Hyder Consulting PLC Annual Financial Report (6716G)

TIDMHYC

RNS Number : 6716G

Hyder Consulting PLC

02 July 2012

Hyder Consulting PLC ("Hyder" or the "Company")

Annual Financial Report and Notice of Annual General Meeting

Hyder announced it's Final Results for the financial year ending 31 March 2012 on 13 June 2012. In accordance with Listing Rule 9.6.1 the following documents have been submitted to the UK Listing Authority via the national storage mechanism, where they will shortly be available for inspection at www.hemscott.com/nsm.do:

Annual Report and Accounts for the financial year ending 31 March 2012;

AGM circular to shareholders containing Notice of the Annual General Meeting to be held on 2 August 2012 ("AGM Notice");

Form of Proxy.

Copies of the Annual Report and Accounts and AGM Notice can also be found on the Company's website at www.hyderconsulting.com.

Additional Information required by Disclosure and Transparency Rule 6.3.5

The Appendix contains the information required in compliance with DTR 6.3.5, which is in addition to the information communicated in the Final Results announcement made on 13 June 2012 and should be read together with that announcement which is available at www.hyderconsulting.com. This information is extracted in full unedited form from the Annual Report and Accounts 2012. References to page numbers and notes refer to page numbers and notes in and to the Annual Report and Accounts. This material is not a substitute for reading the full Annual Report and Accounts.

Neil Hunt

Company Secretary

2 July 2012

Appendix:

Principal risks and uncertainties (Pages 27 to 30 of the Annual Report and Accounts)

The group is broadly based, both internationally and across market sectors, which provides considerable resilience to and mitigates against economic and political risks. The group's risks are regularly monitored by the board. Risk management and internal control systems provide a means of identifying, evaluating and managing the significant risks facing the group. These systems can only mitigate risk rather than eliminate it completely.

The group's principal risks have been identified as follows:

 
 RISK                                    MITIGATION 
--------------------------------------  ------------------------------------------------------------------ 
 Changes in market conditions 
  The group's business environment         *    Our strategy of service differentiation, key client 
  is competitive and we recognise               management and international growth has enabled the 
  that the actions of competitors               group to avoid being dependent on individual markets, 
  or potential competitors                      sectors or clients. 
  may affect our business. 
 
  Challenging market conditions            *    The international spread and sector diversity of the 
  can arise due to changes                      group provides protection against market changes in 
  in social, economic or political              specific geographies or sectors. 
  factors, as well as increased 
  competition. 
                                           *    The development of our design excellence centres in 
  Contracts may be secured                      India, the Philippines and Bulgaria provides 
  at lower margins, or the                      additional flexibility to respond to local market 
  order book could decrease                     movements. 
  as fewer opportunities are 
  secured. Cash generation 
  could be affected and lower              *    The group also recognises that its competitiveness is 
  staff utilisation could result                enhanced by the recruitment and retention of key 
  in reduced profitability.                     staff members (see below). 
--------------------------------------  ------------------------------------------------------------------ 
 Management of projects 
  Managing clients' and our                *    We operate established bid processes to manage 
  own projects is core to our                   profitability and mitigate risks. 
  business. 
 
  Inadequate project management            *    Technical and project reviews are undertaken 
  could lead to financial loss,                 regularly; the group's internal systems and controls 
  increased risk of contractual                 facilitate this process. 
  disputes and claims and reputational 
  damage. 
                                           *    Regular project management training is provided and 
                                                the group ensures that appropriately technically 
                                                skilled staff are used on projects. 
--------------------------------------  ------------------------------------------------------------------ 
 Contractual disputes and 
  claims                                   *    Established project and technical review procedures 
  Disputes and claims can arise                 are in place to minimise any potential exposure. 
  if we do not meet our contractual 
  commitments, and where project 
  solutions are inadequate                 *    Should disputes arise they are dealt with at a local 
  or do not perform as intended.                level wherever possible, to protect and enhance our 
                                                relationship with clients and suppliers. Where this 
  Disputes and claims could                     is not possible disputes are escalated to regional or 
  result in material settlements                group management for resolution as swiftly as 
  against the group, damage                     possible. 
  to our client relationships 
  and limit our ability to 
  secure future contracts.                 *    Arbitration or mediation services are used where 
                                                possible. 
 
 
                                           *    A global insurance programme, at commercially 
                                                acceptable rates, is maintained with appropriate 
                                                limits of indemnity. 
--------------------------------------  ------------------------------------------------------------------ 
 Recruitment, utilisation 
  and retention of key staff                    *    The group aims to offer competitive compensation 
  Failure to attract and retain                      packages to give it the opportunity to recruit and 
  high quality staff will constrain                  retain people of sufficient calibre. 
  the ability of the group 
  to win contracts and grow 
  the business. It could increase               *    We ensure that our staff obtain appropriate and 
  the risk of contractual disputes                   relevant experience to develop further, which assists 
  and claims.                                        with their retention. 
 
 
                                                *    The human resources function plays a central role in 
                                                     succession planning, staff development and 
                                                     recruitment and staff retention strategies. 
 
 
                                                *    We regularly monitor our forward order book against 
                                                     our resource levels and plan accordingly in order to 
                                                     maximise staff utilisation rates. 
 
 
                                                *    We regularly review utilisation rates throughout our 
                                                     business and monitor them against pre-set targets 
                                                     taking prompt action where appropriate. 
--------------------------------------  ------------------------------------------------------------------ 
 Management of working capital, 
  particularly in the Middle 
  East                                     *    We develop and maintain close working relationships 
  The majority of costs, including              with clients and seek advance payments where 
  payroll, are paid before                      possible. 
  fees are settled by clients. 
  It may take us longer to 
  get paid than we anticipated             *    Global cash requirement forecasts are regularly 
  through poor payment terms,                   prepared and debt and work in progress levels with 
  late invoicing or poor collection             clients are monitored. 
  of debts. 
 
  Insufficient working capital             *    Cash management performance indicators are reviewed 
  could constrain growth and                    regularly at project, sector and regional level and 
  lead to increased use of                      have helped to develop a strong cash culture within 
  banking facilities with the                   the group. 
  resultant costs. In the extreme 
  we may breach our banking 
  covenants.                               *    The group maintains strong relationships with its 
                                                principal bankers. The group currently has GBP41m of 
                                                committed facility headroom. 
--------------------------------------  ------------------------------------------------------------------ 
 Defined benefit pension schemes 
  The group's main defined                 *    The AGPS closed to new members in 2001 and future 
  benefit pension scheme, the                   benefit accrual ceased in April 2011. 
  AGPS, has a deficit. 
 
  The deficit is exposed to                *    The group maintains a good relationship with the 
  risk of changes in interest                   trustees and a revised funding plan has been agreed 
  rates and asset values, as                    following the triennial valuation on 1 April 2011. 
  well as inflation and the 
  life expectancy of the members. 
  The cash cost of funding 
  the existing deficit could 
  increase in the future. 
--------------------------------------  ------------------------------------------------------------------ 
 Crisis event/business continuity 
  A crisis event or business               *    Disaster recovery plans are in place and are reviewed 
  continuity issue could lead                   regularly. 
  to a loss of staff and/or 
  interruption to service delivery. 
  We rely on our IT and office             *    The group's IT networks and core business systems are 
  infrastructure in order to                    maintained and supported to provide assurance on data 
  operate.                                      integrity and minimise the risk of data loss. 
 
  The loss of IT systems, or 
  being unable to access offices,          *    Where systems are identified as critical to the 
  could affect our performance.                 business their performance, resilience and security 
                                                is reviewed regularly in order to provide assurance 
                                                as to availability. 
--------------------------------------  ------------------------------------------------------------------ 
 Health and safety 
  The construction industry                *    Health and safety is an essential element of all 
  entails significant health                    Hyder's operations. 
  and safety risks. 
 
  There is a consequent risk               *    As a group we are committed to conducting our 
  to staff and clients, and                     activities in such a way as to ensure the health and 
  also a risk of reputational                   safety of our staff and anyone who may be affected by 
  damage to the group.                          our operations. 
 
 
                                           *    We will comply with all relevant legislation and aim 
                                                continually to improve our health and safety 
                                                performance; all staff are expected to contribute to 
                                                this goal. 
--------------------------------------  ------------------------------------------------------------------ 
 Foreign exchange movements 
  The group reports its results            *    Established procedures exist to monitor foreign 
  in sterling, however only                     exchange risks in accordance with policies set by the 
  approximately 30% of the                      board. A summary of the group's key risk exposures 
  group's revenue is generated                  and the use of derivative and financial instruments 
  in sterling. The remaining                    are given in Note 15. 
  balance is generated in Australia, 
  the Middle East, Germany, 
  China and Hong Kong where                *    The revenue and costs of our international operations 
  revenue is normally denominated               generally arise in the same currency and therefore 
  in the relevant local currency.               the exposure to exchange fluctuations is not usually 
                                                significant and consequently not hedged. 
  Significant movements in 
  foreign exchange rates will 
  affect the sterling profits              *    Where a mismatch does exist it is generally priced 
  reported by the group and                     for in our customer contracts. 
  the value of assets and liabilities 
  denominated in foreign currencies 
  on the balance sheet.                    *    Most of our overseas operations maintain local 
                                                currency overdraft and bonding facilities, which 
                                                provide partial mitigation against balance sheet 
                                                risk. 
 
 
                                           *    In spite of fluctuations in exchange rates which 
                                                occur from time to time, it is not considered 
                                                necessary to hedge the net investment in overseas 
                                                subsidiaries at this time. 
--------------------------------------  ------------------------------------------------------------------ 
 Global regulatory environment 
  and business conduct                          *    Regional management review their operations regularly 
  The group operates in many                         including ethics, employment practices, and health 
  jurisdictions and is subject                       and safety to ensure they have appropriate controls 
  to a wide range of rules                           to monitor and prevent potential breaches of group 
  and regulations, including                         policies and local legislation. 
  the UK Bribery Act. Non-compliance 
  could have significant consequences 
  for our operations or reputation.             *    The group maintains a global ethical business code 
                                                     and has provided training on identifying and 
                                                     preventing bribery. 
--------------------------------------  ------------------------------------------------------------------ 
 

Responsibility Statement (Page 63 of the Annual Report and Accounts)

The following statement is extracted from the Annual Report and Accounts. The statement relates solely to the Annual Report and Accounts and is not connected to the extracted information set out in this announcement:

"The directors confirm that, to the best of their knowledge:

(a) the group and the company's Financial Statements in this Annual Report, which have been prepared in accordance with IFRS and UK GAAP respectively, give a true and fair view of the assets, liabilities, financial position and profit or loss of the group and the company taken as a whole; and

(b) the management report (which comprises the Chairman's Statement and the Directors' Report) includes a fair review of the development and performance of the business and the position of the group and the company taken as a whole, together with a description of the principal risks and uncertainties that they face. "

Related Party Transactions (Page 116 of the Annual Report and Accounts)

The group has entered into transactions on an arm's length basis with related parties, mostly jointly controlled operations, during the year. Transactions relating to sales of consulting services to these jointly controlled operations amounted to GBP41.8m (2011: GBP49.9m).

Net amounts due from these jointly controlled operations amounted to GBP10.0m (2011: GBP8.3m), and are included within trade and other receivables (note 11), as the group utilises these arrangements primarily as special purpose billing vehicles on project related ventures with our partners. A listing of significant jointly controlled operations is set out below:

 
                                                    Legal status     Country 
                                                                      of Incorporation 
                                                                      / region 
                                                                      of operation 
 Hunter Expressway Alliance                         Unincorporated        Asia-Pacific 
 Tulla-Sydney Freeway Alliance                      Unincorporated        Asia-Pacific 
 Airport Link Teaming Arrangement                   Unincorporated        Asia-Pacific 
 Hyder-Arup-Black & Vetch JV*                         Incorporated        Asia-Pacific 
 Aurecon-Hyder JV                                   Unincorporated        Asia-Pacific 
 Sapphire to Woolgoolga Teaming Arrangement         Unincorporated        Asia-Pacific 
 Hyder Meinhardt JV                                 Unincorporated        Asia-Pacific 
 Airport Berlin-Brandenburg Consult                 Unincorporated              Europe 
 Hyder Consulting Middle East Limited & WS Atkins   Unincorporated         Middle East 
  & Partners Overseas 
 Hyder Halcrow JV                                   Unincorporated                  UK 
 Faber Maunsell Hyder JV                            Unincorporated                  UK 
 

* The group holds a 40% interest in the jointly controlled operation's ordinary share capital.

Unincorporated Jointly controlled operations are normally operated from the relevant Hyder regional office.

This information is provided by RNS

The company news service from the London Stock Exchange

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