20th Sep 2023 17:16
(Alliance News) - Wincanton PLC on Wednesday announced an agreement with the group's pension scheme trustee on the terms of the 2023 triennial valuation meaning prior conditions surrounding shareholder distributions have been removed.
The Wiltshire, England-based logistics firm said the valuation of the group's defined benefit pension scheme showed an actuarial surplus of GBP3.9 million, compared to an actuarial deficit of GBP154 million at March 31 2020.
Wincanton said 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 group and the trustees have agreed that no further contributions are currently payable into the scheme as a consequence of the 2023 valuation and prior conditions around shareholder distributions have been removed.
With the scheme now approaching a self-sufficient position, no further contributions will be required between September 30 2023 and the completion of the 2026 valuation, Wincanton said.
Previously, contributions for the year ending March 31 2024 would have been GBP23.6 million and GBP25 million per annum from April 2024 to March 2027, growing in line with the Retail Prices Index.
Tom Hinton chief financial officer said: "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."
Analysts at Liberum see this as an opportunity for the company to enhance cash returns to shareholders while continuing to invest in organic growth and maintaining a low level of financial leverage.
"The low rating of the shares suggests to us that share buybacks would be an attractive method of returning cash to shareholders, albeit constrained by the liquidity of the shares," Liberum said in a note to clients.
Shares in Wincanton leapt 16% to 283 pence each in London on Wednesday.
By Jeremy Cutler, Alliance News reporter
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