Acquisition of Cygnia and Trading Update
13 September 2021
("Wincanton" or the "Group")
Acquisition of leading specialist eFulfilment business Cygnia
· Wincanton further strengthens eFulfilment offer with acquisition of Cygnia for up to £23.9 million
· Cygnia supports high-profile brands including BrewDog, Moonpig, Molton Brown, Revolution Beauty, Whittard of Chelsea and Feelunique
· Transaction positions Wincanton to capitalise on mid-market eCommerce and multi-channel eFulfilment growth opportunities
· Wincanton year-to-date revenue up c.25% from prior year; profit in line with market expectations
Acquisition of Cygnia
Wincanton, a leading supply chain partner for UK business, has agreed to acquire 100% of the shares in Caledonia Bidco Limited, the holding company of Cygnia Logistics Limited ("Cygnia"), a specialist mid-market eCommerce and multichannel eFulfilment provider, from Crescent Capital for a consideration of up to £23.9m on a cash free, debt free basis (the "Acquisition").
Founded in 1999, Cygnia has become one of the UK's principal providers of supply-chain services and solutions to high-profile consumer-facing brands such as BrewDog, Moonpig, Molton Brown, Revolution Beauty, Whittard of Chelsea and Feelunique. Cygnia is a specialist in eCommerce fulfilment with expertise spanning the full breadth of their customers' requirements, including high-volume order fulfilment, returns and carrier management services. The Company has approximately 700 colleagues, operating from four sites across the UK.
The acquisition is in line with Wincanton's strategic focus on eCommerce and will bolster the Group's growing Digital and eFulfilment business division. Cygnia's highly complementary offering will provide Wincanton with access to exciting new growth opportunities in the mid-market sector. The acquisition follows the Group's investment earlier in 2021 in its state-of-the-art, automated eFulfilment facility in Rockingham, Northamptonshire, to create additional capacity to drive growth in eCommerce.
Cygnia will continue to operate as a brand within the broader Wincanton Group, enabling the combined business to leverage Cygnia's reputation as a leading mid-market multichannel fulfilment provider, alongside Wincanton's reputation in eCommerce supply chain services. The acquisition will provide Cygnia with access to Wincanton's scale and expertise, including the Rockingham facility, which will enable it to accelerate the pace of its growth. Cygnia will become part of Wincanton's Digital and eFulfilment sector. Separately, Wincanton is appointing Carl Moore as MD of Digital and eFulfilment. Carl, who will take up his new role in January 2022, has spent the last 13 years in a range of senior roles with Clipper Logistics, most recently as Chief Commercial Officer.
Cygnia reported revenues of £44.6m and profit before tax of £1.3m for the financial year ended 31 March 2021. The acquisition is expected to be earnings accretive within the current financial year ending 31 March 2022, with combination benefits expected through increased asset utilisation and scale buying benefits as operations are consolidated across the Group.
The acquisition will be funded from existing cash resources and committed debt facilities and comprises an initial cash consideration of £22.2m with up to £1.7m of additional consideration, conditional on the settlement of certain outstanding liabilities.
James Wroath, CEO of Wincanton, said:
"This acquisition is a significant step forward for our eCommerce proposition and I am delighted to welcome our new colleagues at Cygnia. This is a business with a fantastic reputation for supporting many of the UK's most successful brands, underpinned by a focus on operational excellence which will complement Wincanton's customer-focused approach. The transaction is perfectly aligned with our strategy to capitalise on the opportunities presented by the shift to online retail and will position us well to benefit from many of the changes we are seeing in the broader logistics sector. Wincanton has long been a leader in supporting many of the UK's biggest brands and now, together with Cygnia, we will be able to further extend our reach to fast-growing, mid-market eCommerce customers."
Glenn Lindfield, CEO of Cygnia, said:
"We're thrilled to be joining Wincanton, one of the UK's leading supply chain specialists, so that we can continue to build on our partnerships with customers in the growing mid-market eCommerce market. This transaction brings together the scale and supply chain expertise of Wincanton with the agility and flexibility of the Cygnia business and will enable us to grow at pace in this important market."
Wincanton Trading Update
The Group's year-to-date core revenue is up over 25% from the prior year (and by more than 20% from the same period in FY20) driven by continued strong volumes, new business growth and the recovery from pandemic-impacted trading in the early part of the prior year. Growth of more than 15% has been seen in all sectors, with the highest growth rates in the Digital and eFulfilment and Public and Industrial sectors.
The widely-reported issue of driver shortages continues to have an impact on business operations and the Group is taking a number of steps to attract and retain drivers, including extending its dedicated driver recruitment function and in-house driver training department and funding the cost of training for new applicants. Wincanton is working closely with customers to address the challenges and, alongside industry bodies, is making representations to government with regard to measures that would increase the pool of drivers in both the short- and medium-term. Following the disposals of non-core businesses last year, more than 70% of the Group's revenue is open-book, which provides commercial protection against cost pressures. The Group is having productive discussions with its closed-book transport customers to mitigate the impact of the reduced capacity and additional costs.
The Group remains on track to deliver full year profits in line with market expectations and the Board remains confident in the future growth opportunities. Wincanton will issue a further trading update in early October 2021.
For further information please contact:
Wincanton Plc Tel: +44 12 4971 0000
Tim Lawlor, Chief Financial Officer
Headland Tel: +44 20 3805 4822
Susanna Voyle/ Henry Wallers/Marta Parry-Jones
Notes to Editors
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.
It 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 19,600-strong team operates from more than 200 sites across the country, utilising 3,500 vehicles.
Founded in 1999, Cygnia is one of the UK's leading mid-market omni-channel fulfilment partners, dedicated to providing innovative tailored logistics solutions that enable e-commerce businesses to scale rapidly. The business provides a wide range of B2B and B2C logistics and added value services including fulfilment, pre-retailing, co-packing, gifting and personalisation. The business operates across a number of sectors including health, beauty and wellness, food and drink and general consumer goods, employing some 700 staff across four warehouses with 750k sq ft of space in the UK.
Caledonia Bidco Limited is the holding company of Cygnia Logistics Limited and as at 31 March 2021 had gross assets of £16.9m. Caledonia Bidco Limited reported a loss before tax of £6.5m for the year ended 31 March 2021, impacted by an aggregate amortisation and interest charge of £7.7m which will not continue under Wincanton's ownership.