but I also suspect that had this cohort done the test in reception, when they were still using phonics to read, they would have got better results.
I think that this might be a clue. Is this an understanding of the use/extent of phonics which you have got from the school?
Phonics for reading is a lifelong skill. Stanovich, way back in the 1970s, discovered that adult skilled readers used phonics for reading unknown words. It is certainly a whole word/look and say proponent's belief that skilled readers use 'other strategies' but the key word here is 'belief'. Actual cognitive research showed that they don't.
You have to understand that we have a whole generation of teachers who, in the main (with honourable exceptions) believe, because of their largely 'look & say' training, that skilled readers don't use phonics. It's a belief that dies hard...
I know, from working with KS3 pupils, that it is perfectly possible to get a L4 in 'reading' ( actually a comprehension exercise) without being able to accurately read unfamiliar words. In fact, without being able to accurately read common words. Well drilled children can get the gist of a passage without much reading accuracy and have been intensively taught how to answer the questions.