REG - Intertek Group Plc - Annual Financial Report
18/03/2022 09:00
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RNS Number : 2036F Intertek Group PLC 18 March 2022
INTERTEK GROUP PLC
(the 'Company')
18 March 2022
ANNUAL REPORT AND ACCOUNTS 2021 AND NOTICE OF 2022 ANNUAL GENERAL MEETING
In accordance with Listing Rule 9.6.1R and Disclosure Guidance and
Transparency Rule ('DTR') 4.1.3R, the Company announces that the following
documents have been posted to shareholders and submitted to the UK Listing
Authority via the National Storage Mechanism:
· Intertek Group plc 2021 Annual Report and Accounts;
· Notice of 2022 Annual General Meeting; and
· Proxy Form for the 2022 Annual General Meeting.
The above mentioned documents (except for the Proxy Form) are available on our
website at www.intertek.com (http://www.intertek.com) and will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . The 2022 Annual
General Meeting is due to be held on Wednesday, 25 May 2022 at 9.00 a.m. in
the Marlborough Theatre, No. 11 Cavendish Square, London W1G 0AN.
In compliance with DTR 6.3.5R, the information contained in the Appendix below
is extracted from the 2021 Annual Report and Accounts and should be read in
conjunction with the Company's 2021 Full Year Results Announcement for the
year ended 31 December 2021 issued on 1 March 2022. Both documents are
available at www.intertek.com (http://www.intertek.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 2021 Annual Report and Accounts in full.
Page numbers and cross references in the extracted information refer to page
numbers and cross references in the 2021 Annual Report and Accounts.
Appendix
1. PRINCIPAL RISKS AND UNCERTAINTIES
This section sets out a description of the principal risks and uncertainties
that could have a material adverse effect on the Group's strategy,
performance, results, financial condition and reputation.
Risk framework
The Board has overall responsibility for the establishment and oversight of
the Group's risk management framework. This work is complemented by the Group
Risk Committee, whose purpose is to manage, assess and promote the continuous
improvement of the Group's risk management, controls and assurance systems.
This risk governance framework is described in more detail in the Directors'
report on pages 98 to 166.
The Group Audit Director and the Group General Counsel, who report to the
Chief Financial Officer and Chief Executive Officer respectively, have
accountability for reporting the key risks that the Group faces, the controls
and assurance processes in place and any mitigating actions or controls. Both
roles report to the Audit Committee, attend its meetings and meet with
individual members each year as required.
Risks are formally identified and recorded in a risk register which is owned
by each of the Group's divisional, regional and functional risk committees.
Risk registers are updated throughout the year by these risk committees and
are used to plan the Group's internal audit and risk strategy.
In addition to the risk registers, all senior executives and their direct
reports are required to complete an annual return to confirm that management
controls have been effectively applied during the year. The return covers
Sales, Operations, IT, Finance and People.
Principal risks
The Group is affected by a number of risk factors, some of which, including
macroeconomic and industry-specific cyclical risks, are largely outside the
Group's control. Some risks are particular to Intertek's operations. The
principal risks of which the Group is aware are detailed on the following
pages, including a commentary on how the Group mitigates these risks. These
risks and uncertainties do not appear in any particular order of potential
materiality or probability of occurrence.
There may be other risks that are currently unknown or regarded as immaterial
which could turn out to be material. Any of these risks could have the
potential to impact the performance of the Group, its assets, liquidity,
capital resources and its reputation.
Changes to principal risks
Our principal risks continue to evolve in response to our changing risk
environment.
This year, based on our current assessment of its materiality, we have
included three new principal risks: macro-economic risk, reflecting an
increase in global economic and fiscal uncertainty caused by Covid-19;
contracting risk, reflecting an increased focus on customer contract terms and
supplier resilience; and sustainability risk, which is the risk of extreme
weather events having an impact on our and our customers' operations. We have
also removed third-party relations as we no longer believe this is a principal
risk to the Group.
Operational
Principal risk Possible impact Mitigation 2021 update
Reputation • Failure to meet financial performance expectations. • Quality Management Systems; adherence to these is regularly audited and This risk remains stable compared with 2020. The Group continues to invest in
reviewed by external parties, including accreditation bodies. staff development, quality systems and standard processes to prevent
Reputation is key to the Group maintaining and growing its business. • Exposure to material legal claims, associated costs and wasted management
operational failures.
Reputation risk can occur in a number of ways: directly as the result of the time. • Risk Management Framework and associated controls and assurance processes,
actions of the Group or a Group company itself; indirectly due to the actions
including contractual review and liability caps where appropriate.
of an employee or employees; or through the actions of other parties, such as • Destruction of shareholder value.
joint venture partners, suppliers, customers or other industry participants.
• Code of Ethics which is communicated to all staff, who undergo regular
• Loss of existing or new business. training.
• Loss of key staff. • Zero-tolerance approach with regard to any inappropriate behaviour by any
individual employed by the Group, or acting on the Group's behalf.
• Whistleblowing programme, monitored by the Audit Committee, where staff
are encouraged to report, without risk, any fraudulent or other activity
likely to adversely affect the reputation of the Group.
• Relationship management and communication with external stakeholders.
Customer • May lead to customer dissatisfaction and • Net Promoter Score ('NPS') customer satisfaction, customer sales trends This risk remains stable compared with 2020.
and turnaround time tracking.
service customer loss.
• Global and Local Key Account Management ('GKAM'/'LKAM') initiatives in
A failure to focus on customer needs, to provide customer innovation or to • Gradual erosion of market share and reputation if competitors are place.
deliver our services in accordance with our customers' expectations and our perceived to have better, more responsive or more consistent service
customer promise. offerings. • Customer feedback meetings.
• Customer claims/complaints reporting.
People retention • Poor management succession. • HR strategy policies and systems. This risk remains stable compared with 2020.
The Group operates in specialised sectors and • Lack of continuity. • Development and reward programme to retain and motivate employees.
needs to attract and retain employees with relevant experience and knowledge • Failure to optimise growth. • Succession planning to ensure effective continuation of leadership and
in order to take advantage of all growth opportunities.
expertise.
• Impact on quality, reputation and customer confidence.
• Loss of talent to competitors and lost market share.
Macro-Economic • Impact on revenue. • We continue to focus on developing business in new markets and for new This is a new risk for 2021.
customers.
Macro-economic factors such as a global/market downturn, inflation, supply • Falling market share.
chain and logistics restrictions, materials shortages, and contraction /
• We continue to focus on innovations in our service offerings.
changing requirements in certain sectors. • Shrinking customer base.
• We continue to monitor trends and customer pipelines.
• Impact on share price.
• We conduct regular strategic and business line reviews, including budget
forecasting.
• We continue to monitor the impacts of external risk factors, and have
access to data and analysis from our external advisers.
Health, safety and wellbeing • Individual or multiple injuries to employees • Quality management and associated controls, including safety training, This risk remains stable compared with 2020.
appropriate PPE (Personal Protective Equipment), Health & Safety policies
Any health and safety incident arising from our activities. This could result and others. (including due diligence on sub-contractors), meetings and communication.
in injury to Intertek's employees, subcontractors, customers and/or any other
stakeholders affected. Wellbeing impacts on our people resulting from the • Litigation or legal/regulatory enforcement action (including prosecution) • Avoiding fatalities, accidents and hazardous situations is paramount. It
Covid-19 pandemic and other similar events. leading to reputational is expected that Intertek employees will operate to the highest standards of
health and safety at all times and there are controls in place to reduce
damage. incidents.
• Loss of accreditation. • Business continuity planning.
• Erosion of customer confidence. • Employee wellbeing programme.
• Wellbeing - individual or multiple instances
of stress-related issues and/or illnesses,
absenteeism, and related impacts on morale.
Industry and competitive landscape • Failure to maximise revenue opportunities. • GKAM and LKAM initiatives in place. This risk remains stable compared with 2020.
A failure to identify, manage and take advantage of emerging and future risks. • Failure to take advantage of new opportunities. • Diversification of customer base. The Group continues to invest in
Examples include the opportunities provided by new markets and customers, a • Lack of ability to respond flexibly. • Focus on new services and acquisitions. innovation and to adapt our service delivery to meet our clients changing
failure to innovate in terms of service offering and delivery, the challenge
needs.
of radically new and different business models; the failure to foresee the • Erosion of market share. • Tracking new laws and regulations.
impact of, or adequately respond to and comply with, changing or new laws and
regulations; a failure to anticipate and address the operational, strategic, • Impact on share price. • Regular strategic and business line reviews.
regulatory and reputational impact of climate change and environmental
factors; and a failure to identify and take advantage of the impact of • Sanctions and fines for non-compliance with new laws, etc. • Development of ATIC-selling initiatives.
post-Brexit changes to our clients' operations and supply chains.
• NPS customer research to understand customer satisfaction.
• Using innovation to respond to the Covid-19 pandemic.
IT systems and • Loss of revenue due to down time. • Information systems policy and governance structure. This risk remains stable compared with 2020.
data security • Potential loss of sensitive data with associated legal implications, • Regular system maintenance.
including regulatory sanctions and potential fines.
Systems integrity: major IT systems integrity issue, or data security breach,
• Backup systems in place.
either due to internal or external factors such as deliberate interference or • Potential costs of IT systems' replacement and repair.
power shortages/cuts, etc.
• Disaster recovery plans that are constantly tested and improved to
• Loss of customer confidence. minimise the impact if a failure does occur.
Systems functionality: a failure to define the right IT strategies, maintain
existing IT systems or implement new IT systems with the required • Damage to reputation. • Global Information Security policies in place (IT, Data Protection,
functionality and which are fit for purpose, in each case to support the
CyberSecurity).
Group's growth, innovation and competitive customer offering. • Loss of revenue/profitability if we fail to adopt an IT investment
strategy which supports the Group's growth, innovation and customer offering. • Adherence to IT finance systems controls (part of Core Mandatory Controls
Data security: a failure to adequately protect the Group's confidential ('CMCs')).
information, customer confidential information or the personal data of the
Group's employees, customers or other stakeholders. • Adherence to IT general controls.
• Internal and external audit testing.
• Processes to ensure compliance with GDPR.
COVID-19 · • There is a health and safety risk to our people who come into • We are closely monitoring our people's health, safety and security and We believe this risk remains similar to the prior year. Although global
contact with confirmed cases. relevant regulatory requirements. vaccination programmes and other factors (such as rapid mass testing and
The risk caused by the ongoing coronavirus
improved treatments and therapies) have reduced this risk during 2021, there
• In affected areas, there is a risk that the ability of our people to work • We have implemented, and continually revise, the Group's Covid-19 Health remains significant uncertainty over new variants and the potential for
pandemic. The virus is a potential risk to: (1) as normal is impacted by mandatory health and safety restrictions, including and Safety Policy, which covers extensive hygiene control and prevention ongoing government restrictions.
quarantine and travel restrictions in certain cases. measures for our office and field-based people.
the health and safety of our people; (2) the
• There is a risk that the ability of our people to perform field-based work • We have made changes to operational procedures to redirect work to
ability of our and our customers' businesses
Intertek facilities in unaffected locations. We continue to work closely with our clients to prioritise the health and
(audits and inspections) continues to be affected by control and prevention
safety of our and their people and to maximise business continuity.
to operate normally; and (3) global supply measures that we and our clients are taking, or are subject to. • We are engaging closely with our customers to support their needs.
chains and the flow of goods and services. • In affected areas, there is risk of disruption to our normal operations • We have working groups at the Group, regional and local levels to monitor
both as a consequence of the issues faced by our people and of the impact to the situation and put appropriate mitigation action and continuity plans in
our clients' operations and production levels. place.
•There is a risk that an ongoing situation could continue to disrupt global • We have implemented a remote inspection approach to ensure compliance with
supply chains, which could lead to a need to refocus our service offering or the Covid-19 Health and Safety Policy across all of our sites.
delivery locations to align optimally with customer requirements and to remain
competitive.
• There is a risk that our 2022 performance will be affected by the
disruption to the supply chains of our clients and any impact it may have on
global trade activities.
Contracting • Margin decretive work. • Any deviations from our standard contract terms are subject to legal This is a new risk for 2021.
review and approval, and all contracts must be approved in line with our
Agreeing unfavourable terms with customers and/or suppliers as a result of not • Onerous liabilities and exposures. Authorities Grid (which sets out approval limits based on contract values and
following agreed contract review processes, and/or failing to negotiate
other relevant factors).
appropriate terms. • Non-optimised pricing.
• We continue to operate our claims notification procedure, including claims
• Financial exposures due to claims and litigation. management and insurer liaison where needed.
• Both our contracting and claims processes are supported by training
programmes for relevant staff, and the use of relevant systems and databases.
Legal and Regulatory
Regulatory and • Loss of revenue, profitability and/or market share. • Monitoring of regulatory environment and political developments. This risk remains stable compared with 2020.
political landscape • Increase to costs of operations, reduction in profitability. • Analysis of impact of regulatory and political changes on operational SOPs
and Group policies.
A failure to identify and respond appropriately to a change in law and/or • Reduction in the attractiveness of investment in specific
regulation, or to a political decision, event or condition which could impact
• Membership of relevant associations, e.g. TIC Council with related
demand for the Group's services or the Group's ability to grow, innovate business, sectors or markets and/or adverse change in the competitive advocacy and liaison activities including in relation to developing
and/or provide a competitive customer offering in any existing or new industry landscape. climate-related or environmental regulations.
sector or market.
Business ethics • Litigation, including significant fines and debarment from certain • Annual Code of Ethics training and sign-off requirement. This risk remains stable compared with 2020.
territories/activities.
Non-compliance with Intertek's Code of Ethics ('the Code') and/or related laws
• Whistleblowing programme, monitored by the Group Risk Committee, where Ongoing annual confirmations ensure that staff verify compliance with the
such as anti-bribery, anti-money laundering, and fair competition legislation. • Reputational damage. staff are encouraged to report, without risk, any fraudulent or other activity Code.
Non-compliance could be either accidental or deliberate, and committed either
likely to adversely affect the reputation of the Group.
by our people or sub-contractors who must also abide by the Code. • Loss of accreditation.
Local compliance officers perform due diligence on sub-contractors to check
• Enhanced processes for engagement with suppliers and third parties. that they have signed the Group's Code.
• Erosion of customer confidence.
• Zero-tolerance approach with regard to any inappropriate behaviour by any During 2021, 112 (2020: 99) non-compliance issues were reported through the
• Impact on share price. individual employed by the Group, or acting on the Group's behalf. whistleblowing hotline and other routes. All were investigated, with 19 (2020:
27) substantiated and corrective action taken.
• The Group employs local people in each country who are aware of local
legal and regulatory requirements. There are also extensive internal
compliance and audit systems to facilitate compliance. Expert advice is taken
in areas where regulations are uncertain.
• The Group continues to dedicate resources to ensure compliance with the UK
Bribery Act and all other anti-bribery legislation, and internal policy.
Sustainability • Impact on business continuity due to facilities being damaged or • All our locations are required to maintain robust business continuity This is a new risk for 2021.
inaccessible. plans.
The risk of extreme weather events leading to business interruption.
• Impact on health, safety and wellbeing of our people. • Net Promoter Score ('NPS') customer satisfaction, customer sales trends
and turnaround time tracking.
• Delays in turnaround time.
• We maintain up-to-date asset registers and values alongside our Group
• Customer relationship impacts. Insurance programme.
• Increased costs. • We have an established crisis management procedure.
• Logistical challenges due to redirection of work.
• Impact on revenue and margin.
Financial
Financial risk • Financial losses with a direct impact on the bottom line. • The Group has financial, management and systems controls in place to This risk remains stable compared with 2020.
ensure
Risk of theft, fraud or financial misstatement by employees. • Large-scale losses can affect financial results.
We continue to review and update the CMCs on an annual basis and use them for
that the Group's assets are protected from major financial risks. year-end compliance certification.
On acquisitions or investments, the financial risk or exposure arising from • Potential legal proceedings leading to costs and/or management time.
due diligence, integration or performance delivery failures.
• Adherence to Authorities Grid (which sets approval limits for financial
• Corresponding loss of value and reputation could result in funding being transactions).
withdrawn or provided at higher interest rates.
• Stringent controls on working capital and cash collection.
• Possible adverse publicity.
• Legal, financial and other due diligence on M&A and other investments.
• Monitoring adherence to our CMCs and tracking of remediations by our
compliance and finance controls teams and using our framework of risk
committees.
• A detailed system of financial reporting is in place to ensure that
monthly financial results are thoroughly reviewed. The Group also operates a
rigorous programme of internal audits and management reviews.
Independent external auditors review the Group's half year results and audit
the Group's annual financial statements.
2. Related Parties
Identity of related parties
The Group has a related party relationship with its key management.
Transactions between the Company
and its subsidiaries and between subsidiaries have been eliminated on
consolidation and are not discussed
in this note.
Transactions with key management personnel
Key management personnel compensation, including the Group's Directors, is
shown in the table below:
2021 2020
£m £m
Short-term benefits 9.7 11.6
Post-employment benefits 0.8 0.8
Equity-settled transactions 7.7 10.4
Total 18.2 22.8
More detailed information concerning Directors' remuneration, shareholdings,
pension entitlements and
other long-term incentive plans is shown in the audited part of the
Remuneration report. Apart from the
above, no member of key management had a personal interest in any business
transactions of the Group.
3. Statement of Directors' responsibilities
Statement of Directors' responsibilities in respect of the Financial
Statements
The Directors are responsible for preparing the Annual Report & Accounts
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 UK-adopted international accounting standards
and the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 "Reduced Disclosure Framework", and applicable law).
Under company law, 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 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 UK-adopted international accounting standards have
been followed for the Group financial statements and United Kingdom Accounting
Standards, comprising FRS 101 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 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 keeping adequate accounting records
that are sufficient to show and explain the Group's 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.
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.
Directors' confirmations
The Directors consider that 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 and Company's position and
performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Directors'
Report confirm that, to the best of their knowledge:
- the Group financial statements, which have been prepared in accordance with
UK-adopted international accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit of the Group;
- the Company financial statements, which have been prepared in accordance with
United Kingdom Accounting Standards, comprising FRS 101, give a true and fair
view of the assets, liabilities and financial position of the Company; 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's 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's and Company's auditors are aware of that
information.
The Directors' Report comprising pages 98 to 166 and the Group Strategic
report comprising pages 1 to 61 have been approved by the Board and signed on
its behalf by the Chief Executive Officer.
The Company's 2021 Annual Report & Accounts will be delivered to the
Registrar of Companies in due course and copies of all of these documents may
also be obtained from:
Fiona Evans
Group Company Secretary
Intertek Group plc
33 Cavendish Square
London
W1G 0PS
Registered Number: 4267576
Telephone: +44 (0)20 7396 3400
Contacts
For further information, please contact:
Denis Moreau, Investor Relations
Telephone: +44 (0) 20 7396 3415
investor@intertek.com (mailto:investor@intertek.com)
Ed Bridges, FTI Consulting
Telephone: +44 (0) 20 3727 1000
scintertek@fticonsulting.com (mailto:intertek@fticonsulting.com)
Intertek is a leading Total Quality Assurance provider to industries
worldwide.
Our network of more than 1,000 laboratories and offices in more than 100
countries, delivers innovative and bespoke Assurance, Testing, Inspection and
Certification solutions for our customers' operations and supply chains.
Intertek Total Quality Assurance expertise, delivered consistently, with
precision, pace and passion, enabling our customers to power ahead safely.
intertek.com (http://www.intertek.com)
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