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ECM Electrocomponents Plc

1,047.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Electrocomponents Plc LSE:ECM London Ordinary Share GB0003096442 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1,047.00 1,043.00 1,045.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Electrocomponents PLC Annual Financial Report (0558H)

02/06/2017 3:04pm

UK Regulatory


Electrocomponents (LSE:ECM)
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TIDMECM

RNS Number : 0558H

Electrocomponents PLC

02 June 2017

ELECTROCOMPONENTS PLC

ANNUAL REPORT AND ACCOUNTS FOR THE YEARED 31 MARCH 2017

NOTICE OF 2017 ANNUAL GENERAL MEETING

Pursuant to Listing Rule 9.6.1R copies of the documents listed below have been submitted to the Financial Services Authority National Storage Mechanism and will shortly be available for viewing at: http://www.morningstar.co.uk/uk/NSM

   --    Annual Report and Accounts for the year ended 31 March 2017 (2017 Annual Report and Accounts) 
   --    Circular and Notice of Annual General Meeting (Notice of AGM) to be held on 20 July 2017 
   --    Form of proxy for the Annual General Meeting (AGM) to be held on 20 July 2017 

The 2017 Annual Report and Accounts and Notice of AGM, which includes explanatory notes on proposed resolutions, are also available in the Investor Relations section of the Electrocomponents plc website at: www.electrocomponents.com

IMPORTANT: EXPLANATORY NOTE AND WARNING

The primary purpose of this announcement is to inform the market about the publication of Electrocomponents plc's 2017 Annual Report and Accounts and Notice of Meeting.

The information below, which is extracted from the 2017 Annual Report and Accounts, is included solely for the purpose of complying with DTR 6.3.5R and the requirements it imposes on issuers as to how to make public annual financial reports. It should be read in conjunction with Electrocomponents' Preliminary Results announcement issued on 23 May 2017. Together these constitute the material required by DTR 6.3.5R to be communicated in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full 2017 Annual Report and Accounts. Statutory accounts for 2017 are included in the 2017 Annual Report and Accounts, which will be delivered to the Registrar of Companies in due course. Page and note references in the text below relate to pages and notes in the 2017 Annual Report and Accounts. The preliminary announcement can be viewed or downloaded from the Investor Relation section of the Company's website www.electrocomponents.com.

LEI: 549300KVXDURRKVW7R37

Enquiries:

 
Ian Haslegrave, Company    Electrocomponents 
 Secretary                  plc                     01865 207491 
Polly Elvin, Head of 
 Investor Relations        Electrocomponents 
 & Corporate PR             plc                     07973 812481 
David Allchurch / Martin                            020 7353 
 Robinson                  Tulchan Communications    4200 
 

APPIX

Pages and note references in the text below relate to pages and notes in the 2017 Annual Report and accounts.

MANAGING OUR RISKS (pages 25 to 27)

The Group has risk management and internal control processes to identify, assess and manage the risks likely to affect the achievement of its corporate objectives and business performance.

The risk management process

The risk management process is co-ordinated by the Group's risk team. The principal elements of the process are:

-- Identification: risks are identified through a variety of sources within the Group, including senior, regional and country management teams. The focus of the risk identification is on those risks which, if they occurred, would have a material quantitative or reputation impact on the Group.

-- Assessment: management identifies the controls for each risk and assesses (using consistent measures) the impact and likelihood of the risk occurring taking into account the effects of the existing controls (the net risk). This assessment is compared with the Group's risk appetite to determine whether further mitigating actions are required. This process is supplemented by an annual risk and controls assessment, which all operating locations and functions are required to complete.

-- Ownership: the Group's principal risks are owned by the Group's Executive Management Team (EMT) with specific mitigating actions/controls owned by individual members of the team. The EMT collectively reviews the risk register, the controls and mitigating actions.

-- The Board: undertakes a robust review of the Group's Principal Risks (including those that could threaten its business model, future performance, solvency or liquidity) and assesses them against the Group's risk appetite. For a number of the principal risks, the Board requires management to present its analysis to the Board, including the gross risk, the mitigating controls and the assessment of the net risk after controls. This allows the Board to determine whether the actions taken by management are sufficient.

Going concern

The Directors, having made appropriate enquiries, have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future. These enquiries included a review of going concern assumptions half yearly through the Audit Committee. For this reason, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group's accounts.

Viability statement

The Directors confirm that they have a reasonable expectation that the Group will continue to operate and meet its liabilities, as they fall due, for the next three years to 31 March 2020.

The assessment period of three years has been chosen in line with the Group's strategic plan, which has a three-year horizon and is updated annually. The Group has few contracts with either customers or suppliers extending beyond three years and, in the main, contracts are within one year. The business operates with a minimal forward order book, generally taking orders and shipping them on the same day.

The assessment considered the Group operating profit, revenue, cash flows, net debt and key operating measures over the three-year period. These metrics were subject to material but plausible downside stress analysis, taking account of the principal risks set out on pages 26 and 27, with a focus on the possible effects on the Group as the UK government negotiates the UK's exit from the EU, how the Group responds to market shifts such as changes in customer demands and/or competitor activity, and the potential impact of volatility in foreign currency earnings. These risks could lead to a downturn in revenue or weakened margins or a combination of revenue decline and weaker margins. In assessing the potential impact of these scenarios, we considered our current robust capital position and ability to flex our cost base and working capital position and other actions to protect viability in adverse economic conditions.

In considering the likely effectiveness of such actions, the conclusions of the Board's regular monitoring and review of risk management internal control systems, as described on page 47, were taken into account. In addition to the risk mitigation plans, our business model is structured so that the Group is not reliant on one particular group of customers or geography, and has a very diverse customer base across our several geographies.

Our current robust capital position is supported by a review of the Group's funding facilities and banking covenants' headroom, through the Board's Treasury Committee. The Group's financial position, in particular cash flow, is also reviewed through monthly

management accounts and regular updates from the Group Finance Director and CEO to the Board. Details of the Group's sources of finance are outlined on page 118 with the earliest date of our facilities expiring being June 2017 in respect of $85 million of the Group's Private Placement loan notes. In making this statement regarding viability, the Directors have also made the key assumption that the remaining sources of funding will continue to be available throughout the three-year period to 31 March 2020.

Risk appetite

In accordance with the UK Corporate Governance Code, the Board defined its risk appetite across three risk categories: strategic, operating and regulatory/compliance. These three categories use both quantitative and qualitative criteria. During the year ended 31 March 2017, the Board reviewed again its risk appetite across the three categories with no significant changes being made.

Principal risks and uncertainties

The Group has identified ten principal risks, which are similar to those disclosed last year, with the only changes being the developing of some already identified risks, e.g. the risk associated with the UK exit from the EU following the UK referendum result on 23 June 2016. The Group's principal risks are categorised under one of three headings: strategic (see the Group's Strategy on page 8), compliance and operating risks (see the Business Model on page 6). These categories mirror those used by the Group to assess its risk appetite.

Risk direction definition

The risk is likely to increase within the next 12 months

The risk is likely to remain stable within the next 12 months

The risk is likely to reduce within the next 12 months

 
        Risk description                                              Risk direction  Mitigating activities 
------  ------------------------------------------------------------  --------------  ----------------------------------------------------------- 
        Strategic risks 
------  ------------------------------------------------------------  --------------  ----------------------------------------------------------- 
        Consequences 
     A   on the organisation                                                           *    A Group risk assessment was undertaken in advance of 
         of the UK exit                                                                     the UK referendum, which led to reviews across 
         from the EU                                                    Possible            business areas that would be affected by a UK exit 
         This includes                                                  implications        and any subsequent changes to the UK/ EU and 
         the risk to the                                                not fully           UK/worldwide trading agreements. 
         Group's supply                                                 defined 
         chain activities                                               and 
         across the UK                                                  dependent      *    Across Electrocomponents these reviews include: 
         and the EU including                                           on national         understanding the potential impacts on the Group's 
         possible changes                                               negotiations        global supply chain infrastructure, including the 
         to customs duties                                              with effects        transport of products between the UK and EU; and 
         and tariffs (around                                            from 2019           group purchasing arrangements both within and outside 
         80% of our purchases                                           onwards             the EU. Other areas that are being, and will be, 
         for the global                                                                     considered in the future include: employee mobility, 
         RS brand are                                                                       treasury management and indirect taxation. 
         routed through 
         the UK to serve 
         our global customer                                                           *    A specific team, headed by the Group Finance Director 
         base). Other                                                                 , 
         related risks                                                                      will continue to monitor the possible effects on, and 
         include migration                                                                  mitigating actions open to, the Group as the UK 
         of employees                                                                       government negotiates the UK's exit from the EU. 
         and potential 
         impact with changes 
         to existing legislation. 
======  ============================================================  ==============  =========================================================== 
        Fail to respond 
     B   to strategic                                                                  *    Monitoring of market developments. 
         market shifts 
         e.g. changes                                                   No 
         in customer demands                                            significant    *    Ongoing strategic and market reviews by the Board and 
         and/or competitor                                              high-               EMT. 
         activity                                                       service 
         Unforeseen changes                                             level 
         in customer and                                                competitor     *    Annual strategic planning process including the 
         market assumptions                                             changes             assessment of external market changes. 
         that the Group                                                 anticipated 
         performance plans 
         are based upon.                                                               *    Ongoing review of the competitive environment. 
======  ============================================================  ==============  =========================================================== 
        Performance Improvement 
     C   Plan (PIP) does                                                                *    Prioritised set of proposals and projects, including 
         not deliver anticipated                                                             sales growth initiatives and supporting activities 
         revenue growth                                                  Current             across shared business services and our supply chain 
         and cost savings                                                plans and           infrastructure, focussed on 'getting the basics 
         This risk could                                                 actions             right' for our customers. 
         lead to lower                                                   delivering 
         than forecast                                                   sales and 
         financial performance                                           reduced        *    Governance structure with accountabilities designed 
         both in terms                                                   costs               to support delivery on time and budget, within our 
         of revenue growth                                                                   resources and capabilities. 
         and cost savings 
         with changes 
         required to Group 
         plans. 
------  ------------------------------------------------------------  --------------  ----------------------------------------------------------- 
        Compliance risks 
------  ----------------------------------------------------------------------------------------------------------------------------------------- 
   D    Failure to comply 
        with international                                                             *    Employment of internal specialist expertise, 
        and local legal/regulatory                                                          supported, where needed, by suitably 
        requirements                                                    No                  qualified/experienced external partners. 
        Failure to manage                                               significant 
        these collective                                                changes 
        risks adequately                                                to new         *    Ongoing reviews of relevant national and 
        could lead to:                                                  or existing         international compliance requirements. 
         *    death or serious injury of an employee or third party,    legislation 
              and/or 
                                                                                       *    Training and awareness programmes in place focussing 
                                                                                            on anti-bribery, competition and data protection 
         *    penalties for non-compliance in health and safety or                          legislation. 
              other compliance areas 
 
                                                                                       *    Global whilstleblowing hotline managed by an 
                                                                                            independent third party providing employees with a 
                                                                                            process to raise non-compliance issues. 
 
 
                                                                                       *    Operational Audit reviews of capabilities to ensure 
                                                                                            compliance with local requirements. 
 
 
                                                                                       *    Global Health and Safety policy, Target Zero 
                                                                                            accidents initiative with regular reviews undertaken 
                                                                                            by the EMT and Board. 
 
 
                                                                                       *    Local health and safety forums in place with the Head 
                                                                                            of Global Health and Safety and Environment. 
 
 
                                                                                       *    Real-time monitoring of customer orders to ensure 
                                                                                            compliance with international trade control 
                                                                                            regulations. 
======  ============================================================  ==============  =========================================================== 
 
 
      Risk description           Risk direction          Mitigating activities 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
      Operational risks 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
   E  Failure in supply 
       chain infrastructure                                *    Business continuity plans in place at operating 
       An unplanned                                             locations. 
       event disrupting            No changes 
       the business's              to the 
       supply chain,               Group's                 *    Annual tests undertaken at key warehouse, sales and 
       impacting the               supply                       back office locations. 
       Group's ability             chain infrastructure 
       to maintain customer 
       service. 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
   F  Prolonged system 
       outage                                              *    Resilient IT systems infrastructure featuring 
       The loss of a                                            operating redundancies and off-site disaster 
       core transactional          No significant               recovery. 
       system resulting            changes 
       in the business             to the 
       being unable                Group's                 *    Strict control over upgrades to core transaction 
       to serve customers.         IT infrastructure            systems and other applications. 
 
 
                                                           *    Recent migration of core transaction systems to an 
                                                                upgraded data centre. 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
   G  Information loss/cyber 
       breach                                              *    Anti-virus software to protect business PCs and 
       An attack on                                             laptops. 
       the business's              Increasing 
       systems/data                frequency 
       could lead to               and sophistication      *    Procedures to update supplier security patches to 
       potential loss              of cyberattacks              servers and clients. 
       of confidential             on businesses 
       information and 
       disrupt the business's                              *    Software scanning of incoming emails for known 
       transactions                                             viruses. 
       with customers 
       (including the 
       transactional                                       *    Firewalls to protect against malicious attempts to 
       website) and                                             penetrate the business IT environment. 
       transactions 
       with suppliers. 
                                                           *    IT control reviews to consider the security 
                                                                implications of IT changes. 
 
 
                                                           *    Security reviews with selected third-party vendors. 
 
 
                                                           *    Computer emergency readiness team (CERT) to track 
                                                                software vulnerabilities. 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
   H  UK Defined Benefit 
       pension scheme                                      *    Quarterly reviews of the pension scheme funding 
       cash requirements                                        position. 
       are in excess               No significant 
       of cash available           changes 
       The company is              to related              *    Regular interaction with the pension scheme trustees. 
       required to contribute      financial 
       increased cash              and other 
       sums to the UK              assumptions             *    Joint trustee/company working group to review 
       Defined Benefit             anticipated                  investment strategy. 
       pension scheme. 
 
                                                           *    Consultation with scheme members on future individual 
                                                                funding options for defined benefit scheme. 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
   I  People resources 
       unable to support                                   *    Development of existing employee competencies, and 
       the existing                                             the introduction of external expertise where 
       and future growth           No significant               appropriate. 
       of the business             changes 
       The business                to the 
       is not able to              supply                  *    Annual employee appraisal processes to align personal 
       attract and retain          and retention                objectives with the Group's PIP. 
       the necessary               of quality 
       high-performing             employees 
       employees to 
       ensure that the 
       business achieves 
       its targeted 
       performance. 
----  -------------------------  ----------------------  ------------------------------------------------------------ 
   J  Macroeconomic 
       environment deteriorates                            *    Strong cash generative business. 
       The Group's sales 
       and hence profits           Economic 
       are adversely               indicators              *    Strong balance sheet. 
       affected by any             currently 
       decline in the              showing 
       global macroeconomic        no significant          *    Significant headroom maintained on banking covenants 
       environment with            change                       and facilities. 
       other associated            in the 
       effects such                global 
       as foreign exchange         outlook                 *    Relevant cash flow foreign exchange hedging for 
       volatility.                                              business trading purposes. 
 
 
                                                           *    Tight cost management and control of stock. 
====  =========================  ======================  ============================================================ 
 

RELATED PARTIES (page 126)

The Company has a related party relationship with its subsidiaries as disclosed in note 17 to the Group accounts and with its key management personnel. The key management personnel of the Group are the Directors and the Executive Management Team. Compensation of key management personnel was:

 
                                   2016 
                                    GBPm 
----------------------------  ---  ----- 
Remuneration                  5.4   4.1 
----------------------------  ---  ----- 
Termination payments          0.3   0.6 
----------------------------  ---  ----- 
Social security costs         0.7   0.5 
----------------------------  ---  ----- 
Equity-settled transactions   2.6   1.7 
----------------------------  ---  ----- 
Pension costs                 0.4   0.5 
----------------------------  ---  ----- 
                              9.4   7.4 
----------------------------  ---  ----- 
 

Details of transactions with the jointly controlled entity are given in note 17 to the Group accounts [and set out below].

( Footnote to Note 17 on page 110)

RS Components & Controls (India) Limited (RSCC) is a jointly controlled entity with Controls & Switchgear Company Limited, a company registered in India. The authorised share capital of this company is INR20 million, of which INR18 million is issued and owned in equal shares by Electrocomponents UK Limited and its partner. RS Components Limited supplies products to RSCC, while office space and distribution network are provided by Controls & Switchgear. During the year ended 31 March 2017 the Group made sales of L1.4 million (2016: L1.0 million) to RSCC. RSCC is accounted for using the equity accounting method.

STATEMENT OF DIRECTORS' RESPONSIBILITIES (page 72)

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law). 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 company and of the profit or loss of the group and company for that period. In preparing the financial statements, the directors are required to:

   --     select suitable accounting policies and then apply them consistently; 

-- state whether applicable IFRSs as adopted by the European Union have been followed for the group financial statements and United Kingdom Accounting Standards, comprising FRS 102, have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements;

   --     make judgements and accounting estimates that are reasonable and prudent; and 

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

The directors are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group and company's performance, business model and strategy.

Each of the directors, whose names and functions are listed on pages 34 to 36 confirm that, to the best of their knowledge:

-- the company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the company;

-- the group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the group; and

-- the Strategic Report includes a fair review of the development and performance of the business and the position of the group and company, together with a description of the principal risks and uncertainties that it faces.

In the case of each director in office at the date the Directors' Report is approved:

-- so far as the director is aware, there is no relevant audit information of which the group and company's auditors are unaware; and

-- they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group and company's auditors are aware of that information.

By order of the Board

   Lindsley Ruth                          David Egan 
   Chief Executive Officer           Group Finance Director 

SAFE HARBOUR

This financial report contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Electrocomponents plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Electrocomponents plc believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, which may be beyond the control of Electrocomponents plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Other than as required by applicable law or the applicable rules of any exchange on which our securities may be listed, Electrocomponents plc has no intention or obligation to update forward-looking statements contained herein.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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