20645_Scapa_AR_160504

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GROUP ACCOUNTING POLICIES CONTINUED PROVISIONS Provisions for environmental restoration, restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Where the effect is material, provisions are discounted in line with IAS 37 using a pre-tax nominal discount rate. The discount rate does not reflect risks for which the estimated future outflows have already been adjusted. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The Group’s accounting policies have been set by management and approved by the Audit and Risk Committee. The application of these accounting policies to specific scenarios requires reasonable estimates and assumptions to be made concerning the future. These are continually evaluated based on historical experience and expectations of future events. The resulting accounting estimates will, by definition, seldom equal the related actual results. Under IFRSs estimates or judgements are considered critical where they involve a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities from period to period. This may be because the estimate or judgement involves matters which are highly uncertain, or because different estimation methods or assumptions could reasonably have been used. Critical judgements and estimates have been made in the following areas when preparing the Group’s accounts: 1. Impairment of goodwill, intangible assets and property, plant and equipment (see notes [13 and 15]). The Group tests annually whether goodwill has suffered any impairment, and tests tangible assets where indication of impairment exists. For goodwill the recoverable amounts of cash-generating units are determined on a value-in-use basis. Determining this value requires the use of estimates. The main estimates are around the forecast cash flows, which are based on approved budgets and growth rates of 3%–15% per annum in years 1–5 and no growth thereafter. The 3% growth rate is used for the majority of cash flows and the higher rate of 15% is used for a specific cash-generating unit. The assumptions used are considered the best available and reasonable. Any reasonable change in the assumptions would not result in any impairment. 2. Retirement benefit liabilities – the key assumptions used to calculate the pensions deficit and the sensitivity of those assumptions to change is contained within note [25]. The assumptions used are considered the best available and reasonable. 3. Taxation (see note [9]). The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provisions for income taxes and the recognition of deferred tax assets. The recognition of deferred tax is based on the availability of suitable future taxable profits of a specific business unit in a specific tax jurisdiction and satisfies the relevant recognition criteria. The assumptions used are considered the best available and reasonable. A significant deterioration in results would need to occur in order to result in an impairment of the deferred tax recognised. 4. Valuation of acquired assets (see note [12]). The Group acquired First Water Limited on 27 February 2015. The acquisition brought with it a number of significant benefits to the Group in terms of development, customer relationships and technology know-how as well as patents, tangible assets and liabilities. The total assets and liabilities acquired have been measured at their fair value for financial reporting purposes. Where available the Group have used third party qualified valuers to perform the valuations. Where third party valuations have not been used, the Group have relied on market data, discounted cash flows and management judgement to arrive at the valuations. Information about the valuation techniques and inputs are disclosed in notes [13 and 14]. 80 SCAPA GROUP PLC ANNUAL REPORT AND ACCOUNTS 2016 75 Annual Report and Accounts 2016 <strong>Scapa</strong> Group plc
NOTES ON ON THE THE ACCOUNTS FINANCIAL STATEMENTS 1. SEGMENTAL REPORTING Business unit segments At the beginning of the year the Group reorganised from a market based matrix organisation into two standalone business units of Healthcare and Industrial, supported by a strategic Corporate function. The chief operating decision maker relies primarily on turnover and trading profit to assess the performance of the Group and make decisions about resources to be allocated to each segment; assets and liabilities are looked at geographically. Trading profit is reconciled to operating profit on the face of the Income Statement. The Board reviews the performance of the business using information presented at constant exchange rates. The prior year results have been restated at constant currency as shown on the following pages. Segment results The segment results for the year ended 31 March 2016 are as follows: Healthcare £m Industrial £m Head office £m Group £m External revenue 93.3 153.4 - 246.7 Trading profit/(loss) 14.0 10.7 (3.4) 21.3 Amortisation of intangible assets (2.3) – – (2.3) Exceptional items (1.5) (4.6) (0.5) (6.6) Pension administration costs - - (0.7) (0.7) Operating profit/(loss) 10.2 6.1 (4.6) 11.7 Net finance costs (1.9) Profit on ordinary activities before tax 9.8 Tax charge (3.7) Profit for the year 6.1 Revenue is allocated based on the country in which the order is received. All revenue relates to the sale of goods. The revenue analysis based on the location of the customer is as follows: Europe £m N America £m Asia £m Other £m Group £m External revenue – 31 March 2016 95.4 121.0 15.1 15.2 246.7 External revenue – 31 March 2015 92.7 111.5 15.0 16.8 236.0 The revenue analysis based on the location where the sale occurred is as follows: Europe £m N America £m External revenue – 31 March 2016 101.9 129.3 14.0 1.5 246.7 External revenue – 31 March 2015 100.7 117.5 16.1 1.7 236.0 Asia £m Other £m Group £m The single biggest customer in the Group constitutes 12.1% of total Group revenue. 76 <strong>Scapa</strong> Group plc Annual Report and Accounts 2016 81 ANNUAL REPORT AND ACCOUNTS 2016 SCAPA GROUP PLC
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STRATEGIC VALUE CREATION SCAPA GROU
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FINANCIAL HIGHLIGHTS STRATEGIC REPO
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STRATEGIC REPORT REVENUE BY DIVISIO
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STRATEGIC REPORT PERFORMANCE AND DI
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STRATEGIC REPORT STRATEGIC PROGRESS
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STRATEGIC REPORT 2016 STRATEGIC GOA
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STRATEGIC REPORT UNDERLYING CASH FL
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STRATEGIC REPORT RISK MANAGEMENT MO
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PRINCIPAL RISKS AND UNCERTAINTIES S
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STRATEGIC REPORT Risk Accountable E
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VIABILITY STATEMENT STRATEGIC REPOR
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STRATEGIC REPORT Healthcare has del
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STRATEGIC REPORT We continue to inv
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STRATEGIC REPORT Umquasperum unt qu
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STRATEGIC REPORT OUR STRATEGY 2015/
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STRATEGIC REPORT The underlying eff
Page 33 and 34: STRATEGIC REPORT projects that prov
Page 35 and 36: STRATEGIC REPORT OUR EXECUTIVE TEAM
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Page 39 and 40: CORPORATE GOVERNANCE of Group Finan
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Page 43 and 44: CORPORATE GOVERNANCE The Chief Exec
Page 45 and 46: CORPORATE GOVERNANCE Board diversit
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Page 49 and 50: CORPORATE GOVERNANCE To assess the
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Page 53 and 54: REPORT OF THE REMUNERATION COMMITTE
Page 55 and 56: CORPORATE GOVERNANCE REMUNERATION C
Page 57 and 58: CORPORATE GOVERNANCE Purpose Operat
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Page 61 and 62: DIRECTORS’ ANNUAL REMUNERATION RE
Page 63 and 64: CORPORATE GOVERNANCE The performanc
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Page 71 and 72: DIRECTORS’ RESPONSIBILITIES FINAN
Page 73 and 74: CONSOLIDATED STATEMENT INCOME INCOM
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Page 77 and 78: GROUP ACCOUNTING POLICIES POLICIES
Page 79 and 80: GROUP ACCOUNTING POLICIES CONTINUED
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Page 87 and 88: FINANCIAL STATEMENTS 2. SEGMENT ASS
Page 89 and 90: FINANCIAL STATEMENTS current status
Page 91 and 92: FINANCIAL STATEMENTS 9. TAXATION CO
Page 93 and 94: NOTES ON THE ACCOUNTS CONTINUED FIN
Page 115 and 116: FIVE YEAR SUMMARIES FINANCIAL STATE
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Page 119 and 120: STATEMENT OF ACCOUNTING POLICIES CO
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