2nd Jul 2009 11:17
Umeco plc (the 'Company') - Annual Financial Report
Umeco plc announces that the Company's Annual Report for the year to 31 March 2009, incorporating the Notice of the Annual General Meeting convened for 29 July 2009, 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:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
An electronic copy of the Annual Report is available on the Company's website at www.umeco.com
The preliminary results announcement issued on 2 June 2009 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 2009 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 2009 Annual Report. All page references and cross-references in the following extracts are to the 2009 Annual Report. The Directors' responsibility statement and the risks and uncertainties statements which have been extracted from the 2009 Annual Report verbatim below, apply to the financial statements and management report contained in the 2 June 2009 preliminary results announcement on the same basis as they apply to the equivalent information in the 2009 Annual Report.
A. Statement of Directors' Responsibilities
The following information has been reproduced from page 29 of the 2009 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 Adopted IFRS 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). The Group financial statements are required by law and Adopted IFRS to present fairly the financial position and performance of the Group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
The parent Company financial statements are required by law to give a true and fair view of the state of affairs of the parent Company. 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 Adopted IFRS;
- 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 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 1985. 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.
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 that law and those 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 26, confirm that the financial statements, prepared in accordance with Adopted IFRS, give a true and fair view of the assets, liabilities, financial position and income and expenditure of the Company and the Group as required by Disclosure and Transparency Rule 4.1.12. The Business Review (which includes the Chairman's Statement, Chief Executive's Review and Finance Director's Review) and Directors' Report include a fair review of the development and performance of the Company and the Group, together with a description of the principal risks and uncertainties faced.
By order of the Board
Doug Robertson
Finance Director
2 June 2009
B. Risks and Uncertainties
The following information has been reproduced from pages 22 and 23 of the 2009 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 on these pages 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 79 to 84.
|
Risk |
Impact |
Mitigation |
|
Effect of the economic climate upon demand levels |
The recent deterioration in the economic climate has led to certain of the Group's business units experiencing lower forward demand levels. This deterioration may cause reduced levels of revenue, 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. Umeco considers that it has broadened its market base and the segments in which it operates will 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. Demand levels for advanced composite materials are considered to be robust, due to moves by aerospace and other manufacturers to improve efficiency. Inventory and debtor policies are continually re-assessed in light of market conditions |
|
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 |
|
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 rising 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, 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 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 impact the Group's ability to fulfil customer orders |
Forward demand and purchase order levels are closely monitored to ensure the continued availability of product from suppliers. The Group continues to focus on cementing strong relationships with suppliers |
|
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 |
Steven Bowers
Company Secretary
Tel 01926 331800
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