20 September 2023

LEI: 213800Z5WTW8QKOHWQ82

This announcement contains inside information.

WINCANTON PLC

("Wincanton" or "the Group")

Update on Pension Scheme

Wincanton, a leading supply chain partner for UK business, is pleased to announce it has reached an agreement with the Group's Pension Scheme Trustee (the "Trustee") on the terms of the 2023 Triennial Valuation (the "2023 valuation").

Highlights:

·          As at 31 March 2023, the valuation of the Group's defined benefit pension scheme showed an actuarial surplus of £3.9m, compared to an actuarial deficit of £154m at 31 March 2020.

·          The strength of the Scheme means that it is well positioned to meet its obligations to both deferred members and current pensioners; with members' liabilities fully backed by assets on current market assumptions.

·          The significant improvement in the Scheme is a reflection of the Trustees' stewardship and collaboration with the Group during a period of macro-economic turbulence.

·          The Group and the Trustees have agreed that no further contributions are currently payable into the Scheme as a consequence of the 2023 valuation.

·          Prior conditions around shareholder distributions have been removed.

Further detail:

The key elements of the 2023 valuation and related covenants are set out below:

·    With the Scheme now approaching a self-sufficient position, no further contributions into the Scheme by the Group will be required between 30 September 2023 and the completion of the 2026 valuation. Previously, contributions for the year ending 31 March 2024 would have been £23.6m and £25m per annum from April 2024 to March 2027, growing in line with the Retail Prices Index.

·    There will be no conditions associated with the payment of dividends or the execution of share buybacks. Previously, Wincanton was required to provide additional 50% matching payments to the Scheme where aggregated shareholder distributions (dividend and buyback) grew more than 10% year-on-year and on a full matching basis if distributions grew more than 15% per annum. 

·    £12m of Letters of Credits can now be released in line with the original Contingent Funding agreement as they were required only if contributions above £25m per annum were needed.

·    If the Scheme experiences severe adverse performance, such that the Technical Provisions deficit of the Scheme exceeds an agreed threshold for two consecutive measurement dates (or if Group financial leverage exceeds agreed trigger points), Wincanton will review contribution requirements or establish contingent assets to protect the Scheme. The current expectation is that either of these are extremely unlikely, due to the substantial headroom between the current position and the agreed thresholds. This mechanism ensures the protection of members' benefits under extreme market or company events.

The significant improvement in the position is the result of Group contributions, a strong return on assets and positive market changes.

The Board will continue to review the performance of and options for the Scheme, in line with the Group's capital allocation framework.

Tom Hinton, Chief Financial Officer, Wincanton, said:

"We are delighted with the outcome of the 2023 Triennial Valuation, which is the result of a well-executed investment strategy by the Scheme Trustees and strong cash generation from the Group enabling consistent contributions into the Scheme in recent years."

"Scheme members can take comfort in the funding level and security of the Scheme, with their benefits backed by a strong portfolio of assets."

"The agreement will significantly improve the Group's free cash flow and we look forward to providing a further update on Wincanton's capital allocation at our Interim Results in November."

-Ends-

For further information please contact:

About Wincanton 

Wincanton is a leading British supply chain solutions company. The Group provides business critical services including storage, handling and distribution; high volume eFulfilment; retailer 'dark stores'; two-person home delivery; fleet and transport management; and network optimisation for many of the UK's best-known companies. 

The Group is active across a range of markets including food and consumer goods; retail and manufacturing; eCommerce; the public sector; major infrastructure; building materials; fuel; and defence. With almost 100 years' heritage, Wincanton's 20,300-strong team operates from more than 170 sites across the country, responsible for 8,500 vehicles.