TIDMMGGT
RNS Number : 5467T
Meggitt PLC
25 March 2021
Date: 25 March 2021
Meggitt PLC
("the Company")
Publication of Annual Report and Accounts 2020 and the Notice of
the 2021 Annual General Meeting
The Company has today posted and published on its website
https://www.meggitt.com/investors/ its Annual Report and Accounts
("Annual Report") for the year ended 31 December 2020 and Notice of
its 2021 Annual General Meeting ("Notice of Meeting").
The Company's Annual General Meeting will be held as a hybrid
meeting at 11.00am on Thursday 29 April 2021 at the Company's
offices at Pilot Way, Ansty Business Park, Coventry, CV7 9JU, and
via live broadcast.
Due to the current UK Government's restrictions on public
gatherings, shareholders will not be permitted to attend the Annual
General Meeting in person. This is to ensure the safety of both our
employees and shareholders. The Company will keep the situation
under review and may make further changes to allow shareholder
attendance if the UK Government's guidance and restrictions permit
this at the time of the Annual General Meeting. Any changes will be
announced via RNS and on the Company's website.
Shareholders are invited to participate in the Annual General
Meeting via a live broadcast and will be able to ask questions and
vote during the meeting. As shareholders will not be able to attend
in person, they are encouraged to vote in advance by appointing the
Chairman as their proxy by one of the methods set out in the Notice
of Meeting.
In compliance with Listing Rule 9.6.1R of the UK Financial
Conduct Authority ("FCA"), the Annual Report, Notice of Meeting and
Form of Proxy for the 2021 Annual General Meeting will be submitted
to the UK Listing Authority and will shortly be available for
inspection at the National Storage Mechanism
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The information included in the preliminary results announcement
released on 4 March 2021, together with the information in the
Appendices to this announcement which is extracted from the Annual
Report, constitute the materials required by the FCA's Disclosure
Guidance and Transparency Rule 6.3.5R. This announcement is not a
substitute for reading the Annual Report in full and page and note
references in the Appendices below refer to page and note
references in the Annual Report.
Enquiries:
Meggitt PLC
Marina Thomas, Group Company Secretary (
marina.thomas@meggitt.com )
Katie Lewis, Senior Assistant Company Secretary (
katie.lewis@meggitt.com )
Simon Grant, Assistant Company Secretary (
simon.r.grant@meggitt.com )
PRINCIPAL RISKS & UNCERTAINTIES
The Group's strategic objectives can only be achieved if certain
risks are taken and managed effectively. We have listed below the
most significant risks that may affect our business, although there
may be other risks - of which the Group is unaware or are
considered less significant - which may affect our performance. The
potential impacts of each of our principal risks were considered as
part of the viability stress testing and considered to be
consistent with, analogous to or less significant than the
scenarios modelled.
Approach to COVID-19
Given the wide-ranging impact of COVID-19 on the aviation
industry we have assessed the effect on our existing risks and
considered resultant emerging risks rather than having a single,
standalone COVID-19 risk.
Strategic priorities
1 Strategic Portfolio
2 Customers
3 Competitiveness
4 Culture
Change in risk
Increase
- No change
Decrease
Risk velocity
H High: Impact within 6 months of risk occurring
M Medium: Impact between 6 and 36 months of risk occurring
L Low: Impact after more than 36 months of risk occurring
KPIs
-- Financial performance (organic revenue growth, underlying
operating profit, ROCE, underlying EPS growth and free cash
flow)
-- R&D investment
-- TRIR (total recordable incident rate)
-- Inventory turns
Strategic risks
Risk Description Impact How we manage it
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Industry changes Significant variation Volatility
1 H in demand in revenue * Demand is managed by monitoring external economic and
for air travel and/or and underlying commercial environment and long-lead indicators
KPIs: our products due profitability. whilst maintaining focus on balanced portfolio.
* Financial performance to aerospace and
defence business
downcycles coinciding; * Monitoring international political and tax
serious political, developments to assess implications of future
economic, pandemic legislation.
(including the on-going
impacts of COVID-19)
or terrorist events;
or industry consolidation
that materially changes
the competitive landscape.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Business model Failure to respond Decreased
2 - M to fundamental changes revenue * Alignment of Group, divisional and functional
KPIs: in our aerospace and profit. strategy processes.
* Financial performance business model, primarily
the evolving aftermarket.
This includes more * Dedicated full-service aftermarket organisation.
* R&D investment durable parts requiring
less frequent replacement,
a growing supply * Long-term customer agreements including
of surplus parts, SMARTSupport(R) packages to create tailored solutions
OE customers seeking for customers throughout the product life cycle
greater control of enabling more effective performance monitoring and
their aftermarket more predictable pricing.
supply chain and
accelerated pace
of new aircraft deliveries * Investment in research and development to maintain
leading to the earlier and enhance Meggitt's intellectual property.
retirement of older
aircraft.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Climate change Failure to adapt Decreased
3 M to the transition revenue * Continued dialogue with governments, industry bodies
KPIs: and physical impacts and profit, and customers to maintain awareness of evolving
* Financial performance of climate change, damage to aviation sector requirements.
including: operational
- government legislation performance
* R&D investment to limit air travel; and reputation. * Continued focus on developing technologies to support
- regulations limiting sustainable aviation and on reducing the carbon
greenhouse gas emissions intensity of our production operations.
from aviation come
into effect faster
than technical solutions; * Allocation of two-thirds of innovation budget to
- societal attitudes sustainable solutions.
shifting against
air travel (e.g.
"flight shaming"); * Reduction in Group carbon footprint through new
- acute physical facilities, more efficient production processes and
risks such as the using green energy sources.
increased likelihood
of extreme weather
events; and * Comprehensive business continuity plans across the
- chronic physical Group, supported by an insurance programme subject to
risks such as changing annual renewal.
weather patterns
including rising
temperatures and * Long-term weather considerations as part of site
sea levels. footprint strategy.
These are considered further
as part of the TCFD disclosures
on page 71.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Operational risks
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Quality escape/ Defective product Decreased
equipment failure leading to in-service revenue * System safety analysis, verification and validation
3 - H failure, accidents, and profit, policy and processes, combined with quality and
the grounding of damage to customer audits and industry certifications.
KPIs: aircraft or prolonged operational
* Financial performance production shut-downs performance
for the Group and and reputation. * Meggitt Production System (MPS).
its customers.
* Supplier quality assurance process.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Business interruption A catastrophic event Decreased
3 H such as natural disasters revenue * Group-wide business continuity and crisis management
KPIs: (including earthquake and profit, plans, subject to regular testing and also invoked
* Financial performance - the Group has a damage to during 2020 in response to COVID-19.
significant operational operational
presence in Southern performance
California); civil and reputation. * Comprehensive insurance programme, renewed annually
unrest, military and subject to property risk assessment visits.
conflict or terrorist
activity; or a pandemic
(including further
impacts from COVID-19)
could lead to
infrastructure
disruption and/or
property damage which
prevents the Group
from fulfilling its
contractual obligations.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Project/programme Failure to meet new Failure
management product development to deliver * Rigorous commercial and technological reviews of bids
3 - M programme milestones financial and contractual terms before entering into
KPIs: and certification returns programmes.
* Financial performance requirements and against
successfully transition investment
new products into and/or * Continuous review of programme performance through
* R&D investment manufacturing as significant the Programme Lifecycle Management (PLM) process
production rates financial including:
increase. This also penalties
covers lower than leading
expected production to decreased o regular monitoring of
volumes, including profit and the end-market performance
programme cancellations damage to of key OE programmes;
or delays, notably reputation. o internal review process,
the 737 MAX. to stress-test readiness
to proceed at each stage
of key programmes; and
o regular monitoring of
the financial health of
customers.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Customer satisfaction Failure to meet customers' Failure
2 - M cost, quality and to win future * Creation of a customer-facing organisational
delivery standards programmes structure including a dedicated aftermarket division.
KPIs: or qualify as preferred resulting
* Financial performance suppliers. in decreased
revenue * Regular monitoring of customer scorecards and
and profit. ensuring responsiveness to issues via Voice of the
* Inventory turns Customer process.
* Functional excellence in operations, project
management and engineering.
* Increased utilisation of low-cost manufacturing base.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
IT/Systems failure A breach of IT security Decreased
1 H due to increasingly revenue * Information Security infrastructure, policies and
KPIs: more sophisticated and profit, procedures supported by a Group wide security
* Financial performance cyber crime/terrorism damage to awareness programme.
resulting in intellectual operational
property or other performance
sensitive information and reputation. * Intelligence sharing on threats with government and
being lost, made security bodies including the FBI, CPNI and NCSC.
inaccessible, corrupted
or accessed by
unauthorised * Group-wide intellectual property protection
users. This also programme.
includes the loss
of critical systems
such as SAP due to * Management of third party service providers and risks,
poorly executed including resilience and disaster recovery processes.
implementation
or change of control;
poor maintenance, * Rolling programme of system upgrades (including SAP
business continuity implementation) to replace legacy systems.
or back -- up procedures
and the failure of
third parties to * Defined vulnerability management policy with
meet service level monitoring capability to ensure that vulnerabilities
agreements. are identified and appropriately patched.
* Dedicated cyber-security protective monitoring
resources, employing industry-leading technical
controls and procedures.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Supply chain Failure or inability Decreased
1 - M of critical suppliers revenue * Supplier excellence framework combined with
KPIs: to supply unique and profit, integrated commercial and procurement approach to
* Financial performance products, capabilities damage to contractual terms and conditions including
or services preventing operational development of long -- term agreements.
the Group from satisfying performance
* Inventory turns customers or meeting and reputation.
contractual requirements. * Local sourcing strategy to improve operational
efficiency and minimise potential impacts and
disruption from cross -- border tariffs.
* Maintenance of buffer inventory for critical and sole
-- source suppliers.
* Implementation of measures to mitigate counterfeit
and fraudulent parts at high -- risk facilities.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Group change management Failure to successfully, Decreased
3 - M simultaneously, deliver revenue * PMO oversight of large capital projects.
KPIs: the significant change and profit,
* Financial performance programmes currently increased
in process and planned, costs, damage * Dedicated site consolidation and property management
including site to operational teams for Ansty Park.
* Inventory turns consolidation performance
activity such as and reputation.
Ansty Park and investments * Regular monitoring by Executive Committee through
in new carbon operational and project reviews.
manufacturing
facilities in the
USA. * HPS implementation at new/expanded sites.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
People Failure to attract, Decreased
4 - H retain or mobilise revenue * Embedding of High Performance Culture.
KPIs: people due to factors and profit,
* Financial performance including industrial damage to
action, workforce operational * Action plans to improve employee engagement.
demographics, lack performance.
* Inventory turns of training, availability
of talent and inadequate * Graduate and apprentice programmes in partnership
compensation. with schools and universities.
* Regular oversight by Executive Committee.
* Creation of Employee Resource Groups to foster
diversity, boost employee engagement and enable
global collaboration.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Corporate risks
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Legal and compliance Significant breach Damage to
3 - H of increasingly complex reputation, * Continuing investment in compliance programmes
KPIs: trade compliance, loss of including Board -- approved policies and rollout of
* Financial performance bribery and corruption, supplier training and IT solutions.
US Government contracting, accreditations,
ethics, intellectual suspension
* TRIR property, data protection of activity, * Regular monitoring of ethics and anti-bribery
or competition/antitrust fines from programme by Corporate Responsibility Committee.
laws and facilitation civil and
of tax evasion. criminal
proceedings. * On -- going trade compliance programme including
third -- party audits.
* Comprehensive ethics programme including training,
anti -- corruption policy and 'Speak Up' Line.
* Third -- party and internal audits including HS&E and
Anti-Bribery & Corruption.
* HPS implementation to enhance safety measures,
validated by third -- party audits.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Financial risks
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Pension funding The Group operates Higher pension
3 M defined benefit scheme funding * Triennial valuation process and deficit funding
KPIs: pensions schemes contributions agreement with UK Pension Trustees.
* Financial performance in the UK, US resulting
and Switzerland. in decreased
The level of deficits cash and * Continued monitoring of asset allocations and funding
in these schemes profit. levels for all schemes.
may be affected
adversely by investment
returns, interest * Closure of UK and US defined benefit schemes to
rates, increasing future accrual.
life expectancy
and changes in
the regulatory
environment. The
rates at which
deficits are funded
is subject to
agreement with
the trustees in
the UK and is
dependent on legislation
in the US and
Switzerland.
=========================
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Liquidity Financial risk management Inability
3 M is considered in to access * Maintaining sufficient headroom in committed credit
KPIs: detail on pages 172 financing facilities and against covenants in those facilities.
* Financial performance to 173. on normal
commercial
terms. * Arranging funding with maturities spread over several
years or the ability to terminate early at little or
no cost to the Group.
--------------------------- ---------------------------- ----------------- -----------------------------------------------------------------------------
Oversight of risk and internal control
The Board is responsible for risk management and internal
control and for maintaining and reviewing its financial and
operational effectiveness. The Board has taken into account the
guidance provided by the FRC on risk management and internal
control in carrying out its duties. The system of internal control
is designed to manage, but not to eliminate, the risk of failure to
achieve business objectives and to provide reasonable, but not
absolute, assurance against material misstatement or loss.
The Group's functions are responsible for determining Group
policies and processes. The businesses are responsible for
implementing them, with internal and/or external audits to confirm
business unit compliance. The key features of the risk management
and internal control system are described below, including those
relating to the financial reporting process, as required under the
Disclosure Guidance and Transparency Rules (DGTR):
-- Group policies - key policies are approved by the Board and
other policies are approved by Group functions;
-- process controls - for example financial controls including
the Group Finance Policies and Procedures Manual, the bid approval
process, programme lifecycle management reviews, IT security
framework and risk management; and
-- the forecasting, budget and strategic plan processes.
The Group's programmes for insurance and business continuity
form part of our risk management and internal control
framework.
-- The following features allow the Group to monitor the
effective implementation of policies and process controls by
business units:
-- a business performance review process (including financial,
operational and compliance performance);
-- semi-annual business unit, product group and divisional
sign-off of compliance with Group policies and processes;
-- compliance programmes and external audits (including trade
compliance, ethics, anti-corruption, health, safety and
environmental);
-- an effective internal audit function which, primarily,
performs business unit reviews by rotation (including finance,
programme management, IT, HR, ethics, anti-bribery & corruption
and business continuity); and
-- a whistleblowing line to enable employees to raise concerns.
To review the effectiveness of the system of internal controls,
the Board and Audit Committee applied the following processes and
activities in 2020 and up to the date of approval of the Annual
Report:
-- reviews of the risk management process, risk register and risk appetite statement;
-- written and verbal reports to the Audit Committee from
internal and external audit on progress with internal control
activities, including:
o Reviews of business processes and activities, including action
plans to address any identified control weaknesses and
recommendations for improvements to controls or processes;
o The results of internal audits;
o Internal control recommendations made by the external
auditors; and
o Follow-up actions from previous internal control
recommendations.
-- regular compliance reports from the Group General Counsel and Director, Corporate Affairs;
-- regular reports on the state of the business from the Chief
Executive and Chief Financial Officer;
-- presentation on IT security activities and plans from the
Chief Information Officer and the Chief Information Security
Officer;
-- strategy reviews, review of the five-year financial plan and
review and approval of the 2021 budget;
-- written reports to the Corporate Responsibility Committee on
the effectiveness and outcomes of whistleblowing procedures;
and
-- reports on insurance coverage and uninsured risks.
The risk management and internal control systems have been in
place for the year under review and up to the date of approval of
the Annual Report, and are regularly reviewed by the Board. The
Board monitors executive management's action plans to implement
improvements in internal controls that have been identified
following the above mentioned reviews and reports. The Board
confirms that it has not identified any significant failings or
weaknesses in the Group's systems of risk management or internal
control as a result of information provided to the Board and
resulting discussions.
Viability statement
In accordance with the provision 31 of the 2018 Code, as part of
their assessment of the Group's viability, the directors have
assessed the prospects of the Group and its ability to meet its
liabilities as they fall due.
Response to COVID-19 and impact on Meggitt's viability
During 2020, along with the rest of the civil aerospace sector,
Meggitt responded to the pressures caused by the COVID-19 pandemic.
Year on year, the Group's revenues fell by GBP592m (26%) and as
such, the last 12 months have tested the Group's viability.
The first actions of the Group secured liquidity, and over the
year the Group's funding structure has proved to be secure and
resilient. In the first half, the Group secured a forward start on
its RCF for one year on $575m to September 2022, and in November
successfully refinanced $300m of debt. The Group also became an
eligible issuer under the Bank of England's CCFF facility. However,
the Group has not issued commercial paper under this facility at 31
December 2020 and at no point during 2020 was the Group viable only
through access to these funds.
The Group has also addressed its structural cost base. As at the
end of 2020, our global headcount is 26% or 3,319 lower than at the
end of 2019. Overall, though GBP592m of revenue have been
lost year on year, the fall in underlying operating profit has
been GBP212m, meaning for every GBP3 of revenue lost, just under
GBP2 has been saved on cost. The Group also generated cash in the
year with free cash flow (after interest and tax) of GBP32m and net
debt lower by GBP138m year on year. The Group has received a small
amount of support under government furlough schemes. The benefit to
the income statement has not been critical to viability.
Meggitt's diversified business model has also proved robust.
Though the Group's civil aerospace business has come under
pressure, the defence business is up 4% on an organic basis and
defence now represents 46% of the Group's revenue. In addition, the
Group's global manufacturing base has proved resilient during 2020,
with manufacturing capacity largely maintained through the pandemic
despite significant levels of infection in both the UK and USA.
Meggitt has benefitted from both globally distributed facilities
and diverse end markets.
Overall, though far from over, the Group's response to COVID-19
has been encouraging. Nearly 12 months into the most severe crisis
to hit aerospace in living memory, Meggitt continues to
be viable.
Assessment of prospects
The Board believes that, despite the impact of COVID-19 in 2020,
the prospects for the Group continue to be favourable in the medium
to long-term.
-- We believe that the desire for individuals to travel remains
and that air travel will play a critical part in meeting that
demand
o Growth in civil aerospace markets will return despite the near
term impact of COVID-19; we provide equipment to all major new
platforms entering service in the near future
o Meggitt has provided equipment to over 73,000 in service
aircraft, and with an average aircraft lifespan of 25 years,
our aftermarket will be providing meaningful revenues to the
Group for decades to come
-- We are diversified by end market and by customer
o We supply into both civil (43% revenue) and defence (46%)
aircraft markets, and into selected energy markets (8%)
o Our revenues are split broadly evenly between equipment sales
and aftermarket
o We work with a diverse group of customers from across the
globe. Our top 10 customers generate less than 50% of our
revenue
-- We invest for the long term and protect our know-how
o We invest in market leading technology. We continue to spend,
on average, 5-7% of revenue on R&D through the cycle
o Our physical capital base is renewed regularly. We have
maintained our investment levels in 2020 (GBP90m of capital
expenditure vs. GBP94m in 2019)
o We grow, manage and defend our intellectual property portfolio
robustly
o We continue to invest in next generation technologies to
support a sustainable future for aviation and power generation
o We seek to attract and retain colleagues who can enable the
extraordinary
-- We manufacture based on quality, consistency and value
o We manage our manufacturing facilities using HPS (previously
MPS), a tiered improvement programme, providing a roadmap to best
in class manufacturing.
o We operate a globally distributed manufacturing
infrastructure, producing both in the OECD and in lower cost
locations
-- We have robust liquidity and a strong financial base
o The Group has reduced its levels of debt by over GBP100m to
GBP773m in spite of the financial pressure of the last 12 months.
The Group generated free cash flow in 2020
o Our gearing ratio at the end of 2020 was 2.2x (net debt /
EBITDA) and interest cover was 9.8x, both well within our covenant
limits
o We have GBP1.5bn of committed facilities as at 31 December
2020, and a headroom of GBP908m
Assessment period
The Board considered the Group's principal risks as detailed in
our risk register, and assessed the impact, likelihood and
timeframe over which the risks might crystallise. It also
considered over what timeframe certain business and sector changes
currently impacting the Group would likely be resolved.
1. Recovery of the civil aerospace market: Many industry
observers including IATA see the civil aerospace market recovering
to 2019 levels by 2024-25.
2. Refinancing: The Group expects to have refinanced a
significant proportion of its debt, including its RCF by
2023-24.
3. Evolution of Meggitt: The Group has a number of projects,
including the completion of the move into Ansty Park and other
footprint reduction efforts, which are expected to complete within
the next five years.
4. Programme investment: The Group typically expects the
investment cycle of five years for engineering development
programmes.
The Board concluded that these four major activities would be
largely resolved in a five-year time frame and as such, five years
continues to be the correct timeframe over which to assess
viability and risk impact.
Assessment of viability and risk stress tests
The Group is modelling a progressive recovery in activity in the
civil aerospace market from a low point in late 2020 and early
2021. Though a number of outcomes are possible, the Group believes
that a full recovery in the civil aerospace market is likely by
2024-25 and it is on this baseline that the Group's viability has
been tested.
Using the output of the Group's long-term planning activity, the
Group has created two adverse downside scenarios. These are
modelled against a baseline "COVID recovery" scenario detailed in
note 1 of the consolidated financials statements and the financial
impact quantified should a number of risks within those scenarios
crystallise within a five-year period.
1. Loss of a major customer
The aviation sector is reliant on a well-developed system of
global regulations and equipment qualifications to ensure
confidence in the sector's functioning. In addition, particularly
when working with the defence arms of governments, security of data
and adherence to military protocols is critical.
The Group has modelled the impact of a significant loss of
revenue following a regulatory or compliance failure at Meggitt.
Censure for non-compliance is severe, whether through the loss of
access to government contracts, or the grounding of fleet which are
deemed to be unsafe.
This scenario is modelled to unfold in parallel with the
recovery from COVID-19. Given necessary lead times to find
alternative sources of supply, the full impact of this loss of
customer scenario would take 12 months to be felt, during which
time the civil AM recovery is underway in the underlying base case.
The maximum impact of the scenario would be in 2023, when the Group
is refinancing a number of facilities.
2. Major business disruption event
As the Group is currently experiencing a significant demand-side
business disruption event in COVID-19, in testing the Group's
viability, a supply-side shock has been considered. Specifically,
manufacturing disruption in California as a result of a natural
disaster.
On the Group's risk matrix, business disruption continues to be
one of the highest impacting risks on the Group's financial
performance, disrupting relationships with both major customers and
suppliers.
The Group used knowledge of previous business disruption events
to model the impact on the Group's future plans. As modelled, the
Group is able to weather the earthquake event without needing to
conclude any additional refinancing.
The Group has modelled the financial impact of the risks
articulated above, together with mitigating actions. Mitigating
actions include a reduction in investment both in PP&E and
R&D or curtailment of indirect expenditure and headcount
reduction. Levers such as dividend suspension or material reduction
in discretionary spend are somewhat reduced in their effectiveness,
as these actions have already been taken in response to COVID-19.
However, the Group continues to sell into diverse end markets and
enjoys long dated aftermarket revenue and technologically
differentiated products. The Group would find it challenging should
a second external shock occur before the recovery from COVID-19 is
established. However, the Group continues to believe that both the
scale of the potential mitigating levers available to it and the
favourable outcomes achieved in 2020 against COVID-19 by it provide
buffers to mitigate the impact of these scenarios.
Statement of viability
Based on the results of the analysis, the Board has a reasonable
expectation that the Group will continue in operation and be able
to meet its liabilities as they fall due over the five-year period
of assessment.
Statement of directors' responsibilities in respect of the
financial statements
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. Additionally, the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules
require the directors to prepare the Group financial statements in
accordance with international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union. The directors have prepared the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 "Reduced Disclosure Framework", and applicable
law).
Under company law, 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 Company and of the
profit or loss of the Group for that period. In preparing the
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
have been followed for the Group financial statements and United
Kingdom Accounting Standards, comprising FRS 101 have been followed
for the Company financial statements, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006.
The Board are responsible for the maintenance and integrity of
the Company's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors' confirmations
The Board consider that 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 and
Company's position and performance, business model and
strategy.
Each of the directors, whose names and functions are listed in
the Board of Directors confirm that, to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies inthe European Union, give a true and
fair view of the assets, liabilities, financial position and loss
of the Group;
-- the Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS
101, give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
-- the Strategic report and this Directors' Report includes a
fair review of the development and performance of the business and
the position of the Group and Company, together with a description
of the principal risks and uncertainties that it faces.
In the case of each director in office at the date the
Directors' Report is approved:
-- so far as the director is aware, there is no relevant audit
information of which the Group's and Company's auditors are
unaware; and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the Group's and Company's
auditors are aware of that information.
Fair, balanced and understandable
The Board of directors as at the date of this report consider
that the Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's position, performance, business
model and strategy. The Board has made this assessment on the basis
of a review of the accounts process, a discussion on the content of
the Annual Report assessing its fairness, balance and
understandability, together with the confirmation from executive
management that the Annual Report is fair, balanced and
understandable.
16. Related party transactions
During the year, the Group made sales to the joint ventures of
GBP0.7m (2019: GBP2.9m) and purchases from the joint ventures of
GBP0.6m (2019: GBP0.1m). Transactions between the Company and its
subsidiaries have been eliminated on consolidation.
The remuneration of key management personnel of the Group, which
is defined for 2020 as members of the Board and the Group Executive
Committee, is set out below.
2020 2019
GBP'm GBP'm
================================================ ====== ======
Salaries and other short-term employee benefits 4.7 10.8
------------------------------------------------ ------ ------
Share-based payment (credit)/expense (0.5) 2.5
================================================ ====== ======
Total 4.2 13.3
================================================ ====== ======
Full details of all elements in the remuneration package of each
director, together with directors' share interests and share
awards, are disclosed in the Directors' remuneration report on
pages 114 to 141 which forms part of these consolidated financial
statements.
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END
ACSFLFLRVVIEFIL
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March 25, 2021 12:30 ET (16:30 GMT)
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