28th Jun 2010 12:43
Umeco plc(the "Company")
Annual Report 2010 and Annual General Meeting 2010
Umeco plc announces that the Company's Annual Report for the year to 31 March 2010, incorporating the Notice of the Annual General Meeting convened for 28 July 2010, and form of proxy have been posted to shareholders.
Copies of these documents have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:
The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS
Telephone: 020 7066 1000
The above documents can also be downloaded from the Company's website at www.umeco.com.
At the Annual General Meeting due to be held on 28 July 2010, it is proposed that the Company adopts new Articles of Association. A summary of the proposed changes is set out in the explanatory notes to the Notice of Annual General Meeting contained within the Annual Report, and which is available on the Company's website at www.umeco.com.
The preliminary results announcement issued on 8 June 2010 included a set of condensed financial statements and a management report on the development and performance of the Company. The following information has been reproduced from the 2010 Annual Report and is included for the purpose of complying with DTR 6.3.5 and should be read in conjunction with the preliminary results announcement. Together, these constitute the information required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the full 2010 Annual Report. All page references and cross-references in the following extracts are to the 2010 Annual Report. The Directors' responsibility statement and the risks and uncertainties statements which have been extracted from the 2010 Annual Report verbatim below, apply to the financial statements and management report contained in the 8 June 2010 preliminary results announcement on the same basis as they apply to the equivalent information in the 2010 Annual Report.
A. Statement of Directors' Responsibilities
The following information has been reproduced from page 29 of the 2010 Annual Report:
The Directors are responsible for preparing the Annual Report, and the Group and Company financial statements, in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law, they are required to prepare the Group financial statements in accordance with IFRS as adopted by the EU and applicable law, and have elected to prepare the parent Company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law, the 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 parent Company and their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- for the Group financial statements, state whether they have been prepared in accordance with IFRS as adopted by the EU;
- for the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the parent Company financial statements; and
- prepare the financial statements on a going concern basis, unless it is inappropriate to presume that the Group and the parent Company will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and to enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance statement that comply with such law and regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors, whose names are set out on page 24, confirm that to the best of their knowledge, the financial statements, prepared in accordance with IFRS as adopted by the EU, 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.
By order of the Board
Doug Robertson
Finance Director
8 June 2010
B. Risks and Uncertainties
The following information has been reproduced from pages 20 and 21 of the 2010 Annual Report:
There are numerous risks and uncertainties relevant to the Group's business, financial condition and operations that may affect future performance. The principal risks that might affect the Group are set out below and these could cause the Group's results to differ materially from expected and/or historical levels. The management and mitigation of risk is discussed in the Corporate Governance statement on pages 75 to 81
|
Risk |
Impact |
Mitigation |
|
Effect of the economic climate upon demand levels |
The current weakness in the economic climate has caused certain of the Group's business units to experience lower demand levels. This economic environment may continue to cause reduced levels of revenue and result in a greater risk of debtors defaulting on payment terms and a higher risk of inventory obsolescence |
The Board regularly reviews strategy, which determines the markets in which the Group operates, and a comprehensive review of the Group's strategy was conducted in March 2010. Umeco considers that its broad market base and the segments in which it operates will continue to prove resistant to the worst effects of the downturn. The strong order books of civil aircraft manufacturers support the long term prospects for the sector. Long term demand levels for advanced composite materials are considered to be robust, due to moves by aerospace and other manufacturers to improve fuel efficiency. Inventory and debtor policies are continually re-assessed in light of market conditions and are rigorously enforced |
|
Restrictions resulting from availability of debt facilities |
If the Group is unable to obtain sufficient capital resources, it may be required to take decisions that adversely affect current or future trading, disadvantaging the Group relative to its competitors. The Group's operating and financial flexibility is restricted by its level of indebtedness and financial covenants |
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for stakeholders and to maintain an optimal capital structure. The Group maintains committed bank facilities, which are regularly reviewed in comparison to forecast capital requirements, and prepares monthly financial forecasts which are scrutinised by the Board. This information enables the Group to take appropriate action on a timely basis. The Board receives regular updates in respect of the dialogue with potential providers of capital |
|
Reduced demand from the civil aerospace sector |
The Group's largest marketplace, civil aerospace, is dependent on passenger demand for air travel. Demand is influenced by factors such as high crude oil prices, Governmental levies which increase airline ticket prices or security fears. A prolonged reduction in demand could cause airlines to cancel or defer orders for new aircraft. This would lead to reductions in demand among Umeco's customers |
The Group continually monitors and assesses market trends and demand within the civil aerospace market using both external sources and internal key performance indicators such as order book levels. These sources enable the Group to respond on a timely basis to changes in demand, for example by reducing its cost base or re-assessing capital expenditure plans |
|
Interruption or failure of IT systems |
Any interruptions to the operation of the Group's IT systems could have an adverse effect on its performance |
Each business unit has in place well established virus protection, back-up and recovery procedures. Changes to systems are implemented in a structured manner following the preparation of documented project plans |
|
Product failure |
Many of the Group's products are fitted to aircraft or used to manufacture aircraft parts. To the extent that any of the Group's products fail, this could expose the Group to significant product liability claims and adversely affect the Group's reputation and financial position |
Stringent quality control procedures ensure thorough checking of products received and despatched. Appropriate quality control mechanisms are in place over all manufacturing processes. Product liability insurance is maintained, with cover being benchmarked by the Group's insurance brokers |
|
Competition and retention of customers |
The loss of key contracts whether through competition, consolidation or insolvency could have a material impact on the Group's trading and financial position |
The Group monitors its competitive position closely, to ensure it provides customers with the optimal product offering. The Group devotes significant resources to ensure that strong relationships are developed and maintained with customers. Developing new and innovative products is a key aspect of ensuring customer retention |
|
Failure of suppliers |
Interruptions in the supply of materials could affect the Group's ability to fulfil customer orders |
Forward demand and purchase order levels are closely monitored to ensure the continued availability of products from suppliers. The Group continues to focus on cementing strong relationships with suppliers and maintains safety stocks where appropriate |
|
Acquisitions |
Acquisitions can involve risks that unless adequately considered and addressed, may have a material impact on the Group's financial position |
Comprehensive due diligence is carried out prior to the completion of all acquisitions and appropriate representations, warranties and indemnities are obtained from vendors. Post-acquisition, action plans are promptly implemented to ensure systems of management and control meet the Group's standards |
|
Financial risks |
The Group is exposed to a number of financial market risks including credit risk, interest rate risk and foreign exchange rate risk |
Policies and procedures exist to ensure customers are given an appropriate level of credit according to their trading history and financial status, and a prudent approach is adopted towards credit control. Interest rate swap contracts are used to hedge the Group's exposure to movements in rates. Forward foreign exchange contracts are used where necessary to manage the exposure to exchange rate movements |
Enquiries:
Steve Bowers, Company Secretary Concorde House, Warwick New Road, Leamington Spa, CV32 5JG
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