QINETIQ GROUP PLC
13 June 2022
Availability of Annual Report and Accounts 2022 and Notice of 2022 Annual General Meeting
QinetiQ Group plc (the 'Company') has today published the following documents:
· QinetiQ 2022 Annual Report and Accounts;
· Notice of 2022 Annual General Meeting;
· Letter from the Group Chair to Shareholders; and
· Form of Proxy
The documents are available to view or download from the Company's website at www.qinetiq.com/investors.
In compliance with Listing Rule 9.6.1, copies of the above documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
These documents are today being posted or otherwise made available to shareholders.
The 2022 Annual General Meeting will be held at 11.00 am on Thursday 21 July 2022 at Ashurst LLP, London Fruit & Wool Exchange 1 Duval Square, London E1 6PW.
In compliance with paragraph 6.3.5 of the Disclosure Guidance and Transparency Rules, the information in respect of Principal Risks, Related Party Transactions and the Directors' Responsibility Statement, contained in the Appendix, is extracted from the Annual Report and Accounts and should be read in conjunction with the Group's preliminary results announcement of 19 May 2022 (the 'Preliminary Results') which can be viewed on the Company's website at www.qinetiq.com/investors. The information in the Appendix and the Preliminary Results together constitute the material required by DTR 6.3.5 to be communicated in unedited full text through a Regulatory Information Service. This is not a substitute for reading the full Annual Report and Accounts. Page and note references in the Appendix refer to page numbers and notes in the 2022 Annual Report and Accounts.
Enquiries:
|
Jon Messent - Company Secretary |
+44 (0) 1252 392000 |
|
John Haworth - Group Head of Investor Relations |
+44 (0) 7920 545841 |
|
Press Office |
+44 (0) 1252 393500 |
APPENDIX
RISK MANAGEMENT
Our approach to identifying and managing risks
How we protect our business
Effective management of current and emerging risks is critical to achieving our strategic goals. Our Group Director of Risk and Governance has oversight and responsibility for risk management across the organisation, providing risk expertise and support to the businesses and reporting risk information to the Global Leadership Team, the Board and its Audit and Risk and Security Committees.
Risk processes cannot operate in isolation and, like safety and security, must engender a supportive and robust culture to enable effective risk-based decision making. Our Group-wide risk management framework supports and develops a positive risk culture that spans the strategic to operational levels; exploiting both a top-down and bottom-up approach. Our culture and embedded risk management processes, combined, result in a stronger and more resilient organisation in the face of challenges. Managing threats and optimising opportunities to support the long-term success of our organisation is an established part of the way we conduct business. Continual cycles of review and improvement of our risk maturity keeps pace with a growing business in a complex industry; to ensure we are best placed to deliver results, while simultaneously innovating for our customers' advantage.
Principal risks
The Group Risk Register consists of material risks relating to both the effective delivery of our strategy and those risks which may have a material effect on our stakeholders, partners and environment. The Board and Global Leadership Team assess these principal risks from a number of different perspectives, both individually and collectively. The Board recognises that some risks may be affected by factors outside the control of the company and that despite the robustness of the risk management processes they cannot provide absolute assurance and unknown risks may manifest without warning. We have well established processes in place to rapidly deploy appropriate management in these situations, and utilise lessons learned across the organisation as part of our ongoing drive for continuous improvement.
Over the past 12 months, we have seen considerable movement in our principal risks, including the addition of three new risks, which have gained in materiality, and the decrease of three existing risks. The pandemic has been the catalyst for fundamental changes in the way employees work, and the subsequent "Great Resignation" phenomenon, driven by worker's dissatisfaction with current working conditions and personal reassessments of career and lifestyle due to the changes and hardships of the pandemic, is likely here to stay. In light of this, we have escalated our people risk to the principal risks. In addition, the step-change in the new requirements and evolving context of our climate risk was met with a significant amount of work throughout the year to assess and evaluate; resulting in it being moved from the emerging risks to the principal risks, Finally, given the significant growth ambitions of the QinetiQ Group, we must ensure that our delivery organisation can match the increasing size and complexity of programmes we undertake. Until our project and programme improvement initiative is completed, the risk of our project management failing to keep pace with our growth will be held as a principal risk.
There has been a reduction in the likelihood of our innovation risk following a number of successful group-wide initiatives. Our UK growth risk has also decreased in likelihood as a result of robust mitigation; including increased collaboration across the Group, paving the way for international opportunities, and the strong positioning of our abilities and offerings following the UK Government Spending Reviews. The large contracts risk has decreased, in part, because the Engineering Delivery Partner (EDP) contract is now firmly established as the default route for contracted engineering services for Defence, Equipment and Support (DE&S). In addition, recent renegotiations of elements of the EDP programme has taken it to the next level and builds on the success of the first three years.
Emerging risks
We define emerging risks as newly developing or changing risks, where the extent and implications are not yet fully understood. These risks are identified and managed using the same established risk management framework as our principal risks and are included as part of our strategic planning process to ensure we capitalise on the opportunity and minimise the downsides they present. Where appropriate, we establish "Working Groups" to monitor and scrutinise the potential impacts of the emerging risks and ensure relevant mitigation actions are undertaken at pace. We also consider the wider impact of emerging external risk; for example, where a risk creates challenges for our customers it may create an opportunity where we have well-aligned capability to further support them.
The enduring COVID-19 pandemic has continued to have limited impact on our operations globally. Our sites and facilities have remained open and the opportunity to maximise the potential of new ways of working is being exploited through our transformation programme in order to re-invent our workspaces to maximise performance and optimise spend whilst simultaneously providing increased flexibility and productive ways of working for our employees. We remain cognisant that the pandemic challenges have the potential to cause future disruption and, therefore, we continue to monitor the situation in readiness to respond effectively to ensure that our people are safe and we continue to deliver excellence for our customers.
ESG issues continue to be a focus for our investors and other stakeholders, and so we are ensuring we provide visibility on our programmes and plans, including how we are managing the associated risks. We have a well-established ESG strategy in place, underpinned by robust sponsorship from our Board and the Global Leadership Team, to ensure we are identifying and managing the ESG risks to our company, including compliance to legislative and reporting requirements. The landscape continues to evolve and, through 2021, we saw a number of topics emerge and develop. Key areas included the focus and outcomes of COP26, the evolution of the management of COVID-19, Social Value and Levelling Up (in the UK), new reporting requirements and Defence Ethics. We carefully track the emerging ESG risks and, where necessary, build in additional work-streams under the ESG Programme to ensure robust mitigation is undertaken and opportunities are leveraged. To reflect the importance and necessary focus of ESG in QinetiQ, our CR&S Director reports on the programme directly to the Board.
Risk management and assurance activity
Three lines model
Our risk management and assurance activity follows the established Three Lines Model with the first and second line reporting to Global Leadership Team and Board, and the third line reporting to the relevant Board Committees. The first line is performed by operational management, who own and manage the risks in accordance with the Group Operating Model; the second line is performed by the compliance, assurance and risk functions; and the third line is performed by the internal audit team and external assurance providers.
|
Board |
||
|
Audit Committee and Risk & Security Committee · Receive reports from second and third line assurance functions · Monitor and review the principal and emerging risks · Risk deep dives · Monitor the effectiveness of internal controls |
||
|
Global Leadership Team Identify and monitor the principal and emerging risks, as well as material risks (including operational) reported from the businesses and Group functions |
||
|
Management |
Independent Assurance |
|
|
1st Line · Managers identify and evaluate risks in conjunction with Second Line · Design and operate internal controls and other mitigation measures, in conjunction with Second Line · Application of risk appetite, delegated authorities, policies, procedures and codes of practice · Report risks through relevant reporting and escalation processes · Manage the day to day operational risks · Ensures compliance with legal, regulatory, and ethical expectations |
2nd Line · Risk Management and other oversight functions with limited independence · Provides complementary expertise, support, monitoring, and challenge related to the management of risk · Design and facilitate the risk management processes across the Group · Provide risk expertise and support, including analysis and reports on the adequacy and effectiveness of risk management · Responsible for continually improving the risk management process across the Group · Monitor compliance with policies and standards · Report to the Board and Global Leadership Team |
3rd Line · Internal Audit and other external independent assurance providers · Review and evaluate risk management activity and provide assurance over the effectiveness of the control environment · Manage the Confidential Reporting process · Report to the Board and Global Leadership Team |
QinetiQ risk appetite
The Board identifies and reviews its tolerance to risk by establishing a clear risk appetite and setting appropriate delegations of authority to the executive and senior leaders. We focus on those critical risk areas necessary to achieve our strategic goals. Risk appetite is articulated by defining three categories which balance scrutiny and mitigation activity against likely benefit:
Cautious
Avoidance of uncertainty - with negligible or low residual risk. Applying innovation prudently where the risks are fully understood.
Balanced
Preference for delivery options that have a low or moderate degree of residual risk. Applying innovation only where successful delivery is likely.
Eager
Willing to consider delivery options with greater inherent risk and eager to be innovative.
|
Commercial |
|
|
Opportunities relating to increased market share where we have proven delivery into existing markets |
Eager |
|
Opportunities that translate proven delivery into new markets |
Balanced to Eager |
|
Opportunities that translate new capability or delivery into existing customers. |
Balanced |
|
Opportunities that involve new capability or delivery into new markets. |
Cautious to Balanced |
|
Operational |
|
|
Operational delivery |
Cautious to Balanced |
|
Compliance with legal and regulatory requirements |
Cautious |
Strategic Risks
|
Execution of our UK growth strategy |
Execution of our US growth strategy |
International Strategy |
|
Risk UK Government budget constraints lead to reduced spending in core markets in which we operate. This and the ever increasing pace required to introduce new technology to respond to emerging threats results in a risk that our approaches/ offerings for evaluating capability may not remain relevant.
|
Risk There is a risk that the US Business will be unable to establish a robust and distinct position in the marketplace and deliver the significant growth ambition, resulting in impact to the strategic direction of the Group and potential reputational damage. The ongoing impact of the Continuing Resolution on the US DoD budgets within the Federal Government may exacerbate this risk through increased customer disruptions and constraints. |
Risk Our international business conducts business in a number of regions, including Australia, Canada and Germany. Plans to grow these businesses to achieve our global leverage may be impacted by external influences outside of our control, such as geo-political risks, or specific risks arising from working in new markets and globalised operation. Political uncertainties could also impact the availability and focus of customer budgets. Elements of this risk exist within QinetiQ's control, including growing the maturity of our in- country capabilities to deliver our growth ambitions.
|
|
Impact A reduction in revenue and associated profitability from the Group's UK Defence and Security contracts. |
Impact Adverse impact on the Group's financial performance. |
Impact Unable to realise expected growth in the planned timeframes. |
|
Mitigation Our strategy is focused on leading and modernising UK test and evaluation in support of our UK and overseas customers' objectives and developing our training and mission rehearsal and data intelligence/cyber businesses. This includes ongoing proactive engagement with our major customers to enable us to support their objectives through mission-led innovation. Our focused investment into contracts enhances our offerings that support our customers with their pace and efficiency challenges as well as ensuring that we provide the right services as the threat environment continues to evolve. We continue to deliver new customer solutions, increasingly utilising modelling and synthetics, embracing digital transformation. We are expanding our global test and evaluation business, as evidenced through securing the contract to operate and maintain the Queensland Flight Test Range and, post-Brexit, maintain relationships with the UK Government to support bilateral relationships within Europe; where there is increased recognition that T&E is an enabler to military capability and prosperity.
|
Mitigation Our US strategy is focused on developing our relationships with the DoD and major industry prime contractors through mission-led innovation at pace in areas of technology such as robotics and autonomy, sensor solutions and systems, artificial intelligence and maritime systems where we feel we have strong technology capability and the ability to deliver the most appropriate products or services. We have created specific and ambitious strategies for the growth US and are developing our capability to enact those strategies under a new US CEO, and through driving the operational performance through two customer-focused businesses, C5ISR Solutions and Technology Solutions. Additionally, we are leveraging the broader QinetiQ group to sell our commercial systems internationally to expand our market and mitigate reliance on the US Government procurement cycles. To encourage business winning, our single routes to market approach enables our in-country team to leverage the full QinetiQ brand and our Group-wide capabilities; maximising the opportunities to cross-sell and offer comprehensive solutions to the domestic challenges our US customers face. Initial focus is on augmenting US business relationships on the next generation of combat vehicle programmes and making a greater selection of threat representation targets available to US DoD customers. We continue to mature our global end-to-end processes and business systems such that we can act with agility and pace in response to our US customer requirements. Further, the US business is fully embedded in our annual Group Audit and Assurance planning process. |
Mitigation Our international strategy is focused on growing capability in our home and priority markets, and leveraging aligned Group products and services to maximise growth. We have developed specific and ambitious growth strategies in our priority markets, including organic and inorganic growth options. We undertake extensive due diligence, taking the appropriate professional advice to ensure structural, regulatory, legal and political risks are understood and minimised. In addition, our international businesses are included in our Group Audit and Assurance plans, and hold several internationally recognised certifications and standards. The continued exploitation of single routes to market enables our in-country teams to leverage the full QinetiQ brand and our Group-wide capabilities; maximising the opportunities to cross-sell and offer more comprehensive solutions to the domestic challenges our customers face. We are maturing our global and local processes and systems, as well as the approach to the global leverage of capabilities, such that we can deliver world-class solutions consistently across all of our home-market countries.
|
|
Metrics Customer satisfaction All financial KPIs |
Metrics All financial KPIs US revenue as % of total revenue |
Metrics All financial KPIs International revenue as % of total revenue |
|
Responsibility Group Function Director Business Development Managing Directors A&S, M&L, and C&I |
Responsibility Group Function Director: Business Development President and CEO: US |
Responsibility Group Finance Director Business Development Managing Director: International |
|
Risk appetite Eager |
Risk appetite Balanced to Eager |
Risk appetite Balanced to Eager |
|
Likelihood/Impact Low / Medium |
Likelihood/Impact High / High |
Likelihood/Impact High / High |
|
Proximity/Velocity 1-2 years / Medium |
Proximity/Velocity 0-1 yrs / Medium |
Proximity/Velocity 1-2 yrs / Medium |
|
Strategy Global Leverage Distinctive Offerings Disruptive Innovation |
Strategy Global Leverage Distinctive Offerings Disruptive Innovation |
Strategy Global Leverage Distinctive Offerings Disruptive Innovation |
|
Innovation Strategy |
A material change to the UK Government's use of existing large contracts |
Mergers and acquisitions |
|
Risk Failure to innovate to enable the realisation of new ideas for our customers and our organisation in the face of market and environmental changes such as rapidly evolving customer needs, technological change and increased competition. Specifically failure to: · Create a culture of innovation across the QinetiQ group. · Develop relevant business models, processes and products/services. · Attract, retain and nurture the right talent.
|
Risk The Long Term Partnering Agreement (LTPA) is a 25-year partnering contract with the UK MOD to provide test, evaluation, and training services. The Engineering Delivery Partnership (EDP) programme is a 10 year agreement delivered by the Aurora Engineering Partnership and is established as the default route for contracted engineering services for UK MOD Defence Equipment and Support (DE&S) and the wider UK MOD. UK Government budget constraints, could lead to a material change in use of these large contracts.
|
Risk M&A activity continues to form a key element of our strategic growth plans in order to expand our customer offerings within our home markets of the UK, the US and Australia, as well as in our priority growth markets. There is a risk that our new acquisition selection and integrations do not realise the maximum potential benefits. |
|
Impact Negative impact on the Group's market position, competitiveness, future growth and profitability.
|
Impact The LTPA and EDP directly Contribute a material proportion of the Group's revenue and earnings.
|
Impact Adverse impact on the Group's financial performance. |
|
Mitigation Global initiatives to ensure innovation and the necessary underlying culture is embedded across the Group, including: · Investment in tools to facilitate innovative approaches, such as enhanced exploitation of digital platforms and virtual environments to collaborate and demonstrate our products/ services globally. · Diversity and Inclusion programme to drive and foster diverse thinking and embraces new ideas. · Commercial innovation, including agile approaches to contracting. · Strategic workforce planning and global Success Factors, utilisation to ensure we identify, attract and retain the right people now and for the future. Ongoing Group-wide communications, including via the Global Roadshows and Q-Talks, and training to drive understanding and adoption of our Mission-Led Innovation philosophy across QinetiQ Group, which is to deliver better operational outcomes for customers and end-users; working collaboratively to solve complex problems, at pace.
|
Mitigation We are investing significantly into the LTPA capabilities to ensure they remain relevant and modern. The investment portfolio is agile to changing customer needs and technological advances to ensure we remain at the cutting edge. We are now also working with the MOD on the T&E Futures programme through the delivery of a number of capability and technology demonstrators. We have achieved excellent customer satisfaction feedback along with very strong performance across all of our KPIs, resulting in strong financial performance on the contract throughout FY22. EDP is a collaborative programme with DE&S and our Aurora partners, that provides customers with key capacity and capability, focused on long term outcomes that maximise efficiencies and operational performance. During FY22 we have renegotiated some commercial elements of our agreement to build on the success of the first two years, ensuring that EDP remains competitive, relevant and continues to form a robust part of the solution to government spending challenges, delivering the best equipment and support of the UK's Armed Forces and Front Line Commands. |
Mitigation Robust governance is underpinned by the M&A Committee, which reports to the Board, and the relevant Integration Steering Committees, for newly acquired companies. All acquisitions are thoroughly assessed for strong strategic alignment for value creation potential and for integration risk. Extensive due diligence involves internal experts and a variety of external advisory companies, and every integration is managed separately to ensure focus. Best practice, learned from successful integrations, is rigorously applied to each new transaction. Portfolio rationalisation is ongoing where appropriate. |
|
Metrics Customer satisfaction Employee engagement |
Metrics All financial KPIs except orders Customer satisfaction |
Metrics Inorganic Growth Revenue & Profit |
|
Responsibility Group Function Director Business Development Group Function Director Strategy & Planning Group Function Director Technical Group Function Director Human Resources |
Responsibility Group Managing Director M&L Group Managing Director A&S LTPA Managing Director |
Responsibility Group Function Director Strategy & Planning Group Managing Directors
|
|
Risk appetite Balanced |
Risk appetite Balanced |
Risk appetite Balanced |
|
Likelihood/Impact Medium / High |
Likelihood/Impact Medium / Medium |
Likelihood/Impact High / High |
|
Proximity/Velocity 2 yrs / Low |
Proximity/Velocity 1 yrs / Low |
Proximity/Velocity 1-2 yrs / Low |
|
Strategy Global Leverage Distinctive Offerings Disruptive Innovation |
Strategy Global Leverage Distinctive Offerings Disruptive Innovation |
Strategy Global Leverage Distinctive Offerings |
|
The transformation and digitisation programme |
|
Risk The Transformation and Digitisation Programme aims to position QinetiQ for further growth, by globalising consistently around the customer to deliver excellence. In order to achieve this we must invest in our processes and systems to embed a robust Global Operating Model, supported by a Global Interoperable Infrastructure to enhance our collaboration, and a Digital Workspace that enables us to leverage our skills globally. This requires significant alignment and effort across the Group as well as cultural and behavioural changes. There is a risk that the investment required to achieve the intended outcomes is greater than budgeted, that the programme benefits are not fully realised and our Group ambitions are constrained. |
|
Impact Failure to realise benefits will challenge our ability to meet our strategic growth targets and limit our capacity to scale affordably. |
|
Mitigation Global Leadership Team work stream sponsorship and Group- wide stakeholder engagement to ensure robust requirement identification and focussed investment. This is supported by a CEO-led steering group and a Global Digital and Data Programme Board. Budget and scope managed through a robust governance model reporting to the Global Leadership Team and Board that gives sufficient flexibility to respond to changing customer needs but with the guide-rails in place to identify and control potential cost overruns. Benefits realisation is managed through a strong focus on change management, to drive adoption and the required changes to behaviours. The Digital and Data Programme acts as an enabler for the overall transformation by providing the tools and ways of working to more rapidly address the cultural and behavioural changes required to make the programme a success. |
|
Metrics Customer satisfaction Employee Engagement All financial KPIs |
|
Responsibility Group Function Director Business Transformation & Services |
|
Risk appetite Balanced |
|
Likelihood/Impact High / High |
|
Proximity/Velocity 0-1 yrs / Medium |
|
Strategy Global Leverage Distinctive Offerings Disruptive Innovation |
Operational Risks
|
Significant breach of relevant laws and regulations |
Security and IT systems |
|
Risk We operate in highly regulated environments across many jurisdictions. Non-compliance to existing and new requirements presents risks to people, property and the environment as well as having the potential to compromise our ability to conduct business in certain markets, potentially having an impact on a variety of stakeholders. |
Risk A breach of physical or data security, cyber-attacks or IT systems failure, leading to loss of customer or company information could have an adverse impact on our reputation, customer confidence and operational delivery. |
|
Impact Failure to comply with particular regulations could result in serious detriment to people, property and the environment, and/or a combination of fines, penalties, civil or criminal action, suspension or debarment from government contracts, as well as significant reputational damage to QinetiQ. |
Impact Significant reputational damage, as well as service interruptions and the possibility of withdrawal of our accredited status (our "licence to operate") resulting in exclusion from some types of government contracts and subsequent impact on orders, revenue. |
|
Mitigation Maintaining and strengthening a proactive safety and regulatory compliance culture across the Group is a key part in minimising the risk of a failure. The Global Operating Model clearly defines lines of responsibility through the organisation. In addition we have robust policy, procedures and mandatory training in place. The QinetiQ Code of Conduct sets out clear expectations for the Group and its employees; and in areas such as bribery and corruption the company adopts a zero-tolerance approach. We drive continuous improvement using a range of approaches such as audit and evaluation, focused training, strategic improvement programmes, and business objectives. One example is the launch of our Group-wide Health and Safety Improvement Programme; partnering with industry safety experts to further enhance our safety culture. The effectiveness of our internal control environment continues to be assessed annually with the Board, and a board assurance map is increasingly used to identify any potential gaps in assurance over key risks. ESG risks are robustly managed under the ESG programmes. |
Mitigation As a key supplier in the National Security supply chain, we must ensure that the organisation's security meets governments' and other relevant requirements worldwide. We employ a holistic security threat approach through four interlocking pillars: Physical, Information, Cyber and Personnel Security. Our changing and increasingly sophisticated threat environment is continuously reviewed, using appropriate tools and techniques, as part of our over-arching Security Strategy such that new and emerging threats are removed or mitigated, ensuring our strategy appropriately balances the security, cost and flexibility required for any given solution. Our programme of continuous security improvement includes: · A Group Cyber Security Standard. · Targeted Cyber Security Training for key IT staff, and mandatory awareness training for all staff and contractors. · Deployment and continual upgrade of cyber security detection and protective technologies. · Annual strategic security reviews. · Continuous employee communications and engagement, including an annual Security Culture survey. The introduction of a group-wide common IT infrastructure through the Digital and Data Transformation Programme will strengthen our overall cyber security capability through the adoption of common security tooling. This will also facilitate greater global inter- operability through technology controlled information sharing while still protecting National and Sovereign data and information.
|
|
Metrics Health, Safety and Environment Mandatory training compliance Commercial intermediary monitoring |
Metrics Cyber dashboard Security dashboard |
|
Responsibility Director of Group Safety Improvement Programme Company Secretary/ Group General Counsel Group Function Director Technical Group Managing Directors |
Responsibility Group Director Transformation & Business Services
|
|
Risk Appetite Cautious |
Risk Appetite Cautious |
|
Likelihood/Impact Medium / High |
Likelihood/Impact High / High |
|
Proximity/Velocity 0-1 yr / High |
Proximity/Velocity 0-1 yr / High |
|
Strategy Global Leverage Distinctive Offerings |
Strategy Global Leverage Distinctive Offerings |
LONGER-TERM VIABILITY ASSESSMENT
Assessing the prospects of the Group
The Group's corporate planning processes involve the following individual processes covering differing time frames:
1. An annual Integrated Strategic Business Plan (ISBP) process that looks at the financial outlook for the following five years. This process commences with an assessment of the orders pipeline producing an order intake scenario. A review of the phased delivery profile and the cost base required to support this enables generation of low-case, base-case and high-case profit forecasts. Capex and working capital requirements are also collected, reviewed, approved and a cash flow produced for the Plan period;
2. An annual budget process that covers the first year of the five-year planning horizon in detail;
3. A bi-annual forecast process to update the view of the first budget year (the year which would be in progress).
4. A rolling monthly "latest best estimate" process to assess significant changes to the budget/forecast for the year in progress.
The corporate planning process is underpinned by assessing scenarios and risks that encompass a wide spectrum of potential outcomes, both favourable and adverse. The sensitivity analysis undertaken by management explores the resilience of the Group to the potential impact of all the significant risks set out on pages 64 to 70, or a combination of those risks.
The scenarios are designed to be severe but plausible, and take full account of the availability and likely effectiveness of the mitigating actions (as described on pages 64-70) that could be taken to avoid or reduce the impact or occurrence of the underlying risks, and that realistically would be open to them in the circumstances. In considering the likely effectiveness of such actions, the conclusions of the Board's regular monitoring and review of risk and internal control systems, as discussed on page 108, is taken into account.
Alongside the annual review of risk scenarios applied to the strategic plan, performance is rigorously monitored to alert the Board and Global Leadership Team to the potential crystallisation of a key risk.
We consider that this stress-testing based assessment of the Group's prospects is reasonable in the circumstances of the inherent uncertainty involved.
The period over which we confirm longer-term viability
The period over which the Directors consider it possible to form a reasonable expectation as to the Group's longer-term viability is the five-year period to 31 March 2027. This is the period covered by our strategic planning process and is subject to stress-testing and scenario planning around potential risks. It has been selected because it presents the Board and readers of the Annual Report with a reasonable degree of confidence while still providing an appropriate longer-term outlook.
Confirmation of longer-term viability
As noted on page 111, the Directors confirm that their assessment of the principal risks facing the Group was robust. Based upon the robust assessment of the principal risks facing the Group and their stress-testing based assessment of the Group's prospects, all of which are described in this statement, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 31 March 2027.
RELATED PARTIES
During the year ended 31 March 2022 there were sales to associates and joint ventures of £5.2m (2021: £6.0m). At the year-end there were outstanding receivables from associates and joint ventures of £1.0m (2021: £1.4m).
STATEMENT OF DIRECTORS' RESPONSIBILITIES
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 and 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). Additionally, the Financial Conduct Authority's Disclosure Guidance and Transparency Rules require the Directors to prepare the Group Financial Statements in accordance with UK-adopted International Accounting Standards.
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 applicable international accounting standards in conformity with the requirements of the Companies Act 2006 and UK-adopted International Accounting Standards 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
· 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 Directors 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
Each of the Directors, whose names and functions are listed on pages 82 and 84 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 UK-adopted International Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit 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
· The Going concern statement on page 71 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.
SCOPE OF THE REPORTING IN THIS ANNUAL REPORT
The Board has prepared a Strategic report which provides an overview of the development and performance of the Group's business in the year ended 31 March 2022.
For the purposes of DTR 4.1.5R(2) and DTR 4.1.8 the Directors' report, the Directors confirm that, so far as they are aware, there is no relevant audit information of which the company's auditor is unaware, and that they have taken all steps that they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
