RNS Number : 9141Y
18 May 2021
18 May 2021
Annual Report and Financial Statements and Notice of Annual
General Meeting 2021
Further to the release of its preliminary results announcement
on 14 April 2021, Tesco PLC (the "Company") announces that it has
today published its Annual Report and Financial Statements 2021. In
addition, the Company announces that its Notice of Annual General
Meeting 2021 (the "Notice") has been sent to shareholders. The 2021
Annual General Meeting will be held at our Heart building, Shire
Park, Welwyn Garden City, Herts, AL7 1TW on Friday, 25 June 2021 at
9.30 am (the "AGM").
We recognise the ongoing importance of engaging with investors,
especially during these unprecedented times. In light of the
current UK Government restrictions, we propose to follow a slightly
different format for this year's events. We invite investors to
join a Virtual Shareholder Event on Friday, 18 June 2021 at 2.00pm.
This will allow shareholders to hear from the Board and ask
questions relating to the business of the AGM. During this event,
shareholders will receive presentations from the Group Chair, John
Allan, and the Group Chief Executive, Ken Murphy, on the
performance and activities of Tesco during the past year. This new
event will also allow those shareholders who vote in advance of the
AGM to do so after having heard from the Board. Following the
latest guidance issued by the UK Government, it is not clear
whether all shareholders who may wish to attend the AGM in person
will be able to do so. Therefore, it is proposed that we hold the
AGM with the minimum number of shareholders present (which will be
facilitated by Tesco) as is required under the Company's articles
of association to enable the business of the AGM to be conducted.
Further information and the current arrangements for the AGM can be
found on our website at www.tescoplc.com/AGM2021.
The Company's Annual Report and Financial Statements 2021,
Notice of Annual General Meeting 2021 and Little Helps Plan
Progress Update can be viewed on the Company's website at
In accordance with Listing Rule 9.6.1R, copies of the following
documents have been submitted to the National Storage Mechanism and
will shortly be available for inspection at
-- Annual Report and Financial Statements 2021;
-- Notice of Annual General Meeting 2021; and
-- Proxy Form for the 2021 Annual General Meeting.
The Company's preliminary consolidated financial information and
information on important events that have occurred during the year,
and their impact on the financial statements were included in the
Company's preliminary results announcement on 14 April 2021. That
information, together with the information set out below, which is
extracted from the Annual Report and Financial Statements 2021,
constitute regulated information, which is to be communicated to
the media in full unedited text through a Regulatory Information
Service in accordance with the FCA's Disclosure Guidance and
Transparency Rules ("DTR"), Rule 6.3.5R. This announcement is not a
substitute for reading the full Annual Report and Financial
Statements 2021. Page and note references in the text below refer
to page numbers and note references in the Annual Report and
Financial Statements 2021. To view the preliminary results
announcement, visit the Company's website: www.tescoplc.com .
Enquiries: Robert Welch
Welwyn Garden City
Tel: 07793 222569
LEI Number: 2138002P5RNKC5W2JZ46
Principal risks and uncertainties
Key Elements of our risk management framework
Our established risk management framework enables us to manage
and report the risks that we face as a business. A risk that can
seriously affect our performance, future prospects or reputation is
termed a principal risk.
To manage our risks effectively we have identified a risk
appetite which is driven by the following factors:
- our performance should be competitive, responsible and focused
on creating value for all our stakeholders including customers,
colleagues, suppliers and shareholders;
- our behaviours must be in line with our Code of Business
Conduct to protect and enhance our reputation;
- we aim to operate our business within the capital allocation
framework we have set out; and
- we seek to ensure that our principal risks are effectively managed.
Principal risks are discussed and agreed by Executive management
and the Audit Committee. These risks are cascaded to the business
units (top-down), who manage and report on the principal risks and
any additional significant business unit risks. Business units also
escalate risks as appropriate (bottom-up) to the Executive
Committee. Our regular risk discussions consider emerging risks and
include horizon scanning, which are reported at business unit and
Executive Committee levels.
The principal risks are discussed and evaluated through regular
meetings with senior management. The Board discusses each principal
risk at least annually to provide oversight and ensure they remain
well-managed and relevant.
The seven steps of the risk, controls and assurance framework on
page 31 are embedded within our business as key elements of how we
manage our risks and ensure appropriate controls are in place.
The risk assessment process relies on our evaluation of the
likelihood and impact of risks, and on the development and
monitoring of appropriate internal controls. Risk registers,
detailing the risks we face, are an important component of how we
manage our risks.
We have carried out a robust review of our principal risks,
which includes periodic assessments of the risks we believe could
threaten our business model, future performance, solvency or
The Brexit risk has reduced since last year when there was no
clarity on the long-term trading relationship between the UK and EU
once the transition period expired on 31 December 2020. The new
UK-EU Trade and Cooperation Agreement (TCA) removed the uncertainty
of a no-deal Brexit. While this has reduced the Brexit risk,
uncertainty remains around the full effect of Brexit, how the TCA
will be implemented and how the trading relationship will
We reported the COVID-19 pandemic as a new principal risk last
year, and it remains an elevated risk. The pandemic has had a more
profound impact on economies and people than was then expected.
Uncertainty remains as to whether the recent lockdowns and
vaccination programme are sufficient to bring the pandemic under
control and allow normal life to return and, if so, when. The
impact of the pandemic is also reflected across many of the
principal risks and our mitigation strategies for them.
Climate change has become a widely acknowledged global emergency
and a key priority for governments, businesses and citizens around
the world. While risks relating to climate change and
sustainability have previously been integral parts of several of
our principal risks, we have now included climate change as a
separate principal risk.
Tesco Bank has been through a challenging year due to increased
macroeconomic uncertainty driven by, among others, the COVID-19
pandemic, thereby increasing its risk profile.
During the year, we recognised the potential disruption arising
from the lengthy regulatory processes involved in the sale of our
businesses in Thailand and Malaysia, which was completed in
December 2020. The actions we took to monitor and manage these
risks proved effective.
The following table sets out our principal risks, their movement
during the year, and a summary of key controls and mitigating
factors. They do not include all our risks and they are not set out
in priority order. Additional risks not presently known, or that we
currently deem to be less material, may also have adverse
As part of our continuous improvement approach to risk
management, and aided by the appointment of a new Chief Audit and
Risk Officer in September 2020, we will continue to develop our
methodology and risk framework. This will enhance risk management
in supporting effective decision-making. As part of this, we also
continue to develop and enhance our approach to risk appetite.
Principal risk Risk movement Key controls and mitigating
Failure to adapt The new UK-EU Trade
to the UK's new trading and Cooperation Agreement * We continue to assess and monitor the potential risks
relationship with (TCA) came into effect of Brexit and its impacts on our customers,
the EU, and how it from 1 January 2021, colleagues and shareholders. We are also taking
may develop as further setting out the conditions appropriate mitigation measures to address challenges
agreements are reached for tariff-free trading including logistics, resourcing and supply with clear
or political decisions with the EU and removing oversight by senior leaders and our Brexit Governance
made, results in the uncertainty of Group.
disruption to our a no-deal Brexit.
business, cost inflation The business is impacted
and impacts on our by more cumbersome * Our focus has been on avoiding transportation delays
ability to supply border controls, and bottlenecks. We are also working to ensure the
our customers with goods inspection, accuracy of documentation to avoid waste and to
the products and and customs documentation, ensure we maximise the shelf life of our fresh
at the prices they with the most trade produce by working with our logistics partners.
expect. These and friction being between
any adverse impact Great Britain and
of Brexit on the Northern Ireland * We continue to work closely with Government,
UK economy could and Ireland. The regulatory bodies and industry on implementing the
affect our business, full effect of Brexit TCA, sharing data and analysis to inform
financial results on the business will policymaking.
and operations. emerge as new trade
patterns are established
and the new regulatory
framework is better
The continuing global During the year,
COVID-19 pandemic governments around * The safety and wellbeing of our colleagues and
may have a significant the world introduced customers has been and continues to be our overriding
and prolonged impact emergency public priority. Our Executive Committee is monitoring
on global economic measures, including events closely with regular Board oversight,
conditions, disrupt travel bans, quarantines evaluating the impacts and designing appropriate
our supply chain and public lockdowns. response strategies.
(including our supplier These measures have,
base, specifically to varying degrees,
regarding business been relaxed then * Our teams continue to work tirelessly to implement
closure and consolidation, reintroduced as COVID-19 specific actions to minimise disruption faced by our
labour shortage, transmission subsided customers in these challenging times. This includes
raw material supply before surging again, increasing our retail store colleague headcount (with
and cost inflation), with new variants redeployment of colleagues where possible), securing
increase employee adding to the speed additional supply chain capacity to meet changes in
absences and adversely of transmission. demand, implementing changes to stores (including
impact our operations Vaccines have been hours, additional security, hygiene and social
(including Tesco developed and are distancing measures), and extending support to
Bank). Failure to being rolled out colleagues and customers at increased risk.
adapt to changes with significant
brought about by coverage in our core
this and any future UK market, however * We have developed practices within our stores and
pandemics in our uncertainty remains distribution centres, as well as for office
markets and the as to whether recent colleagues working from home, to help people adapt to
environment lockdowns and the the new ways of working. We have aligned our controls
in which we operate vaccination programme accordingly with appropriate assurance measures in
may adversely affect are sufficient to place.
our competitiveness bring the pandemic
and financial results. under control and
allow normal life * The availability of cash resources and committed
to return and, if facilities, together with our strong cash flow, are
so, when. It is also supporting Tesco's liquidity and longer-term
unclear how the pandemic viability.
will have changed
the environment in
which we operate
and the choices customers
No risk movement
Data security and data privacy
Failure to comply As a retail organisation,
with legal or regulatory we hold a large amount * We put our customers and colleagues at the heart of
requirements relating of personal data all decisions we make in relation to the processing
to data security on customers and of personal data. Our data privacy and protection
and data privacy colleagues. The threat policies clearly set out how we can protect and
in the course of landscape has been appropriately restrict customer, supplier and
our business activities ever-growing while colleague data. Our multi-year technology security
results in reputational we continue to invest programme is driving enhanced data security
damage, fines or in our security and capabilities.
other adverse privacy programmes.
consequences. The move to homeworking
This includes criminal for most office-based * We have an established team in our security
penalties and colleagues during operations centre to detect, report and respond to
consequential the pandemic has security incidents.
litigation which presented its own
may result in an security challenges
adverse impact on and response requirements. * We have a third-party supplier assurance programme
our financial performance focusing on third-party data security and privacy
or unfavourable effects No risk movement risks.
on our ability to
* We have a privacy compliance programme, which
includes assessment and monitoring of risk across our
* There is regular reporting on progress and results of
the security and privacy programmes to governance and
* We recognise the importance of training and
communication to help prevent data security and
privacy-related incidents and have regular induction,
awareness and refresher courses for our colleagues.
* We have next-generation, behaviour-based anti-virus
and malware solutions, data and payment encryption
and threat detection tools that help us reduce the
likelihood of being compromised.
Health and safety
Failure to meet safety The pandemic has
standards in relation presented unique * We have a business-wide, risk-based safety framework
to our workplace challenges for the which defines how we implement and report on safety
results in death safety of our customers controls to ensure that colleagues, contractors and
or injury to our and colleagues. It customers have a safe place to work and shop.
customers, colleagues, has driven the need
or third parties, for rigorous risk
or in damage to our assessment, the rapid * We require each business to maintain a comprehensive
operations and leads rollout of new ways risk register and safety improvement plan to document
to adverse financial of serving customers and track enhancements.
and reputational and of working for
consequences. colleagues, clear
communication, and * Governance and oversight are established in the form
close attention to of our Group Risk and Compliance Committee and
and compliance with business unit-specific health and safety committees.
Government pronouncements. These committees review critical metrics and monitor
the effectiveness of related controls.
No risk movement
* Our safety audits, whistleblowing arrangements and
the results of our annual colleague surveys inform
management on the delivery of targeted safety
initiatives, including communication plans.
* Our assurance activities, such as store and
distribution compliance reviews, safety health checks
and audits, help us assess our compliance with
established policies and processes. They enable us
continuously to seek and identify areas for potential
Climate change has Climate change has
the potential to become a widely * Our Little Helps Plan on pages 12 to 16 sets out our
change dramatically acknowledged ambitions and action plans for addressing climate
the world in which global emergency, change. The Board's Corporate Responsibility
we live and operate, moving from an emerging Committee provides governance and oversight.
and tackling climate risk to a principal
change, by taking risk for the business.
measures to limit * We have established a number of metrics with
its impact to manageable New risk appropriate management oversight and governance
levels, has become mechanisms to enable us to monitor progress. We are
a key priority for working with third-party organisations to continue
governments, businesses developing this suite of metrics. There is a level of
and citizens around external assurance over the metrics, and we are
the world. Even if working to further enhance and extend this.
manageable, the effect
of climate change
will be quite profound, * We seek to align our climate-related ambitions with
and these measures our financial policies and have launched our first
will themselves have sustainability-linked bond. We have also extended our
a significant impact climate-related financial disclosures.
on economies and
the choices people
make. Climate change
has, therefore, moved
from an emerging
risk to a principal
risk for the business.
Responsible sourcing and supply chain
Failure to meet product The pandemic (and
safety standards to an extent contingency * Our product standards, policies and guidance help
results in death, planning for Brexit) ensure that products are safe, legal and of the
injury or illness put significant stress required quality. They cover food and non-food, as
to customers. Failure on our supply chain well as goods and services not for resale.
to ensure that products during the year.
are sourced responsibly Surges in demand
across our supply placed pressures * We have policies and guidance to help ensure human
chain (including on supply, and some rights are respected and environmental impacts are
fair pay for workers, suppliers were unable responsibly managed. These include a focus on
adhering to human to maintain operating appropriately monitoring conditions and progress,
rights, clean and capacity. We have tackling endemic sector risks and addressing wider
safe working environments, also had to adopt community needs.
meeting climate change new approaches to
and sustainability our technical and
commitments) and supplier audits to * We run colleague training programmes on food and
that all social and ensure our standards product safety, responsible sourcing, hygiene
environmental standards have been met. We controls, and also provide support for stores. We
are met, results have continued to also provide targeted training for colleagues and
in supply chain drive our environmental suppliers dealing with specific challenges such as
disruption, agenda, including modern slavery.
regulatory breaches, actions relating
and reputational to deforestation
impacts of not meeting and animal welfare. * Our crisis management procedures are embedded within
societal expectations. operations to quickly resolve issues if non-compliant
No risk movement products are produced or sold with clear escalation
* We operate supplier audit and product analysis
programmes to monitor product safety, traceability
and integrity, human rights and environmental
standards. They include unannounced audits of
suppliers' sites and facilities.
Competition and markets
Failure to deliver We continue to face
an effective, coherent the challenges of * Our Board develops and regularly challenges the
and consistent strategy a changing competitive strategic direction of our business to enhance our
in response to our landscape and price ability to remain competitive on price, range and
competitors and changes pressures across service. This includes developing our online channels
in market conditions our markets. Our and multiple formats to allow us to compete in
result in a loss strategies are different markets.
of market share and well-developed
profitability. and we review them
regularly to remain * Our Executive Committee and operational management
competitive and informed regularly review markets, trading opportunities,
by competitor and competitor strategy and activity.
No risk movement * We carry out market scanning and competitor analysis
to refine our customer proposition.
Failure to achieve There has been ongoing
our transformation delivery of key programmes * We have clear market strategies and business plans to
objectives due to to meet our transformation address changes to business priorities, strategic
poor prioritisation, objectives while objectives and external market factors.
ineffective change we continue to push
management and a forward with new
failure to understand initiatives. * We have executive-level governance and oversight for
and deliver the technology all activities to ensure programmes are adequately
required, results No risk movement resourced, milestones achieved, and key rollout
in an inability to decisions approved.
quickly to maintain
a competitive cost * Real-time independent assurance activities are
structure and generate conducted during the transformation programme.
sufficient cash to
meet business objectives.
Political, regulatory and compliance
Failure to comply Long-term changes
with legal and other in the global political * Wherever we operate, we aim to ensure that we
requirements in an environment and societal incorporate the impacts of political and regulatory
increasingly restrictive expectations are changes in our strategic planning and policies.
regulatory environment leading to greater
due to changes in regulation of business
the global political and potential penalties. * We have compliance programmes and committees to
landscape, results In some markets, manage our most important risks (e.g. anti-bribery
in fines, criminal regulations can result and competition law) and we conduct assurance
penalties for Tesco in favouring local activities for each key risk area.
or colleagues, companies.
litigation and an No risk movement * Our Code of Business Conduct and various policies
adverse impact on (e.g. gifts and entertainment, conflicts of interest)
our reputation, financial are supported by new starter and annual compliance
results, and/or our training and other tools such as our whistleblowing
ability to do business. hotline.
* The engagement of leadership and senior management is
critical to the successful management of this risk
area. We have established structured communication
plans to provide a clear tone from the top.
Failure of our IT Dependence on technology
infrastructure or continues to grow * Our multi-year programme continues to enhance our
key IT systems results throughout the Group. technology infrastructure and resilience
in a loss of information, We continue to improve capabilities. This involves significant investment in
inability to operate our technology environment our hosting strategy, partnering with cloud providers
effectively, financial and invest in disaster and re-engineering some of our legacy retail systems,
or regulatory penalties, recovery and business while building redundancy for key business systems.
and negative impacts continuity, which
on our reputation. are helping manage
Further, failure our exposure to external * Our investment in data centre facilities is providing
to build resilience threats. greater resiliency and oversight for our key systems.
at the time of investing
in and implementing No risk movement
new technology results * Our technology security programme continues to
in potential loss enhance our information security capabilities,
of operating capability. thereby strengthening our infrastructure and
information technology general controls.
* We have combined governance processes to ensure
alignment between our technology disaster recovery
and business continuity activities.
Failure to attract, Market competition
retain and develop for key leadership * Our talent planning and people development processes
the required capability and specialist talent are established across the Group.
and to embed our remains strong. The
values in our culture year has also presented
results in an impact significant people * Talent and succession planning are regularly
on the delivery of challenges in supporting discussed by line management and the Executive
our purpose and business vulnerable colleagues, Committee, with regular oversight by the Nominations
performance. recruiting and training and Governance Committee and the Board.
huge numbers of new
permanent and temporary
colleagues, supporting * We have clear potential and performance criteria and
the shift to homeworking talent principles, underpinned by our employer value
for most office-based proposition and strategy.
our culture and driving
our diversity and * An independent assessment of all leadership-level
inclusion programmes promotions and external hires is conducted to ensure
harder. capability, potential, leadership and values.
No risk movement
* The Remuneration Committee agrees the objectives and
remuneration arrangements for senior management.
* Our 'how to' and 'when to' speak up programmes across
all areas include our protector line and complaints
process. These allow colleagues to raise in
confidence any workplace concerns such as dishonest
activity, bias or something that endangers colleagues
the public or the environment.
* Our established Group Diversity and Inclusion
strategy ensures that everyone is welcome and that we
provide all our colleagues with equal opportunities
for growth and development. This is embedded in our
values, and we are committed to building an inclusive
Uncertainties (including There remains considerable
the pandemic and uncertainty as to * We have a value, price, promotions and Clubcard
the effects of Brexit) the further impact strategy that drives our business priorities with
and macroeconomic on the economy and governance and oversight mechanisms.
conditions impact employment from the
our customers' budgets pandemic and on
and force customers households. * We have a consistent approach to building impactful
to reappraise the Also, the full effects customer propositions, offering high-quality and
concepts of value of Brexit on the competitive value while improving the customer
and loyalty in a economy in the short experience.
way to which we are and longer term are
unable to respond. unclear. However,
we feel we have the * We undertake Group-wide customer insight analysis to
right strategies improve our propositions by understanding and
and processes in leveraging trends around customer behaviour,
place to monitor expectations and experience across the different
this risk and manage parts of the business.
it as far as circumstances
will allow. The pandemic
has seen a significant * We have well-established product development and
shift in consumer quality management processes, which keep the needs of
demand for online our customer central to our decision-making.
shopping which led
us to significantly
increase our capacity. * We monitor the effectiveness of our processes by
regularly tracking our business and competitors
No risk movement against measures that customers tell us are important
to their shopping experience.
Brand, reputation and trust
Failure to create There has been widespread
brand reappraisal recognition of the * Our Group policies, procedures and our Code of
opportunities to steps we took to Business Conduct set out the detailed expectations
improve quality, feed the nation while and behaviours that enable us to make the right
value and service keeping customers decisions for our customers, colleagues, suppliers,
perceptions, as well and colleagues safe communities and investors.
as meet societal during the year,
expectations in relation prioritising vulnerable
to climate and customers and providing * We listen to our customers and stakeholders as part
sustainability, support for local of our communication and engagement programmes. We
results in a negative communities around reflect their needs in our plans, which include
impact on the trust the country. We are, health, community, sourcing, climate and
which our communities however, very aware sustainability initiatives.
and stakeholders that hard-won reputations
place in our brand. can be quickly lost,
and we continue to * The Board's Corporate Responsibility Committee
implement initiatives oversees all corporate responsibility activities and
and activities aligned initiatives, including climate and sustainability
to our strategic programmes, to ensure alignment with customer
priorities to continue priorities and our brand strategy.
to build and maintain
No risk movement * We continue to use the advice of specialist external
agencies and our in-house marketing expertise to
maximise the value and impact of our brand.
Tesco Bank is exposed The pandemic has
to a number of risks, resulted in lower * The Bank has a formal structure for reporting,
the most significant trading activity, monitoring and managing risks. This comprises, at its
of which are operational, lending balances highest level, the Bank's risk appetite, approved by
regulatory, credit, and income in the the Bank Board and supported by the risk management
funding, liquidity, Bank and increased framework.
market and business provisions for expected
risk. credit losses, reflecting
forecast unemployment, * The Tesco PLC Board also reviews and approves the
resulting in a loss Bank's financial risk appetite. Risk appetite defines
for the year. The the type and amount of risk that the Bank is prepared
Bank continues to to accept to meet its strategic objectives. It forms
actively manage the a link between the day-to-day risk management of the
risks to which it business and its strategic priorities, long-term plan
is exposed and maintains ,
significant regulatory capital planning and stress-testing. Adherence to
capital. While the risk appetite is monitored monthly.
overall risks facing
the Bank are similar
to that of a year * The risk management framework brings together
ago, the risk profile governance, risk appetite, the three lines of defence
is judged to have ,
increased, reflecting the policy framework and risk management tools to
the uncertainty as support the business in managing risk as part of its
to the timing and day-to-day activities. The framework includes
strength of a recovery scenario analysis and regular stress-testing of
in the economy on financial resilience.
which the financial
performance of the
Bank relies. * There is Bank Board risk reporting throughout the
year, with updates to the Tesco PLC Audit Committee
Risk increasing provided by the Bank's Chief Financial Officer and
Audit Committee Chairman. A member of the Tesco PLC
Board or Executive Committee is normally a member of
the Bank's Board to enhance visibility and knowledge
Failure of our business Tesco Group has traded
performance to deliver robustly overall * We maintain an infrastructure of systems, policies
cash as expected; through the pandemic and reports to ensure discipline and oversight on
access to funding and the injection liquidity matters, including specific treasury and
markets or facilities of GBP2.5bn from debt-related issues.
being restricted; the proceeds of the
failures in operational sale of our Asia
liquidity and currency business has greatly * Our treasury policies are regularly reviewed by
risk management; reduced the prospect management, the Executive Committee and the Board.
Tesco Bank cash call; of having to make
or adverse changes further pension deficit
to the pension deficit contributions in * The Group's funding strategy is approved annually by
funding requirement the future. The Group the Board and includes maintaining appropriate levels
create calls on cash has maintained an of working capital, undrawn committed facilities and
higher than anticipated, Investment Grade access to the capital markets.
leading to impacts rating from the credit
on financial performance, rating agencies,
cash liquidity or and maturing bonds * We regularly review liquidity levels and sources of
the ability to continue and the revolving cash, and we maintain access to committed credit
to fund operations. credit facilities facilities and debt capital markets.
No risk movement * We have a long-term funding framework in place for
the pension deficit and there is ongoing
communication and engagement with the Pension
* While recognising that Tesco Bank is financially
separate from Tesco PLC, we continue to monitor the
activities of Tesco Bank that could give rise to
risks to Tesco PLC.
* The Audit Committee reviews and annually approves our
viability and going concern statements and reports
into the Board.
Indicates that the principal risk has been included as part of
the longer-term viability scenarios as detailed on pages 38 and
The key elements of the Group's internal control framework are
monitored throughout the year and the Audit Committee has conducted
a review of the effectiveness of the Group's risk management and
internal control systems on behalf of the Board. To support the
Board's annual assessment, Group Risk and Audit prepared a report
on the Group's principal risks and internal controls. This
describes the risk management systems and key internal controls, as
well as the work conducted in the year to improve the risk and
control environment, including the level of assurance undertaken.
The internal control framework is intended to effectively manage
rather than eliminate the risk of failure to achieve our business
objectives. It can only provide reasonable, but not absolute,
assurance against the risk of material misstatement or financial
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and International
Financial Reporting Standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. The Group
Financial Statements are also prepared in accordance with IFRS as
issued by the International Accounting Standards Board. The
Directors have also chosen to prepare the Parent Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law), including Financial Reporting Standard (FRS) 101
Reduced Disclosure Framework. Under company law the Directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that
In preparing the Parent Company financial statements, the
Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
- properly select and apply accounting policies;
- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
- provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are responsible
for the maintenance and integrity of the corporate and financial
information included on the Company's website. Legislation in the
United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions. Each of the serving Directors, whose names and
functions are set out on pages 42 to 46, confirm that, to the best
of their 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 and
performance, business model and strategy.
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