
Cash flow
People and organisation
Total (maximum 25%)
Weighting
5%
10%
5%
5%
25%
Achievement
Delivery of record Health & Safety performance, with LTIFR of 0.41, and significant
outperformance of the maximum target of 0.49.
Group revenue growth exceeded the target set by the Committee. Sales wins during the year
were below the threshold target set.
Cash flow exceeded the maximum target set.
Successful CEO induction, managing key relationships through a significant period of change.
Improved engagement scores from prior year. Leadership through Project Turquoise.
20% / 25%.
Strategic objectives and achievements for James Wroath (25% of Annual Bonus):
Mr Wroath joined on 2 September 2019 and his annual opportunity was therefore pro-rated. His strategic objective was set based on revenue growth
targets aligned with those set for Mr Lawlor at the beginning of the year. Achievement against this objective was 50% of the maximum for this
element (12.5%/25%).
Strategic objectives and achievements for Former CEO (25% of Annual Bonus):
Given Mr Colman was due to step down as CEO on 2 September 2019, the Committee considered it appropriate to measure his performance under
the strategic objectives element of the Annual Bonus on effecting a smooth transition to Mr Wroath. In the event this was considered achieved by the
Committee, the payout percentage would be equal to the payout percentage under the PBT element of the Annual Bonus.
Following consideration of the above, the Committee awarded annual bonuses as follows:
Objective
Underlying PBT outturn (% of bonus)
Strategic objectives outturn (% of bonus)
Overall outturn (% of bonus)
Weighting
75%
25%
James Wroath
44%
12%
56%
Adrian Colman
44%
14%
58%
Tim Lawlor
44%
20%
64%
The annual bonus awards received by Mr Wroath and Mr Colman were pro-rated to reflect their time in service.
The Committee considered the appropriateness of the formulaic annual bonus outcomes in the context of overall Group and individual performance.
This was a year of solid progress for Wincanton with revenue up 5.2% and underlying profit before tax up 7.3%. While COVID-19 is impacting our
business, for the financial year to 31 March 2020, we achieved our profit targets. The Committee considered the amounts carefully in the context of
the Group's performance, and current environment and determined that the amounts were a fair reflection of performance in the past financial year.
The approach aligns with that taken for the wider management population.
We announced, following the end of the year that the final dividend, which would ordinarily be paid in July, would be suspended. This reflected that
we considered it prudent to hold as much cash as possible until we can fully assess the financial implications. The Committee considered that it was
important to align bonus payments for Executive Directors with the suspension of dividends for our shareholders and therefore determined that
100% of the bonus earned would be deferred, with no cash payments during FY21.
CEO
CFO
Portion of annual
bonus deferred
100%
Form of deferral
50% cash, 50% shares
– The cash bonus will be deferred until July 2021 (subject to the
dividend being reinstated) or March 2022 at the latest.
Deferral period
100%
50% cash, 50% shares
– The share element will be deferred until March 2022 (or when the
dividend is reinstated if later).
– No less than 20% of the CEO’s bonus will be retained in shares for
two years.
Buyout award for James Wroath
No payments in relation to the annual bonus buyout from Lufthansa will be made.
2017 LTIP
In July 2017, Long Term Incentive Plan (LTIP) awards of 100% of salary were granted to Adrian Colman and Tim Lawlor, based on underlying EPS growth
performance and relative TSR performance vs. the FTSE All-Share Index (excluding investment trusts).
The performance targets and actual performance are shown in the table below:
Measure
Underlying EPS growth (60%)
Relative TSR (40%)
Total LTIP vesting
Target range
(Straight-line vesting between threshold and maximum)
Threshold (25% of
maximum vesting)
6% p.a. growth
TSR equal to Index
Maximum
11% p.a. growth
TSR equal to Index +10% p.a.
Actual performance achieved
9% p.a. growth
TSR equal to Index +3.2% p.a.
No awards were due to vest to James Wroath in 2019/20.
Vesting
(% of maximum)
67%
49%
59%
59
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 LTIP awards made in the year ended 31 March 2020 (audited)
LTIP awards of 150% and 100% of salary were made to James Wroath and Tim Lawlor respectively during the year, as set out below. No grant was
made to Adrian Colman.
James Wroath
Tim Lawlor
Date of award
2 September 2019
12 July 2019
Vesting date
2 September 2022
12 July 2022
1 Average share price over the three business days preceding the date of grant.
Share price1
£2.26
£2.64
No. of nil-cost options
granted under the LTIP
164,546
119,763
Face value
of award (£)
371,874
315,767
The awards are subject to underlying EPS growth performance and relative TSR performance vs. the FTSE All-Share Index (excluding investment
trusts), with performance weightings and targets in line with those applicable to the 2017 LTIP.
Incentive framework for FY21
We have formalised in our Remuneration Policy the rebalancing of the incentive package from the short term to the long term for the CEO and
new executive directors. Total incentive maximums are the same but the CEO’s Annual Bonus maximum is now 100% of salary with the LTIP
increased to 150% of salary. The Committee considered it was reasonable to keep the incumbent CFO's incentives unchanged at 120% Annual Bonus
and 100% LTIP.
The annual bonus plan opportunity for Executive Directors for FY21 will be very substantially reduced taking into account the expected impact of
COVID-19 during FY21. The expectation is that the bonus maximum opportunity will be c.50% lower than in a normal year.
The annual bonus framework will continue as 75% based on financial measures and 25% based on non-financial. Given the uncertainty in the first
quarter of the financial year, the Committee delayed consideration of the annual bonus framework for FY21. The expectation is that targets will be
finalised early in the second quarter, with retrospective disclosure provided in the FY21 DRR as normal.
Under our revised Policy we have increased the level of deferral under the Annual Bonus so that 50% of any bonus earned above 50% of maximum
will be compulsorily deferred into shares for a period of two years.
For LTIP awards, given the COVID-19 uncertainty, this year TSR will make up 100% of the performance condition for the FY20 award. The Committee’s
view was that TSR is a well-established and stretching performance condition that is fully aligned to the shareholder experience, and that this is the
simplest approach given the uncertainty around earnings growth as a result of COVID-19. Taking into account shareholder feedback on consultation
for our new Policy, the TSR approach used will be on the more normal ranked basis, rather than out-performance of the TSR index.
Relative TSR vs FTSE All Share excluding investment trusts
Weighting
100%
Threshold (25% of max)
Maximum
Median Upper quartile or above
Our intention is to grant LTIP awards following approval of the new Policy at the AGM. The Committee will consider the share price at the point
of grant when considering the level of award to be granted, mindful of shareholder views. LTIP awards will contain a good practice discretionary
underpin to guard against windfall gains.
Single total figure of remuneration – Non-executive Directors (audited)
The following table sets out the single total figure of remuneration for Non-executive Directors for the years ended 31 March 2020 and 31 March 2019.
£’000
Gill Barr1
Paul Dean
Debbie Lentz2
Stewart Oades3
Dr. Martin Read CBE4
David Radcliffe5
Fees
2020
56
56
39
56
190
35
2019
48
53
–
92
127
45
1 Gill Barr was appointed as Non-executive Director on 15 September 2017 and subsequently appointed as Chair of the Remuneration Committee on 6 November 2018.
2 Debbie Lentz was appointed as a Non-executive Director on 1 June 2019.
3 Stewart Oades took up the role of Interim Chairman between 1 October 2017 and 31 July 2018, during which period his fees reflected those of the prior Chairman. From 1 August 2018,
he resumed his prior role as Senior Independent Director, from which point he was paid the Non-executive Director base fee plus an additional Senior Independent Director fee.
4 Dr. Martin Read CBE was appointed as Chairman on 1 August 2018.
5 David Radcliffe left the Group on 18 December 2019.
60
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report Fees
The base fee paid to the Non-executive Directors has remained unchanged since 2008. Additional fees paid to the Audit and Remuneration
Committee Chairs were last changed in 2014/15.
Consequently, we carried out an external review of Non-executive Director fees for FTSE listed companies of a similar profile to Wincanton (including
other FTSE Small Cap companies) and increased the fees with effect from 1 September 2019. The following fees are payable to the Chairman and
Non-executive Directors.
Non-executive Directors, including the Chairman, volunteered a temporary reduction in fees of 20% applying from 1 April 2020.
Role
Chairman fee
Non-executive Director base fee
Additional Senior Independent Director fee
Additional Remuneration / Audit Committee Chairman fee
Payments to past Directors (audited)
There have been no payments to past directors.
Fee as at
31 August 2019
£190,000
£45,000
£8,000
£8,000
Fee from
1 September 2019
£190,000
£48,000
£10,000
£10,000
Payments for loss of office (audited)
As announced on 9 May 2019, Adrian Colman notified the Board of his intention to retire. Adrian Colman continued to work throughout his 6 month
notice period, stepping down from the Board on 2 September 2019. He continued in employment throughout the period to 31 October 2019 to
ensure a smooth handover.
Mr Colman continued to receive his salary, benefits and pension payments from the announcement on 9 May 2019 to the 31 October 2019, the value
of which has been included in the single figure table. No payments in lieu of notice were made.
Mr Colman remained eligible to receive an annual bonus for FY20, pro-rated for the period of his employment, the full value of which has been
included in the single figure table. In recognition of the Company's focus on cash management, Mr Colman volunteered to defer 50% of his pro-rata
annual bonus payment to July 2021 (subject to the dividend being reinstated) or March 2022 at the latest.
No LTIP award was granted to Mr Colman in 2019.
As disclosed in the 2019 annual report, outstanding LTIP awards have been pro-rated for the proportion of the vesting period served and will remain
subject to performance testing at the normal date. These outstanding incentive awards (set out below) are subject to mitigation in the event of his
employment elsewhere (excluding charitable work or his appointment as a non-executive director or similar).
FY17 LTIP
FY18 LTIP
Date of award
18 July 2017
24 July 2018
Vesting date
18 July 2020
24 July 2021
Outstanding shares (as at 31 March 2020)
133,584
68,723
The Company reimbursed £5,000 (plus VAT) of legal fees incurred in connection with his cessation of employment.
Share ownership and share interests (audited)
Executive Directors are subject to shareholding requirements. James Wroath and Tim Lawlor are required to accrue and then maintain a holding
of shares with a value of 200% and 150% of salary respectively within five years, as assessed by the Committee from time to time.
At 31 March 2020, Mr Wroath and Mr Lawlor held shares to the value of £25,200 and £367,650, representing 6% and 117% of salary respectively.
Post-cessation shareholding policy
Under the new post-cessation shareholding requirements introduced this year, departing Executive Directors will normally be required to hold
Company shares for a period of time following cessation of their roles as Executive Director. The policy will take effect from 1 April 2020 and will
apply to shares delivered or acquired from Annual Bonus deferral and LTIP vesting from this date.
Under this policy:
– Executive Directors will be required to hold shares to the value of 100% of their incumbent shareholding requirement (or their actual shareholding,
excluding personal investment, on cessation if lower).
– This shareholding will apply for one year post departure.
– Shares no longer subject to performance conditions (e.g. deferred annual bonus or LTIP shares within the holding period) will count towards the
requirement on a net-of-tax basis.
– The Committee retains discretion to operate this policy flexibly and waive part or all of the policy, for example in compassionate circumstances.
61
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 Total share interests as at 31 March 2020
Shares
Nil cost options
Options
Owned / vested
31 March 2020
Owned / vested
31 March 2019
Unvested and
subject to
continued
employment
Vested but
unexercised
Unvested and
subject to
performance
Vested but
unexercised
Unvested and
subject to
performance
10,000
145,893
36,509
4,000
10,000
4,000
19,367
N/A¹
N/A¹
70,885
36,509
4,000
10,000
N/A¹
19,367
25,000
N/A¹
1,181,630
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
164,546
354,781
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Director
James Wroath
Tim Lawlor
Dr. Martin Read CBE
Gill Barr
Paul Dean
Debbie Lentz
Stewart Oades
David Radcliffe
Adrian Colman
1 Not in employment at this date therefore N/A.
There were no changes in the Directors’ personal holdings between 1 April 2020 and the date of this report.
Share plan interests
Date of award
Vest date
Option
exercise
price
Share price at
date of award1
No. of shares
under award as
at 1 April 2019
Shares awarded
during the year
No. of shares
vested 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 2020
James Wroath
LTIP
Adrian Colman
LTIP
LTIP
LTIP
Tim Lawlor
LTIP
LTIP
LTIP
LTIP
2 Sep 2019
2 Sep 2022
Nil
£2.26
–
–
164,546
164,546
–
–
–
–
–
–
164,546
164,546
21 Jul 2016
18 Jul 2017
24 Jul 2018
21 Jul 2019
18 Jul 2020
24 Jul 2021
21 Jul 2016
18 Jul 2017
24 Jul 2018
12 Jul 2019
21 Jul 2019
18 Jul 2020
24 Jul 2021
12 Jul 2022
Nil
Nil
Nil
Nil
Nil
Nil
Nil
£1.77
£2.51
£2.74
£1.77
£2.51
£2.74
£2.64
246,582
175,299
162,409
584,290
169,492
121,514
113,504
–
404,510
–
–
–
–
–
–
–
119,763
119,763
206,142
–
–
206,142
141,526
–
–
–
141,526
40,440
41,715
93,686
175,841
27,966
–
–
–
27,966
206,142
–
–
206,142
141,526
–
–
–
141,526
–
133,584
68,723
202,307
–
121,514
113,504
119,763
354,781
1 Three-day average share price immediately preceding the date of award.
Service agreements
All Executive Directors are appointed on the basis of a 12-month rolling period, subject to election and annual re-election by the Company’s
shareholders at the AGM. Details of employment contracts for the Executive Directors are summarised in the table below:
Director
James Wroath
Tim Lawlor1
Date of appointment
to the Board
2 Sep 2019
28 Sep 2015
Date of current contract
8 May 2019
6 Jul 2015
Notice period (Company)
12 months
12 months
Notice period (Director)
6 months
6 months
Unexpired term as at
31 March 2020
Rolling 12 months
Rolling 12 months
1 The contractual provisions of Mr Lawlor’s service contract provide for the following in the event of a change of control:
– If the Director or the Company provides notice to terminate employment within 12 months of a change of control, the Director is entitled to a payment of 12 months’ basic salary (less any
payment for, or in lieu of, notice).
– As such, the Director giving notice following a change of control would be entitled to a payment of 12 months’ basic salary, rather than six months. Any additional payment is made one
month following cessation of employment with no mitigation in the event of alternative employment.
The practical implications of the provisions are that on a change of control the notice period for Mr Lawlor extends from six months to 12 months, and the extent to which mitigation can
be applied is more limited. Note that, notwithstanding the provisions, the payments to Mr Lawlor on a change of control would not exceed 12 months’ salary and benefits.
No such provision exists within James Wroath’s service contract or will be included in future Executive Directors’ contracts.
62
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report The Chairman and Non-executive Directors are appointed under letters of appointment. All Directors are subject to re-election every three years,
however all Directors currently put themselves forward for annual re-election at each AGM. Details of appointment dates and terms for the Chairman
and Non-executive Directors are summarised in the table below.
Director
Dr. Martin Read CBE
Gill Barr
Paul Dean
Debbie Lentz
Stewart Oades
Date of appointment
to the Board
1 Aug 2018
15 Sep 2017
1 Feb 2015
1 Jun 2019
1 Nov 2014
Date of original letter
of appointment
15 Jul 2018
12 Sep 2017
21 Jan 2015
7 Mar 2019
30 Oct 2014
Date of current letter
of appointment
15 Jul 2018
31 Jul 2018
31 Jul 2018
7 Mar 2019
31 Jul 2018
Unexpired term as at
31 March 2020
17 months
6 months
10 months
27 months
7 months
The Executive Directors’ service contracts and Chairman and Non-executive Directors’ letters of appointment are available for inspection by
shareholders at the Company’s registered office and will be available at the 2020 AGM.
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.
Performance graph and CEO remuneration table
The graph below sets out the TSR performance of the Company and of the FTSE SmallCap Index. The SmallCap is considered to be the most
appropriate comparator as the Company is a constituent of this 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 – Value of £100 invested on 31 March 2010 (£)
250
200
150
100
50
0
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2015
Mar
2016
Mar
2017
Mar
2018
Wincanton
FTSE AllShare xIT
FTSE Small Cap
Mar
2019
Mar
2020
Source: Datastream
The table below sets out the total remuneration paid and the proportion vesting under Annual Bonus and Long Term Incentive Plans, as a percentage
of the maximum that could have been achieved in each year of the same period as set out in the graph above, for the Chief Executive Officer:
Year ended 31 March
2020
2020
2019
2018
2017
2016
2016
2015
2014
2013
2012
2011
2011
Chief Executive
James Wroath1
Adrian Colman1
Adrian Colman2
Adrian Colman
Adrian Colman
Adrian Colman3
Eric Born3
Eric Born
Eric Born
Eric Born
Eric Born
Eric Born4
Graeme McFaull4
Chief Executive single figure
of total remuneration
£’000
621
554
1,541
1,933
2,008
1,653
3,750
2,051
1,264
893
710
249
397
Annual Bonus outturn
(% of maximum)
56%
58%
65%
56%
73%
61%
–
56%
68%
69%
41%
0%
0%
LTIP vesting
(% of maximum)
n/a
59%
84%
98%
100%
100%
100%
100%
100%
100%
100%
n/a
0%
1 James Wroath was appointed on 2 September 2019, on which date Adrian Colman stepped down as CEO. These figures contain pro-rated remuneration in respect of each Director according
to the period served.
2 For the year ended 31 March 2019, the LTIP figure has been updated for the actual share price on the date of vesting of the 2016 LTIP.
3 Adrian Colman was appointed on 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 Eric Born was appointed on 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.
63
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 Percentage change in Chief Executive remuneration
The table below sets out the percentage change in salary, benefits and annual bonus awarded to the Chief Executive Officer between the year ended
31 March 2019 and year ended 31 March 2020, compared to the change for all colleagues.
Salary
Taxable benefits
Annual Bonus
2019/20
£’000
509
242
366
CEO1
2018/19
£’000
445
26
438
Increase/
(decrease)
14.4%
830.8%
(16.4)%
Average
change for
employees
(1.2)%2
(6.5)%
5.0%
1 The CEO values for 2019/20 represent the combined remuneration for James Wroath and Adrian Colman, including remuneration paid to Adrian Colman in respect of the period between the
2 September and 31 October in which he was no longer the CEO. Taxable benefits for 2019/20 includes the relocation fees paid to James Wroath.
2 The calculation of the average change in salary for employees excludes joiners and leavers during the year.
Relative importance of spend on pay
The table below sets out the change in total remuneration of all employees and dividends paid to shareholders from year ended 31 March 2019
to year ended 31 March 2020.
Item
Remuneration of all employees1
Dividend
1 Includes all personnel expenses, as set out in Note 5 to the consolidated financial statements.
31 March 2020
£m
608.7
4.8
31 March 2019
£m
556.6
13.5
Difference
£m
52.1
(8.7)
External advisers
During the year, external advisers attended Committee meetings upon invitation to provide advice and support to the Committee.
Deloitte LLP were appointed as advisers to the Committee on 9 January 2019 following a competitive tender process.
Deloitte LLP is a founding member of the Remuneration Consultants Group and a signatory to the Code of Conduct for Remuneration Consultants.
For more detail please refer to the website, www.remunerationconsultantsgroup.com. The Committee is comfortable that Deloitte LLP provides
objective and independent remuneration advice and has no conflicts of interest with the Group that may impair its independence.
Total fees payable to Deloitte LLP for advice provided to the Committee during the year amounted to £152,280. Deloitte LLP also provided share
scheme and taxation advice in the period.
Statement of shareholder voting
The table below sets out the Company voting outcome of the advisory resolution for approval of the Annual Report on Remuneration at the
2019 AGM:
Votes for
82,076,361
%
90.50
Votes against
8,617,871
%
9.50
Total votes
90,694,232
% of issued share
capital voted
72.82
Votes withheld
145,641
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 issued share
capital voted
67.83
Votes withheld
56,154
The Directors’ Remuneration Report has been prepared on behalf of the Board by the Remuneration Committee in accordance with the UK
Corporate Governance Code, the Listing Rules and the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
64
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report Directors’ Remuneration Policy
The following section sets out our proposed
Directors’ Remuneration Policy, which will be
presented to shareholders for approval at the
2020 AGM. The Policy is intended to take effect
from this date and will operate for up to three
years until the 2023 AGM.
A full review of the Policy was undertaken
during the course of the 2020 financial year
ahead of submitting a revised Policy to
shareholders, to continue to motivate delivery
of the Company strategy whilst, at the same
time, providing ever closer alignment with the
shareholder experience. Input was received
from the Chairman and Executives, while
ensuring that conflicts of interest were suitably
mitigated. We undertook a formal shareholder
consultation exercise in early 2020 to provide
our major shareholders with the opportunity to
comment on our proposals, and we discussed
all feedback received as a Committee when
determining if any subsequent changes should
be made to our proposals.
When reviewing the Policy and its disclosure,
the Committee took into consideration
the following:
– Close alignment to the ongoing
Company strategy;
– Close alignment with our key stakeholders,
including our shareholders, customers
and employees;
– Due consideration of latest corporate
governance developments and the views of
our shareholders;
– Ensuring that total remuneration levels
are fair, proportionate and competitive
in comparison to companies of a similar
size and complexity to Wincanton, and
appropriately reflect the responsibilities and
experience of the individual;
– Ensuring that the remuneration structure
appropriately incentivises and rewards
achievement of the Company’s short term
and long term objectives;
– The need to retain sufficient flexibility in the
operation of the Policy, such that outcomes
are fair and appropriate in light of business
and individual performance and any
significant external factors; and
– Communicating the Policy in a clear and
concise manner.
Following our review, we believe that the
broad structure of our Policy continues to be
appropriate. In recognition of recent corporate
governance developments and enhancements
we made in our 2019 Directors’ Remuneration
Report (particularly regarding the appointment
of James Wroath as CEO), we have however
made some changes to our Policy as set
out below.
Key policy changes
The key changes to the Policy are:
– Pension contribution levels for the current
CEO and any new hires aligned to the
workforce rate (currently 3% of salary);
– Formalisation of the rebalancing of
maximum total incentive opportunities from
the short term to the long term, for the CEO
and new hires, retaining the same overall
maximum total incentive opportunity of
250% of salary;
– Formalisation of last year’s introduction of
two year holding periods to LTIP awards
granted to Executive Directors from
1 April 2019;
– Introduction of post-cessation shareholding
requirements; and
– Enhanced annual bonus deferral
requirements, so that 50% of any bonus
earned above 50% of maximum will be
deferred into Company shares for two years.
Other minor changes have been made to
improve the operation of the Policy.
The Committee considers that the proposed
changes to the policy, which are largely
focused on good practice features, continue
to be appropriate in the context of the
COVID-19 environment.
Directors’ Remuneration Policy table
The table below sets out the policy in relation to the key components of remuneration.
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 and experience;
– pay and conditions across the workforce; and
– salary levels in companies of a similar size and complexity.
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 significant change in responsibility;
– the salary of a new hire is deliberately set below market levels with the intention to implement a planned increase
on a phased basis in subsequent years subject to individual performance;
– there is a material market misalignment; or
– there is 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.
65
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 Benefits
Purpose and link to strategy
Operation
Opportunity
All employee share plans
Purpose and link to strategy
Operation of all employee
share plans
Opportunity
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;
– Life assurance;
– Private medical insurance for the Executive Director and their direct family;
– Personal accident and travel insurance; and
– Death in service cover.
Additional benefits (including the tax thereon) may be provided if considered appropriate.
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, family travel and tax
equalisation arrangements and may extend to facilitating and/or meeting the costs of re-establishing them
to their previous location at the end of the employment or assignment.
Benefits vary by role and individual circumstance and eligibility is reviewed periodically. Benefits are not anticipated
to exceed 10% of salary per annum over the period for which this policy applies. The Committee retains the
discretion to approve a higher cost in exceptional circumstances (e.g. relocation) or in circumstances where
factors outside of the Group’s control have materially changed (e.g. costs of medical premiums). If this occurs,
the Committee will provide details and rationale in the relevant Annual Report on Remuneration.
The Company encourages voluntary participation in share ownership throughout the Group where share plans
are appropriate.
Under the current all employee share plan arrangements, Executive Directors are entitled to participate in the
Company’s Share Incentive Plan (SIP).
Participants make monthly contributions from their gross salary to buy Partnership Shares. The Company currently
awards one Matching Share for every four Partnership Shares acquired. In addition, any dividends paid in respect
of shares held under the SIP are used to buy Dividend Shares.
In the event that Wincanton were to introduce another all employee plan, the Committee retains the discretion to
allow Executive Directors to participate on the same basis as other employees.
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 maximum opportunity for any other all employee share plans would be in line with limits set for all employees.
Pension
Purpose and link to strategy
Operation of pension
arrangements
Opportunity
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.
Pension contributions will be set in line with the average workforce pension contribution (in percentage of salary
terms) for the CEO and for new Executive Directors appointed from 1 April 2020.
Pension contribution of up to 15% of salary for Executive Directors appointed prior to 1 September 2019.
66
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report Annual Bonus
Purpose and link to strategy
Operation
Opportunity
Performance measure
Recovery provisions
The aim of the annual bonus is to incentivise and recognise the Executive Directors’ contribution to the delivery of
the Group’s strategy by rewarding achievement of financial and strategic objectives, and to demonstrate alignment
to shareholders.
Normally 50% of any bonus earned above 50% of maximum is compulsorily deferred into Company shares for two
years, with the balance paid in cash.
Dividends or dividend equivalents may accrue on Deferred Shares that vest and will ordinarily be paid in shares.
The CEO’s annual bonus opportunity cannot exceed 100% of salary.
Reflecting legacy arrangements, the current CFO’s annual bonus opportunity cannot exceed 120% of salary.
For a new Executive Director, the annual bonus opportunity cannot exceed 100% of salary.
The overall total incentive opportunity (annual bonus plus LTIP, excluding exceptional LTIP policy maximum) in any
one year cannot exceed 250% of salary.
No more than 25% of maximum is payable for ‘Threshold’ performance. Normally 50% of maximum is achievable
for ‘Target’ performance.
Annual performance is typically based on achievement of financial targets and personal or strategic objectives.
Normally, the Committee would expect financial measures to represent between 60% and 80% of the total annual
bonus, with strategic objectives representing between 20% and 40%. However, the Committee retains discretion to
adjust weightings to align with the business objectives for each year.
At the end of the year the Committee reviews the appropriateness of the formulaic outcome and retains the
discretion to adjust the outcome if considered appropriate taking into factors including, but not limited to, the
underlying performance of the business and shareholder and stakeholder experience.
In certain circumstances, the Committee has the ability to apply malus to unvested deferred bonus awards
or clawback to awards paid.
Long Term Incentive Plan (LTIP)
Purpose and link to strategy
Operation
Opportunity
Performance measures
Recovery provisions
The aim of the LTIP 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.
Awards may be granted as nil cost options or conditional share awards.
For LTIP awards granted from 1 April 2019, any share awards that vest are subject to a two year holding period.
Dividends or dividend equivalents may accrue on any shares that vest and will ordinarily be paid in shares.
Maximum award levels for Executive Directors are 150% of salary. The overall total incentive opportunity (annual
bonus plus LTIP, excluding exceptional LTIP policy maximum) in any one year cannot exceed 250% of salary.
In exceptional circumstances, for example on recruitment, individual awards may be granted up to 250% of salary.
No more than 25% of an award may vest for ‘Threshold’ performance.
Performance is normally measured over a period of no less than three years.
The Committee will review the performance measures and weighting for each award to ensure alignment
with Wincanton’s strategy. A significant portion of awards will be based on financial (e.g. EPS growth) and/or
shareholder return (e.g. relative TSR).
Performance measures for awards granted in 2020 will be based on TSR relative to an appropriate
comparator group.
Following the end of the performance period the Committee reviews the appropriateness of the formulaic
outcome and retains the discretion to adjust the outcome if considered appropriate taking into factors including,
but not limited to, the underlying performance of the business and shareholder and stakeholder experience.
In certain circumstances, the Committee has the ability to apply malus to unvested LTIP awards or clawback to LTIP
awards paid or subject to the holding period.
67
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 Shareholding requirement
Purpose and link to strategy
Operation
Non-executive Directors
Purpose and link to strategy
Operation
Opportunity
Ensures alignment between Executive Directors and shareholders through building a meaningful shareholding
in the Company, including for a period of time post departure.
Shareholding guidelines for the CEO are to accrue and then maintain a holding of shares with a value of 200%
of salary as assessed by the Committee from time to time.
Shareholding guidelines for other Executive Directors are to accrue and then maintain a holding of shares with
a value of 150% of their salary.
A post-cessation shareholding policy will operate for departing Executive Directors. The Committee has the
discretion to waive this requirement in certain circumstances (e.g. compassionate circumstances).
The Company seeks to attract and retain a high calibre Chairman and Non-executive Directors by offering market
competitive fee levels.
Fees are set by reference to responsibilities, expected time commitments and market levels for companies
of a similar size and complexity to Wincanton.
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.
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 (and any associated tax incurred on these costs).
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 CEO.
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. Aggregate fees for the
Chairman and Non-executive Directors will not exceed the limit as set out in the Company’s Articles of Association.
68
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report Notes to the Directors’
Remuneration Policy
Choice of performance measures and
approach to target setting
For the annual bonus, a profit-based metric will
normally be used as the primary measure of
performance. We consider this reflects the basis
on which the Group is managed: sustained
profit performance improvement should
enable the Group to maintain the strength
of its balance sheet and financial position,
and secure the long term success of the
Group for the benefit of all of its stakeholders.
Strategic objectives are also normally set under
the annual bonus to incentivise and reward the
delivery of other objectives that are key to the
Company in the year, for example in relation
to the health and safety of our employees.
The specific strategic objectives will be
selected each year to reflect the priorities
for that specific financial year.
The specific performance measures applying
to awards are reviewed ahead of each award
to ensure they align to shareholders’ interests
and are appropriately aligned to Wincanton’s
long term strategy. A significant proportion
of the LTIP are tied to long term financial
targets growth, which in turn are tied to the
long term financial goals of the Company,
and/or shareholder return metrics, which
align Executive Director remuneration with
shareholder interests.
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.
Discretions
The Committee operates the Company’s
incentive plans according to their respective
rules 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 plan rules;
– discretion to adjust the targets and/or set
different measures and alter weightings
for incentives if events occur (e.g.
material divestment of a group business or
changes to accounting standards) which
cause the Committee to determine that an
adjustment or amendment is appropriate
so that the conditions achieve their
original purpose;
– discretion to adjust annual bonus or
LTIP outcomes if they are considered to
be inconsistent with overall Company
performance, taking into account any
relevant factors. While the Committee
anticipates that any such discretion
would normally result in a reduction to
outcomes, the Committee retains the
right to make an upwards adjustment if
considered appropriate;
– in exceptional circumstances, amendment
of any performance conditions applying
to a share 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 certain circumstances
(e.g. 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 (e.g. 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.
In the event of a temporary base salary
reduction, the Committee retains the discretion
to apply the limits in the policy table relating
to pension, annual bonus and LTIP to the base
salary prior to any such reduction. Where such
temporary base salary or fee reductions are
made, the Committee reserves the ability
(either in part or in full) to reimburse at a later
date taking into account all factors deemed
relevant (e.g. underlying financial health of
the Group).
Minor changes
The Committee may make minor amendments
to the Policy set out above (e.g. 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
The Committee reserves the right to make
any remuneration payments and payments
for loss of office (including exercising any
discretions available to it in connection with
such payments) notwithstanding that they are
not in line with the policy set out above where
the terms of the payment were agreed:
before 1 April 2015 (the date the
(i)
Company’s first shareholder-approved
Directors’ Remuneration Policy came
into effect);
before the Policy set out above came
into effect, provided that the terms
of the payment were consistent with
the shareholder approved Directors’
Remuneration Policy in force at the
time they were agreed; or
(ii)
(iii) at a time when the relevant individual was
not a Director of the Company and, in the
opinion of the Committee, the payment
was not in consideration for the individual
becoming a Director of the Company.
For these purposes ‘payments’ includes the
Committee satisfying awards of variable
remuneration and, in relation to an award
over shares, the terms of the payment are
‘agreed’ at the time the award is granted.
Differences between the
Remuneration Policy for Executive
Directors and employees generally
Pay mix – The remuneration package for the
Executive is more heavily weighted towards
variable pay and share ownership than for
other employees, to make a greater part of
their pay conditional on the delivery of the
Company’s strategy and performance.
Salary – Wincanton’s approach to salary
reviews is consistent across the Group, and
the workforce salary environment is taken into
consideration when reviewing salary increases
for Executive Directors.
Pension – All employees, including the
Executive Directors, are eligible to become
members of one of the defined contribution
sections of the Wincanton plc Pension Scheme.
Under the Directors’ Remuneration Policy, the
pension contribution level for the CEO and any
new appointments is aligned (in percentage
of salary terms) with the wider workforce.
69
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 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 – The most senior
individuals 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.
Share Incentive Plan – The Company
operates a tax-advantaged SIP and actively
promotes SIP participation to all employees
to align their interests to delivery of Group
strategy and performance by providing the
opportunity to become shareholders in order
to share in the Group’s growth and success.
Within the SIP all participants are currently
eligible to receive one matched share for
every four shares purchased.
Employment conditions elsewhere
in the Group
When making remuneration decisions, to
ensure there is a fair and consistent approach
to remuneration, the Committee considers pay
and employment conditions across the Group,
such as determination of salary increases to
Executive Directors with reference to the
range of base pay increases within the Group.
The Committee also reviews base salaries,
pension provision, annual bonuses and LTIP
awards for the EMT.
The Committee does not formally consult with
employees on a routine basis but does so if any
significant changes to Group remuneration
and employment policies are proposed.
The Committee receives information on the
annual base salary reviews across the Group
and the annual bonus and LTIP awards made to
employees that report into the EMT and below.
The Committee members, as Directors, receive
the annual employee consultation results
which are presented to the Board.
Consideration of shareholders’ views
The Committee considers best practice
developments and publications from
institutional investors and shareholder bodies
as well as any shareholder views expressed
during dialogue. The Committee is committed
to maintaining an open and consultative
dialogue with Company shareholders and
shareholder bodies.
During the financial year a formal shareholder
consultation exercise was undertaken as part
of the review of the Policy, to provide the
major shareholders with the opportunity to
comment on our proposals. In total, over 75%
of the shareholder base were consulted, as well
as the proxy voting agencies. The Committee
took this feedback into account when
developing the 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 relevant
market benchmarks. Initial salaries may be
deliberately set below market levels with the
intention to implement a planned increase
on a phased basis in subsequent years subject
to development in the role and individual
performance. Variable pay opportunities will be
subject to the maximums set out in the tables
within the Directors’ Remuneration Policy.
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
take into account relevant factors, including:
the structure and value of the awards forfeited;
the performance conditions and timeframes
attached to those awards; and the likelihood
of those conditions being met. Such buyout
awards would be granted under the
Company’s existing share plans where practical,
however if needed the Company will grant
awards outside these plans as permitted under
the Listing Rules.
In the case of an internal promotion, any
outstanding variable pay awarded in relation
to the previous role will normally be continued
on the original terms.
Service contracts and payments on
termination and change of control
Under the Executive Directors’ service
contracts, the Company is required to give
12 months’ notice, and the Director is required
to give six months’ notice in the case of
Mr Lawlor and 12 months’ notice in the case
of Mr Wroath. For the appointment of a new
Executive Director, notice period would not
exceed 12 months.
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.
As set out in our 2019 Directors’ Remuneration
Report, on a change of control, the contractual
provisions for Mr Lawlor are such that, if he or
the Company provides notice to terminate
employment within 12 months of a change
of control, he is entitled to a payment of
12 months’ basic salary (less any payment for,
or in lieu of, notice). As such, if he were to give
notice following a change of control he would
be entitled to a payment of 12 months’ basic
salary rather than six months as would be the
case in normal circumstances. Any additional
payment is made one month following
cessation of employment with no mitigation in
the event of alternative employment. Note that,
notwithstanding this provision, the payment
to Mr Lawlor on a change of control would not
exceed 12 months’ salary and benefits. No such
provision exists within James Wroath’s service
contract or will be included in future Executive
Directors’ contracts.
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.
70
Wincanton plc Annual Report and Accounts 2020
REMUNERATION COMMITTEE REPORT CONTINUEDDirectors’ remuneration report 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 normally not forfeit
long term incentive awards on cessation of
employment. The awards would continue
to be held by the good leaver until vesting,
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 would only 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 the
Committee determines that any performance
conditions attached to the relevant awards
have been achieved. The awards would,
unless the Committee determines otherwise,
be pro rated for the amount of time worked
by the Executive Director prior to the change
of control. Alternatively, unvested long term
incentive arrangements may not vest on a
change of control and may be replaced by
an equivalent new award determined by the
acquiring Company.
Letters of appointment for Non-executive Directors
The Chairman and Non-executive Directors’ terms of appointment are set out in their respective
letters of appointment. All Directors are subject to re-election every three years in accordance with
the Company’s Articles of Association. In line with corporate governance best practice, all Directors
currently put themselves forward for annual re-election at each AGM. The required notice period
is up to six months’ written notice from either party. Non-executive Directors are not normally
entitled to any remuneration on loss of office.
Illustrations of application of the Remuneration Policy
The charts below set out the potential value and composition of the CEO and CFO remuneration
packages for the year ending 31 March 2021.
The charts show four scenarios: (i) minimum, (ii) target, (iii) maximum, and (iv) maximum with 50%
share price growth. The scenarios exclude the impact of any accrual of dividends or dividend
equivalents. The basis of calculation for each scenario is set out in the table below.
Fixed pay
Maximum plus 50%
Minimum
share price growth
– Salary effective from 1 July 2020 (excluding temporary 20% reduction)
– Benefits based on figure for the financial year ended 31 March 2020. For James
Maximum
Target
Wroath, this excludes the one-off relocation benefits paid in FY20.
Annual bonus Nil payout
Nil payout
LTIP
50% of maximum 100% of maximum 100% of maximum
25% of maximum 100% of maximum 100% of maximum plus
50% share price growth
Chief Executive
Fixed
Target
Maximum
Maximum + share
price growth (50%)
100%
55%
30%
25%
25%
19%
28%
23%
42%
35%
17%
Fixed pay
Annual bonus
LTIP
Share price growth
Chief Financial Officer
Fixed
Target
Maximum
Maximum + share
price growth (50%)
100%
59%
35%
31%
12%
29%
35%
31%
29%
26%
13%
Fixed pay
Annual bonus
LTIP
Share price growth
£470,000
£848,000
£1,549,000
£1,872,000
£402,000
£687,000
£1,139,000
£1,307,000
71
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 The Company
Wincanton plc (the Company) 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 which includes
no branches. The Company is listed on the
London Stock Exchange main market with
a premium listing. 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 30 on pages 119 and 120.
Review of business and future
developments
The business review and details of future
developments are contained within the
Strategic report on pages 1 to 35.
Compliance Reporting
Directors report
The Directors present the Annual Report
together with the audited financial statements
of the Company and the Group, for the year
ended 31 March 2020.
The Directors’ report required by the
Companies Act 2006 comprises the
Strategic report on pages 1 to 35, the
Corporate Governance report on pages 36
to 51 and Directors’ Remuneration report on
pages 52 to 71.
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 2020, 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 35, and includes reviews of the business and
financial performance and the principal risks
and uncertainties facing the Group.
Within the Strategic report, a summary review
of the Group’s activities during the financial
year along with its future prospects are
contained in the Chairman’s review on page 2.
Details of the Group’s business goals, strategy
and model are set out on pages 4 and 9.
A statement on engagement with our
stakeholders and how the Board has complied
with s.172 of the Companies Act is included at
page 9.
Corporate Governance reporting
During the year ended 31 March 2020, the
Company has complied with the UK Corporate
Governance Code 2018. Details of the
Company’s compliance with the UK Code, the
disclosures required under the Code and the
UK Listing Rules can be found in the Corporate
Governance Report on page 37.
The corporate governance statement required
by Rule 7.2.1 of the FCA’s Disclosure Guidance
and Transparency Rules is set out on page 37.
Management report
For the purposes of Rule 4.1.5R(2) and Rule
4.18 of the FCA’s Disclosure Guidance and
Transparency Rules, this Directors’ report and
the Strategic report on pages 1 to 35 and 72 to
75 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 28 of
the Group financial statements, on pages 116
to 119.
Directors
The Directors during the year and to the date
of this report, are:
Executive Directors
– Adrian Colman, Chief Executive Officer
(retired 2 September 2019)
– James Wroath, Chief Executive Officer
(appointed 2 September 2019)
– Tim Lawlor, Chief Financial Officer
Non-executive Directors
– Dr. Martin Read CBE, Chairman
– Stewart Oades, Senior Independent Director
– Paul Dean
– David Radcliffe (retired 18 December 2019)
– Gill Barr
– Debbie Lentz (appointed 1 June 2019)
– Mihiri Jayaweera (appointed 7 April 2020)
The rules governing the appointment and
replacement of Directors are set out in the
Company’s Articles of Association.
At the 2020 AGM, six of the Directors will offer
themselves for re-election. James Wroath and
Mihiri Jayaweera are proposed for election to
the Board following their appointment during
the year. The biographical details for all the
Directors are set out on pages 38 and 39.
Copies of the Executive Directors’ service
contracts are available to shareholders for
inspection at the Company’s registered office
and at the Annual General meeting (AGM).
Details of the letters of appointment for the
Non-executive Directors are set out in the
Directors’ Remuneration Policy on page 70.
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.
Financial Disclosures
Going concern
The financial statements have been prepared
on a going concern basis, as set out in the
Statement of Directors’ Responsibilities on
page 74. Having considered the ability of the
Company and the Group to operate within its
existing facilities and meets its debt covenants,
the Directors have a reasonable expectation
that the Company and the Group have
adequate resources to continue in operational
existence for the foreseeable future.
In determining whether the Group and
Parent Company’s financial statements can
be prepared on a going concern basis, the
Directors considered the Group’s business
activities, together with the factors likely to
affect its future development, performance
and position. The review also included the
financial position of the Group, its cash flows,
and borrowing facilities.
The Board considered in detail the future
impact on the Group of the COVID-19 outbreak.
Further details on how the virus is impacting
the Group can be found in the Financial Review
on pages 24 and 31. The Board has considered
a base case and a severe but plausible
downside case.
In both scenarios, the Group has adequate
headroom in existing bank facilities to fund
itself. In the severe downside case only the
Group exceeds the leverage ratio covenant
at 31 March 2021 giving rise to a material
uncertainty around going concern – further
details are provided in the Basis of Preparation
note in Note 1 Accounting Policies in the
financial statements.
72
Wincanton plc Annual Report and Accounts 2020
DIRECTORS’ REPORTDirectors’ report In this scenario the Board would expect
to negotiate with the syndicate banks to
temporarily amend the leverage ratio covenant
so that it would not be breached.
Other key factors considered by the
Directors were:
– The implications of the current economic
environment and future uncertainties
around the Group’s revenues and profits
by undertaking forecasts and projections
on a regular basis;
– The impact of the competitive environment
within which the Group’s businesses operate;
– The potential actions that could be taken
in the event that revenues are worse than
expected, to ensure that operating profit
and cash flows are protected.
Results and dividends
The Group profit attributable to equity
shareholders for the financial year amounted
to £38.5m. As announced to the market on
the 14 May 2020, in light of the disruption
and uncertainty caused by COVID-19, the
Board has taken the decision to preserve cash
determining that the final dividend, which
would ordinarily be declared and paid to
shareholders in July, should be suspended.
The Board recognises the importance of the
dividend to our shareholders and will keep
dividend payments under review as the
year progresses.
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.
Disclosure of information to auditor
The Directors who held office at the date
of approval of this Directors’ report confirm
that, so far as they are each aware, there is
no relevant audit information of which the
Company’s auditor is unaware; and each
Director has taken all the steps that they ought
to have taken as a director to make themselves
aware of any relevant audit information and to
establish that the Company’s auditor is aware of
that information.
Shareholder
Aberforth Partners
Columbia Threadneedle Investments
Schroder Investment Management
Tellworth Investments
Unicorn Asset Management
Polar Capital
M&G Investment Management
Equity Disclosures
Share capital
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 2019
AGM to purchase its own shares within
certain limits. During the year ended 31 March
2020, the did not purchase shares under this
authority. The Directors will seek renewal of
their authority to purchase in the market the
Company’s shares at the 2020 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.
Greenhouse gas emissions
The disclosures concerning greenhouse gas
emissions required by law are included in the
Corporate Responsibility Report, on page 21.
Charitable donations
During the year ended 31 March 2020, the
Group contributed £11,440 (2019: £10,600)
to charitable and community programmes.
Political donations
No political donations were made during
the year (2019: nil).
Number of
shares held
20,315,908
19,813,171
9,789,425
8,417,071
6,000,000
4,866,893
4,633,433
Holding
(% of issued
share capital)
16.31
15.91
7.86
6.76
4.82
3.91
3.72
Substantial shareholdings
The Company has been advised under the
Financial Conduct Authority’s Listing Rules and
Disclosure Guidance and Transparency Rules,
or has ascertained from its own analysis, the
above interests held in the voting rights of the
Company’s issued share capital.
Annual General Meeting
The Company’s AGM will be held at 11:00am
on Wednesday, 22 July 2020 and this year,
due to COVID-19, will be held by a listen-only
conference call. The Notice of Annual General
Meeting 2020, which contains full explanations
of the business to be conducted at the AGM,
is set out in a separate Notice addressed
to shareholders, and can be found on the
Company’s website (www.wincanton.co.uk).
External Auditor
The Board will propose a resolution at the
2020 AGM for shareholders to approve the
appointment of BDO LLP as the Company’s
Auditor for the year ended 31 March 2021
and authority to fix their remuneration.
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.
Further information about how we engage
with and look after our employees can
be found in the Corporate Responsibility
section of this report.
On behalf of the Board
Lyn Colloff
Company Secretary
16 June 2020
Wincanton plc Annual Report and Accounts 2020
73
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 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.
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 June 2020.
Tim Lawlor
Chief Financial Officer
Wincanton plc
Registered in England and Wales No. 04178808
74
Wincanton plc Annual Report and Accounts 2020
Directors’ reportDIRECTORS’ REPORT CONTINUED Progress we have made
We have continued to review and improve the
way we seek to ensure there is no forced labour
or human trafficking in our workforce or our
supply chain.
Since we published our Modern Slavery Act
Statement last year, we have:
– Reviewed our standard contractual terms
that require our suppliers to commit to
contributing to the prevention of modern
slavery and human trafficking and to
adhere to our Supplier Code;
– We have continued our programme of
reviews to assess compliance by third
party agencies with their commitments
to preventing modern slavery and human
trafficking and with other legislative
requirements including relevant health
and safety legislation; and
– Enhanced our pre-contract checks to assess
the anti-slavery policies and procedures that
new suppliers have in place.
We will continue to review our policies and
practices in line with our commitment to
safeguarding against modern slavery and
human trafficking in our business and our
supply chain.
This statement is made in accordance with
section 54(1) of the Modern Slavery Act 2015
and was approved by the Board of Directors
on 16 June 2020.
Lyn Colloff
Company Secretary
Statement on compliance with
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.
Our values
Wincanton operates with strong corporate
values: Excellence; Integrity; Passion; Proactivity;
Togetherness, and Trust.
Our values are underpinned by a set of
corporate policies supporting our commitment
to high ethical standards and doing business
with integrity, including:
• A Modern Slavery & Human Trafficking
policy reinforcing our commitment to
ensuring there are no instances of forced
labour, slavery or human trafficking in our
business or supply chain and helping our
people to identify these practices;
• The Wincanton Supplier Code: we are
committed to ensuring that our suppliers
adhere to the highest standards of ethics.
Suppliers are required to demonstrate that
they provide safe working conditions where
necessary, treat workers with dignity and
respect, and act ethically and within the
law in their use of labour. Serious violations
of our supplier code will lead to the
termination of the business relationship.
• A Whistleblowing Policy: we encourage
all our workers, customers and other
business partners to report any concerns
related to the direct activities, or the supply
chains of, our organisation. This includes
any circumstances that may give rise to an
enhanced risk of slavery or human trafficking.
Our whistleblowing procedure is designed to
make it easy for workers to make disclosures,
without fear of retaliation; and
• The Wincanton Way, our code of conduct,
explaining our ethical standards as an
organisation and how we expect our
employees and suppliers to act was
re-launched during the year.
Our adherence to these policies is subject to
regular reviews, helping us to continuously
improve in this area.
In addition, our Code of Conduct sets out
the following:
– We expect our suppliers and partners’
employees and their supply chains to
operate to the highest standards of safety,
quality, inclusion, integrity, sustainability
and ethical conduct
– When seeking new suppliers and partners
we select those whose values and
commitment to ethical business conduct
and a sustainable future match our own
and use objective processes and due
diligence to ensure this
– We are opposed to the use of any form of
child labour or practices which inhibit the
development of children and are opposed
to any employment that is not freely chosen.
We commit to refrain from using any form of
labour that could be described as ‘modern
slavery’ and expect the same from all those
we work with.
The induction process that all employees,
including drivers and warehouse operatives
attend, is used to make employees aware
of the content of these polices.
Our workforce and our supply chain
The majority of our Group employees are
UK-based managerial or office based staff,
drivers and warehouse operatives, all of whom
are paid at least the National Living Wage, and
we believe there is a low risk of human slavery
or forced labour in our direct workforce.
The risk may be more significant in our
supply chain and we have therefore focused
on enhancing our approach in relation to
our supply chain as noted below.
Wincanton plc Annual Report and Accounts 2020
75
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts Independent
auditor’s report
to the members of Wincanton plc
1. Our opinion is unmodified
We have audited the financial statements of
Wincanton plc (“the Company”) for the year ended
31 March 2020 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.
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 2020
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 first appointed as auditor by the directors in
March 2001. The period of total uninterrupted
engagement is for the 20 financial years ended 31 March
2020. 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
£2.45 million (2019:£2.2 million)
4.6% of Group profit before tax*
(2019: 4.5% of Group profit before
tax*)
* Normalised to exclude non-underlying items as
disclosed in Note 4
Coverage
100% (2019:100%) of Group profit
before tax
Key audit matters
vs 2019
Recurring risks
Event driven: Going
concern
New: Brexit
▲
▲
Group pension obligation
◄►
New: Unquoted pension
assets
Revenue recognition
▲
◄►
76
Wincanton plc Annual Report and Accounts 2020
Independent auditor’s report5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. INDEPENDENT AUDITOR’S REPORT Wincanton plc Annual Report and Accounts 2020
77
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. The riskOur responseGoing concernWe draw attention to note 1 to the financial statements which indicates that in the Group’s severe but plausible downside case only, the Group exceeds its financial covenants in March2021. These events and conditions, along with the other matters explained in note 1, constitute a material uncertainty that may cast significant doubt on the group’s and the parent company’sability to continue as a going concern. Our opinion is not modified in respect of this matter.Disclosure qualityThere is little judgement involved in the directors’ conclusion that risks and circumstances described in note 1 to the financial statements represent a material uncertainty over the ability of the group and the parent company to continue as a going concern for a period of at least a year from the date of approval of the financial statements.However, clear and full disclosure of the facts and the directors’ rationale for the use of the going concern basis of preparation, including that there is a related material uncertainty, is a key financial statement disclosure and so was the focus of our audit in this area. Auditing standards require that to be reported as a key audit matter.Our procedures included: Assessing transparency: Assessing the completeness and accuracy of the matters covered in the going concern disclosure by: —Evaluating the models used by management in it’s assessment;—Evaluating whether the assumptions are realistic, achievable and consistent when compared to past performance and other forecast information used during the audit;—Evaluating management’s assessment of the group’s compliance with debt covenants and liquidity requirements; and—Assessing the reasonableness of management’s budgets/forecasts, including comparisons to actual results achieved in the yearand the evaluation of downside sensitivities.Our results: —We found the disclosure of the material uncertainty to be acceptable. 2.Material uncertainty related to going concernWearerequiredtoreporttoyouifthedirectors’goingconcernstatementundertheListingRulessetoutonpage72ismateriallyinconsistentwithourauditknowledge.Wehavenothingtoreportinthisrespect. 3. Other key audit matters: including 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. Going concern is a significant key audit matter and is described in section 2 of
our report. We summarise below the other key audit matters, 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.
The risk
Our response
The impact of uncertainties due
to the UK exiting the European
Union on our audit
Refer to page 30 (Financial
Review).
Unprecedented levels of uncertainty
All audits assess and challenge the
reasonableness of estimates made by
the directors, such as valuation of
certain unquoted investments in the
Group’s defined benefit pension scheme
and related disclosures and the
appropriateness of the going concern
basis of preparation of the financial
statements (see above). All of these
depend on assessments of the future
economic environment and the group’s
future prospects and performance.
In addition, we are required to consider
the other information presented in the
Annual Report including the principal
risks disclosure and the viability
statement and to consider the directors’
statement 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.
Brexit is one of the most significant
economic events for the UK its effects
are subject to unprecedented levels of
uncertainty of consequences, with the
full range of possible effects unknown.
We developed a standardised firm-wide
approach to the consideration of the
uncertainties arising from Brexit in planning and
performing our audits. Our procedures included:
— Our Brexit knowledge: We considered the
directors’ assessment of Brexit-related
sources of risk for the group’s business and
financial resources, compared with our own
understanding of the risks. We considered
the directors’ plans to take action to mitigate
the risks.
— Sensitivity analysis: When addressing the
valuation of certain unquoted investments in
the Group’s defined benefit pension scheme
and other areas that depend on forecasts,
we compared the directors’ analysis to our
assessment of the full range of reasonably
possible scenarios resulting from Brexit
uncertainty and, where forecast cash flows
are required to be discounted, considered
adjustments to discount rates for the level
of remaining uncertainty.
— Assessing transparency: As well as
assessing individual disclosures as part of
our procedures on Group gross funded
defined benefit obligations and revenue
recognition, we considered all of the Brexit
related disclosures together, including those
in the strategic report, comparing the overall
picture against our understanding of the
risks.
Our results:
As reported under the valuation of certain
unquoted investments in the Group’s defined
benefit pension scheme, we found the resulting
estimates and related disclosures of
sensitivities and disclosures in relation to going
concern to be acceptable. However, no audit
should be expected to predict the unknowable
factors or all possible future implications for a
company and this is particularly the case in
relation to Brexit.
78
Wincanton plc Annual Report and Accounts 2020
Independent auditor’s report5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. INDEPENDENT AUDITOR’S REPORT CONTINUED Wincanton plc Annual Report and Accounts 2020
79
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. 3.Key audit matters: including our assessment of risks of material misstatement (continued)The riskOur responseGroup gross funded defined benefit obligations£ 1,061.0million (2019: £1,151.2 million)Refer to page 49 (Audit Committee Report), page 93 (accounting policy) and pages109 to 113 (financial disclosures).Subjective valuationSignificant estimates are made in determining the key assumptions used in valuing the Group's gross funded defined benefit obligations. When making these assumptions the directors take independent actuarial advice relating to their appropriateness. The valuation of the gross funded defined benefit obligations is considered a significant risk given the quantum of the gross funded pension obligation and as small changes in the assumptions and estimates used to value the group’s funded pension obligation (before deducting scheme assets) would have a significant effect on the group’s net pension surplus.The effect of these matters is that, as part of our risk assessment, we determined that thedefined benefit obligationhas a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The financial statements (note 26) disclose the sensitivity estimated by the Group. Our procedures included: —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 gross funded defined benefit obligations to be acceptable (2019 result: acceptable). 80
Wincanton plc Annual Report and Accounts 2020
Independent auditor’s report5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. INDEPENDENT AUDITOR’S REPORT CONTINUEDThe riskOur responseValuation of certain unquoted investments in the Group’s defined benefit pension scheme£ 96.9million (2019: £87.7 million)Refer to page 49 (Audit Committee Report), page 92 (accounting policy) and pages 109 to 113(financial disclosures).Subjective valuationThe Group has unquoted plan assets in private debt which were measured using the most recent Net Assets Valuations (NAV) provided by the Investment Fund Manager as at 31 December 2019, adjusted for cash movements between the latest valuation date and 31 March 2020 which preceded the negative impact of the COVID-19 pandemic on financial markets, and as such significant judgment is required to determine the fair value of these assets.The key assumptions used by management to determine the fair value of these private debt plan assets at 31 March 2020 includes leveraged loan index and Bank of America High Yield index, a liquidity adjustment to reflect the illiquid nature of the assets and estimated net asset values for the assets as at 31 December 2019.The effect of these matters is that we determined that the valuation of the private debt plan assets has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The financial statements (note 26) disclose the sensitivities of key assumptions for the valuation of unquoted plan assets estimated by the Group.Our procedures included:—Assessing valuers’credentials: Evaluating the scope, competency and objectivity of the Group’s external experts who assisted in determining the value of private debt assets.—Benchmarking assumptions: Challenging, with the support of our own valuation specialists, the appropriateness of certain market indices used in determining the fair value of private debt, based on the location of the underlying investments as well as challenging the Group over the liquidity adjustment that has been made to the index movement.—Methodology choice: Assessing, using our own valuation specialists, the methodology used in the valuation of the private debt plan assets.—Sensitivity analysis: Performing sensitivity analysis over the liquidity adjustment applied by management in the valuation of the private debt plan assets.—Historical comparisons: Comparing the Group’s fund managers’ historical estimated net asset values to the latest audited financial statements of those funds to assess the Group’s ability to accurately estimate the value of private debt assets. —Assessing transparency: Considering the adequacy of the Group's disclosures in respect of the sensitivity of the valuation to changes in key assumptions.Our results: —We found the valuation of the unquoted plan assets in private debt to be acceptable (2019 result: acceptable). Revenue recognition£1,201.2 million (2019: £1,141.5 million)Contract receivables£30.2million (2019: £31.0 million)Contract liabilities£42.5 million (2019: £43.6 million)Refer to page 94 (accounting policy) and pages96 to 97 (financial disclosures).2020/2021 salesWincanton issue invoices based on the accounting period of its customers which are not necessarily co-terminus with that of Wincanton. There is a risk that revenues could be recognised in the incorrect accounting period due to opportunity arising from 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. Our procedures included: —Enquiry of customers: fora sample of customers, obtainingcustomer confirmations of the invoiced amounts and service delivery for activity before and after the year end as a basis for recalculating revenue for the period.—Test of details:recalculating a sample of accrued and deferred income balances using customer confirmations and their respective accounting calendars where required. Our results: —We found the resulting amount of recorded revenue to be acceptable (2019 result: acceptable).3.Key audit matters: including our assessment of risks of material misstatement (continued)We continue to perform procedures over the recoverability of parent company’s investment in subsidiaries. However, in the context of increased relative significance of going concern, 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. Wincanton plc Annual Report and Accounts 2020
81
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. 4.Our application of materiality and anoverview of the scope of our auditThe materiality for the Group financial statementsas a whole was set at £2.45 million (2019: £2.2million), determined with reference to abenchmark of Group profit before tax, normalisedin 2020 to exclude non-underlying items of £9.0million (2019: £0.7 million) as disclosed in note 4to the financial statements, of which it represents4.6% (2019: 4.5%) of £52.8 million normalisedprofit before tax (2019: £49.3 million normalisedprofit before tax). The group team performedprocedures on the items excluded fromnormalised group profit before tax.Materiality for the parent company financialstatements as a whole was set at £1.87 million(2019: £1.0 million) by reference to componentmateriality and represents 0.8% of theCompany's total assets (2019: 0.5%).We agreed to report to the Audit Committee anycorrected or uncorrected identifiedmisstatements exceeding £0.1 million (2019: £0.1million), in addition to other identifiedmisstatements that warranted reporting onqualitative grounds.With the exception of the Guernsey component(Risk Underwriting (Guernsey) Limited), the Groupteam performed the audit of the Group as if itwas a single component using materiality of £2.2million (2019: £2.2 million). The audit of the parentcompany was conducted by the Group team.The Group team instructed the componentauditor as to the significant areas to be covered,including the relevant risks detailed above and theinformation to be reported back. The Group teamapproved the component materiality of £0.8million (2019: £1.0 million) having regard to themix of size and risk profile of the Group.Overall, the audit of the Group covered 100%(2019: 100%) of total Group revenue, Group profitbefore tax, and total Group assets.Telephone conference meetings were held withthe component auditor. At these meetings, thefindings reported to the Group team werediscussed in more detail, and any further workrequired by the Group team was then performedby the component auditor.Group profit before tax*£52.8m (2019: £49.3m)Group materiality£2.45m (2019: £2.2m)£2.45 millionWhole financialstatementsmateriality(2019: £2.2m)£2.2 millionRange of materiality at 2 components (£0.8m -£2.2m)(2019 1 component: £1.0m)£0.1 millionIdentifiedmisstatementsreportedto the audit committee (2019: £0.1m)Normalised Group PBTGroup materialityGroup profit before taxGroup total assets 100%(2019 100%)Group profit before non-underlying items and tax100%(2019 100%)Key: Full scope for group audit purposes 2020Full scope for group audit purposes 2019Grouprevenue100%(2019 100%)*normalised to exclude non-underlying items of £9.0 million(2019: £0.7 million)100%(2019 100%) 82
Wincanton plc Annual Report and Accounts 2020
Independent auditor’s report5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. INDEPENDENT AUDITOR’S REPORT CONTINUED5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. Wincanton plc Annual Report and Accounts 2020
83
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts5.We have nothing to report on the other information in the Annual ReportThe 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. Disclosures of emerging and principal risks and longer-term viability Based on the knowledge we acquired during our financial statements audit, other than the material uncertainty related to going concern referred to above,we have nothing further material to add or draw attention to in relation to: —the directors’ confirmation within the viability statement on page 33 that they have carried out a robust assessment of theemerging and 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. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.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 provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in these respects. 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. Secondly, the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: health and safety, anti-bribery, and employment law, recognising the nature of the group’s activities. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Through these procedures, we became aware of actual or suspected non-compliance and considered the effect as part of our procedures on the related financial statement items. The identified actual or suspected non-compliance was not sufficiently significant to our audit to result in our response being identified as a key audit matter. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, 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. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.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. Michael Froom (Senior Statutory Auditor)for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants66 Queen SquareBristolBS1 4BE17 June 20207.Respective responsibilities Directors’ responsibilities As explained more fully in their statement set out on page 74, 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 detectWe identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations. 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. The potential effect of these laws and regulations on the financial statements varies considerably.Firstly, the group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), pension legislation, distributable profits legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. FOR THE YEAR ENDED 31 MARCH 2020
Revenue
Underlying operating profit
Non-underlying 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
3
4
4
6
6
6
7
8
8
2020¹
£m
1,201.2
61.0
(9.0)
52.0
–
(8.2)
(8.2)
43.8
(5.3)
38.5
2019
£m
1,141.5
55.3
(0.7)
54.6
0.1
(6.1)
(6.0)
48.6
(5.8)
42.8
31.1p
30.8p
34.5p
34.2p
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without restating prior year figures. Information on the impact of adopting IFRS 16 is presented in Note 31 to the
consolidated financial statements.
84
Wincanton plc Annual Report and Accounts 2020CONSOLIDATED INCOME STATEMENTAccounts FOR THE YEAR ENDED 31 MARCH 2020
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 gain on investment in foreign subsidiaries
Effective portion of changes in fair value of cash flow hedges
Other comprehensive income for the year, net of income tax
Total comprehensive income attributable to equity shareholders of Wincanton plc
Note
26
7
2020¹
£m
38.5
84.0
(15.8)
68.2
0.1
–
0.1
68.3
106.8
2019
£m
42.8
20.3
(3.5)
16.8
–
0.1
0.1
16.9
59.7
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without restating prior year figures. Information on the impact of adopting IFRS 16 is presented in Note 31 to the
consolidated financial statements.
85
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AT 31 MARCH 2020
Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Right-of-use assets1
Investments, including those equity accounted
Deferred tax assets
Employee benefits
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
Lease liabilities1
Trade and other payables
Provisions
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Borrowings and other financial liabilities
Lease liabilities1
Employee benefits
Provisions
Deferred tax liabilities
Net assets/(liabilities)
Equity
Issued share capital
Share premium
Merger reserve
Hedging reserve
Translation reserve
Retained earnings
Total equity/(deficit)
Note
2020¹
£m
2019
£m
10
11
13
14
15
26
16
17
18
19
20
21
22
23
20
21
26
23
15
24
85.6
26.6
114.2
0.2
–
96.5
323.1
2.0
135.0
–
60.9
197.9
(2.4)
–
(36.6)
(248.1)
(12.2)
(299.3)
(101.4)
221.7
(71.0)
(97.8)
(2.1)
(24.8)
(11.3)
(207.0)
14.7
12.5
12.9
3.5
–
(0.2)
(14.0)
14.7
84.0
34.5
–
0.2
4.2
–
122.9
3.7
137.7
2.4
12.7
156.5
(6.1)
–
–
(260.8)
(10.1)
(277.0)
(120.5)
2.4
(32.0)
–
(7.1)
(30.4)
–
(69.5)
(67.1)
12.5
12.9
3.5
–
(0.3)
(95.7)
(67.1)
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without restating prior year figures. Information on the impact of adopting IFRS 16 is presented in Note 31 to the
consolidated financial statements.
These financial statements were approved by the Board of Directors on 16 June 2020 and were signed on their behalf by:
J Wroath
Chief Executive Officer
T Lawlor
Chief Financial Officer
86
Wincanton plc Annual Report and Accounts 2020CONSOLIDATED BALANCE SHEETAccounts FOR THE YEAR ENDED 31 MARCH 2020
Balance at 1 April 2018
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based payment transactions
Own shares acquired
Dividends paid to shareholders
Balance at 31 March 2019
Balance at 1 April 2019
IFRS 16 Restatement¹
Revised balance as at 1 April 2019
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based payment transactions
Dividends paid to shareholders
Balance at 31 March 2020
Issued
share
capital
£m
12.5
–
–
–
–
–
–
–
12.5
12.5
–
12.5
–
–
–
–
–
–
12.5
Share
premium
£m
12.9
–
–
–
–
–
–
–
12.9
12.9
–
12.9
–
–
–
–
–
–
12.9
Merger
reserve
£m
3.5
–
–
–
–
–
–
–
3.5
3.5
–
3.5
–
–
–
–
–
–
3.5
Hedging
reserve
£m
(0.1)
–
0.1
0.1
–
–
–
–
–
Translation
reserve
£m
(0.3)
–
–
–
–
–
–
–
(0.3)
–
–
–
–
–
–
–
–
–
–
(0.3)
–
(0.3)
–
0.1
0.1
–
–
–
(0.2)
Retained earnings
Own
shares
£m
(2.0)
–
–
–
1.3
–
(1.5)
–
(2.2)
(2.2)
–
(2.2)
–
–
–
0.7
–
–
(1.5)
Profit and
loss
£m
(139.0)
42.8
16.8
59.6
(1.5)
0.1
–
(12.7)
(93.5)
(93.5)
(11.2)
(104.7)
38.5
68.2
106.7
(1.0)
0.3
(13.8)
(12.5)
Total
equity/
(deficit)
£m
(112.5)
42.8
16.9
59.7
(0.2)
0.1
(1.5)
(12.7)
(67.1)
(67.1)
(11.2)
(78.3)
38.5
68.3
106.8
(0.3)
0.3
(13.8)
14.7
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without restating prior year figures. Information on the impact of adopting IFRS 16 is presented in Note 31 to the
consolidated financial statements.
87
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsCONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2020
Operating activities
Profit before tax
Adjustments for
– depreciation and amortisation
– interest expense on borrowings
– interest expense on leases1
– impairments
– profit on disposal of property, plant and equipment
– share based payment transactions
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Decrease in provisions
Increase in employee benefits before pension deficit payment
Income taxes paid
Cash generated before pension deficit payment
Pension deficit payment
Cash flows from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Interest received
Trade investment
Additions of property, plant and equipment
Additions of computer software
Cash flows from investing activities
Financing activities
Own shares acquired
Increase/(decrease) in borrowings
Payment of lease liabilities
Equity dividends paid
Interest paid on borrowings
Interest paid on lease liabilities
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Represented by:
– cash at bank and in hand
– restricted cash, being deposits held by the Group’s insurance subsidiary
2020¹
£m
43.8
43.1
4.4
3.8
9.3
(2.3)
(0.3)
101.8
5.8
0.4
(11.2)
(2.0)
0.3
(7.0)
88.1
(17.8)
70.3
5.5
–
–
(5.9)
(3.4)
(3.8)
–
39.0
(35.7)
(13.8)
(4.0)
(3.8)
(18.3)
48.2
12.7
60.9
56.0
4.9
60.9
2019
£m
48.6
11.4
6.0
–
–
(6.0)
(0.2)
59.8
3.0
0.7
(2.9)
(11.2)
9.2
(1.5)
57.1
(32.3)
24.8
13.8
0.1
(0.1)
(6.4)
(3.3)
4.1
(1.8)
(15.0)
–
(12.7)
(4.3)
–
(33.8)
(4.9)
17.6
12.7
7.9
4.8
12.7
1 IFRS 16 was adopted on 1 April 2019 using the modified retrospective approach, without restating prior year figures. Information on the impact of adopting IFRS 16 is presented in Note 31 to the
consolidated financial statements.
88
Wincanton plc Annual Report and Accounts 2020CONSOLIDATED STATEMENT OF CASH FLOWSAccounts 1. Accounting policies
Statement of compliance
Wincanton plc (the Company) is a company incorporated in the
United Kingdom and domiciled and registered 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 132. 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).
Standards, amendments and interpretations effective
or adopted in the year
IFRS 16 Leases became effective in the year and has had a
material impact on the consolidated financial statements of the
Group. The impact of adoption of this standard and the key changes
to the accounting policies are disclosed below and in Note 31 to the
consolidated financial statements.
The following standards and amendments became effective in
the year but did not have a material impact on the consolidated
financial statements:
– Amendments to IFRS 9: Prepayment Features with
Negative Compensation;
– IFRIC 23 Uncertainty over Tax Treatments;
– Amendments to IAS 19: Plan Amendment, Curtailment or Settlement;
– Amendments to IAS 28: Long term Interests in Associates and Joint
Ventures; and
– Annual Improvements 2015-2017 Cycle.
IFRS 16 Leases was issued by the International Accounting Standards
Board (IASB) in January 2016 and is effective for the Group for the year
ended 31 March 2020. IFRS 16 sets out the principles for the recognition,
measurement, presentation and disclosure of leases for both lessees and
lessors. For lessees the distinction between operating leases and finance
leases has been removed and replaced by a single lease accounting
model. Under this model lessees recognise a right-of-use asset,
representing the right to use the underlying asset, and a corresponding
lease liability, representing the obligation to make lease payments for all
leases except where the lease term is 12 months or less or the underlying
asset is of a low value. In the Income statement operating lease rentals
have been replaced with the amortisation of the right-of-use asset and
lease finance costs.
The Group has applied the modified retrospective approach, where the
cumulative effect of applying IFRS 16 is recognised in retained earnings
with no restatement to prior years. The lease liabilities on transition were
the present value of lease payments discounted using the incremental
borrowing rate at 1 April 2019. The right-of-use assets were valued at an
amount equal to the carrying amount as if IFRS 16 had been applied
since the start of the lease, but using the discount rate at 1 April 2019
(the date of initial application), apart from a small number of property
leases where the amounts involved were immaterial or insufficient
historical information was available. For these leases the right-of-use
assets were valued at an amount equal to the lease liability. The Group
took advantage of practical expedients to: apply IFRS 16 only to
contracts previously identified as leases under IAS 17 Leases and IFRIC 4
Determining whether an Arrangement contains a Lease;
– exclude leases where the lease term is 12 months or less from the
date of initial application and class such leases as short term leases;
– exclude low value assets;
– exclude initial direct costs from the measurement of the right-of-use
asset at the date of initial application;
– use hindsight, such as in determining the lease term if the contract
contains options to extend or terminate;
– apply a single discount rate to a portfolio of leases with similar
characteristics; and
– rely on its assessment as to whether a lease is onerous by applying
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
immediately before the date of initial application as an alternative
to performing an impairment review.
The effect on the Group’s results for the year to 31 March 2020 compared
to those that would have been reported under IAS 17 are shown in
Note 31.
The covenant requirements for the Group’s committed financing
facilities are based on ‘Frozen GAAP’ and therefore are not impacted
by the transition to IFRS 16.
Standards and amendments that are issued but not yet
applied by the Group
At the date of authorisation of these financial statements, the following
Standards and Amendments, 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 17 Insurance Contracts;
– Amendments to IFRS 3 Business Combinations;
– Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate
Benchmark Reform;
– Amendments to IAS 1 and IAS 8: Definition of Material; and
– Amendments to references to the Conceptual Framework in
IFRS Standards.
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 the amendments set out above. The impact of the
adoption of these amendments is set out in Note 31 to the financial
statements.
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 Reduced
Disclosure Framework 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.
89
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Accounting policies (continued)
Management discusses with the Audit Committee the development,
selection, application and disclosure of the Group’s critical accounting
estimates and judgements.
Critical judgements in applying the Group’s
accounting policies
The following are key 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:
– the presentation of selected items as non-underlying.
– the use of underlying measures of operating profit, profit before tax,
profit after tax and earnings per share.
– assessment of the impact of COVID-19 on the consolidated
financial statements. Areas impacted include: assessment of the
appropriateness of the going concern basis in preparing the financial
statements; testing for impairment of assets (see Note 12); and the
valuation of pension scheme assets and liabilities (see Note 26).
Key sources of estimation uncertainty
The Group’s key sources of estimation uncertainty in the reporting
period that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial
year are shown below:
Defined benefit pension arrangements
Details of the Group’s defined benefit arrangements are set out in
Note 26 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 and recognised in
other comprehensive income.
Under IAS19, the assets of the Scheme are valued at the bid market
value at the balance sheet date. The Scheme assets include quoted and
unquoted investments. A portion of unquoted investments are valued
based on inputs that are not directly observable which require more
judgement. The assumptions used in valuing unquoted investments are
affected by current market conditions and trends which could result in
changes in fair value after the measurement date. Note 26 sets out the
Group’s estimation methods for these assets together with the sensitivity
of the Scheme asset valuation to changes in the estimation method.
The effect of any change will be classified as a remeasurement in the
pension asset and recognised in other comprehensive income.
Insurance 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 23.
The judgements which have had a significant effect on the amounts
recognised in the financial statements in relation to the insurance
provision were those relating to the estimation of the provision for claims
outstanding, including reported claims and claims incurred but not
reported (‘IBNR’).
The Group takes all reasonable steps to ensure that it has appropriate
information regarding its claims exposures. The estimates and associated
assumptions are based on historical experience and other factors that
are considered to be relevant, and the advice of expert loss adjusters
is obtained where appropriate. An external actuary is appointed to
undertake an annual assessment of the provisions required (the external
90
actuary has applied the Incurred Chain Ladder method) and the Group
adopts a reserving position by applying a measurement basis which on
some policy years is in excess of the external actuaries’ best estimate but
within the actuaries’ reasonable range of possible outcomes.
Given the uncertainty in establishing claims provisions, actual results may
differ from the historical pattern on which these estimates are based
and the cost of settling individual claims may exceed that assumed. It is
likely that the final outcome will prove to be different from the original
liability established.
The estimation of the provision for claims IBNR is generally subject to a
greater degree of uncertainty than the estimation of the cost of settling
claims already notified to the Group, where more information about
the claim event is available. Claims IBNR may often not be apparent to
the insured for a considerable period after the loss event, and classes
of business where the IBNR proportion of the total provision is high
will typically display greater variations between initial estimates and
final outcomes.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the accounting
period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision
affects both current and future underwriting periods. It is reasonably
possible, on the basis of existing knowledge, that outcomes within
the next financial year that are different from the assumption could
require a material adjustment to the carrying amount of the asset or
liability affected.
Other sources of estimation uncertainty
Impairment tests for goodwill
Determining whether goodwill is impaired requires an estimation of
the value in use of the cash-generating units to which the intangible
assets have been allocated. The value in use calculation requires the
Directors to estimate the future cash flows expected to arise from the
cash-generating units and a suitable discount rate in order to calculate
present value. Note 12 provides information on the assumptions used in
the value in use calculations and the amount by which the recoverable
amount exceeds the respective carrying amount for each group of CGUs,
as well as the degree of sensitivity to changes in assumptions for the
Industrial & Transport group of CGUs.
Going concern
The Directors have concluded that it is reasonable to adopt a going
concern basis in preparing the financial statements. This is based on an
expectation that the Company and the Group have adequate resources
to continue in operational existence for at least twelve months from
the date of signing these accounts. The Group has reported a profit
before tax of £43.8m for the year to 31 March 2020 (2019: £48.6m), has
net current liabilities of £101.4m (2019: £120.5m) and net assets of £14.7m
(2019: net liabilities of £67.1m).
The Group’s committed facilities at 31 March 2020 comprise a syndicated
Revolving Credit Facility (RCF) of £141.2m which matures in October
2023 – £71.0m was drawn down on the RCF at 31 March 2020 of which
£50.0m was placed on deposit. On 5 May 2020 the Group secured a
£40m extension to this facility which expires on 4 May 2021. The RCF
requires the Group to comply with the following three financial
covenants at 30 September and 31 March each financial year:
– Leverage ratio: Consolidated total net borrowings of no more than
2.75 times Consolidated EBITDA for the preceding 12 month period;
– Interest cover: Consolidated EBITDA for the preceding 12 month
period is not less than 3.5 times higher than Consolidated net
finance charges for the preceding 12 month period; and
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDWincanton plc Annual Report and Accounts 2020Accounts 1. Accounting policies (continued)
– Fixed charge cover: Consolidated EBITDA plus Operating lease costs
for the preceding 12 month period is not less than 1.4 times higher
than Consolidated net finance charges plus Operating lease costs
for the preceding 12 month period.
The financial covenant tests remain unchanged as a result of the
£40m extension.
In addition, the Group also has an uncommitted £50m Receivable
Purchase Facility, providing flexibility to manage net debt peaks down
and an uncommitted overdraft facility of £7.5m.
In arriving at the conclusion on going concern, the Directors have given
due consideration to whether the funding and liquidity resources above
are sufficient to accommodate the principal risks and uncertainties faced
by the Group.
The Directors have given particular consideration to the risk and
uncertainty caused by the coronavirus outbreak as a potential material
uncertainty. Cash flow and covenant compliance forecasts have been
prepared comprising a base case and a severe but plausible downside
to assess how the virus could impact the Group in the period to
30 September 2021.
The base case assumes that Group revenue will reduce by £40m and
profit before tax by £10m compared to normal levels in the 3 months
until the end of June 2020 due to the impacts of COVID-19 before
gradually recovering throughout the rest of the financial year to 31 March
2021, with most Business Units achieving pre-COVID-19 revenue and
profit before tax levels from April 2021. It also assumes the mitigations
described in the Chief Financial Officer’s Financial Review, such as delays
in VAT payments, the agreed amended pension contributions, the
cessation of all discretionary and non business-critical expenditure and
the suspension of the dividend, remain in place to the extent they have
been contractually agreed or are under management’s control in the
forecast period.
The severe but plausible downside case assumes a second virus-driven
lockdown from October to December 2020, with Group revenue
reduced by a further £50m and profit before tax by a further £10m
compared to normal levels for the duration of the second lockdown
period to the end of December 2020, gradually recovering through to
30 September 2021, with most Business Units achieving pre-COVID-19
revenue and profit before tax levels from October 2021. This scenario
also assumes a major cash shock such as a large customer going into
administration and a deterioration in working capital performance
compared to the base case with the application of further mitigating
actions, including further deferrals of capital expenditure and the
continued suspension of the dividend, to the extent they are under
management’s control.
In both scenarios, the Group has sufficient liquidity and adequate
headroom in the committed facilities above to fund itself without the
use of uncommitted facilities. In the severe downside case only, the
Group exceeds the leverage ratio covenant described above at 31 March
2021. In the event the leverage ratio covenant is exceeded, the syndicate
banks have the right to cancel the RCF and outstanding amounts under
the RCF may become immediately payable. In this scenario the Board
would expect to negotiate with the syndicate banks to temporarily
amend the leverage ratio covenant so that it would not be breached.
In the context of this severe but plausible downside scenario, the
absence as at the date of signing these accounts of amended loan
documentation confirming the flexing of the leverage ratio covenant at
31 March 2021 gives rise to a material uncertainty, as defined in auditing
and accounting standards, related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern
and in such circumstances, it may therefore be unable to realise its assets
and discharge its liabilities in the normal course of business.
Despite this, the Board is confident that the Company and the Group
have adequate resources to continue in operational existence for at
least 12 months from the date of signing these accounts, and therefore
believe it remains appropriate to prepare the accounts on a going
concern basis. The financial statements do not include any adjustments
that would result from the basis of preparation being inappropriate.
Basis of consolidation
The consolidated Group financial statements include the financial
statements of the Company and its subsidiary undertakings made up
to the balance sheet date. When the Company acquired the Wincanton
group of companies upon demerger from the former parent in May
2001, the changes in Group structure were accounted for using the
principles of merger accounting available under UK GAAP at the time.
Businesses acquired or disposed of since then have been accounted
for using acquisition accounting principles from or up to the date that
control passed.
Subsidiaries are those entities controlled by the Group. Control is
achieved when the Company has power over the investee; is exposed
to, or has rights to, variable return from its involvement with the
investee; and has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts
and circumstances indicate that there are changes to one or more of
the three elements of control listed above. In assessing control, potential
voting rights that presently are exercisable or convertible are taken
into account. The financial statements of subsidiaries are included
in the consolidated financial statements from or up to the date that
control passed.
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 groups of 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
six to ten years
91
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 1. Accounting policies (continued)
The cost of computer software purchased or developed inhouse 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:
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.
Computer software costs
three to five years
Major software projects 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.
Right-of-use assets
Right-of-use assets are initially measured at cost, comprising the initial
measurement of the lease liability adjusted for any lease payments
made at or before the commencement date, estimated asset
retirement obligations, lease incentives received and initial direct
costs. Subsequently, right-of-use assets are measured at cost, less any
accumulated depreciation and any accumulated impairment losses,
and are adjusted for certain remeasurements of the lease liability.
Depreciation is calculated on a straight-line basis over the length
of the lease.
Right-of-use assets are presented within non-current assets on the face
of the balance sheet
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.
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.
Trade and other receivables
Trade and other receivables are stated at their fair value on initial
recognition and subsequently at amortised cost, i.e. less any
impairment losses.
Receivables that have been sold in accordance with a non-recourse trade
receivable financing agreement are derecognised at the date sold.
The Group acts as an intermediate lessor of property assets and
equipment. When the Group is an intermediate lessor, it accounts for
its interests in the head lease and the sub-lease separately. The Group
accounts for finance leases as finance lease receivables, using the
effective interest rate method.
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 equity. They are released
into the income statement upon disposal.
Lease liabilities
Applicable following adoption of IFRS 16 Leases on 1 April 2019. The lease
liability is initially measured at the present value of the remaining
lease payments over the lease term, discounted using the rate implicit
within the lease or, where this is not available, the Group’s incremental
borrowing rate. The lease term comprises the non-cancellable period
of the contract, together with periods covered by an option to extend
the lease if the lessee is reasonably certain to exercise that option;
and periods following an option to terminate the lease if the lessee is
reasonably certain not to exercise that option based on operational
needs and contractual terms. Subsequently, the lease liability is measured
at amortised cost by increasing the carrying amount to reflect interest
on the lease liability and reducing it by the lease payments over the
lease term. The lease liability is remeasured when the Group changes its
assessment of whether it will exercise an extension or termination option.
Lease liabilities are shown separately on the balance sheet in current liabilities
and non-current liabilities depending on the length of the lease term.
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDWincanton plc Annual Report and Accounts 2020Accounts 1. Accounting policies (continued)
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. The shares purchased are held in a separately administered offshore
trust for the benefit of the Plan participants.
Provisions
A provision is recognised in the balance sheet when the Group has a
present legal or constructive obligation as a result of a past event and
it is probable that an outflow of economic benefits will be required to
settle the obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows.
The Group provides for 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 dilapidations assessment, and the expected
cost of empty or under-utilised properties on short term leases for
which the practical expedient to exclude from IFRS 16 has been applied.
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
above 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. In addition, Goodwill is tested for
impairment at least annually.
The Group applies the simplified approach permitted by IFRS 9,
which requires the application of a lifetime expected loss provision
to all receivables, including contract assets, contract receivables and
lease receivables. The provision calculations are based on historic
credit losses for each segment adjusted to reflect current and forecast
conditions at the reporting date. This approach is followed for all
receivables unless there are specific circumstances which would render
the receivable irrecoverable and therefore require a specific provision.
These circumstances are specific to each customer and subject to
management judgement based upon indicators such as a change in
customer credit rating or a change in payment patterns. A provision is
made against trade receivables, contract assets, contract receivables and
lease receivables until such time as the Group believes the amount to be
irrecoverable, after which the balance is written off.
93
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 1. Accounting policies (continued)
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 or group of cash
generating units, to which the asset belongs.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed. An impairment
loss in respect of a receivable carried at amortised cost is reversed only
to the extent that the carrying amount does not exceed the carrying
amount that would have been determined if no impairment loss had
been recognised and if the reversal can be related objectively to an event
occurring after the impairment was recognised.
In respect of other assets, an impairment loss is reversed if there has been
a change in the estimates used to determine the recoverable amount.
Revenue recognition
The Group recognises revenue from contracts with customers as
the performance obligations to deliver products and services under
these contracts are satisfied. The Group’s contracts are typically for the
provision of transport (including transportation, planning, home delivery,
eFulfilment and vehicle maintenance services) or warehouse services
(including warehouse management, operation of automated facilities
and co-packing) and normally comprise a single performance obligation
being a series of goods or services satisfied over time.
Revenue is recognised based on the amount of consideration
expected to be received in exchange for satisfying the performance
obligations. The main elements of consideration identified are fixed
management fees and variable consideration less rebates to customers.
Variable consideration includes pass through costs on open book
contracts where the Group is the principal, rate card revenue and KPI
and gain share mechanisms. Variable revenue is constrained and only
recognised to the extent that it is highly probable that a significant
reversal of the cumulative revenue recognised will not take place. As a
result of the constraint, generally, the expected KPI revenue or penalties
are recognised on certain contracts when the performance of those
contracts meets or falls short of the targets set, and expected gain share
revenue is recognised on certain contracts when the impact of any cost
saving initiatives has been agreed with the customer.
Revenue is usually recognised over time, as the customer will
simultaneously receive and consume the goods and services provided.
Further details are provided in Note 2 to the financial statements.
The Group does not expect to have any contracts which include a
significant financing arrangement and therefore does not adjust its
transaction price for the time value of money.
Where payments are received in advance of revenue being recognised
they are included as contract liabilities. Where revenue is recognised
in advance of amounts being invoiced, it is reported as a contract
receivable. Where a payment has been made to a customer, which is not
in exchange for goods and services and it is in advance of the goods or
services provided to the customer, it is reported as contract asset.
Where a modification to an existing contract occurs, the Group assesses
the nature of the modification and whether it represents a separate
performance obligation required to be satisfied by the Group or whether
it is a modification to the existing performance obligation.
Contract fulfilment assets include costs of obtaining a contract and
costs to fulfil a contract. Costs to obtain a contract are those costs
incurred in obtaining a contract that would not have been incurred
if the contract had not been obtained, for example sale bonuses.
Costs to fulfil a contract include the costs of setting up and managing
projects to transition the operations covered by the customer contract
to the Group. An asset is recognised where those costs are specific to
a contract, generate or enhance resources that will be used to satisfy
the performance obligations of the contract and are expected to be
recovered. Contract fulfilment assets are recognised over the term of the
contract to which they relate.
Expenses
Lease payments
The Group has elected to apply exemptions for short term leases and
leases for which the underlying asset is of low value. For these leases,
payments are charged to the income statement on a straight-line basis
over the term of the lease.
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 asset/(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.
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDWincanton plc Annual Report and Accounts 2020Accounts 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.
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.
Dividends
Dividends are recognised in the period in which they are declared and
approved, or paid.
Non-underlying items
Non-underlying items are those items of income or expenditure which,
due to their nature or size, such as amortisation of acquired intangibles
or exceptional items and the related tax items, 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. Non-
underlying items include the amortisation of acquired intangibles and
exceptional items, related tax and exceptional tax items where relevant.
Exceptional items are those items which the Group consider to be
significant in nature and quantum, not in the normal course of business
or are consistent with items that were treated as exceptional in prior
periods. Page 31 provides a reconciliation between APMs and statutory
IFRS measures.
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.
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.
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.
95
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 2. Contract revenue and costs
The following practical expedients have been applied:
– where we have a right to invoice the customer at an amount that corresponds directly with performance to date, for example according
to an agreed rate-card, revenue is recognised at that amount and therefore are not required to disclose the transaction price allocated to
unsatisfied/partially unsatisfied performance obligations; and
– incremental costs of obtaining a contract have not been capitalised where the amortisation period for the asset is one year or less.
Contract revenue
Customer contracts are disaggregated into their component performance obligations, typically transport services (including transportation, planning,
home delivery, eFulfilment and vehicle maintenance services) and warehouse services (including warehouse management, operation of automated
facilities and co-packing), with revenue generally being recognised over time. Further detail is given in the table below:
Area
Fixed/variable
management fee
Explanation
Open book contracts
will typically cover
costs plus an agreed
management fee.
Rate-card revenue
Performance-related
revenue
Payments to
customers
In closed book contracts,
revenue is typically
recognised based on a
pre-agreed rate-card.
Revenue linked to
performance measures,
such as Key Performance
Indicators (KPIs) and gain-
share mechanisms.
Transition payments
made to the customer, or
payments in relation to
KPI performance.
Nature, timing and satisfaction of performance obligations
Fixed management fees are recognised over the contract term. Variable management
fees (a fixed percentage of costs) are recognised as the corresponding costs are
incurred. Where the Group has the right to invoice the customer at an amount that
corresponds directly with performance to date, the practical expedient is applied to
recognise revenue at that amount. Where the Group does not have the right to invoice
the customer in line with performance to date, the input method is applied to measure
progress of performance to date. Revenue relating to costs to serve the customer
are invoiced in line with the customer receiving and consuming benefits under the
contract, and is recognised in the period in which it is earned.
Revenue based on a pre-agreed rate-card is recognised as services are provided.
The Group applies the practical expedient to recognise revenue at the amount the
Group has the right to invoice due to the customer simultaneously receiving and
consuming benefits under the contract.
Variable revenue is estimated monthly on a contract by contract basis. Amounts of
variable revenue at the year end are not significant and are not deemed materially
sensitive.
Payments made to customers that are not for the provision of distinct goods or services
are recognised as a rebate at the later of: when revenue is recognised for the related
services; or when it is paid or promised to be paid.
Disaggregation of revenue
Revenue is disaggregated into two distinct operating segments. This is consistent with the revenue information that is disclosed for each reportable
segment under IFRS 8 Operating Segments, as reported in Note 3 to the financial statements.
Operating segments
Retail & Consumer
Industrial & Transport
Revenue from contracts with customers
The split of Retail & Consumer revenue by the industry sectors is as follows:
Retail General Merchandise
Retail Grocery
Consumer Products
Retail & Consumer
The split of Industrial & Transport revenue by the industry sectors is as follows:
Transport Services
Construction
Other
Industrial & Transport
96
Note
2
Note
Note
2020
£m
782.3
418.9
1,201.2
2020
£m
448.2
227.8
106.3
782.3
2020
£m
150.6
138.2
130.1
418.9
2019
£m
708.9
432.6
1,141.5
2019¹
£m
423.8
180.8
104.3
708.9
2019¹
£m
171.4
136.7
124.5
432.6
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts
2. Contract revenue and costs (continued)
Contract costs
The following table shows assets recognised from costs incurred to obtain contracts or fulfil contracts:
Costs to obtain contracts
Costs to fulfil contracts
Total
2020
£m
0.6
2.9
3.5
2019
£m
0.3
1.2
1.5
Costs to obtain contracts relate to sales bonuses paid as a result of obtaining contracts. These costs are amortised on a straight-line basis over the
period of the contracts obtained. During the period, the amount of amortisation was £0.2m (2019: £0.1m).
Costs to fulfil contracts relate to project management costs as a result of setting up and managing projects. These costs are amortised on a straight-
line basis over the period of contract. During the period, the amount of amortisation was £0.7m (2019: £0.4m).
There was no impairment loss in relation to the costs capitalised.
The Group applies the practical expedient in paragraph 94 of IFRS 15 and recognises the incremental costs of obtaining a contract as an expense
in the income statement when incurred, if the amortisation period of the asset which would otherwise have been recognised is one year or less.
3. 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 of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of software intangibles
Underlying operating profit2
Non-underlying items
Operating profit
Net financing costs
Profit before tax
Total Group assets3
Additions to reportable segment non-current assets:
– property, plant and equipment
– right-of-use assets
– computer software costs
Total Group liabilities
Retail &
Consumer
2020
£m
782.3
Industrial &
Transport
2020
£m
418.9
Total
2020
£m
1,201.2
Retail &
Consumer
2019
£m
708.9
Industrial &
Transport
2019
£m
432.6
Total
2019
£m
1,141.5
Note
11
13
10
4
6
11
13
10
58.6
(4.6)
(13.7)
(1.3)
39.0
45.5
(5.0)
(17.8)
(0.7)
22.0
2.9
15.8
2.2
3.0
18.0
1.2
104.1
(9.6)
(31.5)
(2.0)
61.0
(9.0)
52.0
(8.2)
43.8
521.0
5.9
33.8
3.4
(506.3)
36.9
(4.5)
–
(1.2)
31.2
29.8
(5.0)
–
(0.7)
24.1
3.6
–
2.0
2.8
–
1.3
66.7
(9.5)
–
(1.9)
55.3
(0.7)
54.6
(6.0)
48.6
279.4
6.4
–
3.3
(346.5)
1 Included in segment revenue is £1,188.4m (2019: £1,129.0m) 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 non-
underlying items.
3 Total Group assets include non-current assets of £323.1m (2019: £122.9m), of which £323.1m (2019: £122.9m) are held in the UK.
Revenue of £238.0m (2019: £213.1m) and £133.7m (2019: £131.9m) 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.
97
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts
4. Operating profit
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
2020
Non-underlying
items2
£m
–
–
–
(9.0)
(9.0)
Underlying1
£m
1,201.2
(1,123.6)
77.6
(16.6)
61.0
Total
£m
1,201.2
(1,123.6)
77.6
(25.6)
52.0
2019
Non-underlying
items2
£m
–
–
–
(0.7)
(0.7)
Underlying1
£m
1,141.5
(1,069.6)
71.9
(16.6)
55.3
Total
£m
1,141.5
(1,069.6)
71.9
(17.3)
54.6
1 Underlying operating profit is stated before non-underlying items as defined below.
2 Non-underlying items comprise the amortisation of acquired intangibles and exceptional items as set out below.
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: property, plant and equipment
Amortisation: software intangibles
Depreciation: right-of-use assets
Impairment charges: property, plant and equipment
Impairment charges: right-of-use assets
Short-term leases (2019: operating lease rentals)
– plant and equipment
– land and buildings
Note
2020
£m
2019
£m
11
10
13
12
12
0.1
0.4
0.1
9.6
2.0
31.5
3.4
4.6
4.1
2.1
0.1
0.3
0.1
9.5
1.9
–
–
–
28.8
19.8
Non-underlying items
The Group separately identifies and discloses those items that in management’s judgement need to be disclosed by virtue of their size, nature
or incidence (termed ‘non-underlying items’). Non-underlying items are used to derive the underlying results as presented in the accompanying
consolidated income statement. Underlying results are consistent with the way that financial performance is measured by management and assists
in providing an additional analysis of the reported trading results of the Group. Non-underlying items may not be comparable to similarly titled
measures used by other companies. In determining whether an event or transaction is non-underlying , management considers quantitative as
well as qualitative factors. Examples of charges or credits meeting the above definition and which have been presented as non-underlying items
in the current and/or prior years include profits and losses on disposal of freehold properties, fees and charges related to potential M&A activities,
retrospective regulatory matters and revisions to historic provisions that were originally recognised as non-underlying items. In the event that items
meet the criteria, which are applied consistently from year to year, they are treated as non-underlying items. We have also included the impacts of
COVID-19 on various balance sheet items as at 31 March 2020 as non-underlying. The impact of COVID-19 on underlying trading in the year ended
31 March 2020 was immaterial and has not been recognised as a non-underlying item.
Net profit on disposal of freehold property
Professional fees in relation to M&A activities
COVID-19 impairment charges
Pension Scheme – Guaranteed Minimum Pension (‘GMP’)
Revision to property provisions previously recognised as non-underlying
2020
£m
2.3
(2.0)
(9.3)
–
–
(9.0)
2019
£m
6.0
–
–
(8.2)
1.5
(0.7)
During the year the Group completed the disposal of two freehold properties receiving gross sales proceeds of £5.5m and incurring disposal costs
of £0.8m. The combined carrying value of the properties was £2.4m, generating a net profit on disposal of £2.3m. In the prior year we completed the
disposal of a freehold property receiving gross sales proceeds of £14.5m and incurring costs of disposal and transitioning operations to another site
of £1.2m and £0.5m respectively. The carrying value of the property was £6.8m, which generated a net profit on disposal of £6.0m.
M&A activities were undertaken during the year, including a takeover bid for a competitor, Eddie Stobart Logistics plc. The professional fees associated
with these M&A activities have been recognised within non-underlying items.
98
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 4. Operating profit (continued)
As at 31 March 2020 we recognised one-off, non-cash impairment charges of £9.3m relating to the impact of COVID-19 on assets used in certain parts
of the business (see Note 12). The impairment charge has arisen where the carrying amount of the assets is no longer expected to be fully recovered
through the cash flows those assets generate due to the impact of COVID-19.
In the prior year, the High Court of Justice of England and Wales issued a judgement relating to Lloyds Banking Group requiring equality of treatment
of historic pension benefits for men and women. This resulted in the recognition of a non-cash past service cost of £8.2m in the year.
Also in the prior year, the Group negotiated an exit from a long standing onerous property lease in Dublin on favourable terms. The full novation
of this lease, partly offset by an increase in provision for another long standing lease, resulted in a net exceptional credit of £1.5m.
5. Personnel expenses, including Directors
Wages and salaries
Share based payments (including IFRS 2 fair value charges)
Social security contributions
Contributions to defined contribution pension arrangements
Average number of persons employed by the Group (including Directors) during the year
Directors’ emoluments
Salaries
Bonus
Other benefits
Non-executive Directors’ fees
Total emoluments
Note
26
2020
£m
521.1
0.5
53.5
33.6
608.7
2019
£m
482.5
1.0
48.5
24.6
556.6
2020
18,390
2019
17,460
2020
£’000
823
608
371
432
2,234
2019
£’000
755
686
187
403
2,031
The aggregate of the amount of gains made by Tim Lawlor on exercise of share options during the year was £371,000. Neither Adrian Colman nor
James Wroath exercised options whilst a director of the Company. The element of the share based payment expense attributable to the Directors was
£0.2m (2019: £0.6m). Full details of each individual Director’s emoluments, bonuses, share options and pension entitlements are given in the Directors’
Remuneration Report on pages 52 to 71.
6. Net financing costs
Recognised in the income statement
Interest income
Interest expense
Interest on lease liabilities
Unwinding of discount on provisions
Interest on the net defined benefit pension
Net financing costs
Interest expense is recognised using the effective interest method.
Note
23
26
2020
£m
–
(3.9)
(3.8)
(0.5)
–
(8.2)
(8.2)
2019
£m
0.1
(4.3)
–
(0.8)
(1.0)
(6.1)
(6.0)
99
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts
7. 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% (2019: 19%)
Non-deductible expenditure
Non-underlying items in income statement
Change in UK corporation tax rate
Adjustments for prior years
– current tax
– deferred tax
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
Total recognised in other comprehensive income
Recognised directly in equity
Current tax on share based payment transactions
Total recognised directly in equity
2020
£m
5.1
(1.5)
3.6
1.7
–
1.7
5.3
2020
£m
43.8
8.3
0.3
(0.9)
(0.9)
(1.5)
–
5.3
2020
£m
15.8
15.8
2020
£m
(0.3)
(0.3)
2019
£m
3.3
(1.3)
2.0
3.6
0.2
3.8
5.8
2019
£m
48.6
9.2
0.1
(2.0)
(0.4)
(1.3)
0.2
5.8
2019
£m
3.5
3.5
2019
£m
(0.1)
(0.1)
The main UK Corporation tax rate remained at 19% (2019: 19%). The previously enacted reduction in the rate from 19% to 17% as from 1 April 2020 was
reversed and the 19% was substantively enacted on 17 March 2020.
The Group maintains a provision against tax risks, which is included within income tax payable.
The total tax expense above includes tax on non-underlying items of £2.8m (2019: £2.0m).
100
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts
8. Earnings per share
The basic earnings per share of 31.1p (2019: 34.5p) is calculated based on the profit attributable to the equity shareholders of Wincanton plc of £38.5m
(2019: £42.8m) and the weighted average shares in issue excluding those held within an Employee Benefit Trust, throughout the year as calculated
below of 123.7m (2019: 124.0m). The diluted earnings per share calculation is based on there being 1.3m (2019: 1.3m) 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 year¹
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
2020
millions
2019
millions
123.6
0.1
123.7
123.7
1.3
125.0
123.7
0.3
124.0
124.0
1.3
125.3
1 The number of shares excludes 0.6m Ordinary Shares (2019: 0.8m) being the weighted average number of the Company’s own shares held within an Employee Benefit Trust.
An alternative earnings per share measure is set out below, being earnings before non-underlying items, including exceptional items, amortisation of
acquired intangibles, 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
Non-underlying items
Tax impact of above items and non-underlying tax items
Underlying earnings
9. Dividends
Dividends paid in the year comprise:
Final dividend for the year ended 31 March 2019 of 7.29p per share (2018: 6.63p)
Interim dividend for the period ended 30 September 2019 of 3.90p per share (2018: 3.60p)
Note
4
2020
pence
36.1
35.8
2020
£m
38.5
9.0
(2.8)
44.7
2020
£m
9.0
4.8
13.8
2019
pence
33.5
33.1
2019
£m
42.8
0.7
(2.0)
41.5
2019
£m
8.2
4.5
12.7
In light of the economic impacts of the COVID-19 pandemic, including the cost-efficiency and liquidity measures taken to safeguard the long
term viability of the business, the Board does not consider it appropriate to propose a final dividend for the year ended 31 March 2020 (2019: 7.29p
per share).
The Employee Benefit Trust has waived the right to receive dividends in respect of the shares it holds, see Note 24 for further detail.
101
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 10. Goodwill and intangible assets
Cost
At 1 April 2018
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2019
At 1 April 2019
Effect of movements in foreign exchange
Additions
Disposals
At 31 March 2020
Amortisation and impairment losses
At 1 April 2018
Charge for year
Disposals
At 31 March 2019
At 1 April 2019
Charge for year
Disposals
At 31 March 2020
Carrying value
At 1 April 2018
At 31 March 2019
At 31 March 2020
Note
Goodwill
£m
Acquired
intangibles
£m
Computer
software costs
£m
80.0
(0.1)
–
–
79.9
79.9
0.2
–
–
80.1
(2.5)
–
–
(2.5)
(2.5)
–
–
(2.5)
77.5
77.4
77.6
66.5
–
–
–
66.5
66.5
–
–
–
66.5
(66.5)
–
–
(66.5)
(66.5)
–
–
(66.5)
–
–
–
39.2
–
3.3
(0.1)
42.4
42.4
–
3.4
(0.2)
45.6
(34.0)
(1.9)
0.1
(35.8)
(35.8)
(2.0)
0.2
(37.6)
5.2
6.6
8.0
3, 4
Total
£m
185.7
(0.1)
3.3
(0.1)
188.8
188.8
0.2
3.4
(0.2)
192.2
(103.0)
(1.9)
0.1
(104.8)
(104.8)
(2.0)
0.2
(106.6)
82.7
84.0
85.6
Assets under construction of £5.6m (2019: £3.0m) are included within computer software costs.
The total amortisation charge of £2.0m (2019: £1.9m) is recognised in the income statement within cost of sales.
Details of the impairment testing carried out is included in Note 12.
102
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 11. Property, plant and equipment
Cost
At 1 April 2018
Additions
Disposals
Reclassified as assets held for sale
At 31 March 2019
At 1 April 2019
Additions
Disposals
At 31 March 2020
Depreciation and impairment losses
At 1 April 2018
Charge for year
Disposals
Reclassified as assets held for sale
At 31 March 2019
At 1 April 2019
Charge for year
Impairment of assets
Disposals
At 31 March 2020
Carrying amount
At 1 April 2018
At 31 March 2019
At 31 March 2020
Within plant and equipment, £0.4m (2019: £0.3m) relates to assets under construction.
The carrying amount of property comprises:
Freehold
Short leasehold
Note
Property
£m
Plant and
equipment
£m
3
3
3, 4
12
31.8
0.1
(4.5)
(6.8)
20.6
20.6
–
(0.5)
20.1
(24.0)
(0.9)
3.7
4.4
(16.8)
(16.8)
(0.9)
(0.6)
–
(18.3)
7.8
3.8
1.8
140.6
6.3
(19.8)
(0.7)
126.4
126.4
5.9
(17.2)
115.1
(106.7)
(8.6)
18.9
0.7
(95.7)
(95.7)
(8.7)
(2.8)
16.9
(90.3)
33.9
30.7
24.8
2020
£m
1.4
0.4
1.8
Total
£m
172.4
6.4
(24.3)
(7.5)
147.0
147.0
5.9
(17.7)
135.2
(130.7)
(9.5)
22.6
5.1
(112.5)
(112.5)
(9.6)
(3.4)
16.9
(108.6)
41.7
34.5
26.6
2019
£m
0.3
3.5
3.8
103
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 12. Impairment
Impairment tests for goodwill
The carrying value for goodwill is tested for impairment on an annual basis or more frequently if there are indicators that it may be impaired.
Goodwill is allocated to groups of cash generating units (CGUs) which are in line with the Group’s reported operating segments, as per the
table below.
Retail & Consumer
Industrial & Transport
2020
£m
25.9
51.7
77.6
2019
£m
25.8
51.6
77.4
The recoverable amount of groups of CGUs 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. These forecasts have been
revised to take account of the expected impact of the ongoing COVID-19 situation. Cash flows beyond those 12 month and further 24 month periods
are extrapolated to perpetuity using the estimated long term growth rates stated below, which do not exceed the long term average growth in the
specific geographical area where the groups of CGUs operate.
Key assumptions used for value in use calculations:
Estimated growth rate
Discount rate
2020
Retail &
Consumer
%
1.2
10.6
Industrial &
Transport
%
1.2
10.6
2019
Retail &
Consumer
%
1.5
11.0
Industrial &
Transport
%
1.5
11.0
Management determined the growth 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 is consistent with the prior year.
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 £312m and £22m (2019: £365m and £124m) respectively. The Group has conducted sensitivity analysis on the impairment testing.
Management believe no reasonably possible change in the key assumptions for the Retail & Consumer groups of CGUs would result in an impairment.
Estimated recoverable amount for the Industrial & Transport group of CGUs has reduced in the period primarily due to the impact of COVID-19 on
certain areas of the business. Goodwill allocated to the Industrial & Transport groups of CGUs would be impaired if any of the following were to occur:
– the pre-tax discount rate increased to 12.7%;
– the growth rate of 1.2% per annum beyond the three year forecast falls to (1.6)%; or
– cash flow forecasts reduce by 16.5%.
Impairment tests for assets with finite lives
The Group reviews the carrying amount of non-current assets with finite useful lives when events and circumstances indicate that an asset may be
impaired. Impairment tests are performed by comparing the carrying amount of assets held in a cash generating unit (CGU) with its recoverable
amount. Management consider each contract to be a CGU, except where resources are shared in which case, they are combined into one CGU.
Recoverable amount is the higher of the fair value less costs of disposal and the value in use. An impairment loss is recognised whenever the carrying
amount of a CGU exceeds its recoverable amount.
The current impact of the COVID-19 pandemic has had a significant impact on the economy and the operations of the Group. It has therefore been
identified as an indicator of impairment. In response to this the Group has undertaken a thorough review of all CGUs and compared the carrying
value of assets to its recoverable amount. Recoverable amounts have been determined as value in use, using estimated future cash flows over
the remaining contract term discounted to their present value using a pre-tax discount rate of 10.7%. As a result of these reviews, assets within our
containers, construction and Pullman Fleet Services businesses within the Industrial & Transport segment have been impaired by £7.8m to their
recoverable amount of £4.4m. Any further reduction in performance could result in an impairment of up to £4.4m.
In addition, a number of vehicles within Industrial & Transport, have been identified where the recoverable amount has been determined as the fair
value less costs of disposal. Fair value less costs of disposal have been estimated by reference to the expected fall in the second-hand market due to
the impact of COVID-19. This is a level 3 measurement. As a result, these assets have been impaired by £1.5m to their recoverable amount of £4.5m.
The total impairment charge has been recognised as a non-underlying item in the income statement and has been allocated to the following assets:
Property
Plant and equipment
Right-of-use assets
Inventory
104
£m
0.6
2.8
4.6
1.3
9.3
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 13. Right-of-use assets
Recognised on transition to IFRS 16
Additions
Depreciation
Impairment of assets
Disposals
Net book value as at 31 March 2020
Note
12
Property
£m
65.1
11.1
(10.6)
(1.8)
(0.2)
63.6
Non-property
£m
52.5
22.7
(20.9)
(2.8)
(0.9)
50.6
Total
£m
117.6
33.8
(31.5)
(4.6)
(1.1)
114.2
An analysis of the related lease liabilities is set out in Note 21 ‘Lease liabilities’ and Note 28 ‘Financial instruments’.
14. Investments including those equity accounted
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
Trade Investment
15. 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
IFRS 16 transitional adjustment
Other assets
Assets
Liabilities
2020
£m
3.6
0.5
–
2.5
–
6.6
2019
£m
2.4
0.5
1.2
–
0.1
4.2
2020
£m
–
–
(17.9)
–
–
(17.9)
2019
£m
–
–
–
–
–
–
Movement in deferred tax assets and liabilities during the current year
2020
£m
0.2
0.1
0.1
Net
2020
£m
3.6
0.5
(17.9)
2.5
–
(11.3)
2019
£m
0.1
0.1
0.1
2019
£m
2.4
0.5
1.2
–
0.1
4.2
Property, plant and equipment
Equity compensation benefits
Pension provisions
IFRS 16 transitional adjustment
Other assets
At 1 April
2019
£m
2.4
0.5
1.2
–
0.1
4.2
Adoption of
IFRS 16
£m
–
–
–
2.0
–
Recognised in
income
£m
1.2
–
(3.3)
0.5
(0.1)
Other
movements
£m
–
–
(15.8)
–
–
At 31 March
2020
£m
3.6
0.5
(17.9)
2.5
–
2.0
(1.7)
(15.8)
(11.3)
Deferred tax assets amounting to £0.7m (2019:£nil) have not been recognised due to the uncertainty of their utilisation in the relevant companies.
16. Inventories
Raw materials and consumables
2020
£m
2.0
2019
£m
3.7
Raw materials and consumables with a value of £1.3m were written down in the year see Note 12 ‘Impairment’.
In the year ended 31 March 2020, inventories of £90.3m (2019: £85.2m) were recognised in the Income statement within costs of sales.
105
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 17. Trade and other receivables
Trade receivables
Contract receivables
Contract assets
Contract fulfilment assets
Prepayments
Lease receivables
2020
£m
65.9
30.2
3.3
3.5
29.3
2.8
135.0
2019
£m
78.6
31.0
–
1.5
26.6
–
137.7
Customers are invoiced on a monthly basis with payment terms of 30 to 60 days.
Trade receivables, contract receivables, contract assets and lease receivables are shown net of allowance for impairment of £1.0m (2019: £0.8m).
All receivables are due within one year, except for contract receivables of £nil (2019: £1.7m), contract assets of £1.0m (2019: £nil) in respect of amounts
recoverable from customers and contract fulfilment assets of £1.0m (2019: £0.9m).
The contract receivables relate to the Group’s rights to consideration for work completed but not billed at the reporting date. They are transferred
to trade receivables when the amounts are invoiced. All movements in contract receivables relate to normal trading.
Contract assets relate to transition payments made to customers and are recognised in revenue as the related performance obligations are satisfied.
Contract fulfilment assets are outlined in Note 2 ‘Contract revenue and costs’.
Lease receivables at 31 March 2020 comprise finance leases of £2.8m relating to a number of sites in which Wincanton act as a sub-lessor (2019: prior
year numbers have not been restated for the impact of IFRS 16). Rental income recognised by the Group during the year was £1.3m. Future minimum
rentals receivable under the contracts in place at the year end are as follows:
Within one year
After one year but not more than five years
2020
£m
1.3
1.5
2.8
The Group has a non-recourse trade receivable financing arrangement in place at the year end. As these receivables have been sold without recourse
they have been derecognised in the table above.
Movement in the allowance for impairment loss
At 1 April
Impairment losses recognised on receivables
Amounts written off as unrecoverable
At 31 March
Ageing of trade receivables and contract receivables at the balance sheet date
Contract receivables
Current
1 month overdue
2 months overdue
3+ months overdue
Gross trade receivables and contract receivables
Allowance for impairment
Trade receivables and contract receivables, net of allowance
2020
£m
0.8
0.4
(0.2)
1.0
2020
Gross
£m
30.3
65.2
0.4
0.5
0.7
97.1
(1.0)
96.1
2019
£m
0.8
0.1
(0.1)
0.8
2019
Gross
£m
31.1
75.9
1.3
0.7
1.4
110.4
(0.8)
109.6
Sensitivity analysis
Trade receivables and contract receivables are assessed for impairment using a calculated credit loss assumption. A 10% increase in the assumed
credit risk factor would increase impairment by £0.1m. There were no material individual impairments of trade receivables or contract receivables.
Expected credit losses have not been recognised on lease receivables as the amounts are immaterial.
106
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 18. Assets classified as held for sale
At 31 March 2019 the Group had committed to a plan to dispose of two properties. The disposals were completed during the year, with an exceptional
profit of £2.3m relating to the disposal being recognised in the year ended 31 March 2020.
19. 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 28 ‘Financial instruments’.
20. Borrowings
Non-current
Bank loans and overdrafts
2020
£m
56.0
4.9
60.9
2020
£m
71.0
71.0
2019
£m
7.9
4.8
12.7
2019
£m
32.0
32.0
Bank loans and overdrafts comprise the Group’s Revolving Credit Facility which matures in October 2023. Details of the contractual maturity is set out
in Note 28 ‘Financial instruments’.
21. Lease liabilities
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 4.
Current
Lease liabilities
Non-current
Lease liabilities
2020
£m
36.6
97.8
134.4
2019
£m
–
–
–
Details of the maturity analysis of discounted lease liabilities recognised on the Group Balance sheet are in Note 28 ‘Financial instruments’.
The amounts charged to the Income statement due to the practical expedients taken are shown below:
Expense relating to short term leases
Expense relating to low-value leases
The Group had commitments of £9.7m for leases which had not commenced at the year end.
2020
Property
£m
2.1
–
Plant and
equipment
£m
4.1
–
107
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 22. Trade and other payables
Current
Trade payables
Other taxes and social security
Other payables
Contract liabilities
Accruals
2020
£m
45.9
50.2
14.9
42.5
94.6
248.1
The contract liabilities primarily relate to the consideration invoiced to customers in advance of the work being completed. The total balance of
£43.6m at the beginning of the period has been recognised as revenue during the year. All movements in the balance relate to normal trading.
23. Provisions
At 1 April 2019
IFRS 16 adjustment
Revised 1 April 2019
Provisions made during the year
Provisions used during the year
Provisions released during the year
Unwinding of discount
At 31 March 2020
Current
Non-current
Note
6
Insurance
£m
26.1
–
26.1
10.2
(7.5)
(5.9)
0.5
23.4
6.9
16.5
23.4
Property
£m
13.5
(2.0)
11.5
1.4
(1.2)
(1.3)
–
10.4
2.2
8.2
10.4
Other
provisions
£m
0.9
–
0.9
3.1
(0.7)
(0.1)
–
3.2
3.1
0.1
3.2
2019
£m
62.2
41.4
22.6
43.6
91.0
260.8
Total
£m
40.5
(2.0)
38.5
14.7
(9.4)
(7.3)
0.5
37.0
12.2
24.8
37.0
The Group owns 100% of the share capital of an insurance company which insures certain 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 primarily provisions for dilapidations. Dilapidation provisions comprise
dilapidation estimates made in the normal course of business. Provisions are released when the obligation no longer exists or there is a reduction
in the estimate. There remains a small level of onerous lease provisions relating to short term leases which are utilised over the relevant lease term,
with the majority expected to be utilised over the next year. The dilapidations provisions are expected to be utilised at the end of the lease term.
Estimated costs have been discounted at a rate based on the Group’s assessment of a risk free rate, with any estimated income being discounted at a
rate reflecting an appropriate level of risk.
Other provisions include the estimated costs of restructuring together with provision for sundry claims and settlements where the outcome
is uncertain.
Contingent liability
The Group has recently been notified by HMRC of potential claims for unpaid export duty in connection with a customer’s transfer of stock from
Wincanton’s bonded warehouse to a third party UK export agent. The Group’s view is that its processes and controls have operated as designed at all
times, that the Group has discharged its responsibilities, and that any duty due is payable by third parties. Wincanton have received legal advice and
the claims are being disputed. As a result of the robust legal advice, no liability has been recognised in respect of these claims.
108
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 24. 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
2020
millions
124.5
–
124.5
2019
millions
124.5
–
124.5
The number of shares detailed above differs from those in Note 8 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.
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 2020, the number of the Company’s shares held by the EBT had decreased to 605,153 (2019: 896,024). The EBT has waived the
right to receive dividends in respect of the shares it holds. The average cost of the shares held is 240p each (2019: 242p) and at 31 March 2020, the
market value of the shares held was £1.5m (2019: £2.1m).
All of the shares in the EBT are held in respect of the Group’s various equity compensation schemes (see Note 27) and at 31 March 2020 there were
117,497 (2019: 128,048) shares held in respect of vested options.
25. 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
26. Employee benefits
2020
£m
0.9
The employee benefit assets/(liabilities) of the Group comprise the post-retirement obligations of the Group’s pension arrangements, which are
discussed in detail below:
Defined benefit surplus
Defined benefit deficit
Net defined benefit asset/(liability)
The employee benefit asset/(liability) are all classified as non-current.
2020
£m
96.5
(2.1)
94.4
2019
£m
0.6
2019
£m
–
(7.1)
(7.1)
109
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts The agreement constitutes a minimum funding requirement (MFR)
under IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction. The Group has recognised
a surplus in the Scheme as at 31 March 2020 and has not recognised
any liabilities in relation to the MFR, as under the Scheme rules the
Group has an unconditional right to a refund of the surplus.
Discussions with regards to the 2020 Triennial valuation have
commenced and are expected to be concluded before the end
of the financial year.
Contributions
The deficit funding contribution in the year, net of the above
expenses was £17.8m (2019: £32.3m including a £15m one-off payment).
In addition, other administration costs of the Scheme were borne directly
by the Group and a contribution made towards administration costs
incurred, totalling £1.1m.
In the year commencing 1 April 2020, the Group was expecting to
make deficit funding contributions of £18.2m being the annual deficit
contribution of £18.9m less certain administration expenses mentioned
above. In May 2020, due to the impact of COVID-19, the Group has
agreed an amended Schedule of Contributions with the Trustee
delaying £6.1m of contributions until 2021/22, subject to the level of
cash dividends paid in the year. In addition, other administration costs
of the Scheme will be borne directly by the Group, these are expected
to total £0.7m.
Risks
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.
Net defined benefit asset/(liability)
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.
26. Employee benefits (continued)
Pension schemes
Employees of Wincanton participated in funded pension arrangements
in the UK and Ireland during the year ended 31 March 2020 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 18 years.
In previous years, a small number of employees, who were subject to
the statutory earnings cap on pensionable earnings prior to 6 April 2006,
were entitled to participate in an unfunded unapproved arrangement
in addition to accruing benefits from the Scheme. There have been
no active members of this arrangement throughout current or
comparative years.
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.
Triennial valuation
The latest formal valuation of the Scheme was carried out as at 31 March
2017 by the Scheme actuary, Hymans Robertson, and was agreed with
the Trustee in August 2018. The annual deficit funding contributions
were agreed at £18.0m per annum from 1 April 2018 increasing by RPI
over the three years to March 2021, followed by £25.0m per annum from
April 2021 to March 2027, increasing annually in line with the Retail Prices
Index. In addition, the Group made a one-off contribution of £15.0m in
August 2018. The agreement is also subject to other provisions agreed
with the Trustee being:
– Additional contributions become payable if distributions to
shareholders (dividends and share-buy-backs) grow year on year in
excess of 10%. The matching will only be in relation to the distribution
amounts above the threshold, and are calculated at 50% of the excess
or 100% of any distribution growth above 15%.
– Additional contribution payments become payable in the event
of severe adverse Scheme investment performance where the
actual deficit in the Scheme exceeds an agreed threshold above
the expected deficit at the end of two consecutive six-month
reporting periods.
– A one-off payment to the Scheme of £6.0m in any year if both
the underlying profit after tax is lower than the level of profit after
tax reported in the 2017/18 financial year and the dividend payout
ratio increases to over 40% of profit after tax.
– In the event of disposals of businesses within the Group, an amount
will be paid to the Scheme equal to 50% of the combined net
proceeds for the first £30.0m of the proceeds in any financial year.
As with the previous agreement, it has been 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 (2019: £0.7m) are not included in the
contributions below.
110
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 26. Employee benefits (continued)
Present value of unfunded defined benefit obligations
Present value of funded defined benefit obligations
Fair value of Scheme assets
Net defined benefit asset/(liability)
2020
£m
(2.1)
(1,061.0)
1,157.5
94.4
2019
£m
(2.5)
(1,151.2)
1,146.6
(7.1)
The movement in the above net defined benefit asset/(liability) in the year was primarily the result of the impact of market uncertainty as a result of
COVID-19. Scheme liabilities are calculated using a discount rate based on high quality corporate bond yields while Scheme assets are hedged against
movements in gilt yields. Credit spreads on corporate bonds increased due to market uncertainty resulting in a reduction in the liabilities which was
not matched with a corresponding fall in assets as at 31 March 2020. The net defined benefit asset, after taking into account the related deferred tax
liability, is £76.5m (2019: net defined liability of £(5.9)m).
Movements in the present value of the net defined benefit (liability)/asset
31 March 2020
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 asset
31 March 2019
Opening position
Included in Income statement:
Administration costs
Past service cost
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
Note
Assets
£m
1,146.6
Obligations
£m
(1,151.2)
Net
(liability)/asset
£m
(4.6)
Unfunded
arrangements
£m
(2.5)
Total net
(liability)/asset
£m
(7.1)
Note
4
(1.7)
27.2
18.9
(41.9)
–
–
–
–
(27.1)
–
41.9
72.2
(3.4)
6.6
8.4
1,157.5
–
(1,061.0)
(1.7)
0.1
18.9
–
72.2
(3.4)
6.6
8.4
96.5
–
(0.1)
–
0.3
0.2
–
–
–
(2.1)
(1.7)
–
18.9
0.3
72.4
(3.4)
6.6
8.4
94.4
Assets
£m
1,075.9
Obligations
£m
(1,123.1)
Net liability
£m
(47.2)
Unfunded
arrangements
£m
(2.3)
Total
net liability
£m
(49.5)
(1.9)
–
28.0
33.2
(36.2)
–
–
–
–
(8.2)
(28.9)
–
36.2
(58.7)
25.0
6.5
47.6
1,146.6
–
(1,151.2)
(1.9)
(8.2)
(0.9)
33.2
–
(58.7)
25.0
6.5
47.6
(4.6)
–
–
(0.1)
–
–
(0.1)
–
–
–
(2.5)
(1.9)
(8.2)
(1.0)
33.2
–
(58.8)
25.0
6.5
47.6
(7.1)
111
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts
26. Employee benefits (continued)
The amounts recognised in the income statement comprise administration costs, past service costs and interest on the net defined benefit asset/
(liability). These charges are included in the following lines in the income statement:
Within underlying operating profit:
Administrative expenses
Within non-underlying items:
Past service costs
Within finance costs:
Interest on the net defined benefit asset/(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
Property and other growth assets/(liabilities)
Corporate bonds
Secured finance
Senior real estate debt
Senior private debt and private debt
Index-linked gilts (LDI portfolio collateral)
Notional exposure for synthetic equities/LDI hedging arrangements
Other, including cash
Note
6
2020
£m
(1.7)
–
–
(1.7)
2020
£m
131.8
0.8
304.1
90.3
28.0
96.9
596.8
(101.2)
10.0
1,157.5
2019
£m
(1.9)
(8.2)
(1.0)
(11.1)
2019
£m
143.3
7.1
302.9
86.6
30.9
87.7
593.4
(111.8)
6.5
1,146.6
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, unquoted assets and trade on a less regular basis.
Senior private debt and private debt includes unquoted investment funds which were initially measured at £101.2m using the most recent Net Asset
Valuations (NAV), adjusted for cash movements between the latest valuation date and 31 March 2020. As these initial valuations precede the negative
impact of the COVID-19 pandemic on the financial markets, the Group has determined the fair value based on the latest observable prices (the latest
NAV), updated with reference to movements in comparable observable benchmarked market indices to the reporting date and adjusted to reflect
the difference in liquidity between the assets and the benchmarked indices. The benchmark indices selected were the S&P Leveraged Loan indices
(US and EUR) and the Bank of America High Yield indices (US$ and Euro) as these were deemed the most comparable to the underlying investment.
The movements on the indices have been reduced by 50% reflecting the Group’s estimate for liquidity. The overall impact of this adjustment, net of
the liquidity adjustment, has been to reduce the initial NAV of these assets by £5.2m to £96.9m.
The calculation of this adjustment contains additional uncertainty over that of a formal valuation. Whilst intended to capture material market driven
asset valuation movements in the period to 31March 2020, the calculation of this estimated adjustment contains additional uncertainty over that of
the formal valuation process for these assets. An increase/(decrease) of 10bps in either the liquidity adjustment applied or other movement in the
indices would (reduce)/increase the valuation by £1.7m.
Property investments of £4.2m are based on an open market value from an independent valuer. In light of the negative impact of COVID-19 the
independent valuers have included a material uncertainty clause in respect of the valuations. The Directors still consider these to be the best estimate
of the property investment. A 10% increase/(decrease) in the valuation would increase/(reduce) the asset valuation by £0.4m.
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.
112
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 26. Employee benefits (continued)
Actuarial assumptions
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
2020
%
2.30
2.75
1.85
1.85
1.60-2.70
2019
%
2.40
3.45
2.45
2.45
1.90-3.30
1 A range of assumed rates exist due to the application of annual caps and floors to certain elements of service.
In September 2019, the Chancellor of the Exchequer highlighted the UK Statistics Authority’s proposals to change RPI to align with CPIH (Consumer
Pricing Index, including housing costs). The Chancellor commented that any change would not be made before 2025 and possibly not until 2030.
At the March 2020 budget, the Chancellor launched a public consultation on these proposals which is due to close in August 2020. To provide an
indication of the differential between RPI and CPIH, broadly CPIH increases are expected to average around 1% p.a. below RPI in the long-term (about
the same as CPI), so this change could have a significant impact on many pension schemes. A reduction in RPI will result in a reduction in Scheme
liabilities although this will be partly offset by the Scheme holding inflation-linked assets.
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
2020
Years
20.7
22.4
22.8
25.3
2019
Years
20.6
22.6
22.3
25.2
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
Credit spread
Price inflation – RPI
Mortality rate
Change in
assumption
+0.5%
-0.25%
+0.25%
+ 1 year
(Increase)/
decrease
in liability
£m
89.0
(51.0)
(36.0)
(43.0)
Increase/
(decrease)
in assets
£m
(115.0)
7.0
48.0
–
Movement since the year end
At 31 May 2020 the discount rate has reduced to 1.5%, a reduction of 80 basis points, this is primarily due to a fall in credit spreads which were higher
than usual at 31 March 2020 due to the uncertainty in the markets caused by COVID-19. As a result, the surplus in the Scheme on an IAS 19 basis has
reduced by approximately 60%.
Defined contribution schemes
The total expense relating to the Group’s defined contribution schemes in the current year was £33.7m (2019: £24.6m).
27. 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
at the start of the year was the Special Option Plan (SOP), although no grants were made in respect of this scheme in the year and no options are
outstanding at 31 March 2020. 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 £0.5m (2019: £1.0m)
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.
113
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 27. Equity compensation benefits (continued)
The number of options outstanding and exercisable in respect of each scheme at 31 March 2020 is as follows:
Long Term Incentive Plan
July 2015
July 2016
July 2017
July 2018
November 2018
July 2019
August 2019
September 2019
November 2019
Total number of share options
Outstanding
Exercisable
Option price
pence/share
Date normally
exercisable
63,498
53,999
514,001
470,985
135,945
469,547
89,286
164,546
16,489
1,978,296
63,498
53,999
–
–
–
–
–
–
–
117,497
2018-2025
2019-2026
2020-2027
2021-2028
2021-2028
2022-2029
2022-2029
2022-2029
2022-2029
–
–
–
–
–
–
–
–
–
–
The number and weighted average exercise price of all share options extant under the above schemes are as follows:
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
2020
2019
Options
2,133,386
776,778
(356,112)
(575,756)
1,978,296
117,497
Weighted average
pence
4
–
–
15
–
–
Options
2,850,182
809,879
(353,648)
(1,173,027)
2,133,386
128,048
Weighted average
pence
28
–
–
61
4
69
The weighted average share price at the date of exercise for share options exercised during the period was 258p (2019: 258p). The options outstanding
at 31 March 2020 had an exercise price of £nil and a weighted average remaining contractual life of nine 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.
Vesting
conditions
Three 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
Ten
Grant
date
July 2015
September 2015
July 2016
November 2016
July 2017
July 2018
November 2018
July 2019
August 2019
September 2019
November 2019
Total
Number of
options granted
874,876
142,512
753,888
45,570
710,691
673,934
135,945
506,457
89,286
164,546
16,489
4,114,194
114
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 27. Equity compensation benefits (continued)
The grants made under this Plan have EPS and TSR growth performance conditions. The EPS requirement is a non-market based performance
condition and the Black-Scholes option pricing model has been used to calculate the fair value of the award linked to EPS. The TSR requirement
is a market based performance condition and the fair value is calculated using a Monte-Carlo pricing model, based on assumptions at the date
of the award.
Share price at grant (p)
Exercise price (p)
Risk-free rate (%)
Expected volatility of Wincanton plc (%)
Expected volatility of Index (%)
Expected life (years)
Dividend yield (%)
Fair value per award under TSR condition (p)
Fair value per award under EPS condition (p)
November
2019
grant
261.0
–
0.56
29.2
10.3
3
4.5
123.0
218.0
September
2019
grant
227.0
–
0.56
29.2
10.3
3
4.5
111.0
197.0
August
2019
grant
227.0
–
0.56
29.2
10.3
3
4.5
111.0
197.0
July
2019
grant
259.0
–
0.56
29.2
10.3
3
4.5
126.0
226.0
November
2018
grant
222.0
–
0.85
30.3
11.2
3
3.6
100.0
199.0
July
2018
grant
275.0
–
0.77
31.4
12.9
3
3.6
154.0
247.0
Special Option Plan
Under the Special Option Plan, the Executive Directors and certain senior managers were granted long term incentive awards. The final outstanding
options were exercised in the year.
Vesting
conditions
Three years of service plus an EPS underpin, where the Company’s EPS must not reduce
over the three year vesting period, as well as a performance requirement based on
average absolute TSR growth over three years (the option starts to vest at >10% per
annum with 100% of the option vesting for 22% per annum).
Contractual
life years
Ten
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
The grant made under this Plan had an absolute TSR growth performance condition with an attaching EPS underpin. The EPS requirement was a
non-market based performance condition and as such was not accounted for in the fair value calculation. The TSR requirement was a market based
performance condition and the fair value was calculated by applying a discount to the option value. The discount was calculated using a Monte-Carlo
pricing model and was the expected outcome of meeting the performance condition. The fair value was determined on assumptions at the date of
the award.
115
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 28. 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.
The Group has a £141m (2019: £141m) committed syndicated bank facility which matures in October 2023. At 31 March 2020 £71m (2019: £32m) was
drawn, leaving unutilised facilities of £70m (2019: £109m), reflecting the additional £50m drawn in March 2020 in response to COVID-19. The Group
has uncommitted facilities including a £7.5m overdraft facility and £30m Receivable Purchase Facility. £15.5m of the Receivable Purchase Facility was
utilised as at 31 March 2020 (2019: £4.2m). 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 and cannot be freely transferred to the UK without prior approval. The Group’s net debt at the balance sheet
date was:
Total borrowings and other financial liabilities
Cash and cash equivalents
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
Note
20
19
2020
£m
(71.0)
60.9
(10.1)
(134.4)
(144.5)
The following are the contractual maturities of financial liabilities, including interest payments except for bank loans and overdraft interest:
At 31 March 2020
Non-derivative financial liabilities
Bank loans and overdrafts
Trade and other payables
Lease liabilities
At 31 March 2019
Non-derivative financial liabilities
Bank loans and overdrafts
Trade and other payables
Carrying
amount
£m
Contractual
cash flows
£m
Less than
1 year
£m
Between
1 and 5 years
£m
71.0
157.9
134.4
363.3
71.0
157.9
200.7
429.6
–
157.9
37.7
195.6
71.0
–
64.8
135.8
Carrying
amount
£m
Contractual
cash flows
£m
Less than
1 year
£m
Between
1 and 5 years
£m
32.0
175.8
207.8
32.0
175.8
207.8
–
175.8
175.8
32.0
–
32.0
2019
£m
(32.0)
12.7
(19.3)
–
(19.3)
Over
5 years
£m
–
–
98.2
98.2
Over
5 years
£m
–
–
–
Bank loans and overdrafts comprise the Group’s Revolving Credit Facility (RCF). Interest is charged on this facility based on daily amounts drawn
and charged at LIBOR plus a margin. Commitment and utilisation fees are also charged. The contractual interest payable on the amounts drawn at
31 March 2020 was £0.1m. If the £71.0m drawn at 31 March 2020 remained drawn throughout the year to 31 March 2021, and all other factors remained
the same, interest of £2.5m would be charged for the year; £1.6m of this is variable with part subject to variations in LIBOR.
The RCF requires the Group to comply with the following covenants, measured at 30 September and 31 March each financial year:
– Leverage ratio: Consolidated total net borrowings of no more than 2.75 times consolidated EBITDA for the preceding 12 month period;
– Interest cover: Consolidated EBITDA for the preceding 12 month period is not less than 3.5 times higher than the consolidated net finance charges
for the preceding 12 month period; and
– Fixed charge cover: Consolidated EBITDA plus operating lease costs for the preceding 12 month period is not less than 1.4 times higher than
consolidated net finance charges plus operating lease costs for the preceding 12 month period.
The covenants are on frozen GAAP and are therefore not impacted by the transition to IFRS 16.
116
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 28. Financial instruments (continued)
Analysis of changes in net debt
Bank loans and overdrafts
Financial liabilities arising from financing activities
Cash and bank balances
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
1 April 2019
£m
(32.0)
(32.0)
12.7
(19.3)
Adoption of IFRS
16 £m
–
–
–
–
–
(19.3)
(137.4)
(137.4)
Cash flow
£m
(39.0)
(39.0)
48.2
9.2
39.5
48.7
Non-cash
movements
£m
–
–
–
–
(36.5)
(36.5)
31 March 2020
£m
(71.0)
(71.0)
60.9
(10.1)
(134.4)
(144.5)
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 monitors market pricing and forward looking pricing projections to manage interest rate risk. There were no derivatives in place to fix
borrowing costs and all drawn debt at 31 March 2020 was at floating rates. If market conditions are expected to change then derivatives will be
considered to manage the risk exposure.
Sterling
Bank loans and overdrafts
Borrowings
Cash
Net debt
Interest rate swap
Net debt/(cash) excluding lease liabilities
Euro
Cash
Net debt
Total net debt/(cash) excluding lease
liabilities
Floating
rate
£m
2020
Fixed
rate
£m
71.0
71.0
(59.2)
11.8
–
11.8
(1.7)
(1.7)
10.1
–
–
–
–
–
–
–
–
–
Total
£m
71.0
71.0
(59.2)
11.8
–
11.8
(1.7)
(1.7)
10.1
Floating
rate
£m
32.0
32.0
(12.0)
20.0
(20.0)
–
(0.7)
(0.7)
(0.7)
2019
Fixed
rate
£m
–
–
–
–
20.0
20.0
–
–
20.0
Total
£m
32.0
32.0
(12.0)
20.0
–
20.0
(0.7)
(0.7)
19.3
117
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 28. Financial instruments (continued)
Interest rate sensitivity
The following table demonstrates the sensitivity to a change in interest rates of 0.5% (2019: 1.0%) 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. A variation of 0.5% (2019: 1.0%) 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 26.
Sterling
0.5% (2019: 1.0%) increase in rates
0.5% (2019: 1.0%) decrease in rates
2020
Effect
on profit
before tax
£m
(0.2)
0.2
Effect
on equity
£m
(0.2)
0.2
2019
Effect
on profit
before tax
£m
(0.6)
0.6
Effect
on equity
£m
(0.6)
0.6
The methods and assumptions used to calculate the possible effect of a change in interest rates are consistent with those used in the prior year, with
the exception of an interest rate swap of £20m which was in place at 31 March 2019.
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 in the balance sheet of £163.3m (2019: £122.3m). See Note 17 for further analysis of trade receivables and
the associated allowance for impairment loss.
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.
COVID-19 risk
Since the year end, due to the uncertainty brought about by the COVID-19 crisis the Group has secured a £40m liquidity facility as a temporary
extension to the funds available through the existing syndicated banking facility. This additional committed facility will be available for 364 days
expiring May 2021. Our covenant requirements remain unchanged.
118
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 28. Financial instruments (continued)
Fair values versus carrying amounts
The carrying values of the Group’s assets and liabilities which meet the definition of financial instruments are classified in the following categories:
Assets carried at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial assets
Liabilities carried at amortised cost
Lease liabilities
Bank loans and overdrafts
Trade and other payables
Financial liabilities
2020
£m
102.4
60.9
163.3
(134.4)
(71.0)
(155.4)
(360.8)
2019
£m
109.6
12.7
122.3
–
(32.0)
(175.8)
(207.8)
The fair values are considered to be the same as the carrying amounts set out above.
29. 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 52 to 71.
The total of short term employee remuneration and benefits receivable by the Directors is set out in Note 5.
30. Investment in subsidiaries
The significant subsidiaries and jointly controlled entity as at 31 March 2020 in the Wincanton group of companies, based on the scale of their
activities, are as follows:
Wincanton Holdings Limited
Wincanton Group Limited
Wincanton UK Limited*
Wincanton Ireland Limited
Risk Underwriting (Guernsey) Limited
Wincanton Pullman Fleet Services Limited
Onevast Limited
C.E.L Group Limited
Corstor Limited
Principal activity
Contract logistics services
Contract logistics services
Intermediate holding company
Contract logistics services
Insurance subsidiary
Maintenance and repair of motor services
Online solutions for warehousing space
Intermediate holding company
Container storage and repair
% of equity
held*
100
100
100
100
100
100
100
100
50
Country of incorporation
and registered office
England and Wales1
England and Wales1
England and Wales1
Republic of Ireland3
Guernsey2
England and Wales1
England and Wales1
England and Wales1
England and Wales1
119
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 30. Investment in subsidiaries (continued)
Other subsidiaries and jointly controlled entity as at 31 March 2020:
Principal activity
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Trustee for the Wincanton plc Pension Scheme
C.E.L (Engineering) Limited
C.E.L (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
Storeco Limited
Swales Haulage Limited
Trans European Holdings Limited
UDS Properties Limited
W. Carter (Haulage) Limited
W O Bradstreet Limited
Wincanton (No. 1) Limited
Wincanton (No. 2) Limited
Wincanton Air & Ocean Limited
Wincanton High Tech Limited
Wincanton Logistics Limited
Wincanton Pension Scheme Trustees Limited*
Wincanton Records Management (Ireland) Limited Dormant
Dormant
Wincanton Trans European (Ireland) Limited
Dormant
Wincanton Trans European Limited
Dormant
Wincanton Vehicle Rental Limited
% of equity
held*
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
100
100
100
100
100
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
England and Wales1
Republic of Ireland3
Republic of Ireland3
England and Wales1
England and Wales1
1 Registered office: Methuen Park, Chippenham, Wiltshire, SN14 0WT.
2 Registered office: Maison Trinity, Trinity Square, St Peter Port, Guernsey, GY1 4AT.
3 Registered office: Unit 1, Rosemount Business Park, Ballycoolin Road,
Blanchardstown, Dublin 11.
4 Direct subsidiary of Wincanton plc.
5 All holdings are of Ordinary Shares except where noted.
6 Three 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.
120
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 31. Adoption of new accounting standards
In the current year, the Group has adopted and applied IFRS 16 Leases issued by the International Accounting Standards Board that are relevant to the
operations of the Group.
The impact of the adoption of this new standard on the Group’s financial statements is explained below.
IFRS 16 Leases
Under IFRS 16, there is a single lease accounting model in which lessees recognise a right-of-use asset, representing the right to use the underlying
asset, and a corresponding lease liability, representing the obligation to make lease payments for all leases except where the lease term is 12 months
or less or the underlying asset is of a low value. In the Income statement operating lease rentals have been replaced with the amortisation of the right-
of-use asset and lease finance costs.
Adoption method
During the year, the Group adopted IFRS 16 Leases using the modified retrospective approach. Comparative information has not been restated
and continues to be reported under IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement Contains a Lease. The details of the current
and prior years’ accounting policies are disclosed separately below.
Details of the practical expedients taken are included in Note 1 to the consolidated financial statements.
Accounting Policies
Policy applicable from 1 April 2019
For contracts entered into on or after 1 April 2019, the Group assesses at inception whether the contract is, or contains, a lease. A lease exists if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group assessment includes
whether the contract: involves the use of an identified asset; has the right to obtain substantially all of the economic benefits from the use of the asset
throughout the contract period; and has the right to direct the use of the asset.
The Group as a lessee
At the commencement of a lease, the Group recognises a right-of-use asset along with a corresponding lease liability. The lease liability is initially
measured at the present value of the remaining lease payments, discounted using the rate implicit in the lease, or where this is not available, the
Group’s incremental borrowing rate. The lease term comprises the non-cancellable period of the contract, together with periods covered by an
option to extend the lease if the lessee is reasonably certain to exercise that option; and periods following an option to terminate the lease if the lessee
is reasonably certain not to exercise that option based on operational needs and contractual terms. Subsequently, the lease liability is measured at
amortised cost by increasing the carrying amount to reflect interest on the lease liability and reducing it by the lease payments. The lease liability is
remeasured when the Group changes its assessment of whether it will exercise an extension or termination option. Right-of-use assets are initially
measured at cost, comprising the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement
date, estimated asset retirement obligations, lease incentives received and initial direct costs. Subsequently, right-of-use assets are measured at
cost, less any accumulated depreciation and any accumulated impairment losses, and are adjusted for certain remeasurements of the lease liability.
Depreciation is calculated on a straight-line basis over the length of the lease.
The Group has elected to apply exemptions for short term leases and leases for which the underlying asset is of low value. For these leases, payments
are charged to the income statement on a straight-line basis over the term of the lease. Right-of-use assets are presented within non-current assets on
the face of the balance sheet, and lease liabilities are shown separately on the balance sheet in current liabilities and non-current liabilities depending
on the length of the lease term.
Policy applicable prior to 1 April 2019
Lease 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.
The Group as a lessor
The Group acts as an intermediate lessor of property assets and equipment. When the Group is an intermediate lessor, it accounts for its interests
in the head lease and the sub-lease separately. The Group accounts for finance leases as finance lease receivables, using the effective interest
rate method.
121
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 31 March 2019
as previously
reported
£m
Note
IFRS 16
adjustments
£m
1 April 2019 as
adjusted
£m
a
b
c
d
c
c
d
c
e
84.0
34.5
–
0.2
4.2
122.9
3.7
137.7
2.4
12.7
156.5
(6.1)
–
(260.8)
(10.1)
(277.0)
(120.5)
2.4
(32.0)
–
(7.1)
(30.4)
(69.5)
(67.1)
12.5
12.9
3.5
(0.3)
(95.7)
(67.1)
–
–
117.6
–
2.0
119.6
–
3.1
–
–
3.1
–
(31.5)
1.5
0.7
(29.3)
(26.2)
93.4
–
(105.9)
–
1.3
(104.6)
(11.2)
–
–
–
–
(11.2)
(11.2)
84.0
34.5
117.6
0.2
6.2
242.5
3.7
140.8
2.4
12.7
159.6
(6.1)
(31.5)
(259.3)
(9.4)
(306.3)
(146.7)
95.8
(32.0)
(105.9)
(7.1)
(29.1)
(174.1)
(78.3)
12.5
12.9
3.5
(0.3)
(106.9)
(78.3)
31. Adoption of new accounting standards (continued)
Consolidated Balance Sheet
Non-current assets
Goodwill and Intangible assets
Property, plant and equipment
Right-of-use assets
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
Lease liabilities
Trade and other payables
Provisions
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Borrowings and other financial liabilities
Lease liabilities
Employee benefits
Provisions
Net liabilities
Equity
Issued share capital
Share premium
Merger reserve
Translation reserve
Retained earnings
Total equity deficit
122
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 31. Adoption of new accounting standards (continued)
Notes to IFRS 16 restatement:
a. Right-of-use assets: valued at an amount equal to the carrying amount as if IFRS 16 had been applied since the start of the lease, but using the
discount rate at 1 April 2019 (the date of initial application), apart from a small number of property leases where the amounts involved were
immaterial or insufficient historical information was available. For these leases the right-of-use assets were valued at an amount equal to the lease
liability. Where applicable, the asset value has been adjusted by the amount of onerous lease provision held immediately prior to restatement.
b. Deferred tax asset: under IAS 12, the net liability recognised on transition to IFRS 16 creates a temporary difference from that which will be
deducted for tax purposes, therefore a deferred tax asset is recognised.
c. Reclassification of balance sheet items: lease incentive accruals and onerous lease provisions have been reclassified to right-of-use assets on
adoption. Rent prepayments and accruals are no longer required as they form part of the lease liability. Lease receivable recognised where the
Group is a lessor.
d. Lease liabilities: measured at the present value of the remaining lease payments, discounted using the Group’s weighted average incremental
borrowing rate of 3.09%.
e. Retained deficit: for the majority of leases the Group has calculated the right-of-use asset as though IFRS 16 had been applied since the start of
the lease and depreciated, resulting in a charge to retained earnings as the right-of-use asset is lower than the finance lease liability recognised.
The reconciliation between operating lease commitments previously reported in the financial statements for the year ended 31 March 2019
discounted at the Group’s incremental borrowing rate and the lease liabilities recognised in the balance sheet on initial application of IFRS 16
is shown below.
Operating lease commitment disclosed as at 31 March 2019
Discounted using the lessee’s incremental borrowing rate at 1 April 2019
Short term leases¹
Lease termination options²
Other reconciling items (net)
Lease liabilities recognised at 1 April 2019
£m
201.8
(66.7)
(4.3)
7.8
(1.2)
137.4
1 The Group has applied the practical expedient to exclude leases where the lease term is 12 months or less from the date of initial application and class such leases as short term leases.
2 Operating lease commitments disclosed as at 31 March 2019 only included the non-cancellable period of a lease agreement. Under IFRS 16 the lease term also includes periods following an
option to extend or terminate the lease if the Group is reasonably certain the lease will continue beyond the option date.
The following table summarises the quantitative impact of adopting IFRS 16 on the Group’s financial statements for the year to 31 March 2020:
CONSOLIDATED INCOME STATEMENT
Revenue
Underlying operating profit
Non-underlying items
Operating profit
Net Financing costs
Profit before tax
Income tax expense
Profit after tax
As reported
IFRS 16
£m
IFRS 16
adjustments
£m
Amounts before
adoption of
IFRS 16
£m
1,201.2
61.0
(9.0)
52.0
(8.2)
43.8
(5.3)
38.5
–
(3.7)
–
(3.7)
3.8
0.1
(0.5)
(0.4)
1,201.2
57.3
(9.0)
48.3
(4.4)
43.9
(5.8)
38.1
123
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts 31. Adoption of new accounting standards (continued)
CONSOLIDATED BALANCE SHEET
Non-current assets
Goodwill and Intangible assets
Property, plant and equipment
Right-of-use assets
Investments including those equity accounted
Employee benefits
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Income tax payable
Lease liabilities
Trade and other payables
Provisions
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Borrowings and other financial liabilities
Lease liabilities
Employee benefits
Provisions
Deferred tax liabilities
Net assets
Equity
Issued share capital
Share premium
Merger reserve
Translation reserve
Retained earnings
Total equity
As reported
IFRS 16
£m
IFRS 16
adjustments
£m
Amounts before
adoption of
IFRS 16
£m
85.6
26.6
114.2
0.2
96.5
323.1
2.0
135.0
60.9
197.9
(2.4)
(36.6)
(248.1)
(12.2)
(299.3)
(101.4)
221.7
(71.0)
(97.8)
(2.1)
(24.8)
(11.3)
(207.0)
14.7
12.5
12.9
3.5
(0.2)
(14.0)
14.7
–
1.4
(114.2)
–
–
(112.8)
–
0.3
–
0.3
–
36.5
(1.3)
(2.8)
32.4
32.7
(80.1)
–
96.5
–
(3.1)
(2.5)
90.9
10.8
–
–
–
–
10.8
10.8
85.6
28.0
–
0.2
96.5
210.3
2.0
135.3
60.9
198.2
(2.4)
(0.1)
(249.4)
(15.0)
(266.9)
(68.7)
141.6
(71.0)
(1.3)
(2.1)
(27.9)
(13.8)
(116.1)
25.5
12.5
12.9
3.5
(0.2)
(3.2)
25.5
As a result of adopting IFRS 16, operating lease rental costs have been replaced by depreciation of right-of-use assets and interest on lease liabilities.
This has resulted in an increase in underlying operating profit of £3.7m compared that reported on the previous IAS 17 basis. Net financing costs have
increased by £3.8m leaving underlying profit before tax £0.1m lower under IFRS 16 compared to on an IAS 17 basis.
124
Wincanton plc Annual Report and Accounts 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDAccounts 31. Adoption of new accounting standards (continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
Operating activities
Profit before tax
Adjustments for
– depreciation and amortisation
– interest expense on borrowings
– interest expense on leases
– impairments
– profit on disposal of property, plant and equipment
– share based payment transactions
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Decrease in provisions
Increase in employee benefits before pension deficit payment
Income taxes paid
Cash generated before pension deficit payment
Pension deficit payment
Cash flows from operating activities
Investing activities
Proceeds from sale of property, plant and equipment
Additions of property, plant and equipment
Additions of computer software
Cash flows from investing activities
Financing activities
Increase in borrowings
Payment of finance lease liabilities
Equity dividends paid
Interest paid on borrowings
Interest paid on lease liabilities
Cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of the period
Represented by:
– cash at bank and in hand
– restricted cash, being deposits held by the Group’s insurance subsidiary
As reported
IFRS 16
£m
IFRS 16
adjustments
£m
Amounts before
adoption of
IFRS 16
£m
43.8
0.1
43.9
43.1
4.4
3.8
9.3
(2.3)
(0.3)
101.8
5.8
0.4
(11.2)
(2.0)
0.3
(7.0)
88.1
(17.8)
70.3
5.5
(5.9)
(3.4)
(3.8)
39.0
(35.7)
(13.8)
(4.0)
(3.8)
(18.3)
48.2
12.7
60.9
56.0
4.9
(31.5)
–
(3.8)
–
–
–
(35.2)
(3.4)
–
(0.2)
(0.7)
–
–
(39.5)
–
(39.5)
–
–
–
–
–
35.7
–
–
3.8
39.5
–
–
–
–
–
11.6
4.4
–
9.3
(2.3)
(0.3)
66.6
2.4
0.4
(11.4)
(2.7)
0.3
(7.0)
48.6
(17.8)
30.8
5.5
(5.9)
(3.4)
(3.8)
39.0
–
(13.8)
(4.0)
–
21.2
48.2
12.7
60.9
56.0
4.9
Although IFRS 16 has no impact on the Group’s total cash flow, outflows from financing activities increase while the cash inflows from operating
activities have increased as rental costs previously recognised solely as cash outflows from operations are now apportioned between finance charges
and a reduction of the lease liability.
125
Wincanton plc Annual Report and Accounts 2020Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccounts AT 31 MARCH 2020
Non-current assets
Investment in subsidiaries
Amounts owed by Group undertakings
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Net current assets
Total assets less current liabilities
Non-current liabilities
Net assets
Equity
Issued share capital
Share premium
Hedging reserve
Retained earnings
Total equity
Note
2
3
4
5
6
8
2020
£m
108.9
77.1
186.0
0.9
53.9
54.8
(28.8)
26.0
212.0
(71.0)
141.0
12.5
12.9
–
115.6
141.0
2019
£m
108.9
–
108.9
70.0
4.6
74.6
(20.2)
54.4
163.3
(32.0)
131.3
12.5
12.9
–
105.9
131.3
The Company reported a profit for the year ended 31 March 2020 of £23.5m (2019: £20.5m).
The financial statements were approved by the Board of Directors and authorised for issue on 16 June 2020 and were signed on their behalf by:
J Wroath
Chief Executive Officer
T Lawlor
Chief Financial Officer
Company Registration Number: 04178808
126
Wincanton plc Annual Report and Accounts 2020WINCANTON PLC COMPANY BALANCE SHEETAccounts FOR THE YEAR ENDED 31 MARCH 2020
Balance at 1 April 2018
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based
payment transactions
Own shares acquired
Shares issued
Dividends paid to shareholders
Balance at 31 March 2019
Balance at 1 April 2019
Profit for the year
Other comprehensive income
Total comprehensive income
Share based payment transactions
Current tax on share based
payment transactions
Dividends paid to shareholders
Balance at 31 March 2020
Issued
share
capital
£m
12.5
Share
premium
£m
12.9
–
–
–
–
–
–
–
12.5
12.5
–
–
–
–
–
–
12.5
–
–
–
–
–
–
–
12.9
12.9
–
–
–
–
–
–
12.9
Hedging
reserve
£m
(0.1)
–
0.1
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained earnings
Own
shares
£m
(2.0)
–
–
–
1.3
–
(1.5)
–
(2.2)
Profit
and loss
£m
101.7
20.5
–
20.5
(1.5)
0.1
–
(12.7)
108.1
Total
equity
£m
125.0
20.5
0.1
20.6
(0.2)
0.1
(1.5)
(12.7)
131.3
(2.2)
108.1
131.3
–
–
–
0.7
–
–
(1.5)
23.5
–
23.5
23.5
–
23.5
(1.0)
(0.3)
0.3
(13.8)
117.1
0.3
(13.8)
141.0
127
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020WINCANTON PLC COMPANY STATEMENT OF CHANGES IN EQUITY 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. The Company has
adopted IFRS 16 Leases with effect from 1 April 2019. IFRS 16 has been adopted using the modified retrospective approach. Comparatives have not
been restated.
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 30 to the consolidated financial statements.
3. Amounts owed by Group undertakings
Amounts owed by Group undertakings
2020
£m
108.9
2019
£m
108.9
2020
£m
77.1
2019
£m
–
Amounts owed by Group undertakings are repayable on demand. An assessment was made in the year and it was determined that these amounts
owed are not expected to be repaid within one year. Expected credit losses have not been recognised on amounts owed by Group undertakings as
the amounts would be immaterial.
4. Trade and other receivables
Amounts owed by Group undertakings
Prepayments
Deferred tax assets
All receivables are due within one year, except prepayments of £0.2m (2019: £0.4m).
5. Current liabilities
Bank loans and overdrafts
Amounts owed to Group undertakings
Other payables
Accruals
Income tax payable
Details of bank loans and overdrafts are given in Notes 20 and 28 to the consolidated financial statements.
128
2020
£m
–
0.4
0.5
0.9
2020
£m
9.3
7.1
0.8
0.8
10.8
28.8
2019
£m
68.9
0.6
0.5
70.0
2019
£m
1.7
7.3
1.2
0.9
9.1
20.2
Wincanton plc Annual Report and Accounts 2020NOTES TO THE WINCANTON PLC COMPANY FINANCIAL STATEMENTSAccounts 6. Non-current liabilities
Bank loans
Details of bank loans are given in Notes 20 and 28 to the consolidated financial statements.
7. Equity
Allotted, called up and fully paid
At 1 April
Issued during the year
In issue at 31 March
2020
£m
71.0
2019
£m
32.0
10p Ordinary Shares
2020
millions
124.5
–
124.5
2019
millions
124.5
–
124.5
Details of the Company’s own shares, held within an Employee Benefit Trust, are given in Note 24 to the consolidated financial statements. Details of
the Company’s equity compensation benefits are given in Note 27 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 5 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 4 to the consolidated financial statements.
8. Reconciliation of movement in Total Equity
Profit for the year
Dividends paid to shareholders
Other recognised gains and losses relating to the year
Current tax on share based payment transactions
Share based payment transactions
Own shares acquired
Net increase in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
2020
£m
23.5
(13.8)
–
0.3
(0.3)
–
9.7
131.3
141.0
2019
£m
20.5
(12.7)
0.1
0.1
(0.2)
(1.5)
6.3
125.0
131.3
129
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020 Additional information
As reported under Adopted IFRS
Revenue
Underlying operating profit1
Operating profit
Net financing costs
Underlying profit before tax1
Profit before tax
Underlying profit after tax for the year1
Underlying earnings per share1
Basic earnings per share
Dividend per share
Net debt
20202
£m
1,201.2
61.0
52.0
(8.2)
52.8
43.8
44.7
36.1p
31.1p
3.9p
(10.1)
2019
£m
1,141.5
55.3
54.6
(6.0)
49.3
48.6
41.5
33.5p
34.5p
10.89p
(19.3)
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)
1 Operating profit, and hence profit before and after tax are reported on an underlying basis, i.e. including, where applicable, share of results of associates but before non-underlying items.
Non-underlying items included where applicable 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.
2 IFRS16 Leases was adopted on 1 April 2019 using the modified retrospective approach without restating prior year figures.
130
Wincanton plc Annual Report and Accounts 2020GROUP FIVE YEAR RECORD Financial calendar
Annual General Meeting
Interim results for 2020/21
Full year results for 2020/21
Annual Report
To be held on 22 July 2020 at 11.00am
Interim announcement 5 November 2020
Preliminary announcement 15 May 2021
Posted to shareholders in May 2021
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 707 1788.
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 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 registrars. If you would like further
information, you may contact the registrars.
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.
131
Strategic reportGovernanceDirectors’ remuneration reportDirectors’ reportIndependent auditor’s reportAccountsWincanton plc Annual Report and Accounts 2020SHAREHOLDER INFORMATION Company’s Legal Advisers
DWF
Registered office:
1 Scott Place
2 Hardman Street
Manchester
M3 3AA
Registered number: OC328794
Herbert Smith Freehills LLP
Registered office:
Exchange House
Primrose Street
London
EC2A 2EG
Registered number: OC310989
Pinsent Masons LLP
Registered office:
30 Crown Place
London
EC2A 4ES
Registered number: OC333653
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
Additional information
Non-executive Directors
Dr. Martin Read CBE (Chairman)
Stewart Oades
Paul Dean
Gill Barr
Debbie Lentz
Mihiri Jayaweera
Executive Directors
James Wroath (Chief Executive Officer)
Tim Lawlor (Chief Financial Officer)
Secretary and registered office
Lyn Colloff
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
HSBC Bank Plc
8 Canada Square
London
E14 5HQ
132
Wincanton plc Annual Report and Accounts 2020BOARD OF DIRECTORS AND ADVISERS 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. 04178808
Tel +44 (0)1249 71 00 00