Annual Financial Report

RNS Number : 9490B

QinetiQ Group plc

15 June 2021

 

QINETIQ GROUP PLC

15 June 2021

Availability of Annual Report and Accounts 2021 and Notice of 2021 Annual General Meeting

QinetiQ Group plc (the 'Company') has today published the following documents:

· QinetiQ 2021 Annual Report and Accounts;

· Notice of 2021 Annual General Meeting; and

· Chairman's Letter to Shareholders.

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, together with a copy of the Form of Proxy for the 2021 Annual General Meeting, 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 2021 Annual General Meeting will be held at 10.00 am on Wednesday 21 July 2021 at Portsdown Technology Park, Southwick Road, Cosham, Portsmouth, PO6 3RU.

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 20 May 2021 (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 2021 Annual Report and Accounts.

Enquiries:

Jon Messent - Company Secretary	[phone]
John Haworth - Group Head of Investor Relations	[phone]
Press Office	[phone]

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 & 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 &Security Committees.

Risk processes cannot operate in isolation and, like safety and security, must work within an appropriate culture to create effective risk based decision making. Our Group-wide risk management framework supports and develops the risk culture within the organisation to inform our decision-making at both the strategic and operational levels, adopting both a top-down and bottom-up approach. Our culture and risk management processes together enable us to be stronger and more resilient in the face of challenges, managing threat and optimising opportunity, to support the long-term success of our business. The risk management framework continues to evolve with our business and the rapidly changing external environment in which we operate 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 the effective delivery of our strategy. The Board and Global Leadership Team look to 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 proven 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. These were successfully deployed in the early stages of the COVID-19 pandemic and proved to be effective and deliver business resilience. 

Over the past 12 months one new material risk has been included in our Group risk profile relating to the successful delivery of our ambitious US growth strategy. The Mergers and Acquisition risk has increased in likelihood due to the heightened growth ambition coupled with our recent acquisition in the US (read more on our performance in the US on page 21). Despite the major global crisis created by the COVID-19 pandemic and the rapidly changing external environment all other risks have remained stable owing to the resilience of our business model and our effective crisis and risk management processes. Identifying, attracting and retaining the right people now and in the future is essential to QinetiQ's success and while the associated Group risks have previously been mitigated to a level that they are no longer considered to pose a principal risk to QinetiQ, they remain a key consideration in our operational and strategic planning and, where localised risk remains, are included and managed within other identified risks.

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, and therefore allows us to make good progress in the current environment.

The evolving COVID-19 pandemic has, to date, had limited impact on our operations. Our sites and facilities have remained open; we quickly transitioned to a hybrid remote working model and accelerated our digital transformation programme to support new ways of working. Overall this has meant we are more globally connected and have maintained our top priority of protecting our people's health and wellbeing. Looking forward the potential global economic impacts of the pandemic and their subsequent effect on QinetiQ remain uncertain.

Whilst Brexit has had negligible operational impact on QinetiQ to date we continue to monitor this as a developing risk because of the ongoing uncertainty around the potential broader, including economic, ramifications. We have and continue to undertake robust mitigation throughout the Brexit transition, including proactive management of supply chain dependencies and ensuring our employees and systems were prepared for any resultant changes, including in the regulatory environment.

We recognise that ESG concerns are rapidly moving up our investors' and stakeholders' agenda and our subsequent need to ensure we provide visibility on the materiality of the potential risks and how we are managing them. We have a well-established Corporate Responsibility & Sustainability (CR&S) Programme in place, bolstered by robust sponsorship from the Global Leadership Team and our Board, to ensure we are identifying and managing the ESG risks to our company, including compliance with legislative and reporting requirements.

Through 2020 issues such as climate change, the COVID-19 pandemic, a growing focus on diversity and inclusion, new customer requirements (e.g. social value in UK Government procurement) and defence ethics were all key topics. We carefully track the emerging ESG risks, assessing their potential impacts and where necessary building in additional workstreams under the CR&S Programme to ensure robust mitigation is undertaken. To reflect the growing importance and necessary focus, our CR&S Director now reports on the Programme directly to the Board, rather than via a sub-committee.

We have described our approach to ESG in more detail in the responsible and sustainable business section of this report (pages 39 to 47).

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 Responsible for effective risk management and internal control across the QinetiQ Group Set risk appetite and assess principal and emerging risks
Audit Committee and Risk & Security Committee · Receive reports from the 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 · Design and operate internal controls and other mitigation measures · 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	2nd Line · Risk Management and other oversight functions with limited independence · Design and facilitate the risk management processes across the Group · Provide risk expertise and support · Responsible for continually improving the risk management process across the Group · Monitor compliance with policies and standards · Report to the Board and  the Global Leadership Team	3rd Line · Internal Audit and other external independent assurance providers · Review and evaluate risk management activity and provide assurance of the effectiveness of the control environment · Manage the confidential reporting process · Report to the Board and the Global Leadership Team

QinetiQ risk appetite

The Board identifies and reviews its tolerance of 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 all delivery options despite 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. COVID-19: There remains the potential for this risk to be exacerbated by the impact of COVID-19 both requiring different approaches to deliver in a COVID secure way and any impact on Government spending.	Risk There is a risk that the US Business will be unable to establish a robust and distinct position in the marketplace and deliver our significant growth ambitions, resulting in impact to the strategic direction of the Group and potential reputational damage. COVID-19: The ongoing impact of the pandemic may exacerbate this risk through increased customer budget constraints.	Risk Our International Business conducts business in a number of markets, 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, including the UK leaving the EU could also impact the availability and focus of customer budgets. COVID-19: The ongoing impact of the pandemic may exacerbate this risk through increased budget constraints and restrictions on International travel however the acceleration of our digital investment programme has resulted in increased connectivity across our international businesses.
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 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 and are increasingly moving towards modelling and synthetics, as well as embracing the next generation of digital transformation. We are expanding the links between our UK and global Test & Evaluation business as evidenced through securing the contract to build and operate the Queensland Flight Test Range and post Brexit will maintain relationships with the UK Government to support bilateral relationships within Europe; 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 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 developed specific and ambitious growth strategies for the US and are developing our capability to enact those strategies through robust operational integration. 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 US business is included in our Group Audit and Assurance plans. The creation of single routes to market enables our in-country team to leverage the global QinetiQ brand and our Group-wide capabilities; maximising the opportunities to cross-sell and offer more comprehensive solutions to the domestic challenges our US customers face. We are maturing our global end-to-end processes and systems, and the integration of our US business, as well as the global leverage of capabilities, such that we can act with agility and pace in response to our US customer requirements	Mitigation Our international strategy is focused on our home and priority markets where we feel we have the best routes to access with the most appropriate products or services. We have developed specific and ambitious growth strategies for Australia and our three priority markets. 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. The creation of single routes to market enables our in-country teams to leverage the global 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 end-to-end processes and systems, as well as the global leverage of capabilities, such that we can act with agility and pace in response to our customer requirements.
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 President US Business	Responsibility Managing Director International Managing Director A&S
Risk appetite Eager	Risk appetite Balanced to Eager	Risk appetite Balanced to Eager
Likelihood/Impact Medium / Medium	Likelihood/Impact High / Very High	Likelihood/Impact High / High
Proximity/Velocity 1-2 years / Medium	Proximity/Velocity 0-1 yrs / Medium	Proximity/Velocity 0-1 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; · Develop relevant business models, processes and products/services; · Attract and retain the right talent. COVID-19: The global implications of the pandemic, both internally and for our customers, have provided an opportunity for increased innovation in collaborative working and customer engagement through digital means.	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 & Support (DE&S) and is also available to the wider UK MOD. UK Government budget constraints, could lead to a material change in use of these large contracts. COVID-19: Budget constraints may be exacerbated by the impact of the pandemic.	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 integration do not realise the maximum potential benefits. COVID-19: The ongoing effects of the pandemic may exacerbate this risk, including the impact of potential customer budget constraints.
Impact Negative impact on the Group's market position, competitiveness, future growth.	Impact The LTPA and EDP directly contribute a material proportion of the Group's revenue and earnings and if utilisation of these contracts were to change, our financial performance could be adversely impacted.	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 innovative approaches and tools, for example the use of digital platforms to provide enhanced collaboration environments for our employees and customers, and virtual environments to demonstrate our capabilities; · Diversity and Inclusion programmes to drive and foster diverse thinking; · Commercial innovation, including agile approaches to contracting; · Ensure we identify, attract and retain the right people now and for the future. Ongoing Group-wide communications and training to drive understanding and adoption of our mission-led innovation ethos, 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. At the end of March we transitioned to a fully output based contract, an approach that delivers clear outputs to customers, measured through the delivery of event types. This enables us to capitalise on opportunities delivering outputs in new and agile ways, optimising the efficient delivery of the contract. 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. By undertaking larger programmes of work, we are able to leverage our scale and drive out duplication. Our customer solutions have consistently demonstrated our ability to achieve challenging value for money and performance targets.	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, including the disposal of OptaSense, Boldon James and Commerce Decisions.
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 Managing Director M&L Managing Director A&S LTPA Portfolio Director	Responsibility Group Function Director Strategy & Planning Group Managing Directors Chief Financial Officer
Risk appetite Balanced	Risk appetite Balanced	Risk appetite Balanced
Likelihood/Impact High / High	Likelihood/Impact Medium / High	Likelihood/Impact High / High
Proximity/Velocity 1-2 yrs / Low	Proximity/Velocity 0-1  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 digital transformation, including improved technology, data and analytics. 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. COVID-19: The global restrictions imposed as a consequence of the pandemic presented the opportunity to accelerate parts of our digital programme resulting in enhanced global connectivity and the rapid adoption of hybrid-working.

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 workstream sponsorship and Group-wide stakeholder engagement. Budget and scope managed through a robust project governance model reporting to the Global Leadership Team and Board that gives sufficient flexibility to respond to changing customer needs but with the guiderails 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. For example key functions creating their own roadmaps to deliver a globalised service sponsored at Global Leadership level. Identify and deploy the right people to deliver the programme and maximise the benefits.

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, such as the Task Force on Climate-related Financial Disclosures (TCFD), 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. COVID-19: The consequences of the pandemic, including increased hybrid working and reduced numbers on-site, has the potential to exacerbate the risk of a safety or regulatory non-compliance.	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. COVID-19: The consequences of the pandemic, including increased hybrid working, has the potential to exacerbate the data and cyber security risks.
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 and profit.
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 Group 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; in some 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 our Group-wide Health, Safety and Environment strategy where each manager in the Group shares a supporting collective objective delivering personal ownership towards continuous safety improvement. The effectiveness of our Internal Controls Framework is tested via the use of a Group-wide Board Assurance Map. ESG risks are robustly managed under the CR&S Programme.	Mitigation As a key supplier in the Sovereign 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 employees; · Deployment and continual upgrade of cyber security detection and protective technologies; · Annual strategic security reviews; · Mandatory security awareness training for all employees and contractors; · Continuous Group-wide communications to employees; · Annual group-wide Security Culture survey; · Regular updates to the Risk & Security Committee. Security culture, behaviour and ensuring our people have appropriate awareness of the threats to our organisation is critical to our risk mitigation. To further embed this we have introduced collective security objectives for our Leadership Teams. Our on-going digital transformation and IT improvement programme continues to deliver improved IT robustness through a range of approaches including renewing IT systems and moving to cloud based solutions.
Metrics Health, Safety and Environment Mandatory training compliance Commercial intermediary monitoring	Metrics Cyber dashboard Security dashboard
Responsibility 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 base-case, high-case and low-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; and

5.  The financial impact of principal risks (individually and cumulative), together with mitigating actions.

The corporate planning process is underpinned by assessing scenarios and risks that encompass a wide spectrum of potential outcomes, both favourable and adverse. The downside risk scenarios are designed to explore the resilience of the Group to the potential impact of all the significant risks set out on pages 32 to 36, 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 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 83, 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.

COVID-19 can manifest itself on Group performance through two key factors: lack of availability of key resource to provide our services due to illness or H&S restrictions; reduced availability of funds to our customers to procure our services. Both are considered within the Group's sensitivity analysis, with the former becoming a lower probability risk as the successful vaccination programme rolls out.

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 2026. 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 116, 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 2026.

RELATED PARTIES

During the year ended 31 March 2021 there were sales to associates and joint ventures of £6.0m (2020: £5.7m). At the year-end there were outstanding receivables from associates and joint ventures of £1.4m (2020: £2.1m).

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 International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

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 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

· 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 58 and 59 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 in the European Union, 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 37 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 2021.

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.

 

END

 

 

ACSFAMLTMTABMBB