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RNS Number : 3996E Coats Group PLC 10 March 2022
COATS GROUP PLC
Annual Financial Report 2021
Coats Group plc ('Coats' or the 'Company') has today submitted to the
Financial Conduct Authority's national storage mechanism its Annual Financial
Report for the year ended 31 December 2021 ('Annual Report 2021'), as required
by UK Listing Rule 9.6.1.
The Annual Report 2021 is available from the Company's website,
www.coats.com/ar2021 (http://www.coats.com/ar2021) , and will also be
available for viewing at the Financial Conduct Authority's national storage
mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
A hard copy version of the Annual Report 2021, the Notice of the 2022 Annual
General Meeting and other ancillary shareholder documents ('AGM documents')
will be sent to those shareholders who have elected to receive paper
communications on or about 25 March 2022. The AGM documents will be made
available on the Company's website (www.coats.com/agm2022
(http://www.coats.com/agm2022) ) to those shareholders who have not elected to
receive paper communications, and will also be available for viewing at the
Financial Conduct Authority's national storage mechanism at the link above, on
the same date.
This announcement also contains as appendices additional information for the
purposes of compliance with Disclosure Guidance and Transparency Rule 6.3.5,
including principal risk factors, a responsibility statement and details of
related party transactions. This information is extracted, in full unedited
text, from the Annual Report 2021. The Preliminary Announcement released on 3
March 2022 contained a condensed set of financial statements together with
extracts of the Company's management report, and is also available to view on
the Company's website www.coats.com/Investors
(https://www.coats.com/en/Investors/Investors-Overview) . These announcements
should be read in conjunction with and are not a substitute for reading the
full Annual Report 2021. All page and note references in the extracted
information below refer to page and note references in the Annual Report 2021.
Stuart Morgan
Company Secretary
10 March 2022
Enquiry details
Investors Victoria Huxster Coats Group plc +44 (0)7880 471 350
Nick Kidd Coats Group plc +44 (0)7770 735719
Media Richard Mountain / Nick Hasell FTI Consulting +44 (0)20 3727 1374
About Coats Group plc
Coats is the world's leading industrial thread company. At home in some 50
countries, Coats has a workforce of over 18,000 people across six continents.
Revenues in 2021 were US$1.5bn. Coats provides complementary and value-adding
products, services and software solutions to the apparel and footwear
industries. It also applies innovative techniques to develop high technology
performance materials threads, yarns, fabrics and composites in areas like
personal protection, telecoms, energy, transportation, and household and
recreation. Headquartered in the UK, Coats is a constituent of the FTSE 250
and FTSE4Good Index Series. It is a participant in the UN Global Compact, a
member of the Ellen MacArthur Foundation, has approved short term Science
Based Targets to 2030 and is committed to developing a long-term target to
reach net-zero emissions by 2050, the highest level of ambition on climate
change under the Science Based Target initiative. The pioneering history and
innovative culture of Coats enable the delivery of its purpose to connect
talent, textiles and technology to make a better and more sustainable world.
For further information go to www.coats.com.
Appendix
Principal Risks overview
A description of the principal risks the company faces is extracted from pages
46 to 58 of the Annual Report 2021.
Throughout the year, the Board has kept each of the principal risks under
review with support from the GET and the GRMC. The Board also undertook a
comprehensive assessment of the principal risks facing the Group, along with
the current levels of risk tolerance for each of those risks. Due to the ever-
changing global risk environment, the following risks have been updated since
the last report:
CHANGE OF RISK DESCRIPTION
1. Mergers and Acquisitions (M&A) scale ambition risk has been
re-named M&A programme ambition risk, in light of the Group's increasing
ambition in the scale of its acquisition programme and its ability to source,
satisfactorily acquire and integrate suitable targets.
2. Talent and capability risk has been changed to: Risk of failure to
attract, retain and develop talent and capability, given business changes,
growth in new areas and labour availability challenges.
3. Economic and geopolitical risk arising from political, economic and
demand uncertainty - across both key Asian and developed markets - including
risk to free trade conventions has been changed to: Economic and geopolitical
risk arising from political, economic and demand uncertainty - across both key
Asian and developed markets - including risk to free trade conventions as well
as global inflationary pressures.
4. Environmental non-performance risk given changing standards and
increasing scrutiny resulting in disruption of existing business, fines and/
or reputational damage has been changed to: Environmental non-performance risk
given changing standards, increasing scrutiny, customer and investor demands
and expectations and scale of Group's own self-imposed standards and
ambitions, creating commercial, financial and reputational risks as well as
opportunities.
PROMOTED Risk of supplier non-performance and/or unavailability and/or price increases
of raw materials, labour and freight is promoted to being a principal risk
with an emphasis on the freight/logistical challenges element given, in
particular, the widespread freight and logistical challenges. Consequently the
risk trend for this risk has also increased from stable to increasing.
DEMOTED Pensions risk has been demoted from a principal risk to a key risk, given that
the latest valuation has been completed and signed off with no amendment in
deficit recovery payments and with additional robust hedging strategies in
place. See page 58 for more information.
FROM STABLE TO INCREASING Risk of failure to attract, retain and develop talent and capability trend has
increased from stable to increasing, in light of the heightened labour
availability challenges in various parts of the world.
FROM INCREASING TO STABLE Mergers and Acquisitions (M&A) programme ambition risk trend has decreased
from increasing to stable, in light of the robust process being followed under
the regular oversight of the Board.
FROM INCREASING TO STABLE Risk of ever-increasing customer expectations and the Group's continuing
ability to meet and exceed those expectations as part of its strategic growth
ambitions has decreased from increasing to stable, due to the very close
ongoing attention and actions taken by the management team under the regular
oversight of the Board.
FROM INCREASING TO STABLE The risk trend for Health & Safety has decreased from increasing to
stable, in light of the actions taken by the Executive team and the pattern of
the various metrics presented to the Board regularly throughout 2021.
Our principal risks, along with a summary of the measures we have put in place
to manage and mitigate them, are set out in the table below. As stated above,
the Board will continue to keep these principal risks, as well as the
appropriateness of this list and the constantly changing broader risk
environment, under ongoing review.
Principal risk Risk trend Action / mitigation
1. Strategic
M&A programme ambition risk in light of the Group's increasing ambition in Stable Originating and executing M&A opportunities is a key focus for the Group.
the scale of its acquisition programme and its ability to source, A key component of our strategy is value creation and very carefully
satisfactorily acquire and integrate suitable targets. considered and disciplined use of capital to fund inorganic opportunities to
build scale and acquire new capabilities, technology and talent. The Board has
approved a set of criteria to source and evaluate acquisition opportunities,
aligned to Group divisional strategy. These criteria include both financial
parameters, such as revenue growth and EBITDA margins, and non-financial
parameters, such as innovation and sustainability credentials. All M&A
projects are overseen and closely monitored by the Board and by senior
executive management. Clear M&A processes have been developed and include
identification and evaluation of opportunities, specified roles and
responsibilities for all aspects of M&A projects, along with focussed
project management resources during both execution and integration phases.
Specific M&A risks and mitigations include failing to achieve required
financial returns by either overpaying for a target or under-delivering on the
business case. This risk is managed by deep sector knowledge brought by
executive management, an experienced M&A team which leverages specialist
external advice on valuations, and focussed diligence to satisfy the Board
that the commercial fundamentals are robust.
The risk of failing to fully integrate the target company into the Group is
managed by a dedicated integration management office (IMO), involved from the
diligence phase onwards and leveraging internal and external diligence
resources, to facilitate successful integration of the target company. A key
focus of the IMO is enabling delivery of the business case, whilst managing
people and culture change to ensure sustained success.
The risk of failing to capture synergies is managed by ensuring that synergy
cases are robust and achievable, and are reviewed by internal and external
experts. The IMO plays a key role in ensuring the integration allows for
effective synergy delivery in line with the business case. In addition to a
well-resourced acquisitions team, we leverage wider internal resources and
external advisers in specialist areas such as valuation, financing, due
diligence and integration. Post-completion/integration reviews are also
conducted to ensure that learnings are identified and built into subsequent
projects as part of a continuous improvement process. Significant work has
been completed in 2021 and we have a robust pipeline of opportunities.
Risk of ever-increasing customer expectations and the Group's continuing Stable Faced with unprecedented challenges as the world emerges from Covid, customer
ability to meet and exceed those expectations as part of its strategic growth expectations continue to evolve across speed to market, productivity,
ambitions. innovation, quality and sustainability. Coats as a global supplier, industry
partner and thought leader is well-placed to help our customers meet their own
challenges by rising to these higher expectations. To this end, we continue to
engage intensively with our customers on a daily basis to understand,
anticipate and meet these expectations. In 2021, we carried out customer
surveys with manufacturers, brands and OEMs and continue to engage daily with
multiple customer and industry stakeholders, influencers and decision-makers.
Furthermore, we engaged in an in-depth study with industry experts to
anticipate sustainability trends and expectations. This close engagement with
customers has allowed us to deliver outstanding customer value during 2021.
In collaboration with our customers, we helped them navigate the significant
disruption caused by Covid lockdowns in Asia, leveraging our operational
footprint and supply agility. In China, we have responded to the speed
requirements of the domestic market, eliciting favourable customer feedback
and stronger orders. We have also supported customers in their moves to build
more resilient and closer-to-market supply models, servicing their needs
across multiple markets and new suppliers.
Our sustainability innovations have met and exceeded customer needs, evidenced
by the significant increase in sustainable product sales, partnerships with
customers like Decathlon in Diversity & Inclusion and the development of
new products to progress the industry circularity agenda. Our Technical
Services teams in both Apparel & Footwear and Performance Materials
continued to support customers in their drive for higher productivity,
improved quality and accelerated innovation, delivering over 6,000 direct
customer engagements in the year. We have also acted to improve and automate
customer service processes, creating more time for customer value-adding
activities in key markets. Responding to the accelerating pace of industry
change, Coats Digital has invested in SaaS transition for its industry-leading
Fashion Tech software solutions as well as developing technology partnerships
for greater customer impact.
In 2021, we launched 21 new products across all our industry segments. In our
Performance Materials business, we started industrial production of preforms
for a leading US automaker, using our Lattice composite technology and our
innovative Lattice LiteTM solution has now been adopted by a number of
high-profile sports brands for their high end running shoes. At the same time
2021 saw us extend the Lattice range to Lattice ProtectTM which offers
lightweight, super strong components for safety shoes. Amongst the other
products launched were our new range of reflective tapes - Signal Lucence
which is a sew-on tape phosphorescent powered by VizLite DT. These reflective
tapes offer a third layer of visibility working when there is reduced light or
no primary light. They are lightweight and recharge via UV rays meaning there
is no need for batteries.
We continue to develop our innovation ecosystem, building increased capacity
to create new product solutions as well as products in collaboration with
customers and suppliers. At COP26 we announced the repurposing of our Shenzhen
Hub to focus on the research and development of bio-based and recycled
materials, working towards our commitment that by 2030 all Coats products will
be made completely independently of new oil-extraction materials. We are
already making huge strides in this area with our EcoVerde ranges, and in 2021
we launched our EcoRegen lyocell-based product which is made using fibres that
are made from sustainably sourced wood pulp, which is a 100% cellulosic
material and thus totally biodegradable.
The key mega trends influencing Performance Materials demand intensified in
2021. We have seen continued development of advanced composites with more
innovation around processes, resins, fibres, substrates, matrices and finishes
to build custom composite parts for numerous end uses. The race to reduce
weight in passenger cars continues, with more and more focus on EV and battery
ranges. In Personal Protection, increased worker protection remains a key
theme with more industry regulation and the need for comfort with multi-hazard
protection. Our customers and their customers are becoming ever more
demanding, looking for increased performance from the materials they use, be
this for chemical and corrosion resistance, flexibility, noise control or
performing well at temperature extremes. At the same time high-performance
materials must be increasingly sustainable, whether this is with moves to more
recycled raw materials or increased material durability to minimise waste and
product degradation. On top of the direct sustainable benefits of performance
materials they are increasingly used to improve other production processes,
for example in clean energy production by improving the efficiency of
production methods. Guided by our purpose, we will continue to strive to
deliver sustainable value and long-term benefits for our customers and all our
stakeholders.
Risk of failure to attract, retain and develop talent and capability given Increasing Despite the economic challenges brought by the pandemic, 2021 has seen
business changes, growth in new areas and labour availability challenges. critical labour shortages and specific skill gaps in the labour markets where
Coats operates - particularly the US, Brazil and China, which have become
increasingly competitive. In order to ensure that Coats retains, attracts and
develops the right talent with the right skillsets, the Board's and senior
management team's close focus on talent development and wellbeing continued in
2021.
Following our successful switch to 100% online learning in 2020, we delivered
more than 55,000 hours of training to our employees in 2021 through a variety
of training platforms. We added some new elements to our suite of learning
programmes including Manager Excellence, focussing on critical manager skills
through short, relevant sessions of an hour every month for 12 months, and a
new Mentoring Programme called Unlock Your Potential in which senior managers
are paired with other employees for three months to support them to achieve
particular objectives. While introducing some new programmes for our leaders,
we continued to offer learning opportunities to our individual contributors
and manufacturing employees. We also initiated a capability building project
for our commercial team which will be further reinforced in 2022.
As part of our employee listening strategy, which provides an integrated
approach to understanding the overall employee experience, we continued with
our comprehensive programme of engagement surveys, this time with our new
external provider. The results were extremely encouraging. 90% of our
employees took part in the survey and our engagement score was 83 - well above
the benchmark of 74. We also took part in the external Great Place To Work
surveys. By the end of 2021 we were delighted that 81% of our employees
belonged to a certified 'Great Place To Work'. Whether or not the teams
achieve certification, they all receive feedback from the 'Great Place To
Work' organisation on actions they can take to further improve the working
environment. We continued to deliver key employee health and well-being
interventions in 2021 covering three main areas - Prevention, Protection and
Medical Care, and Education. We introduced a range of global as well as local
initiatives like mental health and wellness programmes. We also actively
monitored the Coats markets considering the minimum wage increases and we
continued our work on living wage to ensure that all employees receive a wage
that is sufficient to afford a decent standard of living in their country or
location.
2. External
Economic and geopolitical risk arising from political, economic and demand Increasing The Group closely monitors the impact of the Covid pandemic on demand as well
uncertainty - across both key Asian and developed markets - including risk to as monitoring the implications of other areas of economic risk on the Group.
free trade conventions as well as global inflationary pressures. Our global reach and local knowledge give us the agility and insights needed
to operate and develop our business prudently and successfully during periods
of economic volatility. Additionally, the Group's global footprint allows us
to quickly respond to any changes in regional supply chains that may arise as
a result of the pandemic. Demand has been very strong during 2021; however,
the Covid pandemic continues to cause significant uncertainty, particularly
around localised disruption to our operations and supply chain, but we have a
clear playbook and proven experience in dealing with such localised
disruptions and minimising the impacts.
Regional lockdowns like in India and Vietnam during 2021 caused operational
challenges for the Group, although our fast response and global footprint
meant that we were able to weather these challenges and continue to serve our
customers. To the extent that the pandemic has a more prolonged impact on the
global economic environment, there may be a negative impact on consumer
spending and further potential localised disruption to our operations and
supply chain - a risk for which we remain alert and prepared. During 2021 we
also faced higher than normal inflation for many, our key raw materials,
freight, labour and energy costs. For raw materials, freight and labour, the
challenges were not just in relation to the high costs, but went much wider
with reduced availability and reliability impacting service lead times. We
have taken swift actions to counter this high inflation through a combination
of self-help initiatives (productivity improvement and cost control measures)
and pricing actions; we have also addressed supply chain disruptions through
leveraging our global footprint, long term relationships with global suppliers
and holding higher stocks as needed (see further actions referred to in Supply
risk on page 54).
Cyber risk Stable 2021 was another year where the pandemic dictated that the workforce remain
not just socially distanced, but also that the bulk of the administrative
Risk of cyber incidents leading to corruption of applications, critical IT workforce was forced to work remotely. This was accomplished with largely the
infrastructure, compromised networks, operational technology and/or loss of same procedural and technical controls initiated in 2020, which allowed us to
data. manage the changing risk landscape that become more apparent with the remote
workforce and the increase in attacks against the employees themselves and
their home networks. To minimise threats, we employed technical controls and
further education, informing our workforce about common attacks, social
engineering schemes, etc. and informing them to be diligent in adhering to the
Group-level processes to keep themselves, their personal information, and the
Company's data and systems secure.
Our programme to defend against email-based threats, includes continuous
security awareness training, routine phishing simulation campaigns, and
deployment of an additional context-based email security solution (Q2 2021).
Despite the increase in phishing threats being detected in both 2020 and 2021,
we have not seen an increase in phishing-related incidents, largely credited
to the existing and additional protections.
Additional enhancements to our cyber programme added in 2021 were an improved
cybersecurity asset management solution in Q3 2021 and SASE solution in Q4
2021. The enhanced asset management solution gives further insight to show any
coverage gaps to security agents and controls. The SASE solution gives
additional visibility, control, and improves end-user experience. Coupling
these with our managed Security Operations Centre (SOC), which has been in
place for the past three years, we continue to mature our programme to better
protect the data of our organization, our customers, and our business
partners.
Climate change risk arising from either (i) the impact of failing to Increasing During 2021 we have progressed our work on climate change risk analysis by
sufficiently address the need to decarbonise the Company's operations and moving from a largely qualitative assessment of risks to a quantitative
reduce emissions, leading principally to commercial and reputational risks and assessment of the potential financial impacts. This has allowed us to identify
the financial risk of emissions taxes or other legislative changes, or (ii) those risks that are more material to our business and where it is imperative
the physical impact of climate change on the Company's operations and business to focus on remedial actions.
model, and that of its customers in the textile supply chain.
As during 2020, this work has been carried out using the Taskforce on
Climate-related Financial Disclosures (TCFD) methodology, published as a
technical supplement to their 2017 report. Included within this report on
pages 38-45 is our first full report on the recommended TCFD disclosures,
including the relevant financial disclosures.
The progress of this work has been reported to the GRMC at each of their
quarterly meetings and was reviewed by the ARC in their December 2021 meeting
and again in February 2022.
Since we started work on climate risk analysis we have made substantial
progress with our climate strategy, which was early on identified as a
critical mitigating action, and have developed and had approved Science Based
Targets for emissions reduction under the 1.5°C pathway. As a result of
these actions, one of the principal transitional risks we identified
initially, that of failing to meet customer expectations and thus losing
sales, has been effectively mitigated and currently is not a risk. The most
significant remaining transitional risk is from the possibility of the
introduction of carbon taxes and this is detailed in our TCFD disclosures.
Obviously here also delivery of the emissions reduction targets that we have
established will have a very significant mitigating effect on any carbon tax
regimes that are introduced. There is a risk of failure to achieve our
emissions reduction targets because of inadequate opportunities to transition
to renewable electricity and a lack of reliable supply of recycled raw
materials; however the Company has robust programmes in place to manage these
risks.
We have done a first analysis of the growing physical risks and have
established the nature and potential scale of these risks, and the localities
potentially impacted by flood and extreme heat risks under each of our
scenarios. As detailed in our TCFD disclosure, these risks apply to our longer
term horizons under higher carbon scenarios and are limited to specific units,
mainly in Asia. More detailed work now needs to be done to review these medium
to long terms risks with our business continuity plans for these particular
sites and determine what, if any, mitigation options exist at each site
potentially impacted.
In parallel to this risk analysis work, we have also identified and studied
the potential opportunities coming from climate change and these are detailed
in our TCFD disclosures on pages 38-45. During 2022, we will also be adjusting
our methodologies, where necessary, to the revised TCFD guidelines issues in
October 2021 (2021 TCFD Implementing Guidance and 2021 Metrics Targets
Guidance 1).
Risk of supplier non-performance, unavailability and/or price increases of raw Increasing The Group conducts scenario analysis and continuity planning in relation to
materials, labour and freight and/or logistical challenges causing major each of our key raw materials, as well as labour and freight, to assess what
disruption to Coats' supply chain. counter measures can be put in place if certain events were to occur. Regular
assessment of financial performance of key suppliers and evaluation of
suppliers' own risk management plans is undertaken, and our dependency on key
suppliers and raw materials is reviewed frequently. The ramifications of the
Covid virus continue to impact global supply chains, limiting availability of
certain feedstocks and raw materials. This, coupled with a difficult sea
freight market dynamic, has reduced the possibility of arbitrage and agility
in global trade to respond to local shortages as they arise. To mitigate that,
we continue to assess our global stocking policy for strategic raw materials,
taking forward positions where possible where we can foresee shortages and
expanding our supplier base where necessary.
The Group applies a similar approach towards freight, where in 2021 the Group
saw an extremely volatile freight market with increasing rates for sea and air
freight and with a very low reliability level mainly caused by port
congestions, equipment shortages and a high demand in the US to import goods
from China. To mitigate the risks, the Group is constantly enhancing planning
accuracy and has increased the number of global and local forwarders and moved
to a monthly tender based on spot rates instead of a long term agreement.
In relation to labour, where 2021 saw labour shortages coupled with labour
inflation, the Group, and specifically the Board and the senior executive
team, remained intently focussed on talent development and wellbeing as
described in more detail in the Talent and capability risk on page 51.
Spanning all these areas, the Group has also moved quickly to implement a
combination of self-help initiatives (productivity improvement and cost
control measures) and pricing actions as referred to in Economic and
geopolitical risk on page 52.
Environmental non‑performance risk given changing standards, increasing Stable Our Sustainability strategy, launched in 2019, is fundamental to our
scrutiny, customer and investor demands and expectations and scale of Group's mitigation plan for this risk, as many of the actions required are part of
own self-imposed standards and ambitions, creating commercial, financial and that strategy implementation. The progress on delivery of our strategy is
reputational risks as well as opportunities. detailed in our annual Sustainability Reports that are published
simultaneously with our corporate Annual Reports. Detailed below are the
principal actions taken during 2021 that impact and mitigate this risk. We are
implementing a harmonised global system to effectively manage our energy and
environmental impacts in a documented, systematic way. This includes an
environmental management system (EMS) aligned to ISO 14001, and an energy
management system aligned to ISO 50001 with many elements of the EMS now
digitised.
To assist us to achieve the energy and water targets detailed in the
sustainability strategy and to more closely align to ISO 50001, we are
implementing an energy management software system that we are currently
piloting at five of our sites. This project involves adding hundreds of
electricity, gas and water meters in addition to humidity and temperature
sensors to understand how we can run production batches more efficiently,
whilst minimising the energy and water used to do so. We further improved our
monitoring and measurement platform for sustainability reporting, to
incorporate a digital analytical tool that assists us to perform deep dives on
sustainability metrics down to manufacturing site level. This allows us to
target underperforming sites whilst using best practice from those sites
consistently meeting interim targets.
These tools will help us meet our 2022 sustainability targets for water,
energy and waste. Following the completion of Environmental Health and Safety
(EHS) legal compliance audits for all of our global manufacturing units, we
now track new and updated EHS legislative requirements, thereby improving our
compliance to EHS legal requirements. We also manage all environmental permits
and licences we hold in each country we operate in, on a permits management
system.
Our environmental incident management system ensures that we have a consistent
and transparent way of managing environmental incidents that occur, and we
implement corrective and preventative actions to prevent reoccurrence through
a risk-based approach. Online analytical monitoring equipment provides
real-time data for our effluent treatment plants that discharge direct to
natural waterways, to ensure we meet local permit conditions and Zero
Discharge of Hazardous Chemicals (ZDHC) limits and to meet our 2022 effluent
treatment plant targets. As a result of this, and other measures, we improved
our compliance to ZDHC in 2021 and continued to make strong progress towards
our target of 100% compliance in 2022.
Our global Business Continuity Plan includes environmental emergency
preparedness and response plans, and we track environmental risks through an
environmental aspects and impacts management system. Our environmental
management plans are run through a series of workstreams to ensure key
stakeholders have an input into their delivery through a define, measure,
analyse, improve and control (DMAIC) process. These environmental and
governance measures are managed through a digital energy and environmental
management system.
3. Operational
Health and safety risk Stable The Board has continued to receive and discuss with management - as a priority
at each Board meeting - detailed reviews of health and safety performance and
of (i) safety incident(s) leading to injury or fatality involving our monitoring of progress against established annual health and safety targets
employees or other interested parties such as contractors, visitors, onsite and objectives. Senior management and employees throughout the Group likewise
suppliers etc. along with potential resulting prosecution, financial costs, remain intently focussed on creating an injury-free work environment.
business disruption and/or reputational damage; and/or (ii) physical and
mental health issues, including as a result of the pandemic, impacting
wellbeing, engagement, productivity and talent retention.
A key focus for 2021 was to continue our effective pandemic response and to
execute our plans for a safe and effective recovery. Through the development
and implementation of a comprehensive recovery matrix and continuation of our
previously effective workplace controls, we are successfully and safely
managing the risk of Covid in the workplace and resuming business as usual
where and when it is safe to do so.
While the health of our workforce and effective pandemic response was a key
focus of 2021, we also continued pursuing our Journey to Zero safety strategy
that was launched in 2019. While focussing on proactive and preventive actions
as well as leading indicators, we identified a series of targeted global
objectives, including a company-wide Journey to Zero week, various targeted
prevention campaigns, a new safety culture survey, and we conducted over
700,000 hours of safety training.
All of our proactive, preventive actions translated into the following results
for 2021:
• 24% reduction in work-related recordable injury rate (0.45 vs 0.59 in
2020)
• 6% reduction in lost time case rate (0.34 vs 0.36 in 2020)
• 23% reduction in days lost per lost time injury
• 91% reduction in eye injuries
• 38% reduction in slip/trip injury rates
Bribery and anti-competitive Stable
behaviour risk of breach of anti- corruption law or competition law, resulting The Group continues to maintain clear and well-publicised policies and
in material fine and/or reputational damage. processes, spanning bribery, anti-corruption and anti-competitive behaviour
along with a number of other ethics issues, including in relation to partners,
contractors and suppliers. These are reinforced with those latter stakeholders
through a comprehensive Supplier Code (covering initial due diligence
processes, onboarding, training, ongoing compliance and auditing). These
policies are reviewed and updated annually. There is extensive online and
face-to-face training and regular communications through a range of channels,
including through leveraging the support of our global ethical culture
champions network. During the pandemic, the ethical culture champions across
the Group were asked to reinforce key ethical messages in light of the
potential heightened risk of corruption in these uncertain times.
Additionally, a sub-committee of the GRMC comprising key business and
functional leaders, meets quarterly to consider a range of ethics risks
(including closely monitoring key risk indicators for those risks),
legislative and regulatory developments and mitigation plans. The risks are
also considered at cluster level during regular local risk management
meetings.
The Group actively maintains a whistleblower system, enabling employees and
others who are aware of, or suspect, unethical behaviour to report it
confidentially. wareness of the system, together with the risks and the
policies, has been increased through an ongoing Ethical Culture Campaign which
operates at a Group and local level. As noted above, we have also now procured
an externally hosted whistleblowing hotline, which further strengthens the
robust existing whistleblowing arrangements that were already in place. See
page 27 for more details.
4. Legacy risks
Lower Passaic River legacy Stable The Board continues to monitor developments very closely and oversees the
strategy in relation to the Lower Passaic River proceedings.
environmental matter
Detail of the Lower Passaic River legacy environmental matter can be found in
note 28 on page 173.
Responsibility statement
The following responsibility statement is repeated here solely for the purpose
of complying with Disclosure and Transparency Rule 6.3.5. This statement
relates to and is extracted from page 95 of the Annual Report 2021.
Responsibility is for the full Annual Report 2021 and not the extracted
information presented in this announcement or the Preliminary Announcement
released on 3 March 2022.
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the relevant financial
reporting framework, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole;
· the Strategic Report includes a fair review of the development and performance
of the business and the position of the Company and the undertakings included
in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
· the Annual Report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Company's position, performance, business model and
strategy.
This responsibility statement was approved by the Board of Directors on 2
March 2022
Related party transactions
A description of the related party transactions of the Company is extracted
from page 176 of the Annual Report 2021:
Remuneration of key management personnel
The Group Executive Team are deemed to be the key management personnel of the
Group. The remuneration of the Group Executive Team, is set out below in
aggregate for each of the categories specified in IAS 24 Related Party
Disclosures. Further information regarding the remuneration of individual
directors is provided on pages 96 to 113 in the audited part of the Directors'
Remuneration Report.
Year ended 31 December 2021 2020
US$m US$m
Short-term employee benefits 10.4 6.0
Share based payments 1.6 0.7
12.0 6.7
Trading transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and its joint ventures are disclosed
below.
During the year, Group companies entered into the following transactions with
related parties who are not members of the Group:
Sale of goods Purchase of goods
2021 2020 2021 2020
US$m US$m US$m US$m
Joint ventures 2.7 5.9 61.1 45.7
Amounts owing by / (to) joint ventures at the year end are disclosed in notes
19 and 21. All transactions with joint ventures are at an arm's length and
payment terms are consistent with normal trading terms with third parties.
END.
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