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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Exova Grp | LSE:EXO | London | Ordinary Share | GB00BKY7HG11 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 238.50 | 239.00 | 239.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMEXO
RNS Number : 3238C
Exova Group PLC
12 April 2017
12 April 2017
EXOVA GROUP PLC
(the "Company")
Annual Report & Accounts 2016 and Notice of 2017 Annual General Meeting
Following release by the Company on 28 February 2017 of its preliminary results for the financial year ended 31 December 2016, the Company announces that it has today posted to shareholders the documents listed below:
-- the Annual Report & Accounts for the financial year ended 31 December 2016 (the "2016 Annual Report & Accounts");
-- the Notice of the 2017 Annual General Meeting; and -- the Form of Proxy for the 2017 Annual General Meeting.
In accordance with Listing Rule 9.6.1, the Company has submitted copies of these documents to the Financial Conduct Authority via the National Storage Mechanism and they will shortly be available for inspection at www.morningstar.co.uk/uk/nsm. The 2016 Annual Report & Accounts and the Notice of the 2017 Annual General Meeting are now available online at the Company's website, www.exova.com.
Additional information required by Disclosure Guidance and Transparency Rule 6.3.5
The Company's preliminary results announcement on 28 February 2017 contained a management report as well as a condensed set of financial statements which were prepared in accordance with applicable accounting standards. In compliance with DTR 6.3.5R, the following information is extracted from the 2016 Annual Report & Accounts and should be read in conjunction with the Company's preliminary results announcement for the year ended 31 December 2016 issued on 28 February 2017. Both documents are available at www.exova.com and together constitute the material required by DTR 6.3.5R to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the 2016 Annual Report & Accounts in full.
1. Principal risks and uncertainties
A description of the principal risks and uncertainties that the Company faces is extracted in full and unedited from pages 10 to 13 of the 2016 Annual Report & Accounts.
The principal risks and uncertainties that could affect the Group are outlined below
--
Operational risks -------------------------------------------------------------------------------------------------------------- Risk Description Strategic Possible Mitigation priorities impact ---------------- ------------------- ------------------ ---------------------- --------------------------- Health The Group's Focusing Failure Health and safety and work environment on to operate is always the safety presents the provision safely could first item on various of technically adversely Board and Executive potential demanding impact the Committee agendas. risks services. Group's Overall strategy within employees and compliance our laboratories Managing or visitors, is monitored and when our laboratories lead to by the operating efficiently. legal action Group HSE director on customers' from regulators, who reports to premises. reputational the Group technical damage director. Clear or loss guidance is given of customer on appropriate confidence. procedures and maintenance of equipment, supported by regular training, supervision and compliance audits. Bulletins are issued in response to any significant incidents which might have group-wide implications. ---------------- ------------------- ------------------ ---------------------- --------------------------- Reputational The Group Focusing Loss of A comprehensive damage relies on existing quality on its the provision or management system reputation of technically new business. is in place which and being demanding is regularly awarded services. Loss of audited both and retaining ability internally and a Building to by external accreditation wide long- service bodies and customer range term customer approval teams. of accreditations client requirements and customer relationships. where accreditations Employee technical specific or customer competence is approvals Generating specific maintained through in order organic approvals mentoring and to provide revenue are lost. training programmes. its services. growth. Reduced financial performance. ---------------- ------------------- ------------------ ---------------------- --------------------------- People The Group Focusing Inability There is a comprehensive provides on to meet recruitment and specialised the provision customer ongoing evaluation technical of technically demand. process supported services demanding by incentive and is services. Failure plans based on dependent to innovate personal and on attracting Building and develop financial performance. and retaining long- customer appropriately term relationships. A Technical Career qualified client Development Programme staff. relationships. is in place which is designed to develop and retain technical staff and support succession planning. ---------------- ------------------- ------------------ ---------------------- --------------------------- Global The strength Generating A prolonged Our business economic of our organic economic is well diversified and market end markets revenue downturn both geographically conditions is an growth. would limit and by end user important our ability markets and our driver Extending to grow focus on technically
for growth. our service the business demanding services range in line gives us and the with our some resilience. global strategic reach plan. We engage regularly of our with our business. customers to understand their plans and requirements which are recorded in our group-wide customer relationship management (CRM) system. This provides consolidated visibility of future revenues and allows us to plan capacity efficiently. ---------------- ------------------- ------------------ ---------------------- --------------------------- UK withdrawal The UK Building Loss of Many of the standards from business long-term revenue and the EU trades client due to changes schemes under within relationships. in standards which we operate the EU or legislation are international and assesses Generating impacting or client specific whether organic our ability and we anticipate products revenue to provide little or no meet European growth. certain impact standards. services in these areas. that can In addition only be We will monitor the provided the impact on UK sits by an testing regimes on various EU member. and certification committees programmes and that determine Additional will engage with future import the relevant standards and export representative and methods costs. bodies of and working groups testing. Financial as required. performance The Group will be Since a large operates impacted portion of the in 33 by fluctuations Group's profit countries in sterling. is derived from and is activities outside therefore of the UK and exposed Europe, the weakening to currency of sterling has risk. had a beneficial impact on results, the Group does not, at this point in time, envisage a material adverse impact in the future. We will continue to monitor developments. ---------------- ------------------- ------------------ ---------------------- --------------------------- Business The business Managing Lack of Business continuity infrastructure depends our laboratories operational plans are in on efficiently. capacity place across its laboratory could affect the Group and network our ability our substantial to service to service laboratory network customers' existing often allows needs. customers work and win to be transferred new business. to alternative sites. ---------------- ------------------- ------------------ ---------------------- --------------------------- IT systems The business Managing Lack of A global Information depends our laboratories timely information Security policy on efficiently. could is in place. the effective affect our operation Building ability Regular system of long-term to service maintenance and global client customer back-ups are IT systems relationships. requirements taken. for its and make key business good business Disaster recovery processes. decisions. plans in place across the network Major Reputational which are tested IT systems damage from and improved integrity loss of regularly. issue systems or data or data. We continually security review and improve breach Potential our cyber defences. due to legal implications either associated internal with potential or external loss of factors. sensitive data. ---------------- ------------------- ------------------ ---------------------- --------------------------- Acquisitions The process Extending Failure We have a well-developed
of identifying, our service to deliver screening process acquiring range expected to ensure that and integrating and the results potential acquisitions new businesses global due meet the criteria is fundamental reach to poor in our strategic to our of our acquisition plans for market overall business. selection. penetration and growth geographical plan. Managing Unforeseen expansion and our laboratories liabilities our target returns efficiently. arising on investment. from failure to understand Thorough due business diligence is risks fully carried during due out by our in-house diligence. experts supplemented by the use of Reduced specialist advisers. financial Customary legal performance protection arising is included in from poor the purchase integration contract. of acquired businesses. Detailed integration plans are approved prior to completion and are closely monitored in line with an agreed timetable. ---------------- ------------------- ------------------ ---------------------- --------------------------- Legal and regulatory risks ----------------------------------------------------------------------------------------------------------- Risk Description Strategic Possible Mitigation priorities impact -------------- ------------------- ------------------ --------------------- --------------------------- Litigation The Group's Building Reputational We have a process operations long-term damage leading for monitoring are subject client to customer compliance with to wide-ranging relationships. loss and laws and regulations laws Managing brand damage. and internal Group and regulations our laboratories Diversion procedures and including efficiently. of management reporting any business time away significant deviations conduct, from to the Board. employment, the operation We also monitor environmental of changes and health the business. in regulations and safety Penalties and communicate legislation. for breaching these as appropriate. There contracts, We have a clear is also laws or delegation of exposure regulations. authority for to contractual business decisions risk. and detailed training is provided on key areas of risk e.g. contract negotiation. We carry insurance cover against certain losses. -------------- ------------------- ------------------ --------------------- --------------------------- Business The activities Building Reputational Our business integrity of the long-term damage leading activities are and business client to customer conducted ethics are governed relationships. loss and in multiple jurisdictions by various Generating brand damage. and are ethical organic Diversion exposed to a requirements revenue of management wide range of including growth. time away business anti-corruption Extending from the practices. We and bribery our service operation have a strong laws, range of the business. Group competition and the Penalties culture of integrity laws, global for and ethical and trade reach breaching behaviour to sanctions of our laws ensure a consistent and export business. or regulations. approach regardless laws. of local custom. We have group-wide policies covering ethical conduct and regular training is provided, backed up by external legal and professional support where required. We encourage reporting of any concerns about wrongdoing or impropriety and have a whistleblowing service managed by a third party. -------------- ------------------- ------------------ --------------------- --------------------------- Financial risks
----------------------------------------------------------------------------------------------------------- Risk Description Strategic Possible Mitigation priorities impact -------------- ------------------- ------------------ --------------------- --------------------------- Financial The Group Managing Significant The Group has irregularity could our laboratories financial a well established suffer efficiently. irregularity system of operational financial could lead and financial loss to loss controls including either of confidence documented procedures through by key stakeholders and delegation misappropriation and reputational of of assets damage to authorities supported or the the by an misrepresentation business. internal audit of financial This might function. results. impact our financial position and ability to raise funds and could affect the share price. -------------- ------------------- ------------------ --------------------- --------------------------- Treasury The Group Generating Volatile Borrowings are is exposed organic financial maintained in to revenue performance appropriate currencies currency, growth. arising to partially liquidity Managing from translation hedge foreign and credit our laboratories of overseas exchange risk risks. efficiently. results. on overseas earnings. Financial We are exposed penalties to limited transactional and reputational risk as most damage arising costs and revenues from breach are matched in of banking the same currencies. covenants. Forecast cash Financial flows are regularly loss from reviewed to ensure inappropriate that sufficient use of financial committed borrowing instruments facilities or failure are in place. to collect Credit risk is amounts actively monitored owed. and is mitigated by the wide spread of our customer base. -------------- ------------------- ------------------ --------------------- ---------------------------
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 December 2019. The Directors' assessment has been made with reference to the resilience of the Group and its strong financial position, the Group's strategy, the Board's risk appetite and the Group's principal risks and how these are managed, as described in this Strategic Report.
The Group has a broad spread of customers across different geographical areas and market sectors and a high level of customer retention and repeat business. The Group is also supported by strong operational cash flows.
The assessment period of three years has been chosen as it is consistent with the Board's annual review of the Group's three year rolling strategic plan. This review covers the prospects for each business, assumptions regarding entry into new markets and geographies, future growth rates and performance of the business. A robust financial model of the Group has been built and the metrics for the Group's KPIs have been reviewed for the assessment period. These metrics are also subject to sensitivity analysis which includes flexing a number of these assumptions, namely, future organic revenue growth, operating margins and operational cash flow. This is supplemented by an overlay of assumptions on the future level of inorganic growth from acquisitions. The results of flexing these assumptions, both individually and in aggregate, are used to determine whether additional bank facilities will be required during this period.
This review and analysis also considers the principal risks and uncertainties facing the Group, as described on pages 10 to 13 and the potential impact these risks would have on the Group's business model, future performance, solvency and liquidity over the assessment period. The Board considers that the diverse nature of the market sectors and geographies in which the Group operates acts significantly to mitigate the impact any of these risks might have on the Group.
2. Related party transactions
The following statements regarding related party transactions are set out on pages 144 to 145 of the 2016 Annual Report & Accounts. The following is extracted in full and unedited form from the 2016 Annual Report & Accounts.
During the year the Group entered into certain transactions with related parties. Details of these transactions are as follows:
Income statement
Company ----------------------------------------------- --------------- 2016 2015 ----------------------------------------------- ------ ------- GBPm GBPm ----------------------------------------------- ------ ------- Dividend received from subsidiary undertaking - 120.0 ----------------------------------------------- ------ -------
Balances at 31 December
Group Company ----------------------------------------- ---------- ================= ==================== 2016 2015 2016 2015 Assets Notes GBPm GBPm GBPm GBPm ----------------------------------------- ---------- ----- ---------- -------- ---------- Amounts due from subsidiary undertakings 16 - - 122.5 122.0 ----------------------------------------- ---------- ----- ---------- -------- ---------- Liabilities ----------------------------------------- ---------- ----- ---------- -------- ---------- Termination of consultancy agreement fee to private equity investor - 1.0 - 1.0 ----------------------------------------- ---------- ----- ---------- -------- ---------- Amounts due to subsidiary undertakings 17 - - 24.2 14.3 ----------------------------------------- ---------- ----- ---------- -------- ----------
Key management compensation
Group Company ----------------------------------- =================== =================== 2016 2015 2016 2015 GBPm GBPm GBPm GBPm ----------------------------------- ----- ------------ ----- ------------ Salaries and short-term benefits 3.8 3.3 0.9 0.9 ----------------------------------- ----- ------------ ----- ------------ Post employment benefits 0.2 0.3 0.1 0.1 ----------------------------------- ----- ------------ ----- ------------ Termination benefits 0.5 0.1 - - ----------------------------------- ----- ------------ ----- ------------ Share-based payments 0.9 0.2 0.1 0.1 ----------------------------------- ----- ------------ ----- ------------ 5.4 3.9 1.1 1.1 ----------------------------------- ----- ------------ ----- ------------
Key management comprises members of the executive team. The executive team is responsible for the day to day running of the Group, and comprises the CEO, CFO, managing directors and group functional directors.
The Group holds equity interests of less than 51% in the following companies where it exercises control:
% shareholding --------------------------------------- -------------- Exova (Qatar) LLC 24.5% --------------------------------------- -------------- Al Futtaim Exova LLC 49.0% --------------------------------------- -------------- Exova Warringtonfire Middle East LLC 49.0% --------------------------------------- -------------- Exova (Saudi Arabia) Limited 50.0% --------------------------------------- -------------- Exova Warringtonfire LLC 49.0% --------------------------------------- --------------
Exova (Qatar) LLC approved and paid a dividend of GBP0.8m (QAR 4,000,000) (2015: GBP1.1m QAR: 6,000,000) to its shareholders.
The Group is exposed, or has rights, to variable returns from its involvement with the equity interests and has the ability to affect those returns through its power over the equity interests. Based on this, the Directors have determined that the Group has control over these equity interests and therefore consolidates them within the financial statements.
The Group has interests in joint venture arrangements in the following companies:
Principal Group place ownership Name of business interest Held by -------------------------------------- ------------ ---------- ---------------------------- Hong BM TRADA Overseas BM TRADA (HK) Limited Kong 70% Limited -------------------------------------- ------------ ---------- ---------------------------- BM TRADA RKCA Certifications Private BM TRADA Overseas Limited India 50% Limited -------------------------------------- ------------ ---------- ---------------------------- Hong BM TRADA Overseas FIRA - CMA Testing Services Limited Kong 50% Limited -------------------------------------- ------------ ---------- ---------------------------- BM TRADA Overseas BM TRADA Cyprus Limited Cyprus 50% Limited -------------------------------------- ------------ ---------- ---------------------------- Standardt BM TRADA Belgelendirme BM TRADA Overseas AS Turkey 50% Limited -------------------------------------- ------------ ---------- ---------------------------- BM TRADA Overseas BM TRADA Latvija Latvia 50% Limited -------------------------------------- ------------ ---------- ---------------------------- BM TRADA RKCA Lanka Certifications BM TRADA RKCA Certifications (Private) Limited Sri Lanka 50% Private Limited -------------------------------------- ------------ ---------- ---------------------------- BM TRADA Suomi OY Finland 50% BM TRADA Latvija -------------------------------------- ------------ ---------- ---------------------------- BM TRADA Eesti Ou Estonia 50% BM TRADA Latvija -------------------------------------- ------------ ---------- ---------------------------- BM TRADA Deutschland GmbH Germany 50% BM TRADA Latvija -------------------------------------- ------------ ---------- ---------------------------- BM TRADA Lietuva Lithuania 50% BM TRADA Latvija -------------------------------------- ------------ ---------- ---------------------------- Tianjin C-Kai BM TRADA Certification BM TRADA Certification Company Limited China 40% Limited -------------------------------------- ------------ ---------- ----------------------------
3. Directors statement of responsibilities
The following statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from page 87 of the 2016 Annual Report & Accounts and is signed on behalf of the Board of Directors by Ian El-Mokadem, Chief Executive Officer and Philip Marshall, Chief Financial Officer. Responsibility is for the full 2016 Annual Report & Accounts and not the extracted information presented in this announcement or the full year results announcement.
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the Group and Company financial statements for each financial year in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
Under Company law the Directors must not approve the Group and Company 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 for that period. In preparing the Group and Company financial statements the Directors are required to:
-- present fairly the financial position, financial performance and cash flows of the Group and Company;
-- select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
-- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
-- make judgements that are reasonable;
-- provide additional disclosures when compliance with the specific requirements in IFRS as adopted by the European Union is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance; and
-- state whether the Group and Company financial statements have been prepared in accordance with IFRS as adopted by the European Union.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the Group and Company financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They 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 also responsible for preparing the Directors' Report, the Directors' Remuneration Report, Strategic Report and the Corporate Governance Statement in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules.
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 accounts may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
Directors' responsibility statement
Each of the Directors, as at the date of this report, confirms to the best of their knowledge that:
-- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group; and
-- the Strategic Report and the Report of Directors include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
We consider the Annual Report & Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
The Strategic Report contains certain forward-looking statements providing additional information to shareholders to assess the potential for the Group strategies to succeed. Such statements are made by the Directors in good faith, based on the information available to them up to the date of their approval of this report, and should be treated with caution due to the inherent uncertainties underlying forward-looking information.
Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report & Accounts except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with Section 90A and Schedule 10A of the Financial Services and Markets Act 2000.
4. Substantial shareholding
As at 31 March 2017, being the latest practicable date prior to release of this announcement, the Company had been notified, in accordance with DTR 5, of the following major shareholdings in the ordinary share capital of the Company:
Name Ordinary share % of Capital holdings at 31 March 2017 ------------------------------ --------------- ------------- Tabasco B.V. 135,045,958 53.91 ------------------------------ --------------- ------------- Fidelity Management & Research Company (US) 13,146,904 5.25 ------------------------------ --------------- ------------- Mubadala Development Company PJSC 12,284,488 4.90 ------------------------------ --------------- ------------- T. Rowe Price 9,653,694 3.85 ------------------------------ --------------- ------------- First Pacific Advisors 8,805,519 3.52 ------------------------------ --------------- ------------- Aberdeen Asset Management Limited 7,585,901 3.03 ------------------------------ --------------- -------------
5. Directors' shareholding and share interests
A statement of Directors' shareholding and share interests as at 31 December 2016 is set out on page 77 of the 2016 Annual Report & Accounts. In compliance with Listing Rule 9.8.6R(1), no changes in the interests of each director (including interests of connected persons) have occurred between 31 December 2016 and the date of posting to shareholders the Notice of the 2017 Annual General Meeting and the 2016 Annual Report & Accounts.
For further information please contact:
Neil MacLennan
General Counsel & Company Secretary
Exova Group plc
Telephone: +44 (0) 131 333 8053
Exova
Exova is one of the world's leading laboratory-based testing groups, trusted by organisations to test and advise on the safety, quality and performance of their products and operations. Headquartered in Edinburgh, UK, Exova operates 136 laboratories and offices in 33 countries and employs around 4,200 people throughout Europe, the Americas, the Middle East, Asia/Asia Pacific and Africa.
Exova's capabilities help to extend asset life, bring predictability to applications, and shorten the time to market for customers' products, processes and materials. With over 90 years' experience, Exova specialises in testing across a number of key sectors ranging from Aerospace to Fire & Building Products; Oil & Gas and Industrials; Infrastructure & Environment; Transportation; and Health Sciences.
Exova Group plc is registered in England and Wales (registration number 08907086). Its legal entity identifier ('LEI') number is 213800BFE317FGSYMZ19.
This information is provided by RNS
The company news service from the London Stock Exchange
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