Annual Report and Accounts 2012 - Scapa

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Business Review Principal Risks and Uncertainties Risk is an inherent part of doing business. A successful risk management process balances risks and rewards and relies on sound judgement of their impact and likelihood. The Group Board has overall responsibility for ensuring the Group has an effective risk management framework aligned to our objectives. Risk Impact The senior management team, Audit Committee and Board review risks which could affect the Group throughout the year. Risk and issue tracking systems are reviewed by our internal auditors on a regular basis to ensure that the framework is in line with good practice in risk management and that identified mitigation plans are being adhered to. Business strategy If the Board develops the wrong business strategy or fails to implement its strategy effectively, this could have a negative impact on long-term growth prospects Financial and treasury risk The main financial risks we face are around the availability and cost of funding and foreign exchange rates Customer Over-reliance on particular markets or customers could put pressure on pricing, margins and profitability Raw material pricing Where our material prices are too high it will be difficult for the Group to remain competitive Pensions Liabilities increase due to increasing life expectancy, inflation, poor performance in investments compounded by fluctuations in the discount rate Acquisitions and disposals Poor decision making on restructuring adversely affects the Group’s results weakening shareholder value Human resources We employ around 1,200 members of staff who are critical to the achievement of our objectives. Being able to attract, develop and retain the right people is essential to the growth, efficiency and sustainability of our business ICT systems and infrastructure The Group relies heavily on its ICT systems and infrastructure and interruptions to these services could have a significant impact on the business Product quality If our products are not up to the required quality and health and safety standards, this could impact on financial performance due to customer returns, product liability claims and ultimately affect customer trust in Scapa as a supplier Health & Safety Failure to ensure safe working practices leading to injury or loss of life Legal proceedings Potential litigation including claims arising from alleged exposure to asbestoscontaining products 14 Scapa Group plc Annual Report and Accounts 2012
We take the view that the policies and monitoring systems which are in place and which have been reviewed regularly throughout the year remain sufficient to effectively manage the risks associated with our business. Key controls and mitigating factors – Clear strategy in place which is reviewed by the Board on a regular basis – Progress against the strategy is monitored by senior management and the Board on an ongoing basis – Risks relating to the achievement of the Group’s strategy are reviewed regularly – All treasury policies are approved at Board level – Corporate Treasury is not intended to be a profit centre – The Group uses simple projects to hedge exposure with no speculative currency risk exposure – Diverse range of customers with no specific weight towards one customer – Credit limits set based on Group policy, with limits monitored regularly and customers put on ‘stop’ as appropriate – Expansion into new markets helps spread risk and encourage growth – Credit insurance for worldwide turnover of North America and Europe – Global supply chain function now in place with clear cost reduction targets – No final salary pensions schemes are open at the Group – Closure of all schemes to future accrual in the UK – Ongoing liability management programme – Active de-risking investment strategy for assets – Significant internal and external due diligence processes – Acquisitions and disposals approved by the Board – Monitoring of business portfolio and structure at senior management and Board level – Integration planning for acquisitions across Finance, Operations, HR and Commercial – Performance management system in place – Succession and development planning process being rolled out across the business – Reward and recognition programmes linked to performance utilised at all levels – Employee communication and engagement programmes in place – Group and site based business continuity and disaster recovery processes in place – Multi-site back up of electronic data – System architecture encourages resilience due to implementation of dual node solution – Annual test of disaster recovery for key systems – Minimum exposure from current e-commerce transactions – Third party quality systems accreditation – Internal quality audit processes are in place with issue resolution tracking – Known problems are being addressed with rigorous root cause and corrective action to ensure they do not reoccur – In process and final product quality checks take place – Clear policies and procedures in place supported by training programmes to ensure that staff are aware of Group procedure – Group Head of Health & Safety has redesigned the approach to Health & Safety Management during the year – Health & Safety audit programme designed to monitor and improve compliance – Best practice shared between sites – Legal advisory teams for defence and insurance coverage – Monitoring adequacy of insurance – Product liability insurance many times higher than potential liabilities – Specialist advisers in each field supporting in-house General Counsel The table below outlines the principal risks and uncertainties which the Group faces together with relevant key controls and mitigating factors. The list does not constitute a list of all risks faced by the Group and the risks are not presented in priority order. Scapa Group plc Annual Report and Accounts 2012 15 Overview Business Review Governance Financial Statements
Page 1 and 2: Annual Report and Accounts 2012 Gro
Page 3 and 4: Sector split Electronics Healthcare
Page 5 and 6: Chairman’s Statement A focus on s
Page 7 and 8: “Our goal is to deliver sustainab
Page 9 and 10: Revenue £145.9m +0.2% 74.6% of Gro
Page 11 and 12: Revenue £39.5m +16.9% 20.2%of Grou
Page 13 and 14: Revenue £10.2m -20.9% 5.2% of Grou
Page 15 and 16: KPIs Return on sales (*1) 5.5% Trad
Page 17: Lost Time Accidents (LTAs) FY12 FY1
Page 21 and 22: Introduction At the heart of how Sc
Page 23 and 24: Leadership Team L-R: Ian Marchant,
Page 25 and 26: Scapa has a combination of unionise
Page 27 and 28: Directors’ Remuneration Report Th
Page 29 and 30: Other benefits Purpose Policy for e
Page 31 and 32: Directors’ interests As of 31 Mar
Page 33 and 34: Corporate Governance “ Good gover
Page 35 and 36: Internal control system In accordan
Page 37 and 38: Under its terms of reference, the A
Page 39 and 40: Independent Auditor’s Report to t
Page 41 and 42: Consolidated Balance Sheet As at 31
Page 43 and 44: Consolidated Cash Flow Statement Fo
Page 45 and 46: Consolidation The consolidated fina
Page 47 and 48: Property, plant and equipment (incl
Page 49 and 50: The liability recognised in the Bal
Page 51 and 52: Notes on the Accounts 1. Segmental
Page 53 and 54: 2. Segment assets and liabilities c
Page 55 and 56: 6. Key management compensation and
Page 57 and 58: 9. Taxation continued Movement in u
Page 59 and 60: 13. Goodwill Cost 1 April 34.2 45.8
Page 61 and 62: 16. Assets held for sale During the
Page 63 and 64: 22. Borrowings Amounts due within o
Page 65 and 66: 23. Derivative financial instrument
Page 67 and 68: 24. Provisions continued During the
Page 69 and 70:
25. Retirement benefit liabilities
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Page 73 and 74:
Page 75 and 76:
27. Share options continued US Stoc
Page 77 and 78:
29. Commitments Capital commitments
Page 79 and 80:
Scapa Group plc Parent Company Fina
Page 81 and 82:
Company Balance Sheet As at 31 Marc
Page 83 and 84:
Foreign currencies Transactions in
Page 85 and 86:
4. Investments Shares in Group unde
Page 87 and 88:
10. Share capital Allotted, issued
Page 89 and 90:
12. Pension schemes continued Five
Page 91 and 92:
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