UMECO PLC Annual Financial Report (7031G)
02 Juillet 2012 - 4:37PM
UK Regulatory
TIDMUMC
RNS Number : 7031G
UMECO PLC
02 July 2012
02 July 2012
Umeco plc
("Umeco" or the "Company")
Annual Financial Report
Umeco announces that its Annual Report and Accounts for the year
ended 31 March 2012 (the "2012 Annual Report") has been published
and posted to shareholders.
A copy of the 2012 Annual Report has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at: www.morningstar.co.uk/uk/NSM
The 2012 Annual Report is also available at www.umeco.com
Enquiries
Umeco plc
Steven Bowers, Finance Director and Company Secretary Tel: +44 (0) 1926 331 800 www.umeco.com
A condensed set of Umeco's financial statements and information
on important events that have occurred during the financial year
and their impact on the financial statements were included in
Umeco's preliminary results announcement released on 19 June 2012.
That information, together with the information set out below,
which is extracted from the 2012 Annual Report, constitutes the
material required by Disclosure and Transparency Rule 6.3.5 which
is required to be communicated in unedited full text through a
Regulatory Information Service. This announcement is not a
substitute for reading the full 2012 Annual Report. Page references
in the text below refer to page numbers in the 2012 Annual Report.
The group headed by Umeco is referred to below as the "Group"
PRINCIPAL RISK FACTORS AND UNCERTAINTIES
Principal Risks and Uncertainties
Significant risks affecting the Group are identified and
monitored principally through the preparation of risk registers.
Risk registers are produced by each business unit on a monthly
basis and are considered at local board level. Significant changes
in the risk profile of the Group are reported to the Umeco Board as
they arise. A 'Group wide' risk register, introduced in 2011,
consolidates the risk registers produced in every part of the
organisation and a comprehensive review of all risks identified is
reviewed by the Board on an annual basis. The risks outlined in
this part of the Annual Report are those that could delay or
prevent the achievement of the Group's strategic objectives and
developments.
Risk Impact Control
----------------------------- ----------------------------- ------------------------------------
Lapse of the offer Lapse of the offer The shareholder meetings
from Cytec. The acquisition from Cytec would held on 28 May 2012 overwhelmingly
by Cytec of Umeco expose the Group approved the Scheme of
is dependent on a to high costs of Arrangement. Competition
number of factors an aborted transaction clearances are in the
including the receipt and to potential process of being sought.
of certain competition reputational damage
clearances and sanction and reduction of
of the Scheme of share value.
Arrangement by the
Court.
----------------------------- ----------------------------- ------------------------------------
Continuing economic Greater potential The sectors in which
uncertainty. Despite volatility in demand the Group operates have
some recovery in levels, continuing shown themselves to be
markets during 2011/12, uncertainty surrounding resilient in the face
economic conditions the Euro and a heightened of the recent economic
continue to be uncertain, risk of debtors defaulting downturn. Strong order
in particular within expose the Group books at key OEMs in
the Eurozone. to the risk of reduced the aerospace sector
profitability. support long term prospects
for this sector which
is currently the Group's
largest customer segment.
Demand levels for advanced
composite materials have
been robust and the long
term prospects for advanced
composites remain strong,
due to the underlying
move to improve efficiency
and address regulatory
and environmental issues
through the use of stronger,
lighter weight materials.
The Group's continued
development of its product
offering through investment
in technology and know-how
provides a strong position
from which to manage
the adverse effects of
short term economic fluctuations.
The longevity of aerospace
programmes, strongly
embedded relationships
with key customers and
market leading technology
give some mitigation
against the effects of
weak and volatile macroeconomic
conditions.
----------------------------- ----------------------------- ------------------------------------
Risk of product failure. The liability faced Business units perform
The Group provides as a result of such quality assurance testing
warranties to customers an incident, particularly on products received
regarding the specification in sectors such as from suppliers and products
and/or proper operation aerospace, could are sourced through ISO
of the products that exceed the Group's approved companies where
it supplies and there product liability possible. All business
is a risk of goods insurance cover, units are aware of the
supplied leading or the nature of need for thorough checking
to the Group being claims may be such of products received
held responsible that insurance cover and despatched, and for
for incidents. provides no protection. ensuring stringent quality
control mechanisms in
manufacturing processes.
Product liability insurance
is maintained, with cover
being benchmarked by
the Group's insurance
brokers.
----------------------------- ----------------------------- ------------------------------------
Unsuccessful merger The complex activities Legal, tax and other
& acquisition activity involved such as advisors are used to
and project management. due diligence and ensure that all merger
A key aspect of the project management, & acquisition activity
Group's development if unsuccessfully is properly considered.
has been merger & carried out, may Sufficient local and
acquisition activity lead to loss of qualified divisional management
and the establishment personnel or customers is put in place to ensure
of new operations and may lead to unforeseen proper control of the
designed to enhance costs and delays. processes. Head office
its strategic position. Furthermore, each resources have been strengthened
project requires during 2011/12 by the
considerable management addition of project resource
attention and this and by the expansion
diversion from the of the central finance
day-to-day management function.
of the Group could
adversely affect
the Group's operating
results.
----------------------------- ----------------------------- ------------------------------------
Debt funding has Unless the Group The Group's revolving
become more difficult puts in place appropriate credit facility comprises
to obtain and volatility financial resources facilities of GBP15.0
in financial markets and action plans, million and $25.0 million.
can cause the raising there is a risk that This facility expires
of new equity funds insufficient financial in May 2016 (subject
to be problematic. resources may be to, amongst other things,
The Group's borrowing available to support change of control provisions)
facilities contain its expected growth. and therefore provides
financial covenants, Should the Group a long term core to the
principally interest fail to meet certain Group's funding. While
cover and the ratio financial covenants, significant covenant
of net debt to EBITDA. facilities may be headroom currently exists,
withdrawn or financial monitoring of forecasts
sanctions may be against banking covenants
imposed by lenders. is designed to provide
The Group may breach sufficient advance notice
its facilities if of any potential future
it does not have covenant issues. In addition,
adequate visibility a strong reporting procedure
of its future cash results in regular, up-to-date
flows and borrowing cash monitoring. Through
requirements. these processes and controls,
the Group identifies
and deals with potential
funding issues, allowing
appropriate and timely
action to be taken.
----------------------------- ----------------------------- ------------------------------------
Each of the Group's Any interruptions System changes are planned
business units depend to the Group's IT in detail and are made
upon IT systems for systems could have in a controlled manner
their efficient running. an adverse effect to cause the minimum
There are risks associated on its performance. of disruption. The Group
with the loss of operates on decentralised
data or key IT personnel, IT systems and continues
or of operational to monitor the suitability
delays caused by of the differing systems
technical problems. in operation. Common
There are also risks software is used wherever
associated with software appropriate. IT disaster
providers, such as recovery plans are in
the withdrawal of place at each business
support. unit, to minimise the
disruption caused by
IT system failures.
----------------------------- ----------------------------- ------------------------------------
Loss of key personnel. Loss of such personnel The need to motivate
In common with most could have a material and develop management
businesses, the Group effect on the Group's is recognised by the
is dependent on certain performance. Board and the remuneration
key members of management and progression of key
for their knowledge, members of staff is monitored
judgement and leadership to ensure they are retained
skills. and are provided with
opportunity for development.
----------------------------- ----------------------------- ------------------------------------
The Group may be Changes in raw material Significant efforts are
vulnerable to rising costs may not be made to ensure that changes
input costs. capable of being in input costs beyond
passed onto customers certain thresholds can
on a timely basis, promptly be reflected
thereby impacting in selling prices. Detailed
profitability. reviews of margins and
relevant key performance
indicators are made by
local management.
----------------------------- ----------------------------- ------------------------------------
Quality and qualifications. Without such qualifications, Significant technical
The strategy of the planned growth levels resource is applied throughout
Group, particularly will be difficult the Group to ensure that
within the aerospace to achieve. necessary qualifications
market, is dependent are obtained. The Group
upon materials gaining has invested in a global
the qualifications research & development
necessary to ensure centre where purpose
they are included designed products are
in build specifications. developed. Technical
To differing extents, standards such as ISO
all business units 9001, AS9100 and AS7003
are required to comply (Nadcap) are in place
with quality standards in the key sites. Product
or regulatory requirements quality is continually
set by customers, monitored and any defects
suppliers and authorities. are investigated promptly
in conjunction with customers
and suppliers.
----------------------------- ----------------------------- ------------------------------------
Increased exposure The risk of business Regular dialogue with
to bad debts. failures has increased customers whose accounts
as a result of the are outside agreed terms
recent economic downturn, or where there are concerns
contributing to an regarding recoverability,
increased risk of together with the forgoing
bad debts arising. of sales to high risk
While the Group has customers, help mitigate
a broad customer this risk of customer
base, there are large failure. Attendance at
debtor balances with business unit meetings
customers across by divisional and head
a range of market office management enables
segments, including exposure to particular
with customers based customers to be considered
in less developed on a Group basis, rather
countries. than solely at local
level. Credit insurance
is used at certain business
units to give protection
against bad debts.
----------------------------- ----------------------------- ------------------------------------
RELATED PARTY TRANSACTIONS
The Company has a related party relationship with its
subsidiaries, details of which are set out on page 98, and with its
Directors and officers. Details of the Company's related party
relationships with its Directors are set out in the Remuneration
Report. Transactions the Company enters into with its subsidiaries,
and transactions between subsidiaries, for the sale and purchase of
products or services, are priced on an arms length basis.
DIRECTORS' STATEMENT OF RESPONSIBILITY
As set out above, this statement is repeated here solely for the
purposes of complying with Disclosure and Transparency Rule 6.3.5.
This statement relates to and is extracted from the 2012 Annual
Report. It is not connected to the extracted information presented
in this announcement or the preliminary results announcement
released on 19 June 2012.
The Directors, namely Neil Johnson, Andrew Moss, Steve Bowers,
Stephen Bird, Graham Zacharias, Chris Hole and Adrian Auer, confirm
that to the best of their knowledge, the financial statements of
the Group, prepared in accordance with IFRS as adopted by the EU,
and the financial statements of the Company, prepared in accordance
with UK GAAP, give a true and fair view of the assets, liabilities,
financial position and income and expenditure of the Company (and
the Group as a whole) as required by Disclosure and Transparency
Rule 4.1.12. The Annual Report includes a fair review of the
development and performance of the business and the position of the
Company (and the Group as a whole), together with a description of
the principal risks and uncertainties and a statement by the
auditors of their responsibilities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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