ANNUAL
REPORT &
ACCOUNTS
2022
6
Group at a Glance
8
Chair’s Statement
10
Group Chief Executive
Officer’s Statement
WE ARE
SENIOR
We are an international, market-leading,
engineering solutions provider with
26 operating businesses in 12 countries.
OUR PURPOSE
We help engineer the transition to a sustainable world for
the benefit of all our stakeholders.
We do this by:
• Using our technology expertise in fluid conveyance and
thermal management to provide safe and innovative
products for demanding applications in some of the
most hostile environments.
• Enabling our customers, who operate in some of the
hardest-to-decarbonise sectors, to transition to low
carbon and clean energy solutions.
• Staying at the forefront of climate disclosure and
action by ensuring our own operations achieve our
Net Zero commitments.
16
Sustainability
40
Investment Case
44
Technology
72
Divisional Review:
Aerospace
76
Divisional Review:
Flexonics
84
Governance
Financial Highlights
Non-Financial Highlights
Group at a Glance
Chair’s Statement
STRATEGIC REPORT
IFC Our Purpose
2
3
6
8
10 Group Chief Executive Officer’s Statement
14 Market Overview
16 Sustainability
20
Our Technology and Product
Development on the Road to Net Zero
Environment
22
TCFD
26
Social
32
36
Governance
38 Our Business Model
40
Investment Case
42 Strategic Priorities
44 Technology
46
48
50 Stakeholder Engagement
56 Section 172 Statement
58 Key Performance Indicators
60 Risks and Uncertainties
72 Divisional Review – Aerospace
76 Divisional Review – Flexonics
78 Financial Review
82 Viability Statement
Our Technology Themes
Our Enabling Technology
GOVERNANCE
86 Chair’s Governance Letter
89 Board at a Glance
90 Board of Directors
94 Executive and HSE Committees
95 Report of the Directors
97 Nominations Committee Report
100 Audit, Risk and Internal Control
102 Audit Committee Report
108 Remuneration Committee Report
111 2022 Remuneration Report at a Glance
113 Remuneration Report: Policy
119 Annual Report on Remuneration
129 Statement of Directors’ Responsibilities
130 Independent Auditor’s Report to the
Members of Senior plc
FINANCIAL STATEMENTS
140 Consolidated Income Statement
141 Consolidated Statement of
Comprehensive Income
142 Consolidated Balance Sheet
143 Consolidated Statement of Changes
in Equity
144 Consolidated Cash Flow Statement
145 Notes to the Consolidated
Financial Statements
184 Company Balance Sheet
185 Company Statement of Changes in Equity
186 Notes to the Company Financial
Statements
192 Five-year Summary
ADDITIONAL INFORMATION
194 Group Undertakings
196 Additional Shareholder Information
197 Officers and Advisers
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
1
STRATEGIC REPORT / FINANCIAL HIGHLIGHTS
HIGHLIGHTS
FINANCIAL
HIGHLIGHTS
Revenue
+29%
£848.4m
2021 – £658.7m
Adjusted profit before tax(2)
£20.1m
2021 – £(1.9)m loss
Adjusted operating margin(1)
+250 bps
3.4%
2021 – 0.9%
Profit before tax
£22.4m
2021 – £23.7m
Adjusted earnings per share(3)
Basic earnings per share
4.36p
2021 – 0.17p
Return on capital employed(4)
+370 bps
4.7%
2021 – 1.0%
Free cash flow(5)
£27.7m
2021 – £14.0m
4.86p
2021 – 5.82p
Dividend per share
1.30p
2021 – nil p
Net debt(5)
£26m increase
£178.9m
2021 – £153.1m
Adjusted operating profit and adjusted profit/loss
before tax are stated before £4.2m net restructuring
income (2021 – £4.4m) and £0.2m amortisation of
intangible assets from acquisitions (2021 – £nil).
Adjusted profit/loss before tax is also stated before
costs associated with corporate undertakings of £1.7m
(2021 – £21.2m income). In 2021, Adjusted earnings
per share is also stated before exceptional non-cash tax
credit of £0.6m.
EBITDA is defined as adjusted profit/loss before tax,
and before interest, depreciation, amortisation, and
profit or loss on sale of property, plant and equipment.
It also excludes EBITDA from businesses which have
been disposed and includes 12 months EBITDA for
businesses acquired and it is based on frozen GAAP
(pre-IFRS 16). This measure is used for the purpose of
assessing covenant compliance and is reported to the
Group Executive Committee.
(1) Adjusted operating margin is the ratio of adjusted
operating profit to revenue. A reconciliation of adjusted
operating profit to operating profit is shown in Note 9.
(2) A reconciliation of adjusted profit/loss before tax to
profit before tax is shown in Note 9.
(3) A reconciliation of adjusted earnings per share to basic
earnings per share is shown in Note 12.
(4) See page 59 for the derivation of return on capital
employed.
(5) See Notes 32b and 32c for the derivation of free cash
flow and of net debt respectively.
The US Dollar exchange rate applied in the translation of
revenue, profit and cash flow items at average rates for
2022 was $1.24 (2021 – $1.38). The US Dollar exchange
rate applied to the balance sheet at 31 December 2022
was $1.21 (31 December 2021 – $1.35).
Cautionary statement
The Annual Report & Accounts 2022 contains certain
forward-looking statements. Such statements are made
by the Directors in good faith based on the information
available to them at the date of this Report and they
should be treated with caution due to the inherent
uncertainties underlying any such forward-looking
statements.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NON-FINANCIAL
HIGHLIGHTS
CDP
(climate disclosure project)
A
(2021 A-)
Leadership rating “Implementing best practices”
Total Scope 1 and 2 Carbon Dioxide Emissions
(tonnes CO2 equivalent emitted)
44,878 tonnes
2021 – 46,540 tonnes
(Scope 1, Scope 2 – market based)
Lost time injury rate
(per 100 employees)
0.38
2021 – 0.32
Waste recycled
94.8%
2021 – 93.1%
Women in leadership – Board of Directors
Women in leadership – Executive Committee
55%
2021 – 50%
29%
2021 – 38%
Global Employee Opinion Survey
(percentage of employees completing the survey)
Ethics
(percentage of employees who completed Annual Code
of Conduct Training)
81%
2021 – 81%
94%
2021 – 94%
Read more about the progress we are making on our
purpose on pages 8, 11, 12, 16, 18, 20 & 42
Read more about our people and culture on pages 18,
34, 39, 42 & 51
Read more about our investment case
on page 40
Read more about our strategic priorities on page 42
Read more about how we are performing in
Aerospace on page 72
Read more about how we are performing in Flexonics
on page 76
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
3
STRATEGIC REPORT /
STRATEGIC
REPORT
IN THIS SECTION
“Senior has continued to make good strategic,
operational and financial progress, with
strong delivery across the Group, in 2022.”
David Squires
Group Chief Executive Officer
Group at a Glance
Chair’s Statement
6
8
10 Group Chief Executive Officer’s Statement
14 Market Overview
16 Sustainability
20
Our Technology & Product Development
on the road to Net Zero
Environment
22
TCFD
26
Social
32
36
Governance
38 Our Business Model
40
Investment Case
42 Strategic Priorities
44 Technology
46
48
50 Stakeholder Engagement
56 Section 172 Statement
58 Key Performance Indicators
60 Risks and Uncertainties
72 Divisional Review – Aerospace
76 Divisional Review – Flexonics
78 Financial Review
82 Viability Statement
Our Technology Themes
Our Enabling Technology
Intermediate Case (IMC) for
Aerospace Turbine Engine
A modern turbofan engine is
a highly complex assembly
of stationary and rotating
components. Various casings
are fundamental structural
components of the engine core,
and as such, have complicated
geometries with thousands of
very close-tolerance features.
Very few suppliers have the
technical competence to be
strategic suppliers of casings
to major engine OEMs.
Ducting
4
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Bellows
Every aircraft has hundreds, if
not thousands of bellows used
extensively in expansion joints,
actuators, mechanical seals,
exhaust systems, manifolds,
fluid management devices
(i.e. accumulators, volume
compensators and reservoirs).
These critical components absorb
vibration, compensate for both
lineal and radial movements,
absorb thermal expansion and
contraction and precisely
measure movement.
These bellows come in all
variety of shapes including
circular, rectangular and even
oval shaped bellows in a single
or multi-ply configuration.
Business Class Seat Frames
Every long-haul airline regards
its business class seats as its
premium offering. As airlines
realised that passengers were
requiring seats that easily
convert into lie-flat beds, the seat
manufacturers updated their old
designs with both minor and major
changes. The exact specifications
change not only from one airline
to another, but also from one
aircraft type to another. In addition,
some airlines will have one type
of seat on one aircraft variant,
and a completely different type
on another.
Flexibility in manufacturing
multiple designs is paramount
to competitiveness.
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Ducting
In order for people to be able
to withstand the extreme
temperatures and pressures
encountered in flight, aerospace
ducting facilitates the distribution
of critical fluids and air throughout
the aircraft, thus ensuring proper
temperature regulation, ventilation,
humidity, and/or containment
control, anti-icing and
noise attenuation.
Modern flight would not be
possible without high- and
low-pressure ducting throughout
the aircraft.
Ducting
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
5
GROUP AT A GLANCE
OUR PURPOSE
We help engineer the transition
to a sustainable world for the
benefit of all our stakeholders
WE DO THIS BY:
• Using our technology expertise in fluid conveyance and thermal
management to provide safe and innovative products for demanding
applications in some of the most hostile environments.
• Enabling our customers, who operate in the hardest-to-decarbonise
sectors, to transition to low carbon and clean energy solutions.
• Staying at the forefront of climate disclosure and action by ensuring
our own operations achieve our Net Zero commitments.
AEROSPACE
Providing high technology products
and systems for demanding
applications in civil aerospace &
defence and adjacent markets.
The Aerospace portfolio spans
a wide range of fluid conveyance
and thermal management
components and sub-systems,
as well as complex structural parts
and assemblies, for fixed-wing
and rotary aircraft, aero-engines,
spacecraft and a variety of other
industrial applications.
Read more about Aerospace on page 72
65%
(2021 – 66%)
Civil Aircraft
Military/defence aerospace
Other aerospace division
40%
14%
11%
Fluid conveyance systems
Design and manufacture:
• high-pressure and low-pressure ducting
systems (metal and composite)
Gas turbine engines
• Precision-machined and fabricated engine
components (rotating and structural)
• Fluid systems ducting and control products
• control bellows, sensors and assemblies
Read more on pages 44 to 49
Structures
• Precision-machined airframe components
and assemblies
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
STRATEGIC REPORT / GROUP AT A GLANCE OUR PEOPLE WORLDWIDE
North America
42%
UK and Europe
34%
Asia
21%
Rest of the world
3%
OUR VALUES
“Our Core Values
underpin our culture.”
David Squires
Group Chief Executive Officer
Worldwide
operating
businesses
Countries
26
12
Read more about our values on page 38
Read more about our people and culture on page 34
FLEXONICS
Providing high technology products
and systems for demanding
applications in land vehicle, power
& energy and adjacent markets.
The Flexonics portfolio spans a
wide range of fluid conveyance
and thermal management
components & sub-systems,
as well as complex precision-
machined parts, for conventional
and advanced land vehicle
propulsion systems,
petrochemical, renewable
energy and a variety of other
industrial applications.
Read more about Flexonics on page 76
35%
(2021 – 34%)
Land vehicles
Power and energy
19%
16%
Land vehicle emission control
• Exhaust gas recycling coolers
• Fuel mixing and distribution systems
• Flexible couplings
Industrial process control
Design and manufacture:
• Engineered expansion joints, dampers
and diverters
• Flexible hose assemblies and
control bellows
• Fuel cells and heat exchangers
• Precision-machined components
Read more on pages 44 to 49
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
7
STRATEGIC REPORT / GROUP AT A GLANCE STRATEGIC REPORT / CHAIR’S STATEMENT
CHAIR’S STATEMENT
CONTINUED RECOVERY
AND GROWTH DURING
A CHALLENGING YEAR
“We remain confident in delivery
of our strategy and that it will
maximise value for shareholders,
as our markets recover, over the
medium term.”
Ian King
Chair
• Staying at the forefront of climate disclosure
and action by ensuring our own operations
achieve out Net Zero commitments.
What Senior offers is pivotal technologies
for emissions reduction and environmental
efficiency; capabilities that continue to be highly
relevant as the world transitions towards a low
carbon economy. Our continued investment in
the right technologies ensures that we not only
provide solutions for today’s challenges but
equally for future requirements.
Our strategy and our positioning in attractive
and structurally resilient core markets, combined
with sector-leading sustainability credentials
and highly relevant technical capabilities,
delivers a strong financial recovery across
both Aerospace and Flexonics Divisions.
With markets recovering, we will continue
to see improving profitability through volume
related operating leverage, while managing
inflationary impacts through our focus on
cost and pricing management.
We are a well-capitalised Group, with
intrinsically strong cash flows and operating
businesses that have capacity to benefit from
end market recoveries. The Group maintains a
strong financial position and the balance sheet
remains robust, further enhanced by the
renewal of the UK revolving credit facility and
the well-funded nature of the UK pension plan.
The Board continues to review the portfolio
within the Group, understanding the importance
of considered and effective capital deployment
to maximise shareholder value creation.
Expanding Senior’s high-quality fluid
conveyance and thermal management
businesses remains an ongoing priority.
Investments are supported by a business case
and are assessed using a rigorous investment
appraisal process.
The Board is confident in our strategy and that it
will deliver enhanced value for all stakeholders.
Overview
Our consistent resolute approach to managing
the effects of significant external factors
continued through 2022 and enabled us to
deliver a strong operational and financial
performance in the year. We continued to
contend with the effects of the pandemic and
the disruption and deglobalisation of the supply
chain was also exacerbated by the conflict in
Ukraine and the consequent energy crisis.
The resulting major inflationary pressures across
our cost base continue to be managed diligently
and proactively by the business, whilst also
recognising the impact that the pressures
have on the cost of living for our employees.
Once again, the operating businesses under
David and Bindi’s leadership have risen to the
occasion and delivered significantly improved
profitability during the period, exceeding market
expectations. Attractive and structurally resilient
core markets, evidenced by increasing
production volumes in both Aerospace and
Flexonics, underpinned a Group revenue growth
of 29% and a healthy order intake. The book to
bill ratio of 1.24 is strong.
The Group’s strategy continues to be compelling
and along with our well-capitalised businesses
provides a solid foundation to support our future
growth aspirations. The acquisition of Spencer
Aerospace is a very considered step in this
direction. Spencer’s capabilities in highly
engineered, high-pressure hydraulic fluid fittings
for use in commercial and military aerospace
applications have strong synergies with Senior’s
existing fluid conveyance business; the
opportunities for further growth in this sector
are exciting.
The Board revisited Senior’s Purpose this year
and aligned it further with our ongoing strategy.
Our renewed Purpose is "we help engineer the
transition to a sustainable world for the benefit
of all our stakeholders". We do this by:
• Using our technology expertise in fluid
conveyance and thermal management to
provide safe and innovative products for
demanding applications in some of the
most hostile environments.
• Enabling our customers, who operate in the
hardest-to-decarbonise sectors, to transition
to low carbon and clean energy solutions.
8
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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The Corporate Governance Report pages 86
to 129 explains how the Board sets the tone
and takes the lead on governance matters.
We continue to ensure the health, well-being
and safety of our employees is a priority and
that our operations conduct themselves with
integrity and in an ethical, sustainable and
socially responsible manner.
Stakeholder Engagement
The Board continues to focus on our
responsibility to all of Senior’s stakeholder
groups – our employees, customers, suppliers,
communities and shareholders. We believe that
engaging with our stakeholders is key to the
long-term success of the Group.
In 2022, the Group increased its engagements
with shareholders, both by the Executive team,
the Group Chair and the Chair of the
Remunerations Committee, through a diverse
and tailored range of channels.
This year we launched our second Global
Employee Opinion Survey. We had excellent
participation and engagement, and feedback
was positive, valuable, and constructive. Celia
Baxter, together with our Group HR Director,
Jane Johnston, participated in 19 employee
engagement focused groups with four of our US
operating businesses and our German business.
Feedback from the meetings was provided to
local Management, the Executive Leadership
Team and to the Company’s Board of Directors,
who were given the opportunity to ask
questions on the findings.
Looking forward
Our compelling strategy and positioning in
attractive and structurally resilient core markets,
combined with our sector leading sustainability
credentials and highly relevant technical
capabilities, underpins our commitment to
continuing to deliver a strong recovery across
our Aerospace and Flexonics Divisions, which
in turn will deliver enhanced value for
our stakeholders.
As we enter 2023, we will continue to focus
on delivering good strategic, operational, and
financial progress. We remain on track to drive
the Group ROCE to a minimum of 13.5% in line
with our previously stated ambition.
On behalf of the Board, I would like to thank all
of our people for their substantial contribution
to Senior over the last year. I would also like to
extend this to all of our stakeholders for their
continued support.
Ian King
Chair
STAKEHOLDER
ENGAGEMENT
The success of the Group is enabled by mature
and progressive engagement with all of our
stakeholders. A key priority for the Group is
ensuring that their viewpoints are fully considered
when assessing the impact of our decisions
and strategies.
Pages 50 to 57 explain more on this
SUSTAINABILITY
REPORT
A commitment to sustainability underpins our
purpose, and is a key objective of the Executive and
the Board. Our programme is well defined and being
delivered. Our progress is measured by metrics,
targets and an annual scorecard.
To find out more on our sector leading
sustainability programme read pages 16 to 37.
Our performance
In 2022, the Board and the Executive team
continued to make good strategic, operational,
and financial progress. With strong delivery
across the Group, we significantly improved
profitability, generated excellent free cash
flow and further strengthened of our
balance sheet.
Group revenue increased 29% to £848.4m,
with growth in both divisions. Our adjusted
operating profit increased to £28.5m which
resulted in the Group’s adjusted operating
margin increasing by 250 basis points,
to 3.4%.
We generated an excellent free cash inflow
of £27.7m. The Group’s financial position
remains robust, with a healthy balance sheet
and period end net debt to EBITDA of 1.47x,
after taking into account the consideration
for the acquisition of Spencer Aerospace.
In line with the Board’s decision from earlier in
the year to reinstate dividends, and reflecting
confidence in the Group’s performance,
financial position and future prospects, the
Board is proposing a final dividend of 1.00
pence per share (2021 – nil pence). This would
bring total dividends, paid and proposed for
2022 to 1.30 pence per share. The Board will
continue to follow a progressive dividend
policy reflecting earnings per share, free cash
flow generation, market conditions and
dividend cover over the medium term.
Our sector leading
sustainability credentials
Our Purpose underpins our commitment to
sustainability. The Board continues to recognise
the importance of adopting a bold and
comprehensive sustainability programme.
We firmly believe that our leadership in this
area provides a distinct commercial competitive
advantage as the world transitions to a low
carbon economy. Sustainability remains an
integral part of our strategy, embedded within
the behaviours of our people and the culture
of our organisation.
In 2022, we have again made good progress
with our key sustainability metrics and activities.
We were awarded the top ‘A’ score by CDP
in its global annual ranking for transparency
on climate change, putting us in the top 2%
of disclosing companies. We were the only
Aerospace and Defence company to achieve an
A rating in 2022. In addition, we have submitted
our Long Tern Net Zero Targets to the Science
Based Targets Initiative for validation. The
targets, to be achieved by 2040, are aligned to
keep global warming to 1.5 degrees centigrade,
the most ambitious goal of the Paris Agreement.
The Sustainability Report on pages 16 to 37
explains how Senior has achieved significant
improvement against our non-financial targets
in 2022.
Our Board
I remain confident we have a cohesive, diverse
and high performing Board in place to work with
the Executive Leadership Team to implement
the Company’s strategy. The non-executive
Directors continued to bring very strong, broad,
professional and complementary qualities to the
Board in 2022, and I look forward to continue
working with the Board in 2023 to deliver
long-term sustainable growth.
As previously highlighted, this year we thank
Celia Baxter and Giles Kerr for their tenure as
highly valued members of the Board; having
reached their nine-year anniversaries on the
Board in 2022, in order to ensure a suitable
transition period with their successors, it was
agreed they remain in office until the conclusion
of the 2023 AGM. Mary Waldner and Barbara
Jeremiah, having joined the Board at the end of
2021 and the beginning of 2022 respectively,
have been given a full and comprehensive
induction programme and are now fully
established members of the Board.
The Board has completed a comprehensive
externally conducted Board evaluation during
2022. The Board was found to be functional,
effective, engaged and motivated and with
clear progress being made against prior actions.
Non-Executive Director (NED) succession
had been handled smoothly and it was agreed
that the process should be extended to hire
an additional NED with relevant industrial and
business experience aligned to our strategy.
The Board is to also review the structure of the
Board meetings schedule and agenda to ensure
more time is allocated on the agenda to achieve
debate and engagement. To find more detail on
these improvements, please refer to page 99 in
the Governance section.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
9
STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT
GROUP CHIEF EXECUTIVE
OFFICER’S STATEMENT
STRONG RESULTS AS
RECOVERY CONTINUES
Overview of 2022 results
Senior has continued to make good strategic,
operational, and financial progress, with strong
delivery across the Group reflected in
significantly improved profitability, excellent free
cash flow generation and further strengthening
of our balance sheet.
With commercial aerospace markets recovering
and other important end markets remaining
buoyant, we saw order intake increase and
a book to bill ratio of 1.24 for the Group,
which underpins our confidence in continued
growth in 2023 and beyond. Both divisions
recorded good order intake demonstrating
the broad, diversified, and high-quality nature
of our business.
Senior’s Purpose is "we help engineer the
transition to a sustainable world for the benefit
of all our stakeholders." Our strategic focus and
industry-leading expertise in fluid conveyance
and thermal management technology was
enhanced by the acquisition of Spencer
Aerospace in November 2022. Additionally,
we made good progress on our technology
roadmap with many new products in
development and significant technology and
engineering milestones achieved: for example,
the development of the bleed air system for the
supersonic X-59 flight demonstrator utilising
our advanced additive manufacturing capability.
(This is discussed further in the Technology
section on page 48.)
In our Post-close Trading Update on 24 January
2023, we reported a strong end to the year with
outperformance in the Flexonics Division and
the Aerospace Division performing in line with
expectations. During 2022, Group revenue
increased 20% on a constant currency basis
to £848.4m, with growth in both divisions.
The year-on-year increase reflected the ongoing
recovery in our core markets as well as recent
programme wins entering series production.
The Group benefited from the increase in civil
aircraft production rates, growth in land vehicle,
power & energy, semi-conductor equipment
and space markets, as well as price increases
of £28.6m to offset inflationary costs.
Additionally, favourable exchange rates
added £46.3m (9%) to total sales.
In Aerospace, revenue increased 18% year-on-
year on a constant currency basis. Excluding
Senior Aerospace Connecticut, which was
divested in April 2021, revenue for the full year
on a constant currency basis increased by 20%.
The year-on-year increase reflected the ramp
up in civil aircraft production rates, growth from
semi-conductor equipment markets and higher
volumes for space programmes. This more than
offset the decline in defence, which was
affected by the delay in spending as a
consequence of the Continuing Resolution
being in place in the USA during the first half
of the year.
In Flexonics, revenue grew 26% compared
to prior year, on a constant currency basis.
The performance in 2022 was driven by strong
customer demand in the land vehicle and
power & energy markets. In land vehicles,
Senior outgrew end market demand due to
recent contract wins entering series production.
In power & energy markets, activity increased
in upstream oil and gas and levels of
maintenance and overhaul activity improved.
We measure Group performance on an adjusted
basis, which excludes items that do not directly
reflect the underlying in-year trading
performance (see Note 9). References below
therefore focus on these adjusted measures.
The Group generated an adjusted operating
profit of £28.5m (2021 – £6.1m), an increase of
367% over the prior year. This resulted in the
Group’s adjusted operating margin increasing by
250 basis points, to 3.4% in 2022 (2021 – 0.9%).
Overall, in 2022, price increases of £28.6m
offset material and other inflationary cost
increases of £26.0m. The improved profitability
principally reflected the volume-related
operating leverage across our businesses.
Supply chain constraints and inflationary
pressures persisted throughout 2022: our
operating businesses worked diligently and
proactively to navigate these challenges,
mitigate their impact on the business and
ensure service levels for customers were
maintained to the best extent possible. As we
enter 2023, supply chain constraints have eased
somewhat in our Flexonics Division but continue
to require relentless management in a number
“We have delivered a strong
set of results for 2022.
We significantly improved
profitability, generated excellent
free cash flow, strengthened
our balance sheet and continued
to make very good progress on
our sustainability goals.”
David Squires
Group Chief Executive Officer
Revenue
£848.4m
(2021 – 658.7m)
Adjusted profit before tax
£20.1m
(2021 – £(1.9)m loss)
Adjusted earnings per share
4.36p
(2021 – 0.17p)
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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of our Aerospace businesses. We see that
continuing to be the situation for some time
given the welcome increase in civil aircraft
production rates required by the industry to
satisfy the strong demand from airlines and
aircraft lessors. We continue to work closely
with our suppliers and customers to minimise
any potential disruption. Very recently, the
situation has been compounded by a fire at
one of our key suppliers in Thailand. We are
working closely with the supplier and our
customers to assess and mitigate the specific
impact of the fire.
Adjusted profit before tax increased to
£20.1m (2021 – £(1.9)m loss). The adjusted
tax charge was £2.0m (2021 – £2.6m credit).
Adjusted earnings per share increased to
4.36 pence (2021 – 0.17 pence).
Reported profit before tax was £22.4m. The
2021 reported profit before tax was £23.7m,
having benefited from the profit on the sale of
our Senior Aerospace Connecticut business
during that period. Basic earnings per share
was 4.86 pence (2021 – 5.82 pence).
The Group delivered an excellent cash
performance in 2022 generating free cash
inflow of £27.7m (2021 – £14.0m), an
increase of 98% over the prior year, driven
by the significant increase in profits.
Gross investment in capital expenditure
was £30.5m (2021 – £21.3m), which was
0.8 times depreciation excluding the impact
of IFRS 16 (2021 – 0.6 times). Cash outflows
from working capital were £12.1m (2021 –
£2.6m) reflecting increased activity levels and
the need to hold some tactical buffer stocks.
However, our effective management of
working capital helped to deliver a small
decrease as a percentage of sales to 15.5%
(2021 – 15.6%). The Group had net cash
outflow of £2.6m (2021 – £57.7m inflow)
in 2022, due to free cash inflow of £27.7m
(2021 – £14.0m), offset by £30.3m cash
outflows related to corporate undertakings
and restructuring activity, interim dividend
payments and purchase of own shares
(2021 – £43.7m inflows).
Net debt at the end of December 2022
was £178.9m (including capitalised leases
of £78.4m), an increase of £25.8m from
December 2021, after taking into account
£25.3m consideration for the acquisition of
Spencer Aerospace, adverse currency
movements of £14.2m and a £9.0m increase
for lease movements. The Group’s financial
position remains robust, with a healthy
balance sheet and period end net debt to
EBITDA of 1.47x (December 2021 – 1.87x).
Return on capital employed (ROCE) increased
by 370 basis points to 4.7% (2021 – 1.0%).
The increase in ROCE reflected the significant
increase in profitability, while managing the
increase in capital employed which was
mainly due to the acquisition of Spencer
Aerospace. This improvement in ROCE is an
important step to delivering our Group ROCE
target of 13.5% over the medium term.
In line with the Board’s decision from earlier in
the year to reinstate dividends, and reflecting
confidence in the Group’s performance, financial
position and future prospects, the Board is
proposing a final dividend of 1.00 pence per
share (2021 – nil pence) and this will be paid on
26 May 2023 to shareholders on the register at
close of business on 28 April 2023. This would
bring total dividends, paid and proposed for
2022 to 1.30 pence per share. We will continue
to follow a progressive dividend policy reflecting
earnings per share, free cash flow generation,
market conditions and dividend cover over the
medium term.
Delivery of Group Strategy
Senior has a compelling strategy to maximise
value for shareholders.
Our renewed Purpose is "we help engineer the
transition to a sustainable world for the benefit
of all our stakeholders". We do this by:
• Using our technology expertise in fluid
conveyance and thermal management to
provide safe and innovative products for
demanding applications in some of the
most hostile environments.
• Enabling our customers, who operate in the
hardest-to-decarbonise sectors, to transition
to low carbon and clean energy solutions.
• Staying at the forefront of climate
disclosure and action by ensuring
our own operations achieve our
Net Zero commitments.
Complementing this, our vision is to be a trusted
and collaborative high value-added engineering
and manufacturing company producing
sustainable growth in operating profit, cash flow
and shareholder value.
To achieve our strategy, we will:
• strengthen our strategic focus on IP-rich
fluid conveyance and thermal
management products;
• organically grow the Aerostructures
business by fully utilising our world class
global footprint;
• maintain a strong focus on lean
manufacturing and operational efficiency
through our Senior Operating System;
• execute on our portfolio optimisation
strategy to maximise value creation;
• maintain our sector leading
sustainability performance;
• drive intrinsic strong cash generation
and deliver a minimum of 13.5% ROCE
over the medium term.
Our strategic focus and expertise in fluid
conveyance and thermal management
technology and capabilities is supported by
extensive design and manufacturing process
intellectual property and know-how. We develop
and supply proprietary products, sub-systems
and systems for our customers’ demanding
applications across a range of diverse and
attractive end markets. Our products are key
enablers of pivotal technologies which are
delivering emissions reduction and
environmental efficiency and are highly relevant
as the world transitions towards a low-carbon
economy. Senior has developed novel solutions
for low and zero carbon applications and we are
involved in a range of research and development
projects that support the drive for electrification
and hydrogen propulsion systems on land and
in the air. This is discussed further on pages 18
to 21 and 44 to 49.
As well as our businesses being actively
focused on new product offerings for the
transition to a low carbon world, we continue
to be actively involved in making conventional
technology cleaner to bridge the gap between
both worlds. In addition, Senior's end-markets
are evolving to reflect the global effort to
achieve net zero carbon emissions. Senior's
technology and product roadmap is aligned
to these trends with a product development
strategy that is compatible with our focus
on sustainability.
This well-defined strategy, along with
our well-capitalised businesses, provides
a solid foundation to support our future
growth aspirations.
In June 2022, we announced the strategic
acquisition of substantially all of the assets
of Spencer Aerospace Manufacturing, LLC
(“Spencer Aerospace”), which completed
in November. The acquisition marks a further
step in our well-defined strategy and is part of
our wider objective of optimising our portfolio
and maximising value for shareholders.
The acquisition enhances Senior's industry-
leading fluid conveyance capabilities, expanding
our capability to produce higher level assemblies
and sub-systems and with the potential to
penetrate new markets such as hydrogen
fittings for power and infrastructure applications.
While Senior has existing hydraulic fluid fittings
expertise, our customers have been strongly
encouraging us to increase our presence and,
following the acquisition, our combined
expertise and market reach will allow us to
respond decisively and accelerate growth as
we leverage Senior’s strong relationships with
OEMs, Tier 1 integrators, and aftermarket
customers around the world to open new
opportunities for Spencer Aerospace.
The strategy for Aerostructures as its core
markets continue to recover is to focus
and drive:
• filling our existing capacity;
• pursuing some further diversification
into Space and Defence; and
• growing market share profitably
in Civil Aerospace.
We saw good progress in our Aerostructures
businesses in 2022 and remain confident of
further performance improvement as production
volumes continue to ramp.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
11
STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
SUSTAINABILITY
A commitment to sustainability is rooted in
our core values and underpins our Purpose.
Sustainability is an integral part of our strategy,
embedded within the behaviours of our people
and the culture of Senior. We believe with
conviction that how you do business is every bit
as important as what you do. Across the Group
we always put safety and ethics first, and we
strongly encourage and promote diversity and
inclusivity across our international operations.
We continuously aim to deliver our products
in a manner that is both environmentally
sustainable and supports economic growth
and long-term value creation for shareholders
through sustainable methods. In implementing
our strategy, we are committed to using
natural resources responsibly, investing for the
long-term wellbeing of the planet and ensuring
that all people involved in our business process’
are treated fairly. Our Environmental, Social and
Governance (“ESG”) programmes continue
to evolve; this year we have been awarded a
class leading “A” rating by CDP for our work
on climate disclosure and action, having already
previously achieved the highest leadership
rating for our Supplier Engagement programme.
“We continued to make
good progress on our
sustainability goals,
maintaining our sector
leading position.”
David Squires
Group Chief Executive Officer
We were also highly commended by the UK
Investor Relations Society in their annual best
practice awards for how we communicate our
sustainability programmes and commitments
to our stakeholders.
• We have submitted our Long-Term Net Zero
Targets to SBTi for validation. The targets,
to be achieved by 2040, are aligned to keep
global warming to 1.5 degrees centigrade, the
most ambitious goal of the Paris Agreement.
Our engineering expertise is key in helping to
tackle the climate change and clean air challenge
as the world transitions to a lower carbon
economy. We achieve this by applying our
expertise and technology across many different
applications, in hard-to-decarbonise sectors
ranging from aviation through to land vehicle
and power & energy markets. We work in close
partnership with our customers' developing
solutions which support both their commercial
and sustainability objectives as we all strive to
achieve our individual Net Zero goals.
In 2022, we have again made good progress
with our key sustainability metrics and activities:
Environment
• Awarded the top ‘A’ score by CDP in its global
annual ranking for transparency on climate
change – Senior is one of only 283 companies
which achieved an A out of nearly 15,000
scored, putting us in the top 2% of disclosing
companies. We were the only Aerospace and
Defence company to achieve an A rating in
2022. In February 2022, we were informed
by CDP that Senior was awarded the highest
leadership status in its annual supplier
engagement ratings, putting us in the top 8%
of companies on this metric.
• We remain on track to achieve our Scope 1, 2
and 3 Science Based Target Initiative (“SBTi”)
verified Near Term Targets.
• 41% of our electricity was sourced from
renewable energy, an increase from 36%
in 2021.
• Recycled 94.8% of waste produced.
Social
• Recognising the impact of high rates of
inflation, Senior has taken steps to help
the broader workforce including salary
settlements that reflected regional cost of
living pressures, a more flexible approach
to working hours and promoting employee
assistance and wellbeing initiatives.
• Building on the success of our first Global
Employee Opinion Survey in 2021 and the
actions taken as a result of the feedback,
we undertook our second Global Employee
Opinion Survey in September 2022.
• We remain on track to achieve our 2025
Lost Time Injury Rate reduction target.
• In 2022, we introduced additional safety
initiatives involving ergonomics and hand
protection to support our 2025 Lost Time
Injury Rate reduction goal.
• Currently, 55% of the Board Directors are
female and two of the Directors are from
ethnic minority backgrounds.
Governance
• In 2022, employees received refresher
training on Senior’s Code of Conduct.
• Employees continue to receive training and
regular reminders about the risks related to
information/cyber security.
• In 2022, we developed our Climate Change
training to improve awareness of climate
related matters across the Group.
12
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Outlook
As we start 2023, our order book is healthy,
reflecting favourable market dynamics,
with commercial aerospace recovery in
full swing with other important markets
remaining buoyant. Demand is currently
holding up well, though we remain mindful
of the potential impact of the ongoing
supply chain pressures in aerospace,
as well as the broader macro-economic
situation and geopolitical uncertainty.
With aircraft build rates increasing through
the year, and the continuing supply chain
challenges in aerospace, including the
recent fire at one of our key suppliers, we
anticipate trading in our Aerospace Division
to be more weighted to the second half
of the year. Overall, the Board anticipates
strong growth for the Group in 2023 in line
with its expectations.
We remain on track to drive the Group
ROCE to a minimum of 13.5% in line with
our previously stated ambition.
Our strategy and positioning in attractive
and structurally resilient core markets,
combined with our sector-leading
sustainability credentials and highly
relevant technical capabilities, is delivering
a strong recovery across our Aerospace
and Flexonics Divisions and enhanced
value for our stakeholders.
David Squires
Group Chief Executive Officer
Aerospace
• Our traditional fluid conveyance products are
entirely compatible with sustainable aviation
fuels, the increasing adoption of which
appears to be the fastest route to lowering
aviation emissions.
• Our Additive Manufacturing capabilities are
enabling advances in complex product design
for improved performance and weight
reduction for the benefit of our customers
across a number of product applications.
• Our world-class capability in thermal
management and fluid conveyance
provides opportunities to support the
further development of electric/hybrid
air vehicle applications.
• We are building upon our long experience
of providing hydrogen fluid handling and
distribution products for industrial markets
to support development of both on-aircraft
and off-aircraft hydrogen technologies as this
alternative propulsion ecosystem evolves.
Land Vehicles
• Our current exhaust gas recirculation and
waste heat recovery products continue to
support evolving Land Vehicle propulsion
systems as they become more efficient
and lower their environmental impact.
• We are focusing on new product offerings
for the transition to a low carbon economy
and engage with our customers’ new product
development programmes by providing
design and engineering support for cooling
and fluid-handling solutions for batteries and
power electronics on the growing number
of electric/hybrid vehicles.
• We are supporting the development of fuel
cell cooling and associated fluid conveyance
for commercial vehicle applications by
capitalising on our experience of producing
hydrogen fuel cell products in the
energy sector.
Power & Energy
• We continue to develop our well-established
wide range of fluid conveyance products,
bellows and expansion joints for harsh
environments in carbon-free energy
generation including solar farms, wind power
plants, hydroelectric, geothermal, fuel cell
and nuclear power applications.
• Our extensive experience of providing fluid
conveyance products for demanding
environments, and specifically hydrogen
fuel cell cooling and conveyance, opens up
opportunities in hydrogen production and
infrastructure applications.
Considered and effective
capital deployment
We understand the importance of
considered and effective capital
deployment towards maximising
shareholder value creation. The Group has
a financial objective to maintain an overall
ROCE in excess of the Group’s cost of
capital and to target a minimum pre-tax
return on capital employed of 13.5% on
a post IFRS 16 basis. Our strategy of
expanding Senior’s high-quality fluid
conveyance and thermal management
businesses remains a priority. All significant
investments are supported by a business
case and are assessed using a rigorous
investment appraisal process.
To maximise the Group’s operating
efficiency and overall effectiveness we
actively review our overall portfolio of
operating businesses and evaluate them in
terms of their strategic fit within the Group.
In December 2019, Senior confirmed that
it was reviewing strategic options for its
Aerostructures business, which included a
potential divestment. Although we received
strong interest for the business, the Group
determined that, with the onset of the
pandemic, it was in the best interests of
Senior and its stakeholders for the
Aerostructures business to remain within
the Group at that time. We are considering
the best time to relaunch the process to
ensure we optimise value for shareholders,
taking into account financing markets and
end market conditions.
Technology and product design and
development on the road to Net Zero
Senior’s fluid conveyance and thermal
management businesses have design IP
(intellectual property) and our structures
businesses have manufacturing IP and know-
how. Both are underpinned by our investment
in advanced manufacturing technology and
supported by our extensive design and
engineering expertise, and collaboration
through our Technology Council.
In support of our core technology themes,
Senior has identified two key enabling
technologies that underpin innovation
throughout our product development and
manufacturing lifecycle: Additive Manufacturing
and Digitisation. Our Technology Council
ensures that these technologies are
collaboratively developed for the benefit
of all business in the Group.
Electrification and hydrogen power are poised
to remain the key technology themes in many
of our end markets in the decades to come.
Our fluid conveyance and thermal management
technology, highly relevant to these themes,
will continue to help us support our customers
with high-valued solutions in the medium- and
long-term to bridge the transition to sustainable
technologies for the future in a low
carbon economy.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
13
STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED
MARKET OVERVIEW
Our core markets across the Group proved resilient in 2022 and are
buoyant as we commence 2023 despite ongoing macro-economic
challenges and geopolitical uncertainty.
ONGOING MARKET RECOVERY
ACROSS THE GROUP WITH STRONG
OPERATING LEVERAGE
World passengers flows long run outlook
9
8
7
6
5
4
3
2
1
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s
a
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O
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l
0
2019
2022
2025
2028
2031
2034
2037
2040
CIVIL
AEROSPACE
CAGR 2025-30: 4.8%
The rebound in flight departure levels in 2022
was testament to the resilience of global air
travel demand, with the subsequent recovery
across commercial aerospace now in full
swing. The strong growth in passenger
numbers seen in most domestic markets
2024: 105% of 2019 level
and other short-haul routes was sustained
2023: 98% of 2019 level
throughout 2022 and is expected to continue.
International, long-haul traffic has been
accelerating, particularly between North
America and Europe and the recent easing
of travel restrictions in China has immediately
provided added momentum. IATA continues
to expect domestic passenger numbers to
reach 2019 levels by 2024 and international
passenger numbers to return to 2019 levels
by 2025.
2022: 82% of 2019 level
2021: 45% of 2019 level
SOURCE: IATA, “Air Passenger Forecasts: Air passenger recovery to begin in earnest in 2022”, November 2021 (right).
World vehicles production forecast
105
100
95
90
85
80
75
70
65
60
s
t
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o
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2016
2017
2018
2019
2020 2021 2022 2023 2024
2025
Light Vehicles
Medium/Heavy Commercial Vehicles
SOURCE: Data sourced from IHS Markit, Feb 2022.
World Energy Demand
800
600
400
l
E
200
40
30
20
10
2
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Production volumes for civil aerospace
accelerated in 2022 driven by increased
single aisle build rates. Both Boeing and
Airbus announced production rate increases
for wide-bodies starting from the end of
2022 and further increases on single-aisle
rates in 2023 and beyond.
In the medium and longer term, structural
growth in air travel of c. 4% per annum is
expected to be driven by growing air traffic
demand in Asia and supported by the
replacement of older aircraft with latest
generation, more fuel-efficient models.
IATA anticipates that Asia Pacific will be the
fastest growing region over the next two
decades, buoyed by favourable income
growth and demographic factors.
With our diversified product portfolio in
the aerospace sector, including attractive
positions across the newest generation of
single aisle aircraft platforms, Senior is well
positioned to benefit from the ongoing market
recovery, and increased aircraft build rates.
2021
STEPS APS
2030
NZE
STEPS APS
2050
NZE
CO2 emissions (right axis)
Traditional use of biomass
Renewables
Nuclear
Natural gas
Oil
Coal
SOURCE: IEA, “World Energy Outlook”, Oct 2022 – Describes the
total energy supply by fuel and CO2 emissions by each scenario –
Stated Policies Scenario, Announced Pledges Scenario and Net
Zero Emissions Scenario by 2050. Illustrates that renewable energy
increases more than any other energy source in each scenario.
14
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
DEFENCE
Senior’s sales to the Defence sector are
primarily focused on the US defence market.
The approved budget for US defence in Fiscal
Year 2022 was $778bn. However, the 2022
Appropriations Bill was not passed until March
2022 which meant that up to that point,
spending was restricted to 2021’s levels under
a Continuing Resolution which led to a delay in
some ordering activity. For Fiscal Year 2023,
the National Defense Authorisation Act has
approved $858bn of spend, 10% higher than
the budget in 2022.
Senior is well placed with good content on the
F-35 Joint Strike Fighter, mature programmes
such as the C-130 transport aircraft, and newer
programmes such as the T-7A Red Hawk trainer.
OTHER
AEROSPACE
Sales from our Aerospace operating businesses
into end markets outside of the civil aerospace
and defence markets are classified under
“Other Aerospace” and include sales into
the space, semi-conductor equipment and
medical markets. Using our world class bellows
technology, we manufacture highly engineered
proprietary products to provide unique solutions
for semi-conductor manufacturing equipment.
The semi-conductor equipment market reached
a new sales record in 2022, growing by an
estimated 4%, reflecting the increase in global
demand for microchips. While wafer fab,
foundry and logic equipment sales increased,
memory and storage demand weakened as
post-pandemic related consumer and work-
from-home trends normalise and inflation rises.
According to the World Semiconductor Trade
Statistics (“WSTS”), the global semi-conductor
market is forecast to contract by 4% in 2023
as a result of challenging macroeconomic
conditions, leading to weaker end
market demand.
The galactic low earth orbit satellites market
revenue is expected to accelerate at a
compound annual growth rate of 15%
between 2022 and 2030. Rising demand for
high-speed and low-cost broadband, growing
advancements in satellite network and
potential uses for laser-based space optical
communications are key factors driving
revenue growth of the market.
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LAND
VEHICLE
The land vehicle market experienced good
momentum in 2022. All segments grew
in 2022, as markets in North America and
Europe were buoyant, aided by signs of
supply chain constraints easing compared
to prior year.
According to Americas Commercial
Transportation (“ACT”) research, the heavy
duty truck market grew by 19% in 2022
compared to 2021. The market is expected
to decline by 3% in 2023 as pent-up demand
for more fuel efficient engines and modest
pre-buy activity ahead of tighter emission
standards coming to be introduced in 2024
are expected to be offset by slowing
macroeconomic indicators in the US.
According to IHS Markit Inc. (“IHS”),
European truck and bus market production
declined by 1% and is forecast to decline
by a further 1% in 2023.
Light vehicle production in 2022 continued
to be impacted by semi-conductor shortages,
although this is showing signs of
improvement. Production rates were further
impacted by interruptions in the supply of
wire harnesses due to the Ukraine crisis.
According to IHS, European light vehicle
production grew by 5% in 2022 compared
to 2021, despite being forecasted to decline.
It is forecast to grow by 6% in 2023 as
semiconductor availability improves.
According to the International Energy
Agency (“IEA”), global electric car sales
have continued their strong growth in 2022.
The Bloomberg NEF Electric Vehicle Outlook
2022 report predicts that by 2025, plug-in
vehicles will represent 23% of new passenger
vehicle sales globally and electric vehicles will
represent 6% of the fleet. With the increasing
adoption of electrification for both land vehicle
and stationary power applications continuing,
this market is fast growing and represents
a major opportunity for Senior in the
medium and long term, particularly for our
proprietary battery cooling technology
POWER
& ENERGY
Power & energy markets grew in 2022, and
in particular, activity in upstream oil and gas
increased and the levels of maintenance
and overhaul improved.
The Ukraine crisis brought pressure to energy
supply in key markets, adding political impetus
to build energy security and to accelerate the
energy transition to renewables.
Electricity demand is forecast to continue
growing steadily and the IEA predicts an even
stronger push for renewables in the power
sector and faster electrification of industrial
processes and heating. In 2022, 30% of global
electricity generation came from renewable
sources and the IEA predicts this rising to
about 50% by 2030 and 80% by 2050.
According to the IEA, in 2022, world oil demand
grew 2% and is expected to surpass pre-
pandemic levels in 2023 and subsequently
grow 1% per year until 2030. Global refining
capacity expanded slightly in 2022 with similar
growth anticipated in 2023, although shortages
in individual products may well persist due to
uneven rates of demand growth and limits in
the refining system. This tight supply, coupled
with a limited appetite for new US refining
capacity due to the US federal government’s
policies on energy, has led businesses to focus
on upgrading and expanding existing facilities,
thereby increasing maintenance and
overhaul work.
Amid soaring fuel prices and growing energy
security concerns, momentum is building
for nuclear power in many countries.
According to the IEA, nuclear power generation
has the potential to play a significant role in
helping countries to securely transition to
energy systems dominated by renewables.
In their global pathway to reach Net Zero
Emissions by 2050, the IEA predicts that
nuclear power generation will double between
2020 and 2050, with construction of new
plants needed in all countries that are open
to the technology. Whilst extending lifetimes
of nuclear plants will be an indispensable part
of a cost-effective path to Net Zero by 2050,
it is feasible that half of the emission reductions
by 2050 may come from small modular reactors
(SMRs) due to their lower cost, smaller size,
and reduced project risks.
CIVIL AEROSPACE
40% of
Group
DEFENCE
14% of
Group
OTHER AEROSPACE
11% of
Group
LAND VEHICLE
19% of
Group
We are ensuring we are appropriately resourced to
take advantage of the market-led opportunities across
our Flexonics and Aerospace Divisions.
POWER & ENERGY
16% of
Group
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
15
STRATEGIC REPORT / SUSTAINABILITY
SUSTAINABILITY
IN THIS SECTION
“A commitment to sustainability is rooted in
our core values and underpins our purpose.
We believe with conviction that how you do
business is every bit as important as what
you do. Across the Group we always put
safety and ethics first, and we strongly
encourage and promote diversity and
inclusivity in all of our operations.”
David Squires
Group Chief Executive Officer
20
Our Technology and Product Development
on the Road to Net Zero
22 Environment
26 TCFD
32 Social
36 Governance
Sustainability remains an indispensable part
of our overall strategy. We always aim to
deliver our products in a manner that is both
environmentally sustainable and supports
economic growth through sustainable
methods as opposed to focusing solely on
short-term financial gains. In implementing
our strategy, we are committed to using
natural resources responsibly, investing for
the long-term wellbeing of the planet and
ensuring that all people involved in and with
our business process are treated fairly.
We continue to enhance our long-term focus on
Environmental, Social and Governance (“ESG”). This year,
for example, we have achieved a class leading “A” rating
in our CDP climate disclosure.
We apply our expertise and technology across different
applications, working in close partnership with our
customers, to develop solutions that support both
their commercial and sustainability objectives.
We remain ever responsive to the climate change and
clean air challenge, as the world and our customers
transition to a lower carbon economy.
16
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Rotation Flex
Rotation Flexes are deployed in
Concentrated Solar Powerplants
globally. They create a leak tight
joint while enabling the trough
to follow the rotation of the sun.
Solar Bellows
Solar Bellows are deployed in
Concentrated Solar Powerplants
globally. They act as a seal and
compensate for the different
thermal expansion of glass
and metal.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
17
STRATEGIC REPORT / SUSTAINABILITY CONTINUED
SUSTAINABILITY
OUR SUSTAINABILITY
FRAMEWORK
ENVIRONMENT
SOCIAL
GOVERNANCE
SUSTAINABLE PRODUCTS
Support our customers in
developing products that help
reduce the impact on the
environment.
ENVIRONMENTAL
FOOTPRINT
Carbon
• Reduce Scope 1 and Scope
2 emissions by 30% by 2025
from 2018 base year
• 80% of the Group’s suppliers
by spend, covering
purchased goods and
services and capital goods,
to have science based
targets by 2025
Waste
• Achieve 95% recycling rate
by 2025
Water
• Limit the environmental
impact of our production
processes through the
efficient use of water
HEALTH & SAFETY
Reduce Lost Time Injury Rate
to 0.3 by 2025
DIVERSITY & INCLUSION
Develop greater diversity and
inclusion within the Group
PEOPLE & CULTURE
Create a working environment
that enables our employees to
achieve their full potential
EMPLOYEE WELLBEING
Support physical and mental
health of employees. Create
the environment that leads to
a highly engaged workforce
COMMUNITY INITIATIVES
Bring positive change to
the communities in which
we operate
UPHOLD HIGH
STANDARDS OF
ETHICAL INTEGRITY
Bribery & Corruption
Ensure our policies and
practices deliver the highest
standards of integrity, avoiding
the possibility of bribery
and corruption
Human Rights
Uphold international standards
on human rights
Modern Slavery
Prevent slavery and human
trafficking in the Group’s
activities and its supply chain
Responsible Sourcing
Promote the use of responsible
practices with a supply chain
Responsible Taxation
Fully comply with the tax laws,
regulations and disclosure
requirements in the countries
we operate in
Whistle-blowing
Encourage the reporting of
wrongdoing in the organisation
CYBER SECURITY &
DATA PROTECTION
Reduce the risk of cyber
attacks and ensure protection
of all confidential data
PRODUCT SAFETY
Ensure that Senior products are
certified to the required
International Standards
Our sustainability framework
Our sustainability framework emphasises
safety, high ethical standards, care for
the environment and our overall
business values.
We believe this framework and the high
standards we set, helps us to attract,
develop and retain the right people, and
that this is fundamental to our long-term
success. We have talented, committed
people with the right skills and experience
across our businesses, and we continue
to support the personal and professional
development of our staff.
Delivering sustainable solutions
As the world transitions to a low carbon
economy, Senior is helping its customers
to develop efficient and effective products
that are more sustainable and have
lower environmental impact during the
manufacture process and in use.
Our success is built on developing
long-term partnerships with our customers,
which enable us to help them meet today’s
challenges and deliver solutions for future
low carbon requirements. An example of
this is our work to provide customers with
more energy efficient solutions on existing
internal combustion technologies while
simultaneously helping these same
customers bring to market efficient and
viable electric and hydrogen power trains.
We have continued to reduce our carbon
emissions (market based Scope 2)
using more renewable energy and more
sustainable production methods and
materials wherever possible. Our advances
in additive manufacturing are a good
example of this, as we are now able to
design and manufacture complex products
quickly, with reduced waste and often at
a reduced weight when compared to
traditional manufacturing methods.
Reducing waste and the consumption
of electricity and water during the
manufacturing of the products remains
a key focus. In 2022 we achieved a waste
recycling rate of 94.8%. With operations
in 12 countries, we are also able to be
geographically close to major customers
which helps to minimise the carbon
footprint of our products.
18
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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“Sustainability remains a core focus in Senior. We continuously
improve our programmes, following global best practice standards.
Inclusion in the CDP “A” list for Climate Disclosure is a highlight
for 2022, placing us at the forefront of companies taking action.
We remain committed to building on this success in 2023.“
Mark Roden
Group Director of HSE & Sustainability,
Environment
22%
Reduction in Scope 1 (Direct) and Scope 2 (Indirect)
emissions (market based) from 2018 base year
Waste
94.8%
Recycling rate
(2021 – 93.1 %)
(2021 – 18.9%)
Diversity
55%
Percentage of women on Senior plc Board
(2021 – 50%)
Employee Opinion Survey
81%
Percentage of employees completing
Employee Opinion Survey
(2021 – 81% of Senior employees completed survey)
CDP – CARBON DISCLOSURE
PROJECT
Senior has been awarded an ‘A’ by CDP
for its 2022 Climate Change disclosure.
CDP is a global environmental non-profit
charity that provides a global disclosure
system for investors, companies, cities,
states and regions.
Based on CDP’s thorough assessment
of comprehensive climate change data,
Senior is the only Company in the
Aerospace & Defence Sector to achieve
the highest ‘A’ rating. A total of nearly
15,000 companies were scored, putting
us in the top 2% of disclosing companies.
Phoebe Duke-Wallace (The Group
Sustainability Co-ordinator) and Mark
Roden (The Group Director of HSE &
Sustainability) accept the award from CDP.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
19
STRATEGIC REPORT / SUSTAINABILITY CONTINUED
OUR TECHNOLOGY AND
PRODUCT DEVELOPMENT
ON THE ROAD TO NET ZERO
Electrification and hydrogen power
are likely to remain the key
technology themes in all our
end-markets in the decades
to come.
Our fluid conveyance and thermal
management technology, highly
relevant to these applications,
will allow us to support our
customers with high-value
solutions in the medium and
long term as they transition to
sustainable technologies.
AEROSPACE
2020
2030
Observation
Current generation engine
technology enhancements
expected to deliver maximum
5 – 25% fuel efficiency
improvements, with the latest
proposed designs. Urban Air
Mobility (UAM) operators
planning to start operations
from 2024, but widespread
acceptance unlikely
before 2030.
Our response
We have significant content
in current best-in-class
engines, and work closely
with customers to further
enhance our products.
We are working with multiple
UAM providers on prototype
solutions for thermal
management solutions.
Observation
The US aims to supply ≥3 bn
gallons of sustainable aviation
fuels (SAF) per year by 2030.
The EU plans for SAF to be
≥5% of aviation fuels, and
plans to end free CO2 credits
for airlines by 2026.
LAND
VEHICLES
Observation
Semiconductor content in
cars is increasing, especially
in EVs. The US passed the
CHIPS act to secure supply,
EU/India considering
similar plans.
California Air Resources
Board requires – 75% NOx
reductions by 2024. Euro VII
and Bharat V (India)
standards are planned.
The Inflation Reduction Act
will extend incentives for EVs.
LEAP-1B
engine oil
bearing nozzle
and distributor
Our response
We have become a key
supplier to microchip
equipment makers, a market
with high barriers to entry.
Our emission control
products help vehicles meet
transitionary regulations.
Observation
The US EPA will tighten
emissions rules countrywide
from 2027.
Major car markets are
implementing a COP26
agreement to ban new
fossil fuel cars by 2035.
Bellow
actuator for
semiconductor
equipment
application
POWER &
ENERGY
Observation
Nuclear is increasingly
seen as vital for a low carbon
future. The European
Parliament voted to
classify nuclear as
a green investment.
World leaders have agreed
to phase out fossil fuel
subsidies at COP26.
Our response
We are supporting
engineering and/or fabrication
with all active OEMs of Small
Modular Reactors (SMR).
Our flue gas diversion
products are mitigating
climate impact of
conventional energy.
Observation
The EU increased its
renewables target to ≥45%
of energy mix by 2030.
The US eyes 100% carbon
pollution-free electricity
by 2035.
20
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Wye piping,
reducer and
crossover
expansion joint
for small modular
reactor (SMR)
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2040
2050
Our response
Our current fluid conveyance and
structural components solutions
are fully compatible with SAFs.
We are collaborating with
multiple customers on developing
components for carbon capture,
energy storage and
electrolyzer systems for
green hydrogen production.
Observation
Alternative-powered aircraft
will increase demand for
our battery thermal
management, fuel cell
and cryogenic expertise.
Airbus ZEROe H₂ aircraft
planned for service in 2035.
Our response
Our Aerospace and Flexonics
divisions are working
together to develop various
demonstrator hydrogen
powertrain components
for OEM customers.
Stainless
steel hoses
for hydrogen
production
Our response
Our electric vehicle inverter
heat sink “Omega Fin”
has been patented.
We are in active customer
discussions on our battery
and electronics cooling and
fluid handling products.
“Omega Fin”
inverter heat sink
Our response
Energy storage will be
required on a larger scale
as renewables grow.
Senior offers multiple
solutions for thermal
management within various
energy storage applications.
Cryogenic
products for
LH2 systems
Observation
16 countries have committed
to 100% zero-emission new
truck and bus sales by 2040.
Our response
We are in series production
of our 70kW battery cooler
for e-buses.
We won our first contract
to supply a cooling pipe
assembly for an electric
motor on a heavy-duty
Battery Electric Vehicle and
are working on H₂ fuel cells
for HDVs.
Cooling pipe
assembly for
an electric
motor on a
fully electric
(BEV) truck
Battery cooling
plate for
electrified
vehicles
Observation
IEA forecasts global wind
and solar photo-voltaic
energy demand to grow
nearly 700% on 2021
in 2050 in its Stated
Policies scenario.
Ensuring stable power
supply for critical
infrastructure such as data
centres will be important.
Our response
We will continue to grow
our low carbon business
including solar and wind.
We have extensive
experience in land based
SOFC fuel cell components
used in backup power
units for data centres
and hydrogen
conveyance solutions.
Heat exchanger
for thermal
management
Fuel distribution
anode separator
plate
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
21
STRATEGIC REPORT / SUSTAINABILITY CONTINUED
ENVIRONMENT
SENIOR HAS COMMITTED
TO ACHIEVE NET ZERO BY 2040
THE ROUTE TO NET ZERO
2010
2015
2020
2020
JULY
2020
DECEMBER
2021
JULY
2021
SEPTEMBER
2021
DECEMBER
2022
2022
JULY
2022
DECEMBER
2023
First submission to the
Carbon Disclosure
Project
Launch of “20/20 Vision
for Sustainability”
including adopting
climate targets for
carbon intensity, waste
recycling and water
usage
“20/20 Vision for
Sustainability” climate
targets achieved
Scope 1, 2 and 3 targets
approved by the Science
Based Targets Initiative
Gap analysis undertaken
to assess the Company’s
alignment to TCFD
recommendations and to
identify areas for
improvement
Re-assessment of
climate-related risks
and opportunities
Scenario analysis
Senior’s 2021 CDP score
Develop our Long-Term
Submit application to
Senior Achieve “A”
undertaken
A- “Implementing
Net Zero Targets
SBTi for verification of
rating for Climate
our Long-Term Net Zero
Disclosure
Targets
Anticipated SBTi
approval for our
Long-Term Net Zero
Targets
current best practice”
Senior achieves
“Supplier Engagement
Leadership Status”
from CDP
SENIOR HAS COMMITTED TO
ACHIEVE NET ZERO BY 2040
In Senior we follow the Net Zero guidance as
defined by SBTi*. Put simply this means cutting
greenhouse gas emissions to as close to zero
as possible, with a removal strategy for any
remaining emissions.
The target, to be achieved by 2040 is aligned
to 1.5 degrees centigrade for all scopes.
We have followed the cross-sector pathway
using modelling from the Intergovernmental
Panel on Climate Change (IPCC) and the
International Energy Authority (IEA).
We expect to achieve Net Zero approval in 2023.
The SBTi Net-Zero Standard is consistent with
societal climate and sustainability goals and
within the biophysical limits of the planet.
The SBTi Net-Zero Standard defines corporate
net-zero as:
• Reducing scope 1, 2, and 3 emissions to zero
or to a residual level that is consistent with
reaching net-zero emissions at the global or
sector level in eligible 1.5°C-aligned pathways.
• Neutralising any residual emissions at the
net-zero target year and any GHG emissions
released into the atmosphere thereafter.
Senior was the first company in the global
Aerospace & Defence sector to have its
emissions reduction targets independently
verified and approved by the SBTi. In 2020 SBTi
approved our Near-Term Net Zero Targets.
These are:
• Senior commits to reduce its absolute Scope
1 and 2 GHG emissions by 30% by 2025
compared to a 2018 base year.
• For Scope 3 GHG emissions, Senior also
commits that 80% of its suppliers by spend,
covering purchased goods and services and
capital goods, will have science based targets
by 2025.
In July 2022 Senior applied to the Science
Based Target Initiative (SBTi) for approval of our
Net Zero Targets for Scope 1, 2 and 3 emissions.
The SBTi Net Zero criteria requires a near-term
and long-term science based target.
PROGRESS TOWARDS OUR
CERTIFIED SCIENCE BASED
TARGETS
Scope 1 and 2 carbon emissions
Scope 1 emissions are greenhouse gas
emissions released directly from a business
– this includes natural gas combustion,
owned transport and refrigerant use.
Scope 2 emissions are indirect GHG
emissions released from energy purchased
by an organisation, principally electricity.
Business activity continued to recover in
2022, as a result we experienced an increase
in electricity usage of around 12%. To mitigate
the potential increase in Scope 2 emissions,
we increased our sourcing of low carbon/
renewable electricity, in combination with our
existing on-site solar generation (Thailand,
Malaysia, India businesses) we achieved:
• 3.6% reduction in total Scope 1 and 2
emissions (market based) in 2022
compared to 2021.
• 4.9% reduction in Scope 2 emissions in
2022 (market based) compared to 2021.
• 41% of our electricity sourced from
renewable supply (36% in 2021).
*The Science Based Targets initiative (SBTi) is a
global body enabling businesses to set ambitious
emissions reductions targets in line with the latest
climate science.
22
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Scope 3 Emissions
Scope 3 emissions are the result of activities
from assets not owned or controlled by Senior,
emissions of carbon outside of Scope 1 and 2
which Senior indirectly affects in the value chain.
In order to reduce Scope 3 emissions, we know
that it is vital to engage with our supply chain as
purchased goods and capital goods are our
major sources of Scope 3 emissions.
In 2021, we commenced our work to achieve
our Scope 3 (supplier engagement) SBTi Target.
In order to facilitate the data capture and to
ensure we were following best practice we
partnered with CDP becoming a member of
the CDP Supplier Programme.
In 2022
41%
of our electricity was sourced from
renewable energy, an increase from
36% in 2021
Senior energy hierarchy
REDUCE ENERGY
CONSUMPTION
ON-SITE RENEWABLE
ENERGY
RENEWABLE/LOW
CARBON ENERGY
PROCUREMENT
TRANSITION FROM
GAS TO RENEWABLE
2010
2015
2020
2020
JULY
2020
DECEMBER
2021
JULY
2021
SEPTEMBER
2021
DECEMBER
2022
2022
JULY
2022
DECEMBER
2023
First submission to the
Launch of “20/20 Vision
“20/20 Vision for
Scope 1, 2 and 3 targets
Gap analysis undertaken
Re-assessment of
Carbon Disclosure
Project
Sustainability” climate
approved by the Science
to assess the Company’s
climate-related risks
targets achieved
Based Targets Initiative
alignment to TCFD
and opportunities
Scenario analysis
undertaken
for Sustainability”
including adopting
climate targets for
carbon intensity, waste
recycling and water
usage
recommendations and to
identify areas for
improvement
Develop our Long-Term
Net Zero Targets
Submit application to
SBTi for verification of
our Long-Term Net Zero
Targets
Senior Achieve “A”
rating for Climate
Disclosure
Anticipated SBTi
approval for our
Long-Term Net Zero
Targets
Senior’s 2021 CDP score
A- “Implementing
current best practice”
Senior achieves
“Supplier Engagement
Leadership Status”
from CDP
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Supplier Engagement
2022 key statistics
Supplier
Response Rate
160 Suppliers
Data taken from CDP 2022 supplier portal extract
Of the 160 Suppliers who responded:
Emission
reporting
64%
Suppliers reporting operational emissions
Targets
45%
14%
Suppliers reporting active targets
Suppliers with validated near-term SBTi targets
Emission
reduction
65 MMT
53%
Estimated annual CO2 savings
Suppliers reporting emission reduction projects
Renewable
energy
37%
Suppliers reporting renewable energy usage
Engagement
41%
Suppliers engaging their own suppliers
Scope 1 & 2 Market Based Emissions
Carbon emissions
(measured as Tonnes of CO2e)
60,000
57,418
56,992
i
i
s
n
o
s
s
m
E
d
e
s
a
B
t
e
k
r
a
M
2
&
1
e
p
o
c
S
50,000
40,000
30,000
20,000
10,000
0
46,747
46,540
44,878
Scope 2
Electricity
+ District
Heating
(market based)
47,004
46,614
38,016
38,095
36,249
Scope 1
10,414
10,378
8,731
8,445
8,629
Total
57,418
56,992
46,747
46,540
44,878
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Target
Total tonnes CO2e
22%
reduction in total
Scope 1 and 2
emissions from our
2018 baseline
We remain
on track to
achieve our
30%
SBTi reduction
target by 2025
SUPPLIER
ENGAGEMENT
CDP recognised our efforts
by awarding us Supplier
Engagement Leader status
based on our Supplier
Engagement Rating
(“SER”). The 2022 score
will be released in
March 2023.
In 2022 we engaged with around 340 of
our suppliers.
In 2021, 94 of our suppliers provided data to
us; in 2022, we were successful in increasing
this response to 160 suppliers, a considerable
increase. We achieved this through an
extended engagement programme including
a series of Supplier Webex meetings as well
as assisting suppliers with calculations.
Data from the CDP portal shows that on
average 20% of a participating company’
suppliers are first time disclosers. For Senior
in 2022 this percentage was much higher at
49%, a strong indication of the success of our
engagement activities, support and approach.
70%
increase in supplier responses in 2022
compared to 2021
49%
Note: The Scope 1 and 2 emissions Location Based
and Market Based (FY22) are independently verified in
accordance with the International Standard on Assurance
Engagements ISAE 3410 (limited assurance).
of suppliers were first time responders
compared with a CDP programme
average of 20%
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
23
STRATEGIC REPORT / SUSTAINABILITY CONTINUED
WATER
WASTE
CERTIFICATION
Objective: 95% recycling
rate by 2025.
To increase the amount of waste that is
recycled on site and provide efficient ways
to recycle the waste that is produced.
With continued progression with business
level actions to increase our overall recycling
rate, we have achieved a recycling rate of
94.8% in 2022, an increase from 93.1%
in 2021.
For information on hazardous waste, please see
www.seniorplc.com/sustainability
Objective: limit the
environmental impact of our
production processes through
the efficient use of water,
particularly in places of high-
water scarcity.
With the increased importance of freshwater
reserves being more strained we are looking
into areas of water scarcity and assessing
how we can limit the use of freshwater from
these areas.
We have used the World Wildlife Fund (WWF)
water filter tool to identify the businesses in
areas of water scarcity. The plan is to target
these businesses in 2023.
For information on water, please see
www.seniorplc.com/sustainability
Water usage
in 2022
266megalitres
Reduction in
usage of
76megalitres
compared to 2019 (342 ML),
the last full year before COVID-19
related impact to operations
In 2022, Senior was
successful in recycling
94.8%
of waste produced
In 2022, 74% of our businesses
achieved a recycling rate of
90%
or higher
24
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Our objective: all Senior
businesses are accredited
to ISO 14001.
Energy Efficiency Actions
In the reporting year Senior plc has implemented
energy efficiency projects across the global
operating businesses. In total, Senior’s
environmental improvements have the potential
to reduce GHG emissions by 2,284 tonnes
of CO2e.
These environmental improvements include
improving the energy efficiency in buildings,
including heating, ventilation and air conditioning
improvements, as well as further installation
of LED lighting. Senior has also looked carefully
at energy efficiency in production processes,
including machine/equipment replacement and
compressed air efficiency. Senior has set out
its year 2025 plan and is on target to reduce
Scope 1 and 2 emissions by 30%. Key to this
is the purchase of 100% renewable electricity
contracts. Six of Senior’s UK operating
businesses have now contracted into the supply
of 100% renewable electricity, avoiding over
2,000 Tonnes of GHG emissions annually.
Also, one US business has entered into a
100% renewable energy contract. Other Senior
operating businesses continue to make progress
to achieving renewable energy contracts.
One USA business has entered into a 25%
renewable energy contract with their supplier.
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Total
8,445
38,243
38,095
46,688
144,167
1,171
47,859
73
CARBON EMISSIONS
In Compliance with Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 –
Streamlined Energy and Carbon Reporting (“SECR”)
1st Jan 2022 to 31st Dec 2022
1st Jan 2021 to 31st Dec 2021
Scope 1: Combustion of fuel and operation of facilities
Scope 2: (location based) Electricity, heat and steam
purchased for own use
Scope 2: (market based) Electricity + District Heating
Total gross Scope 1 and 2 (location based) emissions/tCO2e
Energy consumed in MWh to calculate above emissions
Scope 3: Business travel, waste, water
Total Gross emissions/tCO2e (Scope 1, Scope 2 location
based, Scope 3 ; Business travel, waste , water)
Intensity measure/tonnes CO2 emitted per £m of revenue
Water usage (in megalitres)
Percentage of waste recycled or recovered
UK and
Offshore
1,224
2,159
1,085
3,383
17,198
103
3,486
25
32
100%
Global
excluding UK
and Offshore
7,405
39,550
35,107
46,955
138,029
1,995
48,950
69
Total
8,629
41,709
36,249
50,338
155,227
2,098
52,436
62
235
94%
266
95%
UK and
Offshore
1,244
Global
excluding UK
and Offshore
7,201
36,040
37,220
43,241
126,996
1,118
44,359
80
2,203
875
3,447
17,171
53
3,500
34
37
100%
219
89%
256
93%
Methodology
The Group’s approach to calculating and reporting our
GHG emissions follows the GHG Protocol on how to
measure and monitor GHG emissions.
Three data sources used for GHG emissions.
In 2022, there was one acquisition. Spencer Aerospace,
located in California was acquired on 25 November 2022.
As there were only 5 weeks of GHG emissions until the
end of year 2022, it was decided that GHG emissions
will be reported from January 2023. Therefore, Spencer
Aerospace is omitted from our 2022 reporting.
1. UK Government GHG Conversion factors for
company reporting (DEFRA full set for advanced
users 2022).
Each Senior business reports its environmental
performance monthly using the Group’s financial
reporting process.
2. US EPA (eGRID) Emission factors for greenhouse
gas inventories for US electricity generation
(2022 Version).
3. IEA (International Energy Agency) Emission factors
year 2022 version.
2022’s reporting has incorporated Scope 2
greenhouse gas emissions (associated with
electricity consumption) calculated using both
the Location and Market-based methods.
Data for the market-based, utility emission rates has
been collated during the period December 2022 –
January 2023, as best available information to
represent the emissions during the year. It should be
noted that these vary and are periodically updated, so
are representative of our best endeavour to determine
market-based emissions at the time of collating data
for this report.
The Scope 1 and 2 emissions Location Based and
Market Based (FY22) are independently verified in
accordance with the International Standard on
Assurance Engagements ISAE 3410 (limited assurance).
In calculating GHG emissions, the Group has used the
control approach and more specifically the financial
control approach under which a company accounts for
100% of the GHG emissions from operations over which
it has control. This covers all wholly owned operations and
subsidiaries of the Group for financial reporting purposes.
Limited Scope 3 emissions are reported in the table
above, they are not externally verified at the time of
publication of this Annual Report. A full disclosure of
the 2022 Scope 3 emissions, externally verified, will be
made publicly available within our CDP Climate Change
later in 2023.
Total waste includes the reported production and
non-production-related hazardous and non-hazardous
solid, sludge and liquid materials (including wastewater
since 2019) that is sent off site for disposal, treatment,
reprocessing, recycling or reuse by others. Waste
materials do not include by-products or scrap from
a Senior business process which are re-used in a
production process. Similarly, wastes that arise from
construction and other maintenance / remediation
works performed by third party contractors are not
included in the scope of reporting where the contractor
is responsible for the disposal of the waste. DEFRA
conversion factors are used worldwide for waste data
as means to determine a reasonable carbon
conversion factor.
Water volumes are obtained from meter readings
and from supplier invoices. All water consumption
is converted to megalitres, carbon is derived using
recognised and appropriate DEFRA conversion factors.
Senior uses DEFRA conversion factors to calculate
carbon based on distance and class of travel.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
25
STRATEGIC REPORT / SUSTAINABILITY / TCFD
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES (‘TCFD’)
This section summarises
the Group’s climate-related
financial disclosures
consistent with the TCFD
framework recommending
11 disclosure topics across
four pillars – governance,
strategy, risk management
and metrics and targets.
TCFD compliance statement
In accordance with the Listing Rule 9.8.6 R(8),
we confirm that the Company has made
climate-related financial disclosures for the
year ending 31 December 2022 which are
consistent with the TCFD Recommendations
and Recommended Disclosures.
GOVERNANCE
Oversight of climate-related risks
and opportunities
The Company’s Board of Directors has oversight
over climate-related matters. The Group Chief
Executive Officer is ultimately responsible for
climate-related risks and opportunities.
Reporting to the Group Chief Executive Officer,
the Group Director of HSE & Sustainability is
responsible for Senior’s sustainability and
climate-related strategies. During 2022, the
Board discussed climate-related matters as part
of the regular scheduled Board meetings as
outlined below:
• During every Board meeting, the Group Chief
Executive Officer provided updates to the
Board on a wide range of sustainability
matters, including climate-related issues. Our
newly developed carbon emissions tracking
dashboard has been incorporated into the
Chief Executive Officer’s report to the Board
and enabled improved visibility, monitoring
and oversight over the Group’s performance
in meeting its climate-related sustainability
targets by the Board. The Group Chief
Executive Officer also regularly reports to the
Board on other climate matters discussed
during the Executive Committee and HSE
Committee meetings.
• The Group Director of HSE & Sustainability
attended two Board meetings in 2022 to
update on the progress of meeting Senior's
Near-Term Scope 1 and 2 targets, report on
the initiatives taken to meet the existing
Scope 3 targets and to present the business
case for Long-Term Net Zero climate targets.
In June 2022, the Board approved the
submission of Senior's Long-Term Net Zero
targets for Scope 1, 2 and 3 to the SBTi for
verification and approval, committing Senior
to a long-term target to reach Net Zero GHG
emissions across the value chain by 2040.
• Recognising that climate considerations are
an important factor in capital expenditure
decisions, we have started work on
enhancing the Group’s Capital Expenditure
Request process by incorporating calculations
and accounting of carbon which would result
from the purchase and operations of the
new equipment. This is an important step
towards developing the Group’s internal
carbon price mechanism.
• The Audit Committee considered the TCFD
disclosures included in the Annual Report &
Accounts 2021 during its meeting in February
2022. The Committee will also be responsible
for reviewing the TCFD disclosures proposed
for the Annual Report & Accounts 2022.
• Following the Group’s annual identification
and assessment of climate-related risks and
opportunities, the Executive Committee
and the Board received and reviewed the
summary of findings during their respective
meetings in October and December 2022.
• The Group continued its focus on Board
technology presentations made by the
Group’s members of the Technology Council
in September and October 2022, highlighting,
among other matters, climate-related
megatrends likely to affect the Group in
the next 5-10 years, regulatory government
commitments impacting the Company’s
end markets and development of new
technologies by the customers.
We recognise the importance of ensuring that
the Board of Directors has the necessary
knowledge and skills to understand and address
the impact of climate change on the Group.
We maintained the Board’s climate competence
through regulatory and legal updates as part of
regular secretarial reports to the Board. In
Senior’s climate-related governance framework
Board of Directors
Oversight of climate-related matters
Group Chief Executive Officer
Ultimate responsibility for management of
climate-related risks and opportunities
Executive Committee
Leading the Group’s efforts
on climate change
HSE Committee
Monitoring progress
on GHG emissions
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addition, all Board directors will be offered
to undertake climate-related training in 2023,
covering the range of topics shown in the
graph below.
The Board’s strategic discussions always
consider global megatrends expected to
shape the Company’s future operating
environment. During the Board Strategy
meeting in October 2022, matters such as the
impact of global warming, increased pressure
on scarce mineral resources and
decarbonisation trends informed the Board’s
strategic conversations around Senior’s ability
to take advantage of such macro and end
market trends.
Assessing and managing climate-related
risks and opportunities
Senior's management is responsible for
assessing and managing climate-related risks
and opportunities.
The Group Director of HSE & Sustainability has
direct oversight over Senior's operations on the
matters of climate change, ensuring that data,
such as Scope 1, 2 and 3 emissions, waste
recycling and water consumption, is collated,
monitored, presented and reported to the
Executive Committee and the Board on a
regular basis. Responsibility for carbon emisison
management and the development of the
Energy Efficiency programme also resides with
this position.
Chief Executives of the Aerospace and the
Flexonics divisions have direct responsibility for
ensuring that their divisions meet the Group's
carbon reduction targets and supplier
engagement responsibilities. They constantly
monitor customer demands and are best placed
to ensure that these requrements are reflected
in future programmes as customers transition
to low carbon products.
The Group Executive Committee, led by the
Group Chief Executive Officer, ensures that
material climate-related risks form part of the
Group’s overall risk management framework,
and that climate-related opportunities are
incorporated into the Group’s strategic and
financial planning. The HSE Committee, chaired
by the Group Chief Executive Officer, monitors
the Group’s progress on its environmental
targets, including Scope 1, 2 and 3 emissions.
CLIMATE
CHANGE
TRAINING
Recognising the importance of raising
awareness of climate-related matters across the
Group, we developed our Climate Change
training course in 2022, which focused on the
following key areas:
• interrelation between climate change and
financial stability;
• differentiating between transition and physical
climate risks;
• introduction to TCFD and the recommended
disclosures;
• climate-related scenario analyses; and
• Scope 1, 2 and 3 emissions and Science-
Based Targets.
We acknowledge that achieving Net Zero
GHG emissions across all of our value chain
requires meaningful understanding of
strategic risks and opportunities arising due to
climate change, as well as practical skills to
implement the change needed to transition to
low carbon future and to meet the Group’s
sustainability objectives.
The training will be rolled out in 2023.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
27
STRATEGIC REPORT / SUSTAINABILITY / TCFD CONTINUED
STRATEGY
Climate-related risks and opportunities
identified over the short, medium and
long term
In considering climate-related risks and
opportunities, Senior has selected the
following time horizons to align with the
current Group internal risk management
and planning time frames:
Rating
Range
S Short term
2022 – 2025
M Medium term 2025 – 2027
L Long term
2027 – 2042
Climate change has been reported as one of
the Group’s principal risks since 2019. In 2022,
we performed our annual assessment of
climate-related risks and opportunities taking
into consideration legislative frameworks on
climate change, expectations from regulators
and market stakeholders, changes in weather
patterns as well as the latest technological
trends related to climate change.
The results of the assessment, presented
in the table below, indicate that the Group’s
material risks remain unchanged from the
2021 assessment, with one risk moving from
long-term into medium-term horizon, reflecting
the increasing focus of credit rating agencies
on ESG. The assessment also identified one
new opportunity related to reduced reliance
on fossil fuels for energy sources.
Furthermore, in 2022 we analysed each of
our businesses using the Worldwide Fund for
Nature (WWF) Water Risk Filter. This indicated
that 8 of the 26 operating businesses were in
areas of potential water scarcity. These are our
business in India, South Africa, California
(Senior Aerospace SSP, Senior Aerospace
Jet Products, Senior Aerospace Ketema,
Senior Aerospace Steico Industries), as well
as our Flexonics and Aerospace businesses
in Mexico. Our businesses use water in the
production process to dilute coolant used in
machining as well as cleaning and chemical
treatment processes; in addition, water is
required for staff hydration and hygiene. To
date, Senior has not been subject to conditions
where water scarcity had led to interruptions
in operations, however we are aware of the
possibility of operational interruption and the
potential of interrupted supply of products to
our customers in the case of a severe localised
water shortage. We are targeting these
businesses on an individual basis to
understand where we can reduce overall
water consumption. Senior Aerospace
Spencer, located in California, the acquisition
of which was completed in November 2022,
will be assessed using the WWF Water Risk
Filter in 2023.
Category
Sub category Risk/Opportunity Description
Opportunities Products and
Services
Development of new products
Development or expansion of low emissions products resulting in increased demand for
Senior’s products.
Resilience
Transition
Risks
Market
Technology
Policy & legal
Reputation
Physical
Risks
Acute
Chronic
Shift in Consumer preferences
Changing customer/consumer behaviour or preferences increases demand for Senior’s
products which support the transition to a low carbon economy.
Resource substitutes/diversification
Reduced reliance on fossil fuel for energy sources resulting in reduced costs and a more
resilient energy supply programme.
Changing customer/consumer behaviour or preferences
Customers may change demand to lower emissions products, as they adapt to a lower carbon
intensive economy. This might result in a reduction in demand for some of Senior’s products.
Influence of ESG on debt-rating agencies/assessment of credit risk
Changes in investor expectation can change market valuations in a negative way (such as
attracting negative screening).
Substitution of existing products and services with lower emissions options
Failure to recognise and invest in changing and emerging (net-zero) technologies and demand
for low emission products may result in reduced market share and reduced volume of sales.
Costs to transition to lower emissions technology
Decarbonisation of manufacturing processes and products away from fossil fuels consistent
with Science Based Targets may require additional investment of capital.
Unsuccessful investment in new technologies
Failure to invest in low emissions technology at the right time can lock the business into
fossil-fuel reliant assets over the long term, or require additional investment costs to pivot
away from assets before the end of their useful life.
Increased pricing of GHG emissions/cost of carbon offset
Pricing of GHGs may continue to be introduced in the future, which would increase the cost of
products/services both purchased and sold by Senior.
Exposure to litigation
Failure to manage climate related issues may result in prosecution (fines and reputational
damage).
Increased stakeholder concern or negative stakeholder feedback
Mismatch between Senior’s commitments/communication on climate change and action may
lead to dissatisfied customers and impeded customer loyalty, suppliers and community
members attracting negative press and reputational damage.
Stigmatisation of sector
Activism and protests against aviation, land vehicles and oil and gas market sectors might
become a threat to the reputation of Senior.
Increased severity of extreme weather events such as cyclones and floods
Extreme weather events may cause damage to infrastructure, equipment or product stored
within it and resulting in disruption to operations.
Changes in precipitation patterns and extreme variability in weather patterns
Increasing global surface temperatures and changing weather patterns may lead to the
increased intensity of droughts/water scarcity in some areas, impacting the supply of water to
Senior’s manufacturing sites and potentially disrupting operations.
Indicative
time frame
Link to Senior's
Principal Risks
S
S
M
M
M
M
M
M
M
L
M
M
S
S
Climate change
Implementation
of strategy
Financing and
liquidity
Innovation and
technological change
Inflation
Corporate
governance breach
Implementation
of strategy
Climate change
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IMPACT OF CLIMATE-RELATED RISKS AND OPPORTUNITIES ON THE
ORGANISATION’S BUSINESSES, STRATEGY AND FINANCIAL PLANNING
Products and Services
We recognise that climate change is one of the megatrends transforming our business environment. Senior’s purpose – “we help
engineer the transition to a sustainable world for the benefit of all our stakeholders" – is aligned with the Group’s environmental
sustainability objectives to support our customers moving to a lower carbon environment in developing products that are more
sustainable and have lower environmental impact.
Climate change regulation and understanding are driving changes in consumer preferences and increasing demand for energy efficient
transportation. This will mean the extended use of hybrid, fully electric and hydrogen powered vehicles. Senior is currently active in this
area with products including innovative thermal management solutions for large battery packs (initially for public transport vehicles).
Examples of the products include battery cooling, electronics cooling, electric vehicle fluid handling and flex for vehicle range extenders.
A dedicated team of Senior Flexonics businesses are collaborating with their customers on Exhaust Gas Recirculation (EGR) systems to
ensure these meet European EU7 standards expected in 2022/2023.
Our investment in specialised additive manufacturing equipment in some of our aerospace businesses is aimed at developing and
manufacturing lighter metallic components that reduce weight and, ultimately, save fuel and reduce carbon emissions during flight.
Read more on pages 20 to 21 and 46 to 49
Operations and supply chain
We are committed to continuously reducing our environmental footprint. In 2022, we revised our Group Energy Policy with an Energy
Hierarchy model including internal reduction targets. In addition, numerous energy conservation projects were implemented in the
Group’s operating businesses across the world, including improving building insulation, upgrading energy efficient lighting, installing heat
recovery systems.
The Group’s progress on reducing its carbon emissions, increasing waste recycling and its initiatives in promoting the efficient use
of water, are described on pages 22 to 25.
Each site within the Group has a scenario-based Business Continuity Plan which is tested on an annual basis.
In 2022, we continued working with around 340 suppliers through the Carbon Disclosure Project, asking them to align with Senior’s
environmental goals and set emissions reduction targets by 2025.
Read more on page 23
Investment in research and development
Senior’s Advanced Technology Collaboration Forum identifies investment opportunities in new technologies and supports the delivery of
targeted R&D projects that are aligned to the Company’s purpose. When we look to R&D spend and investment, we assess sustainability
of products in terms of supporting the customers’ aims to reduce energy consumption and carbon.
Read more on page 42
Access to capital
In November 2022, the Group successfully refinanced its main UK Revolving Credit facility (“RCF”). In support of the strong ESG
commitments made by the Group, Senior and its lenders jointly agreed appropriate sustainability KPIs linked to the RCF.
Acquisitions or divestments
Portfolio optimisation is a central pillar of our strategy. We look to incorporate sustainability considerations when assessing strategic
acquisitions in our target areas of fluid conveyance and thermal management.
Financial planning process
It is important that the potential of climate-related risks and opportunities is considered in the Group's financial planning, so that adequate
strategies are developed to manage such risks and seize opportunities. We recognise that climate-related risks and opportunities can
influence financial planning in a number of ways. One of them is that climate change can alter demand for certain products and services.
Although we are seeing some negative effects from the decreasing market trend for diesel passenger vehicles in Europe and a
consequent reduction in demand for some products, the overall impact on the Group is not significant, with other product lines filling the
demand. Changes in climate-related regulations and policies can also impact the financial planning, for example through the introduction
of carbon pricing. In support of our SBTi targets, our operating businesses have initiated energy conservation projects (as described on
page 24). Climate-related risks such as extreme weather events and water shortages could potentially disrupt operations. The investment
of around £30,000 in a water filtration project in Cape Town was initiated in response to the extreme water shortages in the region.
The water filtration system was installed to reduce the amount of main water needed by recycling some wastewater sources. This has
resulted in a greater than 30% reduction in metered water usage and enabled the business to continue operating as usual. Our Mexico
businesses also operate in a region of water scarcity. We invested around £10,000 in water harvesting and saw around 10% reduction
in water usage with potential benefits to business continuity as the harvested water acts as a buffer supply.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / SUSTAINABILITY / TCFD CONTINUED
Resilience of the organisation’s strategy
with reference to three climate-related
scenarios, including a 2ºC or lower scenario
In 2021, we carried out scenario analysis to
understand the potential impact of climate
change on the Group’s operations. We selected
the three climate scenarios produced by the
Bank of England because:
• they meet TCFD recommendation to assess
business resilience at different climate-related
scenarios, including a 2ºC or lower scenario;
• these scenarios are used by the Bank of
England to explore resilience of the UK
financial system to climate change;
• the scenarios are modelled to a thirty-year
timespan, out to 2050 to align to the Paris
Agreement and other net zero 2050 targets;
• they consider the macroeconomic impacts
with more granularity and within a more
applicable business context than climate
scenarios based on temperature increases;
and
• multiple high transition scenarios provide
diversity in stress test.
Further information on the assumptions and
parameters used in the scenarios can be found
on the Company's website.
SCENARIO 1
(<2ºC)
SCENARIO 2
(<2ºC)
SCENARIO 3
(>3ºC)
EARLY POLICY ACTION:
SMOOTH TRANSITION
• Decisive carbon action to reduce global
emissions starts in 2021;
LATE POLICY ACTION:
DISRUPTIVE TRANSITION
• Delay in implementing the policy required
to reduce global emissions by 10 years;
• Carbon taxes and other policies intensify
• Starting in 2031, significant and rapid
gradually over the scenario horizon;
• Global warming is limited to 1.8ºC by
policy action causing drastic bending of
emissions trajectory globally;
2050 compared to pre-industrial levels;
• Global warming is limited to 1.8ºC by
NO POLICY ACTION:
BUSINESS AS USUAL
• Governments fail to introduce further
policies to address climate change
beyond those already implemented;
• Increase in global temperatures reach
3.3ºC by 2050 compared to pre-industrial
levels;
• Limited physical risks.
2050 compared to pre-industrial levels;
• High physical risks.
• Limited physical risks.
Potential impact
Policy changes start to accelerate, and
consumer and investor preferences evolve
rapidly to facilitate decarbonisation.
In the short and medium term, Senior needs
to ensure that its investment decisions are
consistent with its Science Based Targets and
deliver expected results.
In the long term, it is important to keep pace
with changing market demand for low
emission products and remain consistent
between Senior’s public commitments and
market expectations.
Potential impact
A sudden increase in the intensity of climate
policy in 2031, following an initial period which
is characterised by insufficient or ineffective
emission reducing policies.
Senior needs to ensure that it takes action
over this time period to avoid disruption in the
long term as mature economies make rapid
strides to cut emissions.
Potential impact
Absence of transition policies result in a
growing concentration of greenhouse gas
emissions in the atmosphere.
Increased exposure to heatwaves, tropical
cyclones and droughts may increasingly
provide challenge for some of Senior’s sites
and supply chains.
With less policy action and investment driving
forward technology development, the costs
of transitioning to the new technologies may
be higher, the likelihood of successful
implementation and the relative rewards for
the investment may be lower.
Opportunities
The ability to maximise returns on new
investments in the long term, once
transition has occurred and markets have
stabilised.
Opportunities
Early investment can set the Group up to
be ready for the swift changes to the
disrupted economy after 2030.
Opportunities may materialise over the long
term, due to the late policy action and the
abrupt transition to low carbon economy.
Opportunities
The Group’s continued investments and its
ability to diversify business activities can
help Senior be more resilient to changes in
the markets and adapt to the impacts of
climate change.
Resilience statement
The output of forward-looking scenario analysis
indicated that transition risks could have more
significant impacts in scenarios 1 and 2. The
Group’s application to the SBTi for the approval
of Long-Term Net Zero Targets, aligned to 1.5ºC
for all scopes, can help build resilience to the
effects of policy, legal, reputation and taxation
risks expected under scenarios 1 and 2. The
Group’s focus on innovation and strong
relationships with customers means we are well
positioned to maximise opportunities offered by
smooth and disruptive transition scenarios. We
are proactively assessing the way climate
change affects market demand for our products
as part of our annual strategic meetings. Under
scenario 3, the physical impacts of climate
change could be more significant. The Group’s
robust business continuity plans, tailored to the
specific risks and vulnerabilities of a given area,
help us become more resilient against the
potential physical impacts of climate change.
We recognise that scenario analysis will be
developed over time,and we shall continue to
ingrate the findings into Senior's risk
management framework.
30
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
RISK
MANAGEMENT
The organisation’s processes for
identifying, assessing and managing
climate-related risks
Climate risks are identified, assessed and
managed using Senior’s risk management
process as shown on page 62 on an annual
basis. The Committee of Sponsoring
Organizations of the Treadway Commission
(“COSO”) enterprise risk management
integrated framework serves as the
foundation of the Group’s risk management
process, tailored to reflect Senior’s culture
and values. The process includes
identification of relevant risks, risk scoring,
development and assignment of response
actions, monitoring the effectiveness of key
mitigating controls and reporting of the risk
and assurance environment to the Executive
Committee, the Audit Committee and
the Board.
During 2022, the multi-disciplinary team
including the Group Director of Risk and
Assurance, the Group Director of HSE &
Sustainability, the Divisional CFOs, the
Director of Investor Relations and Corporate
Communications, the Director of Business
Development & Strategy, the Head of
Treasury and the members of the Secretarial
team, re-assessed the climate-related risks,
taking into account the evolving landscape
associated with climate change in the areas of
existing and expected legislation, supplier and
consumer preferences, government policies
and commitments, as well as changes in
weather patterns. The results of the
assessment were reviewed by the Executive
Committee and the Board.
Climate-related risks and opportunities are
identified using a wide range of data sources,
such as climate change specific publications
and data, CDP disclosures from peers,
relevant sector literature and guidance from
TCFD for Senior’s sector. Materiality of
climate-related risks is assessed by
considering such factors as likelihood,
magnitude of impact and the strategic
importance to the business. For our 2022
assessment, risks were assessed as residual,
having considered existing controls
and mitigations.
Mitigating action plans are developed for all
climate-related risks where the risk scoring
exceeds the Group’s tolerance level for that
risk. The action plans include a detailed
description of the response actions (assigned
to the members of the Executive Committee
and other senior members of staff) as well as
time horizons for completion of the mitigating
action plans. Action plan progress is tracked
to ensure timely implementation. The overall
effectiveness of the risk control environment
is closely monitored through assurance and
audit activities to assess if critical risks are
being mitigated within the Group’s
risk tolerance.
Integration of processes for identifying, assessing, and managing climate-related
risks into the organisation’s overall risk management framework
Climate-related risks form part of the Group’s risk register and will be subject to the annual
review by the Executive Committee and the Board. Climate change has been reported as one
of the Group’s principal risks since 2019.
METRICS AND TARGETS
Metrics used to assess climate-related risks and opportunities
Targets used to manage climate-related risks and opportunities and performance
against targets
The below table illustrates the metrics we have selected to measure our climate-related risks
and opportunities. We selected these metrics because we consider that they are relevant to
the climate-related risks and opportunities facing Senior, as well as regulatory and stakeholder
expectations; in addition, these metrics are measurable, transparent, comparable and actionable.
Our Near-Term Scope 1, 2 and 3 targets were verified by SBTi in 2021. In July 2022, Senior
applied to the SBTi for verification and approval of its Long-Term Net Zero climate targets for
Scope 1, 2 and 3 emissions. The targets, to be achieved by 2040, are aligned to 1.5ºC for
all scopes.
Although the Company's Remuneration Policy allows the Remuneration Committee to include in
the bonus, strategic measures limited to 25% of the bonus opportunity, this facility has not been
used nor have we included an ESG target within the long term incentive plan. Part of our thinking
is that it is clear from past and current performance, that our sector-leading ESG metrics and
progress has been achieved without the need to incentivise, due to our core values.
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Climate-related target
Reduce absolute
Scope 1 and 2 GHG
emissions by 30%
Target
year
Base
Year
2025
2018
22% decrease
(2021 – 19%
decrease)
Progress in
Metric
Link to material climate risk
Tonnes CO2e Increased pricing of GHG
For Scope 3 GHG
emissions, 80% of
suppliers by spend to
have climate Science
Based Targets
Achieve a recycling
rate of 95%
2025
2025
160
(2021 – 94)
Supplier
Engagement
(response rate)
94.8%
(2021 – 93.1%)
% of waste
recycled
emissions/cost of carbon offset
Increased stakeholder concern or
negative stakeholder feedback/
Stigmatisation of sector
Increased pricing of GHG
emissions/cost of carbon offset
Increased stakeholder concern or
negative stakeholder feedback/
Stigmatisation of sector
Increased stakeholder concern or
negative stakeholder feedback/
Stigmatisation of sector
Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (“GHG”) emissions
The details of our Scope 1, 2 and 3 emissions, in compliance with SECR, can be found on page 25.
Focus areas for 2023
Governance
Strategy
Risk Management
Metrics and Targets
Develop, review and approve the actions required to implement Senior's
Long-Term Net Zero targets
Incorporate the risks and opportunities presented by Senior’s Long-Term
Net Zero Targets into the 2023 annual risk assessment
Perform annual assessment of climate-related risks and opportunities at the
operational level
Review the impact of Senior’s Long-Term Net Zero targets on its strategy
and business model
Continue to enhance the Group’s risk management process in respect of
climate-related risks
Develop interim milestones to achieve Senior’ Long-Term Net Zero targets
and consider additional metrics and targets to assess climate-related risks
and opportunities
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STRATEGIC REPORT / SUSTAINABILITY / SOCIAL
SOCIAL
HEALTH & SAFETY
The health and safety of our employees
remains a core focus for Senior. The pursuit
of world class health and safety in all of our
undertakings is a recognised priority at all
levels in our business.
Employees at our operating businesses are
required to take regular environment, health
and safety training determined by their
specific roles, areas where they work,
job functions and responsibilities.
We ask all our employees to be proactive
in identifying and reporting unsafe work
practices or potentially hazardous situations,
in 2022 we received 12,615 such “near
miss” reports, an improvement from 11,556
in 2021 (which help to prevent recordable
safety incidents). We actively share
good practices and learnings across our
operations with regional meetings and
on our intranet.
Senior has a Group-wide Environment,
Health & Safety (EHS) Management
Framework encompassing risk evaluation
and operational controls for all our facilities.
This is subject to an annual audit by ISO-
trained staff. Seven of our operating
businesses have already transitioned from
OHSAS 18001 to ISO 45001.
No work-related employee or contractor
fatalities occurred in the Senior Group in
2022 with no major (serious / life changing)
injuries to employees or contractors working
on behalf of Senior.
We experienced a reduction in the Total
Recordable Injury and Illness Rate of around
21% compared to 2021 underpinning the
positive, downward trajectory of safety
incidents. However, there was a small
increase in the Lost Time Injury and Illness
Rate emphasising the need for continuous
improvement. With this in mind, in 2022 we
initiated three major global safety initiatives
in addition to the routine auditing and
support activities. Two of these – hand
safety and ergonomics – are aimed at the
most frequent causes of lost time injuries
across Senior whilst the Golden Rules
update is designed to prevent major injuries.
Senior Group Injury cases
Senior Group Injury rates
s
e
i
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u
n
I
j
e
m
T
i
t
s
o
L
f
o
r
e
b
m
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160
140
120
100
80
60
40
20
0
136
136
119
51
39
35
69
66
57
21
18
23
2017
2018
2019
2020
2021
2022
s
e
i
r
u
n
I
j
e
m
T
i
t
s
o
L
f
o
r
e
b
m
u
N
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
1.78
1.69
1.48
1.09
1.17
0.93
0.66
0.50
0.44
0.32
0.32
0.38
2017
2018
2019
2020
2021
2022
Lost Time Injury Illness Cases
Total Recordable Injury Illness Cases
Lost Time Injury Illness Rate
Total Recordable Injury Illness Rate
Lost Time Injury and Illness Rate (“LTIIR”), defined as the
number of work-related lost time injury or illness cases
(losing more than one complete shift) per 100 employees.
The Total Recordable Injury Illness Rate is defined as the
number of cases of lost workdays, restricted work activities,
job transfers, medical care beyond first aid and work-related
illnesses expressed per 100 employees.
These initiatives are:
1) Senior Golden Rules for Safety
– refresh and roll out.
Work commenced on this
programme in 2021, our Golden
Rules have been enhanced by
incorporating elements of our
behavioural safety programme and
updated best practices. Multi-lingual
training material has been produced
and all of our businesses have
completed the programme this year.
2) “Hand Injury” reduction
Cuts and injuries to hands have
been a common source of injury
in Senior for many years. The parts
we produce often have sharp edges
and hand finishing of the high-quality
components remains a part of
our process in many businesses.
In 2022, we took a fresh look at
these risks and rolled out a global
programme to address the main
causes after an exhaustive
evaluation of the detailed causes
of injury over the last five years.
It is too early to report on the
success of the programme as yet,
an update will follow in 2023.
3) A New Ergonomic assessment
programme
Ergonomic injuries are the second
most common type of injury in
Senior (just behind hand injuries).
To counter this, we have engaged
a leading global consultancy and
started to roll out a programme,
initially in North America – see the
case study.
SENIOR AEROSPACE MEXICO
CELEBRATES HEALTH & SAFETY
ACHIEVEMENT
Senior Aerospace Mexico recognises
five years with no lost time injuries.
Over 200 senior employees joined local
officials from the health & safety secretary
office and civil protection office, together
with general managers of other companies
from the local industrial park for a celebratory
lunch and presentation.
32
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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EQUALITY, DIVERSITY AND INCLUSION
as diverse contributions lead to better
solutions and business outcomes.
The Group’s Equality, Diversity and
Inclusion policy is contained within the
Code of Conduct, and every employee
receives a personal copy of the booklet.
Senior promotes a culture and working
environment in which everyone can make
the best use of their skills, free from
discrimination or harassment. In 2022,
all employees undertook Preventing
Harassment and Promoting Respect training
as part of our annual, mandatory Code of
Conduct training. Our Values define how we
treat people, and reinforce our commitment
to be open and straightforward with
colleagues, customers, suppliers and
other stakeholders.
We expect people to treat everyone they
meet in the course of business with
respect and dignity. The right behaviours
are underpinned by our Values, policies
and procedures that support our people
processes, for example talent acquisition,
succession planning, promotions and
learning and development opportunities.
The Executive Committee and business
leaders continue to focus on providing a
diverse and inclusive workplace. Gender
diversity receives much attention in Senior,
however we believe that it remains an
opportunity for further improvement,
particularly in our operating businesses
general management. We are continuing our
global participation in Mission Gender Equity
Mentoring. The programme supports and
encourages the development of talented
women. In 2022, we analysed the 2022
Global Employee Opinion Survey feedback
by gender. The participation in the survey
was higher for women than men, levels of
participation being a measure of positive
engagement. In addition, it was notable
that women again scored higher than men
on their overall engagement score and
organisational fit, indicating that they feel
that Senior is a great place to work.
The table below shows the Group’s Board
of Directors, Executive Committee and
operational senior management in 2022
by gender.
All employees
Operational senior
management
Executive
Committee
Board
Male
78%
82%
Female
22%
18%
71%
29%
45%
55%
We strive to reflect the diversity of the
communities we work in at all levels
across our workforce. Senior is an equal
opportunities employer. The Board seeks
to ensure a diverse workforce that supports
all employees, irrespective of age, disability,
gender reassignment, marriage and civil
partnership, race, religion or belief, sex or
sexual orientation. We will not tolerate any
form of unlawful discrimination against
our colleagues, or any third parties be
they potential employees, customers,
subcontractors, suppliers or members
of the public.
In accordance with the Equality Act 2010
(Gender Pay Gap Information) Regulations
2017, Senior publishes its Gender Pay
Gap Report, as required on the
Company’s website.
“Senior promotes an inclusive
culture and working
environment where
individuals can thrive,
and diversity is valued.“
Jane Johnston
Group HR Director
Our Core Values underpin our culture.
Senior’s leaders are committed to ensuring
equal opportunities, fairness of treatment,
work-life balance, and the elimination of all
forms of discrimination in the workplace for
employees and job applicants. We aim to
create a working environment in which
everyone can thrive, achieve their full
potential, and contribute to the success of
Senior, and where all decisions are based on
skills and merit. We recognise the benefits
of different perspectives and local cultures
and encourage individuals to speak freely,
SENIOR PARTNERS WITH LEADING CONSULTANCY TO REDUCE
ERGONOMIC RISKS
Ergonomic injuries account for around 40% of
our safety-related incidents in Senior. To reduce
these incidents, we have engaged a leading
global expert consultancy and have piloted
“Industrial Ergonomics”, an online ergonomics
training, assessment, and management
solution in 10 of our manufacturing operations
in the US and Mexico.
the application generates a colour-coded image
of the human body, indicating low-risk (green),
medium-risk (yellow), and high-risk (red) on
affected body segments. An overall risk score
for the job is also calculated. These dashboards
act as our status report and are reviewed at our
monthly leadership meeting. They allow us to
see the issues we have at each site, and
proactively calculate where we want to be in
the future. The ability to filter the data by site,
state, or country is especially helpful to the
team. The data will help our businesses
establish local action plans to eliminate risk.
On a global level, we can track the businesses
performance and establish areas of common
risk and best practice.
“One thing that differentiates Industrial
Ergonomics from other software solutions is
the e-learning made available to the teams”
says Nick De Bruyne, Senior’s Group Safety,
Health and Environmental Manager.
Nick conducted a roll-out programme in our
Bartlett facility, training around 20 Senior
staff how to use the bespoke software.
While assessing a job, workshop attendees
enter the data into the bespoke portal. When
data entry for all body segments is complete,
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
33
STRATEGIC REPORT / SUSTAINABILITY / SOCIAL CONTINUED
PEOPLE AND CULTURE
This year we have seen an increase in
face-to-face and on the job training and
workshops as COVID-19 restrictions have
eased. This includes Toolbox talks,
supervisor and leadership skills training,
“lunch and learns” as well as technical
training. We continue to sponsor individuals
undertaking external and more academically
orientated courses and training, for example
engineering degree courses. Across Senior,
we have continued to provide opportunities
for learning and development, meeting both
skills and technical training across the Group.
In 2022 we enhanced our skills training
content in Learn, our best in class eLearning
platform, expanding the catalogue and
providing the training in all our languages.
Individuals can select courses and manage
their own learning, covering areas such as
IT skills, Leadership and Management,
Project Management, Health & Wellbeing
and Communication skills. Learn also
enables us to deliver our Code of Conduct
training and other compliance training such
as Cybersecurity. A significant proportion
of learning is on the job and our culture
of sharing knowledge and supporting
colleagues is central to developing
technical competencies in our operations.
As evidenced in the Global Employee
Opinion Survey, peer relationships remain
a strength and colleagues help and support
each other. We have an open and honest
culture of respect and trust and people value
teamwork and the teams they work in and
with. This has been particularly important
when we welcomed new employees to our
operations and support them to become
valued team members.
“Perform”, our Performance and
Development system, provides a framework
for managers and team members to discuss
feedback, performance, behaviours linked
directly to our Values, set clear objectives,
both business and personal development
and create development plans. These
discussions are designed to be constructive,
open two-way dialogues. This year we have
changed our succession planning cycle to
align with year-end Perform reviews and
have improved the process, introducing
updated leadership indicators and the use of
high-performance indicator tool for our top
talent. The Executive Committee scrutinises
the succession plans and talent pipeline,
identifying successors or interim cover for
key roles across the Group. During these
discussions we focused on functional
capability, for example engineering, as
well as operational leadership. Personal
development plans are recorded and
monitored in Perform to enable individuals
to fulfil their potential. The Board reviews
the succession plans for the Executive Team
and their direct reports on a regular basis,
with a special emphasis on encouraging
diversity and inclusion.
As outlined in our Values and Code of
Conduct, we work together with mutual
trust and respect and operate with integrity
and in an ethical manner. The feedback from
our survey is consistent with this and
confirms that employees believe that people
are treated fairly and that we do not tolerate
misconduct. Our culture is to encourage
open and honest feedback with potential
issues or concerns being raised with local
management. However, on the rare
occasion when things cannot be resolved
locally, employees are encouraged to
raise their concerns through our third-party
whistle-blowing service, Ethics Point.
All concerns raised are investigated and
learning points are actioned by local
leadership teams as appropriate.
In order to meet the increased demand
from customers, we have seen an increase
in recruitment activity. In order to meet
demand, we are continuing to focus on
building strong relationships with local
technical colleges, universities and
education establishments, partnering with
recruitment firm. We are extending our
use of job boards and other approaches to
advertising and attracting applicants, and are
continuing the roll out of Recruit, our talent
acquisition system, to our UK businesses
as well as focusing on our employer brand.
to their local needs and have promoted
specific health drives, for example, breast
cancer awareness and fund raising, prostate
cancer testing, menopause awareness,
health checks, providing vitamin pack to
employees and flu vaccinations. We have
a number of individuals specially trained
to support colleagues with mental health
issues and employee assistance
programmes in many of our businesses.
In common with many businesses, where
possible, we are offering employees more
flexibility with working patterns by offering
hybrid working and changing shift patterns,
thereby improving individual work life
balance. Other examples of how we support
employees include offering subscriptions to
wellbeing apps, sports activities and team
building events.
During the year we have enhanced our
eLearning content to now include a number
of focused wellbeing modules such as
Mindfulness at Work and Positive Mental
Health delivered in multiple languages.
We remain vigilant regarding occupational
health, for example ergonomics, supported
by our Health and Safety frameworks.
In our autonomous and collaborative
business model, our operational business
leaders are empowered and accountable,
setting the tone for their operations guided
by our Values. As we emerge from the
pandemic, we have seen a change in
emphasis during 2022 as the business
recovers. In a challenging employment
market, we have been focusing on retaining
and recruiting talent to meet business
growth requirements. We have done this
by benchmarking pay rates in local markets,
making adjustments if appropriate, and
ensuring we are paying people fairly for the
work they do. We have seen operations
providing one off payments or allowances
to support employees with the increased
cost of living. We have remained vigilant
regarding changing pay expectations and
supporting employees through these
challenging times. Examples include,
promoting our employee assistance
programmes which cover areas such
as debt management, legal advice and
counselling services, promoting saving for
retirement and flexible working. We have
also strengthened our links with technical
colleges and universities close to our
operations, providing opportunities for
students to visit Senior, apprenticeships,
and for Senior to build a longer-term
talent pipeline.
We continue to view the provision of
development opportunities and training
across the group as vital to our success.
EMPLOYEE WELLBEING
The health and wellbeing of our colleagues
remains a priority. Included in our Global
Employee Opinion Survey is a specific
Health and Wellbeing section and the score
across all of Senior was 7.5 out of 10. The
wellbeing section of the survey looks at four
key drivers of health and wellbeing and in
addition to the question scores, we have
received over 3,000 comments which are
analysed by leadership teams, and provide
further insights into how we can support
our employees.
Our operating businesses provide support
and education to employees as appropriate
34
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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PEOPLE AND CULTURE
This year we have seen an increase in
face-to-face and on the job training and
updated leadership indicators and the use of
high-performance indicator tool for our top
workshops as COVID-19 restrictions have
talent. The Executive Committee scrutinises
eased. This includes Toolbox talks,
supervisor and leadership skills training,
“lunch and learns” as well as technical
the succession plans and talent pipeline,
identifying successors or interim cover for
key roles across the Group. During these
training. We continue to sponsor individuals
discussions we focused on functional
undertaking external and more academically
capability, for example engineering, as
orientated courses and training, for example
well as operational leadership. Personal
engineering degree courses. Across Senior,
development plans are recorded and
we have continued to provide opportunities
monitored in Perform to enable individuals
for learning and development, meeting both
to fulfil their potential. The Board reviews
skills and technical training across the Group.
the succession plans for the Executive Team
In 2022 we enhanced our skills training
and their direct reports on a regular basis,
content in Learn, our best in class eLearning
with a special emphasis on encouraging
platform, expanding the catalogue and
diversity and inclusion.
In our autonomous and collaborative
business model, our operational business
leaders are empowered and accountable,
setting the tone for their operations guided
by our Values. As we emerge from the
pandemic, we have seen a change in
emphasis during 2022 as the business
recovers. In a challenging employment
market, we have been focusing on retaining
and recruiting talent to meet business
growth requirements. We have done this
by benchmarking pay rates in local markets,
making adjustments if appropriate, and
ensuring we are paying people fairly for the
work they do. We have seen operations
providing one off payments or allowances
to support employees with the increased
cost of living. We have remained vigilant
regarding changing pay expectations and
supporting employees through these
challenging times. Examples include,
promoting our employee assistance
programmes which cover areas such
as debt management, legal advice and
counselling services, promoting saving for
retirement and flexible working. We have
also strengthened our links with technical
colleges and universities close to our
operations, providing opportunities for
students to visit Senior, apprenticeships,
and for Senior to build a longer-term
talent pipeline.
We continue to view the provision of
development opportunities and training
across the group as vital to our success.
providing the training in all our languages.
Individuals can select courses and manage
their own learning, covering areas such as
IT skills, Leadership and Management,
Project Management, Health & Wellbeing
and Communication skills. Learn also
enables us to deliver our Code of Conduct
training and other compliance training such
as Cybersecurity. A significant proportion
of learning is on the job and our culture
of sharing knowledge and supporting
colleagues is central to developing
technical competencies in our operations.
As evidenced in the Global Employee
Opinion Survey, peer relationships remain
a strength and colleagues help and support
each other. We have an open and honest
culture of respect and trust and people value
teamwork and the teams they work in and
with. This has been particularly important
when we welcomed new employees to our
operations and support them to become
valued team members.
“Perform”, our Performance and
Development system, provides a framework
for managers and team members to discuss
feedback, performance, behaviours linked
directly to our Values, set clear objectives,
both business and personal development
and create development plans. These
discussions are designed to be constructive,
open two-way dialogues. This year we have
changed our succession planning cycle to
align with year-end Perform reviews and
have improved the process, introducing
As outlined in our Values and Code of
Conduct, we work together with mutual
trust and respect and operate with integrity
and in an ethical manner. The feedback from
our survey is consistent with this and
confirms that employees believe that people
are treated fairly and that we do not tolerate
misconduct. Our culture is to encourage
open and honest feedback with potential
issues or concerns being raised with local
management. However, on the rare
occasion when things cannot be resolved
locally, employees are encouraged to
raise their concerns through our third-party
whistle-blowing service, Ethics Point.
All concerns raised are investigated and
learning points are actioned by local
leadership teams as appropriate.
In order to meet the increased demand
from customers, we have seen an increase
in recruitment activity. In order to meet
demand, we are continuing to focus on
building strong relationships with local
technical colleges, universities and
education establishments, partnering with
recruitment firm. We are extending our
use of job boards and other approaches to
advertising and attracting applicants, and are
continuing the roll out of Recruit, our talent
acquisition system, to our UK businesses
as well as focusing on our employer brand.
COMMUNITIES
Senior’s businesses actively supported
their communities in which they operate by
undertaking a range of charitable activities.
In the UK four operations sponsored local
community sports teams with Senior
Aerospace Thermal Engineering in Royston
providing uniforms to a girls football team.
In June, a small team of dedicated cyclists
rode the 260 miles from Senior Aerospace
Weston in Earby, Lancashire to our
Rickmansworth head office, visiting
colleagues at Senior Aerospace BWT,
Senior Aerospace Bird Bellows and
Senior Aerospace Thermal Engineering
on route – “Tour de Senior”. The trip was
completed over four days raising money
to support youth programmes in the
community local to Weston.
At Senior Flexonics India, we have again
collaborated with a non-government
organisation, "PRAKASH DEEP" to help
support the provision of quality education
to underprivileged children.
All our operations support their local
communities and to name some examples:
Senior Metal Bellows is a long-standing
sponsor of HESSCO’s (Health and Social
Services Consortium) St Patrick’s Day 5K
race. HESSCO’s mission is to help older
adults and individuals living with a disability
remain safe and independent at home for
as long as possible. The team was placed
1st in the Race with additional accolades to
one Team Member who finished 1st overall.
Senior Flexonics Lymington and Senior
Aerospace Metal Bellows supported the
Empty Bowls campaign that encourages
members of the local community to support
their local food bank or any initiative that
provides food to those in need and educates
people about the issue of hunger. Senior
Flexonics Upeca (China) held a parent-child
outward bound training for employees.
As well as having fun, the event developed
communication and cooperation skills,
and was a great team building event.
Many of our businesses have also been
supporting food banks, donating to local
and national charities and have a regular
programme of supporting local
community efforts.
Our colleagues contribute their time,
money and effort in areas including
educational mentoring and encouraging
the take-up of Science, Technology,
Engineering and Mathematics (“STEM”)
subjects in schools. Across the Group
we encourage and support our colleagues
in sharing their expertise and in particular,
enthusing the next generation about
the possibilities offered by science and
engineering. For example, by working
with technical colleges and education
establishments local to our operations.
SENIOR FLEXONICS CRUMLIN
ENVIRONMENTAL IMPROVEMENT
PROJECT
The team at Senior Flexonics Crumlin
participated in a Community based project at
a Primary School local to their site to renovate
an area for the children to utilise for learning.
The team invested their time, resources and
funds into this community project, and
managed to source materials for the
improvements for free or at discounted rates.
The forest school area was in a poor state,
with limited areas for the children to use due
to overgrown brambles, broken rocks, trip
hazards and rubbish thrown into the area off
the street. The Senior Flexonics Crumlin team
cleared the area and rebuilt it to make it an
amazing place for the children to enjoy for
many years to come. The team-built mud
kitchens, rope climbs, a new path, a water
feature, imagination area and even a fire pit.
The project was a great success, both in
terms of enhancing the area for the benefit
of the school and team building for the
team at Crumlin.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
35
STRATEGIC REPORT / SUSTAINABILITY / GOVERNANCE
GOVERNANCE
Whistle-blowing
As part of our internal control procedures, the
Group has a Whistle-blowing Policy that is
communicated across all our operations. This
Policy provides employees with the opportunity
to report suspected unethical or illegal corporate
conduct confidentially and anonymously.
The third-party whistle- blowing free, secure
reporting service, which is externally hosted,
is available in all languages appropriate to our
global locations.
The Group Company Secretary provides
information on any reported whistle-blowing
cases in monthly Secretarial reports to the
Board of Directors. This is a standing agenda
item at every Board meeting. In addition, the
Group HR Director summarises the total
cases and assesses if any patterns or trends
are emerging. This is included in every Group
Chief Executive Officer’s report to the Board.
Information Security update and our
plans for 2023
In 2022, Information Security training continued
to be delivered to all employees. Further details
of the training courses provided during 2022 can
be found on page 37. Training courses planned
to be rolled out in 2023 include: Secure Use
of Email and Instant Messaging; Using Mobile
Computing Securely; and Working Securely
in Public Places.
Board
Board gender diversity
The Board is supportive of the aim to improve
diversity in public companies. In 2022, five of
the nine Directors were female (55%).
Board succession & Board effectiveness
Please see the Nominations Committee
Report on pages 97 to 99 in the Annual Report
& Accounts 2022 for details of the Board’s
succession planning and the annual review
of Board effectiveness.
Independence of Directors
Six of the Board members out of a total of
nine at the 2022 year-end were independent.
These were Celia Baxter, Susan Brennan,
Barbara Jeremiah, Giles Kerr, Rajiv Sharma
and Mary Waldner.
Anti-bribery & Corruption
The Group recognises that the use of third-party
intermediaries can increase potential bribery and
corruption risks within the markets in which we
operate. The Company conducts appropriate
due diligence and ongoing monitoring of third
parties with which it works, including regular
screening, risk assessments, and compliance
health checks. The Company also subscribes
to third-party rating organisations to support
its due diligence process, particularly when
appointing agents and distributors. The
Company has a Responsible Sourcing Policy
which includes a structured approval process for
all key suppliers and those with additional risks.
The Group’s Code of Conduct clearly states
that Senior will follow all applicable laws and
regulations, including the UK Bribery Act, etc.
Other Group policies, such as The Use of
Agents, reinforce this.
Insider dealings
The Company has a Dealing Code (the “Code”),
aimed at ensuring that the Directors of the
Company, and employees identified as persons
discharging managerial responsibilities
(“PDMRs”) of the Company and its subsidiaries,
do not abuse, and do not place themselves
under suspicion of abusing, Inside Information
and comply with their obligations under the
Market Abuse Regulation. The Code contains
the dealing clearance procedures which must
be observed by the Company’s PDMRs and
those employees who have been told that
the clearance procedures apply to them.
This means that there will be certain times
when these employees cannot deal in the
Company’s securities. The Code also contains
certain additional obligations which only apply
to PDMRs. Failure to observe and comply
with the requirements of the Code may result
in disciplinary action.
Compliance risk assessments and audits
The Company conducts annual Control Self
Assessments at all of the Group’s operating
businesses, which include questions related
to the Code of Conduct. The Company also
conducts Internal Audits which include testing
on areas of governance, including the Code and
the prominent display of the Group’s whistle-
blowing procedures at all of the Group’s sites.
Risk assessments are conducted at operating
business and Group level. Risks related to
areas contained in the Code of Conduct are
considered, with follow up actions where
residual risk is deemed high. A more detailed
fraud risk assessment is also performed.
Ethics Governance
Our Core Value of “Integrity” is essential
to our success
Senior remains committed to the highest
standards of ethics, promoting the culture of
zero tolerance towards bribery and corruption.
Employees can give honest feedback, express
concerns if there are any practices that they
feel uncomfortable with allowing us to take
corrective actions when mistakes happen.
Our ethics and business conduct programme
commits us to conducting business fairly,
impartially and in compliance with local laws
and regulations and to acting with integrity
and honesty in our business relationships.
The programme is underpinned by the Code
of Conduct, which provides a clear framework
on which to base decisions when conducting
day-to-day business. It does this by:
• clearly setting out the behaviour expected
of all employees;
• providing guidelines which help employees
to apply our Values; and
• enabling employees to raise a concern or
ask a question if in doubt.
Acting ethically is fundamental to our business
success; it enables us to strengthen long-term
relationships and protect the Group’s reputation.
We use various forms of communication and
training materials, both in person and through
electronic media, to embed the ethics and
integrity requirement across the Group. We
investigate any alleged violations or complaints
and take the necessary action. A register of
reported whistle-blowing incidents is maintained
by the Group Company Secretary and the Board
receives regular updates.
In July 2021, all employees were issued with
a personal copy of the Group’s updated Code
of Conduct booklet and provided with training
on the revised Code of Conduct. All new joiners
are issued with a copy of the booklet and
provided with training on the Code. In 2022,
all employees received refresher training on
Senior’s Code of Conduct. The completion rates
typically run at around 94% allowing for new
starters who have not completed their training
immediately on joining.
The Code of Conduct booklet is available in all
languages applicable to the Group’s employees.
Any fraud issues that have come to the attention
of the Director of Risk and Assurance (formerly
the Head of Risk & Compliance) are discussed
by the Audit Committee, noting the cause, the
action taken and any improvements to internal
controls implemented as a result.
Gifts and hospitality
The Group’s Code of Conduct contains specific
provisions on Gifts and Hospitality. Employees
must declare any gift or hospitality provided or
received with the individual or annual aggregate
value in excess of £200 (or lower amount) as
specified in the Group Gifts and
Hospitality Policy.
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ADDITIONAL RESOURCES
Read more about Technology
on pages 44 to 49
Read more about Our Technology and Product
Development on the Road to Net Zero on
pages 20 and 21
Read more about Stakeholder Engagement
on page 50 to 55
Shareholder Democracy
Restriction on Voting Rights
The Company has only one class of shares;
these are ordinary shares which carry no right
to fixed income and have equal voting rights.
The Company does not apply any voting
rights ceilings.
Size of shareholding necessary to
introduce a new Resolution
Threshold requirements to introduce a new
Resolution at the forthcoming AGM are
stated in the Notes to the 2023 AGM Notice
of Meeting, which can be found on the
Company’s website.
Facilitation of shareholder participation
At the 2023 AGM, shareholders will be
able to vote in person, or by proxy, on
resolutions by post or electronically by visiting
www.sharevote.co.uk. Further details can be
found in the Notes to the 2023 AGM Notice
of Meeting.
Internal Audit
The Internal Audit Manager reports to the
Director of Risk and Assurance (formerly
the Head of Risk and Compliance). In 2022,
the Internal Audit Manager undertook four
Information Security audits, 10 Internal
Control audits, one Trade Compliance
audit and three Thematic audits.
Risk process
Please see the Risks and Uncertainties
section of the Annual Report & Accounts
2022 on pages 60 to 71.
Data Protection and Information
Security
Information security risk assessments are
routinely conducted across the Group, an
example of which includes assessing
third-party suppliers to ensure systems are
secure by design. Where a system is unable
to comply fully with Senior’s security policy
or minimum standards, the risk is identified
by subject matter experts, reviewed with
applicable risk owners and steps agreed
to manage any risks identified.
In 2022, information security continued to be
a key area of focus to safeguard the Group’s
assets, with some of the Group’s employees
continuing to work from home in
environments that could not be directly
controlled by the Group’s Head of Information
Security. Working from home was facilitated
by secure remote access to the operating
businesses’ computer networks. During the
year, all staff received training and regular
reminders about the risks related to
information security and the importance
of awareness of matters such as fraud,
scammers and ransomware, proper use
of the internet and smart downloading.
The Group’s Head of Information Security
provides regular updates to the Board and
attended the September 2022 Board meeting
to formally present a report on information
security issues identified during the year,
the improvements to security made and
the plans for the future.
Targets and Objectives
In 2019, the Group implemented a three-year
rolling Information Security plan, which
documented its mission to improve security
maturity and reduce business risk across
the Group. As capabilities were introduced,
metrics were developed and routinely reported
(including to the Executive Committee) which
measured effectiveness and provided a
feedback loop to the ongoing plan. In July 2022,
the Executive Committee approved a new
Information Security strategy, with the objective
of further maturing the Group’s cyber defences
for the next three years.
Physical and Technical Safeguards
The new three-year Information Security
strategy builds on existing physical and technical
safeguards already in place by creating a more
mature security infrastructure with growing
capability, using a risk-based approach.
Certification
The Group’s Information Security policy is based
upon a number of recognised, international
standards, including ISO 27001, NIST CSF and
the CIS top 20 controls, which all the Group
operating businesses are required to follow.
Procedures for Outsourced Data Processing
Where third-party data processing is utilised, the
Group follows its internal data protection policies
and risk assessment procedures, including
reviewing contractual provisions for both
existing and new providers.
Sustainability Governance
Internal governance of the Group’s Sustainability
factors is reviewed at both Executive
Committee and Board level and the factors are
externally verified, where applicable. Further
details can be found on page 25 of the Annual
Report & Accounts 2022.
Product Safety
Product quality is absolutely core in all of
Senior’s businesses and activities. All of Senior’s
businesses have ISO 9001 accreditation for
manufacturing. The operating businesses
have additional aerospace and automotive
accreditations, dependent upon their intended
markets. Ultimate responsibility for product
quality and safety lies with the senior manager
of each business unit.
All products undergo service/safety risk
assessments, as required in Senior’s demanding
markets. Employees receive regular training
on product and service safety. All the Group’s
operating businesses have in place incident
investigation and corrective action policies and
procedures and quality testing programmes.
Product/service objectives or targets are
set by the operating businesses to meet
customer requirements and regular external
product/service safety audits are conducted,
where standards require.
Tax Transparency
Senior’s ‘Approach to Tax’ document can
be found on the Company’s website.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / OUR BUSINESS MODEL
OUR BUSINESS MODEL
We aim to create
value for all our
stakeholders through
our business model.
OUR PURPOSE
We help engineer the transition to a sustainable
world for the benefit of all our stakeholders.
We do this by:
• Using our technology expertise in fluid
conveyance and thermal management to
provide safe and innovative products for
demanding applications in some of the most
hostile environments.
• Enabling our customers, who operate in the
hardest-to-decarbonise sectors, to transition
to low carbon and clean energy solutions.
• Staying at the forefront of climate disclosure
and action by ensuring our own operations
achieve our Net Zero commitments.
WHAT
WE DO
Senior designs and
manufactures highly
engineered, technology rich
components and systems for
principal original equipment
manufacturers in the
worldwide aerospace and
defence, land vehicle and
power & energy markets.
The Group
has a global
footprint with
26
operating
businesses
Located in
12
countries
AEROSPACE
Read more about Aerospace on page 72
FLEXONICS
HOW WE DO IT
OUR STRENGTHS/DIFFERENTIATORS
Organisation
• A culture of autonomous collaboration
• Active sharing of best practices
• Complementary capabilities
• Leverage common customer and
People and culture
• Integrity and high ethical standards
• Maintaining a safe and healthy workplace
• Empowerment of local management,
within a well-defined control framework
supplier relationships
• Strong Divisions provide additional focus
on growth, performance and governance
• Ongoing investment in personal and
professional development at all levels
throughout the business
Financial
• Financial strength supporting investment
and innovation for customer benefit
Global footprint
• 26 operating businesses in 12 countries
covering five market sectors
• An integrated global footprint providing
customers with market proximity and
cost competitiveness
Read more about our people on page 34
Innovation
• Focusing on technology, product and process
innovation to better serve our customers and
enhance our business model
OUR CORE VALUES
“THE SENIOR WAY”
Safety
We operate safely, protecting people
and the environment.
Respect and trust
We work together with mutual respect
and trust.
Integrity
We operate with integrity and in an
ethical manner.
Customer focus
We put the customer at the heart
of everything we do.
Accountability
We do what we say.
Excellence
We continually strive to do better in every
aspect of our business.
Read more about Flexonics on page 76
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OUR VISION
Our vision is to be a trusted and
collaborative high value-added engineering
and manufacturing company delivering
sustainable growth in operating profit,
cash flow and shareholder value.
OUR STRATEGIC PRIORITIES
Focus on growth
We seek to outgrow our end markets, which
have structural long-term growth drivers,
both organically and through acquisition.
Considered and effective
capital deployment
Senior understands the importance of
considered and effective capital deployment
in the interest of maximising the creation of
shareholder value.
Talent development
Senior has a skilled workforce and highly
experienced entrepreneurial business leaders.
We invest continuously in technical skills and
professional and leadership development.
Autonomous and collaborative
business model
Senior’s business model is one of empowering
and holding accountable our businesses,
operating within a clearly defined divisional
structure, to develop and deliver business plans
in line with overall Group strategy.
Competitive cost country strategy
Senior has a global footprint to ensure we
stay competitive at a capability and cost level.
In addition to our North American
and European footprint, we have facilities
in Thailand, Malaysia, China, India, Mexico,
South Africa and the Czech Republic which
help to ensure we meet our customers’
cost and price challenges whilst enhancing
returns on investment.
High performance operating system
Senior has implemented a high performance
operating system, drawing on the many
excellent practices from across the Group,
through the Senior Operating System and
a comprehensive business review process.
Sustainability
We continuously aim to deliver our products
in a manner that is both environmentally
sustainable and supports economic growth
and long-term value creation for shareholders
through sustainable methods. We help tackle
climate change by applying our expertise and
technology across many different applications
in hard to decarbonise sectors.
Read more about our strategic priorities on
pages 42 and 43
OUR CULTURE
Our Values set out the principles and
standards of behaviour that drive
our culture.
The safety and wellbeing of our employees
is a priority in everything that we do, and our
safety culture has been key to how we have
successfully managed the business during
the pandemic, supporting employees through
very challenging times.
In our autonomous and collaborative business
model, our operational business leaders are
empowered and accountable, and set
the tone for their operations. The principles
of openness and transparency are strongly
encouraged and are evident across all of
our businesses.
OUR LONG-
TERM
SUSTAINABLE
VALUE
OUR EMPLOYEES
Inspiring entrepreneurial
and operational leadership
directs a highly motivated
and skilled workforce
OUR CUSTOMERS
Continuously delivering
competitive products and solutions
to customers with outstanding
quality and delivery performance
OUR SUPPLIERS
Developing reliable, ethical
and sustainable supply chains
ensuring we can meet our
customers’ requirements
OUR COMMUNITIES
Actively participating and helping
to improve the quality of life in our
local communities. Minimising our
environmental impact through peer
leading sustainability programmes
OUR SHAREHOLDERS
Generating value through
sustainable growth in
operating profit, cash flow
and shareholder value
PLANET
Caring for our planet by reducing
greenhouse gas emissions,
beneficially using our water
and recycling our waste
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / INVESTMENT CASE
INVESTMENT CASE
POSITIONED
FOR GROWTH
OUR PURPOSE
We help engineer the transition to
a sustainable world for the benefit
of all our stakeholders
AEROSPACE
CLEAR STRATEGY TO MAXIMISE SHAREHOLDER VALUE
FLEXONICS
Read more on pages 72 to 77
DIFFERENTIATED
BUSINESS MODEL
FOCUSED STRATEGIC
PRIORITIES
TRUSTED AND COLLABORATIVE HIGH VALUE ADDED ENGINEERING AND MANUFACTURING COMPANY
DELIVERING MINIMUM 13.5% ROCE (RETURN ON CAPITAL EMPLOYED) OVER THE MEDIUM TERM
STRONG CORE END MARKETS
Civil Aerospace
Increasing passenger demand to
fly and higher air traffic drives the
need for new and replacement
aircraft. Environmental pressures
to focus on clean technology
is ideal for Senior’s product and
technology portfolio
Defence
Defence remains a priority for
the US and has increased in
importance for other countries
given the current geopolitical
situation. Senior has key
positions on major funded
programmes
Read more on page 14
Read more on page 14
Land Vehicle
Demand driven by tightening
global emission control
regulations for truck, off-highway
and passenger vehicles
Read more on page 15
Power & Energy
Market leader of complex
fluid systems and products
Read more on page 15
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“Senior's Purpose and compelling
strategy provides a solid foundation to
support our future growth aspirations.”
David Squires
Group Chief Executive Officer
We do this by:
• Using our technology expertise in fluid conveyance and thermal management to provide safe
and innovative products for demanding applications in some of the most hostile environments.
• Enabling our customers, who operate in the hardest-to-decarbonise sectors, to transition
to low carbon and clean energy solutions.
• Staying at the forefront of climate disclosure and action by ensuring our own operations
achieve our Net Zero commitments.
LEADING POSITION IN
ATTRACTIVE MARKETS
LONG-TERM GROWTH
AND VALUE CREATION
Focus on IP-rich fluid
conveyance & thermal
management technology
and capabilities.
These capabilities are supported
by a strong body of design and
manufacturing process intellectual
property and know-how.
DELIVERING SUSTAINABLE GROWTH
OUR DIFFERENTIATORS
• Safety & ethics are always our highest priorities
• High performance operating system
• Intrinsically strong cash generation
• Autonomous and collaborative business
model with a robust control framework
• Strong balance sheet
• Technology, product and process innovation
supporting transition to clean energy
• Considered and effective capital deployment
• Global footprint
Read more about on page 38
SUSTAINABILITY LEADERSHIP
• First worldwide in A&D sector to have greenhouse
gas reduction targets verified and approved by the
Science Based Targets initiative
• CDP leadership rating of A on climate change
and Supplier Engagement Leader status on supplier engagement
• Lost Time Injury Illness Rate improved by 62% and Total Recordable
Injury Rate improved by 67% from 2015 to 2022
• Early adopters of Hampton Alexander and Parker
Reviews on gender and ethnic diversity targets
Read more about on pages 16 to 37
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / STRATEGIC PRIORITIES
STRATEGIC
PRIORITIES
The following seven
strategic priorities
are key elements
of our business
model which drive
the creation of
stakeholder value.
We have added
sustainability as the 7th
priority reflecting the
increasing importance
which our stakeholders
attribute to our work in
this area.
Our progress since these
priorities were established
is shown and they
continue to receive
specific attention
and focus.
Read more about Risks
and Uncertainties on
pages 60 to 71
CONSIDERED AND
EFFECTIVE CAPITAL
DEPLOYMENT
Senior understands the importance
of considered and effective capital
deployment in the interest of
maximising the creation of
shareholder value. All significant
investments undertaken by Senior
are assessed using a rigorous
investment appraisal process and
are supported by a business case.
The Group has a financial objective
to maintain an overall return on
capital employed in excess of the
Group’s cost of capital and to target
a minimum pre-tax return on capital
employed of 13.5% on a post IFRS
16 basis.
What we did in 2022:
• Increased ROCE by 370 bps
through significantly improved
profitability;
• Maintained our pricing and
return on capital discipline
when negotiating contracts
and assessing investments;
• Acquired Spencer Aerospace a
Fluid Systems fittings business,
a company specialising in highly
engineered, high-pressure
hydraulic fittings for fluid
conveyance applications;
• Continued to actively manage
the portfolio by reviewing our
operating businesses and
evaluating them in terms of
strategic fit within the Group;
• Reinstated dividend in 2022.
Our plans for 2023
• Continue to increase the
Group's ROCE;
• Integrate and grow Spencer
Aerospace in line with the
business plan;
• Continue to drive working capital
efficiencies at all operations;
• Continue to actively
manage portfolio.
Governance
The Board regularly reviews its
portfolio to ensure that long-term
value is being generated for
shareholders. Where appropriate,
divestments will be considered.
M&A opportunities are evaluated and
discussed at each Board meeting, as
appropriate, and the M&A and Prune
To Grow strategies are reviewed at
the Board’s Strategic Review.
TALENT AND
DEVELOPMENT
Senior has a skilled workforce and
highly experienced entrepreneurial
business leaders. It aims to further
develop and attract new talent,
supporting employees with online
tools to enable personal and skills
development. The Group has
a strong focus on diversity and
inclusion across the business
including on our Board and Executive
Team. We were early adopters of
Hampton Alexander and Parker
Review recommendations on
gender and ethnic diversity targets.
What we did in 2022:
• Ongoing actions as a result of
the Global Employee Opinion
Survey feedback;
• Focused on attracting and
developing talent. To support
this, we continued to implement
“Recruit”, our online recruitment
system, and supplemented local
training and development activities
by launching more skills and
personal development eLearning,
via “Learn”, our global learning
management system;
• Continued to focus on diversity
and inclusion across the business
with a particular focus on gender;
• Undertook our second Global
Employee Opinion Survey to
assess culture and employee
engagement across the Group.
Our plans for 2023
• Developing and implementing
action plans following the Global
Employee Opinion Survey run
in October 2022;
• Relaunching our Group Leadership
Development Programme;
• Continue to focus on diversity
and inclusion across the business
with a particular focus on gender;
• Focus on talent acquisition and
retention plans, and future skills.
Governance
The Executive Committee conducts
an extensive review of operating
businesses leadership succession
plans. The review scrutinises our
talent pipeline, identifying successors
or interim cover for key roles across
our businesses. Appropriate
development plans are in place and
recorded in "Perform", our
performance management system,
to enable individuals to fulfil their
potential. The Board formally reviews
the succession plans for the
Executive Team and their direct
reports on a bi-annual basis.
FOCUS ON
GROWTH
Senior’s end markets have structural
long-term growth drivers. We believe
it is possible to outgrow our end
markets and we seek to do that
both organically and through
acquisition by:
• Growing market share, particularly
with key customers;
• Focusing on technology and
product innovation;
• Geographical expansion;
• Seeking out and exploiting
adjacent opportunities organically
and through acquisition.
What we did in 2022:
• Succeeded in expanding our
Space business for both low orbit
satellites and launch vehicles;
• Secured higher share of dual
sourced content as a result of
strong operational performance;
• Senior Flexonics Bartlett launched
EGR cooler production for heavy
duty truck engine replacing
an incumbent;
• Completed the acquisition
of Spencer Aerospace
Manufacturing;
• Continued to pursue the utilisation
of Additive Manufacturing ("AM"),
both non-metallic and metallic, in
our product offerings. Senior now
has AM products on both civil and
military programmes;
• Developed new material
technologies in support of our
customers’ requirements for
thermal management applications
for passenger car and commercial
vehicles.
Our plans for 2023
• Develop capability for the
manufacture of highly engineered
standard parts, which will include
hydraulic fittings, metallic flanges
and clamps to vertically integrate
and support our customers’ high
rate production requirements;
• Establish and develop capability
for the design, qualification,
manufacture and supply of
hydraulic fittings in Europe to
support European OEMs;
• Develop products for battery
cooling, thermal management
of inverters, hydrogen gas
compression and fuel cells;
• Develop fluid distribution systems
for hydrogen powered fuel cells
& electrolysers.
Governance
Growth opportunities are
regularly reviewed by the
Executive Committee and Board.
The Technology Council is in place
under the chairmanship of the
Group Director of Business
Development & Strategy and
progress on strategic technology and
product developments are regularly
presented to, and discussed by, the
Executive Committee and the Board.
The long-term strategic growth
plan is evaluated at the annual
Board Strategy Review and
monitored continuously.
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ENHANCE SENIOR’S
AUTONOMOUS AND
COLLABORATIVE
BUSINESS MODEL
Senior’s business model is one
of empowering and holding
accountable our operating
businesses to operate within a
clearly defined control framework
to develop and deliver business
plans in line with overall Group
strategy. Increasing collaboration
amongst operating businesses in
the Group is a priority to ensure
profitable, risk-reduced solutions are
created to address our customers’
needs whilst maintaining the
autonomous business structure.
Business leaders throughout Senior
are actively embracing collaboration
activities with priorities set at both
divisional and Group level in
consultation to address and
expand in our evolving markets.
What we did in 2022:
• In line with customer
expectations, we established an
AS 13100 Council to share best
practice and co-ordinate efforts
to ensure on time completion of
the certification;
• Refocused our Technology
Council to align our technology
investment with our purpose,
focusing on research and
development that supports
growth in low carbon
technologies, completing projects
aligned to renewables;
• Participated on R&D projects
with our customers, focusing on
new technologies that will be
employed on future programmes.
Our plans for 2023
• Form a new Global Market Team
(GMT) for Hydrogen with both
Flexonics and Aerospace
participants.
• Launch inaugural Group-wide
Innovation Competition
sponsored by the Technology
Council aimed at inspiring
innovation and encouraging
greater collaboration and
participation with our wider
Technology Council activities;
• Further enhance effectiveness of
the IT Council through quarterly
conferences to share best
practice and collaborate on
initiatives that support our InfoSec
Strategy for 2023 to 2025.
Governance
The Executive Committee and
the Board regularly review the
organisational design of the Group
to ensure it is aligned to our
strategic plan.
COMPETITIVE COST
COUNTRY STRATEGY
Enhance Senior’s global footprint to
ensure our operating businesses stay
competitive at both a capability and
cost level, with key investments
made in Thailand, Malaysia, China,
India, Mexico, South Africa, and the
Czech Republic to help ensure we
meet our customers’ cost and price
challenges whilst enhancing returns
on investment. Establishing
increasingly sophisticated capabilities
in these competitive cost countries
and optimising production capacity
to align with growing demand.
What we did in 2022:
• Doubled the production volume
of Senior Aerospace Mexico by
transferring key EBU assemblies
from our US businesses;
• Continued to invest and enhance
the capability of Senior Aerospace
Mexico to support production of
Fluid Systems products including
machining, welding and assembly;
• Secured contracts to fill capacity
in our cost competitive country
locations;
• Continued to transfer product lines
to locations where our customers
operate reducing supply chain risk
and supporting customer cost
expectations.
Our plans for 2023
• Continue investing and transferring
Fluid Systems product to Senior
Aerospace Mexico;
• Invest in more machining capacity
to support the production ramp
in Malaysia;
• Investing in machining to support
recently awarded A320 contracts
as rates increase in Malaysia
and Thailand;
• Continue to transfer cost sensitive
product lines to competitive cost
locations to support customer rate
increase where appropriate;
• Launch production of products
being relocated from a Western
European truck customer’s facility
to our plant in the Czech Republic;
• Relocate industrial products from
our operation in France to Czech
Republic, driven by customer’s
assembly being in the Czech
Republic. This will allow for
planned growth of aerospace
fittings in France.
Governance
The Executive Committee conducts
quarterly Business Reviews of all
operations. The Group Chief
Executive Officer and Group Finance
Director report and discuss progress
at each Board meeting. The overall
progress of the competitive cost
country strategy is reviewed at the
Board Strategy Review on a
regular basis.
SUSTAINABILITY
Sustainability is an integral part of our
strategy. We continuously aim to
deliver our products in a manner that
is both environmentally sustainable
and supports economic growth and
long-term value creation for
shareholders through sustainable
methods. Our engineering expertise
is key in helping to tackle the climate
change and clean air challenge as the
world transitions to a lower carbon
economy. We achieve this by
applying our expertise and
technology across many different
applications in hard to decarbonise
sectors.
What we did in 2022:
• Awarded the top ‘A’ score by
CDP in its global annual ranking
for disclosure and actions on
climate change.
• In February 2022, Senior was
awarded the highest leadership
status in CDP’s annual supplier
engagement ratings.
• CO2 emissions were reduced
further in our operations, keeping
us on track to deliver our Scope 1,
2 and 3 Science Based Target
Initiative (“SBTi”) verified Near
Term (2025) Targets.
• We have submitted our long-term
Scope 1,2 and 3 Net Zero Targets
to SBTi for validation.
• 41% of our electricity was
sourced from renewable energy,
an increase from 36% in 2021.
• We secured multiple
development contracts for
clean energy projects.
Our plans for 2023
• Continue to deliver our Scope 1,
2 and 3 Science Based Target
Initiative (“SBTi”) verified Near
Term (2025) Targets.
• Maintain our CDP leadership
status.
• Achieve verification from SBTi of
our long-term Scope 1,2 and 3
Net Zero targets.
• Secure additional development
and production clean energy
contracts.
Governance
The Executive Committee and the
Board reviews progress against our
sustainability targets at the regular
Board meetings, through the CEO’s
monthly report and during the annual
strategy review. The Board also
receives presentations from key
engineering and technology leaders
explaining progress with product
development aligned to our
customers decarbonisation goals.
INTRODUCED A HIGH
PERFORMANCE
OPERATING SYSTEM
Senior has implemented a high
performance operating system,
drawing on the many excellent
practices from across the Group.
The key elements include:
• The Senior Operating System: an
operational toolkit incorporating
best practice processes such as
lean and continuous improvement
techniques, supplier management,
new product introduction, 5/6S
methodology, factory visual
management systems, risk and
financial management;
• A comprehensive business review
process utilising a balanced
scorecard incorporating KPIs with
focus on performance, growth,
operational excellence and talent
development.
What we did in 2022:
• Our Aerospace Division Lean
Council met monthly to collaborate
and share best practices, while our
Flexonics Division lean champions
continued to leverage the Senior
Operating System tools;
• Added continuous improvement
champions to key Aerospace
businesses to drive faster
improvements;
• Both divisions conducted multiple
lean events with continuing focus
on cycle time reduction and cost
reduction, together with continued
targeted inventory improvement
workshops;
• Completed the roll-out of APQP
process standards across our
Aerospace operating businesses.
• Mitigated freight, materials,
labour, and energy inflation with
appropriate pricing actions.
Our plans for 2023
• Continue to diligently manage
supply chain and inflationary
pressures by having active
dialogue with our customers
and suppliers and mitigating for
inflation where possible as part of
negotiations in contract renewals;
• Continue events focused on
improving efficiencies and output
as demand increases;
• Work to improve capacity and
throughput in our Aerospace
operating businesses;
• Establish a supplier council
focused on improving supplier
on-time delivery, risk of supply
reduction, cost reduction and
insourcing opportunities;
• Continue to work to improve the
SOS Lean skill set of new
Continuous Improvement leaders
and Manufacturing Engineers
across the business;
• Continue to focus on improving
working capital efficiencies.
Governance
Our Vice President of Operational
Excellence chairs the Aerospace
Lean Council on a monthly basis.
The Executive Committee reviews
operational performance and the
Group CEO reports progress to the
Board at every Board meeting.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / TECHNOLOGY
TECHNOLOGY
IN THIS SECTION
“We continue to work collaboratively across
Senior to progress the key technology
themes that future-proof our product
portfolio and enable sustainable growth
across our end markets.”
Martin Barnes
Director of Business Development & Strategy
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Our Technology Themes
Our Enabling Technology
Refractory Lined
Louver Damper
Dampers are flow control devices
that are used in Thermal Oxidizers,
which convert hazardous volatile
organic compounds (VOCs) and
other pollutants into CO2 and H₂O
before emission into the
atmosphere.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Universal Expansion Joint
Expansion Joint assemblies act as
a thermal compensator for fluid and
gas conveyance ducts. These are
used in Petrochemical processing
plants, such as Catofin®
applications.
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Pressure Balance
Expansion Joint
Expansion Joint assemblies
compensate for mechanical or
thermal expansion & movement in
fluid and gas ducts. These are used
in Boiler Feed pump exhaust
system in Power Generation plants.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
45
STRATEGIC REPORT / OUR TECHNOLOGY THEMES
OUR TECHNOLOGY THEMES
Senior’s fluid conveyance and thermal
management businesses have design
IP (intellectual property) and our
structures businesses have
manufacturing IP and know-how.
Both are underpinned by our
investment in advanced
manufacturing technology and
supported by our extensive design
and engineering expertise, and
collaboration through our Technology
Council. Our core technologies
support deliverable growth
opportunities in all our end markets.
FLUID CONVEYANCE AND
THERMAL MANAGEMENT
PROOF OF CONCEPT DEVELOPMENT FOR
AEROSPACE HEAT EXCHANGERS
Senior’s extensive experience in the design and
manufacture of fluid conveyance applications provides
significant insight into the system requirements for various
aerospace applications. Our fluid conveyance products
frequently connect to heat exchangers within airframe and
engine applications and, in response to customer requests
for a single-source system provider, we are investing in
the design and manufacture of a proof of concept high
temperature heat exchanger for aerospace applications,
building on our extensive experience gained in producing
high performance heat exchangers for land vehicles and
battery thermal management.
We have been able to demonstrate significant
performance and weight advantages by leveraging our
Additive Manufacturing (AM) expertise to outperform
“conventional“, commonly available, heat exchanger
designs. Developing this new product capability will open
significant new markets for Senior and complements our
existing expertise and knowledge in fluid conveyance
system and component design, demonstrating how we
can leverage AM techniques and apply our land vehicles
expertise to new aerospace applications.
Fluid conveyance is the flow of fluid,
including both gases and liquids, within
a system. Senior has extensive
background IP in fluid conveyance
applications. For example, Senior is a
market leading design and manufacturer
of bleed-air systems on modern
turbofan engines for commercial
aerospace applications. For land vehicle
and industrial applications, we have
applied our extensive expertise in
fluid conveyance systems on multiple
exhaust gas ducting applications,
ranging from half-inch diameter
passenger car systems to large size
power plant applications which are
up to two metres (80 inch) diameter.
In thermal management, as the pace of
electrification picks up, our technology
and IP can be used to develop products
that can prolong the life of the battery
and increase charging speed. Senior has
already developed custom solutions for
both passenger car and heavy duty
Battery Electric Vehicles. As the market
moves towards zero-carbon solutions
for propulsion and energy generation,
we are leveraging our core thermal
management expertise for fuel cell
applications, such as recuperators (for
polymer membrane or PEM fuel cell
systems), and dielectric compensators
(for solid oxide fuel cell systems).
Capability highlights
• World class design capability
for complex fluid conveyance
systems incorporating zero-leakage
flexible joints and couplings to
compensate for vibration and
thermal displacement.
• Industry leader in the design and
fabrication of highly engineered
edge-welded and formed bellows
devices and components from
3.2 millimetres to 5.1 metres
diameter for various applications,
including frictionless servo-
pneumatic actuators.
• Component and system level
simulation and analysis, including
Finite Element Analysis (FEA),
Computational Fluid Dynamics (CFD)
and vibration analysis, plus verification
and qualification testing.
• Extensive expertise with thin-wall
aluminium, copper and stainless steel
structures for demanding thermal
management solutions for battery
cooling, fuel cells and cryogenic
applications.
• Additive Manufacturing (AM)
capabilities in both metal and polymer
materials as an enabling technology
for complex high-pressure and
low-pressure ducting systems
and heat exchanger designs.
Senior is developing a new heat exchanger product
line focused on aerospace applications, combining our
traditional experience from land vehicle applications
and design freedom enabled by our Additive
Manufacturing capability.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
GROUP REVENUE BY TECHNOLOGY THEME
Thermal Management
Product and System Design
& Manufacturing IP
68% Fluid Conveyance &
32% Structures
Complex Machining and
Manufacturing Know-How:
Process IP
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STRUCTURES
Our capabilities and strong customer
relationships have secured substantial
content on the key aerospace platforms.
Modern airframes and turbine engines
require durable lightweight components
manufactured to extremely tight
tolerances that operate in extreme
environments. Senior is a trusted
partner for high value-added engineering
and manufacturing of critical structural
components for the leading OEMs in
the civil and military aviation sectors.
Capability highlights
• Extensive expertise in manufacturing,
• Highly vertically integrated, with
assembly and qualification of a
wide range of complex airframe,
aeroengine and power/
energy components
• State-of-the-art capabilities in
complex 5-axis machining and
fabrication, including toolpath
optimisation, robotics, on-machine
probing, and vibration dampening.
wide-ranging process qualifications
across machining, Non-Destructive
Testing (NDT), special processes,
welding and forming.
• High level of collaboration between
operations in North America,
the UK and Southeast Asia
including software model-based
engineering capabilities.
ON-MACHINE PROBING FOR COST AND
QUALITY IMPROVEMENTS
Senior manufactures some of the most complex
machined parts for various airframe and engine platforms.
A good example is an extremely complex engine casing
manufactured from the heaviest single piece titanium
investment casting in the world. This part has over three
thousand machined features, many of which have very
tight tolerances.
Senior uses the most advanced mill-turn machine
technology available to manufacture the part, however,
tolerances on the component are at the edge of the
machine’s capabilities. Maximum use is made of in-
process probing to precisely measure feature dimensions
automatically and adjust the depth of finishing cuts to
account for part-to-part variation as well as any process
drift without operator intervention. This allows us to
maintain high levels of conformance, minimise errors,
deliver customer efficiencies and improve operator safety.
Over the last 18 months, Senior has applied on-machine
probing routines across multiple complex machined
components, resulting in cycle time savings and
significantly improved quality and process capability.
By using on-machine probing extensively, Senior has
significantly improved quality and process capability
on highly complex machined components.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
47
STRATEGIC REPORT / OUR ENABLING TECHNOLOGY
OUR ENABLING TECHNOLOGY
In support of our core technology
themes, Senior has identified two
key enabling technologies that
underpin innovation throughout
our product development and
manufacturing lifecycle: Additive
Manufacturing and Digitisation.
Our Technology Council ensures
that these technologies are
collaboratively developed to ensure
that we continue to provide safe
and innovative products that meet
customer needs.
ADDITIVE MANUFACTURING
Additive Manufacturing (AM), sometimes
referred to as 3D printing, is a key enabling
technology for Senior that underpins the
development of novel product designs across
our product portfolio. AM offers boundless
possibilities for designers to develop unique
and innovative product designs unconstrained
by traditional manufacturing process limitations,
enabling the design to be optimised for a
multitude of different characteristics such as
weight, performance parameters and
physical envelope.
Our team has skillfully optimised the AM
machine and process parameters, based on
real-world aerospace production applications.
We have built an unparalleled, proprietary
dataset of AM process parameters that allows
our customers to have complete confidence
in our ability to produce AM parts that are fully
qualified for series aerospace production. In
conjunction with our robust quality system,
Senior obtained Nadcap certification for AM
processes in 2022, which only a handful of
other companies have achieved worldwide.
Senior has made significant investments in AM,
both from a hardware and infrastructure
perspective as well as a capability and expertise
perspective. In 2017 Senior established our
Advanced Additive Manufacturing centre at our
Senior Aerospace SSP facility in Burbank, CA.
Since then, we have established a highly
integrated AM process capability covering every
aspect of AM design, build, post-processing,
and material characterisation – including a fully
equipped and accredited materials laboratory.
In addition, we have made significant
investments in building AM design expertise,
which is vital to take full advantage of the
freedom that AM processes can offer. These
include AM process simulation tools and an
in-depth knowledge of what features can be
produced reliably with AM.
Capability highlights
• Nadcap certification for metal AM process
capability – significant achievement
highlighting the robustness of our AM
production system.
• Full vertical integration of the AM design and
manufacturing process, including all post-
processing and finishing steps. Achieved
significant experience integrating AM-derived
subcomponents into subsystems and
modules with traditional fabricated i.e.
welding and brazing methods.
• AM process simulation and extensive process
parameter dataset allows us to predict and
subsequently optimise various design
candidates for predictable build performance
in production.
We are currently working with a number of
Aerospace OEMs and Tier 1 suppliers on
qualifying various AM components for
production applications. These range from
fuel and oil flow components for high volume
single-aisle aerospace applications, to critical
structural components for next generation
defence platforms. In all these cases, our
customers have chosen to work with
Senior due to our proven pedigree on
AM production capability, as well as our
wider design expertise.
We consider our AM capability to be an
integral part of our product design and
manufacturing technology toolkit. We are
prioritising investment to enable the
development of process parameters to
perfect the build process, as well as
developing design expertise to take full
advantage of AM’s ability to enhance
product performance.
• Internal design simulation and analysis
capabilities have helped us fully
demonstrate the benefits AM can offer,
such as part consolidation, performance
improvement and weight reduction in
a variety of demanding aerospace
applications.
• Additive Manufacturing capabilities in both
metal and polymer materials as an enabling
technology for complex high-pressure and
low-pressure ducting systems and heat
exchanger designs.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
ADDITIVE COMPONENTS
FOR SUPERSONIC FLIGHT
DEMONSTRATOR
Senior Aerospace SSP (SSP) is working on
NASA's Quiet SuperSonic Technology
(QueSST) programme. The research aircraft
will be used to collect data of a quiet sonic
boom generated by the unique design of the
aircraft aimed at lifting the ban on commercial
supersonic travel over land; a breakthrough
that would open the door to an entirely new
global market for aircraft manufacturers. SSP
has successfully designed and manufactured
the bleed air duct system for the research
aircraft using both conventional manufacturing
methods as well as advanced Additive
Manufactured (AM) for critical portions of the
system. The bleed air duct system comprises
several hundred individual part numbers, of
which over 40 were made via AM.
The use of AM in combination with
conventional machining and welding
processes allowed the SSP design team
to create an innovative, complex system.
AM builds components layer-by-layer without
the need for either special forming tools or
dedicated fixturing, creating design
opportunities to enable multiple components
to be consolidated into single assemblies
thus reducing part count, creating shorter
lead times and lighter weight components,
whilst improving the system's operating
performance compared to a conventional
bleed air duct system.
Manufacturing such a large number of
components with very complex features,
thin walls, and previously "unprintable"
characteristics required significant
collaboration between SSP and the AM
machine builder and raw material (i.e., metal
powder) providers, and showcases Senior's
Additive Manufacturing design and build
expertise for complex aerospace
production applications.
Additive Manufacturing
Our internal expertise in
Additive Manufacturing allows
us to overcome constraints
of traditional manufacturing
processes in developing
innovative, high-performance
solutions for demanding
applications.
DIGITISATION
Digitisation, or the fourth industrial revolution,
is a broad field with multiple definitions
covering the adoption of digital technologies
in manufacturing. Multiple OEMs are already
focusing on operational data collection for
value generation throughout the entire product
lifecycle. To this end, we have seen increased
efforts by OEMs to ensure a minimum level
of digital capabilities throughout their supply
chains through supplier focus groups, and
regular scorecards grading suppliers’ capabilities
in terms of digital readiness, automated data
exchange and native product data formats.
Accordingly, Senior’s focus on Digitisation
relates to three specific focus areas:
1.
Design and Engineering development
toolsets to standardise the design and
simulation/analysis tools used within a
number of Senior’s Operating Businesses
to achieve manufacturing cost synergies
and accelerated adoption across our
business units.
2.
3.
Project management & Engineering
Data management, covering PLM
(Product Lifecycle Management) and
MBD (Model Based Design). Adoption
and implementation of PLM is essential
to streamline our product development
cycles by encouraging reuse of common
engineering data and eliminating
inefficiencies and lost time due to design
data change/version control issues. Our
MBD efforts are focused on using “rich“
models with embedded manufacturing
and quality control information and
requirements, removing the need for
additional documents and drawings.
Operational Technology and Process
Management. Our operating businesses
are working on monitoring real-time
process data with the use of IIOT
(Industrial Internet of Things) and
machine monitoring to optimise
resource usage and production planning.
Multiple sites are connecting the
machine/resource monitoring data
directly into their ERP systems, moving
towards a true Manufacturing Execution
System approach to resource planning.
Capability highlights
• PLM solutions in use across multiple
operating businesses, especially in the
build-to-spec environment
• Standardised capability to use rich model data
(e.g. ISO 10303-242 STEP AP 242 standard)
natively for all aspects of downstream
engineering data processing.
• Standard database of engineering
simulation and analysis tools with cross-
functional team looking to optimise usage
of these tools across Senior as part of the
Digitisation technology focus.
Digitisation
We are actively pursuing
Digitisation as an enabling
technology across all our
product and process technology
development processes to
improve efficiencies and
promote collaboration at
all levels.
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DIGITAL PLATFORM
FOR ENGINEERING
PROJECT MANAGEMENT
One of Senior’s Aerospace businesses has
successfully implemented a cloud-based
software solution for engineering project
portfolio management. The key driver was the
need to update and modernise the existing
processes for managing engineering resource
allocation, project portfolio management and
task prioritisation across multiple projects
operating under significant resource
constraints. Historically, Senior has used
various standalone project management
tools such as MS Project and bespoke
spreadsheets to manage these tasks.
As part of our Technology focus on
Digitisation as an Enabling Technology,
Senior implemented a cloud-based work
management platform focused primarily on
engineering project management. Automated
resource management, workflows and task
notifications have significantly improved
engineering resource efficiency and allowed
significantly higher throughput even in the
face of challenging personnel constraints.
The cloud based software gives users an
easy-to-use visual interface to interact with
collaborators across multiple locations. A key
advantage with the new work management
platform is the ability to develop customised
workflows to automate typical engineering
processes such as review and approval
cycles, status rollups and summary data
for presentations and dashboards. This has
significantly improved the level of
collaboration between various project teams,
as well as enabling automated email
notifications and reminders to allow scarce
technical resources to focus on value-added
tasks rather than reporting and status
reporting to management.
Future uses of the platform include the ability
to conduct brainstorming and visualisation
sessions during the initial discovery phases
of the project to help tighten project scopes
and improve on-time delivery of new
product development.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
49
STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT
STAKEHOLDER ENGAGEMENT
Senior’s engagement with stakeholders is a continual
process which embeds the highest standards to ensure
the business's success. Our stakeholders are people,
communities and organisations with an interest or
concern in our purpose, strategy, operations and actions.
Senior engages with five key groups – our employees,
customers, suppliers, communities and shareholders.
By engaging and collaborating with our stakeholders
we can ensure our business delivers long-term
sustainable value.
OUR STAKEHOLDERS
Career development opportunities
Skills, loyalty and value creation
Safe and high performance products
and value creation
Trust and long-lasting relationships
EMPLOYEE ENGAGEMENT
The calibre and capabilities of the people within the Group
drive our success and we recognise the importance of
attracting the best talent into the business and retaining and
developing individuals to enable them to do their best work.
Read more on page 51
CUSTOMERS
Our Core Value of “Customer Focus” firmly establishes
that we put our customer at the heart of everything we do.
Read more on page 52
CONTINUOUS
STAKEHOLDER
ENGAGEMENT
Respectful relationships and
supply chain stability
SUPPLIERS
Constructive engagement with suppliers sets fair
expectations on safety, quality, ethical behaviour,
commercial terms and delivery performance.
Safe, high quality, ethical and cost effective
suppliers
Read more on page 53
Sustainable growth in operating profit,
cash flow and shareholder value
SHAREHOLDERS
Senior engages regularly with our investors to ensure
our priorities are aligned on strategy, capital deployment,
sustainability goals and value creation.
Investment and valuable feedback
Read more on page 54
Local support and value creation
Talent for recruitment and
sense of community
COMMUNITIES
We recognise our responsibility to the communities
in which we operate.
Read more on page 55
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EMPLOYEE ENGAGEMENT
How we engage
During 2022, we placed great emphasis
on employee engagement which was
particularly important as we emerged from
the impact of the COVID-19 pandemic.
Gradually we were able to return to more
normal working conditions, with business
leaders able to hold all-hands meetings to
communicate business objectives and
answer questions from employees. We also
reintroduced smaller group meetings,
question and answer sessions, skip level
meetings and employee focus groups. We
continued to utilise some of the new ways
of engaging and communicating with
employees that we had developed during
the pandemic, for example employee apps,
TV information screens, video messages,
and tried and tested methods like
newsletters and employee representative
bodies such as works councils.
A key area of focus during the year was
implementing the action plans following the
successful 2021 Global Employee Opinion
Survey. 2021 was the first time we had
run a global survey and the output provided
a rich source of employee feedback,
suggestions for improvement and
affirmation of what we do well. The survey
provided feedback on three key areas;
Engagement, Values, and Health and
Wellbeing. Each operating business
developed their own action plans and
communicated them to their teams.
Actions included skills training for managers
and supervisors to improve personal
development, an increase in focused
technical training, enhanced wellbeing
offerings such as wellness apps, employee
recognition and social activities, and
reviewing pay, benefits and resourcing
levels post pandemic.
In the 2021 survey “Mission”, which is
linked to strategy and indicates whether
people are inspired by the purpose of the
business, was identified as an area for
improvement, and an area that our
operations worked on following the 2021
survey. Business leaders will continue to
focus on communicating their strategy
and mission to their teams.
unexpected that Reward is still an area
for improvement, when considered in
the context of the current economic
environment. Similarly, there was an
improvement in our score for “Mission”,
although it remains an area of focus.
For much of the year, and depending on
geographical location, our operations had
to remain vigilant regarding COVID-19
outbreaks and supported employees by
continuing COVID-19 safe working protocols
and by encouraging them to be vaccinated.
Outcome of engagement
At the end of September 2022, we
launched our second Global Employee
Opinion Survey. We once again asked our
employees for their opinions and we saw
a small improvement in the overall
engagement score compared to May 2021,
when we ran our first global survey. Using
the same questions enabled us to review
the feedback in comparison to the first
survey. As in 2021, the response rate was
81%, which for manufacturing companies,
with a significant number of employees
completing the survey, who do not have
ready access to company emails, is a high
participation rate, and in itself is a positive
indicator of engagement and our employees
desire to provide feedback.
Our overall engagement score improved
slightly from 7.1 to 7.2 out of a possible
maximum of 10. The main engagement
question, “Overall, how satisfied are you
working at Senior?”, score increased from
7.4 to 7.5. Goal setting, peer relationships,
organisational fit and meaningful work,
remain our best scoring areas. Compared
to the previous survey the score for Reward
improved, however it was still highlighted
in the 2022 survey as an area for further
improvement both in terms of how
individuals are rewarded but also the
process for determining pay. It was not
Company actions responding
to engagement outcome
Management-level actions
Action plans developed following the 2021
Global Employee Opinion Survey, were
monitored and updates provided by the
operating businesses throughout the year
via business reviews. Operating business
leadership teams and the Executive
Committee are analysing their 2022 Global
Employee Opinion Survey feedback and
action planning is underway across the
Group. There is a framework in place for
the businesses to provide regular updates
to the Executive Committee and the Board
throughout 2022. The next global survey
will be in 2024.
Board-level actions
Celia Baxter, the Non-executive Director
with responsibility for employee
engagement, and Jane Johnston, Group HR
Director have continued their programme
of face-to-face focus groups. As well as
holding the focus groups, site visits included
factory tours and meeting leadership teams.
They visited four US operations and our
German business, holding 19 sessions in
2022. The sessions afford an opportunity
to engage directly with a cross section of
employees, allowing them to ask questions
and provide feedback. As always, the
discussions were positive, enthusiastic
and interactive.
The Board reviewed progress against the
2021 Global Employee Opinion Survey
action plans and were provided with high
level feedback from the 2022 survey during
the Board meeting in December.
SENIOR GLOBAL EMPLOYEE OPINION SURVEY RESULTS
Overall engagement score
(of a max of 10)
Health and Wellbeing score
(of a max of 10)
7.5
7.2
81%
Employee participation
All comments
39,020
Health and Wellbeing
Values
Max Score: 10
5
1
4
2
3
1 Social
Wellbeing
2 Physical
Wellbeing
3 Organisational
Support
4 Mental
Wellbeing
5 Overall Health
& Wellbeing
Max Score: 10
1 Safety
6
1
5
2
4
3
2 Respect
& Trust
3 Integrity
4 Excellence
5 Customer
Focus
6 Accountability
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
51
STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT CONTINUED
CUSTOMERS
How we engage
We maintain an ongoing dialogue with our
customers across Senior, including at the
operating business, Division and Group senior
management levels. Division-level Customer
Relationship Managers and Global Marketing
Teams are in place in Europe, the UK, and the
USA to interact with and support all levels of our
largest customers, ensuring that we monitor and
understand as much as possible the fundamental
dynamics impacting their businesses and the
potential knock-on effects on their end-markets.
This regular and cross-functional insight gives us
the ability to respond appropriately when issues
arise and to quickly capitalise on opportunities
across the whole Group. These interactions also
provide the information necessary for Senior to
develop strategies that link up with our
customers' forward-focused efforts, such as
their sustainability goals, including the transition
to a zero carbon economy, their new competitive
offerings to the market place, and mutual
investments in research and technology.
We actively seek feedback from our customers
via frequent interactions between our operating
business's customer account and business
development managers, with monthly reporting
of activities and monitoring of customer
performance scorecards across the Senior
businesses. Whilst Senior regularly receives
customer awards for operational excellence, in
those cases where our performance falls short
of expectations, we actively engage with the
customer to agree improvement targets,
implementation schedules, resource dedication,
and executive involvement.
Furthermore, we continued to conduct regular
Senior Management Meetings, including at
CEO level, with our major customers in 2022
as well as frequent interactions regarding supply
chain and labour issues, operational metrics,
communications, growth strategies, and market
dynamics. These executive-level meetings,
as well as forming a vital part of our ongoing
relationship management, helped to clarify
and focus our mutual activities towards driving
both our success. Remaining close to our
customers helped us to support them through
a challenging supply chain and operational
environment, which has helped to position
Senior as a valued and trusted supply partner.
Outcome of engagement
The close partnerships we have nurtured with
our customers allowed us to mitigate operational
challenges, which stemmed from industry-wide
supply chain and labour shortages. Together,
we have worked to solve these challenges,
supporting our customers production and
development programmes to the maximum
extent possible.
As the opportunity for face to face meetings
improved post pandemic, we were able to have
much stronger engagement with customers
particularly in relation to clean energy product
and technology development.
Company actions responding to
engagement outcome
Management-level actions
Listening to and understanding our customers,
their programme/market issues and
opportunities provides valuable insight to Senior,
which helps to inform our future technology,
product development, and innovation
investments and activities towards ensuring
Senior remains a healthy, vibrant, and reliable
supplier in all the industries we operate in.
Board-level actions
Our Board receives detailed monthly updates
relative to customer activities.
"Actively seeking
feedback from our
customers is vital
to ensuring we are
aligned to their needs,
and that we work
closely with them
to provide solutions,
resulting in long-term,
positive relationships.”
Launie Fleming
Chief Executive of Aerospace Division
SENIOR AEROSPACE THAILAND AWARDED MEMBERSHIP
OF ROLLS-ROYCE’S “HIGH PERFORMING SUPPLIER GROUP”
The growth of Senior Aerospace Thailand
(SAT) in recent years is due in no small part
to the level of engagement SAT has built
with stakeholders, particularly suppliers and
customers. This was exemplified by the award
of a place in Rolls-Royce’s “High Performing
Supplier Group” in 2022. Membership is
gained by the attainment of “class leading”
scorecard status. SAT achieved this
recognition through sustained improvement
in performance and customer collaboration
using formal engagement plans, and now
benefits from additional executive contact and
prioritisation for new sourcing opportunities.
The relationship with Rolls-Royce started in
2013, when SAT began supplying aerofoils
for Rolls-Royce’s (Trent XWB, Trent 1000
and V2500 ) engines, building on the existing
aerofoil supply relationship between SAT’s
sister company, Senior Aerospace Weston,
and the customer.
Using best in class processes for aerofoil
machining, from 2014 to 2018, the SAT
team rapidly increased its production output.
Collaborative management of the forging
supply, machining capacity and engineering
approvals between SAT and the Rolls-Royce
teams in the UK and Singapore created a
strong and trusting working relationship,
addressing challenges as they arose. In 2019,
SAT’s performance was recognised by being
awarded the “Most Improved Supplier”
award by the customer.
SAT has a strong engineering capability
and is an active and recognised member
of the Rolls-Royce “Supply Chain Digital
Transformation Focus Group”. Through
collaboration in this group, SAT has
developed areas of innovation including
automating the creation of programmes
for inspection equipment directly from
the customer’s digital model.
52
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Engaged with around
340
suppliers through CDP’s
supply chain programme
"Our collaboration with
suppliers enabled the
operating businesses
to mitigate ongoing
supply chain volatility."
Mike Sheppard
Flexonics Division Chief Executive
Officer
SUPPLIERS
How we engage
We engage with our suppliers in a variety of
ways, including during tender and bid processes,
as well as on-site visits and audits where
appropriate. As supply chain constraints
persisted through 2022, the Group continued to
employ two-way communication channels with
its supplier base to help mitigate the impacts of
material availability and inflationary pressures
across operating businesses. Our efforts
included supplier surveys and close co-ordination
with suppliers regarding lead times, demand
changes, transportation options and other
sources of volatility. The Executive Committee
continues to closely monitor the health and
performance of critical Group suppliers and
supports the operating businesses in their
engagement with suppliers where necessary.
In line with our Contract Review Policy, which
is mandatory for all operating businesses, we
continue to communicate the requirements of
the Group Responsible Sourcing Policy to key
suppliers, and provide feedback to our suppliers
on their performance and, where necessary,
will agree improvement action plans.
The Group also completes bi-annual reporting
pursuant to The Reporting on Payment
Practices and Performance Regulations (2017),
demonstrating our commitment to remain a
strong financial partner with our suppliers.
The Board reviews the bi-annual reports for
our UK subsidiaries to monitor compliance
with negotiated vendor payment terms.
For Scope 3 Greenhouse Gas emissions, Senior
committed that 80% of its suppliers by spend,
covering purchased goods and services and
capital goods, will have science based targets
by 2025. We identified suppliers to respond to
CDP’s questionnaires through an online platform.
We arranged webinars and video calls with
suppliers to provide support, communicate
expectations and exchange best practice ideas.
In 2022, we increased the number of webinars
and video calls and were successful in engaging
with significantly more of our supply base as
a result.
Outcome of engagement
During 2022, our collaboration with suppliers
enabled the operating businesses to mitigate
ongoing supply chain volatility through lead time
management, order flexibility and other
cooperative solutions.
As part of CDP’s supply chain engagement
programme, we identified and engaged
with around 340 suppliers, accounting for
approximately 80% of the Group’s total spend.
We increased the number of companies
responding from 94 in 2021 to 160 in 2022.
A significant number of our suppliers were
responding to CDP for the first time, a positive
reflection of our increased engagement activity.
The insights from the engagement programme
are being used to set strategy and prepare for
the 2023 supplier climate programme.
In February 2022, we were informed by CDP
that Senior was awarded the highest leadership
status in its annual engagement ratings based
on our Supplier Engagement Rating (“SER”).
This put us in the top 8% of companies on
this metric.
Company actions responding to
engagement outcome
Management-level actions
Supply chain challenges and inflation remained
principal risks to the Group in 2022. As a result,
supply chain and inflationary concerns, as well as
related mitigating actions, continued to be focal
points during operating business reviews and
Executive Committee meetings throughout
the year.
The Group Chief Executive is directly engaged
with our largest suppliers on our Scope 3
greenhouse gas emission targets and provides
regular updates to the Board on progress.
Board-level actions
The Group Director of HSE & Sustainability
attended two Board meetings in 2022 and
provided an in-depth review on the progress in
engaging with suppliers in respect of the Group’s
Scope 3 targets. When necessary the Group
CEO has actively intervened at executive level
with critical under-performing suppliers.
Read more in the Risk & Uncertainties Section on
page 60
Read more in the Sustainability Section on page 16
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
53
STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT CONTINUED
SHAREHOLDERS
How we engage
In 2022, the Group increased its engagement
with shareholders, both by the Executive team
and the Group Chair.
The Group’s Chair attended the full-year and
interim results announcements in February and
August 2022, respectively. Additionally, the Chair
undertook a series of solo meetings with the
largest shareholders to receive feedback on
strategy, capital allocation and management.
As the Group resumed its normal active Investor
Relations programme, we kept an ongoing
dialogue and engaged with shareholders
throughout the year using a diverse and tailored
range of channels:
• Twice in the year, the Group Chief Executive
Officer, Group Finance Director and Director
of Investor Relations & Corporate
Communications undertook a series of mostly
face-to-face as well as some virtual meetings
(by video conference or conference call) with
our major shareholders, following the
announcement of the full-year and interim
results. These meetings centred around the
detailed performance of the business, the
Group’s strategic objectives and how Senior’s
fluid conveyance and thermal management
capabilities are key enablers as we transition
to a low carbon economy. We used these
meetings to understand our shareholders’
views and address any concerns they may
have about the Company.
• In addition, we issued three market updates,
on each occasion offering major shareholders
the opportunity of a follow-up call
with management.
• The Group resumed its overseas roadshows,
with trips to the US in April (New York) and
September (Chicago). The Group Chief
Executive Officer, Group Finance Director and
Director of Investor Relations & Corporate
Communication met with current shareholders
as well as potential shareholders to update on
Senior’s investment case, performance and
strategy. These roadshows were well
attended and greatly appreciated, with
attendees positively noting that Senior was
one of the first companies to resume
face-to-face meetings.
• In our efforts to return to in-person
engagements, the Group ran three investor
site visits during the year to showcase our
fluid system businesses: two in the UK to our
Senior Aerospace Bird Bellows and Senior
Aerospace BWT facilities and one in the US
to our Senior Aerospace Metal Bellows facility.
In attendance were the management teams
of the operating businesses and members of
the wider Executive team (Chief Executive
of the Aerospace Division and Group Director
of Business Development & Strategy).
These visits were well-received by the
shareholders who had the opportunity to
further understand the fluid conveyance
and thermal management capabilities of the
Group and see practical applications of our
products and services.
• The Group Chief Executive Officer hosted
the Group’s inaugural virtual fireside chat.
Investors were able to hear strategic insights
on Senior and to pose questions to the Group
Chief Executive Officer. The event allowed
attendees to gain a better understanding of
the Group’s evolution, near-term risks and
opportunities, and the longer-term vision and
strategy of helping customers operating in
sectors that are hard to de-carbonise, as they
transition to a low carbon economy.
• The Group has also leveraged digital platforms
to keep our investors up to date. Tools such as
our newly upgraded website homepage and
more widespread use of LinkedIn, provided
investors with updates on the Group covering
a range of topics (from performance to
sustainability, community case studies and
our capabilities).
Throughout the year we responded to requests
for further information and addressed any
questions or concerns.
The Group typically makes constructive use
of the Annual General Meetings (“AGM”) to
communicate with its private shareholders as
we value their engagement and provide them
with the opportunity to hear directly from the
Group Chief Executive Officer about the
performance of the business. In April 2022, we
were once again able to host an in-person event
for those who wanted to attend as well as a live
audio access to the proceedings of the AGM.
Private shareholders had the opportunity to
submit questions to the Directors and listen
to their responses.
54
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SHAREHOLDERS CONTINUED
Following on from the relationships built during
the Remuneration consultation process last year,
in 2022, Celia Baxter (our Senior Independent
non-executive Director and Chair of the
Remuneration Committee) made herself
available throughout the year for discussions
on key remuneration topics, and continues to
have regular interaction as appropriate with
major shareholders. Regular investor updates
were provided to the Board as part of the
reporting cycle, which includes feedback on
investor perceptions and market environment.
The feedback was provided either directly
from shareholders, from the Group’s Investor
Relations function or from our corporate broker.
Updates from Company-level engagement
with shareholders are also provided to the
Board as appropriate (i.e investor site visits,
fireside chats, etc.).
Outcome of engagement
• Increased engagement via the Investor
Relations function & Management with
current and potential shareholders both
through regular reporting and off-cycle
• Shareholders were kept fully informed of the
market dynamics and strategy and progress
of the Group through various channels
including in-person meetings, investor site
visits, a fireside chat and via social platforms
(i.e. website/LinkedIn).
• Maintained open channel of communications
with our shareholders on key topics such as
remuneration and targets.
COMMUNITIES
• Focused engagement with selected ESG
ratings providers to ensure shareholders
viewing this information have accurate
and up-to-date insight
• Provided reassurance that the Group continues
to be in a strong position and remains a good
investment opportunity.
• Received better understanding of shareholder
expectations in respect to strategic decisions
and sustainability, including climate change
risks and opportunities.
Company actions responding to
engagement outcome
Management-level actions
Engagement with shareholders during 2022
emphasised how focused they are on the
Group’s performance, strategy, end-market
recovery, and fluid conveyance and thermal
management capabilities. In response, we
resumed our normal active Investor Relations
engagement programme with in-person
meetings, investor site visits, fireside chats
and social platforms. The investors were able
to gain an appreciation for the wider Senior
leadership team and a practical understanding
of the fluid conveyance and thermal
management applications.
Board-level actions
Feedback received from engagement
with our shareholders has been taken into
consideration when making decisions on
Executive remuneration.
How we engage
Our Group’s operations continue to support their
local communities and nurture good relationships
with their stakeholders, finding ways to
contribute to local society, in addition to providing
employment opportunities. Examples of our
community engagement programmes include:
• At the end of 2021, our Malaysian operation
provided support to employees and local
communities that had been impacted by
flooding. Our employees donated their time to
help with clean-up operations and we provided
food, bottled water, cleaning equipment,
clothes, bedding and power banks to staff
and their families, helping them get back on
their feet.
• Senior Aerospace Bird Bellows sponsored
a local college’s Student Award.
• Senior Aerospace Thailand supports education
through its “Senior Aerospace Academy"
• Continuing our work with Prakash Deep a
non-governmental, not for profit organisation
set up with the objective of providing free
quality education, Senior Flexonics India
donated laptops for their computer lab,
23 bicycles and school bags to top
performing students.
• Senior Aerospace Thailand has helped
30 students to study for their High Diploma
degree and two students to study for a
bachelor degree in Aerospace Component
Manufacturing.
• By sponsoring a student award Senior
Aerospace Bird Bellows is supporting
vocational and lifeskills programmes.
• Through their donation Senior Flexonics India
helped underprivileged children develop to
succeed in mainstream education.
Company actions responding to
engagement outcome
Management-level actions
Group operations continue to support
communities by contributing to charities serving
their local causes, including fundraising for local
hospitals, children’s homes, education
programmes, cancer foundations and charities
supporting mental health and the elderly.
Board-level actions
The Board is cognisant of its responsibility to
the communities in which we operate and the
need to have a positive impact and strong
employer brand.
Read more in the Social Section on page 32
Outcome of engagement
• With our support we helped employees,
and their families recover from the floods
in Malaysia.
"In 2022, the Group
increased its
engagements with
shareholders, both by
the Executive team
and the Group Chair.”
Ian King
Chair
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to engage with their
local communities to
make a positive impact”
Jane Johnston
Group HR Director
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
55
STRATEGIC REPORT / SECTION 172 STATEMENT
SECTION 172 STATEMENT
This section describes how the Directors have had regard to the
matters set out in section 172 (1)(a) to (f) when performing their
duties under section 172 of the Companies Act 2006.
In their discussions and decisions during 2022, the Directors of
Senior plc have acted in the way they consider, in good faith,
would most likely promote the success of the Company for the
benefit of its members as a whole.
The likely consequences of any decision
in the long term:
• The Directors recognise the decisions they
make today will affect Senior’s long-term
success. During the year, the Board had
particular regard to the long-term success
of the Company in its discussion on the
evolution of the Group’s purpose. Our
Company Purpose is highly relevant for all
of our stakeholders and guides the Board’s
decisions towards investments, both short
and longer term.
• In 2022, the Directors decided to acquire
Spencer Aerospace. The Board believed that
Spencer’s capabilities in highly engineered,
high-pressure hydraulic fluid fittings for use
in commercial and military aerospace
applications have strong synergies with
Senior’s existing fluid conveyance business
and recognised the opportunity presented
by Senior's global reach beyond Spencer's
current North American customer base.
This decision was a considered step in the
Group’s overall strategy.
• Further details can be found on the
Investment Case (page 40), Business Model
(page 38) and Strategic Priorities (page 42).
The impact of Senior’s operations
on the community and environment:
• Many of the Group’s operations are major
employers within their local communities
and nurture good relationships with their
stakeholders, finding ways to contribute
to local society, in addition to providing
employment opportunities. In 2022, the
operating businesses continued their focus
on community engagement programmes
and further details on the Group’s activities
are set out on page 55.
• Senior's sector-leading performance and
accreditations on sustainability are testament
to the great importance the Board and
Executive Committee places on ESG matters.
Senior’s programme is well defined and
being delivered. Its progress is measured by
metrics, targets and a monthly scorecard.
Sustainability is a standing agenda item in
the CEOs report at every Board meeting.
The HSE Committee monitors and updates
on the progress being made on the strategy
set forth by the Group in terms of health,
safety and environment.
• Senior was the first company in its sector
to have its scope 1, 2 and 3 greenhouse
emissions reduction targets approved and
verified by the SBTi. In 2022, we were
recognised by CDP for our work on climate
disclosure and action and awarded an ‘A,
putting us in the top 2% of disclosing
companies. Further detail on Senior’s
sustainability progress in 2022 are set out
on page 19.
• We have also continued our commitment to
implementing the recommendations of the
TCFD. See page 26 to 31 for our update
on TCFD.
The desirability to maintain a reputation
for high standards of business conduct:
• The Board acknowledges its responsibility for
setting and monitoring the culture, values and
reputation of the Company. For Senior, our
core Values underpin our culture. During the
year, the Board considered Senior’s culture in
its decision-making and discussions (further
details on this can be found on page 34).
• The Board is accountable for the oversight
of a robust Corporate Framework which
establishes the unequivocal expectation
that Senior will operate with integrity and
respect in every aspect of its business.
The framework includes a comprehensive
Code of Conduct, which provides clear
guidance on behavioural expectations across
multiple facets of the business, including a
zero tolerance towards bribery and corruption,
adherence to all applicable trade compliance,
competition and anti-trust regulations, a safe,
diverse and inclusive workplace, accurate and
complete business records and protection of
company data and assets. The framework
also provides for a whistle-blowing channel
that allows stakeholders to confidentially
and anonymously report suspected unethical
or illegal corporate conduct. All reported
whistle-blowing incidents and any resulting
actions are reviewed and monitored by the
Board and Audit Committee. The Board, via
the Audit Committee, also receives regular
reports regarding compliance training
programmes, Corporate Framework updates,
sanctions and trade compliance matters and
incidents of fraud or suspected fraud. Read
more on pages 100 and 101 for our Corporate
Governance Report.
Interests of the Company’s employees
and the need to foster the Company’s
business relationships with customers,
suppliers and others:
• The Board and its committees understand
the strategic importance of stakeholders to
Senior’s business. When making decisions,
the Directors have regard to the interest of
colleagues, and the need to foster business
relationships with other key stakeholders.
• While the Board engages directly on some
issues with stakeholders, there are other
engagements that happen below Board level.
Nevertheless, the Board is well informed of
these engagements and this helps it
understand how our operating businesses
affect our stakeholders’ interests and views.
More detail on how we engage with our key
stakeholders (including our customers and
suppliers) can be found on pages 50 to 55.
For further details on how the Board operates
and makes decisions, and its activities this
year, see page 93.
• Our colleagues are vital to our success and
they are always considered in the Board’s
discussions and decision-making process.
During 2022, the wellbeing of our colleagues
across the Group continued to be a priority,
especially in light of the cost of living crisis.
As inflation continued to rise over the course
of 2022, the Board were cognisant of the
potential impact on our employees and their
families, and ensured that wage settlements
were fair, taking into account the cost of living
challenges and prevailing regional conditions.
The Board continued to monitor the
organisation’s response to COVID-19 and how
the Company maintained operational delivery
in the ever-changing situation. Operational
leadership continued to maintain appropriate
measures and protocols to keep people safe.
• In order to ensure that the Board considers
the impact of their decisions on employees
across the Group, the Board receives regular
feedback regarding people and culture.
In 2021, the Board received a wealth of
information provided by the Senior’s first
global employee engagement survey.
Operating business actions plans and
progress against them were reviewed
regularly throughout 2022 by the Executive
Committee. In addition, a summary of the
56
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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NON-FINANCIAL INFORMATION STATEMENT
In compliance with the Non-Financial Reporting requirement set out in sections 414CA and 414CB of the Companies Act 2006, the table below
illustrates where our stakeholders can find information in respect of non-financial matters. The due diligence carried out for each policy is
contained within each policy’s documentation.
Reporting
Where to find it
Environmental Matters
• Sustainability: Environmental, Social and Governance (ESG) Pages 16 to 37 and www.seniorplc.com/sustainability
Employees
• Employee Engagement
• Health, Safety and Environment Policy
• Talent Management
• Equality, Diversity and Inclusion
• Code of Conduct
• Whistle-blowing Policy
www.seniorplc.com
Pages 51, 56 and 88
Pages 33 to 34, 42, 69
Page 33
Pages 33 to 34, 36, 56, 71, 100 to 101 and
www.seniorplc.com
Pages 34, 36, 56, 100 and www.seniorplc.com
Social Matters
• Community Engagement
Pages 35, 55 to 56, 88
Respect for Human Rights • Statement on Anti-Slavery and Human Trafficking
Page 100
Business model
Principal risks
KPIs
• Anti-bribery and Anti-corruption Policy
• Modern Slavery Statement
• Responsible Supply Chain Policy
• Business Model
• Risks and Uncertainties
• Financial and Non-Financial KPIs
Pages 36 and 71
www.seniorplc.com
Pages 53, 100 and 101 and www.seniorplc.com
Page 38
Pages 60 to 71
Pages 58 to 59
For more information please visit: www.seniorplc.com
actions was reviewed by the Board
throughout 2022. The survey was repeated
towards the end of 2022 and the Group
Chief Executive Officer and Group HR
Director shared initial feedback from the
2022 Survey with the Board in December
2022 highlighting key themes, strengths,
areas recommended for improvement. In
addition, Celia Baxter, the non-executive
Director designated to engage with
employees has continued with our
programme of focus groups and with
COVID-19 travel restrictions lifting, the
Board has visited operating businesses,
and met with management teams and
employees. Read more on our employees
on pages 32 to 34 and 51.
The need to act fairly between
members of the Company
(shareholders):
• During the year, the Group Chair, Senior
Independent Director, Group Chief
Executive Officer, Group Finance Director,
and the Director of Investor Relations and
Corporate Communications held various
meetings with investors (see page 54 for
more detail on our engagement with
shareholders). These meetings gave
investors the opportunity to discuss views
on the Group’s financial and operational
performance, strategy, end-market recovery,
fluid conveyance and thermal management
capabilities and capital deployment.
In discharging our section 172 duties, the
Directors have regard to the factors set out
above and any other factors which we consider
relevant to the decision being made. We
acknowledge that every decision we make will
not always result in a positive outcome for all of
our stakeholders. However, by considering the
Company’s Purpose, Vision and Values, together
with our Strategic Priorities and having a process
in place for decision-making, we aim to ensure
that our decisions are considered, proportionate
and balanced.
Further details on how the Board operates and
reflects stakeholder views in its decision-making
are set out in the Corporate Governance Report
on pages 87 and 88.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
57
STRATEGIC REPORT / KEY PERFORMANCE INDICATORS
KEY PERFORMANCE INDICATORS
The Group highlights five financial and two non-financial
metrics to measure progress in implementing its strategy.
Increased
Decreased
Unchanged
NON-FINANCIAL
METRICS
The Group’s non-financial objectives are
as follows:
• To reduce the Lost Time Injury Illness Rate
(per 100 employees) to 0.3 by 2025;
• To reduce the absolute Scope 1 and 2
Greenhouse Gas (“GHG”) emissions
by 30% by 2025 (compared to 2018
base year).
The key performance indicators (“KPIs”)
are determined as follows:
• CO2 emissions is an estimate of the
Group’s carbon dioxide emissions in
tonnes equivalent; and
• Lost time injury illness frequency rate is the
number of OSHA (or equivalent) recordable
injury and illness cases involving days away
from work per 100 employees.
The Group’s approach to calculating and
reporting our GHG emissions follows the
GHG Protocol.
2022’s reporting has incorporated Scope 2
greenhouse gas emissions (associated with
electricity consumption) calculated using both
the Location and Market-based methods.
The Scope 1 and 2 emissions Location Based
and Market Based (FY22) are independently
verified in accordance with the International
Standard on Assurance Engagements ISAE
3410 (limited assurance).
In calculating GHG emissions, the Group has
used the financial control approach under
which a company accounts for 100% of the
GHG emissions from operations over which
it has control. This covers all wholly owned
operations and subsidiaries of the Group for
financial reporting purposes.
Senior is on track to meet our 2025 targets
for Scope 1 & 2 GHG emissions and lost
time injury illness rate. Further details of the
Group’s performance, including its long-term
performance trends, are shown on pages 22
to 23. More detail on the Methodology can
be found on page 25.
Carbon dioxide emissions Scope 1 & 2 (market based)
(Total tonnes CO2e)
22% decrease
from 2018 base year
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2
2
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60,000
57,418
56,992
50,000
40,000
30,000
20,000
10,000
0
46,747
46,540
44,878
2018
2019
2020
2021
2022
Target
Total tonnes CO2e
In 2022, our absolute Scope 1 and 2 Greenhouse Gas (“GHG”) emissions reduced from
57,418 tCO2e (2018) to 44,878 tCO2e. We are on track to meet our SBTI 2025 target with
a 22% reduction against our 2018 base year.
Lost Time Injury Illness Rate
(incidents per 100 employees p.a.)
0.38
2.0
1.78
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1.5
1.0
0.5
0.0
1.69
1.48
1.09
1.17
0.93
0.66
0.50
0.44
0.32
0.32
0.38
2017
2018
2019
2020
2021
2022
Total Recordable Injury Illness Rate
Lost Time Injury Illness Rate
We experienced an increase in the Lost Time Injury and Illness Rate from 0.32 in 2021 to 0.38
in 2022. The total number of injuries has fallen as indicated by the Total Recordable Injury and
Illness Rate reduction from 1.17 in 2021 to 0.93 in 2022, a reduction of around 21%.
The small increase in the Lost Time Injury and Illness Rate emphasises the need for continuous
improvement. With this in mind, in 2022 we initiated three major global safety initiatives in
addition to the routine auditing and support activities. More details can be found on page 32.
58
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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FINANCIAL
METRICS
The Group’s financial objectives are
as follows:
• to achieve revenue growth (at constant
exchange rates) in excess of the rate
of inflation;
• to increase the Group’s return on revenue
margin each year;
• to increase adjusted earnings per share
on an annual basis;
• to generate sufficient cash to enable the
Group to fund future growth and to follow
a progressive dividend policy; and
• to maintain an overall return on capital
employed in excess of the Group’s cost
of capital and to target a pre-tax return in
excess of 13.5% on a post IFRS 16 basis.
The key performance indicators (“KPIs”)
are determined as follows:
• revenue growth is the rate of growth of
Group revenue, at constant exchange rates;
• return on revenue margin is the Group’s
adjusted operating profit divided by
revenue;
• adjusted operating profit is defined in
Note 9;
• adjusted earnings per share is defined in
Note 12;
• net cash from operating activities is
available from the Consolidated Cash Flow
Statement; and
• return on capital employed is the Group’s
adjusted operating profit divided by the
average of the capital employed at the start
and end of the period, capital employed
being total equity plus net debt (defined
in Note 32c).
Net cash from operating
activities (£m)
+113.7%
27.0
21
22
57.7
The Group delivered an excellent cash
performance in 2022 driven by the significant
increase in profits. Net cash from operating
activities of £57.7m funded gross capital
expenditure of £30.5m in 2022.
Revenue growth
(£m)
+20.3%
+21.9%
excluding
disposal
21
22
705
848
1,102
As discussed in the Group Chief Executive
Officer’s Statement, the year-on-year
increase reflected the ongoing recovery in our
core markets as well as recent programme
wins entering series production. The impact
on the Divisions is set out in the Divisional
Reviews, on pages 72 to 77. The overall
increase in Group revenue was a result of
higher revenues in both Aerospace and
Flexonics year-on-year.
Return on revenue margin
(%)
+250bps
0.9
21
22
3.4
Return on capital employed
(%)
+370bps
1.0
21
22
4.7
The Group’s adjusted operating margin
increased by 250 basis points, to 3.4% for
the full year. This improvement in profitability
principally reflected volume related operating
leverage across our businesses. Inflationary
pressures were successfully mitigated by
diligently managing costs and by increasing
prices and surcharges where possible.
Return on capital employed (“ROCE”)
increased to 4.7%. The increase in ROCE
reflected the significant increase in
profitability, while managing the increase
in capital employed which was mainly due
to the acquisition of Spencer Aerospace.
Adjusted earnings per share
2,464.7%
0.17
21
22
4.36
The year-on-year improvement arose from
improved profitability.
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STRATEGIC REPORT / RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES
2022 KEY
FOCUS
LOOKING
FORWARD
Risk Management
• The Board, Executive Committee and
operating businesses completed two
comprehensive risk assessments,
encompassing both principal and
emerging risks
• Refined the climate change risk
assessment process to establish a
multi-disciplinary participant team and
further clarify the Group’s strategy to
embed climate change risk consideration
throughout the organisation
Assurance
• Completed ten broad scope internal audits
and four Information Security assurance
reviews across various operating
businesses and corporate offices
• Piloted a new Trade Compliance
“deep dive” assessment
• Deployed thematic audits to address
specific risks related to supply chain
disruption, inflation challenges and the
impacts from the crisis in Ukraine, talent
and skills management and software
compliance
Principal Risks (starts on page 64)
• Supply Chain Challenges: The Group
successfully implemented a variety of
mitigating actions to counteract supply
chain disruptions, including increased safety
stock of critical materials and components,
expanding our supply base to provide
alternate material sources and enhancing
communication with customers and
suppliers regarding changes in demand,
lead times and other production factors
• Inflation: A variety of measures were
deployed to mitigate escalating inflationary
pressures, including negotiating selling
price escalations with customers, efficiency
improvements to contain labour and energy
cost escalations and utilising alternate
supply arrangements
• Talent and Skills: The Group responded
to regional labour market challenges
with enhanced retention and
recruitment strategies
Risk Management
• Conduct a focused risk assessment and
scoping exercise to guide the Group’s
response to the BEIS consultation
Restoring Trust in Audit and
Corporate Governance
• Review and enhance our Information
Technology/Information Security risk
management process throughout the
Group and complete the deployment of
expanded threat and security monitoring
tools across all operating businesses
and corporate offices.
• Implement a climate change risk
assessment process at the operating
business level to further embed climate
change risk into the Group’s risk
management structure
Assurance
• Reassess the Group’s assurance
framework in consideration of the proposed
requirements in response to the BEIS
consultation Restoring Trust in Audit and
Corporate Governance
• Broad scope internal audits and Information
Security assurance reviews planned across
14 locations
• Trade Compliance “deep dive”
assessments to be conducted with three
operating businesses and a thematic
assurance review completed for the
remaining locations
• New thematic audits covering payment
fraud controls, Information Security patch/
vulnerability management and personal
data protection
Principal Risks (starts on page 64)
• Economic and Geopolitical Impact:
Remain vigilant to the potential impacts
on the Group from fluctuating global
economic conditions
• Customer Disruption: Strengthen our
adaptable response to customer
demand variability
• Pandemic: Conduct a post incident review
to assess the Group’s response to the
COVID-19 pandemic
“Our risk management process has
proved vital in helping effectively
identify and manage ongoing
supply chain challenges,
inflationary pressures and
challenging labour markets. The
complex geopolitical environment
has introduced further uncertainty
and intensified the risk profile
across the Group. These key
principal risk areas are expected
to persist through the year ahead.”
Amy Legenza
Group Director of Risk and Assurance
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Information Security, HR and other operational
controls, plus limited scope thematic reviews
designed to provide assurance over targeted
risk areas. Internal audits are conducted either
in person or virtually, with all Group businesses
audited on a multi-year rotational schedule
based on a variety of factors, including site
specific risks, prior audit results and changes
within local management. Thematic reviews are
deployed across the entirety or a cross section
of the Group dependent on the risk being
targeted. In addition, all Group businesses must
complete an annual Controls Self Assessment,
allowing the Group to identify and address gaps
in compliance with the Group’s governance
policies and internal control standards. Divisional
Management, the Executive Committee and
the Audit Committee monitor the completion
progress of improvement actions resulting
from internal audits, thematic reviews and
the Controls Self Assessment.
The key elements of the Senior risk
management process are shown on
the following page.
OUR APPROACH TO
RISK MANAGEMENT
Identifying and effectively managing risks is
essential to the achievement of the Group’s
strategic priorities and supporting the Group’s
sustainability initiatives. The Group’s Business
Model is described on page 38, our Strategic
Priorities are on page 42 and Sustainability
starts on page 16.
elements contemplated over a 20+ year time
frame, and applies Scenario Analysis to the
most material transition and physical risks.
Climate-related risks are also considered as part
of the overall Group risk assessment completed
during the annual strategic planning process
and rank as one of the Group’s principal risks.
The Board is responsible for the Group’s
integrated risk and assurance framework,
ensuring that the Group risk process and
systems of internal control are robust,
continuously monitored and evolve to address
changing business conditions and threats.
The Board also provides direction and sets the
tone on the importance of risk management.
Responsibility for the monitoring and review
of the effectiveness of the Group’s risk and
assurance framework has been delegated by
the Board to the Audit Committee. The risk
process is reviewed and agreed annually with
the Audit Committee. The Director of Risk and
Assurance delivers a comprehensive report
of risk, assurance and compliance activities
at each Audit Committee meeting.
The Group embeds risk management within
its existing business processes across all levels
within the Group. Risk tolerance is reflected
throughout our control framework by way
of the Group’s delegation of authority, code
of conduct and internal controls system.
A catalogue of approximately 50 identified risks
encompassing strategic, financial, operational,
environmental and other external risks serves
as the foundation for comprehensive risk
assessments completed by every operating
business and by the Executive Committee as
part of the annual strategic planning process.
The risk assessments also consider emerging
risks as detected through internal workshops
and external sources. Emerging risks are risks
which may develop but have a greater
uncertainty attached to them in terms of
likelihood, timing and velocity. Emerging risks
are monitored and formally added to the
identified risk catalogue when the risk solidifies
within the Group’s strategic planning horizon.
The Group also conducts functional risk
assessments, targeting areas such as fraud, tax
evasion facilitation and climate change. The risk
assessment specific to climate change follows
the Group’s standard risk assessment process
but considers multiple time horizons, with some
During the risk assessment process, all
identified risks are evaluated against our
purpose, strategy and values to understand their
likelihood and impact of occurrence, resulting in
a register of principal risks. Once the principal
risks have been identified, mitigating controls
and relevant policies are documented and
additional mitigating actions are developed
where appropriate. An owner and due date are
assigned to each action and progress toward
completion is closely monitored. The operating
business risk registers are refreshed regularly
and reviewed by Divisional Management and
the Executive Committee. The Executive
Committee conducts its risk assessment
twice a year and the principal risks are
discussed at each Executive Committee
meeting. Every principal risk is assessed for
our financial viability scenarios to see if they
could have a material financial impact
individually or if they materialised together.
The Board performs robust, semi-annual
assessments of the principal and emerging risks
facing the Group. In addition, the Board regularly
assesses outputs from the integrated risk and
assurance framework and takes comfort from
the “three lines of defence” risk assurance
model. The first line represents operational
management who own and manage risk on
a day-to-day basis through effective internal
controls. The Group Executive Committee and
Divisional Management monitor and oversee
these activities, representing governance and
compliance at the second line.
The third line is the independent assurance over
these activities provided by internal and other
external assurance. The internal assurance
programme includes a combination of broad
scope internal audits, evaluating financial,
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STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED
KEY RESPONSIBILITIES
WITHIN THE RISK
MANAGEMENT
STRATEGY
SENIOR’S RISK
MANAGEMENT PROCESS
1 Identify risks
The risks to the achievement of the Group’s strategic
priorities are identified from a top down and bottom up
perspective. Existing and emerging risks are considered.
2 Evaluate gross (inherent) risks
The gross level of risk, considering impact and likelihood,
to the achievement of the strategic priorities is assessed.
3 Identify existing controls and processes
The existing controls and processes which mitigate the risks
are identified and assessed for adequacy.
4 Risk response planning
Based on the controls and processes already in place,
the net risk from an impact and likelihood perspective is
evaluated. Where the net risk is considered to be higher
than the Group’s tolerance level for that risk, additional
mitigating actions are identified and owners assigned.
5 Monitor and assure
The most significant risks are regularly reviewed. Second
line assurance and internal audit activity is conducted to
assess whether key controls are effective and risks
mitigated to an acceptable level. Timely implementation
of resulting actions is monitored.
6 Risk reporting and review
The status of the most significant risks, top down and
bottom up, are regularly reviewed to ensure any changes
to the risk profile are captured and acted upon.
The consolidated risk, assurance and control position
is reported to the Audit Committee and the Board.
The Board
• Has overall responsibility for ensuring
the Group risk management process
and systems of internal controls are
robust and continually monitored
• Formulates the Group’s strategy and
defines the Group’s risk tolerance
and culture
• Monitors the nature, extent and
management of risk exposure for the
Group’s principal and emerging risks
• Provides direction and sets the tone
on the importance of risk management
Audit
Committee
• Supports and challenges the Board in
monitoring risk exposure in line with
its Terms of Reference
• Reviews the effectiveness of the
Group’s risk management and internal
control systems and reports to the
Board for consideration
Executive
Committee
and
Divisional
Management
• Development and implementation of
strategy, operational plans, policies,
procedures and budgets
• Monitoring of operating and financial
performance including prioritisation
and allocation of resources
• Assessment and control of risk –
including emerging risks
Group
Corporate
Functions
• Lead and co-ordinate Group risk
and control related processes
• Assesses and supports the Group in
mitigating the Group’s risks through
policies and procedures, control
self-assessments, specialist support,
business reviews and other activities
Operating
Units
• Operational units identify, assess
and mitigate their key risks
• Risk assessments are reviewed and
discussed by Divisional Management
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RISK HEAT MAP (Residual risk after mitigations)
1
12
6
8
11
14
3
4
2
5
7
10
9
13
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I
Low
High
Likelihood of Occurrence
Increased Residual Risk
Decreased Residual Risk
Residual Risk Unchanged
RISK DEFINITIONS
Strategic
1 Economic and Geopolitical Impact
2 Climate Change
3
4
Implementation of Strategy
Innovation and Technological
Change
5 Pandemic
Operational
6 Supply Chain Challenges
7 Customer Disruption
8 Cyber/Information Security
9 Programme Management
10 Price-down Pressures
People and Culture
11 Talent and Skills
Financial
12 Inflation
13 Financing and Liquidity
Compliance
14 Corporate Governance Breach
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STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED
PRINCIPAL GROUP RISKS
During 2022, assessments of the principal
risks and uncertainties, including emerging
risks, that could threaten the Group’s business
model or achievement of the strategic
priorities were performed.
As a result of the most recent assessment, the
name of the Customer Demand principal risk
was updated to Customer Disruption to better
reflect the nature of the risk. The remainder of
the principal risks remain unchanged since our
2022 Interim Statement.
The principal potential risks
and uncertainties, together
with actions that are being
taken to mitigate each risk, are:
Increased residual risk
Decreased residual risk
Residual risk unchanged
New risk
Emerging risk
Areas of strategic priorities
Key Performance Indicators
1 Enhance business model
A Organic Revenue Growth
2 Focus on growth
B Return on Revenue Margin
3 High performance operating
C Adjusted Earnings per Share
system
D Net Cash from Operating
4 Competitive cost countries
Activities
5 Capital deployment
E Return on Capital Employed
6 Talent and development
F Carbon Dioxide Emissions
G Lost Time Injury Illness Rate
All of the Group’s principal risks
are factored into the severe but
plausible downside scenario
applied in the Group’s viability
assessment as described on
page 82.
Principal Risk
How we manage it
Focus in 2022
STRATEGIC
ECONOMIC AND GEOPOLITICAL IMPACT
2 3 4 5 A B C D E
Divisional Management and the Executive Committee
closely monitor economic and geopolitical trends that may
impact the operating businesses through regular business
reviews. Contingency planning is undertaken to minimise
operations disruption where necessary.
The Group employs tax, treasury and trade compliance
specialists who maintain the Group’s trade-related
compliance programmes and continually monitor the
impacts of evolving trade relations from regulatory, supply
chain, people and financial perspectives.
The Board ensures that it is kept informed of significant
trade developments in order to assess the impact on the
Group and take action as appropriate.
The Group monitors potential changes to international tax
regulations and tariffs to understand the likely impact.
The COVID-19 pandemic continues to impact the global
economy and certain sectors within which we operate.
Ongoing supply chain constraints and inflationary
pressures added to the economic uncertainty during 2022.
As a result, the Group remained focused on delivering
profitable growth and generating free cash flow, as
described in the Financing and Liquidity risk, and
completion of restructuring projects, as described in the
Implementation of Strategy risk.
In response to heightened trade tensions resulting from
the crisis in Ukraine, the Group conducted a targeted
assurance review across the operating businesses which
confirmed the Group has identified and is continuing to
monitor and mitigate the impacts of the crisis on our
operating businesses. The assurance review also
confirmed that our relevant trade compliance controls
are operating effectively.
There is a risk that there will be a
global economic downturn impacting
some or all of the sectors within which
the Group operates.
Changes in critical trade relations
factors, such as tariffs, sanctions and
exchange rates, resulting from
geo-political events have created
uncertainty over the future impacts on
international trade, including export
revenues, material availability and cost
and the ability to employ foreign
nationals. Shifts in political regimes
and government spending
programmes can lead to higher
taxation and have an impact
on earnings.
These events may result in supply
chain disruptions, rising energy prices
and labour shortages which can
escalate inflationary pressure on
earnings. Additional detail regarding
our inflation risk and responses can
be found on page 70.
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Principal Risk
How we manage it
Focus in 2022
CLIMATE CHANGE
There is a risk that climate change
and/or the measures taken to address
it may have an adverse impact on the
Group. Climate change may result in
extreme weather events that may
impact our ability, or that of a supplier,
to meet our customers’ requirements.
Our customers’ products may evolve
to require new technology, such as
electrification. This also presents an
opportunity to the Group to be
involved in replacement technologies.
Increasing legislation aimed at
accelerating decarbonisation may
increase our operating costs. It may
also change consumer behaviours
impacting on our end markets.
For example, consumers may fly
less often.
2 5 B F G
In 2022, the Group was awarded the highest possible
“leadership” rating of A from the globally recognised CDP
for our climate change disclosures.
In support of our Science Based Targets, the Group has
achieved a 22% reduction in combined Scope 1 and 2
carbon emissions through 2022 compared with the 2018
base year, on track to meet the 2025 target deadline.
During 2022, the Group engaged with over 350 of its
leading suppliers regarding climate change, accounting for
approximately 80% of the Group’s total spending. 160 of
these suppliers provided a full disclosure on their climate
change programmes, representing a significant increase
from the level of response in 2021. As a result, CDP once
again awarded the Group with the status of Supplier
Engagement Leader in 2022 in recognition of our
increased efforts to raise the level of climate action
across our supply chain.
The Group submitted our 2040 Net Zero targets to SBTi
in 2022 with validation expected in the first half of 2023.
For further details on TCFD and Sustainability, including
how the Group is leveraging our technology and product
development to drive progress towards net zero, please
see pages 16 to 31.
To mitigate the impact of catastrophic events, such as an
extreme weather event, each site has a scenario-based
Business Continuity Plan which is tested on an annual
basis. The Group also has insurance which helps to protect
profits in such situations.
The Group continues to invest in and develop solutions
relevant to changing end markets. Examples include our
battery cooling, waste heat recovery, heat sink in hybrid
cars technologies, and additive manufacturing solutions
for aerospace.
A comprehensive climate change risk and opportunity
assessment exercise is conducted annually by a multi-
disciplinary team to evaluate transitional and physical
risks, as well as resource efficiency opportunities. The
assessment considers mulitple time horizons, with some
elements contemplated over a 20+ year time frame.
The exercise also applies Scenario Analysis to the most
material transition and physical risks as per TCFD. The
Group's SBTi approved emissions reductions targets
covering GHG emissions from the Group’s operating
businesses are consistent with reductions required to
limiting climate warming to 1.5°C and are aligned with
Net Zero as Near-Term Targets. SBTi has approved the
following targets:
• The Group commits to reduce its absolute Scope
1 and 2 GHG emissions by 30% by 2025 compared
to a 2018 base year; and
• For Scope 3 GHG emissions, The Group also commits
that 80% of its suppliers by spend, covering purchased
goods and services and capital goods, will have science
based targets by 2025.
IMPLEMENTATION OF STRATEGY
An inability to implement the Group’s
strategy and/or effectively manage
the Group’s portfolio could have a
significant impact on the Group’s
ability to generate long-term value
for shareholders.
Ambiguity surrounding the Group’s
strategy and strategic priorities may
result in investors failing to recognise
the value of the Group’s
investment case.
The Group regularly reviews its strategy and portfolio to
ensure that long-term value is maximised for shareholders.
Where appropriate, divestments will be considered.
M&A opportunities continue to be evaluated and discussed
at the Board’s strategic review. Processes are in place to
ensure that the Group is aware of emerging acquisition
opportunities.
The Group has a well-established M&A framework that
includes proven valuation, due diligence and integration
processes designed to be efficiently executed by an
experienced cross-functional team.
Post-acquisition reviews are conducted as appropriate.
The Group has incorporated the experiences gained from
navigating strategic challenges, such as the COVID-19
pandemic, into an adaptable response framework to ensure
sufficient focus remains on the Group’s core strategic
priorities while responding to critical operational, strategic
and financial challenges.
1 2 3 4 5 B D E
The Board carried out its annual assessment of our
strategic objectives, end markets, capabilities and
technologies and determined that the Group is well
positioned to deliver its strategy and continue the transition
through the evolving net zero world.
The Group continues to focus on:
• investment in new technology and product development
in our core markets, including fluid conveyance and
thermal management, and expand our additive
manufacturing capabilities;
• targeting new markets with structural growth potential,
such as space and semiconductor, through leveraging
the expertise we have developed in our traditional core
markets; and
• liquidity, effective cash management and a healthy
balance sheet.
The Group acquired substantially all of the assets of
Spencer Aerospace Manufacturing, LLC, a leading
manufacturer of highly engineered, high-pressure
hydraulic fluid fittings for commercial and military
aerospace applications. The acquisition supports the
Group’s strategic priorities through expansion our fluid
conveyance capabilities.
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Principal Risk
How we manage it
Focus in 2022
INNOVATION AND TECHNOLOGICAL CHANGE
1 2 5 A B C E F
The Group must innovate in order to
continue to win new business and
achieve profitable growth. There is a
risk that the Group does not continue
to innovate and implement
technological change resulting in its
technology becoming uncompetitive
or obsolete.
New technologies may have an impact
on the Group’s markets, e.g. electric
vehicles and hydrogen aircraft.
The Group has a Technology Collaboration forum which
meets regularly to discuss innovation and technological
changes across our various businesses and markets.
The Group has continued to invest in additive
manufacturing “AM” capabilities as an enabling
technology, design and simulation capabilities, AM process
certifications and equipment at its Advanced Additive
Manufacturing Centre “AAMC”. Multiple AM parts have
been qualified and delivered to customers for both
production platforms and technology demonstrators,
such as the NASA sponsored supersonic X59 platform.
The AAMC team has also developed significant design
capability to re-engineer existing product designs to
deliver significant weight savings and
performance enhancements.
The Group continues to develop products to support
the move to low carbon technologies and sustainability,
both in the land vehicle and aerospace markets.
Global Marketing Teams are engaged to ensure that
customer requirements and priorities are considered.
The Group continues to invest in machining and fabrication
technology enhancements to improve process efficiency
and reduce cost.
The Senior Operating System continues to deliver best
practice tools for innovation and product development
across the Group.
The Technology section, starting on page 44, details the
Group's technology themes and product development
case studies.
In 2022, we identified five specific Technology Focus
areas – Hydrogen, Electrification, Aerospace Heat
Exchanger development, Additive Manufacturing and
Digitisation. The Group has continued to invest in new
product development and emerging technologies within
these focus areas, with significant progress being made
on a number of key projects:
• development of high-pressure flexible hoses for
industrial hydrogen applications;
• introduction of several innovative products for battery
and fuel cell cooling, including ultra-thin patented
designs for very demanding environments;
• development of an extensive process parameter
dataset for complex metallic AM component design
and manufacture, including full vertical integration of the
complete AM process chain. Senior’s process quality
and expertise was recognised in 2022 as one of the
few companies in the world to have achieved Nadcap
certification for AM; and
• significantly expanded the use of non-metallic (polymer)
AM for low-pressure ducting applications, including
development of innovative knitting technology for
thermoplastic composite components.
The Group remains focused on sustainability as a driver for
new product development and market expansion through
leveraging existing capabilities, expertise and products in
Thermal Management and Fluid Conveyance into new
adjacent markets such as space, hydrogen etc. Additional
detail on how the Group is leveraging our technology and
product development to drive progress towards net zero
can be found on pages 20 and 21.
PANDEMIC
A pandemic, such as the current
COVID-19 pandemic, could have
a significant impact on business
operations affecting our employees,
our supply chain and ultimately our
ability to meet customer
requirements. There is also the
potential for a pandemic to create
a global slowdown in demand
impacting our end markets.
An adverse indirect consequence
may result from our customers
having to reduce production rates
even where our supply chain and
production remains intact.
The Group has an Incident Response Plan and it is
being used to manage the Group’s response to the
current pandemic.
Emerging threats are monitored and advice provided
to employees as appropriate. This may include travel
restrictions, temporary site closures and additional
safety measures when at work.
Where a pandemic threat does emerge, we liaise with
our suppliers and customers to manage the situation
to the greatest extent possible.
2 3 6 A B C D E
The pandemic continues to impact the Group, though to
a lesser degree in many locations and markets. Response
measures enacted throughout the COVID-19 pandemic
remain in effect, with many of the actions now embedded
into the Group’s standard policies and procedures.
These include:
• the ongoing activities of the Group’s Coronavirus
Oversight Committee;
• flexible and responsive localised leave policies and
“return to office” strategies to ensure the health and
safety needs of our employees continue to be met;
• business continuity and ensuring that the business is
able to meet its financial commitments while continuing
to navigate the impacts of the ongoing pandemic.
Further details are provided against other principal risks
as appropriate;
• close communication with suppliers and customers as
we continue to adapt our business to address shifts in
demand, supply chain capabilities and labour availability
created by the evolution of the pandemic; and
• careful management of the Group’s response to
demand recovery to ensure the cost savings measures
implemented in recent years are not diluted.
The Group remains vigilant to the potential impacts
of future waves of the COVID-19 pandemic.
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How we manage it
Focus in 2022
OPERATIONAL
SUPPLY CHAIN CHALLENGES
Suppliers may be unable or unwilling
to respond to increases or decreases
in demand, impacting our ability to
supply our customers and/or our
ability to optimise inventory held.
Critical materials or components may
become temporarily or permanently
unavailable, leading to an inability to
meet production commitments.
Supply chain disruption can lead to
higher volatility in delivery schedules
as customers adjust demand to
protect their production capabilities.
This may challenge the Group’s ability
to meet customer schedule, quality
and cost requirements, resulting
in potential delays, penalties and
cost overruns.
In extreme cases some suppliers
may face financial difficulties and
go out of business.
The resilience of the supply chain is monitored and, where
possible, over-reliance on individual suppliers is reduced.
The Group closely monitors the resource required to deliver
customer demand.
The Group has deployed the Senior Operating System to
provide operating businesses with a toolkit to optimise the
use of lean and continuous improvement techniques,
supplier management and other operational best practice
processes.
Operating businesses are required to maintain strong
internal controls over supplier management from new
supplier selection to performance monitoring and
management of existing suppliers.
Our core Values (see page 38) emphasise operating with
integrity and respect, which allows the Group to cultivate
strong, long-term relationships with critical suppliers.
1 2 3 4 A B C D E
Significant supply chain disruption driven by ongoing
labour challenges, material shortages and transportation
delays persisted throughout 2022, with the crisis in
Ukraine adding further complexity in the year. In response,
the Group has maintained the initiatives previously
deployed, including:
• maintaining close and frequent communication with
customers regarding delivery schedules, the need to
qualify additional supply sources and potential
incremental costs to mitigate supply chain disruptions;
• working with suppliers to manage lead times and
maximise the benefits from long-term supply
agreements, where applicable;
• leveraging supplier relationships across the Group to
identify alternate supply sources and opportunities
to streamline or consolidate supply requirements;
• applying the Senior Operating System and our
engineering expertise to generate innovative solutions
to supply chain challenges; and
• highlighting supply chain challenges in operating
business reviews and Executive Committee meetings.
To gain additional comfort over our management of the
intensifying supply chain challenges in 2022, the Group
conducted a supply chain assurance review across the
operating businesses to assess the scope and severity
of supply chain constraints, as well as the effectiveness
of mitigating actions employed to navigate the current
operating environment.
1 2 5 A B C E
CUSTOMER DISRUPTION
Supply chain constraints, staffing
shortages and other labour
disruptions may leave customers
unable to meet current sales
commitments and/or respond to
increases in market demands. As a
result, there is a risk that customers
do not honour firm order schedules,
delay programme ramp-up, postpone
new programmes.
The Group has fostered long-lasting and cooperative
relationships across its customer base.
In furtherance to its strategic priorities, the Group actively
seeks to grow the business through diversification of its
customer base and new product innovation.
Customer demand continued to strengthen during the year
driven by the resilience of the Group’s end-markets in the
post-pandemic recovery. However, supply chain and labour
issues have challenged some customers’ ability to meet
market demand increases, suppressing demand down
through their supply base.
The Group closely monitors market trends and
developments through in-house market research analysis.
Focus in 2022 has been on:
There is a Group Contract Review policy which is
mandatory for all operating businesses and requires
comprehensive financial modelling and sensitivity analysis
of contractual terms and assumptions.
• collaborating with our customers to understand their
demand variability and potential schedule changes;
• diligently managing supply chain challenges to meet
our product delivery objectives in support of customer
operations; and
• continuing to balance direct headcount with demand
whilst retaining the ability to meet increased demand in
the future and identifying overhead reductions through
efficiency improvements where possible.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED
Principal Risk
How we manage it
Focus in 2022
CYBER/INFORMATION SECURITY
1 3 B
The risk that the Group is subjected to
external threats from hackers or
viruses potentially causing critical or
sensitive data to be lost, corrupted,
made inaccessible, or accessed by
unauthorised users, resulting in
financial and/or reputational loss.
Remote, hybrid and other flexible work arrangements
are now common in many locations across the Group.
These types of alternate work arrangements can
increase Information Security risks so the Group remains
committed to full compliance to our IT/IS policies and
diligent monitoring of the IS environment. 2022
actions included:
• approval of a new three-year IS strategy and roadmap
to account for the dynamic nature of the cyber
threat landscape;
• selected and transitioned to a new Managed Security
Service provider offering enhanced visibility and security
monitoring across the entire organisation;
• introduced new, market-leading security systems and
software to provide real-time security event monitoring
via a single portal. This includes increased protection
against the latest cyber threats, such as ransomware
and other destructive attacks;
• deployed proactive threat hunting capabilities and
user behavioural scanning capabilities to enable
defence against the latest methods of attacks
used by cybercriminals;
• implemented a new external scanning capability
allowing the Group to see the security posture of the
organisation through the eyes of a cybercriminal; and
• completion of comprehensive IS assurance reviews
across multiple operating businesses.
The Group has a strategic roadmap to continually improve
Information Security.
The Group has dedicated and robust Information Security
capability in place with a wide range of proactive and
reactive security controls, including up-to-date antivirus
capability across our operating businesses and network
and system monitoring to identify vulnerabilities and
potential threats.
A multi-year rotational Information Security (IS) assurance
review programme is in place to assess and enhance
compliance with established IS controls, policies
and procedures.
Vulnerability metrics have been developed and are
actively reviewed by Divisional Management and the
Executive Committee.
The Group has a risk management framework specific to
Information Technology “IT”/Information Security “IS”.
Each operating business deploys a suite of protection
and monitoring services, including endpoint detection
and response, vulnerability management and cyber
threat intelligence. These are fully monitored by our
centralised Group Information Security team to ensure
consistency, continuity and rapid remediation
Technology-led security controls are further supported
by a clear and documented series of policies, standards
and playbooks.
Employees receive annual awareness training on
cyber-related issues and the Group maintains a cyber
awareness campaign to alert employees to cyber threats.
A near miss and incident reporting process is deployed
across the Group to alert IT/IS teams of immediate
cyber threats.
PROGRAMME MANAGEMENT
1 2 3 5 6 A B C D E
The ability to introduce new products
in line with customer requirements
and to respond appropriately to
increases or decreases in demand
thereafter is key to achieving the
Group’s strategic objectives.
There is a risk that the Group is unable
to respond quickly enough to changes
in demand, potentially resulting in
excess inventory and/or an inability to
meet schedule and cost requirements
resulting in delays, penalties, cost
overruns or asset write-downs.
Changes across a variety of production
requirements, such as fluctuations in
material supplies, volatility in customer
ordering and employee retention and
training, may challenge the Group’s
ability to maintain programme quality
specifications, leading to the potential
for higher costs of quality or greater
risk of product defects.
The Group is experienced in bidding and launching new
products. Formal New Product Introduction “NPI”
processes, such as Advanced Product Quality Planning
“APQP”, are in use across many operating businesses
with full adoption in process across the Group.
The ongoing pandemic continued to impact customer
demand in 2022 to some degree but supply chain
constraints and labour availability created substantial
programme management challenges during the year.
In response, the Group has maintained its focus on:
There is a Group Contract Review policy which is
mandatory for all operating businesses and requires
comprehensive financial modelling and sensitivity analysis
of contractual terms and assumptions.
NPI programmes are subject to regular review by divisional
and Group management to ensure that schedule, cost or
quality issues are identified and dealt with promptly.
The Group monitors market and customer data so that we
can be prepared to respond to changing market dynamics.
A variety of tools are deployed throughout the Group to
prevent, detect and manage quality issues, including
supplier audits, comprehensive quality management
systems, internal quality audits, Gemba walks and
documented root cause analysis.
• continuing to work with our customers to ensure that,
wherever possible, orders within firm windows can
be delivered;
• working with our suppliers and managing inventory to
balance inventory levels where there are delays in firm
orders and/or ensure adequate supply to meet
production demands;
• maintaining flexible labour resource plans to adapt to
variations in demand and production schedules; and
• responding to the ongoing elevated level of new
requests for quotation.
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Principal Risk
How we manage it
Focus in 2022
PRICE-DOWN PRESSURES
Customer pricing pressure is an
ongoing challenge within our
industries, driven by the expectations
of airlines, land vehicle operators and
governments seeking to purchase
more competitively priced products
in the future. This may put some
pressure on the Group’s future
operating margins.
The Group works closely with its customers to find
innovative ways to produce products at a lower cost,
thus helping them to meet pricing challenges.
The Group is able to consider bundles of products that
in total help achieve customer pricing challenges.
Where appropriate, the Group will actively pass work
to some of its cost competitive facilities such as
Mexico, Thailand, the Czech Republic, South Africa,
India, China and Malaysia with a view to helping satisfy
customer challenges.
There is a Group Contract Review policy which is
mandatory for all operating businesses and requires
comprehensive financial modelling and sensitivity
analysis of contractual terms and assumptions
1 3 4 5 A B C E
Disruptive supply chain challenges and escalating
inflationary pressures converged during 2022 to force
many customers to strike a balance between prioritising
delivery schedules, which may require higher freight,
material and other costs, and managing programme
costs to mitigate inflation impacts. In 2022, the Group
focused on:
• formalising a pragmatic and adaptable pricing response
framework across the Group;
• working in partnership with customers to support
their priorities within the contractual terms of
existing agreements;
• facilitating alignment between supplier and customer
agreements to stabilise material costs; and
• identifying labour and overhead cost reductions through
efficiency improvements where possible.
PEOPLE AND CULTURE
TALENT AND SKILLS
There is a risk that the Group,
particularly in the US and UK, is
unable to attract sufficient skills and
talent and/or is unable to retain the
skills and talent it has in order to meet
demand. Margins may be impacted
by higher wage rates necessary to
retain current employees and/or
attract new employees.
As demand increases there may be
a disproportionate increase in the
number of indirect heads, undoing
some of the cost savings that the
Group has achieved through its
restructuring programme.
A notable portion of the Group’s
workforce may reach retirement age
at the same time, creating a gap in
skills and labour availability.
The Group may have insufficient
talent to respond to all
strategic priorities.
Employee retention and recruitment challenges are
regularly discussed within the operating businesses,
Divisional Management and the Executive Committee.
The Group HR Director hosts focus groups across a cross
section of the operating businesses to solicit constructive
feedback from employees and foster open communication.
Operating businesses partner with technical colleges
and apprenticeship schemes to create talent
pipeline programmes.
A groupwide succession planning exercise is conducted
annually to identify successors or interim cover for key roles
and ensure appropriate development plans are in place to
support employees in meeting their career goals.
The Nominations Committee reviews management
development and succession plans twice a year, making
recommendations to the Board regarding size, structure
and composition where applicable.
The “Perform” performance and development system
is utilised across the Group to facilitate objective setting,
development planning and performance and
behaviour assessment.
The Group HR Director regularly provides people
and culture feedback to the Board.
2 6 A B D
2022 presented a uniquely challenging labour market as
wage inflation and a post-pandemic increase in hiring
demand converged with subdued labour availability
creating fierce competition amongst employers to attract
and retain employees. The Group responded to the
escalating challenges in employee retention and
recruitment in 2022 by:
• softening the effects of inflation on our workforce
through off-cycle wage increases or lump sum inflation
payments to support employees with the impact of
increased costs of living;
• offering new incentive opportunities such as sign-on
bonuses to attract new employees and enhancing
recruiting bonuses to existing employees for
candidate referrals;
• promoting opportunities for remote, hybrid and flexible
work arrangements;
• implementing additional employee engagement actions,
such as employee activities, newsletters, employee
suggestion/feedback channels and management
meetings; and
• expanding in-house training programmes.
The Group conducted its second Global Employee Opinion
Survey in 2022. Additional detail regarding the 2022
employee engagement survey can be found on page 51.
An expansion of the Group’s online recruitment system,
“Recruit,” commenced in 2022 for operating businesses
in the UK
A talent and skills assurance review was completed across
the Group to assess the scope and severity of employee
recruitment and retention concerns, as well as the
effectiveness of mitigating actions implemented to
counteract the effects of the challenging labour market.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED
Principal Risk
How we manage it
Focus in 2022
FINANCIAL
INFLATION
Inflationary pressures stemming from
a confluence of labour constraints,
supply chain disruption and shifting
customer demand could result in a
reduction of earnings from existing
programmes if the Group is unable to
secure mitigating price adjustments
from customers.
Higher production costs resulting
from material, energy and labour
cost inflation can reduce our ability
to remain cost competitive and win
new business.
Inflationary pressures may result in
higher interest rates, which could
impact the Group’s earnings.
FINANCING AND LIQUIDITY
The Group could have insufficient
financial resources to fund its growth
strategy or meet its financial
obligations as they fall due or
insufficient liquidity to meet
financing covenants.
Foreign exchange movements could
have a material impact on the Group’s
financial performance, both on the
balance sheet (translation risk) and
income statement (transaction risk).
2 3 A B C D E
The Group’s Treasury Committee actively monitors the
economic forces impacting the Group and consider a variety
of viable containment strategies where necessary.
There is a Group Contract Review policy which is
mandatory for all operating businesses and requires
comprehensive financial modelling and sensitivity analysis
of contractual terms and assumptions.
Inflationary pressures continued to escalate in 2022
as ongoing supply chain issues, wage inflation, labour
disruptions and the crisis in Ukraine combined to fuel
a historic surge in labour, energy, transportation and
material costs. The Group expanded efforts to monitor
and mitigate inflation impacts during 2022 through the
following actions:
A significant portion of the Group’s external debt is at
fixed rates of interest, which mitigates the effect of
higher benchmark interest rates that can result from
inflationary pressures.
The Group utilises the Senior Operating System to
deploy lean and continuous improvement techniques
with a focus on improving labour efficiencies and cost
reduction initiatives.
• spotlight inflationary impacts and evaluate potential
mitigating actions in operating business reviews and
Executive Committee meetings;
• where inflationary pressures have increased, the Group
has worked closely with customers to secure price
increases, delay contractual price decreases and/or pass
through higher production costs to mitigate the impact
on Group margins;
• leverage existing fixed-price supply agreements to
secure lower pricing across as much supply as possible
while maintaining a focus on inventory optimisation;
• seek out alternate sources of energy supply to reduce
the possibility of energy supply disruption and slow
escalating costs; and
• assess the impacts of inflation and effectiveness of
actions deployed to mitigate those impacts across the
Group through a targeted assurance review.
2 3 5 D E
The Group’s overall treasury risk management programme
focuses on the unpredictability of financial markets, and
seeks to minimise potential adverse effects on the Group’s
financial performance.
Financing and liquidity initiatives continued to play a critical
role during 2022 to mitigate the ongoing impacts of the
COVID-19 pandemic, supply chain challenges and inflation.
Actions taken included:
The Group enters forward foreign exchange contracts to
hedge the transactional exchange risk arising on operations’
trading activities in foreign currencies; however, it does not
enter or trade financial instruments, including derivative
financial instruments, for speculative purposes.
The Group monitors liquidity risks monthly and ensures
sufficient headroom in its committed borrowing facilities to
meet financial obligations across the Group as they fall due.
The Group’s Treasury policy is updated and approved by the
Board regularly.
Compliance with financial policies, exposure limits and
headroom/liquidity limits are reviewed by the Group’s
Treasury Committee on a regular basis.
The Group’s viability assessment process considers a base
case and risk case scenario, which considers the principal
risks and uncertainties.
• after a period of covenant relaxation through 2020 and
2021 in agreement with the Group’s lenders, the Group
reverted to original covenant limits in 2022. A strong
focus on free cash flow generation has continued
into 2022;
• both main committed revolving credit facilities (in UK
and US) were refinanced during 2022 and the tenors
extended to 2026 and 2025, respectively;
• a global notional cash pooling solution was implemented
in 2022 to enable the Group to make better use of cash
in the operations for working capital needs to minimise
central borrowings;
• responsibly managing growth in inventory requirements
where customer demand is recovering and/or supply
chain disruptions are occurring;
• continued compliance with transactional foreign
exchange hedging policy to mitigate income statement
volatility from currency movements; and
• the Group’s Treasury Policy was updated and approved
by the Board in December 2022.
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How we manage it
Focus in 2022
COMPLIANCE
CORPORATE GOVERNANCE BREACH
Corporate governance legislation
(such as the UK Bribery Act and the
US Foreign Corrupt Practices Act),
regulations and guidance (such as the
UK Corporate Governance Code and
global health and safety regulations)
are increasingly complex and
onerous. A serious breach of these
rules and regulations could have a
significant impact on the Group’s
reputation, lead to a loss of
confidence on the part of investors,
customers or other stakeholders
and ultimately have a material
adverse impact on the Group’s
enterprise value.
The Group has well-established governance policies and
procedures in all key areas, including a Group Code of
Conduct, anti-bribery procedures, a Health & Safety
Charter, an Agent’s Policy and various policies and
procedures over the review and reporting of risk
management and internal control activities.
Governance and regulatory compliance updates are
provided to the Board and the Executive Committee at
appropriate intervals, and to key operational management.
All employees are required to complete annual Code
of Conduct training.
All EU sites have received training on the General Data
Protection Regulations and employees in other locations
have received training as appropriate to their roles.
1 2 3 A B C
Employees received annual refresher training on our
Code of Conduct during 2022. The completion rates
typically hover around 94%, allowing for new starters
who have not yet completed their training immediately
on joining. The course included content related to
conflicts of interest, anti-bribery, general business
ethics and preventing harassment.
Additional training was conducted for appropriate
employee groups on topics including prevention of
payment fraud and information security related topics.
The Group expanded its trade compliance capabilities
through the addition of an internal classification specialist
and enhanced legal entity due diligence procedures.
Updates have been issued to various Group policies.
The Group’s 2022 internal audit programme and Controls
Self Assessment were completed as planned, providing
a level of assurance that the Group’s Code of Conduct,
controls, policies and procedures are being followed.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
71
STRATEGIC REPORT / DIVISIONAL REVIEW
DIVISIONAL REVIEW
AEROSPACE
DIVISION
Revenue
+18%
£553.6m
(2021 – £471.0m)
Adjusted operating profit
+142%
£20.3m
(2021 – £8.4m)
Adjusted operating margin
+190 bps
3.7%
(2021 – 1.8%)
Aerospace sales across the group
65%
40%
Civil aircraft
11%
Other
14%
Defence
Revenue by large commercial platforms
33%
Boeing
67%
Airbus
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
“Revenue in the Aerospace
Division increased by 17.5%
year-on-year, reflecting the
recovery now well underway
in commercial aviation.“
Launie Fleming
Aerospace Division Chief Executive
The Aerospace Division represents 65%
(2021 – 66%) of Group revenue and consists of
14 operating businesses. These are located in
North America (six), the United Kingdom (four),
continental Europe (two), Thailand and Malaysia.
This Divisional review is on a constant currency
basis, whereby 2021 results have been
translated using 2022 average exchange rates
and on an adjusted basis to exclude the charge
relating to amortisation of intangible assets
from acquisitions and net restructuring income.
The Division’s operating results on a constant
currency basis are summarised below:
Revenue
Adjusted
operating profit
Adjusted
operating margin
2022
£m
2021(1)
£m
553.6
471.0
Change
+18%
20.3
8.4 +142%
3.7%
1.8% +190bps
(1) 2021 results translated using 2022 average exchange
rates - constant currency.
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Divisional revenue increased by £82.6m (17.5%)
to £553.6m (2021 – £471.0m) whilst adjusted
operating profit increased by £11.9m (141.7%)
to £20.3m (2021 – £8.4m).
Revenue Reconciliation
2021 revenue
Civil aerospace
Defence
Other
Disposal of business
2022 revenue
£m
471.0
81.4
(6.6)
16.8
(9.0)
553.6
Revenue in the Aerospace Division increased
by 17.5% year-on-year on a constant currency
basis, reflecting the overall recovery in demand.
Excluding the prior year £9.0m revenue
from Senior Aerospace Connecticut, which
was divested in April 2021, revenue on a
constant currency basis increased by 19.8%.
The year-on-year increase reflected the ramp
up in civil aircraft production rates, growth from
semi-conductor equipment markets and ramp
up in space programmes reflecting end market
growth. This more than offset the decline in
defence, which was affected by the delay in
spending as a consequence of the Continuing
Resolution being in place in the USA during
the first half of the year.
The civil aerospace sector had the strongest
growth during the period with Senior’s sales
increasing by 31.6% compared to prior year.
This was reflective of the significant ramp up
in aircraft production rates from the OEMs
resulting in rates being higher in 2022 compared
to 2021, driven particularly by single aisle aircraft
including regional and large business jets, with
widebody production rate increases announced
towards the end of the year. In 2022, 21% of
civil aerospace sales were from widebody
aircraft, with the other 79% sales being from
single aisle, regional and business jets.
Excluding the divestment of Senior Aerospace
Connecticut, total revenue from the defence
sector decreased by £6.6m (5.1%) as purchase
orders were delayed due to the late approval of
the Appropriations Bill which resulted in the
Continuing Resolution coming into force as well
as our sales to F-35 programme being impacted
by customer inventory levels of some of the
parts we supply.
Revenue derived from other markets such as
space, power & energy, medical and semi-
conductor equipment, where the Group
manufactures products using very similar
technology to that used for certain aerospace
products, increased by £16.8m as a result of
increased demand in the semi-conductor
equipment market and the ramp up in space
satellite programmes reflecting end
market growth.
During the period, adjusted operating profit
increased by 141.7% to £20.3m (2021 - £8.4m)
and the adjusted operating margin increased
by 190 basis points to 3.7% (2021 – 1.8%).
The improved profitability reflected the
volume related operating leverage across our
businesses, while price increases helped offset
the impact of material and other inflationary cost
increases. Our operating businesses worked
hard to address the persistent supply chain
challenges and mitigate their impact, ensuring
service levels for customers were maintained
to the best extent possible. These supply chain
constraints are likely to be evident throughout
2023 and continue to require relentless
management in a number of our operations.
These challenges are a function of the welcome
increase in civil aircraft production rates required
by the industry to satisfy the strong demand
from airlines and aircraft lessors. We will
continue to work closely with our suppliers and
customers to minimise disruption. Very recently,
the situation has been compounded by a fire at
one of our key suppliers in Thailand. We are
working closely with the supplier and our
customers to assess and mitigate the specific
impact of the fire.
Both Airbus and Boeing are planning further
increases in aircraft production programmes in
2023 and beyond which gives confidence that
civil aerospace revenue will continue to grow
in 2023. With aircraft build rates increasing
through the year, and the continuing supply
chain challenges in aerospace, including the
recent fire at one of our key suppliers, we
anticipate Aerospace Division trading to be
more weighted to the second half of the year.
The most fuel-efficient single aisle aircraft
are in high demand which underpins planned
rate increases:
• Airbus announced at their FY 2022 results
that on the A320 Family programme, they
are now progressing towards a monthly
production rate of 65 aircraft by the end of
2024 and 75 in 2026. For the entry-into-
service of the A321XLR, Airbus announced
that they expect this to take place in Q2 2024.
Airbus ended 2022 with a backlog of 6,093
A320 Family (2021: 5,839).
• Boeing announced at their full year results
that the 737 programme is stabilising
production rate at 31 per month, which is on
steady course to being achieved, with plans
to ramp production to approximately 50 per
month in the 2025/2026 timeframe. At their
Investor Day in November 2022, they
announced a target of 400-450 737 MAX
deliveries in 2023, rising from the low 30s
deliveries per month in the beginning of
the year and reaching near 40 deliveries per
month in H2 2023. As at the end of 2022,
Boeing had a 737 firm order backlog of
around 3,653 units (2021: 3,414) and 250 737
MAX aircraft in inventory.
14 Global Aerospace operations
6
North America
4
United Kingdom
Continental Europe 2
1
Thailand
1
Malaysia
Revenue reconciliation (£m)
A 2021 revenue
B Civil aerospace
C Defence
D Other
E Disposal of business
F 2022 revenue
£m
81.4
16.8
553.6
471.0
(6.6)
(9.0)
A
B C D E
F
Sales in civil aerospace
increased by
32%
(2021 – 15% decrease)
"The ramp up in large
commercial aircraft
production rates reflected
the recovery in domestic
and international flights.”
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STRATEGIC REPORT / DIVISIONAL REVIEW CONTINUED
"Improved profitability reflected
volume related operating
leverage across our businesses,
while price increases helped
offset the impact of inflationary
cost increases.“
Launie Fleming
Aerospace Division Chief Executive
Adjusted operating
margin increased to
3.7%
(2021 – 1.8%)
"Both Airbus and Boeing are
planning further increases in
aircraft production programmes
in 2023 and beyond which gives
confidence that civil aerospace
revenue will continue to grow
in 2023.”
We expect defence revenue to be stable in
2023 compared to prior year.
• Lockheed Martin delivered 141 F-35 aircraft
in 2022, below its stated target of 147-153,
as they experienced supplier performance
challenges and a delivery pause & suspension
of the Government Furnished Equipment
(GFE) engine. At their full year results, they
announced an intention of producing 147-153
aircraft in 2023 and 2024, although deliveries
in 2023 will be determined pending the
resumption of engine deliveries and other
factors. They continue to anticipate annual
deliveries of 156 aircraft in 2025 and for the
foreseeable future. In Q4 2022, they finalised
the F-35 Low-Rate Initial Production (LRIP)
Lots 15-17 production contract with the U.S.
Government for up to 398 aircraft.
In November 2022, Senior completed its
acquisition of Spencer Aerospace, expanding
Senior’s presence in hydraulic fluid fittings and
allowing Senior to meet customer demand in
an area that closely complements existing fluid
conveyance products. Initial integration activities
are proceeding well.
Senior Aerospace has a diversified product
portfolio of innovative offerings with many
growth opportunities as our customers value
Senior’s financial resilience, stability, design and
manufacturing expertise and global footprint.
We continue to secure new contracts and
contract extensions on civil platforms and other
aerospace markets that will drive our growth.
In 2022, new contracts of note that were
signed include:
• Senior Aerospace Ketema was awarded
multi-year contracts worth in excess of
$30m to supply cryogenic valves for space
launch vehicles
• Senior Aerospace AMT was awarded repeat
production contracts worth c.$10m to supply
floor beam assemblies and frames for large
commercial aircraft.
• Senior Aerospace Jet Products increased
market share for v-blade production for large
commercial aircraft.
• Senior Metal Bellows won a development
and certification contract for implantable
medication delivery pumps. This included
a proof-of-design bellow for an intra-aortic
balloon pump assembly.
• During 2022, the first customer delivery of the
COMAC C919 was completed. COMAC
announced that they have received orders for
more than 1200 units and expect to reach
annual production capacity of 150 aircraft in
five years.
Recovery in long-haul routes, which typically
use widebody aircraft, has been accelerating
in 2022. With the easing of travel restrictions
in Asia, especially recently in China, this is
expected to provide added momentum over
the coming year. IATA has signalled that this
segment will return to 92% of 2019 levels by
2025 and 104% of 2019 levels by 2026. As a
result, both Boeing and Airbus have announced
production rate increases for wide bodies
starting from the end of 2022.
• On widebody aircraft, Airbus announced at
their FY 2022 results that the A330 monthly
production rate increased to around 3 at the
end of 2022 as planned and they are now
targeting to reach a monthly production rate
of 4 in 2024. On the A350 platform, Airbus
confirmed the monthly rate is now around 6
aircraft. In order to meet growing demand for
widebody aircraft as international air travel
recovers, and following a feasibility study with
the supply chain, it is now targeting a monthly
production rate of 9 A350s at the end of 2025
The company’s total widebody backlog was
619 at the end of 2022 (2021: 766).
• Boeing resumed 787 programme deliveries
in August 2022, after receiving approval from
the FAA for their plan on inspections and
retrofit work. The 787 programme continues
at a low production rate with plans to ramp up
to five per month in late 2023 and to 10 per
month in the 2025/2026 timeframe. At their
Investor Day in November 2022, they
announced a target of 70-80 787 deliveries
for 2023. Boeing confirmed at the full year
earnings call that they had 100 787 aircraft
in inventory at the end of 2022, which they
stated will be delivered by the end of 2024.
• Boeing reaffirmed on their full year earnings
call that the 777X programme timeline is
holding for delivery of the first plane in 2025.
Global business jet activity in 2022 was resilient,
continuing the pandemic bounce. According to
WingX Advance, 2022 was a record year as
sales were up 10% year-on-year and 14% above
pre-pandemic 2019 levels. In 2023, demand is
forecast to normalise to 2019 levels in Europe,
with North America sustaining higher than
pre-pandemic activity. Airbus continues to
ramp-up A220 production, having increased to
6 per month during 2022. They announced at
their FY 2022 results that they are still on track
for rate 14 which they envisaged by the middle
of the decade.
74
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Senior Aerospace Metal Bellows provides custom engineered
bellows-based mechanical and electromechanical component
and assembly solutions, by applying its technologies to
applications requiring hydraulic system pressure and flow
control, dynamic sealing, precision sensing and actuation
(pressure and thermal), and flexible coupling.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
75
STRATEGIC REPORT / DIVISIONAL REVIEW CONTINUED
DIVISIONAL REVIEW
FLEXONICS
DIVISION
Flexonics sales across the group
35%
19%
Land vehicles
16%
Power & Energy
Revenue
+26%
£295.6m
(2021 – £234.6m)
Adjusted operating profit
+83%
£25.4m
(2021 – £13.9m)
Adjusted operating margin
+270 bps
8.6%
(2021 – 5.9%)
76
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
“In Flexonics, strong customer
demand in the land vehicle and
power & energy markets in 2022
drove an increase in sales of
26.0% compared to prior year.“
Mike Sheppard
Flexonics Division Chief Executive
The Flexonics Division represents 35%
(2021 – 34%) of Group revenue comprising 12
operations which are located in North America
(four), continental Europe (two), the United
Kingdom (two), South Africa, India, and China
(two) including the Group’s 49% equity stake
in a land vehicle product joint venture. This
Divisional review is on a constant currency
basis(1), whereby 2021 results have been
translated using 2022 average exchange rates
and on an adjusted basis to exclude net
restructuring income/costs. The Division’s
operating results on a constant currency basis
are summarised below:
Revenue
Adjusted
operating profit
Adjusted
operating margin
2022
£m
2021(2)
£m
295.6
234.6
Change
+26%
25.4
13.9
+83%
8.6%
5.9% +270bps
(1) The divisional review is presented before the share
of the joint venture results.
(2) 2021 results translated using 2022 average exchange
rates - constant currency.
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Divisional revenue increased by £61.0m (26.0%)
to £295.6m (2021 – £234.6m) and adjusted
operating profit increased by £11.5m (82.7%)
to £25.4m (2021 – £13.9m).
• The North American medium-duty diesel
truck production is forecast to be stable
in 2023 as backlogs remain elevated,
indicating solid pent-up demand.
Revenue Reconciliation
2021 revenue
Land vehicles
Power & energy
2022 revenue
£m
234.6
37.1
23.9
295.6
In Flexonics, strong customer demand in the
land vehicle and power & energy markets in
2022 drove an increase in sales of 26.0%
compared to prior year.
Group sales to land vehicle markets increased
by 29.2% as Senior outgrew end market
demand due to higher market share. Senior’s
sales to the North American truck and off-
highway market increased by £18.7m (25.8%),
with strong demand for on-highway vehicles
as production of heavy-duty trucks increased
by 19%. Sales to other truck and off-highway
regions, including Europe and India, increased
by £12.0m (45.6%), helped by recent contract
wins entering series production, and end market
production growth as supply chain constraints
eased through the year. Group sales to
passenger vehicle markets increased by £6.4m
(22.8%) in the year, benefiting from recent
contract wins entering series production in
North America and Europe.
In the Group’s power & energy markets, sales
increased by £23.9m (22.2%) in the year. Sales
to power generation and nuclear markets
increased by £9.3m (26.7%) as efforts to extend
powerplant life and maintenance grew. Sales to
oil and gas markets increased by £8.8m (27.1%),
as a result of higher production volumes for
upstream. Sales to other power & energy
markets increased by £5.8m.
Adjusted operating profit increased by £11.5m
compared to prior period and the divisional
adjusted operating margin increased by 270
basis points to 8.6% (2021 – 5.9%). This
significant improvement in profitability reflected
the volume related operating leverage across
our operating businesses and agreed price
increases to offset the impact of inflationary
cost increases.
In 2023, Senior’s overall sales to land vehicle
markets are expected to outperform end
markets due to the launch and ramp up of new
programmes. In terms of the end markets:
• ACT Research is forecasting a 3% decline in
North American heavy-duty truck production
in 2023. Pent-up demand for more fuel
efficient engines and modest pre-buy activity
ahead of tighter emission standards coming
to be introduced in 2024 are expected to be
offset by slowing macroeconomic indicators
in the US.
• IHS Markit Inc. forecasts that European truck
and bus production will fall by 1% in 2023
in line with the slowing macroeconomic
indicators, while light vehicle production
is forecast to grow by 6% in 2023 with
semiconductor availability improving.
• Indian light vehicle production is forecasted
to grow by 8% in 2023.
Positive momentum is expected in power
& energy markets given higher activity levels
in the upstream oil & gas and nuclear sectors:
• The IEA expects world oil demand in 2023
to surpass pre-pandemic levels.
• According to the IEA, global refining capacity
is anticipated to expand slightly in 2023. Tight
supply, coupled with a limited appetite for
new refining capacity due to the US federal
government’s policies on energy, has led
businesses to focus on upgrading and
expanding existing facilities, thereby
increasing maintenance and overhaul work.
• In power generation, the IEA forecasts global
electricity demand growth in 2023 to be
similar as 2022, albeit with some uncertainty
around how macroeconomic growth rates
will impact demand.
• In the nuclear sector, 2023 will see nations
focus on energy security through ensuring
the smooth operating of existing powerplant
and look to further develop SMRs.
Our innovative technology is a key point of
differentiation for the Group, and we continue
to focus our development efforts, with our
products applicable across a diverse range of
attractive industrial markets. In 2022, we made
good progress with new product development:
• Senior Flexonics Crumlin supplied prototype
Battery Cooling Plates to several European
car companies.
• Senior supplied Prototype Heat Sinks to
several tier one electric vehicle inverter
suppliers.
• Senior Flexonics Crumlin secured a production
order for Battery Cooling Plates for a premium
sports car manufacturer.
• Senior Flexonics Kassel was named as
a partner for the development of a marine
hydrogen powered fuel cell fluid
management system.
• Senior Flexonics Bartlett was nominated
to supply assemblies for a Solid Oxide Fuel
Cell being developed to replace diesel
powered generators.
12 Global Flexonics operations
North America
4
Continental Europe 2
2
United Kingdom
1
India
1
South Africa
China (1)
2
(1) Including joint venture.
Revenue reconciliation (£m)
A 2021 revenue
B Land vehicles
C Power & energy
D 2022 revenue
23.9 295.6
37.1
234.6
£m
A B C D
Increasing global energy
consumption will drive
higher demand for
many of the Flexonics
Division’s products.
Sales to power & energy
markets increased by
+22%
(2021 – 12% decrease)
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
77
FINANCIAL REVIEW
GOOD FINANCIAL
PROGRESS
Financial Summary
A summary of the Group’s operating results (at reported currency) is set out in the table below.
Further detail on the performance of each Division is set out in the Divisional Review.
2022
£m
553.6
295.6
–
(0.8)
–
848.4
Revenue
2021
£m
439.3
219.9
–
(0.5)
–
658.7
Adjusted
operating profit(1)
2022
£m
20.3
25.4
0.4
–
(17.6)
28.5
2021
£m
7.9
12.9
0.2
–
(14.9)
6.1
Margin
2021
%
1.8
5.9
–
–
–
0.9
2022
%
3.7
8.6
–
–
–
3.4
Aerospace
Flexonics(2)
Share of results of
joint venture
Inter-segment sales
Central costs
Group total
(1) See table below for reconciliation of adjusted operating profit to reported operating profit.
(2) Flexonics results are presented before share of results of joint venture.
Adjusted operating profit may be reconciled to the operating profit that is shown in the
Consolidated Income Statement as follows:
Adjusted operating profit
Amortisation of intangible assets from acquisitions
Net restructuring income
Operating profit
2022
£m
28.5
(0.2)
4.2
32.5
2021
£m
6.1
–
4.4
10.5
Financial detail
Group revenue
Group revenue was £848.4m (2021 – £658.7m).
Excluding the favourable exchange rate impact
of £46.3m, Group revenue increased by
£143.4m (20.3%), of which £28.6m related to
pricing. Revenue grew in both Aerospace and
Flexonics year-on-year. In 2022, 59% of revenue
originated from North America, 17% from the
UK, 12% from the Rest of Europe and 12% from
the Rest of the World.
Operating profit
Adjusted operating profit increased by £22.4m
(367.2%) to £28.5m (2021 – £6.1m). Excluding
the favourable exchange rate impact of £1.3m,
adjusted operating profit increased by £21.1m
(285.1%) on a constant currency basis. After
accounting for £0.2m amortisation of intangible
assets from acquisitions (2021 – £nil) and £4.2m
net restructuring income (2021 – £4.4m),
reported operating profit was £32.5m (2021 –
£10.5m).
The Group’s adjusted operating margin
increased by 250 basis points, to 3.4% for the
full year. This improved profitability principally
reflected volume related operating leverage
across our businesses. Inflationary pressures
were successfully mitigated by diligently
managing costs and by increasing prices
and surcharges where possible. Overall price
increases of £28.6m offset material and
other inflationary cost increases of £26.0m.
"Senior delivered significantly
improved profitability, generated
excellent free cash flow and
further strengthened the
balance sheet.”
Bindi Foyle
Group Finance Director
Adjusted Operating Profit
+367%
£28.5m
2021 – £6.1m
Free Cash Flow
+98%
£27.7m
2021 – £14.0m
ROCE
+370 bps
4.7%
2021 – 1.0%
78
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
STRATEGIC REPORT / FINANCIAL REVIEW Revenue (£m)
+29%
21
22
Adjusted operating profit (£m)
+367%
Free cash flow (£m)
+98%
658.7
848.4
6.1
21
22
21
22
28.5
14.0
27.7
As set out in Note 9, adjusted operating profit
and adjusted profit/loss before tax are stated
before £0.2m amortisation of intangible
assets from acquisitions (2021 – £nil) and
£4.2m net restructuring income (2021 –
£4.4m). Adjusted profit/loss before tax is also
stated before costs associated with corporate
undertakings of £1.7m (2021 – £21.2 income).
Restructuring
In 2020 the Group had focused on taking
actions to conserve cash to manage through
the pandemic, including curtailing capital
expenditure, tightly managing working capital
and implementing further cost cutting actions.
In 2022 there were still some residual
activities associated with that.
The decisive actions which we took on
restructuring and cost management delivered
the expected benefits. In addition, the Group
has continued to review inventory and asset
exposures on programmes that have been
reduced, cancelled or where the Group will no
longer participate. As part of the restructuring
focus, we have assessed critically any
inventory or asset exposures on these
programmes and written down the carrying
values on excess holdings and assets where
there is no alternate use. Where demand has
picked up on previously reduced or cancelled
programmes, inventory impairments have
been reversed to the extent that there are
confirmed orders in place.
The restructuring resulted in net income of
£4.2m (2021 – £4.4m). Of this, £4.0m income
(2021 – £4.2m) related to an aerospace
manufacturing grant and £1.2m net charge
related to consultancy and other costs
(2021 – £0.4m net charge). For certain
specific programmes, and in conjunction
with the focus on restructuring, management
has also identified inventory impairment
reversals of £2.7m (2021 – £1.4m) where
customer demand has increased, and further
impairment provisions on property, plant and
equipment in 2022 with a charge of £1.3m
(2021 – £0.8m) to cover the risk where there
are no alternative uses. Net cash inflow
related to restructuring activities was
£2.1m (2021 – £0.9m net cash outflow).
At 31 December 2022, a restructuring
provision of £0.2m (31 December 2021:
£1.3m) was recognised and is expected
to be utilised in 2023.
Finance costs and investment income
Finance costs, net of investment income and
before interest unwind of deferred and
contingent consideration increased to £8.4m
(2021 – £8.0m) and comprise IFRS 16 interest
charge on lease liabilities of £2.5m (2021 –
£2.6m), net finance income on retirement
benefits of £1.2m (2021 – £0.4m) and net
interest charge of £7.1m (2021 – £5.8m). This
increase was mainly due to higher underlying
interest rates on variable rate debt and foreign
exchange movements on fixed rate USD Private
Placement Notes denominated in US Dollars.
Gross finance costs, including interest unwind
of deferred and contingent consideration were
£10.6m (2021 – £8.5m) and investment income
was £1.9m (2021 – £0.5m).
Corporate undertakings
Costs associated with corporate undertakings
were £1.7m in 2022, of which £1.2m of
acquisition costs and £0.3m interest unwind
of deferred and contingent consideration
relates to the acquisition of Spencer Aerospace
in November 2022 and £0.2m costs relate to
other corporate activities. In 2021, net income
of £21.2m was recognised, of which £24.2m
gain relates to the disposal of Senior Aerospace
Connecticut in April 2021, partly offset by
£3.0m bid defence and costs relating to other
corporate activities. See Note 31 to the Financial
Statements for further details on the £24.2m
gain on disposal.
Net cash outflow related to corporate
undertakings in 2022 was £26.7m,
comprising £25.3m for the acquisition of
Spencer Aerospace and £1.4m of acquisition
related costs and other corporate activities.
In 2021, net cash inflow related to corporate
undertakings was £46.9m, comprising
£51.7m proceeds from disposal activities,
offset by £1.8m disposal costs and £3.0m
bid defence and other costs.
Profit/loss before tax
Adjusted profit before tax was £20.1m (2021 –
£1.9m loss). Reported profit before tax was
£22.4m (2021 – £23.7m). The reconciling items
between adjusted profit/loss and reported
profit before tax are shown in Note 9 to the
Financial Statements.
Tax charge
The adjusted tax rate for the year was 10.0%
(2021 – 136.8% credit), being a tax charge of
£2.0m (2021 – £2.6m credit) on adjusted profit
before tax of £20.1m (2021 – £1.9m loss).
The adjusted tax rate benefitted from enhanced
deductions for R&D expenditure in the US,
the super-deduction for capital expenditure
in the UK, as well as prior year items.
The reported tax rate was 9.8% charge, being
a tax charge of £2.2m on reported profit before
tax of £22.4m. This included £0.2m net tax
charge against items excluded from adjusted
profit before tax, of which £0.7m charge related
to net restructuring income and a £0.5m credit
related to corporate undertakings in the year.
The 2021 reported tax rate was 2.1% credit,
being a tax credit of £0.5m on reported profit
before tax of £23.7m. This included £2.1m net
tax charge against items excluded from adjusted
loss before tax, of which £2.9m related to the
corporate undertakings in the year and £0.6m
credit to the revaluation of UK deferred tax
assets at the substantially enacted 25%
corporation tax rate effective from 1 April 2023.
Cash tax paid was £3.5m (2021 – £5.3m)
and is stated net of refunds received of £1.1m
(2021 – £0.9m) of tax paid in prior periods,
including refunds arising from the offset of tax
losses against taxable profits of prior periods.
Tax payments in 2021 were £2.3m higher than
they would otherwise have been as a result of
coronavirus relief measures in some countries
which allowed the deferral of tax bills normally
due in 2020 into 2021.
Tax policy
The Group acts with integrity in all tax matters,
in accordance with the Group’s ethics and
business conduct programme. It is the Group’s
obligation to pay the amount of tax legally
due and to observe all applicable rules and
regulations in the jurisdictions in which it
operates. While meeting this obligation, the
Group also has a responsibility to manage and
control the costs of our business, including
the taxes we pay for the benefit of all our
stakeholders. The Group seeks to achieve this
by conducting business affairs in a way that
is efficient from a tax perspective, including
maintaining appropriate levels of debt in the
countries we operate in and claiming available
tax reliefs and incentives. The Group is
committed to building and maintaining
constructive working relationships with the
tax authorities of the countries in which it
operates. Further details on our approach
to tax may be found on Senior’s website
at www.seniorplc.com.
Earnings per share
The weighted average number of shares, for
the purposes of calculating undiluted earnings
per share, decreased to 415.3 million (2021 –
415.7 million). The decrease arose principally
due to the purchase of shares held by the
employee benefit trust during 2022. The
adjusted earnings per share was 4.36 pence
(2021 – 0.17 pence). Basic earnings per share
was 4.86 pence (2021 – 5.82 pence). See Note
12 for details of the basis of these calculations.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
79
STRATEGIC REPORT / FINANCIAL REVIEW STRATEGIC REPORT / FINANCIAL REVIEW CONTINUED
Return on capital employed (“ROCE”)
ROCE, a key performance indicator for the
Group as defined above, increased by 370 basis
points to 4.7% (2021 – 1.0%). The increase in
ROCE was mainly a result of the significant
increase in adjusted operating profit compared
to prior year.
Research and design
The Group’s expenditure on research and design
was £19.8m during 2022 (2021 – £19.2m).
Expenditure was incurred mainly on funded
and unfunded work, which primarily relates
to designing and engineering products in
accordance with individual customer
specifications and investigating specific
manufacturing processes for their production.
The Group also incurs costs on general
manufacturing improvement processes
which are similarly expensed. Unfunded costs
in the year have been expensed, consistent
with the prior year, as they did not meet the
strict criteria required for capitalisation.
Exchange rates
A proportion of the Group’s operating profit
in 2022 was generated outside the UK and
consequently, foreign exchange rates,
principally the US Dollar against Sterling,
can affect the Group’s results.
The 2022 average exchange rate for the US
Dollar applied in the translation of income
statement and cash flow items was $1.24
(2021 – $1.38). The exchange rate for the
US Dollar applied to the translation of
Balance Sheet items at 31 December 2022
was $1.21 (31 December 2021 – $1.35).
Using 2022 average exchange rates would
have increased 2021 revenue by £46.3m
and increased 2021 adjusted operating profit
by £1.3m. A 10 cents movement in the £:$
exchange rate is estimated to affect forecast
full-year revenue on average by £44m, adjusted
operating profit by £2m and net debt by £11m.
Cash flow
The Group generated excellent free cash flow
of £27.7m in 2022 (2021 – £14.0m) as set out
in the table below:
Operating profit
Amortisation of intangible
assets from acquisitions
Net restructuring income
Adjusted operating profit
Depreciation (including
amortisation of software)
Working capital and
provisions movement, net
of restructuring items
Pension payments above
service cost
Other items(1)
Interest paid, net
Income tax paid, net
Capital expenditure
Sale of property, plant and
equipment
Free cash flow
Corporate undertakings
Net restructuring
proceeds/(cash paid)
US Class action lawsuits
Dividends paid
Purchase of shares held
by employee benefit trust
Net cash flow
Effect of foreign exchange
rate changes
IFRS 16 non-cash
additions and
modifications including
acquisition
Change in net debt
Opening net debt
Closing net debt
2022
£m
32.5
0.2
(4.2)
28.5
2021
£m
10.5
–
(4.4)
6.1
49.6
47.8
(12.1)
(2.6)
(1.4)
5.6
(9.0)
(3.5)
(30.5)
0.5
27.7
(26.7)
2.1
–
(1.2)
(4.5)
(2.6)
(5.1)
2.2
(8.0)
(5.3)
(21.3)
0.2
14.0
46.9
(0.9)
(2.3)
–
–
57.7
(14.2)
0.7
(9.0)
(25.8)
(153.1)
(178.9)
(5.6)
52.8
(205.9)
(153.1)
(1) Other items comprises £4.3m share-based payment
charges (2021 – £3.5m), £(0.4m) profit on share of joint
venture (2021 – £(0.2m)), £1.8m working capital and
provision currency movements (2021 – £(1.1m)) and
£(0.1m) profit on sale of fixed assets (2021 – £nil).
Capital expenditure
Gross capital expenditure of £30.5m (2021 –
£21.3m) was 0.8 times depreciation excluding
the impact of IFRS 16 (2021 – 0.6 times). The
disposal of property, plant and equipment raised
£0.5m (2021 – £0.2m). 2023 capital investment
is expected to be in line with depreciation
(excluding the impact of IFRS 16). We are
prioritising new investment on sustainability
related items; important replacement equipment
for current production; and growth projects
where contracts have been secured.
Working capital
Working capital increased by £28.3m in 2022
to £131.3m (2021 – £103.0m), of which £9.3m
related to foreign currency movements.
As expected, the underlying increase was
reflective of increased activity in our key end
markets along with some supply chain lead
times increasing. In 2022, our effective
management of working capital reduced it as a
percentage of sales by 10 basis points to 15.5%
(2021 – 15.6%). Although we may continue to
see an increase in working capital over the
coming year, we will continue our relentless and
effective focus on working capital management.
The Group participates in some non-recourse
reverse factoring schemes which are arranged
by our customers as a way of reducing credit
risk. The trade receivables reverse factored
under such non-recourse schemes at
31 December 2022 were £24.9m (31 December
2021 – £16.8m). The net impact of reverse
factoring on 2022 was a cash inflow in working
capital of £6.2m (2021 – £0.9m outflow) and the
discount interest presented within other finance
costs is a charge of £0.6m in 2022 (2021 –
£0.2m). These arrangements follow standard
market terms and conditions and, as noted
above, are 100% non-recourse to the Group,
thereby transfer all credit risk to the financial
institutions who provide the factoring schemes.
Dividend
The Group had a long and stable track record
of dividend growth prior to 2020. Reflecting
confidence in the Group’s performance,
financial position and future prospects, the
Board reinstated dividend payments in 2022 and
is proposing a final dividend of 1.00 pence per
share (2021 – nil pence). If approved, it would
be paid on 26 May 2023 to shareholders on
the register at the close of business on 28 April
2023 and payment would total £4.1m. This
would deliver total dividends paid and proposed
in respect of 2022 of 1.30 pence per share
(2021 – nil pence). At the level recommended,
the full year dividend would be covered 3.4
times by adjusted earnings per share. The cash
outflow incurred during 2022 in respect of
dividends was £1.2m (2021 – £nil) relating to
the interim dividend for 2022.
We will continue to follow a progressive
dividend policy reflecting earnings per share,
free cash flow generation, market conditions
and dividend cover over the medium term.
80
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Net debt/EBITDA
Funding headroom (£m)
Return on capital employed (%)
21
22
1.87x
1.47x
21
22
208
179
1.0
21
22
4.7
The Group has £0.5m (2021 – £nil) of
uncommitted borrowings which are repayable
on demand.
The Group has two covenants for committed
borrowing facilities, which are tested at June
and December: the Group’s net debt to EBITDA
(defined in the Notes to the Financial Headlines
on page 2) must not exceed 3.0x and interest
cover, the ratio of EBITDA to interest must
be higher than 3.5x. At 31 December 2022,
the Group’s net debt to EBITDA was 1.47x
and interest cover was 9.4x, both comfortably
within covenant limits.
During the year the Group implemented a global
cash pooling structure which has enhanced
liquidity and cash management, reduced gross
debt levels and will help mitigate rising interest
costs moving forward.
Bindi Foyle
Group Finance Director
Goodwill
The increase in goodwill from £150.2m
at 31 December 2021 to £199.7m at
31 December 2022 reflects the acquisition
of Spencer Aerospace in November 2022
(£42m increase) and foreign exchange
differences (£7.5m increase).
Retirement benefit schemes
The retirement benefit surplus in respect of
the Group’s UK defined benefit pension plan
(“the UK Plan”) decreased by £20.4m to
£51.8m (31 December 2021 – £72.2m) due
to £23.2m net actuarial losses, partly offset
by £1.4m cash contributions by the Group,
in excess of running costs, and £1.4m net
interest income. Retirement benefit deficits
in respect of the US and other territories
increased by £1.1m to £12.1m (31 December
2021 – £11.0m).
The latest triennial actuarial valuation of the
UK Plan as at 5 April 2022 showed a surplus
of £24.5m (5 April 2019 – deficit of £10.2m).
As a result, and effective from April 2022, the
Group’s deficit reduction cash contributions,
including administration costs, to the UK Plan
ceased on 30 June 2022.
The estimated cash contributions expected
to be paid during 2023 in the US funded
plans is £2.3m (£0.4m was paid in 2022).
Net debt
Net debt which includes IFRS 16 lease
liabilities increased by £25.8m to £178.9m
at 31 December 2022 (31 December
2021 – £153.1m). As noted in the cash flow
above, the Group generated net cash outflow
of £2.6m (as defined in Note 32(c) of the
Financial Statements), after £14.2m adverse
foreign currency movements and £9.0m
non-cash changes in lease liabilities due to
additions and modifications of which £4.7m
relates to acquisition leases.
Net debt excluding IFRS 16 lease liabilities
of £78.4m (31 December 2021 – £73.2m)
increased by £20.6m to £100.5m at 31
December 2022 (31 December 2021 –
£79.9m), due to free cash inflow of £27.7m
being more than offset by £26.7m cash
outflow in respect of corporate undertakings,
£9.1m capital repayment of leases, £3.6m net
cash outflows for dividends and purchase of
shares net of restructuring income and £8.9m
adverse foreign currency movements.
Funding and Liquidity
As at 31 December 2022, the Group’s gross
borrowings excluding leases and transaction
costs directly attributable to borrowings were
£145.3m (31 December 2021 – £132.0m),
with 64% of the Group’s gross borrowings
denominated in US Dollars (31 December
2021 – 62%). Cash and bank balances were
£43.2m (31 December 2021 – £51.1m).
The maturity of these borrowings, together with
the maturity of the Group’s committed facilities,
can be analysed as follows:
Within one year
In the second year
In years three to five
After five years
Gross
borrowings(2)
£m
Committed
facilities
£m
0.5
–
120.0
24.8
145.3
–
–
255.1
24.8
279.9
(2) Gross borrowings include other loans and committed
facilities, but exclude leases of £78.4m and transaction
costs directly attributable to borrowings of £(1.6)m.
At the year-end, the Group had committed
facilities of £279.9m comprising private
placement debt of £126.2m and revolving
credit facilities of £153.7m. The Group is in
a strong funding position, with headroom
at 31 December 2022 of £179.4m in cash
and undrawn facilities.
During the first half of 2022, the Group
refinanced its US revolving credit facility of
$50.0m (£41.3m at year end exchange rate) and
extended the maturity to June 2025. In October
2022, the US private placement debt of $20m
(£16.5m at year end exchange rate) was repaid.
In November 2022 the Group refinanced its
UK revolving credit facility and extended the
maturity to November 2026 with a commitment
of £115m and in support of the strong ESG
commitments made by Senior and its lenders,
we have jointly agreed appropriate sustainability
linked key performance indicators.
The weighted average maturity of the Group’s
committed facilities at 31 December 2022
was 3.5 years.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
81
STRATEGIC REPORT / VIABILITY STATEMENT
VIABILITY STATEMENT
Following a robust assessment, the Directors have concluded
that the Group and Parent Company have sufficient funds to
operate for the foreseeable future (evaluated to 31 December
2025), even in a severe but plausible downside scenario.
In accordance with provisions 30 and 31 of
the 2018 UK Corporate Governance Code,
published by the Financial Reporting Council
in 2018, the Directors have assessed the
prospects of the Group over the three-year
period to 31 December 2025.
As we start 2023, markets remain favourable,
with commercial aerospace recovery in full
swing and other important markets remaining
buoyant. Demand is currently holding up well,
though we remain mindful of the potential
impact of the broader macro-economic situation
and geopolitical uncertainty. Notwithstanding
near-term uncertainties in the global economy,
Senior is well placed to benefit from the
recovery underway in our end markets. The
Board has considered a three-year period, as
this reflects the normal mid-term planning cycle
of its business operations while adequately
covering customer lead times for both new
and expansion investment. In addition, this
period provides sufficient clarity to consider the
business prospects and continued recovery
from the pandemic under a base case, while
also assessing impacts under a severe
but plausible downside scenario.
The base case projections of the viability
assessment are based on the Group’s Budget
for 2023 and the Group’s Strategy for 2024 and
2025. The rebound in flight departure levels in
2022 was testament to the resilience of global
air travel demand, with the recovery across
commercial aerospace underway. The strong
growth in passenger numbers seen in most
domestic markets and other short-haul routes
was sustained throughout 2022 and is expected
to continue. International, long-haul traffic has
been accelerating, particularly between North
America and Europe and the recent easing of
travel restrictions in China has immediately
provided added momentum. IATA continues to
expect domestic passenger numbers to reach
2019 levels by 2024 and international passenger
numbers to return to 2019 levels by 2025. As
demand recovers, production of new aircraft will
be supported by the replacement cycle driven
by the accelerated retirement of older, less
efficient, aircraft during the pandemic. Beyond
this, the drivers supporting air traffic growth
over the long term of c. 4% per annum remain
in place. The lower operating cost and better
sustainability of new aircraft, on which Senior
has significant content, will continue to be a
necessity for the airline industry. In the Group’s
other key markets, defence is anticipated to
remain stable over the medium term, the
Flexonics land vehicle markets are expected to
continue to grow through the medium term and
in the power and energy markets, recovery in
the oil and gas sector is underway and demand
for power generation is expected to grow
through the medium term.
The Group has two covenants for committed
borrowing facilities, which are tested at June
and December: the Group’s net debt to EBITDA
(defined in the Notes to the Financial Headlines
on page 2) must not exceed 3.0x and interest
cover, the ratio of EBITDA to interest must be
higher than 3.5x. At 31 December 2022, the
Group’s net debt to EBITDA was 1.47x and
interest cover was 9.4x, both comfortably
within covenant limits.
In determining a severe but plausible downside
scenario, the base case projections are flexed to
reflect the weighted probability and cumulative
estimated effects of all the Group’s principal
risks and uncertainties, as disclosed on pages
60 to 71. This scenario reflects the combined
probabilistic effect of all principal risks, rather
than individual scenarios for each risk, according
to impact and likelihood of occurrence and
include mitigations where appropriate to
maintain liquidity. These effects drive key
metrics in revenue growth, operating profit
margin and borrowing rates. The top 3 principal
risks with the highest estimated effect on key
metrics include Economic and Geopolitical
impact, Inflation, and Supply chain challenges.
The remaining risks, such as Pandemic and
Climate Change, have relatively equal weighting
in the scenario, with Corporate Governance
Breach and Innovation & Technological Change
having the lowest estimated effect.
To address the impacts under the severe but
plausible downside, the Board has considered
the mitigating actions within the Group’s direct
control. These include a continued focus on
conserving cash through vigilant management
of capital expenditure and working capital
together with further restructuring actions
and limiting non-critical discretionary spend.
Committed facilities and debt covenants
At 31 December 2022, the Group held
committed borrowing facilities of £279.9m with
liquidity headroom of £179.4m. The weighted
average maturity of the Group’s committed
facilities at the end of December 2022 was
3.5 years. Net debt (defined in Note 32c) was
£178.9m, including £78.4m of capitalised leases
which do not form part of the definition of debt
under the committed facilities and do not impact
the Group’s lending covenants.
Board’s conclusion
Modelling the base case and severe but
plausible downside scenario and mitigations
indicate that the Group is in compliance with
all debt covenants at all measurement dates
out to 31 December 2025. The scenarios
also highlight sufficient liquidity headroom
throughout the period in light of the committed
facilities available. Accordingly, following a
robust assessment the Directors have
concluded that the Group and Parent Company
have sufficient funds to operate for the
foreseeable future, even in a severe but
plausible downside scenario. For the going
concern assessment, the foreseeable future
covers a minimum period of 12 months from the
date of approval of these Financial Statements,
and with the viability period evaluated out to
31 December 2025.
Going concern
As a consequence of the work undertaken
to support the viability statement above, the
Directors have, at the time of approving these
Financial Statements, a reasonable expectation
that the Group and Parent Company have
adequate resources to continue in operational
existence for the foreseeable future, being
a period of at least 12 months from the date
of approval of these Financial Statements.
Accordingly, they continue to adopt the going
concern basis of accounting in preparing these
Financial Statements, having undertaken a
rigorous assessment of the financial forecasts.
Approval
The Strategic Report from pages 1 to 83
was approved by the Board of Directors on
24 February 2023 and signed on its behalf by
David Squires
Group Chief Executive Officer
82
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The rebound in flight
departure levels in 2022
was testament to the
resilience of global air
travel demand, with
the recovery across
commercial aerospace
underway. Defence is
anticipated to remain
stable over the
medium term.
Land vehicle markets are
expected to continue to
grow through the medium
term. In the power and
energy markets, recovery
in the oil and gas sector
is underway and demand
for power generation is
expected to grow through
the medium term.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
83
GOVERNANCE /
GOVERNANCE
IN THIS SECTION
86 Chair's Governance Letter
“In 2022, the Group's Corporate
Governance Framework has supported
all decisions made by the Board and
the Executive Committee.”
90 Board of Directors
94 Executive and HSE Committees
95 Governance and Report of the Directors
97 Nominations Committee Report
“The Group seeks to ensure diversity in the
composition of its Board, including gender,
ethnicity and personal and cognitive skills.”
Ian King
Chair
102 Audit Committee Report
“Collectively, the members of the
Audit Committee have significant
commercial and financial experience
at a senior management level.”
Giles Kerr
Chair of the Audit Committee
108 Remuneration Committee Report
“The implementation of our
Remuneration Policy seeks to motivate
and support outperformance.”
Celia Baxter
Chair of the Remuneration Committee
111 2022 Remuneration Report at a Glance
113 Remuneration Report: Policy
119 Annual Report on Remuneration
129 Statement of Directors’ Responsibilities
130 Independent Auditor’s Report to the
Members of Senior plc
84
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Bellows for Land Vehicles
Bellows are used in fluid
conveyance to hermetically
seal piping systems that
connect different propulsion
components moving in different
motions. A critical component
needed to meet leak tight
emissions standards.
EGR Cooler
Aids in reducing combustion
temperatures, thereby reducing
NOx (which creates smog) and
improving fuel economy (which
results in lower CO2). In order to
meet tightening emissions
standards, EGR Coolers will be
required for diesel, natural gas and
synthetic fuel combustion engines.
EV Fluid Conveyance
Engineered fluid conveyance
tubes and assemblies are critical
for both EVs and ICE vehicles.
Optimized coolant management
and delivery enhances the
performance and durability of
the entire propulsion system.
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Electronic Thermal
Management
Thermal management of critical
electronic components is required
for all new land vehicles. Newer
more efficient vehicles require
more electronic systems for engine
management and therefore need
advanced thermal management
for electronic durability.
Battery cooling plates
Battery cooling plates
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
8585
GOVERNANCE / CHAIR’S GOVERNANCE LETTER
CHAIR’S GOVERNANCE LETTER
AN INVALUABLE AND
ROBUST FRAMEWORK
Application of the five principles
of the Code
Leadership, Company purpose,
values and strategy
The role of the Board
Division of responsibilities:
the Chair, the non-executive
Directors and the
Company Secretary
Purpose
Core Values
Strategic Priorities
Page 93
Page 93
Page 6
Page 38
Pages 42
to 43
Effectiveness: Board composition,
evaluation and succession
Composition of the Board
Nominations Committee Report,
including appointments to the
Board and succession planning
Skills, experience and
knowledge of the
Board of Directors
Board evaluation
Page 89
Pages 97
to 99
Pages 90
to 92
Page 99
Accountability: Audit, risk and internal
control
Audit, risk and Internal Control
Audit Committee Report
Risks and Uncertainties
Pages 100
to 101
Pages 102
to 107
Pages 60
and 61
Remuneration
Remuneration Committee
Report
Pages 108
to 128
Relations with Shareholders
Shareholder engagement
Other stakeholder engagement Pages 50 to
Pages 54
53 and 55
Dear Shareholders,
In another year of external events that
challenged the Company, the Governance
Framework once again proved to be invaluable
and robust. Throughout 2022, it has been my
privilege to lead the Board in the next phase
of the Company’s development and growth
and we have delivered a year of strong progress.
I remain confident we have the right Board of
Directors in place, working with the Executive
Leadership Team, to implement the Company’s
strategy. The non-executive Directors continued
to bring strong, broad, professional and
complementary qualities to the Board in 2022.
I look forward to working with the Board in 2023
to continue to deliver long-term sustainable
growth. The acquisition of Spencer Aerospace
and the opportunities it will bring to our Fluid
Conveyance business have heightened my
confidence and outlook for the Group.
In 2022, the Board has maintained its focus on
sustainability, both in terms of environmental,
social and governance (“ESG”) across the
operations, as well as those relevant to the
Group’s products, technologies and capabilities.
Corporate governance continues to have
prominence across the Senior Group; the Board
sets the tone and takes the lead on governance
matters. The Governance section of this
Annual Report is intended to provide Senior’s
shareholders with a clear and meaningful
explanation of what governance means to
the Board and how this guides its decision-
making processes.
The Board remains firmly committed to
ensuring the long-term sustainable growth
of the Group, generating value for
shareholders, whilst considering the
needs of all its stakeholders.
On the following pages, I have summarised
the Company’s approach to key
governance matters.
“In 2022, the Group's Corporate
Governance Framework
has supported all decisions
made by the Board and the
Executive Committee.”
Ian King
Chair
Statement of compliance with
the Corporate Governance Code
The Company is subject to the UK Corporate
Governance Code 2018 (the Code), which is
published by the Financial Reporting Council
and available on their website: www.frc.org.
uk/directors/corporate-governance-and-
stewardship/uk-corporate-governance-code.
We have been fully compliant with the Code
throughout 2022 apart from the executive
Directors’ pension contributions, which
were aligned with the rates available to the
majority of the UK workforce in December
2022. Further details of how the Company
applied the Principles of the Code can be
found on pages 86 to 107.
86
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Board governance
Directors’ duties
Under the Companies Act 2006, each
of our Directors must: act within their
powers, promote the success of the
Company, exercise independent
judgment, exercise reasonable care,
skill and diligence, and avoid conflicts
of interest.
Role of the Board
The Board is responsible for Group
decisions affecting governance, strategy
and the approval of annual operating budgets
and Financial Statements. It also approves
significant financial and contractual
commitments made by the Group. The
Board’s Terms of Reference were updated
in 2022 and more fully describe the
responsibilities of the Board; the Matters
Reserved for the Senior plc Board may be
found on the Company’s website.
The Board recognises its role in assessing
and monitoring the Group’s culture. To that
effect, “Culture” has been made a regular
Board agenda item. The Board deploys
various initiatives to monitor culture, from
participating in site visits to reviewing
qualitative and quantitative evidence of culture
(succession plans, Health & Safety reporting,
whistle-blowing notifications, payment
practices reports and training completion
rates). In 2022, a Global Employee Opinion
Survey was undertaken. The results were
positive and shared with employees;
further details can be found on page 51.
At the Board’s Annual Strategic Review
meeting held in October 2022, the Group’s
Strategy was tested, taking into account
recent events on the Group’s end markets,
and was found to be still relevant by
the Board.
Leadership
The Board is led by me, as the non-executive
Chair, together with two executive Directors
and six independent non-executive Directors.
All Directors were selected for appointment
because of their wide industrial and
commercial experience; we have an excellent,
well-balanced Board. In addition, the Group’s
Executive Committee, chaired by the Group
Chief Executive Officer, comprises the two
executive Directors and other key executives.
Details of the members of the Board and
of the Executive Committee can be found
on pages 90 to 92 and 94. My role as
Chair includes:
(a) setting the Board’s agenda, the style
and tone of Board discussions and
ensuring that adequate time is available
for discussion of all agenda items,
in particular strategic issues;
(b) supporting the Group Chief Executive
Officer in the development of strategy
and, more broadly, to offer guidance to
the Group Chief Executive Officer;
(c) promoting a culture of openness and
debate by facilitating the effective
contribution of non-executive Directors,
and ensuring constructive relations
between non-executive Directors
and executive management;
(d) ensuring that the Directors receive accurate,
timely and clear information;
(e) ensuring, in conjunction with the Group Chief
Executive Officer, effective communication
with shareholders; and
(f) ensuring that the performance of the Board,
its main committees and individual Directors
are formally evaluated on an annual basis.
The non-executive Directors have an important
role in reviewing and challenging executive
management’s decisions and actions. Global
events over the last couple of years, including
the COVID-19 pandemic, supply chain issues
and the war in Ukraine have highlighted the
importance of having an effectively functioning,
flexible and dedicated Board, with the Directors
working together to ensure the Group was
able to contend with the difficult and complex
issues that arose.
The Directors are confident that an effective
Board is in place, with a clear division of
responsibilities between the running of the
Board and the running of the Group’s
businesses. In 2022, Clare Chalmers Limited
was engaged to undertake a detailed Board
evaluation review which found the Board to
be functional and effective. A summary of the
2022 report on the Board evaluation findings
are provided in the Nominations Committee
Report on page 99.
I was independent upon appointment as Chair
of the Company in 2018. The Board considers
all non-executive Directors of the Company
continue to be independent, having taken into
account a list of relationships and circumstances
that may appear relevant in determining
independence; the Group Company Secretary
maintains a register of the Directors’ potential
conflicts of interest. As Chair, I encourage open
and honest discussions between the Directors,
both within and outside Board meetings, and
I ensure no Director or group of Directors
exerts pressure or dominates the Board’s
decision-making.
Division of responsibilities
The Board delegates a certain number of its
responsibilities to the Audit, Remuneration,
Nominations, and Health, Safety & Environment
Committees. The Group Chief Executive
Officer, together with the Executive Committee,
is responsible for the implementation of the
decisions made by the Board and for the
day-to-day conduct of the Group’s operations.
The Board meets formally on a regular basis,
12 times in 2022; in addition, there were four
meetings of the Audit Committee in 2022,
together with five meetings of the
Remuneration Committee and four meetings
of the Nominations Committee. A table
showing Board and Committee meeting
membership and attendance is shown on
page 89. Other Committees are appointed
by the Board to deal with treasury matters,
disclosure matters and specific matters such
as acquisitions and disposals.
During 2022, the Chair met with the non-
executive Directors to discuss matters in
confidence, without the executive Directors
being present; this is in line with good practice.
In 2022, the minutes arising from all Committee
meetings are made available to the Board. There
are procedures in place to ensure that all
Directors are properly briefed, so that decisions
taken by the Board are based on the fullest,
up-to-date, available information. The non-
executive Directors are encouraged to visit
the Group’s operations to meet the local
management teams and discuss any issues
that they may face. In 2022, as COVID-19 travel
restrictions were lifted, the Directors were able
to recommence some site visits. Our Senior
Independent Director, Celia Baxter, who is the
nominated Director responsible for employee
engagement, visited a number of sites during
the year to meet employees. In 2022, at every
Board meeting, there were reviews of health,
safety and environmental performance,
operational, financial and administrative matters,
social and ethical issues, and reported whistle-
blowing incidents. The agreement of budgets
and levels of insurance cover were also
reviewed whenever appropriate.
There is a procedure by which all Directors can
obtain independent professional advice at the
Company’s expense in furtherance of their
duties, if required, and they have been made
aware of this.
To enable the members of the Board and its
Committees to discharge their duties effectively,
the Chair ensures that accurate and clear
information is provided to all Directors in a timely
manner in advance of meetings. The Group
Company Secretary supports the Board to
ensure that it has in place appropriate policies,
processes, time and resources to enable it to
operate efficiently and effectively.
Engagement with stakeholders
Shareholders
Each year, the Group Chief Executive Officer,
Group Finance Director and Director of Investor
Relations & Corporate Communications
undertake a series of meetings with the
Company’s major shareholders following the
announcement of the full-year and interim
results, to discuss both the Board’s strategic
objectives and the detailed performance of
the business.
As the Company’s non-executive Chair, I also
attended the 2021 full year and 2022 interim
results announcements made to analysts in
March 2022 and August 2022 respectively.
I also met with the Company’s major
shareholders on a regular basis, with a cycle that
is complementary to the executive Directors.
Meetings with major shareholders in 2022
continued to address the challenges faced
by the Company, but also conveyed positive
messages around improved margins and
profitability, robust end markets and a healthy
order book.
The Company typically makes constructive
use of the Annual General Meetings (“AGM”)
to communicate with its private shareholders.
In April 2022, following the lifting of the UK
Government’s restrictions imposed during the
pandemic, we were able to offer shareholders
the opportunity to attend the AGM in person in
London, or to listen to the AGM proceedings,
submit questions and view David Squires'
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
87
GOVERNANCE / CHAIR’S GOVERNANCE LETTER CONTINUED
presentation on the Company’s 2021
performance. In April 2023, our forthcoming
AGM will be held as a face-to-face meeting
and I look forward to meeting shareholders
in person again. A presentation on the
Company’s annual performance will be made
to shareholders by the Group Chief Executive
Officer. A copy of this presentation will also
be uploaded to the Company’s website.
At our AGMs, we value the engagement
with shareholders and the opportunity for the
Group Chief Executive Officer to present on
the Group’s business and answer questions
on the Group's 2022 performance.
Employees
Celia Baxter is the Director designated by the
Board to engage with the Group’s people and
listen to any concerns. During the year, as in
2021, she participated in 15 face-to-face focus
group meetings at four of the US operating
businesses, together with four focus group
meetings in Germany, with the Group HR
Director, Jane Johnston. Feedback from the
meetings was provided to local Management,
the Executive Leadership Team and to the
Company’s Board of Directors, who were
given the opportunity to ask questions on
the findings. As announced, Celia is to retire
from the Board and her role in employee
engagement at the conclusion of the 2023
AGM having completed her nine-year term
of office. Barbara Jeremiah will succeed Celia
as Chair of the Remuneration Committee and
Mary Waldner will be appointed the Director
designated to engage with the Group's
employees upon Celia's retirement. Employee
engagement will continue to be given high
importance by the Board and the structure
of the engagement will be developed under
Mary's leadership.
Further details on Employee Engagement
can be found on page 51.
Community and the environment
Many of the Group’s operations are major
employers within their local communities and
nurture good relationships with their
stakeholders, finding ways to contribute to local
society, in addition to providing employment
opportunities. The Group’s commitment to, and
focus on, the environment continued following
our greenhouse gas emission reduction targets
being independently verified and approved by
the Science Based Targets initiative (“SBTi”)
in 2022. In December 2022, we were delighted
to have again achieved a Leadership rating of
A from CDP. All of the Group’s operating
businesses take stakeholder engagement very
seriously, ensuring they adhere to the highest
of standards for the protection of health, safety
and the environment. In many cases, they have
established or maintained close relationships
with local schools and colleges to offer training
or apprenticeship programmes.
Further details on Community Engagement and the
environment can be found pages 55 and 22 to 25.
2022 has been an improving year for the
Company, its employees and shareholders.
Whilst we have had to face the challenges
of the macroeconomic and geopolitical
environment, supply chain issues and rising
inflation, we have risen to the challenges and
shown resilience and resourcefulness, without
compromising the Group’s high standards and
values. The Group’s Corporate Governance
Framework has supported all decisions made
by the Board and the Executive Committee,
and will continue to guide us as we go about
our day-to-day business in 2023. I convey
the Board’s thanks for your support.
Ian King
Chair
24 February 2023
Customers
Due to the nature of the business, the Group
has well-established relationships with all its
key customers. These relationships are
maintained on an ongoing basis and managed
in a transparent and constructive manner;
any customer concerns are addressed in a
timely manner, to ensure customer satisfaction.
In 2022, it remained important for the Group’s
operating businesses to maintain regular contact
with their customers, as the Group’s supply
chain continued to face difficult conditions
created by, for example, global events such as
the conflict in Ukraine. Our operating businesses
are supported by their Divisional Vice Presidents
of Business Development to ensure good
relations are maintained with their customers
and address any concerns that may arise
before they escalate.
The Group has dedicated account managers
to deal directly with key customers on existing
and new customer agreements. Relationships
with existing and potential new customers
are established and maintained on an open
and professional basis, and in compliance with
the Group’s Corporate Framework and Code
of Conduct.
Further details on Customer Engagement
can be found on page 52.
Suppliers
Maintaining a good relationship with Senior’s
supply chain is fundamental to providing
customers with products in a timely manner
and to a high standard. In 2022, it was
particularly important for the Group to maintain
regular contact with its suppliers, and for us
to work together constructively to ensure
the Group’s supply chain was able to maintain
continuity of supply during the challenging
business environment.
Agreements with major suppliers have, in many
cases, been arranged to support long-term
agreements with the Group’s key customers.
Due to the nature of the materials used,
supplies may involve long lead times, and so
communication and managing good relations
with suppliers is paramount to the Group’s
operating businesses. In 2022, we engaged
with the top 80% of our suppliers by value,
to encourage and help them to analyse their
sustainability performance and goals in relation
to greenhouse gas reduction. This was
recognised by the globally recognised CDP
(formally known as the Carbon Disclosure
Project) who gave us an 'A' rating for
transparency on climate change. In 2022,
Senior was also recognised by CDP as
a supplier engagement leader, ranked in
the top 8% of companies worldwide and
awarded the highest level in the rankings.
Further details on Supplier Engagement
can be found on page 53.
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BOARD AT A GLANCE
The Board is responsible for Group decisions affecting governance, strategy
and the approval of annual operating budgets and Financial Statements.
Board and Committee membership as at 31 December 2022 and meeting attendance in 2022
The membership and attendance record of the full Board Meetings and its full Committee Meetings during 2022 are shown in the table below:
Chair
Ian King
Celia Baxter
Susan Brennan
Bindi Foyle
Barbara Jeremiah
Giles Kerr
Rajiv Sharma
David Squires
Mary Waldner
Total number of meetings
Main Board
Ian King
12/12
12/12
11/12
12/12
10/12*
12/12
12/12
12/12
12/12
12
Audit Committee
Nominations Committee
Remuneration Committee
Giles Kerr
Ian King
Celia Baxter
-
4/4
4/4
-
4/4
4/4
4/4
-
4/4
4
4/4
4/4
3/4
-
4/4
4/4
4/4
-
4/4
4
5/5
5/5
5/5
-
5/5
5/5
5/5
-
5/5
5
* In advance of her appointment in January 2022, Barbara Jeremiah notified the Board she would be unable to attend two of the 2022 Board meetings due to
prior commitments.
Board composition as at 31 December 2022
Gender
Men
Women
Not specified
Ethnicity
White British or other White
(including minority-white groups)
Mixed/Multiple Ethnic groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified
Tenure
Over six years
Over three and up to six years
Up to three years
Number of
Board members
Percentage of
the Board
4
5
-
45%
55%
-
Number of senior positions
on the Board
(Group CEO, Group FD,
SID, Chair)
2.
2
Number of
Board members
Percentage of
the Board
Number of senior
positions on the Board
(Group CEO, Group FD,
SID, Chair)
7
-
2
-
-
-
78%
-
22%
-
-
-
3
-
1
-
-
-
Number of
Board members
Percentage of
the Board
4
3
2
45%
33%
22%
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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GOVERNANCE / BOARD OF DIRECTORS
BOARD OF DIRECTORS
The Board is responsible for Group decisions affecting
governance, strategy and the approval of annual operating
budgets and Financial Statements.
IAN
KING
Company Chair
and Chair of the
Nominations Committee
Committee membership:
Nominations and Remuneration.
Independence
Ian met the UK Corporate Governance Code’s
independence criteria on his appointment as
Company Chair.
Qualifications
Fellow of the Chartered Institute of
Management Accountants.
Skills and experience
Ian King joined the Board in November 2017
as a non-executive Director and became Chair
in April 2018. For more than 40 years Ian has
held many senior management and directorship
roles, including finance, executive management,
customer support and strategic planning.
Ian joined Marconi in 1976 and held a number
of roles with them. He was Chief Executive
of Alenia Marconi when Marconi and British
Aerospace merged in 1999 to form BAE
Systems plc. He then became Group Strategy
and Planning Director of BAE Systems;
Ian was its Chief Executive from 2008 until
his retirement in June 2017. He was also the
senior independent director of Rotork plc
until June 2014.
External appointments
Ian is the Senior Independent Director of
Schroders plc, having been appointed to
its Board on 1 January 2017, the lead non-
executive director of the Department for
Transport, a non-executive director of
High Speed Two (HS2) Limited, and is a
senior adviser at Gleacher Shacklock LLP.
Specific contribution to the Company’s
long-term success
Ian leads the Board in defining the strategy of
the Group and driving the Company’s vision to
produce sustainable growth in operating profit,
cash flow and shareholder value. Ian has
relevant direct experience in Aerospace,
a key element of Senior’s strategy.
CELIA
BAXTER
Senior Independent
Non-Executive Director,
Chair of the Remuneration
Committee and Director
designated to engage with the
Group’s employees
Celia is to retire from the Board following
the conclusion of the 2023 AGM.
Committee membership:
Remuneration, Audit and Nominations.
Qualifications
BSc – Botany/Plant Biology and PhD and
a Member of the Chartered Institute of
Personnel and Development.
Skills and experience
Celia Baxter joined the Board in September
2013, became Chair of the Remuneration
Committee in December 2013 and the Senior
Independent non-executive Director in April
2019. Celia is an experienced non-executive
Director, Remuneration Committee and Pension
Trustee Company Chair. Celia’s early HR career
was with Ford Motor Company and KPMG.
She has held executive HR positions with
Hays plc, Enterprise Oil Plc and Tate & Lyle Plc,
and most recently was Director of Group HR
and responsible for all areas of sustainability for
Bunzl plc. Celia was a non-executive director
of RHI Magnesita until June 2021.
External appointments
Celia is a non-executive Director
of DS Smith plc.
Specific contribution to the Company’s
long-term success
Celia brings extensive experience of working
in international, decentralised businesses
and managing HR departments to the
Board. She holds a key role in engaging
with the Group’s stakeholders, particularly
its employees. She advises and guides
on succession planning matters. Celia
demonstrates valuable knowledge of
sustainability policies and practices.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SUSAN
BRENNAN
Independent Non-
Executive Director
Committee membership:
Audit, Nominations
and Remuneration.
Qualifications
BSc in Microbiology and MBA.
Skills and experience
Susan Brennan joined the Board in January
2016. Susan has more than 30 years of
manufacturing experience, including commercial
vehicle electric battery, fuel cell, automotive
vehicle, powertrain, and component assembly.
Susan has dedicated her career to improving
American manufacturing. In her time as a
manufacturing practitioner, she has always
been a strong proponent of sustainability.
Today, Susan is the President of her own
consulting company, Susan Brennan
Leadership, which advises companies on
energy, emerging technology scale and
automotive-based technologies. From August
2021 to October 2022, she was the President
and Chief Executive Officer of Romeo Power,
Inc., leading Romeo’s mission of advancing
and commercialising high-density battery
technology for heavy-duty commercial vehicles.
In the past, she has served as Chief Operations
Officer of Bloom Energy and in a variety of
leadership roles for major automakers,
including Nissan and Ford.
Susan led Nissan’s launch of the all-electric
Nissan Leaf in Smyrna, Tennessee and led the
transformation of the facility to a sustainable
future. She has created and supported
organisations that encourage young women
to pursue careers in STEM as a pathway for
future generations of technological research,
development and manufacturing in the United
States and the globe. She is the founder and
a board member of the Southern Automotive
Women’s Forum and is an advisor to many
other women’s empowerment groups.
Specific contribution to the Company’s
long-term success
Susan brings valuable manufacturing experience
to the Board, especially in areas of key
technological advances. Her operational and
executive experience, particularly in automotive
and component assembly, means she is well
placed to understand issues at both operational
and strategic levels.
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Ethnic diversity – Board
Tenure – Board
Female
Male
55%
45%
White British or
7
other White (including
minority-white groups)
Asian/Asian British
2
Over six years
Over three and
up to six years
Up to three years
4
3
2
BINDI
FOYLE
Group Finance Director
Committee
membership:
Group’s Executive Committee
and the Treasury Committee, which is
not formally appointed as a Committee
of the Board.
Qualifications
BSc (Hons) in Economics & Accounting
and a Chartered Accountant.
Skills and experience
Bindi Foyle joined the Board as an executive
Director in May 2017 and became Group
Finance Director in July 2017. Bindi joined Senior
as Group Financial Controller in January 2006,
a role she held until July 2014 when she
became responsible for the Group’s Investor
Relations activities. Prior to her appointment
as an executive Director, Bindi was Director
of Investor Relations and Corporate
Communications for the Group. Prior to
joining Senior, Bindi held senior finance roles
at Amersham plc and GE, having previously
worked with BDO Stoy Hayward.
External appointments
Bindi is a non-executive director of
Avon Protection plc and is the Chair
of its Audit Committee.
Specific contribution to the Company’s
long-term success
Bindi’s experience of financial control and
investor relations and communications means
that she is ideally placed to implement the
strategy and policies approved by the Board.
Since joining the Group in 2006, she has gained
extensive knowledge of the running of all the
Group’s operations and is instrumental in
managing the Group’s finances and assisting
the Group Chief Executive Officer in the
management of the Executive team.
BARBARA
JEREMIAH
Independent Non-
Executive Director
Committee membership:
Audit, Nominations
and Remuneration.
Upon the retirement of Celia Baxter following
the conclusion of the 2023 AGM, Barbara will
be appointed the Chair of the Remuneration
Committee and the Senior Independent
Non-Executive Director.
Qualifications
BA in Political Science and a qualified lawyer.
Skills and experience
Barbara Jeremiah was appointed to the Board
on 1 January 2022. Barbara is a US citizen and
has over 30 years’ experience with Alcoa Inc,
in a number of positions, including Executive
Vice President, Corporate Development
and Chairman’s Counsel. She was formerly
Chairwoman of Boart Longyear Limited and
a non-executive director of Premier Oil plc and
Russel Metals Inc. Barbara was most recently
a non-executive director and Remuneration
Committee Chair of Aggreko plc from March
2017 to August 2021.
External appointments
Chair of The Weir Group PLC since April 2022,
having been appointed a non-executive director
of that company in August 2017.
Specific contribution to the Company’s
long-term success
Barbara’s extensive experience in a number
of Senior’s key markets as an executive and
a non-executive director will complement
those of the existing members of the Board.
GILES
KERR
Independent non-
Executive Director and
Chair of the Audit
Committee
Giles is to retire from the Board following
the conclusion of the 2023 AGM.
Committee membership:
Audit, Nominations and Remuneration.
Qualifications
BA (Hons) in Economics and a Chartered
Accountant.
Skills and experience
Giles Kerr joined the Board in September 2013
and became Chair of the Audit Committee in
April 2014. Giles has over 35 years’ experience
in finance across a broad range of industrial
sectors. During his tenure as Director of
Finance at Oxford University, he established
a successful investment office and he gained
considerable experience of establishing
and growing technology-based companies.
Giles is a former Director of Finance of Oxford
University and non-executive director of BTG Plc
and Victrex plc, Adaptimmune Therapeutics plc
and Arix Bioscience plc. Giles held a number of
positions with Amersham plc, including Group
Finance Director. He was formerly a Partner
with Arthur Andersen & Co.
External appointments
Giles was appointed a non-executive director
of PayPoint plc in November 2015. He is also
a non-executive director of Abcam plc.
Specific contribution to the Company’s
long-term success
Giles’ extensive experience as a chair and senior
independent director, and as the chair of several
UK and US listed company audit committees,
enables him to make a strong contribution to
the Board and he has ensured strong financial
governance of the Group.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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GOVERNANCE / BOARD OF DIRECTORS CONTINUED
RAJIV
SHARMA
Independent non-
Executive Director
Committee membership:
Audit, Nominations
and Remuneration.
Qualifications
BTech in Mechanical Engineering and MBA,
Marketing & Strategy.
Skills and experience
Rajiv Sharma was appointed to the Board
in January 2019. Rajiv has nearly 30 years’
experience which includes commercial,
operations, M&A, strategy, digital and general
management. Rajiv joined Coats Group plc in
November 2010 as Global CEO Industrial and
was responsible for developing and executing
a growth strategy. He has lived and worked in
the US, Europe and Asia and has multi-industry
global experience. He has managed complex
businesses with blue-chip companies. The
majority of his career has been dedicated to
growing or turning around businesses and he
has been on the board of joint ventures. During
his career, Rajiv has held senior roles in various
companies including Honeywell, GE and Shell.
External appointments
Rajiv has been the Group Chief Executive
of Coats Group plc since January 2017,
having served as an executive director
since March 2015.
Specific contribution to the Company’s
long-term success
Rajiv has had a long career running and growing
multinational companies across the world,
particularly in South East Asia. His background
in mechanical engineering means that he
brings operational and technical understanding
to the Board’s discussions. His experience
of developing and executing growth
strategy makes his contribution to delivering
the Company’s long-term success an
important one.
DAVID
SQUIRES
Group Chief Executive
Officer
Committee membership:
David chairs the Group’s
Executive Committee. He is also the Chair of
the Health, Safety & Environment Committee,
which meets formally three times a year to
formulate the Group’s HSE strategy and
objectives for approval by the Board.
Qualifications
BA in Business Management Studies,
a Fellow of the Chartered Institute of
Purchasing and Supply and Fellow
of the Royal Aeronautical Society.
Skills and experience
David Squires was appointed to the Board in
May 2015 and became Group Chief Executive
Officer in June 2015. A graduate in business
management, a Fellow of the Chartered
Institute of Purchasing and Supply and Fellow of
the Royal Aeronautical Society. David has held
senior posts in operations and procurement,
business development, programme
management and general management.
David started his career in the oil industry
working for Shell; however, most of his working
life has been spent in the aerospace industry,
initially with Hughes Aircraft Company (now
Raytheon), then GEC-Marconi/BAE Systems
and Eaton Corporation. Prior to joining Senior
plc in May 2015, David was Chief Operating
Officer of Cobham plc.
External appointments
David holds no other directorships.
Specific contribution to the Company’s
long-term success
David has a long- established career in
manufacturing, for the most part having
specialised in the aerospace sector. He brings
extensive knowledge of the aerospace industry
and understanding of procurement and business
development to the Board. David has been
the guiding force in driving the Group’s vision
and operating in a safe and ethical manner.
ANDREW
BODENHAM
Group Company
Secretary
MARY
WALDNER
Independent Non-
Executive Director
Committee membership:
Audit, Nominations and
Remuneration.
Upon the retirement of Giles Kerr and Celia
Baxter following the conclusion of the 2023
AGM, Mary will be appointed the Chair of the
Audit Committee and the Director designated
to engage with the Group's employees.
Qualifications
MA (Hons) in Physics and a Fellow of the
Chartered Institute of Management
Accountants.
Skills and experience
Mary Waldner joined the Board in December
2021. Mary held a number of senior roles within
the aerospace and automotive sectors at British
Airways, General Motors and Vauxhall Motors.
At Ultra Electronics, Mary gained experience of
working within the defence, security and energy
markets. She was previously the Group Finance
Director of Ultra Electronics Holdings plc, the
Director of Group Finance at QinetiQ Group plc
and Group Financial Controller of 3i Group plc.
External appointments
Mary is Chief Financial Officer of Lloyd’s
Register, the global professional services
company specialising in engineering and
technology for the maritime industry. She is also
a non-executive director and Chair of the Audit
and Risk Committee of Oxford Instruments plc,
a provider of high technology products and
services to the world’s leading industrial
manufacturers and scientific research institutes.
Specific contribution to the Company’s
long-term success
Mary’s background and experience in finance
and in the engineering sector will complement
the current Board membership and prove
invaluable in Senior’s continued development.
Andrew was appointed Group Company
Secretary in 2002. He acts as Secretary to
the Senior plc Board and its Committees;
he is also a member of the Group’s Executive
Committee and of the Treasury Committee.
Prior to joining Senior, Andrew had gained
experience working for businesses in
technology/software, manufacturing,
insurance and aviation services sectors.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Governance structure
Role
Company Chair
and Chair of the
Nominations
Committee
Group Chief Executive
Officer
Director
Ian King
Key responsibilities
Leadership of the Board, setting its agenda
and ensuring its effectiveness. Ian chairs the
Nominations Committee.
David Squires
Group Finance Director Bindi Foyle
Senior Independent
Non-Executive
Director, Chair of
the Remuneration
Committee and
Director designated
to engage with the
Group’s employees
Independent Non-
Executive Director and
Chair of the Audit
Committee
Independent Non-
Executive Directors
Group Company
Secretary
Celia Baxter
Giles Kerr
Susan Brennan,
Barbara
Jeremiah, Rajiv
Sharma and
Mary Waldner
Andrew
Bodenham
To manage the Group’s business and to
implement the strategy and policies approved
by the Board.
To manage the Group’s financial affairs and to
contribute to the management of the Group’s
business, and the implementation of the strategy
and policies approved by the Board.
To support the Chair and to act as an intermediary
for other non executive Directors, if necessary.
Celia chairs the Remuneration Committee and
is also the Director designated to engage with
the Group’s employees.
To challenge the executive Directors and monitor
the delivery of the strategy within the risk and
control framework set by the Board. To Chair the
Audit Committee and focus its agenda on its key
matters: quality, financial accounting, corporate
reporting and effective internal controls.
To challenge the executive Directors and monitor
the delivery of the strategy within the risk and
control framework set by the Board.
To provide advice to the Directors on all corporate
governance matters and ensure the Company
complies with legal and regulatory matters and
good practice. Andrew acts as Secretary to the
Senior plc Board and its committees.
Board evaluation
The 2022 external Board evaluation process was undertaken by Clare Chalmers Limited.
A summary of the 2021 Board evaluation findings and the progress made in 2022 are
provided below.
2021 actions
2022 progress
To ensure Mary
Waldner and Barbara
Jeremiah were given
appropriate time
to complete their
induction
To ensure strategy
forms part of every
Board meeting agenda
To ensure the Directors
have good access to
the Executive teams,
as performance and
strategy are reviewed
To review Board
meeting structures
(virtual, hybrid and
physical)
Mary and Barbara were appointed to the Board in December 2021
and January 2022, respectively. Both were recruited at an early
stage, to allow a suitable induction period and handover prior to
the retirements of Celia Baxter and Giles Kerr from the Board.
Mary and Barbara also received support from the Nominations
Committee and guidance from Celia Baxter and the Group
HR Director, Jane Johnston.
Strategy was discussed at every Board meeting in 2022 and this
will continue in 2023.
The Directors had good access to the Group’s Executive Committee
throughout 2022. They also met local management teams when
Board meetings were able to be resumed at some of the Group’s
operating businesses in 2022. In addition, Martin Barnes, Launie
Fleming, Jane Johnson and Mike Sheppard separately attended
a number of 2022 Board meetings.
For 2022, Board meetings were largely held as physical meetings,
following the lifting of COVID-19 restrictions. However, on occasion,
Directors who were not able to physically attend, were able to
participate by videoconference and so some meetings were held
as hybrid participation. Whilst the Directors appreciate the benefits
of holding physical Board meetings, they have found the flexibility
to participate by videoconference, if necessary, useful and it has
enabled our Directors to attend the majority of meetings. The
Directors will continue to keep the Board and Committee meeting
structures under review.
A summary of the findings of the 2022 external Board evaluation can be found in the
Nominations Committee Report on page 99.
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Board meetings and site visits
In mid 2022, the Directors were able to restart
visits to some of the Group’s operating
businesses and held Board meetings at Senior
Flexonics Kassel and Senior Aerospace SSP;
these visits included site tours and discussions
with local management. Board meetings
throughout the rest of the year were held as
face-to-face or hybrid meetings. The Group
Director of HSE & Sustainability, the Group HR
Director, the Director of Business Development
& Strategy, the Director of Risk and Assurance
(formerly the Head of Risk & Compliance),
the Director of Trade Compliance and the
Head of Treasury were invited to separately
attend certain Board meetings during the year,
to provide updates to the Directors and
answer their questions.
Strategy
At every Board meeting held in 2022, the
Directors discussed the Board’s Strategy. This
included topics such as the Group’s markets and
technologies, the divisional strategies, the key
risks that could impact on the Board’s strategy,
people planning, divestments and acquisitions
and forecasting and scenario planning.
Financial and contractual matters
During the year, the Board meeting agendas
included financial and contractual matters such
as the Group’s trading and performance, the
refinancing of the Group's Revolving Credit
Facilities, the 2022 full-year and interim results,
Going Concern and Viability, the 2021 and draft
2022 Annual Report & Accounts, including the
TCFD disclosures made, the reinstatement of
dividends to shareholders, and the approval of
major capital expenditure for projects over £2m.
Operational management
In December 2021, the Board approved the
Group’s 2022 annual operating budget. It was
kept informed of operational management’s
activities through receipt of the Group Chief
Executive Officer’s Board report at every
meeting; his reports include updates on: the
market backdrop, HSE and sustainability, people,
investor relations, the Company’s share price
performance and analysts’ expectations on
the Company’s performance. At every Board
meeting, the Directors were given the
opportunity to put questions on these reports
to David Squires and Bindi Foyle. In December
2022, the Board approved the Group’s 2023
annual operating budget.
Governance
The Group Company Secretary advises the
Directors on all corporate governance matters
and updates them on statutory and regulatory
developments at every Board meeting. Strong
corporate governance is of key importance to
the Board. This includes Board effectiveness,
adherence to the Group’s policies and
procedures and stakeholder engagement.
Risk and compliance
Amy Legenza, the Director of Risk and
Assurance (formerly the Head of Risk &
Compliance), advises the Board on all risk and
compliance matters across the Group. Amy also
attends all Audit Committee meetings held in
a year. In 2022, the Board reviewed the Group’s
approach to risk management and monitored
all principal risks.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
93
GOVERNANCE / EXECUTIVE COMMITTEE
EXECUTIVE COMMITTEE
DAVID
SQUIRES
MARTIN
BARNES
ANDREW
BODENHAM
LAUNIE
FLEMING
BINDI
FOYLE
JANE
JOHNSTON
MIKE
SHEPPARD
AMY
LEGENZA
The Executive Committee oversees the running
of all Senior Group Operations.
Executive Committee meeting
attendance
The Executive Committee met nine times
during 2022.
David Squires
See biography on page 92.
Martin Barnes
Martin became the Director of Business
Development & Strategy in October 2021 and
was appointed to the Executive Committee on
that date. Prior to this appointment, Martin was
the CEO of Senior Flexonics Lymington and of
Senior Flexonics Upeca. Martin joined the
Senior Group in April 2016.
Andrew Bodenham
See biography on page 92.
Launie Fleming
A US citizen, he has worked for the
Group for over 20 years. Launie joined the
Executive Committee upon his appointment
as Chief Executive of Aerospace Fluid Systems
in September 2008. In October 2020,
Launie was appointed Chief Executive of
the Aerospace Division, formed by the
consolidation of the Aerospace Fluid Systems
division and Aerospace Structures division.
Prior to these divisional roles, Launie was the
Chief Executive of Senior Aerospace SSP.
Bindi Foyle
See biography on page 91.
Jane Johnston
Jane joined Senior as Group HR Director
in May 2016. A Fellow of the Chartered
Institute of Personnel and Development,
Jane has considerable experience heading
up HR functions across a range of global
geographies. She has worked in a number
of different sectors, including technology,
drug development, construction, professional
services and, prior to joining Senior, was
Group HR Director at Pace plc.
Mike Sheppard
A US citizen, Mike has worked for the Group
for over 30 years and is the Chief Executive
of the Flexonics Division. A qualified engineer,
Mike’s previous positions within the Group
included operational roles at the two largest
Flexonics businesses, Pathway and Bartlett.
Amy Legenza
A US citizen, Amy became the Director of Risk
and Assurance on 1 January 2023 and was
appointed to the Executive Committee on that
date, having previously served as the Group's
Head of Risk & Compliance. A Certified Public
Accountant, Amy joined the Group in 2008 and
has broad experience in senior finance and
accounting roles.
Executive Committee composition as at 31 December 2022
Gender
Men
Women
Not specified
Ethnicity
Number of Executive
management members
Percentage of
Executive management
members
5
2
-
71%
29%
-
Number of Executive
management members
Percentage of
Executive management
members
White British or other White
(including minority-white groups)
Mixed/Multiple Ethnic groups
Asian/ Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified
6
-
1
-
-
-
86%
-
14%
-
-
-
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Executive Committee Activities
The purpose of the Executive Committee is
to assist the Group Chief Executive Officer
in the performance of his duties, including:
• the development and implementation
of strategy, operational plans, policies,
procedures and budgets;
• the monitoring of operating and financial
performance;
• the assessment and control of risk;
• the prioritisation and allocation of resources;
and
• the monitoring of competitive forces in
each area of operation.
The Committee is also responsible for
the consideration of all other matters not
specifically reserved for consideration by
the Board. A report on the activities of the
Executive Committee is provided to the
Board by the Group Chief Executive Officer
at each Board meeting.
The Committee is comprised of two
members of the Board, David Squires and
Bindi Foyle, together with Launie Fleming
(Chief Executive of the Aerospace Division),
Mike Sheppard (Chief Executive of the
Flexonics Division), Martin Barnes (Director
of Business Development & Strategy),
Andrew Bodenham (Group Company
Secretary) and Jane Johnston (Group
HR Director).
Health, Safety & Environment (“HSE”)
Committee
The HSE Committee is appointed by the
Executive Committee; it oversees all health,
safety and environmental matters across
the Group. Its Terms of Reference can be
found on the Company’s website.
There is a process in place for the Board to
be kept regularly informed of all matters
discussed by the HSE Committee. The Group
Chief Executive Officer provides an HSE
update at every Board meeting.
The members of this committee are David
Squires (Chair of the Committee), Mike
Sheppard (Chief Executive of the Flexonics
Division) and Launie Fleming (Chief Executive
of the Aerospace Division). The Committee
met three times during the year and there
was full attendance at every Committee
meeting. Mark Roden, the Group HSE &
Sustainability Director, attended all of the
meetings held during the 2022.
The Directors present their Report and supplementary reports,
together with the audited Financial Statements for the year
ended 31 December 2022.
Disclosures located elsewhere in the
Annual Report & Accounts 2022
The Strategic Report on pages 2 to 81 includes
details of Senior’s business model, strategic
priorities, financial and non-financial key
performance indicators, risks and uncertainties,
market overview, key growth drivers and a
summary of the Group’s 2022 performance.
Acquisitions and disposals
Corporate governance statement
of compliance
Directors
Directors’ share interests
Employee engagement
Future developments
Greenhouse gas emissions
Anti-bribery
Modern slavery
Related-party transactions
Risk management
Section 172 statement
Share capital
Use of Financial Instruments
Whistle-blowing
Page
174
86
90
125
51
20
25
36
100
191
61
56
172
165
36
Activities and business review
Senior plc is a holding company. The nature of
the Group’s operations and its principal activities
are set out in the Strategic Report on pages 2 to
81. Its Group undertakings are shown on pages
194 and 195. Six of the Company’s operating
businesses are located in the UK and 20 in the
Rest of the World.
Dividends
An interim dividend of 0.30 pence per share
(2021 – nil pence) has already been paid and the
Directors recommend a 2022 final dividend of
1.00 pence per share (2021 – nil pence). The
final dividend, if approved, will be payable on 26
May 2023 to shareholders on the Register of
Members at the close of business on 28 April
2023. This would bring the total dividend for the
year to 1.30 pence per share (2021 – nil pence).
Policy on employee disability
Senior provides support, training and
development opportunities to all our employees
irrespective of any disabilities they may have.
We give full and fair consideration to disabled
applicants, and where an existing employee
becomes disabled during their employment,
we will make every effort to ensure they are
able to continue working for Senior in their
original or an alternative role.
Employee share plans
Details of employee share plans are set out
in Note 33.
There are no specific restrictions on the size of
a holding nor on the transfer of shares, which
are both governed by the general provisions
of the Company’s Articles of Association and
prevailing legislation. The Directors are not
aware of any agreements between holders
of the Company’s shares that may result in
restrictions on the transfer of securities or on
voting rights. No person has any special rights
of control over the Company’s share capital,
and all issued shares are fully paid.
With regard to the appointment and
replacement of Directors, the Company is
governed by its Articles of Association, the
UK Corporate Governance Code 2018, the
Companies Act 2006 and related legislation.
The Articles may be amended by special
resolution of the shareholders. The powers of
Directors are described in the Matters Reserved
for the Senior plc Board, which may be found
on the Company’s website. Each year,
shareholder approval is sought to renew the
Board’s authority to allot relevant securities.
There are also a number of other agreements
that take effect, alter or terminate upon a
change of control of the Company, such as
commercial contracts, bank loan agreements,
property lease arrangements, and employee
share plans. None of these are considered to be
significant in terms of their likely impact on the
business of the Group as a whole. Furthermore,
the Directors are not aware of any agreements
between the Company and its Directors or
employees that provide for compensation for
loss of office or employment that occurs
because of a takeover bid.
Conflicts of Interest
The Board has a procedure for identifying
and managing Directors’ potential conflicts
of interest. The Group Company Secretary
maintains the Register of Directors’ Potential
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Authority to purchase the Company’s
own shares
The Company purchased no ordinary shares
of 10 pence each in the capital of the Company;
2,992,477 shares in the Company (2021– nil
shares) were purchased by the Senior plc
Employee Benefit Trust in the year to satisfy
the future vesting of executive share awards
and employee share plans. At the end of the
year, the Directors had authority, under a
shareholders’ resolution dated 21 April 2022,
to make market purchases of the Company’s
shares up to an aggregate nominal amount
of £42m (2021 – £42m), which represented
approximately 10% of the issued share
capital of the Company. A resolution to
renew this authority will be proposed at
the forthcoming AGM.
Auditor
• Each of the persons who is a Director of
the Company at the date of approval of this
Annual Report & Accounts confirms that
so far as the Director is aware, there is no
relevant audit information of which the
Company’s Auditor is unaware; and
• the Director has taken all steps that he/she
ought to have taken as a Director in order
to make himself/herself aware of any
relevant audit information and to establish
that the Company’s Auditor is aware of
that information.
This information is given and should be
interpreted in accordance with the provisions
of Section 418 of the Companies Act 2006.
In 2016, the Group undertook a formal tender
process for its external audit function, which
resulted in KPMG LLP being appointed the
Group’s External Auditor for the financial year
commencing 1 January 2017. KPMG’s
re-appointment was last approved by the
Company’s shareholders at the 2022 AGM. In
accordance with Section 489 of the Companies
Act 2006, a resolution for the re-appointment
of KPMG LLP as Auditor of the Company is to
be proposed at the forthcoming AGM.
By Order of the Board
Andrew Bodenham
Group Company Secretary
24 February 2023
Conflicts of Interest. Directors are required to
declare their own potential conflicts, together
with those of their close family members, their
partners, any trust to which they are a
beneficiary, a corporate body in which they have
a 20% interest or above, or a firm in which they
are a partner. The Directors review and confirm
their Register entries at least annually. At every
Board meeting, the Directors are required to
declare if they have any potential conflicts of
interest in the business to be discussed at the
meeting. In 2022, the Directors confirmed there
were no potential or actual conflicts of interest.
Directors’ indemnities
Qualifying third-party indemnity provisions for
the benefit of the Directors were renewed by
the Company during the year and remain in
force at the date of this Report.
Research and Design
In 2022, the Group incurred £19.8m (2021 –
£19.2m) on research and design. Product
development and improving manufacturing
processes represent the primary focus of the
Group’s research and design activities.
Political donations
No political donations were made by the
Company or any of the Group’s operations
during the year.
Major shareholdings
The Company has been notified that
the following shareholders were interested
in 3% or more of the issued share capital
of the Company:
% at
8 February
2023
Alantra Asset Management
Aberforth Partners
Heronbridge Investment Management
Columbia Threadneedle Investments
Vanguard Group
BlackRock
Janus Henderson Investors
Legal & General Investment
Management
17.38
8.71
5.97
4.91
4.63
4.48
3.30
3.25
So far as is known, no other shareholder had a
notifiable interest amounting to 3% or more of
the issued share capital of the Company, and
the Directors believe that the close company
provisions of the Income and Corporation
Taxes Act 1988 (as amended) do not apply
to the Company.
Annual General Meeting
The Notice of Annual General Meeting
describes the business to be considered at the
AGM to be held at 11.30 am on Friday 21 April
2023 at Ironmongers’ Hall, Off Shaftesbury Pl,
Aldersgate St, Barbican, London EC2Y 8AA.
Please see the Notice of Annual General
Meeting 2023 for the details of the AGM;
a copy of the Notice can be found on the
Company’s website.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
COMPOSITION,
SUCCESSION
AND EVALUATION
"The Group seeks to ensure
diversity in the composition
of the Board, including gender,
ethnicity, personal and cognitive
skills.”
Ian King
Chair
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Extension of appointments to the Board
In 2022, Celia Baxter and Giles Kerr reached
their nine year anniversary with Senior;
their appointments were extended until the
conclusion of the 2023 AGM to support
the induction of Mary Waldner and Barbara
Jeremiah, when it has been announced they
will retire from the Board.
Succession planning
The Committee regularly considers succession
planning for Board-level and the Group’s senior
management roles. Cognisant of the length of
the terms of Celia Baxter and Giles Kerr, the
Committee followed its recruitment process,
described above, and appointed Mary Waldner
and Barbara Jeremiah to the Board in December
2021 and January 2022 respectively, thereby
allowing for a suitable transition period between
them and the two departing Board members.
Mary’s and Barbara’s skills and previous work
experience make them a good fit for the
Company and complement those of the existing
Board members; a summary of their biographies
can be found on pages 90 to 92.
The Group continues to focus on maximising
the potential of its employees and improving
succession planning. The Group's Executive
Committee, supported by the Group HR
Director, conducted an extensive review of
senior executive succession plans. The review
identified key employees who are considered
capable of being developed into leadership
roles, which is critical to the success of the
Group. Appropriate plans are in place to
ensure there is a mix of employees within
the Group who could fill key roles in the short
and longer term.
In 2022, the Nominations Committee also
reviewed the Group, divisional and operating
business level succession plans, and maintained
its focus on further strengthening diversity in
these plans, particularly gender diversity in
operational roles.
Independence
The Nominations Committee and the Board
consider all of the non-executive Directors to
be fully independent and free from conflicting
interests which could cause difficulties whilst
performing their duties. Senior considers its
non-executive Directors to be proactive in
contributing their respective experiences and
skills gained from a range of sectors. Conflicts
of interest are fully disclosed by Directors upon
appointment and are reviewed on a regular
basis throughout each year.
I am confident that Senior has the requisite
diversity of skills, people, and experience that
will guide the Company in delivering shareholder
value. This Report was reviewed and approved
by the Nominations Committee and signed on
its behalf by:
Ian King
Chair of the Nominations Committee
24 February 2023
NOMINATIONS
COMMITTEE REPORT
Dear Shareholder,
Overview
The Nominations Committee is chaired by
me and comprises all non-executive Directors.
The Group Company Secretary acts as
Secretary to the Committee. Senior members
of management and advisers are invited to
attend meetings, as appropriate. There were
four scheduled meetings of the Committee
in 2022. Two members constitute a
quorum for the Nominations Committee.
The Committee’s attendance records are
shown on page 89.
The Committee is tasked with administering
the process for appointments, considering
succession planning, regularly reviewing such
processes and overseeing the composition
of the Board. The Nominations Committee’s
Terms of Reference can be found on the
Company’s website.
Appointments to the Board
In 2021, two consultancy firms were
engaged to assist with the recruitment of
two new Board members, as part of the
Board’s succession planning process. The
Nominations Committee sought confirmation
that candidates under consideration would
have sufficient time to perform their duties as
a Director of the Board, if appointed. The time
commitment of the Directors is kept under
review and the potential for over-boarding
monitored and discouraged. Following a
diligent interview process, Mary Waldner was
appointed to the Board on 1 December 2021
and Barbara Jeremiah was appointed to the
Board on 1 January 2022.
A full and comprehensive induction
programme was provided to Mary and
Barbara. The induction process covered areas
such as financial forecasts, Group strategy
and values, corporate ethics and training on
the Group’s Code of Conduct, together with
other relevant topics. Visits to some of the
Group’s operations by the newly appointed
Directors were also undertaken.
The Nominations Committee and the Board
are supportive of the aim to increase diversity
and the level of female representation in
Board and senior leadership positions. Five of
the nine Directors are female (55%).
In addition, the Nominations Committee
and the Board have ensured the Board’s
composition is diverse in terms of the
Directors’ ethnic backgrounds, as
recommended by the Parker Review;
further detail can be found on page 89.
At 31 December 2022, there were seven
members of the Group's Executive
Committee, of which two are female (29%).
On 1 January 2023, Amy Legenza joined the
Executive Committee and therefore at the
time of signing this report 38% of that
committee are female.
The Nominations Committee regularly
discusses the benefits of diversity with
regard to the Board and its Committees.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Nominations Committee
The Company’s Nominations Committee
leads the process for Board appointments
and supervises leadership development
and succession planning. It also makes
recommendations to the Board on all new
Board appointments and re-appointments.
The Committee, which consists entirely of
non-executive Directors, is chaired by Ian
King; its composition is shown on page 89.
Details of the Directors’ external statutory
appointments can be found in their
biographies on pages 90 to 92. The Board
believes that the Directors’ experience of
working with other companies adds value to
their contribution to the Company’s Board
and Committee meetings. In compliance with
the Corporate Governance Code, all Directors
offered themselves for re-election at the
Company’s 2022 AGM. All continuing
Directors will again offer themselves for
re-election at the 2023 AGM. The resolutions
to be put to shareholders at the 2023 AGM
can be found in the Notice of Annual General
Meeting, which is available on the
Company’s website.
The Board confirms that in 2022 all Directors
in office at the time worked assiduously and
diligently. Each Board member made a very
positive contribution to the running of the
Company and the Board confirms that they
will all continue to work to ensure its
long-term success.
Nominations Committee Activities
In February 2022, the Nominations
Committee discussed the composition of the
Board and the performance of the Directors
and recommended to the Board that all
Directors currently in office stand for election
or re-election at the 2022 AGM. At this
meeting, the Nominations Committee also
reviewed and discussed the draft 2021
Nominations Committee Report contained
within the Annual Report & Accounts 2021
and the draft Board Diversity and Inclusion
Policy and recommended to the Board that
they both be approved. In June 2022, the
Nominations Committee met and discussed
the succession plans at Group, Divisional and
Operating Business levels. In July 2022, the
Nominations Committee held a meeting to
discuss possible updates to the Board
Diversity and Inclusion Policy, to bring it in
line with an amendment made to the FCA’s
Listing Rules and the Disclosure and
Transparency Rules; the Nominations
Committee recommended to the Board that
it approved the updates. The Nominations
Committee convened to review the
Executive Committee’s succession plans
in December 2022.
Following the 2022 year end, the Nominations
Committee held a meeting to discuss and
make recommendations to the Board
concerning the Directors to stand for election
at the AGM 2023 and the draft 2022
Nominations Committee Report, as contained
within the Annual Report & Accounts 2022.
Remuneration
The Remuneration Committee Report on pages
108 to 128 fully describes the Board’s approach
to remuneration matters.
Board effectiveness
The Board is structured under a non-executive
Chair and currently comprises two executive
Directors and six independent non-executive
Directors, who were each selected for
appointment because of their wide industrial
and commercial experience. The Directors
believe that the Board and its committees have
the appropriate balance of skills, experience and
knowledge to enable them to fulfil their duties
and responsibilities effectively. The Nominations
Committee reviews the composition of the
Board at least annually.
Board diversity and inclusion
The Group seeks to ensure diversity in the
composition of the Board, including, amongst
other qualities, diversity of gender, ethnicity,
personal and cognitive skills. The Company’s
female representation on the Board complies
with the recommendations of the Hampton-
Alexander Review, and meets the proposals on
ethnic diversity outlined by the Parker Review.
Furthermore, we endeavour to incorporate
diversity into our recruitment process by
engaging, wherever possible, with recruitment
firms that have committed to follow the
Voluntary Code of Conduct for Executive Search
Firms, and by widening the pool of candidates
from diverse backgrounds.
We confirm that the Company has met the
targets stipulated in the Listing Rule 9.8.6R(9)
as at 31 December 2022. The numerical data
on the ethnic background and the gender
identity of the individuals on the Board of the
Company and in its Executive Committee as at
31 December 2022 is set out on pages 89 to 94.
There have been no changes to the Board since
31 December 2022. Data used for the purpose
of making the disclosures was collected through
the Company’s diversity monitoring forms
completed by the individuals on the Board of
the Company and in its Executive Committee.
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Board induction and development
Appointments to the Board are made following a
rigorous, formal, recruitment process supported
by professional consultants. All Directors
receive induction upon joining the Board and
are encouraged to update their knowledge
and skills on a frequent basis. The Nominations
Committee arranged for Mary Waldner and
Barbara Jeremiah, our most recently appointed
non-executive Directors, to receive early and
appropriate induction. The Group Company
Secretary provides the Board with statutory
and regulatory updates at every Board meeting
and notifies them of any pressing points that
are relevant between meetings.
The Directors are cognisant of the fact that the
Board, and its Committees, should have the
appropriate combination of skills, experience
and knowledge to enable them to perform their
duties effectively. Membership of the Board and
its Committees is kept under regular review and
refreshed when appropriate, taking into account
the Directors’ lengths of service and their ability
to devote sufficient time to Company matters.
Evaluation of the Board and the Directors
In 2022, the Directors felt that it was again
appropriate to undergo an external Board
evaluation process and chose to engage a
different firm to bring a new perspective when
undertaking the evaluation. Clare Chalmers
Limited undertook the evaluation which included
attending a full Board meeting and conducting
individual confidential interviews with each
Board Director, the Group Company Secretary,
the Group HR Director and the Chief Executives
of the Aerospace and Flexonics Divisions.
The Board had operated and made only a
limited number of recommendations for the
Board to consider.
The Board was found to be functional, effective,
engaged and motivated and with clear progress
being made against prior actions. Non-executive
Directors' succession had been handled
smoothly and it was agreed that process
should be extended to hire an additional
non-executive Director with relevant industrial
and business experience aligned to our
strategy. The Board is to also review the
structure of the Board meetings schedule
and agendas to ensure adequate time is
given to debate and engagement.
The Board continued its momentum during
2022, building on further strengthening the
business as it emerged from the difficult
conditions encountered during the COVID-19
pandemic. The findings of the 2022 evaluation
will add to the Board’s development as the
recovery phase of our end markets and the
strategic growth of the Company continue
to make timely progress.
Clare Chalmers Limited has no other
connection with the Company or its Directors.
In addition, the Chair undertakes individual
reviews of each Director and provides
feedback and guidance on their performance
and contribution to the Board. The Senior
Independent Director, in consultation with the
non-executive Directors, undertakes a similar
review process of the Chair.
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Succession planning
The Nominations Committee met four times
during the year and considered succession plans
for Board-level and senior management roles.
The Group has continued to increase its focus
on maximising the potential of its employees
and improving succession planning. The Group
Chief Executive Officer and Group HR Director
present a detailed Executive Succession
Plan for each Executive Committee role, to
the Nominations Committee twice a year. This
ensures that the Nominations Committee is able
to undertake a detailed review of the succession
plans for the Executive Committee, the talent
pipeline, and a talent profile for each member of
the Executive Committee. The review includes
discussions regarding individuals’ strengths
and areas for development plans. As a result,
development activities are identified, for
example, supporting the Executives in pursuing
external non-executive director roles. Prior to
the 2022 Nominations Committee review, the
Executive Committee, supported by the Group
HR Director, conducted an extensive review
of the Group’s operating business leadership
succession plans. Utilising skills and talent
mapping, assists both the Executive
Committee and, ultimately, the Nominations
Committee in identifying any gaps, taking
into account the Group’s long-term strategy
to provide a solid foundation for Senior’s
growth aspirations.
When reviewing succession plans, the
Committee recognises the benefits of a diverse
workforce, diversity of thought and employing
individuals from diverse backgrounds and
experience across the organisation, including
Board members and senior managers.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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AUDIT, RISK AND
INTERNAL CONTROL
Resources, internal controls
and risk management
The Board has ultimate accountability for
the Group’s risk management process.
The Board determines the nature and extent
of the significant actions necessary to achieve
its strategic objectives and maintains a sound
system of internal control. The Company’s
Audit Committee reports to and, for certain
matters, advises the Board of Directors. The
Audit Committee Report on pages 102 to 107
describes the role and activities of the Audit
Committee, together with the significant risks
and judgments that it considered in relation
to the 2022 Financial Statements and its
relationship with the internal and External
Auditors. Details of the Group’s approach to
risk management and its Risk and Assurance
Framework can be found on pages 60 to 62.
Communicating the Senior plc Code of
Conduct and operating with integrity
In 2021, the executive Directors published
an updated booklet for issue to all employees
and relevant third parties, explaining the
Group’s Code of Conduct (the Code) and
Senior’s Values; these values can be found
on page 38. The booklet includes a message
from the Group Chief Executive Officer,
explaining that it is his unshakeable belief that
how you do business is as important as what
you do in business. It contains work-related
scenarios, together with a selection of
questions and answers, to help employees
to understand the Code and relate it to their
individual roles and working environment.
Copies of the Code are issued to all new
employees and reissued periodically to
continuing employees to remind them
of the required level of conduct.
Senior trains its employees on the
requirements of the Code upon induction,
educating them on what they can and cannot
do, and how to address any ethical dilemmas
they may face. A compulsory 2022 Global
Code of Conduct online training course was
rolled out across the Group to all employees
during the year. The 2022 course contained
training modules on: Anti-bribery, Preventing
Harassment & Promoting Respect, Business
Ethics and Avoiding Conflicts of Interest.
All employees and Directors were required
to achieve a Pass grade, as a minimum.
Typically, all the Group’s operations are visited
by the Group Chief Executive Officer, the
Group Finance Director or other members of
the Executive Committee on an annual basis
and make presentations to local senior
management, reinforcing the Code and the
importance of maintaining an absolute
commitment to the highest possible standards
of ethics and a zero tolerance towards bribery
and corruption. Until travel restrictions imposed
as a result of COVID-19 were lifted, site visits
by the Executive Directors and members of
the Executive Committee were not possible;
however, they reinforced the Code at meetings
held at Divisional and local levels and monitored
the progress of the training programme across
the Group. The Board verifies compliance with
the Code through its internal audit programme,
ensuring that employees have received the
mandatory training and that the Group’s
businesses operate with integrity at all times
and in compliance with the Code.
Operating with integrity and in an ethical
manner builds trust with customers and other
stakeholders and underpins the Board’s
strategic objectives.
Human rights
The Group recognises the importance of the
Universal Declaration of Human Rights and
adheres to the core principles and values
defined within it. The majority of countries in
which Senior operates have their own laws
banning child labour and promoting human
rights. Senior monitors the ages of its workforce
across the world to ensure compliance and
identify any potential succession issues.
Senior is committed to preventing slavery
and human trafficking in its corporate activities
and throughout its supply chain. Senior does
not restrict any of its employees in any of the
countries in which it operates from joining a
trade union if they wish to do so. Senior also
works closely with its suppliers to ensure that
they at least meet internationally recognised
minimum requirements for workers’ welfare
and conditions of employment. Senior publishes
a Modern Slavery Act Statement, which is
kept under review and updated as necessary.
The current statement has been signed by
the Group Chief Executive Officer and was
published in February 2023, it can be found
on the Company’s website.
Reporting and investigating concerns
and whistle-blowing
As part of its internal control procedures, the
Company has a Whistle-blowing Policy that is
communicated throughout the Group. This
policy provides employees with the opportunity
to report suspected unethical or illegal corporate
conduct confidentially and anonymously.
Senior is committed to maintaining high ethical
standards across the Group. Employees and
representatives of Senior have an obligation to
act honestly, with integrity, and to comply with
applicable laws. Consequently, employees are
encouraged to report any suspected unethical
or illegal corporate conduct in accordance with
this policy.
Senior will not tolerate the harassment or
victimisation (including the application of
informal pressure) of a person reporting
corporate conduct in good faith. In addition to
the legal protection provided to such employees,
Senior will treat retaliatory conduct in violation
of this policy as a serious disciplinary offence.
The Group encourages its employees to discuss
any ethical concerns that they may have with
local management, or at Group level if more
appropriate. Where an employee feels unable
to approach local or Group management, or are
dissatisfied with the response, they can contact
Senior’s third-party whistle-blowing service
provider by telephone, a web reporting tool or, in
some languages, an app. The provider will pass
on information to an investigating officer within
Senior, maintaining anonymity of the individual,
if requested.
All reports of suspected unethical or illegal
corporate conduct are independently
investigated and tracked from inception to
resolution and, where necessary, actions are
taken to rectify any weakness in systems that
may have been identified. These actions, and
the overall integrity of the reporting system,
are subject to regular scrutiny by the Audit
Committee. This process is also available to
third parties, such as suppliers and customers.
Subject to confidentiality considerations, the
outcome of each investigation is provided,
insofar as it is possible, to the individual who
reported the concern. All reported whistle-
blowing incidents are reviewed by the Board
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
that are in place to help reduce risk associated
with the inappropriate use of the Group's
information technology and operational
technology assets, which could lead to data
loss, manufacturing disruption, virus or malware
infection or other issues that could have a
negative financial or reputational impact on the
Group. In compliance with the Data Protection
(Charges and Information) Regulations 2018,
the Company is registered with the Information
Commissioner’s Office.
To ensure compliance with the General Data
Protection Regulations (GDPR), both in the
EU and the UK, the Company and all relevant
Group operations have in place a GDPR policy
and breach incident procedure which have been
communicated to their employees. As the
Company is not a public authority, its core
activities do not require regular and systematic
monitoring of individuals on a large scale and it
does not process special categories of personal
data, criminal convictions or offences data on
a large scale, it is not required to appoint a data
protection officer. However, the Company and
relevant Group operations each have a Data
Protection Champion, whom employees
can approach for guidance if they have any
queries or concerns relating to data protection.
Compliance with data protection regulations will
continue to be monitored on an ongoing basis.
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of Directors, which the Company believes
to be the most appropriate forum.
Celia Baxter is the Company’s Senior
Independent Director, providing employees
and third parties with an alternative channel of
communication to resolve issues if they have
a concern that the Chair, Group Chief Executive
Officer or Group Finance Director have failed
to resolve the issues, or where such contact
with them is not appropriate.
Managing external sales agents and
representatives
Senior has in place a Responsible Sourcing
Policy which establishes the minimum
standards expected of our supply chain.
Senior is committed to the highest possible
standards of environmental, ethical and social
responsibility performance in respect of all its
products and services. Senior strives to be the
best for its customers and its people and looks
to make a positive contribution to society
wherever it operates. Adherence to this policy
is mandatory and all Group operations are
required to ensure that they are aware of the
requirements of the policy.
The Board recognises the potential bribery and
corruption risks posed by the markets in which
the Group operates and, in particular, the use of
third-party intermediaries it engages. All external
sales agents and representatives working on
behalf of Senior across the world are required to
operate in compliance with Senior’s Code of
Conduct or have their own code of conduct of
an equivalent high standard. Local management
is required to conduct a due diligence and risk
assessment process prior to engaging or
re-appointing any sales agents and to issue
them with a copy of the Code, ensuring that
they understand, acknowledge and accept
its requirements.
International trade compliance
The Code of Conduct includes a section
dedicated to Complying with International
Sanctions and Trade Compliance Requirements.
It states “Senior will conduct its business in
full compliance with all global trade laws and
regulations and all relevant sanctions for the
import and export of goods and services in
the countries within which it operates.”
Managing gifts and hospitality
The Board recognises that gifts and hospitality
have the potential to create a conflict of interest,
or the perception of a conflict of interest. As a
result, there is a Group policy restricting the
receiving and giving of gifts and hospitality from,
and to, third parties. This policy requires that all
gifts and hospitality must be recorded annually
through a self-declaration process. The Internal
Audit Manager assesses adherence with the
Group’s gifts and hospitality policy during
internal audit visits, which are carried out
physically or virtually.
Group information and operations business
security policy and data protection
The Group’s confidential information is valued
highly by the Board. In early 2022, the Group
Head of Information Security departed the
Group and his successor appointed, with a
suitable handover period arranged to ensure
continuity. In 2019, a three-year roadmap
was developed, which contained a prioritised,
risk-based, improvement plan. Linked to the
three-year roadmap, a tactical execution plan
was created annually, building on the activity
to date; the incoming Group Head of Information
Security continued this work. In September
2022, the Group Head of Information Security
was invited to present to the Board meeting,
providing an update on the 2019 to 2022
maturity journey. The key focus areas on the
journey included the external security posture,
the risk management framework, patch and
vulnerability management, security event
monitoring and incident response and
network security.
In 2022, all Group employees continued to
receive regular updates on information security,
supported by circulation of weekly tips of the
week. The aim of these weekly communications
was to provide small, bitesize recommendations
and guidance on all matters information security
related. These included informing employees
how to protect themselves both in their personal
lives as well as when at work.
An Acceptable Use Policy is in place to provide
guidelines for the acceptable and appropriate
use of the Group's information technology
and operational technology assets by all Group
employees. The policy sets out the controls
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
101
GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT
"Collectively, the members of the
Audit Committee have
significant commercial and
financial experience at a senior
management level.”
Giles Kerr
Chair of the Audit Committee
AUDIT COMMITTEE
REPORT
Dear Shareholder,
The Audit Committee has been established
by the Board and consists entirely of
independent non-executive Directors. The
primary role of the Audit Committee is to
maintain the integrity of the financial reporting
of the Group and to ensure appropriate risk
management and internal control procedures.
To enable the Audit Committee to fulfil this
role, its main responsibilities include:
• conducting the process for selecting
the External Auditor and making
recommendations to the Board, and
ultimately shareholders for approval, of the
appointment of the External Auditor, the
audit fee, initiating tender processes in
accordance with regulatory requirements,
and the resignation or dismissal of the
External Auditor;
• if an External Auditor resigns, investigating
the issues leading to this and deciding
whether or not any action is required;
• monitoring and assessing annually the
independence and objectivity of the
External Auditor, its compliance with
regulatory requirements, the effectiveness
of the external audit process and
authorising the provision, if any, of
non-audit services and the impact this
may have on independence;
• monitoring the integrity of the Company,
including its annual and the half-yearly
reports, preliminary announcements and
related formal statements. Reviewing
and reporting to the Board on significant
financial reporting issues and judgments
which those statements contain, having
regard to matters communicated to it
by the Auditor. Reviewing any other
statements requiring Board approval
which contain financial information where
practicable and consistent with any prompt
reporting requirements. Where the
Committee is not satisfied with any aspect
of the proposed financial reporting by the
Company, it shall report its views to
the Board;
• reviewing the Company’s statement on
the Annual Report & Accounts prior to
endorsement by the Board, that taken as a
whole the Annual Report & Accounts is fair,
balanced and understandable and provides
the information necessary to assess the
Group’s position and performance,
business model and strategy;
• discussing with the External Auditor issues
and reservations, if any, arising from the
year-end audit and the half-year review,
and any other matters the External Auditor
may raise;
• reviewing and approving the terms of the
External Auditor’s engagement, including
the management representation letter
addressed to the External Auditor at the
start of each audit;
• reviewing the longer-term viability and
the going concern basis of accounting in
preparation of the Financial Statements
of the Group;
• approving the appointment or termination
of appointment of the Director of Risk and
Assurance (formerly the Head of Risk
& Compliance);
• reviewing the effectiveness of the internal
audit function (currently headed by the
Director of Risk and Assurance, formerly the
Head of Risk and Compliance); considering
the major findings of internal audit activities
and management’s response; ensuring
co-ordination between the internal audit
function and the External Auditor; reviewing
and approving the role and mandate of the
internal audit function. Annually approving
the Internal Audit Charter, ensuring it is
appropriate for the Group’s current needs,
that the function is adequately resourced and
has appropriate standing within the Group;
• ensuring the internal audit function has
unrestricted scope, the necessary resources
and access to information to enable it to
fulfil its mandate, ensuring there is open
communication between different functions
and that the internal audit function evaluates
the effectiveness of these functions as part
of its internal audit plan, and ensuring that the
internal audit function is equipped to perform
in accordance with appropriate professional
standards for internal auditors;
• ensuring the internal Auditor has direct
access to the Board Chair and to the Audit
Committee Chair, providing independence
from the Executive and accountability to
the Audit Committee;
• carrying out an annual assessment of the
effectiveness of the internal audit function;
• reviewing the effectiveness of the Group’s
internal controls systems that identify,
assess, manage and monitor financial risks,
and other internal control and risk
management systems;
• developing and recommending to the Board
the Group’s Policy for the Provision of
Non-Audit Services by the External Auditor,
including specifying permitted non-audit
services and their approval requirements;
• ensuring the External Auditor’s remuneration
fee level is appropriate to enable an effective
and high quality audit;
• monitoring the External Auditor’s
processes for maintaining independence,
its compliance with relevant law, regulation,
other professional requirements and the
Ethical Standard;
• ensuring the co-ordination of the External
Auditor and the internal audit function;
• agreeing with the Board a Policy on the
Employment of Former Employees of the
Group’s External Auditor, taking into account
the Ethical Standard and legal requirements,
and monitoring the application of this Policy;
• understanding the strategy at both Group
and operational levels to ensure that business
risks and other relevant issues are effectively
identified and communicated to the Board;
• assessing the Audit Committee’s capabilities
in relation to diversity, risk experience and
the financial expertise of its members;
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Member
Giles Kerr (Committee Chair)
Celia Baxter
Susan Brennan
Barbara Jeremiah
Rajiv Sharma
Mary Waldner
Appointment date
2 September 2013
2 September 2013
1 January 2016
1 January 2022
1 January 2019
1 December 2021
Retirement date
–
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Two members constitute a quorum for the Audit
Committee. The Group Company Secretary acts
as Secretary to the Audit Committee.
There was full attendance at every Audit
Committee Meeting held during 2022.
Collectively, the members of the Audit
Committee have significant commercial and
financial experience at a senior management
level. I have the recent and relevant financial
experience required by the UK Corporate
Governance Code to chair the Audit Committee.
Mary Waldner will succeed me as Chair of the
Audit Committee, upon my retirement following
the conclusion of the 2023 AGM; Mary too has
the recent and relevant financial experience
required by the Code.
The Board expects the Audit Committee
to have an understanding of:
• the principles, contents and developments
in financial reporting, including the applicable
accounting standards and statements of
recommended practice;
• the key aspects of the Group’s operations,
including corporate policies, its products and
services, Group financing, and systems of
internal control;
• the matters that could influence or distort
the presentation of accounts and key figures;
• the principles of, and developments in,
company law, sector-specific laws and
other relevant corporate legislation;
• the roles of internal and external auditing
and risk management; and
• the regulatory framework for the
Group’s businesses.
The full Terms of Reference of the
Audit Committee may be found on
the Company’s website.
For details of the qualifications of members
of the Audit Committee, please refer to the
Board of Directors’ biographies shown on
pages 90 to 92.
No member of the Audit Committee has any
connection with the company’s External Auditor,
KPMG LLP.
Audit Committee’s Terms of Reference
Periodically, the Audit Committee’s Terms of
Reference are reviewed to take into account
current views on good practice and recent
updates to the UK Corporate Governance Code.
The UK Corporate Governance Code 2018 was
adopted by the Audit Committee from the
accounting period beginning on 1 January 2019.
The Audit Committee’s Terms of Reference
were updated in December 2022.
• understanding the implications of changes
to accounting standards;
• ensuring the Company’s corporate ethics,
anti-bribery and compliance procedures are
up to date in terms of addressing the potential
risks of fraud and misconduct;
• reviewing the Group’s Whistle-blowing Policy,
to ensure that appropriate procedures are in
place for employees, contractors and external
parties to raise, in confidence, any concerns
that they may have relating to suspected
malpractice, illegal acts, omissions or other
unethical corporate conduct, regarding
financial or other matters; and ensuring that
arrangements are in place for investigation
of such matters and follow-up action;
• giving due consideration to all relevant laws
and regulations, the provisions of the Code
and published guidance, the requirements of
the FCA’s Listing Rules, Prospectus Rules and
Disclosure Guidance and Transparency Rules
sourcebook, and any other applicable rules;
• after each Audit Committee meeting, the
Audit Committee Chair formally reports
to the Board on its proceedings and how
the Committee has discharged its duties;
• working and liaising with all other Board
Committees, ensuring interaction between
the Committees and the Board is reviewed
regularly; and
• considering any other topics specifically
delegated to the Audit Committee by the
Board from time to time.
The Audit Committee is required to report its
findings to the Board, identifying any matters
where it considers that action or improvement
is needed, and to make recommendations as
to the steps taken.
Composition of the Audit Committee
The Terms of Reference for the Audit
Committee state that the Audit Committee
shall be appointed by the Board from amongst
the independent non-executive Directors of the
Company, excluding the Company Chair, at least
one of whom shall have recent and relevant
financial experience. The Audit Committee shall
consist of not less than three members, of
which all shall be independent of any business
connection with the Group. Appointments to
the Audit Committee shall be for a period of
up to three years, which may be extended by a
maximum of two additional three-year periods,
subject to the members remaining independent.
The Audit Committee is composed entirely
of independent non-executive Directors,
as shown in the table above.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
103
GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT CONTINUED
Activities of the Audit Committee
The Audit Committee met on 22 February 2022 to consider the 2021 year-end report and during the subsequent 12 months conducted the following
business on the four standard scheduled meeting dates, as indicated below:
26 May 2022
27 July 2022
• Discussed and approved the external audit plan and strategy proposed by
KPMG LLP for the 2022 audit, including materiality, scope, significant risks
and other areas of audit focus, the audit cycle and auditor reporting.
• Received and considered an Internal Audit Report including Risk & Assurance
and Mapping reports presented by the Head of Risk & Compliance (now the
Director of Risk and Assurance).
• Reviewed KPMG LLP’s 2022 Audit Fee Estimate.
• Reviewed and approved the terms of the proposed letter of engagement
addressed to the External Auditor.
• Received and reviewed KPMG LLP’s assessment on its objectivity
and independence
• Received and reviewed KPMG LLP’s assessment on its objectivity and
independence
• Reviewed the accounting presentation and judgmental issues, and the funding
and liquidity reports for the half-year ended 30 June 2022..
• Reviewed, challenged and agreed the basis for going concern to be adopted
for the 2022 Interim Results.
• Reviewed the Tax Memorandum for the half-year ended 30 June 2022.
• Reviewed and accepted KPMG LLP’s Report to the Audit Committee on the
half-year review for the six months ended 30 June 2022.
• Reviewed and approved the terms of the management representation letter
addressed to the External Auditor.
• Discussed the Group’s draft Announcement of the 2022 Interim Results
together with the draft slides for the analysts’ presentation.
• Approved KPMG LLP’s proposed fees for the 2022 Audit.
• Noted the FRC’s Audit Quality Review of KPMG LLP’s audit work in 2021/22.
29 September 2022
21 February 2023
• Reviewed the effectiveness of the external audit process.
• Assessed the significant risks that are considered by the Audit Committee,
agreeing they would broadly unchanged from 2021, subject to review at the
next meeting.
• Reviewed the accounting presentation and judgmental issues, and the viability
assessment report for the year ended 31 December 2022, which included
consideration of compliance with all debt covenants at all measurement dates
out to 31 December 2025.
• Addressed Government agency recommendations on the Company’s Annual
Report & Accounts 2021, agreeing areas that could be better signposted in
the Annual Report & Accounts 2022.
• Reviewed and approved the addition of acquisition accounting as a significant
risk and a risk assessment change of inventory net realisable value risk from
significant risk to other focus area.
• Received and considered an Internal Audit Report presented by the Head
of Risk & Compliance (now the Director of Risk and Assurance).
• Received an update on the Group’s cyber risk communications programme
and on 2022 Code of Conduct training..
• Reviewed the effectiveness and quality of the 2021 external audit.
• Approved the existing Policy for the Provision of Non-Audit Services by the
External Auditor and the Policy on the Employment of Former Employees
of the Company’s External Auditor, with no changes required.
• Reviewed the draft updated Terms of Reference of the Audit Committee
with one small update agreed.
• Approved the Group’s existing Whistle-blowing Policy, with
no changes required.
• Reviewed and approved the statements included in the Annual Report &
Accounts 2022 concerning internal control, risk management, including the
assessment of principal risks and emerging risks, TCFD and the Viability
Statement.
• Reviewed, challenged and agreed the going concern basis to be adopted for
the 2022 Accounts.
• Reviewed the Tax Memorandum for the year ended 31 December 2022.
• Reviewed and accepted KPMG LLP’s Report to the Audit Committee on the
audit of the Financial Statements for the year ended 31 December 2022.
• Reviewed KPMG LLP’s confirmation of its objectivity and independence,
including identification of a prohibited non-audit service which was provided to
a residual component from 2018 to 2022. The Audit Committee was satisfied
with the conclusions and actions taken by the Auditor.
• Reviewed and approved the terms of the management representation letter
addressed to the External Auditor.
• Approved the Audit Committee Report for 2022.
• Reviewed the effectiveness of the Group’s risk management and internal
control systems and disclosures made in the Annual Report & Accounts 2022.
• Reviewed the draft Annual Report & Accounts 2022 and reviewed the
Company’s statement on the draft Annual Report & Accounts prior to
endorsement by the Board, that, taken as a whole, the draft Annual Report
& Accounts is fair, balanced and understandable and provides the information
necessary to assess the Group’s position and performance, business model
and strategy.
• Discussed the Group’s draft Announcement of the 2022 Final Results
together with the draft slides for the analysts’ presentation.
• Reviewed the Notice of Meeting for the 2023 AGM and the Proxy Form
for the 2023 AGM.
• Received and considered a report presented by the Director of Risk
& Assurance, which included the proposed 2023 internal audit plan.
• Reviewed and approved the Internal Audit Charter.
• Assessed the effectiveness of the internal audit function.
The Audit Committee held a private meeting with the External Auditor and a private meeting with the Group’s Director of Risk and Assurance
(formerly the Group’s Head of Risk & Compliance) on 27 July 2022 and 21 February 2023, without executive management being present.
In addition to the four scheduled meetings summarised above, meetings were held in January 2022 to approve the Full-year 2021 Post Close Trading
Update and in November 2022, to approve the draft Trading Update for the 10-month period ended October 2022, subject to final confirmation by
the Disclosure Committee.
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Audit Committee Attendance and Separate Discussions
The Audit Committee typically invites the non-executive Chair, Group Chief Executive Officer, Group Finance Director, Group Financial Controller,
the Group’s Director of Tax & Strategic Finance, the Group’s Director of Risk and Assurance (formerly the Head of Risk & Compliance) and senior
representatives of the external audit firm to attend its meetings, although it reserves the right to request any of these individuals to withdraw from
any meeting.
During 2022, the Audit Committee also held separate discussions with the External Auditor and the Group’s Director of Risk and Assurance, without
executive management being present. In addition, the Chair of the Audit Committee held separate meetings with each of these during the course
of the year.
Significant risks considered by the Audit Committee
The table below summarises the significant risks considered by the Audit Committee, including significant judgments and estimates:
Significant risks considered by the Audit Committee
Other provisions
Provisions are held where management considers there is an obligation,
payment is probable and the amount payable can be reliably estimated.
Provisions held by the Group include but are not limited to:
• those held against legal claims and contractual matters, product
warranties; and
• tax provisions for uncertain risk exposures.
There is a risk that other provisions overstate or understate the
associated liability.
How the risk was addressed by the Audit Committee
The Audit Committee considered the basis upon which management had
made its accounting judgments to determine the level of other provisions.
The Audit Committee receives a separate report from the Group Head
of Tax that sets out the various uncertain risk exposures and any related
provisions that are based on the best estimate of the amounts likely to
be payable. The Audit Committee carefully considers the assumptions
applied and provides appropriate challenge including an assessment of
the related sensitivities. These were further discussed with the
External Auditor.
The Audit Committee believes there are no further reportable issues
arising from these significant areas.
Acquisition accounting
On 25 November 2022, the Group acquired substantially all of the
assets of Spencer Aerospace Manufacturing, LLC, for total
consideration of $100m split between initial, deferred and contingent
payments (See Note 31 for further details). There is judgment in
determining the valuation of the intangible assets and associated
goodwill with the acquisition.
The Group recognised goodwill of £42.0m and intangible assets of
£31.0m on the acquisition date. The Audit Committee held discussions
with executive management regarding the procedures performed to fair
value the assets and liabilities acquired. The Committee noted the use
of external valuation experts in order to form the necessary judgments.
The external auditor provided the Audit Committee with details of the
audit work performed to assess that the assets and liabilities are held at
fair value. The Audit Committee was satisfied that the assumptions used
were appropriate and that the assets and liabilities are valued at fair value.
Inventory net realisable value, which was a significant risk in the Annual Report & Accounts 2021, is no longer considered a significant risk
by the Audit Committee given strengthening demand and subsequent impact on expected utilisation of inventory. It is now a focus area
as outlined below.
Other judgments and estimates
The Audit Committee considered other areas of focus where judgments and estimates have a significant effect on the amounts recognised in the
2022 Financial Statements. These areas of focus and how they were addressed by the Audit Committee are described below:
Other focus area considered by the Audit Committee
How these were addressed by the Audit Committee
Other key judgments and estimates
These include, but are not limited to, judgments and estimates in areas
not covered by significant risks such as inventory net realisable value,
going concern and viability, goodwill impairment assessment,
retirement benefits, leases and tax (excluding provisions for uncertain
tax which is a significant risk).
The Audit Committee reviewed the accounting presentation and
judgmental issues paper, including a funding and liquidity report, for the
related reporting period from the Group Financial Controller. In addition,
the Audit Committee received a tax memorandum paper for the related
reporting period from the Group’s Head of Tax.
In its review of these presentation papers, the Audit Committee
challenged management on the critical accounting judgments, and
the key sources of estimation and uncertainty that were taken in the
preparation of the Financial Statements, and concluded that they
were appropriate.
The Audit Committee believes there are no further reportable issues
arising from these other key judgments and estimates.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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Presentation of results
The Board presents adjusted key measures of
profit, in addition to reported measures, where
items are significant in size and either they do
not form part of the trading activities of the
Group or their separate presentation enhances
understanding of the underlying financial
performance. The Audit Committee assessed
the presentation to ensure a fair and balanced
treatment of what is and is not included as
an adjusting item.
The Audit Committee considered the accounting
policy applied to exclude adjusted items by
reference to guidance issued by the FRC and
the European Securities and Markets Authority
(“ESMA”), and the need to ensure
any alternative performance measures are
presented with equal prominence to reported
figures and on a consistent basis year-on-year.
The Audit Committee discussed the
presentation of adjusted items with the External
Auditor, and concurs with management’s view
that the presentation of items excluded from
adjusted results provides useful disclosure to
aid the understanding of the performance of
the Group.
External audit
Independence of the External Auditor and
policy on the provision of non‑audit services
To fulfil its responsibility regarding the
independence of the External Auditor, the Audit
Committee reviewed:
• a report from the External Auditor describing
the arrangements that had been made to
identify, report and manage any conflicts of
interest and to maintain its independence; and
• the FRC’s Audit Inspection Unit public report
on KPMG LLP.
The Audit Committee’s policy in respect of
services provided by the External Auditor and
its Policy on the Provision of Non-Audit Services
by the External Auditor are as follows:
• The External Auditor is invited to provide
services which, in its position as auditor,
it must or is best placed to undertake. This
includes formalities relating to borrowings,
shareholder and other circulars, various other
regulatory reports and certain work in
respect of larger acquisitions and disposals;
• The Company has a Policy on the Provision
of Non-Audit Services by the External Auditor,
which is in line with the recommendations
set out in the Financial Reporting Council’s
(“FRC”) Guidance on Audit Committees
(2016) and the requirements of the
FRC’s Revised Ethical Standard (2019)
(the “Ethical Standard”). In line with these
recommendations and requirements, the
external audit firm is only appointed to
perform a service when doing so would be
consistent with both the requirements and
the overarching principles of the Ethical
Standard, and when its skills and experience
make it the most suitable supplier. In addition,
the Ethical Standard requires an assessment
of whether it is probable that an objective,
reasonable and informed third party would
conclude independence is not compromised.
The approval of the Audit Committee must
be obtained before the External Auditor is
engaged to provide any non-audit services
and these services are limited to activities
which feature on the approved Permitted
Non-Audit Services list. The total fees for
non-audit services shall be limited to no more
than 70% of the average of the statutory
audit fee for the Company, of its controlled
undertakings and of the consolidated Financial
Statements paid to the External Auditor in
the last three consecutive financial years;
• Other services may not be provided where
precluded by law, regulation, or Ethical
Standards or where the Audit Committee
believes that it would compromise audit
independence and objectivity; and
• All proposed contracts for permitted services
to be provided by the External Auditor require
the Audit Committee’s approval. Approval
for permitted services below £0.050m has
been delegated by the Audit Committee to
its Chair and below £0.025m to the Group
Finance Director.
In 2022, the level of permitted services
undertaken by KPMG LLP was broadly
unchanged, as set out in the table below.
The Audit Committee considered that it was
beneficial for the Company to retain KPMG LLP
for a small amount of permitted non-audit work
and audit related services, because of the firm’s
knowledge of the Group and our requirements
that the Interim audit to be performed by the
External Auditor. The Audit Committee
continues to closely monitor the nature and
level of such permitted non-audit work.
Fees
2022
2021
£0.06m £0.05m
Interim review
Auditor assessment of tax
incentives in Malaysia
and certification of
£0.01m £0.01m
expenses in France
Total audit-related services: £0.07m £0.06m
Non-audit related services:
£nil
£0.1m
Apart from the matter noted below, KPMG have
not performed any non-audit services during the
year ended 31 December 2022 or subsequently
which are prohibited by the FRC Ethical
Standard. In early 2023, KPMG identified that a
KPMG member firm had provided preparation
of local GAAP financial statement services over
the period 2018 to 2022 to an entity which was
a residual component and therefore not in scope
for the Group audit. The services, which have
been terminated, were administrative in nature
and did not involve any management decision-
making or bookkeeping. The work had no direct
or indirect effect on Senior plc's Consolidated
Financial Statements. KPMG sent a letter to the
Audit Committee explaining the cause, analysis
of implications and actions taken. The Audit
Committee reviewed the letter and following
discussions, have concurred with KPMG's
professional judgment, that based on the
assessment of the breach, KPMG's integrity
and objectivity as Auditor has not been
compromised and believe that an objective,
reasonable and informed third party would
conclude that the provision of this service would
not impair KPMG's integrity or objectivity for
any of the impacted financial years.
Policy on tendering
In order to maintain auditor independence
and comply with FRC, EU guidance and the
provisions of the CMA Order 2014 on audit
tendering, the Group undertook a formal tender
of its external audit during the first half of 2016,
led by the Audit Committee. The appointment
of KPMG LLP as the Group External Auditor for
the financial year commencing 1 January 2017
received approval by shareholders at the Annual
General Meeting held in April 2017. The Audit
Committee reviews annually whether it is
appropriate to put the external audit out to
tender and concluded in 2022 that it was not
appropriate to do so. In 2022, the Group's
Audit Partner was rotated off the Senior account
and a new Audit Partner appointed, in line with
regulatory rotation requirements. The Audit
Committee fully evaluates auditor performance
and independence annually but does not favour
mandatory five-year rotation.
Assessment of external audit quality
and effectiveness
The Audit Committee reviewed the
effectiveness of the External Auditor and the
external audit process, including an assessment
of the quality of the audit, at its September
2022 meeting.
In 2022, the effectiveness of the external audit
process was again performed by assessing
a range of key areas through a formal
questionnaire that was individually distributed
to all the members of the Audit Committee and
all other executive and non-executive Directors.
This framework required consideration of
performance areas which needed future focus
by the External Auditor, the areas where the
External Auditor was meeting expectations
and those where it was considered to have
a special strength.
Senior management received answers and
comments from all questionnaires and
consolidated them into a report. The Audit
Committee used this report to facilitate a
debate at its September 2022 meeting and to
assist in assessing the level of external audit
effectiveness. The Audit Committee discussed:
the calibre of the external audit firm, the
robustness of the external audit process and
degree of challenge to matters of significant
audit risk and areas of management subjectivity,
the degree of professional scepticism applied
by the External Auditor, the quality of delivery
of the audit and the service provided by the
External Auditor, the Audit Partner, the audit
approach and planning, the role of management,
the communication by the Auditor to the Audit
Committee, the provisions of support for the
work of the Audit Committee by the Auditor,
the sharing of insights and adding value by
the Auditor, the audit fee, the Auditor’s
independence and objectivity, and the quality
of formal reporting by the Auditor to the Audit
Committee. Feedback about the effectiveness
of the external audit process from the local
management teams was also considered by
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Conclusion
As a result of its work during the year, the
Audit Committee has concluded that it has
acted fully in accordance with its Terms of
Reference. At its meeting held on 21 February
2023, the Audit Committee considered each
section of the Annual Report & Accounts 2022,
and the document as a whole, as proposed by
the Company; it reached a conclusion and
advised the Board that it considered the Annual
Report & Accounts 2022 to be fair, balanced
and understandable and that it provided the
information necessary for shareholders to
assess the Group’s position and performance,
business model and strategy. As the Chair of the
Audit Committee, I will be available at the 2023
AGM to answer any shareholders’ questions
about the work of the Audit Committee.
As previously announced, I shall be retiring from
the Board of Directors following the conclusion
of the 2023 AGM and Mary Waldner will
succeed me as Chair of the Audit Committee;
Mary too will be attending the 2023 AGM.
Change of Audit Committee Chair
During 2022, I have been working with Mary
Waldner who will be taking over from me as
Audit Committee Chair after the AGM in April
2023. I wish her every success in the role and
thank everyone for their support over the
previous nine years.
Approval
This Report was reviewed and approved by the
Audit Committee and signed on its behalf by:
Giles Kerr
Chair of the Audit Committee
24 February 2023
the Audit Committee. The Audit Committee
concluded that the External Auditor had
challenged the thinking of the Company and of
the Audit Committee on a number of significant
issues and had maintained its independence,
notwithstanding the provision of an insignificant
non-audit service to a residual component of
the Group as discussed in the previous section.
In July 2022, the Financial Reporting Council
(FRC) published its 2021/2022 Audit Quality
Inspection Reports (AQIR) for each of the
largest audit firms, including KPMG. Five of the
largest firms had no audits requiring significant
improvements and the FRC had found KPMG’s
individual audit inspections to have improved
significantly. The Audit Committee noted the
FRC was to continue to closely monitor KPMG
LLP’s banking audits. Following completion of
the assessment process outlined above, the
Audit Committee concluded that it was satisfied
with the effectiveness of the External Auditor;
as a consequence, the Audit Committee has
recommended to the Board that KPMG LLP
be re-appointed as Auditor for 2023.
Specific areas referred to the
External Auditor
In 2022, the Audit Committee has not asked
the Auditor to explicitly review any specific areas
because the significant risks and other focus
areas considered by the Auditor where aligned
with the significant risks considered by the
Audit Committee. The Audit Committee was
satisfied with the results of the Auditor's
results and findings.
Internal audit
The Audit Committee is required to assist
the Board in fulfilling its responsibilities relating
to the effectiveness, resourcing and the plans
of the Group internal audit function, which
were headed by the Group Head of Risk
& Compliance (now the Director of Risk and
Assurance) throughout 2022. The Internal
Audit Manager reports to the Director
of Risk and Assurance.
In 2022, as set out on pages 60 to 62, the
Group further strengthened its risk management
procedures and these have been reviewed by
the Audit Committee. Risk has been assessed
on a top down and bottom up basis and the
consideration of emerging risks has been
formally added to the process. A risk-based
programme of internal audit has been
conducted in the year. In 2022, the internal
audit programme was delivered through
a combination of face-to-face and remote
working methods.
The Chair and non-executive Directors are
actively encouraged to visit the Group’s
operating businesses unaccompanied by
executive Directors and such visits were able
to recommence in 2022, following the lifting
of travel restrictions imposed by governments
during the pandemic. Such visits enable the
Directors to meet the local management teams
and employees and also undertake site tours to
review matters including production methods,
health and safety and the status of internal audit
findings. These visits are viewed by the Audit
Committee as making a positive contribution
to the internal control framework.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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GOVERNANCE / REMUNERATION: CHAIR’S ANNUAL STATEMENT
REMUNERATION
CHAIR’S ANNUAL
STATEMENT
“The implementation of our
Remuneration Policy seeks
to motivate and support
outperformance.”
Celia Baxter
Chair of the Remuneration Committee
REMUNERATION REPORT:
ANNUAL STATEMENT
FROM THE CHAIR OF THE
REMUNERATION
COMMITTEE
Dear Shareholder
I am pleased to present the Report of the
Remuneration Committee for the financial year
ended 31 December 2022. This statement sets
out the work of the Committee during the year
and provides the context for the decisions taken.
Remuneration is linked to our strategy
and operational performance
Senior’s vision is to be a trusted and
collaborative high value-added engineering and
manufacturing company producing sustainable
growth in operating profit, free cash flow and
shareholder value.
Our Remuneration Policy (“Policy”) and
practices support this vision, with our bonus
plans incentivising earnings growth and free
cash flow, and our long-term plans rewarding
the creation of shareholder value, earnings
growth and return on capital. We regularly
consider the alignment of our performance
metrics with the business strategy. Following
feedback from some of our shareholders we
continue to include ROCE as a third measure
within our LTIP for awards granted from 2021
onwards. This recognises the need to build the
business back to healthy returns and brings
consideration of capital deployment into
sharper focus.
Sustainability is a key element of our strategy,
and the Board continues to be satisfied with
the ongoing progress of the Group in this area.
Senior was the first company in its sector to
set science-based greenhouse gas emission
reduction targets, committing to net zero
targets and our health and safety performance
is excellent. Although our Policy allows the
Committee to include in the bonus, strategic
measures limited to 25% of the bonus
opportunity, this facility has not been used nor
have we included an ESG target within the long
term incentive plan. Having carefully considered
shareholder feedback, current market conditions
and the stage of recovery of the business, we
continue to believe that it is more important at
this stage of our rebuilding to incentivise the
executive Directors on delivering the core
financial performance of EPS, ROCE, Free Cash
Flow and TSR. Part of our thinking is that it is
clear from past and current performance, that
our sector-leading Environmental, Social and
Governance (ESG) metrics and progress has
been achieved without the need to incentivise,
due to our core values. We have therefore
decided once again not to introduce a
sustainability metric for incentives, but we
will continue to keep this matter under review.
Senior’s performance during 2022
As explained in the Chair’s Statement and the
Group Chief Executive Officer’s Statement,
Senior has continued to make good strategic,
operational and financial progress, with strong
delivery across the Group. This is reflected in
significantly improved profitability, excellent free
cash flow generation, further strengthening of
the balance sheet and improved its sector-
leading sustainability progress. This has been
achieved while navigating through the impact of
the pandemic, the disruption and deglobalisation
of the supply chain, exacerbated by the conflict
in Ukraine and the consequent energy crisis.
Key headlines include:
• the Group’s revenue increased by 20%
(on a constant currency basis);
• adjusted operating profit increased by 285%
(on a constant currency basis);
• the Group’s adjusted operating margin
increased by 250 basis points, to 3.4% for
the full year;
• adjusted earnings per share increases by
2,465%, to 4.36 pence; and
• the Group generated excellent free cash flows
of £27.7m, double that of the prior year.
The restructuring of the Group to meet our
strategy and purpose continued in a focused
manner with the acquisition of Spencer
Aerospace, as well as an ongoing review of
the portfolio within the Group, and continued
investment in technologies for emissions
reduction and environmental efficiency.
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Awards made under the LTIP in 2020 were
subject to Adjusted EPS and TSR performance
measured over three years up to the end of
2022. Unfortunately, the Adjusted EPS and the
TSR performance was below threshold as a
result of the impact of the COVID pandemic
on Senior's markets and customers, and
therefore there was no vesting of this award.
The Committee is satisfied that the above
outcomes were a fair reflection of the
performance of the Company over the relevant
performance periods for the incentive schemes.
The Committee did not have to exercise any
discretion in agreeing the outcome of the
incentive plans and no adjustments were made
relating to the acquisition of Spencer Aerospace
nor as a consequence of the impact of the
pandemic on the Group's ability to meet its
LTIP targets.
The current economic environment and
the wider workforce’s remuneration
Recognising the impact of high rates of inflation,
Senior has taken steps to help the broader
workforce including salary settlements that
reflected regional costs of living pressures.
The impact of this has been particularly felt
by our more junior employees and therefore
although approaches vary between businesses,
these employees have been targeted for higher
salary increases or other initiatives such as:
• Introducing or extending bonus plans;
• One-off special ‘cost of living’ payments; and
• Support with travel costs.
In addition, there were changes made for the
benefit of the wider workforce, such as:
• Offering an increased level of pension
contributions to the majority of the
UK workforce;
• Introducing a more flexible approach to
working hours; and
• Promoting employee assistance programmes
and wellbeing initiatives.
Implementation of the Policy for 2023
The basic salaries of the Group Chief Executive
Officer and Group Finance Director were
increased by 5.4% and 5.5% respectively
with effect from 1 January 2023. Typically,
pay of employees at our UK operations
increased by 6% or higher, depending upon
skills and geographic location.
As previously reported, the pension
contributions of the executive Directors were
reduced from 1 January 2023 to 15% which
aligns with the pension contribution available
to the majority of the UK workforce.
Consultation with stakeholders
during the year
Consultation with employees regarding
executive remuneration
During 2022, I once again consulted with
employees by holding a video conference with
representatives from Senior’s six UK operating
businesses. We reminded them of the
structure of our Board of Directors’ pay and
explained the outcome of the AGM voting on
the Remuneration Policy and Remuneration
Report. We asked them if they thought that
our executive Directors should have ESG
targets linked to their bonus, any suggestions
they had for changes to the remuneration policy
which would be subject to shareholder vote
in 2024 and their views on the clarity of the
Remuneration Report within the Annual Report.
The consensus view was that they would be
supportive of introducing an ESG element within
the remuneration of the executives. There were
no suggestions for remuneration policy change,
and it was commented that the Remuneration
Report was clear and well laid out. We will
continue to run these sessions in the coming
year as we are keen to get input from our
employees in this area.
This was the fourth year of running employee
focus groups. In 2021, we were unable to travel
to the US when we had planned due to travel
restrictions and therefore, we focused on the UK
operations only. In 2022, the Group HR Director
and I have undertaken a further 15 focus groups
at four of our West Coast US locations, together
with four focus groups in Germany, thereby
meeting and talking to over 200 people from
a cross section of each business. There were
no questions raised related to executive pay.
Consultation with shareholders
As previously reported, following extensive
consultation with major shareholders and the
major governance agencies during 2021, the
executive Directors offered and the Committee
agreed that the alignment of their pension
contributions to that available to the UK
workforce, would be brought forward to the
end of 2022. This has now been implemented.
During 2022, I have undertaken a number
of discussions regarding executive
remuneration and will continue to do so with
individual shareholders as per their request.
Further in early 2023 I have consulted our
major shareholders and the major governance
agencies with regard to the implementation
of our 2023 Long Term Incentive which I detail
in the relevant section below. We listened to
the views of shareholders and have made
changes to our proposals to take account
of their feedback.
Executive Directors’ remuneration 2022
The basic salaries of the Group Chief Executive
Officer and Group Finance Director were
increased by 3.15% and 4.99% respectively
with effect from 1 January 2022, broadly
in line with the increase applied to the wider
workforce. In line with the Remuneration Policy,
the executive Directors were eligible for a
maximum bonus equivalent to 125% of basic
salary, payable subject to the satisfaction of
performance targets linked to Adjusted EPS
and Free Cash Flow targets.
For the Annual Bonus Plan, we set Adjusted
EPS and Free Cash Flow targets in January
2022 which were viewed as appropriately
challenging. The proportion of bonus related to
the achievement of EPS targets and Free Cash
Flow targets remained unchanged from 2021
60% and 40% respectively, reflecting the
continued importance of earnings growth
and Free Cash Flow to the business.
The Committee retains an overriding discretion
in relation to the amount of bonus it awards
not withstanding any formulaic calculations
and targets. The targets are disclosed in the
Annual Report on Remuneration on page 123.
LTIP awards were granted to both executive
Directors and senior management and are
subject to the satisfaction of challenging
three-year targets linked to Adjusted EPS
growth, relative TSR and ROCE to align with
our business strategy and due to the importance
of building the business back to healthy levels
of returns. The executive Directors' LTIP awards
were subject to a two-year holding period on
vested awards and the enhanced malus and
clawback conditions. The LTIP awards to the
Group Chief Executive Officer and the Group
Finance Director were at a level of 150% of
basic salary. As a matter of best practice, before
finalising the LTIP awards, the Committee
considered the movements in the share price
since the beginning of 2021 financial year. As
the share price had increased over the period,
it was felt appropriate to grant the LTIP awards
to the executive Directors based on the normal
percentage of salary of 150% of basic salary.
Incentive scheme outcomes for 2022
After the end of the financial year, the
Committee reviewed the extent to which
the targets under the Annual Bonus Plan had
been achieved. In considering the outcome,
the Committee took into account the ongoing
performance of the management team who
continue to:
• lead the Group's recovery of profitability
and healthy revenue growth;
• manage efficiently and diligently the
pressures across the business due to supply
chain disruptions and the energy crisis;
• reshape the structure and strategy of the
Group moving forward;
• maintain liquidity;
• lead the sector in sustainability progress
and commitments; and
• invest in technology to ensure that the
business and its customers meet carbon
reduction targets.
The Committee decided that the annual bonus
outturn was appropriate taking into
consideration the attainment of continued cash
generation within the business, maintaining the
savings post-restructuring, and further progress
in meeting sustainability targets. Therefore, the
executive Directors’ bonus awards for the year
shall be 100 % of the maximum bonus
opportunity (representing 125% of the 2022
base salary), of which one third will be
delivered in shares deferred for three years
and two thirds will be delivered in cash.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
109
Annual bonus plan 2023
Having considered the priorities for the
year we will be maintaining the same bonus
performance conditions and weightings as
in 2022: Adjusted EPS (60% weighting) and
Free Cash Flow (40% weighting).
The Committee has set targets that are both
stretching and challenging in the current
environment and retains an overriding discretion
in relation to the amount of bonus it awards
not withstanding any formulaic calculations
and targets. We also have malus and clawback
arrangements in place.
At the AGM in April 2023, shareholders will
be asked to vote on the Annual Remuneration
Report. I hope that the decisions the
Committee has taken in respect of 2022
will have your support.
Change of Remuneration
Committee Chair
During 2022, I have been working with
Barbara Jeremiah who will be taking over from
me as Remuneration Committee Chair after
the AGM in April 2023. I wish her every success
in the role and wish to thank everyone for their
support over the previous nine years.
Celia Baxter
Chair of the Remuneration Committee
GOVERNANCE / REMUNERATION: CHAIR’S ANNUAL STATEMENT CONTINUED
LTIP 2023
Senior’s markets have been impacted by a
number of external events since the grounding
of the Boeing 737 Max, the effects on
profitability have been huge. We remain
confident in the resilience and recovery of these
markets and in our ability to recover profitability
from our products and technology over the
medium term. This rationale was the reason
behind why the Board rejected the Lone Star bid
as it was not good value for our shareholders.
In order to deliver on this commitment we need
to retain and motivate the leaders through this
key period of recovery.
• Relative TSR – Our approach to measuring
TSR against a broad group of FTSE 350
companies will remain unchanged. Threshold
for vesting will continue to require median
performance against the peer group. For
maximum vesting of the enhanced award, we
will require upper quintile (rather than upper
quartile) performance against the peer group.
• Adjusted EPS – We will assess this based on
the absolute level of adjusted EPS reported in
2025. Threshold for vesting will be adjusted
EPS of 11.77p and maximum vesting will be at
18.50p, more than quadrupling adjusted EPS,
compared to 2022.
Senior has a decentralised business model,
comprised of discrete business units run by
senior managers each with their own profit and
loss account. These senior managers are key to
our success and to meet our aspirations we will
require a stable and highly motivated leadership
team. The LTIP is an important tool to achieve
this, ensuring the ongoing recovery is built on
and outperformance delivered.
For the reasons set out above, the Committee
intends to provide a special long-term incentive
to drive material outperformance through the
next stage of the recovery, by enhancing the
LTIP for 2023 by granting awards at higher than
normal levels to all participants in the LTIP
(approximately 50 senior leaders), with awards
granted at a value that will typically be one-third
higher than granted in 2022. For the executive
Directors, this means they will receive LTIP
awards at a level of 200% of basic salary,
up from the normal level of 150%.
The Committee appreciates that an LTIP
award at a level higher than normal must be
accompanied by particularly challenging and
stretching performance targets. For the 2023
award, we have decided to retain the same
overall construct in our plan design, i.e. using
three equally-weighted performance metrics:
ROCE, relative TSR and adjusted EPS. Targets
for each metric will be measured based on
performance up to the end of the financial year
ending 31 December 2025, with a range of
targets from threshold to maximum. For the
amount of each award above the normal
grant level, we have incorporated additional
“super-stretch” targets. Participants will
therefore only receive the full benefit of their
enhanced award if performance is delivered
above and beyond what would be required
in normal circumstances, as follows:
• ROCE – The maximum of the enhanced
award will vest only in the event of ROCE in
2025 being at a level materially higher than
our stated target of 13.5% over the medium
term. Threshold for vesting will require
achieving 12.5% ROCE and maximum will
require achieving 17.0% ROCE.
The Committee remains confident that a mix of
ROCE, relative TSR and adjusted EPS provides
a balanced approach to measuring performance
over the next three-year period which aligns
with Senior’s strategy for recovery and growth.
We have again reflected on the potential use of
a specific sustainability measure, recognising
the expectations of some investors in this
space. Sustainability is central to the strategy
of the business and taken very seriously by the
executive Directors and other senior leaders,
and we remain of the view that Senior’s
sector-leading ESG performance demonstrates
that we do not need to include an explicit ESG
target within the incentive schemes to ensure
appropriate focus on these matters. As a result,
we are not changing our approach for 2023
but we will consider this again later in the year
as we review the Remuneration Policy ahead
of its renewal at the AGM in 2024.
We have also considered the LTIP proposal, and
executive Directors’ remuneration more broadly,
very carefully in the context of the remuneration
of the wider workforce. As noted above, a key
feature of the proposal is its application to all
LTIP participants, ensuring consistency across
the senior executive population. Given Senior’s
decentralised nature, it is important that we align
all leaders with a consistent award structure
and set of targets which focuses them on the
performance of the overall Group. More broadly,
the Committee has reflected on the specific
challenges facing the wider workforce in an
environment when inflation has returned and
many are experiencing cost-of-living pressures,
as outlined above.
The Remuneration Committee believes that
the enhanced award is in the best interests of
the Group and its shareholders. The Committee
retains the discretion to adjust the level of
vesting if it considers the outcome to be
anomalous or is not reflective of the underlying
performance of the Group over the period,
taking into account the resilience of the markets
in which Senior operates and trends in the
underlying equity markets.
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2022 REMUNERATION REPORT
AT A GLANCE
Overview of our remuneration framework for 2022
Element of remuneration
Key features
Salary and employment benefits
Market competitive to attract and retain high quality executives (including fully expensed car or car allowance,
private medical insurance, life insurance, income protection, and defined contribution retirement benefits
or allowances)
Annual bonus:
Adjusted EPS 60%
Free Cash Flow 40%
Rewards achievement against annual performance objectives:
• Maximum bonus is 125% of salary
• 1⁄3 of any award is paid in shares, deferred for three years
• Group Chief Executive Officer and Group Finance Director target: 62.5% of salary
Long-Term Incentive Plan:
Adjusted EPS (33.3%)
TSR (33.3%)
Return on Capital Employed (33.3%)
Supports the Company’s longer-term strategic aims to create sustainable growth in shareholder value
and to incentivise, motivate and retain senior talent:
• Maximum award is 200% of salary and normal awards are 150% of salary
• 25% vesting at “threshold”
Shareholding requirements
Equivalent to 200% of executive Directors’ salary
Post-employment shareholding requirement applies for a period of two years following cessation,
as set out on page 116
Clawback and malus provisions
Cash Bonus Awards subject to clawback
Share awards (LTIP and unvested deferred shares) subject to clawback, malus and post-employment
shareholding requirement
Performance highlights and incentive outcomes
Annual bonus
Performance condition
Free Cash Flow – full year
Adjusted EPS – full year internal target(1)
Target
Actual
Achieved
(% of
maximum)
£6.0m
2.91p
£27.7m
3.88p
100%
100%
Bonus award to Group Chief Executive Officer and Group Finance Director: 100% of maximum
(1) Adjusted EPS is measured on a constant currency basis to reduce the impact of exchange rate movements on bonus outcomes
Long-Term Incentive Plan (2020 award)
Targets (threshold – maximum)
Adjusted EPS (50%)
Total Shareholder Return (50%)
13.5p (minimum threshold) to 16.5p (maximum
threshold) for the final Financial Year of the three-year
performance period
TSR ranking: 50th percentile (minimum threshold)
to 75th percentile (maximum threshold)
Targets for the 2020 Awards were not achieved and therefore the awards shall lapse in full.
Actual
4.36p
(below threshold)
24th percentile
(below threshold)
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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GOVERNANCE / 2022 REMUNERATION REPORT AT A GLANCE CONTINUED
Application of Remuneration Policy
The chart below shows how the composition of each of the executive Directors’ packages varies at different levels of performance under
the Remuneration Policy. The assumptions noted for “target” performance in the graph below are provided for illustration purposes only.
This chart is based on the following assumptions:
3,500
3,000
2,500
2,000
1,500
s
0
0
0
£
1,000
722
3,180
45%
1,419
27%
49%
1,364
22%
26%
Threshold
Target
Maximum
Fixed pay
Salary is the 2023 basic salary
The value of Benefits and Pension is taken from the single
total figure of remuneration for 2022
2,162
45%
Nil
Nil
Annual
bonus
Long-term
share
awards
925
22%
26%
962
27%
49%
488
62.5% of 2022
basic salary
125% of 2022
basic salary
25% vesting under
the LTIP (i.e. 25%
of (200% x 2023
basic salary)) and
set out at face value,
assuming no share
price growth or
dividend.
100% vesting under
the LTIP (i.e. 100%
of (200% x 2023
basic salary)) and
set out at face value,
assuming 50% share
price growth and no
dividend.
500
0
81%
43%
23%
41%
82%
43%
23%
42%
Below
Target
Target Max.
Actual
Below
Target
Target Max.
Actual
Group Chief Executive Officer
Group Finance Director
Salary
Benefits and Pension
Annual Bonus
Long-Term Share Awards
Long-Term Share Price Growth
Changes made in 2022
There were no changes to the Remuneration Policy in 2022. The Pension section of the Remuneration Policy was changed in 2021 in line with
shareholder feedback. In accordance with the changes made in 2021 to the Pension section of the Remuneration Policy, the pension contributions
or pension allowance for executive Directors were reduced from the end of 2022 to 15% which aligns with the pension contribution available to the
majority of the UK workforce. The details of the full Remuneration Policy are for ease of reference is laid out on pages 114 to 116.
About this Report
The Report on Remuneration on pages 119 to 128 is produced in accordance with the 2013 Regulations and the relevant provisions of the Listing Rules
of the Financial Conduct Authority. Parts of the Annual Report on Remuneration are subject to audit, as indicated within this Report.
The rest of the Report covers the following key areas:
• Remuneration Policy:
– How shareholder views are taken into account
– Discretions of the Remuneration Committee
– Policy for non-executive Directors
• Annual Report on Remuneration
112
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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2022 REMUNERATION REPORT:
POLICY
• Predictability – The Policy includes full details of the individual limits
in place for the incentive schemes as well as “scenario charts” on
page 112 which set out potential pay-outs in the event of different
levels of performance, based on a number of reasonable assumptions.
Any discretion exercised by the Committee in implementing the
Policy will be fully disclosed.
• Proportionality – The link between the delivery of strategy, long-term
performance, shareholder return and the remuneration of the executive
Directors is set out in the Remuneration Report.
• Alignment to culture – The approach to Directors’ remuneration is
consistent with the Group’s culture and values.
Summary of Decision-Making Process for Policy Changes
In determining and implementing the Policy, the Committee follows a
robust process which includes discussions on the content of the Policy
at Remuneration Committee meetings. To support this process, the
Committee receives advice from independent advisers. It also considers
representations from other key stakeholders, including shareholders,
executive management and employees (whilst ensuring potential conflicts
of interest are suitably managed), in the context of the evolving corporate
governance landscape. The Committee monitors changes in corporate
governance guidance and regulations to ensure the Policy remains
compliant. The implementation of the Policy takes account of the
remuneration of the wider workforce and is aligned with the Group’s
strategy by appropriately incentivising the executive Directors to deliver
the strategic objectives.
Policy for executive Directors
The Policy which was approved by shareholders at the 2021 AGM can be
found on page 114. Following shareholder feedback after the 2021 AGM,
the Pension section of the Policy was updated to bring forward the
alignment of the pension contributions or pension allowance for executive
Directors with the majority of the UK workforce to the end of 2022.
This part of the report sets out the Remuneration Policy that was put
to a binding vote of the shareholders at the AGM held on 23 April 2021.
This policy applies for a maximum of three years from the date of approval
and took effect from 1 January 2021. The revised policy was reviewed in
the context of the business strategy and the evolving expectations of our
shareholders and stakeholders, which included pension alignment and
post-employment shareholding provisions.
When developing policies and practices, the Remuneration Committee
regularly considers the approach to remuneration and makes decisions
to ensure it is aligned to the business strategy. We do this by developing
an overall package that reflects the skills and experience of the
individuals and appropriate short- and long-term incentive plans. The key
performance metrics for both the bonus plan and the long-term incentive
plan are directly linked to the delivery of the strategy and the creation of
shareholder value. Currently the bonus incentivises free cash flow and
earnings growth; Adjusted EPS, TSR and ROCE are included in the
long-term incentive plan. We continue to believe that it is more important
at this stage of our rebuilding to incentivise the executive Directors and
senior managers on delivering the core financial performance of EPS,
ROCE, Free Cash Flow and TSR. We have therefore decided once again
not to introduce a sustainability metric for incentives, as it is clear from
past and current performance, that our sector-leading Environmental,
Social and Governance (ESG) metrics and progress has been achieved
without the need to incentivise; rather it is something driven by our
core values, but we will continue to keep this matter under review.
Factors considered in reviewing the Policy
The Committee is comfortable that the Policy and its implementation
are fully consistent with the factors set out in Provision 40 of the 2018
UK Corporate Governance Code (set out below):
• Clarity – The Policy and the way it is implemented is clearly disclosed
in this policy section of the Directors’ Remuneration Report, with full
transparency of all elements of Directors’ remuneration.
• Simplicity – The Policy is simple and straightforward, based on a mix of
fixed and variable pay. The annual bonus and LTIP include performance
conditions which are aligned with Senior’s business strategy.
• Risk – The Committee believes that the performance targets in place
for the incentive schemes provide appropriate rewards for stretching
levels of performance without driving behaviour which is inconsistent
with the Company’s risk profile and values. Potential reward is aligned
with market levels of peer companies and the reputational risk from a
perception of “excessive” pay-outs is limited by the maximum award
levels set out in the Policy and the Committee’s discretion to adjust
formulaic remuneration outcomes.
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Element
Salary
Purpose and link
to strategy
• Reflects the
performance of the
executive Director,
his or her skills and
experience over time
and the responsibilities
of the role
• Provides an appropriate
level of basic fixed pay
avoiding excessive risk
arising from over-
reliance on variable
income
Operation
Maximum
• Other than to reflect change
in the size and complexity
of the role/Company, the
Committee will have
regard to the basic salary
percentage increases taking
place across the Company
more generally when
determining salary increases
for the executive Directors
• No maximum salary cap
• Will normally be reviewed
annually with effect from
1 January
• Benchmarked periodically
against companies with
similar characteristics and
sector companies
• Normally positioned within a
range around the mid-market
level taking into account the
experience and performance
in the role of the individual,
complexity of the role, market
competitiveness and the
impact of salary increases
on total remuneration
Bonus
• Incentivises annual
• Up to 83.3% of salary paid in
• Overall maximum of 125%
delivery of corporate
financial and non-
financial goals
cash with up to a further 41.7%
of salary paid as a conditional
award of deferred shares
of salary
• Delivery of a proportion
of bonus in deferred
shares provides
alignment with
shareholders and
assists with retention
• Maximum bonus only
payable for achieving
demanding targets
• Deferred shares are released
three years after award but
are subject to forfeiture by
a “bad leaver”
• Executives are entitled to
receive the value of dividend
payments that would have
otherwise been paid in respect
of vested deferred shares
• All bonus payments are at the
discretion of the Committee
• Different performance
conditions may be set when
recruiting an executive Director
• The Committee may review
the performance conditions
from time to time
• The Committee has the
discretion in certain
circumstances to grant and/or
settle an award in cash. In
practice, this will only be used
in exceptional circumstances
for executive Directors
• The Committee has the
discretion to adjust bonus
targets or outcomes if deemed
appropriate, where the bonus
outcome feels perverse. In
practice, this will only be used
in exceptional circumstances
for executive Directors
Performance assessment
• Individual performance in the
role and Group performance
are among the factors taken
into consideration when
awarding increases
• The Committee determines
appropriate performance
targets and weightings at
the start of each year
• Details of the financial
performance targets will
normally be disclosed in the
following Annual Report on
Remuneration for reasons of
commercial sensitivity
• The Committee may include
non-financial metrics up to
25% of the overall award
• Performance below threshold
results in zero payment.
Payment rises from 0%
to 100% of the maximum
opportunity for levels of
performance between
the threshold and
maximum targets
• Typically, threshold is around
90% of target, and on-target
performance delivers
approximately 50% of the
maximum opportunity
• Subject to clawback at the
Committee’s discretion over
cash bonus outcomes and
unvested deferred shares
in the event of material
misstatement, gross
misconduct, serious
reputational damage
or corporate failure and,
if required, over any
unvested LTIP awards
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Element
Purpose and link
to strategy
Operation
Long-Term
Incentive Plan
(LTIP)
• Incentivises sustained
performance over the
longer term
• The use of longer-term
performance targets
and delivery of awards
in shares rewards the
achievement of the
Company’s strategic
goals and increases
in shareholder value
• Annual grants of performance
shares which vest subject
to performance measured
over three years and
continued service
• Executives are entitled to
receive the value of dividend
payments that would have
otherwise accrued during the
three-year performance period
in respect of vested LTIP awards
• All awards are subject to the
discretions contained in the
plan rules
• The Committee may review the
performance conditions from
time to time
• The Committee has the
discretion in certain
circumstances to grant and/or
settle an award in cash. In
practice, this will only be used
in exceptional circumstances
for executive Directors
• A two-year post-vesting holding
period applied to LTIP awards
from the March 2018 award,
creating a five-year period
between the grant of the
awards and their final release
Maximum
• 150% of salary
• 200% of salary in
exceptional circumstances,
such as upon recruitment
Performance assessment
• The Committee determines
performance conditions and
weightings at the start of
each year, providing that the
targets are not materially
less challenging
• In respect of each
performance element,
performance below the
threshold target results in
zero vesting. Vesting of each
performance element starts
at the 25% threshold and
rises to 100% for maximum
level of performance
• Subject to clawback at the
Committee’s discretion
during the period of three
years following the date
of vesting in the event of
material misstatement,
gross misconduct, serious
reputational damage or
corporate failure
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• Employees including
• The Sharesave Plan has
• Employees can normally
• N/A
All-
Employee
Share
Schemes
executive Directors are
encouraged to become
shareholders through
the operation of the
Sharesave Plan, the
HMRC-approved
all-employee share plan
Pension
• Provides competitive
retirement benefits for
the Group’s employees
elect for a three-year savings
contract under standard terms
and within HMRC limits
• The option price for Sharesave
awards can be set at a
discount of up to 20% of the
market value of the shares
at the start of the savings
contract, although to date
no awards granted under the
2006 Sharesave Plan have
been set at a discount
• From the end of 2022, the
pension contributions or
allowances for executive
Directors reduced to 15%
which aligns with the
pension contribution
available to the majority
of the UK workforce
• N/A
standard terms under which
participants can normally enter
a savings contract in return for
which they are granted options
to acquire shares at the market
value of the shares at the start
of the performance period
• The rules for this plan were
first approved by shareholders
at the 2006 AGM and the
updated rules were approved
at the 2016 AGM
• The executive Directors may
participate in the Senior plc
Group Flexible Retirement Plan
(Senior GFRP), a contract-
based, money purchase
pension plan and/or receive
cash allowances
• Bonuses are not included in
calculating retirement benefits
• From 2020, any new executive
directors will receive a pension
contribution in line with that
available to the majority of
employees in the relevant
jurisdiction
• The pension contributions
or pension allowance for
executive Directors will be
aligned with the majority of
the UK workforce by the
end of 2022
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GOVERNANCE / 2022 REMUNERATION REPORT: POLICY CONTINUED
Element
Other
benefits
Purpose and link
to strategy
• Provides a competitive
package of benefits that
assists with recruitment
and retention
Shareholding
guidelines
• Aligns executive
Directors’ interests
with those of other
shareholders in
the Company
Operation
Maximum
Performance assessment
• N/A
• The value of benefits is
based on the cost to the
Company and is not
predetermined
• There is no monetary cap
on other benefits
• N/A
• N/A
• Benefits include provision of
a fully expensed car or car
allowance, private medical
insurance, life insurance
and income protection,
tax equalisation and
relocation benefits
• Any reasonable business-
related expenses (including tax
thereon) can be reimbursed
• Executive Directors to retain
at least 50% of the shares
that vest under the LTIP and
Deferred Bonus Award, after
allowing for tax liabilities, until
a shareholding equivalent in
value to 200% of base salary
is built up
• Post-employment shareholding
requirements will apply, for all
LTIP awards granted from 2021
onwards and any shares that
vest from deferred bonus from
the 2021 bonus scheme
onwards, for a period of two
years following cessation of
employment at the lower of
(1) 80% of the in-employment
shareholding guideline in
place prior to cessation and
(2) the actual shareholding
held at the time of cessation.
Recruitment of executive Directors
Salaries for newly appointed executive directors will be set to reflect their
skills and experience, the Company’s intended pay positioning and the
market rate for the role.
Where it is appropriate to offer a below median salary initially, the
Committee will have the discretion to allow phased salary increases
over time for newly appointed directors, even though this may involve
increases in excess of the rate for the wider workforce and inflation.
Benefits will be provided in line with those offered to other employees,
with national or international relocation expenses/arrangements (e.g.
schooling, tax equalisation) provided for if necessary.
The aggregate incentive offered to new recruits will be no higher than
that outlined in the Policy on pages 114 to 116. The Remuneration
Committee has flexibility to grant share awards of up to 200% of salary
upon recruitment. Different performance measures may be set initially
for the annual bonus and LTIP, taking into account the responsibilities
of the individual, and the point in the financial year that they joined.
Current entitlements (benefits, bonus, share schemes) may be bought
out on terms that are no more favourable than a like-for-like basis
(with a comparable time horizon, fair value and subject to performance
conditions). Existing incentive arrangements will be used to the fullest
extent possible, although awards may also be granted outside these
schemes if necessary and as permitted under the Listing Rules. In the
case of an internal hire, any outstanding variable pay awarded in relation
to the previous role will be allowed to pay out according to its terms of
grant (adjusted as relevant to take into account the Board appointment).
Rationale behind performance metrics and targets
The performance-related elements take into account the Company’s risk
policies and systems and are designed to align the Directors’ interests
with those of shareholders. Variable pay elements aim to reward
executive Directors for performance at the highest levels and, as such,
the Committee aims to set targets that are both stretching and achievable.
All targets are set on a sliding scale. The Committee reviews the annual
bonus measures set for all the Company’s senior executives (not only
the executive Directors) every year in order to ensure that they are
aligned with the Company’s strategy and annual goals and to ensure
that bonus arrangements amongst the Company’s senior executive
team are consistent.
The annual bonus may include a mix of financial and non-financial
measures reflecting the key annual priorities of the Group. The financial
metrics currently include two of the Company’s KPIs: Free Cash Flow,
which is a key measure of the business’s ability to fund future
acquisitions; and Adjusted EPS, which will reflect the Group’s ability
to expand into new regions and product markets and increase the
profitability of the existing operations. Adjusted EPS is measured on
a constant currency basis to reduce the impact of exchange rate
movements on bonus outcomes. If non-financial measures are selected,
these may include reference to the Group’s sustainability, safety and
organisational goals.
The Free Cash Flow measure applies to 40% of the total bonus award,
and the Adjusted EPS measure applying to the remaining 60% of the
total bonus, reflecting the importance of both measures to the running
of the Group.
The performance measures used in the LTIP awards consist of Adjusted
EPS, TSR and ROCE; with ROCE being added as a third performance
measure for awards granted from 2021 onwards, given its importance in
the M&A evaluation process, capital investment decisions and customer
bid evaluations. In line with the Policy, the Committee retains the ability
to amend performance measures to reflect changes in market conditions
and business strategy.
The targets will be reviewed prior to each grant by taking account
of internal and external expectations. The targets for awards granted
under this Remuneration Policy are set out in the Annual Report on
Remuneration.
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Policy on outside appointments
The Remuneration Committee believes that it is beneficial both for the
individual and the Company for an executive Director to take up one
external non-executive appointment. Fees paid for the appointment
may be retained by the executive.
Executive Directors’ service agreements and loss
of office payments
The table below summarises the key provisions of each executive
Director’s contract:
Provision
Detailed terms
Employment
contract dates
Notice period
David Squires – 5 January 2015
Bindi Foyle – 3 May 2017
12 months from both the Company and the
executive Director
Termination payment Contracts may be terminated without notice
by the payment of a sum equal to the sum of
salary due for the unexpired notice period, and
the value of pension contributions and other
benefits such as use of company car, life cover,
income protection and private healthcare
There are no provisions in the agreements, or
otherwise, for additional termination payments
Payments may be made in monthly instalments
and, in these circumstances, there is a
requirement for the Director to mitigate loss
There are no enhanced provisions in relation
to a change of control
Change of control
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Copies of the executive Directors’ service contracts are available from
the Group Company Secretary at the Company’s Registered Office during
normal business hours. The Committee’s policy in the event of early
termination of employment is set out below.
Relationship between executive Director and employee pay
The Remuneration Policy for the executive Directors is designed taking
into account the policy for employees across the Group as a whole. There
are some differences in the structure of the Remuneration Policy for the
executive Directors and other senior employees, which the Remuneration
Committee believes are necessary to reflect the different levels of
responsibility of employees across the Company and reflect different
market norms for different roles. The key differences in remuneration
policy between the executive Directors and employees across the Group
are the increased emphasis on performance-related pay and the inclusion
of a share-based long-term incentive plan for executive Directors.
Executive Directors are provided with a competitive package of benefits
that includes (depending on role) participation in the Group’s occupational
pension arrangements, and/or receipt of pension allowance, provision of
a fully expensed car or car allowance, private medical insurance, life
insurance and income protection.
The majority of senior managers are eligible to participate in annual bonus
arrangements with challenging targets tied to the performance of their
operating business, Division and, for the most senior executives, the
Group’s performance.
Long-term incentives are provided to the most senior executives and
those anticipated as having the greatest potential to influence
performance levels within the Company. A lower aggregate incentive
quantum operates below the senior executive level, with levels driven
by the impact of the role and market comparatives.
Awards under the Restricted Share Award Plan, a deferred share award
plan without performance conditions, are a retention tool and are made
to selected individuals who do not benefit from other long-term incentives
but are considered to have significant potential or are key contributors.
In order to encourage wider employee share ownership, the Company
operates a Sharesave Plan in which employees in the UK, North America
and continental Europe, including executive Directors, may participate.
How employees’ pay is taken into account when setting
executive Director remuneration
The Committee also reviews the salaries of corporate, divisional and
senior operational managers and therefore is fully cognisant of pay levels
in the Group when determining the pay of the executive Directors.
In addition, the Committee’s policy is that salary increases for the
executive Directors and senior executives should not normally be greater
than the general level of increases awarded to other senior managers in
Europe and North America, other than when an executive changes role
or when it is necessary in order to ensure levels of remuneration remain
market competitive.
Recognising the impact of high rates of inflation, Senior has taken steps
to help the broader workforce including salary settlements that reflected
regional costs of living pressures. The impact of this has been particularly
felt by our more junior employees and therefore although approaches vary
between businesses, these employees have been targeted for higher
salary increases. effect from 1 January 2023. Typically, pay of employees
at our UK operations increased by 6% or higher, depending upon skills
and geographic location. As previously reported, the pension contributions
of the executive Directors were reduced from 1 January 2023 to 15%
which aligns with the pension contribution available to the majority of the
UK workforce.
As laid out in the Remuneration Committee Chair’s Annual Statement,
the Company consulted with employees in 2022 regarding executive
Director remuneration.
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Policy on payment for departure from office
On termination of an executive Director’s service contract, the Committee will take into account the departing executive Director’s duty to mitigate
his or her loss when determining the amount of compensation. The Committee’s policy in respect of the treatment of executive Directors leaving the
Group is described below and is designed to support a smooth transition from the Company, taking into account the interests of shareholders:
Component
of pay
Base salary,
pension and
benefits
Voluntary resignation
or termination for cause
Death, ill health, disability, retirement
excluding redundancy
Departure on
agreed terms
Paid for the proportion of
the notice period worked
Paid up to the date of death or leaving, including any untaken
holidays prorated to such date. In the case of ill health, a payment
in lieu of notice may be made and, according to circumstances,
may be subject to mitigation. In such circumstances, some
benefits such as company car or medical insurance may be
retained until the end of the notice period
Annual bonus
cash
Cessation of employment
during a bonus year will
normally result in no cash
bonus being paid
Cessation of employment during a bonus year or after the
year-end but prior to the normal bonus payment date will result in
cash and deferred bonus being paid and prorated for the relevant
portion of the financial year worked and performance achieved
Annual bonus
deferred shares
Unvested deferred share
awards will lapse
LTIP share
awards
Unvested LTIP share
awards will lapse
In the case of the death of an executive Director, all deferred
shares will be transferred to the estate as soon as possible
after death. In all other cases, subject to the discretion of the
Committee, unvested deferred shares will be transferred to
the individual on a date determined by the Committee
Subject to the discretion of the Committee, unvested LTIP
share awards will remain subject to the relevant performance
conditions and normally be measured at the original vesting date.
The awards will normally be prorated for the relevant proportion
of the performance period worked. However, in the case of the
death of an executive Director, the Committee will determine
the extent of vesting within 12 months of the date of death
Options under
Sharesave
As per HMRC regulations As per HMRC regulations
Other
None
Statutory payments and disbursements such as any legal costs
and outplacement fees
Any agreed terms will
normally fall between the
two treatments described
in the previous columns,
subject to the discretion of
the Committee and the terms
of any termination agreement
Notes
a) The Committee will have the authority to settle any legal claims against the Company e.g. for unfair dismissal etc. that might arise on termination.
b) There are no enhanced provisions in relation to a change of control.
• determining the extent of LTIP vesting based on the assessment of
performance, including the discretion to allow the override of formulaic
outcomes;
• determining “good leaver” status and the extent of vesting in the case
of the LTIP and deferred shares;
• determining the extent of vesting in the case of the LTIP in the event
of a change of control;
• making the appropriate adjustments required in certain circumstances
(e.g. rights issues, corporate restructuring events, variation of capital
and special dividends);
• varying the performance conditions to apply to LTIP awards if an
event occurs which causes the Committee to consider that it would
be appropriate to amend the performance conditions, provided the
Committee considers the varied conditions are fair and reasonable
and not materially less challenging than the original conditions would
have been but for the event in question;
• undertaking the annual review of weighting of performance
measures, and setting targets for the annual bonus plan and LTIP
from year to year;
• adjusting bonus and LTIP targets or outcomes if deemed appropriate,
for example to take account of material M&A activity or other
exceptional circumstances when they arise; and
• adjusting bonus targets or outcomes if deemed appropriate, where
the bonus outcome feels perverse.
How shareholder views are taken into account
The Remuneration Committee considers shareholder feedback
received in relation to the AGM each year and guidance from
shareholder representative bodies more generally. In 2020, major
shareholders were consulted on the updating of the Remuneration
Policy and its implementation for the 2021 financial year. Prior to the
2021 AGM there was further interaction with major shareholders
regarding the Remuneration Policy and Remuneration Report. Following
the AGM held in April 2021, major shareholders were consulted on the
AGM voting of the Remuneration Policy and Remuneration Report
resolutions. As a result of the consultation, an amendment was made
to the Remuneration Policy regarding pension alignment. Consultation
with shareholders has always been constructive.
During 2022, I have undertaken a number of discussions regarding
executive remuneration and will continue to do so with individual
shareholders as per their request. Further in early 2023 I have consulted
our major shareholders and the major governance agencies with regard
to the implementation of our 2023 Long Term Incentive which I detail in
the relevant section below. We listened to the views of shareholders and
have made changes to our proposals to take account of their feedback.
Discretions of the Remuneration Committee
The Committee operates the Group’s various incentive plans according to
their respective rules and in accordance with HMRC rules where relevant.
To ensure the efficient administration of these plans, the Committee
may apply certain operational discretions. These include the following:
• selecting the participants for the annual bonus plan and LTIP awards;
• determining the timing of grants and/or payments;
• determining the quantum of grants and/or payments (within the limits
set out in the policy table commencing on page 114);
• adjusting the constituents of the TSR comparator group;
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2022 REMUNERATION REPORT:
ANNUAL REPORT ON REMUNERATION
Policy for non-executive Directors
Element
Non-executive
Directors and
Chairman fees
Purpose and
link to strategy
• Takes account of
recognised practice
and set at a level that
is sufficient to attract
and retain high calibre
non-executive Directors
Operation
Maximum
Performance
assessment
• N/A
• Other than when a
non-executive
Director changes
role or where
benchmarking
indicates fees
require realignment,
fee increases will not
normally exceed the
general level of
increases for the
Group’s employees
• The Chair of the Board is paid a single fee for all their
responsibilities as determined by the Remuneration
Committee. The non-executive Directors are paid a basic fee.
The Senior Independent Director and the Chairs of the Audit
and Remuneration Committees receive additional fees to
reflect their extra responsibilities
• When reviewing fee levels, account is taken of market
movements in non-executive Director fees, Board Committee
responsibilities, ongoing time commitments and the general
economic environment
• Fee increases, if applicable, are normally effective from
1 January
• The Chair of the Board and non-executive Directors do not
participate in any pension, bonus, share incentive or other
share option plans
• The remuneration of the non-executive Directors is
determined by the Board of Directors. The non-executive
Directors do not participate in any discussion or decisions
relating to their own remuneration
• Any reasonable business-related expenses (including tax
thereon) can be reimbursed
Non-executive Directors’ letters of appointment
The Chair of the Board and non-executive Directors do not have service agreements but the terms of their appointment, including the time
commitment expected, are recorded in letters of appointment. The Chair’s appointment may be terminated on providing 12 months’ notice by either
party. The appointments of the other non-executive Directors may be terminated by the Company or non-executive Director on providing one month’s
notice. Copies of the Chair’s and non-executive Directors’ letters of appointment are available from the Group Company Secretary at the Company’s
Registered Office during normal business hours.
Non-executive Directors’ terms of appointment
Name
Ian King
Celia Baxter
Susan Brennan
Barbara Jeremiah
Giles Kerr
Rajiv Sharma
Mary Waldner
Date original term commenced
Joined the Board November 2017
and became Chairman in April 2018
September 2013
January 2016
January 2022
September 2013
January 2019
December 2021
Date current term
commenced
Expected expiry date of
current term
–
September 2019
January 2022
January 2022
September 2019
January 2022
December 2021
–
April 2023(1)
December 2024
December 2024
April 2023(1)
December 2024
November 2024
(1) In September 2022, Celia Baxter and Giles Kerr reached the ninth anniversary of their respective appointments to the Board. Both Directors are to retire from the Board at the
conclusion of the AGM in April 2023; at which time Barbara Jeremiah will become Senior Independent Director and Chair of the Remuneration Committee, and Mary Waldner
will become Chair of the Audit Committee and the Director nominated for Employee Engagement.
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Other attendees at Remuneration Committee meetings
The Group Chief Executive Officer and Group HR Director attend
meetings by invitation and the Group Company Secretary acts as
secretary to the Committee but no executive Director or other employee
is present during discussions relating to his or her own remuneration.
Advisers
Before recommending proposals for Board approval, the Remuneration
Committee may seek advice from external remuneration consultants
to ensure that it is fully aware of comparative external remuneration
practice as well as shareholder, legislative and regulatory developments.
The Committee also considers publicly available sources of information
relating to executive remuneration.
All advisers to the Remuneration Committee are appointed and instructed
by the Committee. During the year, the Committee was advised by
Korn Ferry in relation to remuneration advice, LTIP performance
monitoring and the provision of LTIP advice, and by FIT Remuneration
Consultants in relation to the provision of LTIP advice. During 2022, the
Company incurred fees of £6,408 from Korn Ferry and of £8,784 from
FIT Remuneration Consultants, and these costs were based on a
combination of hourly rates and fixed fees for specific items of work.
The Committee does not have a formal policy of subjecting its
remuneration consultants to a regular fixed-term rotation, although
the Committee remains cognisant of the need to seek objective advice
and good value whilst also benefiting from the consultants’ knowledge
of the Company. Other than described above, neither remuneration
consultants have other connections with the Company or its Directors.
The Committee is satisfied that the advice it has received during 2022
has been objective and independent.
Summary of the Committee’s Terms of Reference
The Terms of Reference of the Remuneration Committee, available in full
on the Company’s website, are summarised below:
• determine and agree with the Board the framework or broad policy
for the remuneration of the Chair of the Board, the executive Directors
and other members of the executive management as it is designated
to consider;
• within the terms of the agreed Policy and in consultation with the Chair
of the Remuneration Committee and/or Group Chief Executive Officer,
as appropriate, determine the total individual remuneration package of
the Chair of the Board, each executive Director, and other designated
senior executives including bonuses, incentive payments and share
options or other share awards;
• approve the design of, and determine targets for, any performance
related pay plans operated by the Company and approve the total
annual payments made under such plans;
• review the design of all share incentive plans for approval by the Board
and shareholders. For any such plans, determine each year whether
awards will be made and, if so, the overall amount of such awards, the
individual awards to executive Directors, and other designated senior
executives and the performance targets to be used; and
• oversee any major changes in employee benefits structures throughout
the Group.
Members
The Remuneration Committee consists entirely
of non-executive Directors.
Member
Celia Baxter – Chair
Susan Brennan
Barbara Jeremiah
Giles Kerr
Ian King
Rajiv Sharma
Mary Waldner
Number of
meetings during
term(1)
Number of
meetings
attended
5
5
5
5
5
5
5
5
5
5
5
5
5
5
(1) The full Committee met five times in 2022. In addition, authority was delegated to
two members of the Committee, Celia Baxter and Ian King, to hold one additional
meeting to confirm the granting and vesting of share awards.
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GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED
Principal activities and matters addressed during 2022
The Committee has a calendar of standard items within its remit and in addition it held in-depth discussions on specific topics during the year.
The Committee typically meets four times each year. In addition, authority was delegated to two members of the Committee, Celia Baxter and
Ian King, to hold one additional meeting to confirm the grant and vesting of share awards. The table below shows the items considered at each
meeting, leading up to the meetings in February and March where the key decisions regarding performance, outcomes and grants for the
coming year are determined.
Standard agenda items
Ad hoc items
January
February
March
September
Preliminary review of performance and outcomes under the Annual Bonus and Deferred
Bonus Award.
Preliminary Review of performance and vesting under long-term incentives.
Discuss incentive structure and targets for the 2022 financial year.
Review of performance and outcomes under the Annual Bonus and Deferred Bonus Award.
Review of performance and vesting under long-term incentives.
Determine incentive structure for the 2022 financial year including finalisation of targets.
Review and approve draft Remuneration Report.
Confirmation of grants of LTIP, Deferred Bonus Awards and Restricted Share Awards.
Confirmation of vestings of Deferred Bonus Awards and Restricted Share Awards.
December
(two meetings)
Review and approval of Directors’ and senior managers’ salary and total remuneration
packages for the following financial year taking into consideration available salary market data.
Performance update on outstanding incentive and bonus awards.
Discussion on 2023 LTIP and bonus targets; and associated shareholder consultation.
Determine remuneration of Chairman.
Review of Committee’s Terms of Reference.
Review gender pay gap reporting
and CEO Pay Ratio.
Discuss options relating to the existing
share-based executive award plans,
and current shareholder thinking and
topical matters, including the use of
ESG targets.
Review feedback from UK
employee consultation.
Statement of voting at General Meeting
At the AGM held on 21 April 2022, shareholder votes on the Directors’ Remuneration Report were cast as follows:
Remuneration Report
Voting
Votes
%
For
Against
Total
Withheld(1)
308,019,668
91.07%
30,221,012
8.93%
338,240,680
100%
6,954,222
N/A
(1) A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast “For” and “Against” a resolution.
Reason for vote
against, (if known)
Action taken by
Committee
See below
N/A
The Committee consulted extensively with shareholders prior to the 2022 AGM concerning executive remuneration. A large proportion of the votes
cast against the Remuneration Report related to a single large shareholder's objection to a Total Shareholder Return performance condition being
included in the executive Directors’ LTIP awards. A TSR performance condition has been used in executive Directors’ LTIP awards for many years, in
conjunction with the EPS and (since the 2021 awards) Return of Capital Employed performance conditions. The Remuneration Committee considers
these performance metrics provide an appropriate balance of targets to properly incentivise the executives to deliver long-term value for shareholders.
The Committee will continue to review the suitability of these and other potential performance conditions in advance of the granting of each year’s
LTIP awards.
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Single total figure of remuneration (Audited information)
The following table shows a single total figure of remuneration in respect of qualifying service for the 2022 financial year for each Director, together
with comparative figures for 2021. Aggregate Directors’ emoluments are shown at the end of the Single Total Figure of Remuneration section.
Salaries and
fees
£000s
Taxable benefits
and allowances(1)
£000s
Bonus(2)
£000s
Long-term
incentives(3)
£000s
Pension benefits
including cash in
lieu of pension
£000s
Total fixed
remuneration
£000s
Total variable
remuneration
£000s
Total
£000s
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2022
2022
2021
557
379
936
197
73
55
55
64
55
55
554
540
361
901
191
71
53
–
62
53
4
434
24
12
36
2
–
–
–
–
–
–
2
27
22
49
696
474
675
451
1,170 1,126
1
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0
0
0
–
–
–
–
–
–
–
–
0
0
0
–
–
–
–
–
–
–
–
111
76
187
108
72
180
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
692
467
1,159
199
73
55
55
64
55
55
556
696
474
1,170
1,388 1,350
906
2,329 2,256
941
–
–
–
–
–
–
–
–
199
73
55
55
64
55
55
556
192
71
53
–
62
53
4
435
Executives
David Squires
Bindi Foyle
Total remuneration
Non-executives
Ian King (Chairman)
Celia Baxter
Susan Brennan
Barbara Jeremiah(5)
Giles Kerr
Rajiv Sharma
Mary Waldner(5)
Total remuneration
(1) Taxable benefits for executive Directors include the provision of a fully expensed company car or car allowance and private medical insurance. Taxable benefits for non-executive
Directors are travel expenses.
(2) Awards for the deferred share element of the Bonus in respect of 2022 performance will be granted following the announcement of the 2022 results. The deferred bonus
element that is to be granted in the form of shares to David Squires and Bindi Foyle following the announcement of the 2022 results, is included in the Bonus figure and will
be equivalent in value to one-third of the Bonus figure, namely £232,083 and £157,917 respectively.
(3) The performance conditions attached to David Squires’ and Bindi Foyle’s 2020 LTIP Awards were not achieved, and this award will lapse in March 2023. Further details on
the performance conditions can be found on page 111.
(4) The aggregate amount of remuneration paid to or receivable by Directors in respect of qualifying services as per paragraph 9 of SI 2008/40 Schedule 5 was £2,696,061.
(5) Mary Waldner was appointed to the Board on 1 December 2021 and her 2021 fee is the amount paid from that date. Barbara Jeremiah was appointed to the Board on
1 January 2022.
Fees received for outside appointments
The Board supports executive Directors taking up appointments outside the Company to broaden their knowledge and experience. Each executive
Director is permitted to accept one non-executive appointment from which they may retain any fee. Any external appointment must not conflict with
a Director’s commitments to Senior plc.
David Squires does not hold any outside appointments for which he is remunerated. Bindi Foyle was appointed to the Board of Avon Protection plc
as a non-executive director with effect from 1 May 2020 and retained fees of £60,000 for the year ending 31 December 2022 (£59,205 for the year
ended 31 December 2021). Prior to her taking up this appointment, the Nominations Committee considered the time commitment required for this
new role and was supportive of her taking up that appointment.
Annual fees of non-executive Directors
The non-executive Directors do not participate in any pension, bonus, share incentive or other share option plans. Their remuneration reflects both
the time given and the contribution made by them to the Company’s affairs during the year, including membership or chairing of the Board or its
Committees. The remuneration of the non-executive Directors is determined by the Board of Directors. The non-executive Directors do not participate
in any discussion or decisions relating to their own remuneration.
Having considered Senior’s financial performance, the then current market conditions experienced by the Group and its 2022 outlook, the Board
agreed that the salaries and fees paid to the Directors would increase in 2022 as follows:
Fees
Chairman
Non-executive Director
Chair of Audit Committee
Chair of Remuneration Committee
Senior Independent Director
2022
£
197,000
54,500
9,000
9,000
9,000
2021
£
Percentage
change
191,000
53,000
9,000
9,000
9,000
3.14%
2.83%
0%
0%
0%
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Senior managers’ emoluments
In addition to setting the remuneration of the executive Directors, the Remuneration Committee oversees the remuneration of other senior managers.
The table below shows the cumulative benefits of the two Divisional CEOs, the two Divisional CFOs and the most senior corporate managers. For the
purpose of valid comparison, the benefits and payments that had been made to one of the senior corporate managers who had retired in December
2021 and was not replaced in 2022, have been excluded from the prior year comparator.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total
2022
Total
£000s
3,325
55
1,356
4,736
2021
Total
£000s
2,926
42
881
3,849
Performance against performance targets for annual bonus (audited information)
Bonuses are earned by reference to the financial year and paid in March following the end of the financial year. Consistent with recent years, the
bonuses accruing to the executive Directors in respect of 2022 have been determined by Adjusted EPS and Free Cash Flow performance as set out
in the table below. The acquisition of Spencer Aerospace completed on 25 November 2022; the Committee determined that this acquisition had no
material impact on the achievement of the maximum thresholds of the Free Cash Flow and Adjusted EPS targets and that no adjustment to the 2022
bonus payments was required.
A summary of the measures, weightings and performance achieved is provided in the table below:
Threshold
Target Maximum
2022
2021
Actual
achieved
Maximum
bonus
achievable
Percentage
of maximum
achieved
Bonus
payable
(% of 2022
salary)(1)
Maximum
bonus
achievable
Percentage
of maximum
achieved
£4.0m £6.0m £15.0m £27.7m 50.00%
100%
50%
50.00% 100.00%
Bonus
payable
(% of 2020
salary)(1)
50%
2.63p
2.91p
3.56p
3.88p
75.00%
125.00%
100%
100%
75%
75.00% 100.00%
125% 125.00% 100.00%
75%
125%
Free Cash Flow targets – full year
Adjusted EPS targets(2) – full year
internal target
Totals
(1)
When bonus is payable, this is paid two-thirds in cash and one-third in deferred shares. The deferred share element of the 2021 bonus was awarded on 8 March 2022 based on
a share price of £1.21 and shall ordinarily vest on the third anniversary of the award on 8 March 2024. The deferred element of any 2022 bonus shall be awarded following the
announcement of the 2022 annual results in 2023 and the details disclosed in the 2023 Remuneration Report.
(2) The internal Adjusted EPS target is calculated on a constant currency basis.
Total pension entitlements (audited information)
The 2022 single figure remuneration for pension benefits for David Squires and Bindi Foyle consisted of a cash allowance of £111,400 (2021 –
£108,000) and £75,800 (2021 – £72,200) respectively, this being 20% of the respective base salaries.
The pension contributions or pension allowance for executive Directors were reduced to 15% from the end of 2022 which aligns with the pension
contribution available to the majority of the UK workforce.
Further detail may be found on page 115 of the Remuneration Report: Policy section.
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Payments for loss of office (audited information)
There were no payments made in the year for loss of office.
Performance against performance conditions for LTIP vesting
The performance conditions are set out below.
By reference to performance in the financial year (audited information)
Set out below are the performance conditions attached to the 2020 LTIP award. Neither performance condition was achieved and therefore the 2020
LTIP awards shall lapse in full.
Performance condition
Total shareholder return percentile ranking (50% of Award)
Adjusted earnings per share for the final Financial Year of the
Performance Period (50% of Award)
Target
(25% vesting)
Maximum
(100% vesting)
50th
75th
Actual
24th
13.5p
16.5p
4.36p
Percentage
of total award
achieved
0%
0%
Scheme interests awarded during the financial year (audited information)
Directors
David Squires(1)
Bindi Foyle(1)
Scheme
LTIP
LTIP
Basis of award
Annual award
Annual award
Face value
£000s
Percentage vesting
at threshold
performance
836
569
25%
25%
Number of
shares
690,495
469,834
Performance period
end date
31 December 2024
31 December 2024
(1) The face value of the awards represented 150% of the executive Directors’ respective 2022 base salaries.
Current position on outstanding LTIP awards (non-audited information)
The following table shows the current position against performance targets for LTIP awards outstanding from 2021 and 2022.
Performance condition
(25% vesting)
(100% vesting)
Actual to date
(25% vesting)
(100% vesting)
Actual to date
Threshold
Maximum
Threshold
Maximum
Conditional share awards granted in 2022
Conditional share awards granted in 2021
Total shareholder return ranking
Adjusted EPS performance for
the final Financial Year of the
performance period
Return on Capital Employed
50th percentile 75th percentile 52nd percentile
50th percentile
75th percentile
98th percentile
10.05p
10.0%
12.35p
13.5%
4.36p(2)
4.7%(4)
5.67p
9.8%
7.56p
11.0%
4.36p(1)
4.7%(3)
(1) Actual to date figure of 4.36p represents the Adjusted EPS during the first two years of the three-year performance period for the 2021 LTIP award.
(2) Actual to date figure of 4.36p represents the Adjusted EPS during the first year of the three-year performance period for the 2022 LTIP award.
(3) Actual to date figure of 4.7% represents the Return on Capital Employed during the first two years of the three-year performance period for the 2021 LTIP award.
(4) Actual to date figure of 4.7% represents the Return on Capital Employed during the first year of the three-year performance period for the 2022 LTIP award.
To ensure a suitably broad peer group, the TSR comparator group applicable to LTIP awards is the FTSE 350 index, excluding sectors with limited
direct relevance to Senior and those exhibiting high volatility. TSR is averaged over three months prior to the start and end of the performance period.
The acquisition of Spencer Aerospace completed on 25 November 2022; the Committee reviewed the potential impact of the acquisition on the three
performance targets for the outstanding LTIP awards: Total Shareholder Return; Earnings per Share; and, for the awards granted in 2021 and 2022,
Return on Capital Employed, and agreed that the original targets for the outstanding LTIP awards should remain unaltered.
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Shareholder dilution
Percentage of issued shares
Discretionary
schemes
(maximum 5%)
All schemes
(maximum 10%)
2.85%
2.15%
Shares awarded as % of issued shares
Headroom
3.57%
6.43%
The Company complies with the dilution guidelines contained within The Investment Association Principles of Executive Remuneration.
At 31 December 2022, awards outstanding and shares issued in the previous 10 years under the Senior plc 2005 Long-Term Incentive Plan (the 2005
LTIP), the Senior plc 2014 Long-Term Incentive Plan (the 2014 LTIP), and the 2006 Savings-Related Share Option Plan (the Sharesave Plan)) amounted
to 3.57% of the issued ordinary share capital of the Company. At 31 December 2022, awards outstanding and shares issued in the previous 10 years
under executive (discretionary) plans (the 2005 LTIP and 2014 LTIP) amounted to 2.85% of the issued ordinary share capital of the Company.
During 2022, all share awards were satisfied using market-purchased shares. The Remuneration Committee monitors the flow rates of the Company’s
share plans, in particular before new share awards are made, to ensure the flow rates remain within the Investment Association dilution guidelines.
Statement of Directors’ shareholding and share interests (audited information)
The Remuneration Committee encourages Directors to own shares in the Company and, in support of this policy, it expects executive Directors
to retain at least 50% of the shares that vest under the LTIP awards and the deferred share element of the Bonus, after allowing for tax liabilities,
until a shareholding equivalent in value to 200% of base salary is built up. Included within the Directors’ holdings are 325,000 shares and 38,788
shares that David Squires and Bindi Foyle purchased respectively.
The table below shows how each Director complies with this requirement. Shares are valued using the Company’s closing share price on
31 December 2022 of 125.2p (31 December 2021 – 147.03p). No options under the Sharesave Plan were exercised by the executive Directors
during the year.
Executive Directors
David Squires
Bindi Foyle
Number of shares
required to be held
(equivalent to 200%
of basic salary at 31
December 2022)
Number of shares
held (including
unvested deferred
shares net of tax) at
31 December 2022
889,776
605,431
809,003
354,843
Unvested awards, subject to
performance conditions
Unvested awards, not subject
to performance conditions
Share ownership
requirements met
No – 90.9%
No – 58.6%
LTIP award(1)
Sharesave
1,891,412
1,272,669
0
0
Total deferred
share award
355,940
237,785
(1) The minimum thresholds were not reached for the two performance conditions attached to David Squires’ and Bindi Foyle’s 2020 LTIP awards over 482,832 shares,
and 322,782 shares respectively (included within their respective LTIP award figures above) and therefore these awards shall lapse in full in March 2023.
The interests of Directors have remained unchanged between the date of the review and the date of the signing of the Annual Report and Accounts.
Executive Directors
David Squires
Bindi Foyle
Non-executive Directors
Ian King
Celia Baxter
Susan Brennan
Barbara Jeremiah(2)
Giles Kerr
Rajiv Sharma
Mary Waldner
Number of shares
owned outright
(including connected
persons) at
1 January 2022
Shares vested
during 2022(1)
Shares retained
from 2022
vested shares
Shares purchased
during 2022
Number of shares
owned outright
(including connected
persons) at
31 December 2022
512,125
202,887
514,297
31,653
5,900
–
10,000
–
–
73,230
49,013
73,230
25,930
–
–
–
–
–
–
–
–
–
–
–
–
–
–
35,000
–
300,000
–
–
25,000
–
–
10,000
620,355
228,817
814,297
31,653
5,900
25,000
10,000
–
10,000
(1) In 2022, the following gains were made by David Squires and Bindi Foyle: £90,122 and £60,319 respectively upon the vesting of the deferred share element of the Bonus and
dividend equivalent shares. The gains were calculated by multiplying the number of shares that vested by the average share price secured by all recipients that sold vested
shares on the vesting day of 8 March 2022 of 123.07p.
(2) Barbara Jeremiah was appointed to the Board on 1 January 2022.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
125
GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED
Performance graph
Share price performance
The closing middle market price of the shares at 31 December 2022 was 125.2p (2021 – 147.03p). During 2022, the shares traded in the range
of 111.0p to 152.1p.
Senior plc total shareholder return
The following TSR graph compares the total shareholder return of the Company’s shares against the FTSE All-Share, Aerospace & Defence index,
and the FTSE 250 Index over a ten-year period (where dividends are included gross of tax). This graph allows a comparison to be made against
organisations facing broadly similar economic and market conditions as the Company.
Senior
FTSE250
FTSE All-Share A&D
300
250
200
150
100
50
0
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Source: Refinitiv Eikon Datastream
Remuneration of Group Chief Executive Officer
CEO single figure of total remuneration (£000s)
Annual variable element award rates against maximum
opportunity (%)
Long-term incentive vesting rates against maximum
opportunity (%)
2013
2014
2015(1)
1,726
1,316
1,020
65
54
100
91.8
14
21
2016
790
31
0
2017
2018(2)
2019
1,009
1,107
1,203
2020
917
2021
2022
1,350
1,388
79
0
75
0
58
28
40
100
100
0
0
0
(1) During 2015, Mark Rollins retired from the Board on 31 May 2015 and David Squires was appointed a Director on 1 May 2015. The CEO single figure of total remuneration
includes the combined 2015 values for Mark Rollins and David Squires.
(2) The annual variable maximum bonus opportunity increased from 105% to 125% in 2018.
Percentage change in remuneration of Directors
The table below shows how the percentage changes in Directors’ salary, benefits and bonus between 2020 and 2021 and between 2021 and 2022
compare with the percentage change in the average of each of those components of pay for Senior plc employees. During 2020, the executive
Directors, the Chair and the non-executive Directors voluntarily reduced their salaries and fees by 20% for a three-month period in recognition of the
disruption caused by the pandemic. The percentage change of Salary figures in the table below are calculated using the 2020 salaries before the
voluntary reduction in salaries and fees for the Directors and some Senior plc employees. Employees who joined or left in either year have been
excluded to prevent distortion.
Executive Directors
David Squires
Bindi Foyle
Non-executive Directors
Ian King
Celia Baxter
Susan Brennan
Barbara Jeremiah(3)
Giles Kerr
Rajiv Sharma
Mary Waldner(3)
Senior plc Employees, excluding Directors
2021 vs 2022
Taxable
benefits and
allowances
Salary
2020 vs 2021
Bonus
Salary
Taxable benefits
and allowances
Bonus
Percentage
change(1)
Percentage
change(2)
Percentage
change
Percentage
change(1)
Percentage
change
Percentage
change
3.2%
5.0%
3.1%
2.1%
2.8%
N/A
2.4%
2.8%
N/A
6.7%
-12.3%
-44.3%
–
–
–
–
–
–
–
7.0%
3.2%
5.0%
–
–
–
–
–
–
–
6.7%
0%
0%
0%
0%
0%
N/A
0%
0%
N/A
3.3%
3.4%
4.8%
–
–
–
–
–
–
–
2.0%
150.0%
150.0%
–
–
–
–
–
–
–
158.6%
(1) The Salary Percentage change figure also includes any merit increases awarded to Directors and employees.
(2) Bindi Foyle’s Taxable benefits and allowances reflects the transition from having a car allowance to having a company car during 2022.
(3) Mary Waldner was appointed to the Board on 1 December 2021 and Barbara Jeremiah was appointed to the Board on 1 January 2022.
126
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED
CEO Pay Ratio narrative
The CEO Pay Ratio is calculated using Option B, by taking the gender pay gap data (based on Senior’s largest UK employer, Senior UK Limited) and
adding the data for Senior’s two additional UK employing entities. For the purpose of making a valid comparison, leavers were excluded. Using the
same principles as the gender pay data, the best equivalents were identified, namely: the 25th, 50th and 75th percentile. The full-time equivalents
pay and benefits figures for the year ending December 2022 were calculated, and then reviewed to ensure that the selected best equivalents were
reasonably representative. The modest change compared to prior year was mainly due to the increase in the number of employees receiving a bonus
during 2022.
Year
2022
2021
2020(2)
2019
Pay ratio
Method(1) 25th percentile
50th percentile
75th percentile
B
B
B
B
51 : 1
53 : 1
25 : 1
53 : 1
44 : 1
49 : 1
20 : 1
39 : 1
36 : 1
33 : 1
16 : 1
32 : 1
(1) Method B was selected as the most appropriate basis for selecting the 25th percentile, median and 75th percentile pay ratios because the Gender Pay Gap data was more
readily available.
Year 2022
Base salary
Total
25th percentile 50th percentile
75th percentile
£21,286
£27,392
£24,801
£31,484
£33,910
£38,692
Relative importance of spend on pay
The following table sets out the percentage change in profit, dividends and overall spend on pay in the financial year ended 31 December 2022
compared with the financial year ended 31 December 2021.
Employee remuneration costs (excluding social security)(1)
Adjusted profit/ (loss) before tax
Dividends paid
2022
£m
234.7
20.1
1.2
2021
£m
198.9
(1.9)
–
Percentage
change
18.0%
1,158%
N/A
(1) The 2021 Employee Remuneration costs include those incurred by Senior Aerospace Connecticut during the period until its disposal in April 2021.
2023 Remuneration (non-audited information)
Salaries and fees for 2023
Recognising the impact of high rates of inflation, Senior has taken steps to help the broader workforce including salary settlements that reflected
regional costs of living pressures. The impact of this has been particularly felt by our more junior employees and therefore although approaches vary
between businesses, these employees have been targeted for higher salary increases or other initiatives, more broadly described in the Chair's Annual
Statement on page 108. When determining the 2023 basic salaries of the Group Chief Executive Officer and Group Finance Director, which were
increased by 5.4% and 5.5% respectively, the Committee was cognisant of the increases applied to the wider UK workforce, which were typically 6%
or higher, depending upon skills and geographic location.
Although determined by the Board, rather than the Remuneration Committee, the 2023 fees for the Non-executive Directors were increased by 5.5%
and had been determined after considering the increasing time commitment of the non-executive Directors, and the increases applied to the wider UK
workforce, and to those for the executive Directors. The fees for the roles of the Chairs of the Audit and Remuneration Committees and for the Senior
Independent Director were last increased in 2016.
G
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2
2
R
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P
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:
A
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Executive Directors
David Squires
Bindi Foyle
Non-executive Directors(1)
Chairman
Non-executive Directors
Chair of Audit Committee
Chair of Remuneration Committee
Senior Independent Director
Director with responsibility for employee engagement(2)
2023
£
2022
£
Percentage
change
587,000
400,000
208,000
57,500
10,000
10,000
10,000
6,000
557,000
379,000
197,000
54,500
9,000
9,000
9,000
–
5.39%
5.54%
5.58%
5.50%
11.11%
11.11%
11.11%
N/A
(1) No additional fees are payable for Committee membership.
(2) The Committee considered the significant time commitment required of the non-executive Director with designated responsibility for employee engagement and determined
that it would be appropriate for a fee of £6,000 p.a. be paid for this role with effect from 1 January 2023.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
127
GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED
Annual bonus for 2023
The maximum bonus opportunity remains unchanged for the 2023 annual bonus and is 125% of basic salary, with two-thirds payable in cash
and one-third in deferred shares. The individual weightings of the KPIs for the executive Directors for the annual bonus are set out below.
Free Cash Flow target – full year
Adjusted EPS target – full year internal target
Totals
2023
2022
Maximum possible
cash award
Maximum share
award
33.33%
50.00%
83.33%
16.67%
25.00%
41.67%
Maximum
possible cash
award
Maximum share
award
33.33%
50.00%
83.33%
16.67%
25.00%
41.67%
The actual targets are currently considered commercially sensitive because of the information that this provides to the Company’s competitors.
Full disclosure of the 2023 targets will be in the 2023 Annual Report.
LTIP Awards for 2023
Senior’s markets have been impacted by a number of external events since the grounding of the Boeing 737 Max, the effects on profitability
have been huge. We remain confident on the resilience and recovery of these markets and our ability to recover profitability from our products
and technology over the medium term. This rationale was the reason behind why the Board rejected the Lone Star bid as it was not good value
for our shareholders. In order to deliver on this commitment we need to retain and motivate the leaders through this key period of recovery.
Senior has a decentralised business model, comprised of discrete business units run by senior managers each with their own profit and loss account.
These senior managers are key to our success and to meet our aspirations we will require a stable and highly motivated leadership team. The LTIP
is an important tool to achieve this, ensuring the ongoing recovery is built on and outperformance delivered.
The Remuneration Committee intends to provide a special long-term incentive to drive material outperformance through the next stage of the
recovery, by enhancing the LTIP for 2023 by granting awards at higher than normal levels to all participants in the LTIP (approximately 50 senior
leaders), with awards granted at a value that will typically be one-third higher than granted in 2022. For the executive Directors, this means they
will receive LTIP awards at a level of 200% of basic salary, up from the normal level of 150%.
We have also considered the LTIP proposal, and executive Directors’ remuneration more broadly, very carefully in the context of the remuneration
of the wider workforce. As noted above, a key feature of the proposal is its application to all LTIP participants, ensuring consistency across the senior
executive population. Given Senior’s decentralised nature, it is important that we align all leaders with a consistent award structure and set of targets
which focuses them on the performance of the overall Group. More broadly, the Committee has reflected on the specific challenges facing the wider
workforce in an environment when inflation has returned and many are experiencing cost-of-living pressures, as outlined above.
Adjusted EPS, TSR and ROCE metrics will be retained as the performance measures in the LTIP and have equal weighting of 33.3%: 33.3%: 33.3%.
The Adjusted EPS target has been set to be stretching and challenging. The target is expressed as absolute growth achieved in 2025 compared to
2022. TSR performance will continue to be measured against the FTSE 350 (excluding companies in the following sectors: Banks; Financial Services
(other than Closed End Investments); Life and Non-life Insurance; Oil, Gas & Coal; Precious Metals & Mining; Industrial Support Services; and Real
Estate Investment Services and Trusts). The excluded sectors remain the same to those used in previous years. The Company has consistently stated
that its medium-term ROCE target is a minimum of 13.5% pre-tax, post IFRS 16 and this has not changed. The ROCE targets set for the 2023 LTIP
award have been increased from those set in 2022 to reflect where we are on our recovery. The targets are set at a stretching level that takes account
of market conditions and the minimum medium-term target.
The Thresholds and Maximum for 2022 and 2023 are set out in the table below:
Return on Capital Employed
Total Shareholder Return ranking
Adjusted earnings per share
2023
2022
Weighting
(%)
33.33%
33.33%
33.33%
Threshold
(25% vesting)
Maximum
(100% vesting)
Weighting
Threshold
(%)
(25% vesting)
Maximum
(100% vesting)
12.5%
Median
or higher
11.77p
17.0%
Upper quintile
or higher
18.5p
33.33%
33.33%
33.33%
10.0%
Median
or higher
10.05p
13.5%
Upper quartile
or higher
12.35p
Approval of the Directors’ Remuneration Report
The Directors’ Remuneration Report was approved by the Board on 24 February 2023.
Signed on behalf of the Board
Celia Baxter
Chair of the Remuneration Committee
24 February 2023
128
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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STATEMENT OF DIRECTORS’
RESPONSIBILITIES IN RESPECT
OF THE ANNUAL REPORT AND
THE FINANCIAL STATEMENTS
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Parent Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of
the Parent Company and enable them to ensure
that its Financial Statements comply with the
Companies Act 2006. They are responsible
for such internal control as they determine is
necessary to enable the preparation of Financial
Statements that are free from material
misstatement, whether due to fraud or error,
and have general responsibility for taking such
steps as are reasonably open to them to
safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing a
Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate
Governance Statement that complies with
that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the corporate and
financial information included on the Company’s
website. Legislation in the UK governing the
preparation and dissemination of Financial
Statements may differ from legislation in
other jurisdictions.
Responsibility statement of the Directors
in respect of the annual financial report
We confirm that to the best of our knowledge:
• the Financial Statements, prepared in
accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilities, financial position
and profit or loss of the Company and the
undertakings included in the consolidation
taken as a whole; and
• the Strategic Report includes a fair review of
the development and performance of the
business and the position of the issuer and
the undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face.
We consider the Annual Report and Accounts,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s position and performance, business
model and strategy.
David Squires
Group Chief Executive Officer
24 February 2023
Bindi Foyle
Group Finance Director
24 February 2023
The Directors are responsible for preparing
the Annual Report and the Group and Parent
Company Financial Statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare
Group and Parent Company Financial
Statements for each financial year. Under that
law they are required to prepare the Group
Financial Statements in accordance with
UK-adopted international accounting standards
and applicable law and have elected to prepare
the Parent Company Financial Statements in
accordance with UK accounting standards
and applicable law, including 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 Group and Parent
Company and of the Group’s profit or loss for
that period. In preparing each of the Group
and Parent Company Financial Statements,
the Directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable, relevant, reliable and prudent;
• for the Group Financial Statements, state
whether they have been prepared in
accordance with UK-adopted international
accounting standards;
• for the Parent Company Financial Statements,
state whether applicable UK accounting
standards have been followed, subject to any
material departures disclosed and explained
in the Parent Company Financial Statements;
• assess the Group and Parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting
unless they either intend to liquidate the
Group or the Parent Company or to cease
operations, or have no realistic alternative
but to do so.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
129
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SENIOR PLC
1. Our opinion is unmodified
We have audited the financial statements of
Senior plc (“the Company”) for the year ended
31 December 2022 which comprise the
Consolidated Income Statement, the
Consolidated Statement of Comprehensive
Income, Consolidated and Company Balance
Sheet, Consolidated and Company Statement
of Changes in Equity, Consolidated Cash Flow
Statement and the related notes, including
the accounting policies in note 2.
In our opinion:
• the financial statements give a true and fair
view of the state of the Group’s and of the
parent Company’s affairs as at 31 December
2022 and of the Group’s profit for the year
then ended;
• the Group financial statements have
been properly prepared in accordance
with UK-adopted international
accounting standards;
• the parent Company financial statements
have been properly prepared in accordance
with UK accounting standards, including FRS
101 Reduced Disclosure Framework; and
• the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit
evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit
opinion is consistent with our report to the
audit committee.
We were first appointed as auditor by the
shareholders on 21 April 2017. The period of
total uninterrupted engagement is for the
6 financial years ended 31 December 2022.
We have fulfilled our ethical responsibilities
under, and we remain independent of the Group
in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied
to listed public interest entities.
Apart from the matter noted below, we have
not performed any non-audit services during
the year ended 31 December 2022 or
subsequently which are prohibited by the
FRC Ethical Standard.
In early 2023, we identified that a KPMG
member firm had provided preparation of local
GAAP financial statement services over the
period 2018 to 2022 to an entity which was
a residual component and therefore not in
scope for the group audit. The services, which
have been terminated, were administrative in
nature and did not involve any management
decision-making or bookkeeping. The work
in each case had no direct or indirect effect on
Senior plc’s consolidated financial statements.
In our professional judgment, we confirm that
based on our assessment of the breach, our
integrity and objectivity as auditor has not been
compromised and we believe that an objective,
reasonable and informed third party would
conclude that the provision of this service
would not impair our integrity or objectivity for
any of the impacted financial years. The audit
committee have concurred with this view.
Overview
Materiality:
Group financial
statements as
a whole
£3.2m (2021: £3.2m)
0.4% (2021: 0.5%) of
Group revenue
Coverage
• 75%(2021: 72%) of Group revenue
• 80%(2021: 89%) of Total losses/profit
before tax
• 84%(2021: 82%) of Group total assets
Key audit matters
vs 2021
Event driven
• New:
Recurring risks
Business
combination
accounting
• Provision for
uncertain tax
positions
• Recoverability
of the Parent
Company’s
investment in
its subsidiary
130
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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2. Key audit matters: our assessment
of risks of material misstatement
Key audit matters are those matters that,
in our professional judgement, were of
most significance in the audit of the financial
statements and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) identified by us,
including those which had the greatest effect
on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts
of the engagement team. We summarise below
the key audit matters, in decreasing order of
audit significance, in arriving at our audit opinion
above, together with our key audit procedures to
address those matters and, as required for
public interest entities, our results from those
procedures. These matters were addressed,
and our results are based on procedures
undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements
as a whole, and in forming our opinion thereon,
and consequently are incidental to that opinion,
and we do not provide a separate opinion on
these matters.
Business combination accounting
Valuation of intangible assets acquired of
£31m and contingent consideration of
£28.7m in respect of Spencer Aerospace
Manufacturing LLC (“Spencer Aerospace”)
(2021: £nil).
Refer to the Audit Committee Report in
the Governance section on pages 105,
Note 2 (significant accounting policies) and
Note 31 (acquisition and disposal activities).
The risk
Subjective estimate
The acquisition of Spencer Aerospace on
25 November 2022 required the net assets
acquired to be recorded at fair value and for
intangible assets to be separately identified
from goodwill.
Estimation was required to value the part of
the consideration paid that was contingent
on the future revenue of Spencer Aerospace.
This estimation is dependent on significant
estimates and assumptions management
makes related to the sales forecasts of
Spencer Aerospace.
The fair value of intangible assets acquired
are determined through complex valuation
methods including by forecasting and
discounting future cash flows (based on
assumptions such as growth rates, and
expected revenue opportunities), which
are inherently highly judgemental.
The effect of these matters is that, as part
of our risk assessment, we determined
that the valuation of intangible assets
acquired on acquisition and determination
of the contingent consideration of Spencer
Aerospace contain a high degree of
estimation uncertainty, with a potential range
of reasonably possible outcomes greater
than our materiality as a whole, and possibly
many times that amount.
Our response
Our procedures included:
• Assessing the valuer’s credentials: We evaluated
the competence and independence of the expert
engaged by the Directors and whether they had
been appropriately instructed and were provided
with complete, accurate data on which to base
their valuations.
• Our corporate finance expertise and our sector
knowledge: We evaluated the basis upon
which the Directors identified the intangible
assets acquired. We assessed whether the
measurement basis used to estimate the fair
values of the intangible assets were reasonable,
taking account of our experience of similar
assets in other comparable situations and our
assessment of the work performed by the
third party expert.
• Benchmarking assumptions: We challenged the
appropriateness of discount rates, growth rates,
and expected revenue opportunities which have
been used to value acquired intangible assets
and contingent consideration with reference
to assumptions developed by our own
valuation specialists, post acquisition trading,
and market data.
• Assessing transparency: We assessed whether
the appropriate disclosures have been provided
on the judgements and estimates applied in
arriving at the fair values.
We performed the tests above rather than seeking
to rely on any of the Group’s controls because the
nature of the balance is such that we would expect
to obtain audit evidence primarily through the
detailed procedures described.
Our results
• We found the fair values adopted for the
intangible assets acquired and contingent
consideration to be acceptable.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
131
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SENIOR PLC CONTINUED
Provision for uncertain tax positions
The Group recorded a provision for
uncertain tax position totalling £16.2m
as at 31 December 2022 (2021: £16.7m)
Refer to the Audit Committee Report in
the Governance section on pages 105,
Note 2 (significant accounting policies)
and Note 21 (tax balance sheet).
Recoverability of the Parent Company’s
investment in its subsidiary
The parent Company recorded an
investment carrying value of £259.9m as
at 31 December 2022 (2021: £259.9m).
Refer to Note 36 (accounting policies)
and Note 38 (financial disclosures) and
Parent Company Balance Sheet.
The risk
Our response
Subjective estimate
The Group operates in a number of different
tax jurisdictions and judgment is required to
determine tax provisions across the Group,
principally in the US.
Determination of provisions for tax
uncertainties is subject to judgment in
assessing the probable outflow of taxes that
will be borne by the entity relating to matters
where the relevant tax authority’s final
assessment of the tax treatment is uncertain.
The tax risk provisions held in connection
with transfer pricing, including inter-company
royalty charges, is a key risk due to its size
and the subjective nature of the arm’s length
basis to which the pricing should adhere to.
The effect of these matters is that, as part of
our risk assessment, we determined that the
provision for uncertain tax positions has a
high degree of estimation uncertainty, with a
potential range of reasonable outcomes
greater than our materiality for the Financial
Statements as a whole. The Financial
Statements (Note 21) disclose the range
estimated by the Group.
Low risk, high value:
The carrying amount of the Parent
Company’s investment in its subsidiary
represents 59% of its total assets. Its
recoverability is not at a high risk of
significant misstatement or subject to
significant judgment. However, due to its
materiality in the context of the Parent
Company Financial Statements, this is
considered to be the area that had the
greatest effect on our overall Parent
Company audit.
Our procedures included:
• Our tax expertise: We have used our own tax
specialists to assess the Group’s tax positions,
the Company’s correspondence with the relevant
tax authorities, and to analyse and challenge the
assumptions used to determine provisions for tax
uncertainties. This is based on our knowledge
and experiences of the application of the tax
legislation, and our understanding of the
production activities at the sites where royalty
charges are applied. We challenged the Directors
on the adequacy of the Group’s provision for
transfer pricing risks particularly arising in the US.
• Assessing transparency: We assessed the
adequacy of the Group’s disclosures in respect of
tax and uncertain tax positions and the range of
possible outcomes.
We performed the tests above rather than seeking
to rely on any of the Group’s controls because the
nature of the balance is such that we would expect
to obtain audit evidence primarily through the
detailed procedures described.
Our results
• We found the level of provisions for tax
uncertainties to be acceptable. (2021
result –acceptable.)
Our procedures included:
• Tests of detail: We compared the carrying
amount of the investment with the relevant
subsidiary’s draft statutory balance sheet to
identify whether its net assets, being an
approximation of its minimum recoverable
amount, was in excess of its carrying amount
and assessed whether the subsidiary has
historically been profit-making.
We performed the tests above rather than seeking
to rely on any of the Group’s controls because the
nature of the balance is such that we would expect
to obtain audit evidence primarily through the
detailed procedures described.
Our results:
• We found the company’s conclusion that there is
no impairment of its investment in it’s subsidiary
to be acceptable. (2021 result –acceptable.)
3. Our application of materiality and
an overview of the scope of our audit
Materiality for the Group financial statements
as a whole was set at £3.2m (2021: £3.2m),
determined with reference to a benchmark of
Group revenue of which it represents 0.4%
(2021: 0.5%).
We consider total revenue to be the most
appropriate benchmark in 2022 as it provides
a more stable measure year on year than
Group profit before tax.
Materiality for the parent Company financial
statements as a whole was set at £2.9m
(2021: £2.9m), which is the component
materiality for the parent company determined
by the group audit engagement team. This is
lower than the materiality we would otherwise
have determined by reference to parent
Company total assets of which it represents
0.7% (2021: 0.7%).
In line with our audit methodology, our
procedures on individual account balances
and disclosures were performed to a lower
threshold, performance materiality, so as
to reduce to an acceptable level the risk that
individually immaterial misstatements in
individual account balances add up to a material
amount across the financial statements
as a whole.
Performance materiality was set at 75% (2021:
75%) of materiality for the financial statements
as a whole, which equates to £2.4m (2021:
£2.4m) for the Group and £2.2m (2021: £2.2m)
for the parent Company. We applied this
percentage in our determination of performance
materiality because we did not identify any
factors indicating an elevated level of risk.
132
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED Group revenue
£848.4m (2021: £658.7m)
Group materiality
£3.2m (2021: £3.2m)
£3.2m
Whole financial statements
materiality (2021: £3.2m)
£2.4m
Whole financial statements
performance materiality
(2021: £2.4m)
£1.76m
Range of materiality at 14
components (£0.4m-£1.76m)
(2021: £0.4m-£1.76m)
£0.16m
Misstatements reported to the
audit committee (2021: £0.16m)
Revenue
Group materiality
Group revenue
Total profits and losses that
made up Group profit before tax
25%
28%
75%
(2021 – 72%)
51%
72%
24%
20%
11%
80%
(2021 – 89%)
54%
26%
89%
Group total assets
16%
18%
14%
84%
(2021 – 82%)
82%
70%
Full scope for group audit purposes 2022
Specified risk-focused audit purposes 2022
Full scope for group audit purposes 2021
Residual components
We agreed to report to the Audit Committee
any corrected or uncorrected identified
misstatements exceeding £160,000 (2021:
£160,000), in addition to other identified
misstatements that warranted reporting
on qualitative grounds.
Of the Group’s 31 (2021: 30) reporting
components (excluding the Parent Company),
we subjected 10 to full scope audits for group
purposes and 4 to specified risk-focused audit
procedures (2021: 14 combined). The latter
were not individually financially significant
enough to require a full scope audit for group
purposes, but we performed specified
procedures across all material accounts in
line with those components subject to full
scope audit.
The components within the scope of
our work accounted for the percentages
illustrated opposite.
The remaining 25% (2021: 28%) of total Group
revenue, 20% (2021: 11%) of total profits and
losses that made up Group profit before tax
and 16% (2021: 18%) of total Group assets
is represented by 17 (2021: 16) reporting
components, none of which individually
represented more than 5% (2021: 5%) of any
of total Group revenue, total profits and losses
that made up Group profit before tax or total
Group assets. For these components, we
performed analysis at an aggregated group level
to re-examine our assessment that there were
no significant risks of material misstatement
within these.
The Group team instructed component auditors
as to the significant areas to be covered,
including the relevant risks detailed above and
the information to be reported back. The Group
team approved the component materialities,
which ranged from £0.4m to £1.76m (2021:
£0.4m to £1.76m), having regard to the mix
of size and risk profile of the Group across
the components. The work on 10 of the 14
components (2021: 9 of the 14 components)
was performed by component auditors and the
rest, including the audit of the parent Company,
was performed by the Group team.
The scope of the audit work performed was
fully substantive as we did not rely upon the
Group’s internal control over financial reporting.
The Group team visited 5 component locations
in the US and UK to assess the audit risk and
strategy. Video and telephone conference
meetings were also held with these component
auditors and all others that were not physically
visited. At these visits and meetings, the
findings reported to the Group team were
discussed in more detail, and any further
work required by the Group team was then
performed by the component auditor.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
133
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SENIOR PLC CONTINUED
5. Going concern
The directors have prepared the financial
statements on the going concern basis as
they do not intend to liquidate the Group or the
Company or to cease their operations, and as
they have concluded that the Group’s and the
Company’s financial position means that this
is realistic. They have also concluded that there
are no material uncertainties that could have
cast significant doubt over their ability to
continue as a going concern for at least a year
from the date of approval of the financial
statements (“the going concern period”).
We used our knowledge of the Group, its
industry, and the general economic environment
to identify the inherent risks to its business
model and analysed how those risks might
affect the Group’s and Company’s financial
resources or ability to continue operations over
the going concern period. The risks that we
considered most likely to adversely affect the
Group’s and Company’s available financial
resources and/or metrics relevant to debt
covenants over this period were:
• The impact of a global economic downturn
on the Group’s key end markets, including
increasing inflationary pressures;
• The volatility of and disruption to supply chain
affecting critical materials or components; and
• The uncertainty of the recovery following the
impact of COVID-19.
We considered whether these risks could
plausibly affect the liquidity or covenant
compliance in the going concern period by
comparing severe, but plausible downside
scenarios that could arise from these risks
individually and collectively against the level
of available financial resources and covenants
indicated by the Group’s financial forecasts.
We considered whether the going concern
disclosure in Note 2 to the financial statements
gives a full and accurate description of the
Directors’ assessment of going concern,
including the identified risks and dependencies.
We assessed the completeness of the going
concern disclosure.
Our conclusions based on this work:
• we consider that the directors’ use of
the going concern basis of accounting in
the preparation of the financial statements
is appropriate;
• we have not identified, and concur with
the directors’ assessment that there is not,
a material uncertainty related to events or
conditions that, individually or collectively,
may cast significant doubt on the Group’s
or Company’s ability to continue as a going
concern for the going concern period;
• we have nothing material to add or draw
attention to in relation to the directors’
statement in Note 2 to the financial
statements on the use of the going concern
basis of accounting with no material
uncertainties that may cast significant
doubt over the Group and Company’s use
of that basis for the going concern period,
and we found the going concern disclosure
in Note 2 to be acceptable; and
• the related statement under the Listing
Rules set out on page 82 is materially
consistent with the financial statements
and our audit knowledge.
However, as we cannot predict all future events
or conditions and as subsequent events may
result in outcomes that are inconsistent with
judgements that were reasonable at the time
they were made, the above conclusions are
not a guarantee that the Group or the Company
will continue in operation.
4. The impact of climate change on
our audit
We have considered the potential impacts of
climate change on the financial statements as
part of planning our audit.
Climate change impacts the Group in a variety of
ways including the impact of climate risk on the
substitution of existing products and services
with lower emissions options, increased costs
to transition to lower emissions technology
and the impact on useful lives of assets from
physical and obsolescence risks. There is also
potential reputational risk associated with the
Group’s delivery of its climate related initiatives,
and greater emphasis on climate related
narrative and disclosure in the annual report.
As part of our audit we have made enquiries
of management to understand the extent of
the potential impact of climate change risk
on the Group’s financial statements. We have
performed a risk assessment of how the impact
of climate change may affect the financial
statements and our audit. We held discussions
with our own climate change professionals to
challenge our risk assessment, including the
goodwill impairment assessment, the estimates
made regarding useful economic lives of
property, plant and equipment, and the valuation
of inventory, recoverability of trade receivables
and going concern. Taking into account the
extent of headroom on goodwill, the expected
remaining useful lives of property, plant and
equipment, the nature of customers and
products, our assessment is that the climate
related risks to the Group’s business, strategy
and financial planning did not have a significant
impact on our key audit matters given the nature
of the Group’s operations and knowledge gained
of its impact on critical accounting estimates
during our risk assessment procedures
and testing.
We have read the Group’s and the Parent
Company’s disclosure of climate related
information in the front half of the annual report
as set out on pages 30 to 31, and considered
consistency with the financial statements and
our audit knowledge.
134
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED We also performed procedures including:
• Identifying journal entries and other
adjustments to test for all full scope
components based on risk criteria and
comparing the identified entries to supporting
documentation. These included those posted
by senior finance management, those posted
and approved by the same user and those
posted to unusual accounts.
• Assessing whether the judgements made
in making accounting estimates are indicative
of a potential bias.
Identifying and responding to risks of
material misstatement due to non-
compliance with laws and regulations
We identified areas of laws and regulations that
could reasonably be expected to have a material
effect on the financial statements from our
general commercial and sector experience and
through discussion with the Directors (as
required by auditing standards), and discussed
with the Directors the policies and procedures
regarding compliance with laws and regulations.
As the Group is regulated, our assessment
of risks involved gaining an understanding
of the control environment including the
entity’s procedures for complying with
regulatory requirements.
We communicated identified laws and
regulations throughout our team and remained
alert to any indications of non-compliance
throughout the audit . This included
communication from the Group audit team to
full-scope component audit teams of relevant
laws and regulations identified at the Group
level, and a request for full scope component
auditors to report to the Group audit team any
instances of non-compliance with laws and
regulations that could give rise to a material
misstatement at the Group level.
The potential effect of these laws and
regulations on the financial statements
varies considerably.
6. Fraud and breaches of laws and
regulations – ability to detect
Identifying and responding to risks of
material misstatement due to fraud
To identify risks of material misstatement due
to fraud (“fraud risks”) we assessed events
or conditions that could indicate an incentive
or pressure to commit fraud or provide an
opportunity to commit fraud. Our risk
assessment procedures included :
• Enquiring of Directors, the audit committee,
internal audit and inspection of policy
documentation as to the Group’s high-level
policies and procedures to prevent and detect
fraud, including the internal audit function,
and the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of
any actual, suspected or alleged fraud.
• Reading Board and audit committee minutes.
• Considering remuneration incentive schemes
and performance targets for management
and Directors including the long-term
incentive plan for Management remuneration.
• Using analytical procedures to identify any
unusual or unexpected relationships.
We communicated identified fraud risks
throughout the audit team and remained alert
to any indications of fraud throughout the audit.
This included communication from the Group
audit team to full scope component audit teams
of relevant fraud risks identified at the Group
level and request to full scope component audit
teams to report to the Group audit team any
instances of fraud that could give rise to a
material misstatement at the Group level.
As required by auditing standards, and taking
into account possible pressures to meet profit
targets and market consensus, we perform
procedures to address the risk of management
override of controls and the risk of fraudulent
revenue recognition. In particular the risk that
revenue is overstated through recording
revenues in the wrong period and the risk that
Group and component Management may be
in a position to make inappropriate accounting
entries, and the risk of bias in accounting
estimates and judgements such as the
valuation of acquired intangibles, contingent
consideration, provisions for uncertain tax
provisions and pension assumptions.
We did not identify any additional fraud risks.
Firstly, the Group is subject to laws and
regulations that directly affect the financial
statements including financial reporting
legislation (including related companies
legislation), distributable profits legislation,
pension scheme legislation and taxation
legislation, and we assessed the extent of
compliance with these laws and regulations
as part of our procedures on the related
financial statement items.
Secondly , the Group is subject to many other
laws and regulations where the consequences
of non-compliance could have a material effect
on amounts or disclosures in the financial
statements, for instance through the imposition
of fines or litigation or the loss of the Group’s
license to operate. We identified the following
areas as those most likely to have such an
effect: health and safety, environmental laws
and regulations, anti-bribery and corruption,
employment law and export laws and
regulations, recognising the financial and
regulated nature of the Group’s activities.
Auditing standards limit the required audit
procedures to identify non-compliance with
these laws and regulations to enquiry of the
directors and inspection of regulatory and legal
correspondence, if any. Therefore if a breach
of operational regulations is not disclosed to
us or evident from relevant correspondence,
an audit will not detect that breach.
Context of the ability of the audit to detect
fraud or breaches of law or regulation
Owing to the inherent limitations of an audit,
there is an unavoidable risk that we may not
have detected some material misstatements
in the financial statements, even though we
have properly planned and performed our
audit in accordance with auditing standards.
For example, the further removed non-
compliance with laws and regulations is from
the events and transactions reflected in the
financial statements, the less likely the
inherently limited procedures required by
auditing standards would identify it.
In addition, as with any audit, there remained
a higher risk of non-detection of fraud, as these
may involve collusion, forgery, intentional
omissions, misrepresentations, or the override
of internal controls. Our audit procedures are
designed to detect material misstatement.
We are not responsible for preventing non-
compliance or fraud and cannot be expected
to detect non-compliance with all laws
and regulations.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
135
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SENIOR PLC CONTINUED
7. We have nothing to report on the
other information in the Annual Report
The directors are responsible for the other
information presented in the Annual Report
together with the financial statements. Our
opinion on the financial statements does not
cover the other information and, accordingly,
we do not express an audit opinion or, except
as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider whether,
based on our financial statements audit work,
the information therein is materially misstated
or inconsistent with the financial statements or
our audit knowledge. Based solely on that work
we have not identified material misstatements
in the other information.
Strategic report and directors’ report
Based solely on our work on the
other information:
• we have not identified material
misstatements in the strategic report
and the directors’ report;
• in our opinion the information given in those
reports for the financial year is consistent
with the financial statements; and
• in our opinion those reports have been
prepared in accordance with the Companies
Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks
and longer-term viability
We are required to perform procedures
to identify whether there is a material
inconsistency between the directors’
disclosures in respect of emerging and principal
risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing
material to add or draw attention to in relation to:
• the directors’ confirmation within the Viability
Statement page 82 that they have carried out
a robust assessment of the emerging and
principal risks facing the Group, including
those that would threaten its business model,
future performance, solvency and liquidity;
• the Risks and uncertainties disclosures
describing these risks and how emerging
risks are identified, and explaining how they
are being managed and mitigated; and
• the directors’ explanation in the Viability
Statement of how they have assessed the
prospects of the Group, over what period
they have done so and why they considered
that period to be appropriate, and their
statement as to whether they have a
reasonable expectation that the Group will
be able to continue in operation and meet
its liabilities as they fall due over the period
of their assessment, including any related
disclosures drawing attention to any
necessary qualifications or assumptions.
We are also required to review the Viability
Statement, set out on page 82 under the
Listing Rules. Based on the above procedures,
we have concluded that the above disclosures
are materially consistent with the financial
statements and our audit knowledge.
Our work is limited to assessing these matters
in the context of only the knowledge acquired
during our financial statements audit. As we
cannot predict all future events or conditions
and as subsequent events may result in
outcomes that are inconsistent with judgements
that were reasonable at the time they were
made, the absence of anything to report on
these statements is not a guarantee as to the
Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures
to identify whether there is a material
inconsistency between the directors’ corporate
governance disclosures and the financial
statements and our audit knowledge.
Based on those procedures, we have concluded
that each of the following is materially
consistent with the financial statements and
our audit knowledge:
• the directors’ statement that they consider
that the annual report and financial
statements taken as a whole is fair, balanced
and understandable, and provides the
information necessary for shareholders to
assess the Group’s position and performance,
business model and strategy;
• the section of the annual report describing the
work of the Audit Committee, including the
significant issues that the audit committee
considered in relation to the financial
statements, and how these issues were
addressed; and
• the section of the annual report that
describes the review of the effectiveness
of the Group’s risk management and internal
control systems.
We are required to review the part of the
Corporate Governance Statement relating to
the Group’s compliance with the provisions of
the UK Corporate Governance Code specified
by the Listing Rules for our review. We have
nothing to report in this respect.
136
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED 8. We have nothing to report on the other
matters on which we are required to
report by exception
Under the Companies Act 2006, we are
required to report to you if, in our opinion:
• adequate accounting records have not been
kept by the parent Company, or returns
adequate for our audit have not been received
from branches not visited by us; or
• the parent Company financial statements
and the part of the Directors’ Remuneration
Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information
and explanations we require for our audit.
We have nothing to report in these respects.
10. The purpose of our audit work and
to whom we owe our responsibilities
This report is made solely to the Company’s
members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so
that we might state to the Company’s members
those matters we are required to state to them
in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone
other than the Company and the Company’s
members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Mike Barradell
(Senior Statutory Auditor)
for and on behalf of KPMG LLP,
Statutory Auditor
Chartered Accountants
15 Canada Square, London, E14 5GL
24 February 2023
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set
out on page 129, the directors are responsible
for: the preparation of the financial statements
including being satisfied that they give a true
and fair view; such internal control as they
determine is necessary to enable the
preparation of financial statements that are free
from material misstatement, whether due to
fraud or error; assessing the Group and parent
Company’s ability to continue as a going
concern, disclosing, as applicable, matters
related to going concern; and using the going
concern basis of accounting unless they either
intend to liquidate the Group or the parent
Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue our opinion in an auditor’s report.
Reasonable assurance is a high level of
assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK)
will always detect a material misstatement
when it exists. Misstatements can arise from
fraud or error and are considered material if,
individually or in aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities
is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these
financial statements in an annual financial report
prepared using the single electronic reporting
format specified in the TD ESEF Regulation.
This auditor’s report provides no assurance over
whether the annual financial report has been
prepared in accordance with that format.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
137
GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED
FINANCIAL STATEMENTS /
FINANCIAL
STATEMENTS
IN THIS SECTION
“Senior delivered a strong set of results
in 2022.”
Bindi Foyle
Group Finance Director
140 Consolidated Income Statement
141 Consolidated Statement of Comprehensive Income
142 Consolidated Balance Sheet
143 Consolidated Statement of Changes in Equity
144 Consolidated Cash Flow Statement
145 Notes to the Consolidated Financial Statements
184 Company Balance Sheet
185 Company Statement of Changes in Equity
186 Notes to the Company Financial Statements
192 Five-year Summary
Accumulators and Reservoirs
Accumulators and reservoirs
manage operating pressures in
fluid systems to account for
fluctuating working fluid volumes
throughout the aircraft. Senior is a
leading designer and manufacturer
of maintenance free accumulators
and reservoirs for demanding
applications like those found on all
three variants of the F-35 Lightning.
138
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
I
F
I
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
/
Accumulators and Reservoirs
Tube and Duct Assemblies
A modern 5th-generation fighter jet
like the F-35 has extremely
challenging thermal management
requirements, satisfied by
thousands of complex tubes and
ducts carrying fuel, hydraulic fluid,
oxygen, and various coolants
throughout the aircraft. These
components range from 0.25
inches up to 3 inches in diameter
and are manufactured from multiple
materials and must conform to
precise geometry to take up as little
space in the aircraft as possible.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
139
139
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
Revenue
Trading profit
Share of joint venture profit
Operating profit (1)
Investment income
Finance costs
Corporate undertakings
Profit before tax (2)
Tax (charge)/credit
Profit for the period
Attributable to:
Equity holders of the parent
Earnings per share
Basic (3)
Diluted (4)
(1) Adjusted operating profit
(2) Adjusted profit/(loss) before tax
(3) Adjusted earnings per share
(4) Adjusted and diluted earnings per share
Year ended
2022
£m
Year ended
2021
£m
Notes
3
15
5
7
8
9
10
12
12
9
9
12
12
848.4
32.1
0.4
32.5
1.9
(10.6)
(1.4)
22.4
(2.2)
20.2
658.7
10.3
0.2
10.5
0.5
(8.5)
21.2
23.7
0.5
24.2
20.2
24.2
4.86p
4.73p
28.5
20.1
4.36p
4.24p
5.82p
5.73p
6.1
(1.9)
0.17p
0.17p
140
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
FINANCIAL STATEMENTS / CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Profit for the period
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Losses on foreign exchange contracts – cash flow hedges during the period
Reclassification adjustments for losses/(gains) included in profit
Losses on foreign exchange contracts – cash flow hedges
Foreign exchange (gain) recycled to the Income Statement on disposal and restructuring (business closures)
Exchange differences on translation of overseas operations
Tax relating to items that may be reclassified
Items that will not be reclassified subsequently to profit or loss:
Actuarial (losses)/gains on defined benefit pension schemes
Tax relating to items that will not be reclassified
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Attributable to:
Equity holders of the parent
Notes
Year ended
2022
£m
Year ended
2021
£m
20.2
24.2
28
28
28
10
34
10
(4.5)
2.2
(2.3)
–
24.5
0.7
22.9
(23.1)
5.7
(17.4)
5.5
25.7
(2.1)
(1.3)
(3.4)
(2.9)
(3.8)
0.8
(9.3)
19.7
(6.4)
13.3
4.0
28.2
25.7
28.2
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
141
FINANCIAL STATEMENTS / CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
Non-current assets
Goodwill
Other intangible assets
Investment in joint venture
Property, plant and equipment
Deferred tax assets
Retirement benefits
Trade and other receivables
Total non-current assets
Current assets
Inventories
Current tax receivables
Trade and other receivables
Cash and bank balances
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Lease liabilities
Bank overdrafts and loans
Provisions
Deferred consideration
Total current liabilities
Non-current liabilities
Bank and other loans
Retirement benefits
Deferred tax liabilities
Lease liabilities
Provisions
Contingent consideration
Others
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued share capital
Share premium account
Equity reserve
Hedging and translation reserve
Retained earnings
Own shares
Equity attributable to equity holders of the parent
Total equity
Year ended
2022
£m
Year ended
2021
£m
Notes
13
14
15
16
21
34
18
17
21
18
32c
23
21
22, 32c
19
24
31
19
34
21
22
24
31
23
25
26
27
28
29
30
199.7
36.2
4.4
307.2
10.9
51.8
0.4
610.6
194.3
2.1
126.7
43.2
366.3
976.9
191.2
17.7
12.7
0.5
16.7
23.4
262.2
143.2
12.1
4.7
65.7
2.9
28.9
7.8
265.3
527.5
449.4
41.9
14.8
6.4
51.5
346.5
(11.7)
449.4
449.4
150.2
4.2
3.9
294.6
5.7
72.2
0.1
530.9
145.2
2.6
98.0
51.1
296.9
827.8
143.0
14.6
0.4
14.8
13.8
–
186.6
116.2
11.0
10.5
72.8
2.2
–
3.4
216.1
402.7
425.1
41.9
14.8
5.8
28.6
343.2
(9.2)
425.1
425.1
The Financial Statements of Senior plc (registered number 282772) were approved by the Board of Directors and authorised for issue on 24 February
2023. They were signed on its behalf by:
David Squires
Director
Bindi Foyle
Director
142
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
FINANCIAL STATEMENTS /
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Balance at 1 January 2021
Profit for the year 2021
Losses on foreign exchange contracts –
cash flow hedges
Foreign exchange loss/(gain) recycled to the Income
Statement on disposal
Exchange differences on translation of
overseas operations
Actuarial gains on defined benefit pension schemes
Tax relating to components of other
comprehensive income
Total comprehensive income/(expense)
for the period
Share-based payment charge
Tax relating to share-based payments
Use of shares held by employee benefit trust
Transfer to retained earnings
Dividends paid
Balance at 31 December 2021
Profit for the year 2022
Losses on foreign exchange contracts –
cash flow hedges
Foreign exchange loss/(gain) recycled to the Income
Statement on disposal
Exchange differences on translation of
overseas operations
Actuarial losses on defined benefit pension schemes
Tax relating to components of other
comprehensive income
Total comprehensive income/(expense)
for the period
Share-based payment charge
Purchase of shares held by employee benefit trust
Use of shares held by employee benefit trust
Transfer to retained earnings
Dividends paid
Balance at 31 December 2022
All equity is attributable to equity holders of the parent
Notes
Issued
share
capital
£m
41.9
–
Share
premium
account
£m
14.8
–
Equity
reserve
£m
Hedging
reserve
£m
Translation
reserve
£m
5.1
–
(37.2)
–
75.1
–
Retained
earnings
£m
305.1
24.2
Own
shares
£m
(11.5)
–
Total
equity
£m
393.3
24.2
28
28
28
34
10
33
30
29
11
28
28
28
34
10
33
30
30
29
11
–
–
–
–
–
–
–
–
–
–
–
41.9
–
–
–
–
–
–
–
–
–
–
–
–
41.9
–
–
–
–
–
–
–
–
–
–
–
14.8
–
–
–
–
–
–
–
–
–
–
–
–
14.8
–
–
–
–
–
–
3.5
–
–
(2.8)
–
5.8
–
–
–
–
–
–
–
4.3
–
–
(3.7)
–
6.4
(3.4)
–
2.6
(5.5)
–
–
–
–
(3.8)
–
–
19.7
0.8
–
(6.4)
–
–
–
–
–
–
(37.2)
–
(2.3)
–
–
–
(9.3)
–
–
–
–
–
65.8
–
–
–
37.5
–
0.1
(2.3)
2.8
–
343.2
20.2
–
–
24.5
–
–
(23.1)
0.7
–
5.7
(1.6)
–
–
–
–
–
(38.8)
24.5
–
–
–
–
–
90.3
2.8
–
–
(2.0)
3.7
(1.2)
346.5
–
–
–
–
–
–
–
–
2.3
–
–
(9.2)
–
–
–
–
–
–
–
–
(4.5)
2.0
–
–
(11.7)
(3.4)
(2.9)
(3.8)
19.7
(5.6)
28.2
3.5
0.1
–
–
–
425.1
20.2
(2.3)
–
24.5
(23.1)
6.4
25.7
4.3
(4.5)
–
–
(1.2)
449.4
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
143
FINANCIAL STATEMENTS / CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
Net cash from operating activities
Investing activities
Interest received
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Acquistion of Spencer
Proceeds on disposal activities net of cash balances
Net cash (used)/generated in investing activities
Financing activities
Dividends paid
New loans
Repayment of borrowings
Purchase of shares held by employee benefit trust
Repayment of lease liabilities
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of period
Year ended
2022
£m
Year ended
2021
£m
57.7
27.0
Notes
32a
0.7
0.5
(28.7)
(1.8)
(25.3)
–
(54.6)
(1.2)
90.8
(90.4)
(4.5)
(9.1)
(14.4)
(11.3)
51.1
2.9
42.7
0.1
0.2
(20.2)
(1.1)
–
51.7
30.7
–
20.0
(41.1)
–
(8.4)
(29.5)
28.2
23.2
(0.3)
51.1
16
14
31
31
11
32c
144
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
FINANCIAL STATEMENTS / NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. General information
Senior plc is a Company incorporated in England and Wales under the
Companies Act 2006. The address of the registered office is given on the
inside back cover. The nature of the Group’s operations and its principal
activities are set out in Note 3 and on pages 1 to 83.
acquired and liabilities and contingent liabilities assumed are measured
initially at their fair values at the acquisition date. On an acquisition-by-
acquisition basis, the Group recognises any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets.
Items included in the Financial Statements of each of the Group’s entities
are measured using the currency of the primary economic environment in
which the entity operates (the functional currency). These Financial
Statements are presented in Pounds Sterling, which is the Company’s
functional and the Group’s presentation currency.
2. Significant accounting policies
Basis of accounting
These Financial Statements have been prepared in accordance with
UK-adopted international accounting standards. They have been prepared
on the historical cost basis, except for the revaluation of certain financial
instruments and retirement benefit costs measured in accordance
with IAS 19.
Going concern
In determining the appropriate basis of preparation of the Financial
Statements for the year ended 31 December 2022, the Directors are
required to consider whether the Group and Parent Company can
continue in operational existence for the foreseeable future, being a period
of at least 12 months from the date of approval of these Financial
Statements (the “going concern period”).
The Board has applied a robust process to assess the resilience of the
forecast out-turns. This assessment included applying severe but
plausible downside risks as set out in the Viability Statement on page 82.
To address these risks the Board has considered mitigating factors that
could be employed that would address the impact and provide options to
the Group and Parent Company.
The Group has two covenants for committed borrowing facilities, which
are tested at June and December: the Group’s net debt to EBITDA
(defined in the Notes to the Financial Headlines on page 2) must not
exceed 3.0x and interest cover, the ratio of EBITDA to interest must
be higher than 3.5x. At 31 December 2022, the Group’s net debt to
EBITDA was 1.47x and interest cover was 9.4x, both comfortably
within covenant limits.
Based on the above assessment, the Board has concluded that the Group
will continue to have adequate financial resources to realise its assets and
discharge its liabilities as they fall due over the going concern period.
Accordingly, the Directors have formed the judgement that it is
appropriate to prepare these Consolidated Financial Statements on the
going concern basis.
Changes in accounting policies
At the date of authorisation of these Financial Statements, there are no
relevant and material new standards, amendments to standards or
interpretations which are effective for the year ended 31 December 2022.
Basis of consolidation
The Consolidated Financial Statements incorporate the Financial
Statements of Senior plc and the entities controlled by it (its subsidiaries)
made up to 31 December 2022. Control is achieved when Senior plc has
the power to govern the financial and operating policies of an invested
entity so as to obtain benefits from its activities.
Acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration transferred for each acquisition is
the aggregate of the fair values (at the date of exchange) of assets
transferred, liabilities incurred or assumed, and equity interests issued by
the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement.
Acquisition-related costs are expensed as incurred. Identifiable assets
The results of subsidiaries acquired or disposed of during the year are
included in the Consolidated Income Statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
The results of joint ventures are accounted for using the equity
accounting method.
Where necessary, adjustments are made to the Financial Statements of
subsidiaries to bring the accounting policies used in line with those used
by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Goodwill
Goodwill arising on consolidation, which was acquired in a business
combination, is measured as the excess of the consideration transferred,
the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree
over the fair value of the Group’s share of the identifiable net assets
acquired. Goodwill is recognised as an asset and allocated, at acquisition,
to the group of cash-generating units (CGU groups) that are expected to
benefit from that business combination. If the consideration transferred,
the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree is
less than the fair value of the net assets acquired (i.e. bargain purchase),
the difference is credited to the Consolidated Income Statement in the
period of acquisition.
CGU groups to which goodwill has been allocated are tested for
impairment at least annually and reviewed for indicators of impairment at
the Balance sheet date. If impairment indicators exist, the individual
assets within the CGUs, and the individual CGUs excluding goodwill, are
tested for impairment before the CGU group is tested for impairment. Any
impairment is recognised immediately through the Consolidated Income
Statement and is not subsequently reversed. The determination of the
recoverable amount of the CGU group is disclosed in the Notes to the
Financial Statements (Note 13). If the recoverable amount of the CGU
group is less than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the CGU
group and then to the other assets of the CGU group pro rata on the basis
of the carrying amount of each asset in the CGU group.
On disposal of a subsidiary or part thereof, the attributable amount of
goodwill is included in the determination of the profit or loss on disposal.
Goodwill acquired in a business combination prior to the date of transition
to IFRS has been retained at the previous UK GAAP amount subject to
being tested for impairment at that date. Goodwill written off to reserves
under UK GAAP prior to 1998 has not been reinstated and is not included
in determining any subsequent profit or loss on disposal.
Revenue recognition
The Group predominantly has one revenue stream relating to engineered
components or systems (products), which are customer specific, with
a secondary revenue stream of funded development revenue. Both
streams have identifiable customer contracts and pricing specific
performance obligations.
The transaction price is the amount of consideration to which an entity
expects to be entitled in exchange for transferring promised goods or
services to a customer. Revenue is recognised net of discounts, VAT and
other sales related taxes. The determination of the transaction price is
based upon pricing specified in the customer contract i.e. a price per unit.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
145
FINANCIAL STATEMENTS / 2. Significant accounting policies continued
Revenue is recognised as the identified performance obligations
are satisfied.
The performance obligation for goods is a specific point in time when the
customer obtains control, which is upon delivery or when available for
collection. Allocation of transaction price to performance obligations is
given in the contract i.e. a unit delivered or available for collection.
The performance obligation for development revenue is a specific point
in time when the customer obtains control of the output, for example a
first article good, which is the acceptance milestone specified in the
customer contract.
Dividend income from investments is recognised when the shareholders’
legal rights to receive payment have been established.
Interest
Interest receivable/payable is credited/charged to the Consolidated
Income Statement using the effective interest method.
Leasing
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
a right to control the use of an identified asset for a period of time in
exchange for consideration. The assessment of control includes whether
the Group has a right to obtain substantially all of the economic benefits
from the use of the asset throughout the period of use and the right to
direct the use of the asset.
As a lessee, the Group recognises a right-of-use asset and lease liability at
the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability
adjustment for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate
of costs to dismantle or restore the underlying asset, less any lease
incentives received.
Lease payments comprise fixed payments and variable lease payments
based on an index or rate. The right-of-use asset is subsequently
depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the asset or the end of the
lease term. The lease term includes optional extensions or terminations
which are reasonably certain to be exercised by the Group. These optional
terms are reassessed periodically or when there is a significant event
which affects the lease. The estimated useful lives of the right-of-use
assets are determined on the same basis as those of property, plant and
equipment. Periodically the right-of-use asset is reduced for impairment,
if necessary, as well as re-measurements of the lease liability.
The lease liability is measured at amortised cost using the effective
interest method, which is initially equal to the present value of lease
payments that are not paid at the commencement date, discounted using
an incremental borrowing rate determined on a lease portfolio basis. The
lease liability is re-measured either as a modification or reassessment.
Modification occurs where there is a change in terms, such as rental
payments, which did not form part of the original terms of the contract. In
this case, the lease liability is re-measured using the revised terms and a
revised incremental borrowing rate at the modification date.
Reassessment occurs where there are changes within the scope of the
original terms of the contract, such as rental payments changes with
reference to an index. For reassessment changes, the lease liability is
re-measured in the same way as for a modification, except for the
incremental borrowing rate, which is not changed from the original
commencement date of the contract.
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases which have a lease term of 12 months or
less and leases of low-value assets. The Group recognises the lease
146
146
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
payments associated with these leases as an expense on a straight-line
basis over the lease term. When the Group acts as a lessor, it determines
at lease inception whether each lease is a finance lease or an operating
lease. To classify each lease, several indicators are assessed, such as the
present value of the lease payments amounting to at least substantially all
of the fair value of the asset. When the Group is an intermediate lessor, it
accounts for its interest in the head lease and the sub-lease separately.
The Group assesses the classification of the sub-lease with reference to
the right-of-use asset arising from the head lease. The Group recognises
lease payments received under operating leases as income on a straight-
line basis over the lease term.
Foreign currencies
Transactions in currencies other than the functional currency are recorded
at the rates of exchange prevailing on the date of the transaction. At each
Balance Sheet date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on the Balance
Sheet date. Non-monetary items carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured at
historical cost in a foreign currency are not retranslated. Gains and losses
arising on retranslation are included in profit or loss for the period, except
for exchange differences arising on non-monetary assets and liabilities
where the changes in fair value are recognised directly in equity, subject
to meeting the requirements under IAS 21.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into forward exchange contracts (see section below on derivative
financial instruments and hedging for details of the Group’s accounting
policies in respect of such derivative financial instruments).
On consolidation, the assets and liabilities of the Group’s overseas
operations are translated at exchange rates prevailing on the Balance
Sheet date. Income and expense items are translated at the average
exchange rates for the period. Exchange rate differences arising, if any,
are classified as equity and transferred to the Group’s translation reserve.
Such translation differences are recognised as income or expense in the
period in which the operation is disposed.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate on the relevant Balance Sheet date.
The exchange rates for the major currencies applied in the translation of
results were as follows:
US Dollar
Average
rates
2022
1.24
Average
rates
2021
1.38
Year-end
rates
2022
Year-end
rates
2021
1.21
1.35
Government grants
Government grants received for items of a revenue nature are recognised
as income over the period necessary to match them with the related
costs, which are deducted in reporting the related expense and presented
net of the costs to which they relate. The Group recognises a COVID-19
grant when it has reasonable assurance that it will comply with the
relevant conditions and the grant will be received. If the conditions are
met, then the Group recognises income in the profit or loss on a
systematic basis and in line with its recognition of the expenses that the
grants are intended to compensate.
Government grants relating to investment in property, plant and
equipment are deducted from the initial carrying value of the related
capital asset.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS Deferred tax assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition of goodwill
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the Group’s taxable profit nor its
accounting profit.
The carrying value of deferred tax assets is reviewed at each Balance
Sheet date and reduced to the extent it is no longer probable that
sufficient taxable profits will be available to allow all or part of the deferred
tax asset to be recovered. Deferred tax is calculated at the tax rates that
are expected to apply in the period when the liability is settled or the asset
is realised based on tax laws and rates that have been enacted at the
Balance Sheet date. Deferred tax is charged or credited in the
Consolidated Income Statement, except when it relates to items charged
or credited to Other Comprehensive Income or directly to Equity, in which
case the deferred tax is also dealt with in Other Comprehensive Income
or Equity.
Property, plant and equipment
Land and buildings held for use in the production or supply of goods or
services, or for administrative purposes, are stated in the Balance Sheet
at their historical cost, or at modified historical cost, being a revaluation
undertaken in 1988 which has been taken as the effective cost on
transition to IFRS. Land and buildings were revalued to fair value at
the date of revaluation. The Group does not intend to conduct
annual revaluations.
Plant and equipment are stated at cost less accumulated depreciation and
any recognised impairment loss. Depreciation is charged to write off the
cost of an asset on a straight-line basis over the estimated useful life of
the asset, and is charged from the time an asset becomes available for its
intended use. Annual rates are as follows:
Freehold land
Freehold buildings
Right-of-use land and
buildings
Leasehold building
improvements
Plant and equipment
Right-of-use plant and
equipment
Nil
2%
on the same basis as owned assets or,
where shorter, over the lease term
on the same basis as owned assets or,
where shorter, over the lease term
5%–33%
on the same basis as owned assets or,
where shorter, over the lease term
The Group primarily leases land and buildings for manufacturing use. The
lease term, including options to extend which are reasonably certain,
typically range from two to fifteen years. The Group also leases plant and
equipment, including office equipment, vehicles and manufacturing
equipment, with lease terms typically ranging from one to four years.
The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sale proceeds and the carrying
amount of the asset at disposal and is recognised in the Consolidated
Income Statement.
2. Significant accounting policies continued
Retirement benefit costs
Payments to defined contribution retirement plans are charged as an
expense as they fall due. Payments made to state-managed retirement
benefit plans are dealt with as payments to defined contribution plans
where the Group’s obligations under the plans are equivalent to those
arising in a defined contribution retirement plan.
For defined benefit retirement plans, the cost of providing benefits is
determined using the Projected Unit Method, with full actuarial valuations
being carried out on a triennial basis, and updated at each Balance
Sheet date. Actuarial gains and losses are recognised in full in the period
in which they occur. They are recognised outside the Consolidated
Income Statement and are presented in the Statement of
Comprehensive Income.
Past service cost is recognised as an expense at the earlier of a plan
amendment, curtailment, or restructuring.
The retirement benefit obligation recognised in the Consolidated Balance
Sheet represents the present value of the defined benefit obligation, and
as reduced by the fair value of scheme assets.
Taxation
Provisions for uncertain tax positions are included within current tax
liabilities on the Consolidated Balance Sheet representing Management’s
best estimate of the likely cash outflow related to the uncertainty. There
are transactions and activities that the Group engages in where the
ultimate tax determination is uncertain and a provision may be made
against the tax benefit. For example, the Group seeks to price
transactions between Group companies on an arms length basis and in
compliance with OECD transfer pricing principles and the laws of the
relevant jurisdictions. The application of OECD principles and local tax
laws require interpretation, and accordingly involves the application of
judgment and is open to challenge by the relevant tax authorities. This
gives rise to a level of uncertainty. Provisions for uncertain tax positions
are established in accordance with IFRIC 23 based on an assessment of
the range of likely tax outcomes in open years and reflecting the strength
of technical arguments. Amounts are provided for individual tax
uncertainties based on Management’s assessment of whether the most
likely amount or an expected amount based on a probability weighted
methodology is the more appropriate predicter of amounts that the
company is ultimately expected to settle. When making this assessment,
the Group utilises specialist in-house tax knowledge and experience and
takes into consideration specialist tax advice from third party advisers on
specific items.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in the
computation of taxable profit, and is accounted for using the Balance
Sheet liability method. Deferred tax liabilities are generally recognised for
all taxable temporary differences, including for taxable temporary
differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available for their utilisation before their
expiry. Amounts will be recognised first to the extent that taxable
temporary differences exist and it is considered probable that they will
reverse and give rise to future taxable profits against which losses or
other assets may be utilised before their expiry. Assets will then be
recognised to the extent that forecasts or other evidence support the
availability of future profits against which assets may be realised.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
147
FINANCIAL STATEMENTS / 2. Significant accounting policies continued
Internally generated intangible assets – development expenditure
An intangible asset arising from unfunded development work shall be
recognised if the following can be demonstrated:
i. the asset can be separately identified.
ii. it is probable that the asset created will generate future economic
benefits.
iii. the development cost of the asset can be measured reliably during its
development.
iv. it is technically feasible to complete the asset so that it will be available
for use or sale.
v. there is intention to complete the asset and use or sell it.
vi. the Group has ability to use or sell the asset.
vii. the Group has availability of adequate technical, financial and other
resources to complete the development work and to use or sell
the asset.
Internally generated intangible assets are amortised on a straight-line
basis over their useful lives. Costs incurred in relation to funded
development work are accumulated in inventory and are recognised when
the related billings are made. Any amounts held in inventory are subject to
normal inventory valuation principles. Expenditure on research, design and
other development activities, that do not meet the capitalisation criteria
above, is recognised as an expense in the period in which it is incurred.
Other intangible assets
Other intangible assets include computer software and intangible assets
acquired as part of a business combination. The cost of acquiring
computer software (including associated implementation and
development costs where applicable) is classified as an intangible asset.
Costs associated with maintaining computer software programs are
recognised as an expense as incurred. Capitalised computer software is
amortised over its estimated useful life of between three and five years
on a straight-line basis, and is stated at cost less accumulated
amortisation and impairment losses. Intangible assets acquired as part of
a business combination principally comprise qualified parts list, customer
relationships, contracts and trade names. They are shown at fair value at
the date of acquisition less accumulated amortisation at the rates of
between one and eighteen years on a straight-line basis.
Impairment of tangible and intangible assets excluding goodwill
At each Balance Sheet date, the Group reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). Where the
asset does not generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
The recoverable amount is the higher of the fair value less the costs to sell
and the value in use. In assessing the value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable amount,
so that the increased carrying amount does not exceed the carrying
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
amount that would have been determined had no impairment loss been
recognised for the asset in prior years. A reversal of an impairment loss is
recognised as income immediately, unless the relevant asset is carried at
a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs
comprise direct materials and, where applicable, direct labour costs and
an appropriate allocation of production overheads. Cost is calculated using
the first-in, first-out method. Net realisable value represents the estimated
selling price less the estimated costs of completion and the costs to be
incurred in marketing, selling and distribution.
Financial instruments
Financial assets and liabilities are recognised when the Group becomes a
party to the contractual provisions of the relevant instrument and
derecognised when it ceases to be a party to such provisions.
Financial instruments are classified as cash and cash equivalents, bank
overdrafts and loans, lease liabilities, trade receivables, trade payables,
deferred consideration payable, contingent consideration payable, other
receivables and other payables, as appropriate.
Non-derivative financial assets are categorised as “Financial assets at
amortised cost” and non-derivative financial liabilities are categorised as
“Financial liabilities at amortised cost”. Derivative financial assets and
liabilities that are not designated and effective as hedging instruments are
categorised as “financial assets at fair value through profit or loss” and
“financial liabilities at fair value through profit or loss”, respectively. The
classification depends on the nature and purpose of the financial assets
and liabilities and is determined at the time of initial recognition.
Trade receivables
Trade receivables do not carry any interest and are stated at their nominal
value as reduced by loss allowance. The Group has elected to measure
loss allowance for trade receivables at an amount equal to the lifetime
expected credit losses (”ECLs”), which are based on quantitative and
qualitative credit risk assessments, using historical and forward looking
information. Changes in the carrying amounts of the loss allowance are
recognised in the Consolidated Income Statement.
Trade receivables in default are considered uncollectible and are written
off against the loss allowance. The Group considers a trade receivable to
be in default when the customer is experiencing significant financial
difficulties, bankruptcy, financial reorganisation or is in default or
delinquent in paying its credit obligations to the Group in full. Subsequent
recoveries of amounts previously written off are credited against the
loss allowance.
Trade receivables are derecognised when reverse factored, without
recourse, through schemes with financial institution counterparties who
assume the risk of non-payment by the customer. Derecognition occurs
when cash is received from the financial institution (less reverse factoring
discount). For further details, see Strategic Report and the financial
instrument credit risk section in the notes to the Consolidated
Financial Statements.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and other short-term
highly liquid investments that are readily convertible to a known amount
of cash and are subject to an insignificant risk of changes in value.
Non-derivative financial liabilities
Non-derivative financial liabilities are stated at amortised cost using the
effective interest method. The effective interest method is a method of
calculating the amortised financial liability and of allocating interest over
the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 2. Significant accounting policies continued
the financial liability, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition. For borrowings, their carrying value
includes accrued interest payable, as well as unamortised issue costs.
Contingent consideration payable is measured at fair value through profit
or loss.
Equity instruments
Equity instruments issued by the Company are recorded at the value of
the proceeds received, net of direct transaction costs.
Derivative financial instruments and hedging
The Group’s activities expose it primarily to the financial risks of changes
in foreign currency exchange rates and interest rates. The Group uses
foreign exchange contracts and, on occasion, interest rate swap contracts
to hedge these exposures. The use of financial derivatives is governed by
the Group’s Treasury Policies as approved by the Board of Directors,
which provides written principles on the use of derivatives. The Group
does not use derivative financial instruments for speculative purposes.
Certain derivative instruments do not qualify for hedge accounting. These
are categorised as “fair value through profit or loss” and are stated at fair
value, with any resultant gain or loss recognised in the Income Statement.
The Group designates certain hedging instruments in respect of foreign
currency risk as cash flow hedges. At the inception of the hedge
relationship, the Group documents the relationship between the hedging
instrument and the hedged item, along with its risk management
objectives and strategy for undertaking various hedging transactions. The
Group also documents, both at hedge inception and on an ongoing basis,
whether the hedging instrument that is used in a hedging relationship is
highly effective in offsetting changes in fair values or cash flows of the
hedged item.
For the Group’s cash flow hedges of highly probable forecast transactions
in foreign currencies, the hedged risk is always considered to be 1:1. If the
underlying exposure changes over time, either due to commercial factors
or timing differences, the hedging instruments will be rebalanced to
ensure that the hedge ratio of 1:1 is maintained.
Changes in the fair value of derivative financial instruments that are
designated and are effective as a cash flow hedge are recognised directly
in equity and the ineffective portion is recognised immediately in the
Consolidated Income Statement. If the cash flow hedge of a firm
commitment or forecasted transaction results in the recognition of an
asset or a liability, then, at the time the asset or liability is recognised, the
associated gains or losses on the derivative that had previously been
recognised in equity are included in the initial measurement of the asset
or liability. For hedges that do not result in the recognition of an asset or a
liability, amounts deferred in equity are recognised in the Income
Statement in the same period in which the hedged item affects profit
or loss.
For an effective hedge of an exposure to changes in fair value, the hedged
item is adjusted for changes in fair value attributable to the risk being
hedged with the corresponding entry in the Consolidated Income
Statement. Gains or losses from remeasuring the derivative are also
recognised in the Consolidated Income Statement. If the hedge is
effective, these entries will offset in the Consolidated Income Statement.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the Consolidated Income
Statement as they arise.
Hedge accounting is discontinued when the hedging instrument expires
or is sold, terminated, exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging
instrument recognised in equity is retained in equity until the forecasted
transaction occurs. If a hedged transaction is no longer expected to occur,
the net cumulative gain or loss recognised in Equity is transferred to the
Consolidated Income Statement for the period.
Gains and losses accumulated in Equity are recognised in the
Consolidated Income Statement on disposal of the overseas business.
Assets and disposal groups held for sale
Assets are classified as held for sale if their carrying amount will be
recovered by sale rather than by continuing use in the business. Where a
group of assets and their directly associated liabilities are to be disposed
of in a single transaction, such disposal groups are also classified as held
for sale. For this to be the case, the asset or disposal group must be
available for immediate sale in its present condition, and Management
must be committed to and have initiated a plan to sell the asset or
disposal group which, when initiated, was expected to result in a
completed sale within 12 months. Assets that are classified as held for
sale are not depreciated. Assets or disposal groups that are classified as
held for sale are measured at the lower of their carrying amount and fair
value less costs to sell.
Provisions
Provisions are recognised when the Group has a present obligation (legal
or constructive) as a result of a past event, it is probable that the Group
will be required to settle that obligation and a reliable estimate can be
made of the amount of the obligation. Provisions are measured at the
Directors’ best estimate of the expenditure required to settle the
obligation at the Balance Sheet date, taking into account the risks and
uncertainties (such as timing or amount) surrounding the obligation. They
are not discounted to present value if the effect is not material.
Provisions for restructuring are recognised when the Group has a detailed
formal plan for the restructuring and the plan has been communicated to
the affected parties. Provisions for the expected cost for warranty
obligations under local sale of goods legislation are recognised at the date
of sale of the relevant products.
Share-based payments
The Group applies the requirements of IFRS 2 Share-based payments.
The Group issues equity-settled share-based payments to certain
employees. The fair value (excluding the effect of non-market-related
conditions), as determined at the grant date, is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of the
number of shares that will eventually vest and adjusted for the effect of
non-market-related conditions.
Fair value is measured by use of a Black-Scholes model for the share
option plans, and a binomial model for the share awards under the 2005
Long-Term Incentive Plan.
The liability in respect of equity-settled amounts is included in Equity.
Critical accounting judgments
IAS 1 requires disclosure of the judgments Management makes when
applying its significant accounting policies and that have the most
significant effect on amounts that are recognised in the Group’s Financial
Statements. In the course of preparing the Financial Statements, no
significant critical judgments have been made in the process of applying
the Group’s accounting policies, other than leases and those involving
estimations, which are dealt with separately below. Management makes
other judgments in the normal course of conducting business, such as
those in relation to legal claims and contractual matters (see Note 24 for
further details).
Leases
Where a lease includes the option for an extension to the lease term,
Management makes a judgment as to whether they are reasonably
certain the option will be taken. This will take into account the length of
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
149
149
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 2. Significant accounting policies continued
time remaining before the option is exercisable, current and forecasted
plans for utilising the asset and the level and type of planned future capital
investment. As at 31 December 2022, these extension options have an
approximate average remaining lease term of seven years. These
judgments are reassessed at each reporting period or when there is a
significant event affecting the lease, which could result in a recalculation
of the lease liability and a material adjustment to the associated balances.
Key sources of estimation and uncertainty
When applying the Group’s accounting policies, Management must make
assumptions and estimates concerning the future that affect the carrying
amounts of assets and liabilities at the Balance Sheet date and the
amounts of revenue and expenses recognised during the period. Such
assumptions are based upon factors including historical experience, the
observance of trends in the industries in which the Group operates, and
information available from the Group’s customers and other external
sources. The key sources of estimation and uncertainty at the Balance
Sheet date that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
and beyond include:
Income taxes
In determining the Group provisions for income tax and deferred tax, it is
necessary to consider transactions in a small number of key tax
jurisdictions for which the ultimate tax determination is uncertain. To the
extent that the final outcome differs from the tax that has been provided,
adjustments will be made to income tax and deferred tax provisions held
in the period the determination is made. The carrying amount of net
current tax liability and deferred tax asset/liability at 31 December 2022
was £15.6m (2021 – £12.0m) and £6.2m asset (2021 – £4.8m liability),
respectively. Further details on these estimates are set out in Notes 10
and 21.
Retirement benefits
Management makes assumptions and estimates, for the next financial
year and beyond, which affect the value of the carrying amount of the UK
Plan retirement benefit obligation at 31 December 2022. Management
follows actuarial advice from a third party when determining estimation
uncertainty on the valuation of the UK gross defined benefit obligation,
the significant assumptions being discount rate, inflation and life
expectancy (see Note 34). The carrying amount of the UK Plan’s
retirement benefits at 31 December 2022 was a surplus of £51.8m (2021
– surplus of £72.2m), being the present value of the defined benefit
obligations of £198.4m (2021 – £294.9m) and fair value of plan assets of
£250.2m (2021 – £367.1m). Further details and sensitivities from changes
in estimates are set out in Note 34g.
Acquisition accounting
On 25 November 2022, the Group acquired substantially all of the assets
of Spencer Aerospace Manufacturing, LLC, for total consideration of
$100m split between initial, deferred and contingent payments (See Note
31 for further details). There is judgment in applying assumptions and
estimates which determine the valuation of the intangible assets and
associated goodwill. The fair value of contingent consideration is based on
the expected present value technique, using risk-adjusted discount rate to
discount probability weighted cashflows. Intangible valuation is based on
a hybrid cost/income approach, which is predominantly based on future
income streams of the acquiree. The contingent consideration is subject
to fair valuation reviews each reporting period.
Consideration of climate change
In preparing the Financial Statements, the Directors have considered the
impact of climate change, particularly in the context of the risks identified
in the TCFD disclosure on pages 26 to 31. There has been no material
impact identified on the financial reporting judgements and estimates. In
150
150
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
particular, the Directors considered the impact of climate change in
respect of the following areas:
• Useful lives of assets – The useful lives of assets could be reduced by
climate-related matters, for example as a result of physical risks,
obsolescence or legal restrictions. The change in useful lives would
have a direct impact on the amount of depreciation or amortisation
recognised each year from the date of reassessment. The Directors’
review of useful lives has taken into consideration the impacts of the
Group’s net zero commitments and has not had a material impact on
the results for the year.
• Inventory valuation – Climate-related matters may affect the value of
inventories as they could become obsolete as a result of a decline in
selling prices or a reduction in demand. After consideration of the
typical inventory days compared to the rate of change in the market the
Directors consider that inventory is appropriately valued.
• Going concern and viability – risks identified in the TCFD disclosures in
pages 26 to 31 have been factored into the going concern and viability
assessment. See page 82 further details.
• Goodwill Impairment assessment – cash flow forecasts used in the
impairment assessment of goodwill have considered potential changes
in demand over the next 5 years as a result of changing customer
preferences on Senior’s products. This is not expected to have a
material impact on the cashflows, with longer term growth rates based
on forecasted market demand. Aerospace market rates were used for
the Aerospace CGU and long-term GDP rates for advanced economies
were used for the Flexonics CGU. Sensitivity analysis (See Note 13)
shows that a 1 percent decrease in growth rate would not result in the
carrying amount of CGU groups exceeding their recoverable amount.
• Recoverability of trade receivables – After consideration of the typical
receivable days compared to the rate of change in the market, the
Directors consider that receivables at 31 December 2022 are not
adversely affected by climate change.
• Valuation of the UK Plan retirement gross benefit olibgation - there is no
material impact on key financial assumptions which are set according to
market yields. Mortality assumptions take account of current views of
possible climate pathways that may develop. Asset values are set
according to market valuations which incorporate market expectations
of climate impacts.
The Directors are aware of the ever-changing risks attached to climate
change and will regularly assess these risks against judgements and
estimates made in preparation of the Group’s financial statements.
3. Revenue
Total revenue is disaggregated by market sectors as follows:
Civil Aerospace
Defence
Other
Aerospace
Land Vehicles
Power & Energy
Flexonics
Eliminations
Total revenue
Year ended
2022
£m
Year ended
2021
£m
339.4
122.1
92.1
553.6
164.1
131.5
295.6
244.5
125.0
69.8
439.3
118.8
101.1
219.9
(0.8)
(0.5)
848.4
658.7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 3. Revenue continued
Other Aerospace comprises space and non-military helicopters and other markets, principally including semiconductor, medical, and
industrial applications.
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance obligations that
have original expected durations of one year or less.
Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an expense when
incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.
4. Segment Information
The Group reports its segment information as two operating Divisions according to the market segments they serve, Aerospace and Flexonics, which
is consistent with the oversight employed by the Executive Committee. The chief operating decision-maker, as defined by IFRS 8, is the Executive
Committee. The Group is managed on the same basis, as two operating Divisions.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 2 and the sales between
segments are carried out at arm’s length. Adjusted operating profit, as described in Note 9, is the key measure reported to the Group’s Executive
Committee for the purpose of resource allocation and assessment of segment performance. Investment income, finance costs and tax are not
allocated to segments, as this type of activity is driven by the central tax and treasury functions.
Segment assets include directly attributable computer software assets, property, plant and equipment (including right-of-use assets), working capital
assets, goodwill and intangible assets from acquisitions. Cash, deferred and current tax and other financial assets (except for working capital) are not
allocated to segments for the purposes of reporting financial performance to the Executive Committee.
Segment liabilities include directly attributable working capital liabilities and lease liabilities. Debt, retirement benefits, deferred and current tax
and other financial liabilities (except for working capital) are not allocated to segments for the purposes of reporting financial performance to the
Executive Committee.
Central costs, assets and liabilities are corporate items not allocated to segments, which is consistent with the format used by the chief operating
decision-maker.
Segment information for revenue, operating profit/loss and a reconciliation to entity and profit/loss after tax is presented below:
Aerospace
Year ended
2022
£m
Flexonics
Year ended
2022
£m
Notes
Eliminations/
central
costs
Year ended
2022
£m
Total
Year ended
2022
£m
Aerospace
Year ended
2021
£m
Flexonics
Year ended
2021
£m
Eliminations/
central
costs
Year ended
2021
£m
Total
Year ended
2021
£m
External revenue
Inter-segment revenue
Total revenue
Adjusted trading profit
Share of joint venture profit
Adjusted operating profit
Amortisation of intangible assets
from acquisitions
Net restructuring income
Operating profit
Investment income
Finance costs
Corporate undertakings
Profit before tax
Tax (charge)/credit
Profit after tax
553.0
0.6
553.6
20.3
–
20.3
(0.2)
4.2
24.3
295.4
0.2
295.6
25.4
0.4
25.8
–
–
25.8
–
(0.8)
(0.8)
(17.6)
–
(17.6)
–
–
(17.6)
9
9
9
848.4
–
848.4
28.1
0.4
28.5
(0.2)
4.2
32.5
1.9
(10.6)
(1.4)
22.4
(2.2)
20.2
438.9
0.4
439.3
7.9
–
7.9
–
2.2
10.1
219.8
0.1
219.9
12.9
0.2
13.1
–
2.2
15.3
–
(0.5)
(0.5)
(14.9)
–
(14.9)
–
–
(14.9)
658.7
–
658.7
5.9
0.2
6.1
–
4.4
10.5
0.5
(8.5)
21.2
23.7
0.5
24.2
Trading profit and adjusted trading profit is operating profit and adjusted operating profit respectively before share of joint venture profit. See Note 9 for
the derivation of adjusted operating profit.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
151
151
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 4. Segment Information continued
Segment information for assets, liabilities, additions to non-current assets and depreciation and amortisation is presented below:
Assets
Aerospace
Flexonics
Segment assets for reportable segments
Unallocated
Central
Cash
Deferred and current tax
Retirement benefits
Others
Total assets per Consolidated Balance Sheet
Liabilities
Aerospace
Flexonics
Segment liabilities for reportable segments
Unallocated
Central
Loans and Overdrafts
Deferred and current tax
Retirement benefits
Deferred and Contingent consideration
Others
Total liabilities per Consolidated Balance Sheet
Aerospace
Flexonics
Sub total
Central
Total
The Group’s revenues from its major products is presented below:
Aerospace – Structures
Aerospace – Fluid Systems
Aerospace total
Land vehicles
Power & Energy
Flexonics total
Group total
No individual customer accounted for more than 10% of external revenue in 2022 or 2021.
152
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SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Year ended
2022
£m
Year ended
2021
£m
647.8
217.3
865.1
3.6
43.2
13.0
51.8
0.2
976.9
506.6
184.9
691.5
4.6
51.1
8.3
72.2
0.1
827.8
Year ended
2022
£m
Year ended
2021
£m
189.5
79.7
269.2
19.2
143.7
22.4
12.1
52.3
8.6
527.5
148.1
63.9
212.0
15.4
131.0
25.1
11.0
–
8.2
402.7
Additions to
non-current
assets
Year ended
2022
£m
Additions to
non-current
assets
Year ended
2021
£m
Depreciation
and
amortisation
Year ended
2022
£m
Depreciation
and
amortisation
Year ended
2021
£m
18.6
13.5
32.1
0.4
32.5
12.9
10.3
23.2
0.1
23.3
35.9
13.4
49.3
0.5
49.8
35.1
12.2
47.3
0.5
47.8
Year ended
2022
£m
Year ended
2021
£m
242.6
310.4
553.0
164.1
131.3
295.4
848.4
178.9
260.0
438.9
118.8
101.0
219.8
658.7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 4. Segment Information continued
Geographical information
The Groups’ operations are located principally in North America and UK.
The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods. The carrying values of
segment non-current assets are analysed by the geographical area in which the assets are located.
USA
UK
Rest of the World
Sub total
Unallocated amounts
Total
The unallocated amounts on non-current assets relate to deferred tax assets.
5. Operating profit
Operating profit can be analysed as follows:
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Profit on sale of fixed assets
Share of joint venture profit
Operating profit
Operating profit for the period has been arrived at after charging:
Net foreign exchange losses/(gains)
Research and design costs
Depreciation of property, plant and equipment
Amortisation of intangible assets included in administration expenses
Cost of inventories recognised as expense
Provision for loss allowance against receivables
Restructuring: provision (release)/charge for impairment of property, plant and equipment and inventories
Restructuring: staff and other costs
COVID-19 grant (income)
Aerospace manufacturing grant (income)
Sales
revenue
Year ended
2022
£m
Sales
revenue
Year ended
2021
£m
Segment
non-current
assets
Year ended
2022
£m
Segment
non-current
assets
Year ended
2021
£m
417.1
140.6
290.7
848.4
–
848.4
316.4
105.0
237.3
658.7
–
658.7
296.5
158.8
144.4
599.7
10.9
610.6
202.5
181.8
140.9
525.2
5.7
530.9
Year ended
2022
£m
Year ended
2021
£m
848.4
(698.7)
149.7
(6.3)
(111.4)
0.1
0.4
32.5
658.7
(555.7)
103.0
(5.4)
(87.3)
–
0.2
10.5
Year ended
2022
£m
Year ended
2021
£m
4.6
19.8
48.1
1.7
698.7
1.5
(1.4)
1.2
–
(4.0)
(1.7)
19.2
46.3
1.5
555.7
0.6
2.3
2.5
(0.3)
(4.2)
Staff costs are disclosed in Note 6. The majority of research and design costs incurred during the year have been expensed in line with Note 2 Group’s
accounting policies.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
153
153
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS
5. Operating profit continued
The analysis of the Auditor’s remuneration is as follows:
Fees payable to the Company’s Auditor and their associates for the audit of the Company’s annual accounts
Fees payable to the Company’s Auditor and their associates for other services to the Group
– The audit of the Company’s subsidiaries
Total audit fees
Year ended
2022
£m
Year ended
2021
£m
0.5
1.7
2.2
0.3
1.5
1.8
Fees payable to Company’s Auditor and their associates for non-audit services to the Company are not required to be disclosed because the
Consolidated Financial Statements are required to disclose such fees on a consolidated basis.
The Group paid £0.06m (2021 – £0.06m) to the Company’s Auditor for audit related services and £nil (2021 – £0.1m) for non-audit related services
during 2022, in line with the Company’s policy on the use of Auditors for non-audit services.
Details of the Company’s policy on the use of auditors for non-audit services, the reasons why the Auditor was used rather than another supplier and
how the Auditor’s independence and objectivity were safeguarded are set out in the Audit Committee Report on pages 102 to 107. No services were
provided pursuant to contingent fee arrangements.
6. Staff costs
The average monthly number of employees (including Directors) was:
Production
Distribution
Sales
Administration
Total
The actual number of employees at 31 December 2022 was 6,361 (2021 – 5,664).
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Termination benefits
Other pension costs – defined contribution
Other pension costs – defined benefit
Share based payments
Aggregate remuneration
Year ended
2022
Number
Year ended
2021
Number
5,297
64
249
495
6,105
4,850
63
252
473
5,638
Year ended
2022
£m
Year ended
2021
£m
Notes
234.7
26.9
–
8.9
0.8
4.3
275.6
198.9
22.6
1.0
8.6
0.7
3.5
235.3
34a
34e
33
The Group also incurred medical and other employee benefit expenses during the year of £24.6m (2021 – £20.9m) and received £nil (2021 – £0.3m)
COVID-19 grant income related to government assistance schemes to compensate for furloughing of employees.
7. Investment income
Interest on bank deposits
Net finance income of retirement benefits (Note 34e)
Total income
154
154
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Year ended
2022
£m
Year ended
2021
£m
0.7
1.2
1.9
0.1
0.4
0.5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 8. Finance costs
Interest on bank overdrafts and loans
Interest on other loans and other finance costs
Interest on lease liabilities
Interest unwind on acquistion consideration
Total finance costs
Year ended
2022
£m
Year ended
2021
£m
Notes
2.0
5.8
2.5
0.3
10.6
1.0
4.9
2.6
–
8.5
9, 31
9. Adjusted operating profit and adjusted profit/(loss) before tax
The presentation of adjusted operating profit and adjusted profit before tax measures, derived in accordance with the table below, have been included
to identify the performance of the Group prior to the impact of amortisation of intangible assets from acquisitions, net restructuring income and the
costs and income associated with corporate undertakings. The Board has adopted a policy to separately disclose those items, where significant in size,
that it considers are outside the results for the particular year under review and against which the Board measures and assesses the performance of
the business.
The adjustments are made on a consistent basis and also reflect how the business is managed on a day-to-day basis.
The amortisation charge relates to acquisition of Spencer Aerospace. It is charged on a straight-line basis and reflects a non-cash item for the reported
year. The Group implemented a restructuring programme in 2019, which continued through 2020 and 2021 in response to the impact of the COVID-19
pandemic on some of the Group’s end markets. Some residual restructuring activity has continued in 2022. The aerospace manufacturing grant, within
net restructuring income, represents incentives specific to only part of the Group for a limited time period. Corporate undertakings relate to business
acquisition activities, gain on disposal of a business, bid defence and other costs relating to corporate activities. None of these charges are reflective
of in year performance. Therefore, they are excluded by the Board and Executive Committee when measuring the operating performance of
the businesses.
Operating profit
Amortisation of intangible assets from acquisitions
Net restructuring income
Adjusted operating profit
Profit before tax
Adjustments to profit/loss before tax as above
Corporate undertakings
Corporate undertakings – interest
Total Corporate undertakings
Adjusted profit/(loss) before tax
Notes
£m
Year ended
2022
£m
Year ended
2021
£m
£m
32.5
0.2
(4.2)
28.5
22.4
(4.0)
1.7
20.1
(21.2)
–
10.5
–
(4.4)
6.1
23.7
(4.4)
(21.2)
(1.9)
31
1.4
0.3
Net restructuring income
In 2020 the Group had focused on taking actions to conserve cash to manage through the pandemic, including curtailing capital expenditure, tightly
managing working capital and implementing further cost cutting actions. In 2022 there were still some residual activities associated with that. The
decisive actions which we took on restructuring and cost management delivered the expected benefits. In addition, the Group has continued to review
inventory and asset exposures on programmes that have been reduced, cancelled or where the Group will no longer participate. As part of the
restructuring focus, we have assessed critically any inventory or asset exposures on these programmes and written down the carrying values on
excess holdings and assets where there is no alternate use. Where demand has picked up on previously reduced or cancelled programmes, inventory
impairments have been reversed to the extent that there are confirmed orders in place.
The restructuring resulted in net income of £4.2m (2021 - £4.4m). Of this, £4.0m income (2021 - £4.2m) related to an aerospace manufacturing grant
and £1.2m net charge related to consultancy and other costs (2021 - £0.4m net charge). For certain specific programmes, and in conjunction with the
focus on restructuring, management has also identified inventory impairment reversals of £2.7m (2021 - £1.4m) where customer demand has
increased, and further impairment provisions on property, plant and equipment in 2022 with a charge of £1.3m (2021 - £0.8m) to cover the risk where
there are no alternative uses.
Net cash inflow related to restructuring activities was £2.1m (2021 - £0.9m net cash outflow). At 31 December 2022, a restructuring provision of
£0.2m (31 December 2021: £1.3m) was recognised and is expected to be utilised in 2023.
Corporate undertakings
Costs associated with corporate undertakings were £1.7m in 2022, of which £1.2m of acquisition costs and £0.3m interest unwind of deferred and
contingent consideration relates to the acquisition of Spencer Aerospace in November 2022 and £0.2m costs relate to other corporate activities. In
2021, net income of £21.2m was recognised, of which £24.2m gain relates to the disposal of Senior Aerospace Connecticut in April 2021, partly offset
by £3.0m bid defence and costs relating to other corporate activities. See Note 31 to the Financial Statements for further details.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
155
155
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 10. Taxation
Current tax:
Current year
Adjustments in respect of prior periods
Deferred tax (Note 21):
Current year
Adjustments in respect of prior periods
Total tax charge/(credit)
Year ended
2022
£m
Year ended
2021
£m
8.2
(1.9)
6.3
(3.5)
(0.6)
(4.1)
2.2
7.0
(6.0)
1.0
(1.7)
0.2
(1.5)
(0.5)
On 24th May 2021, a future increase in UK corporation tax rate from 19% to 25% was substantially enacted with an effective date of 1 April 2023.
Deferred tax assets and liabilities are measured at the rates that are expected to apply to the year when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantially enacted at the Balance Sheet date. The impact of the tax rate change to 25%
on deferred tax assets and liabilities has been reflected at the Balance Sheet date and this has resulted in a current year charge of £0.2m recognised in
the Income Statement and a credit of £1.4m through Other Comprehensive Income. Taxation for other jurisdictions is calculated at the rates prevailing
in the respective jurisdictions.
The total charge for the year can be reconciled to the profit before tax per the Consolidated Income Statement as follows:
Profit before tax
Expected tax charge/(credit) at the UK standard corporation tax rate 19%
Effect of different statutory rates in overseas jurisdictions
Tax incentives and credits
Tax losses not recognised
Impact of share options
Effect of difference in treatment of financing activities between jurisdictions
Non-deductible expenses and other permanent differences
Effect of changes in UK tax rate on deferred tax items
Withholding taxes
Adjustments in respect of prior periods – current tax items
Adjustments in respect of prior periods – deferred tax items
Tax charge / (credit) and effective tax rate for the year
Year ended
2022
£m
22.4
Year ended
2022
%
Year ended
2021
£m
23.7
Year ended
2021
%
a
b
c
d
e
f
g
h
i
j
4.3
0.3
(1.2)
(0.4)
0.2
(0.4)
1.5
0.2
0.2
(1.9)
(0.6)
2.2
9.8%
4.5
0.9
(1.1)
0.3
0.1
(0.3)
1.4
(0.6)
0.1
(6.0)
0.2
(0.5)
(2.1%)
a. Mainly attributable to a higher rate of tax in the US.
b. Includes a £1.2m benefit from enhanced US R&D deductions and the UK capital allowance super-deduction.
c. Tax losses utilised in the year includes £0.3m of UK tax losses whose use is uncertain and therefore unrecognised for deferred tax. Unrecogised amounts in 2021 included
£0.5m of State tax losses in the US which have restricted use, net of tax losses utilised of £0.2m.
d. Impact of non-tax deductible share based payment charges net of current tax deductions for share exercises in the year and the deferred tax asset recognition for
future exercises.
e. Effect of different rates of tax between jurisdictions on internal financing activities.
f. Non-deductible expenses and other permanent differences, includes a £1.7m charge in respect of uncertain tax positions in accordance with IFRIC 23 principles.
g. Relates to the Income Statement impact of the retranslation of UK deferred tax assets and liabilities following the substantial enactment of the future 25% tax rate effective
from 1 April 2023.
h. Arises from irrecoverable withholding taxes.
i.
Includes a credit in respect of the uncertain tax positions which have been been resolved, settled or released in accordance with IFRIC 23 principles of £3.8m as well as prior
year items arising from the true up of tax accruals in line with local tax filings which in many cases have an equal and opposite prior year item in deferred tax.
j. Arises from the true up of deferred tax estimates following the finalisation of entity statutory accounts and local tax returns.
156
156
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 10. Taxation continued
In addition to the amount charged to the Consolidated Income Statement, the following amounts relating to tax have been recognised directly in other
comprehensive income:
Deferred tax:
Items that will not be reclassified subsequently to profit and loss
Tax on actuarial items
Effect of change in UK tax rate
Items that may be reclassified subsequently to profit or loss
Tax on foreign exchange contracts – cash flow hedges
Total tax credit/(charge) recognised directly in other comprehensive income
2022
£m
2021
£m
4.3
1.4
0.7
6.4
(3.7)
(2.7)
0.8
(5.6)
In addition to the amount charged to the Consolidated Income Statement and Other Comprehensive Income, the following amounts relating to tax
have been recognised directly in equity:
Deferred tax:
Excess tax deductions related to share-based payments in exercised options
Total tax credit recognised directly in equity
Deferred tax (Note 21)
11. Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2021 of £nil per share (2020 – £nil)
Interim dividend for the year ended 31 December 2022 of 0.30p per share (2021 – £nil)
Proposed final dividend for the year ended 31 December 2022 of 1.00p per share (2021 – £nil)
12. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
Share options
Weighted average number of ordinary shares for the purposes of diluted earnings per share
Year ended
2022
£m
Year ended
2021
£m
–
–
0.1
0.1
6.4
(5.5)
Year ended
2022
£m
Year ended
2021
£m
–
1.2
1.2
4.1
–
–
–
–
Year ended
2022
Million
Year ended
2021
Million
415.3
415.7
11.6
426.9
6.8
422.5
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
157
157
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS
12. Earnings per share continued
Earnings and earnings per share
Profit for the period
Adjust:
Amortisation of intangible assets from acquisitions net of
tax of £nil (2021 – £nil)
Net restructuring income net of tax of £0.7m (2021 – £0.2m tax credit)
Corporate undertakings net of tax of £0.5m (2021 – £2.9m)
Non-cash tax credit
Adjusted earnings after tax
Earnings per share
– basic
– diluted
– adjusted
– adjusted and diluted
Year ended 2022
Year ended 2021
Notes
Earnings
£m
20.2
EPS
pence
4.86
Earnings
£m
24.2
9
31
10
0.2
(3.5)
1.2
–
18.1
–
(4.6)
(18.3)
(0.6)
0.7
0.05
(0.84)
0.29
–
4.36
4.86p
4.73p
4.36p
4.24p
EPS
pence
5.82
–
(1.11)
(4.40)
(0.14)
0.17
5.82p
5.73p
0.17p
0.17p
The denominators used for all basic, diluted and adjusted earnings per share are as detailed in the table above.
The presentation of adjusted earnings per share, derived in accordance with the table above, has been included to identify the performance of the
Group prior to the impact of amortisation of intangible assets from acquisitions, net restructuring income, the costs and income associated with
corporate undertakings and non-cash tax credit. The Board has adopted a policy to separately disclose those items, where significant in size, that it
considers are outside the earnings for the particular year under review and against which the Board measures and assesses the performance of the
business. See Note 9 for further details.
13. Goodwill
Cost
At 1 January
Corporate undertakings
Exchange differences
At 31 December
Accumulated impairment losses
At 1 January
Exchange differences
At 31 December
Carrying amount at 31 December
Notes
31
Year ended
2022
£m
Year ended
2021
£m
308.5
42.0
9.9
360.4
158.3
2.4
160.7
199.7
322.9
(15.1)
0.7
308.5
157.9
0.4
158.3
150.2
In 2022, goodwill has increased by £49.5m, of which £42.0m relates to the acquisition of Spencer Aerospace (see Note 31), with £7.5m net foreign
exchange differences.
Goodwill is allocated to the group of CGUs (CGU groups), namely Aerospace and Flexonics, reflecting the lowest level at which management exercises
oversight and monitors the Group’s performance. The table below highlights the carrying amount of goodwill allocated to these CGU groups, all of
which are considered significant in comparison with the total carrying amount of goodwill.
Aerospace
Flexonics
Total
Year ended
2022
£m
Year ended
2021
£m
143.6
56.1
199.7
98.0
52.2
150.2
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The timing of the annual
assessment at 30 September 2022 coincided with the Board’s review of the most recent financial strategy. Management applied the value in use
methodology to assess impairment. The key assumptions on which the value in use calculations were based relate to business performance over the
next five years, long-term growth rates beyond 2027 and the discount rates applied. The discount rates were pre-tax measures based on the rate of
10-year government bonds issued in the relevant market and in the same currency as the cash flows, adjusted for a risk premium to reflect both the
increased risk of investing in equities generally and the systematic risk of the CGU group. The key estimates were the level of revenue and operating
158
158
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 13. Goodwill continued
margins anticipated, the proportion of operating profit converted into cash flow in each year, long-term growth rates and discount rates applied. The
forecast compound annual growth rate in revenue from 2022 to 2027 was 8% (2021 – 2021 to 2026 was 9%), reflecting continued market recovery
post COVID-19 pandemic.
Forecasts used in the cash flow were based on the most recent financial strategy, as approved by Management for the next five years to 2027. These
estimates up to 2027, where appropriate, take account of the current economic environment as set out in the Strategic Report on pages 1 to 83.
Cash flows after 2027 have been extrapolated based on estimated long-term growth rates into perpetuity, which has been determined by the lower of
the long-term market growth rates and the historical forecast compound annual growth in revenue to 2027. For Aerospace, the long-term market
growth rate is 3.7% per annum (2021 – 3.0%), which does not exceed the long-term average growth rate forecast for the aerospace market as
included in market outlooks from Boeing and Airbus. For Flexonics, the long-term market growth rate is 1.5% per annum (2021 – 1.4%), which is based
on the world long-term forecast GDP growth for advanced economies.
The pre-tax discount rates applied to discount the pre-tax cash flows for Aerospace and Flexonics are 10.9% and 13.7% respectively (2021 – 10.7%
and 11.8%); these discount rates include CGU group specific risk adjustments which are the measurements used by Management in assessing
investment appraisals specific to each CGU group. The increase in discount rates is mainly driven by changes in 10-year UK and US government
bond yields.
Sensitivities reflecting reasonable possible changes have also been considered for each CGU group in relation to the value in use calculations: the
long-term growth rate assumption was reduced to 1 percentage point and the discount rate was increased by a 1 percentage point. Neither these
sensitivities or a reasonable possible change in the cash flows results in the carrying amount of the CGU groups exceeding their recoverable amount.
Further to the 30 September 2022 annual impairment test, the Board considered whether there were any triggering events as at the 31 December
2022 reporting date. The Board concluded that the market factors considered as at 30 September were largely unchanged and remained relevant for
the year end reporting date, with no new triggers identified for impairment.
14. Other intangible assets
Cost
At 1 January
Additions
Acquired on acquisition
Disposals
Restructuring impairment and disposal
Reclassification
Exchange differences
At 31 December
Amortisation
At 1 January
Charge for the year
Disposals
Restructuring impairment and disposal
Exchange differences
At 31 December
Carrying amount at 31 December
Intangible
assets
from
acquisitions
Year ended
2022
£m
Computer
software
and others
Year ended
2022
£m
Total
Year ended
2022
£m
Intangible
assets
from
acquisitions
Year ended
2021
£m
Computer
software
and others
Year ended
2021
£m
Total
Year ended
2021
£m
117.5
–
31.0
–
–
–
8.8
157.3
117.5
0.2
–
–
8.8
126.5
30.8
22.8
1.8
–
(1.2)
(0.4)
0.6
1.7
25.3
18.6
1.5
(1.2)
(0.4)
1.4
19.9
5.4
140.3
1.8
31.0
(1.2)
(0.4)
0.6
10.5
182.6
136.1
1.7
(1.2)
(0.4)
10.2
146.4
36.2
121.0
–
–
(3.5)
–
–
–
117.5
121.0
–
(3.5)
–
–
117.5
–
23.0
1.1
–
(0.6)
(0.6)
–
(0.1)
22.8
18.2
1.5
(0.6)
(0.6)
0.1
18.6
4.2
144.0
1.1
–
(4.1)
(0.6)
–
(0.1)
140.3
139.2
1.5
(4.1)
(0.6)
0.1
136.1
4.2
The carrying amount of intangible assets from acquisitions as at 31 December 2022 relates to the acquistion of Spencer Aerospace and consists of
£23.8m relating to Qualified parts list, £6.5m relating to Customer relationships and £0.5m relating to Order backlog. These are being amortised over
periods of 18 years and 1 month, 16 years and 1 month and 1 year and 1 month respectively.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
159
159
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 15. Investment in joint venture
The Group has a 49% interest in Senior Flexonics Technologies (Wuhan) Limited, a jointly controlled entity incorporated in China, which was set up in
2012. Senior Flexonics Technologies (Wuhan) Limited is a precision manufacturer of automotive components.
The results of the joint venture are accounted for using equity accounting.
The Group’s investment of £4.4m represents the Group’s share of the joint venture’s net assets as at 31 December 2022 (2021 – £3.9m). The
following amounts represent the aggregate amounts relating to the revenue and expenses and assets and liabilities of Senior Flexonics Technologies
(Wuhan) Limited for the years ended 31 December 2022 and December 2021.
Revenue
Expenses
Profit
Total assets
Total liabilities
Net assets
Group's share of profit
Group's share of net assets
2022
£m
7.0
(6.2)
0.8
11.5
(2.6)
8.9
0.4
4.4
2021
£m
6.6
(6.1)
0.5
10.0
(2.0)
8.0
0.2
3.9
160
160
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 16. Property, plant and equipment
Freehold
land and
buildings
Year ended
2022
£m
Leasehold
building
improve-
ments
Year ended
2022
£m
Plant
and
equipment
Year ended
2022
£m
Right-of-
use
Land and
Buildings
Year ended
2022
£m
Right-of-
use
Plant and
equipment
Year ended
2022
£m
Total
Year ended
2022
£m
Freehold
land and
buildings
Year ended
2021
£m
Leasehold
building
improve-
ments
Year ended
2021
£m
Plant
and
equipment
Year ended
2021
£m
Right-of-
use
Land and
Buildings
Year ended
2021
£m
Right-of-
use
Plant and
equipment
Year ended
2021
£m
Total
Year ended
2021
£m
Cost or
valuation
At 1 January
Additions
Acquired
on acquisition
Lease
Modifications
Exchange
differences
Disposed
on disposal
activities
Disposals
Reclassification
Restructuring
impairment
and disposal
At 31 December
Accumulated
depreciation
and impairment
At 1 January
Charge for
the year
Lease
Modifications
Exchange
differences
Eliminated on
disposal activities
Eliminated
on disposals
Reclassification
Restructuring
impairment
and disposal
At 31 December
Carrying
amount at
31 December
104.6
1.2
4.5
0.3
518.8
27.2
88.2
0.8
6.5
1.2
722.6
30.7
111.7
0.3
4.2
0.3
536.7
19.6
86.1
0.9
6.2
1.1
744.9
22.2
–
–
–
–
1.1
2.6
2.1
5.8
–
2.7
(0.5)
2.2
–
–
9.4
0.5
46.2
6.3
0.5
62.9
(1.1)
–
(0.3)
–
–
–
3.0
–
(11.2)
(6.7)
–
(1.5)
–
–
(0.5)
–
–
(13.5)
(3.7)
(3.1)
(0.1)
–
–
–
–
–
–
–
–
–
–
–
–
3.7
(0.2)
3.5
(5.0)
(0.5)
–
(6.6)
(16.6)
(11.0)
–
–
(0.4)
–
–
(0.2)
–
(19.7)
(11.7)
–
(1.9)
113.0
–
8.3
(5.2)
570.2
–
99.1
–
9.3
(7.1)
799.9
(3.1)
104.6
–
4.5
(4.9)
518.8
(1.6)
88.2
(0.4)
6.5
(10.0)
722.6
36.3
3.5
360.9
23.6
3.7
428.0
35.8
3.2
355.6
16.8
3.0
414.4
2.6
0.3
34.9
8.7
1.6
48.1
2.5
0.3
34.0
8.1
1.4
46.3
–
–
–
0.3
(0.4)
(0.1)
–
3.9
0.5
32.2
1.8
0.3
38.7
(0.3)
–
(0.3)
–
–
–
1.1
–
–
–
–
(0.9)
(10.8)
(4.2)
(1.5)
–
(0.5)
–
(13.1)
(3.1)
(0.1)
–
–
–
–
–
–
–
–
(0.1)
(0.1)
(2.3)
(0.1)
(11.3)
–
–
–
(10.8)
–
(0.4)
–
(0.2)
–
(2.7)
(12.2)
(11.5)
–
(1.9)
40.6
–
5.4
(3.9)
409.1
–
32.9
–
4.7
(5.8)
492.7
(0.7)
36.3
–
3.5
(4.3)
360.9
(0.8)
23.6
(0.4)
3.7
(6.2)
428.0
72.4
2.9
161.1
66.2
4.6
307.2
68.3
1.0
157.9
64.6
2.8
294.6
As part of the restructuring programme (see Note 9), £1.3m (2021 – £3.8m) of property, plant and equipment has been impaired in 2022, of which
£1.3m relates to Aerospace and £nil relates to Flexonics. The recoverable amount of the assets was determined based on value-in-use for assets with
confirmed orders, or fair value less costs to sell, where assets are to be disposed.
At 31 December 2022, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to £1.9m
(2021 – £3.4m).
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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161
161
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 17. Inventories
Raw materials
Work-in-progress
Finished goods
Total
Year ended
2022
£m
Year ended
2021
£m
77.5
80.6
36.2
194.3
56.5
60.1
28.6
145.2
Inventory releases in 2022 were £1.9m (2021 – write-down of £2.5m), after releases of £2.7m (2021 – £1.5m) relating to restructuring (see Note 9).
18. Trade and other receivables
Trade and other receivables at 31 December comprise the following:
Non-current assets
Foreign exchange contracts
Other receivables
Current assets
Trade receivables
Value added tax
Foreign exchange contracts
Prepayments
Other receivables
Total trade and other receivables
Year ended
2022
£m
Year ended
2021
£m
0.3
0.1
0.4
110.6
2.9
2.4
10.7
0.1
126.7
127.1
–
0.1
0.1
85.2
1.9
0.8
10.0
0.1
98.0
98.1
Credit risk
The Group’s principal financial assets are bank balances and cash and trade receivables. The credit risk on liquid funds and derivative financial
instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the Consolidated Balance Sheet are net of loss
allowances. There are no other credit or impairment losses for other classes of financial assets.
Further disclosures on credit risk are included in Note 20.
The average credit period taken on sales of goods is 55 days (2021 – 52 days). An allowance has been made for estimated irrecoverable amounts from
the sale of goods of £3.3m (2021 – £2.0m). In determining the recoverability of trade receivables, the Group considers any change in the credit quality
of the trade receivable from the date credit was initially granted up to the reporting date. At 31 December 2022, the carrying amount of the receivable
from the Group’s most significant customer was £8.3m (2021 – £6.7m from the same customer). The Group has no other significant concentration of
credit risk, with exposure spread over a large number of counterparties and customers. Accordingly, the Directors believe that there is no further credit
provision risk in excess of the loss allowance.
162
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 18. Trade and other receivables continued
Expected credit loss
Movements in loss allowance:
At 1 January
Provision for impairment
Amounts written off as uncollectible
Amounts recovered
Exchange differences
At 31 December
Ageing analysis of past due, net of loss allowance:
Up to 30 days past due
31 to 60 days past due
61 to 90 days past due
91 to 180 days past due
Total past due, net of loss allowance
Not past due
Total current trade receivables
Year ended
2022
£m
Year ended
2021
£m
2.0
1.5
(0.2)
(0.2)
0.2
3.3
10.4
3.0
1.5
1.9
16.8
93.8
110.6
1.6
0.6
(0.2)
–
–
2.0
9.3
3.2
0.9
1.6
15.0
70.2
85.2
There are no items past due in any other class of financial assets except for trade receivables.
The Directors consider that the carrying amount of trade and other receivables approximates their fair value. The maximum exposure to credit risk at
the reporting date is the fair value of each class of receivable above. The Group does not hold any collateral as security.
19. Bank overdrafts and loans
Bank overdrafts
Bank loans
Other loans
The borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
After five years
Less: amount due for settlement within 12 months (shown under current liabilities)
Amount due for settlement after 12 months
Year ended
2022
£m
Year ended
2021
£m
0.5
17.4
125.8
143.7
0.5
–
118.5
24.7
143.7
(0.5)
143.2
–
(0.5)
131.5
131.0
14.8
–
70.7
45.5
131.0
(14.8)
116.2
At 31 December 2022, bank loans of £18.6m are drawn and there are £1.2m of capitalised revolving credit facility transaction costs. At 31 December
2021, bank loans were undrawn, and there were £0.5m of capitalised revolving credit facility transaction costs.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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163
163
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS
19. Bank overdrafts and loans continued
Analysis of borrowings by currency
31 December 2022
Bank overdrafts
Bank loans
Other loans
31 December 2021
Bank overdrafts
Bank loans
Other loans
The weighted average interest rates paid were as follows:
Bank loans and overdrafts
Other loans
Total
£m
0.5
17.4
125.8
143.7
Total
£m
–
(0.5)
131.5
131.0
Pound
Sterling
£m
–
(1.2)
26.9
25.7
Pound
Sterling
£m
–
(0.5)
26.9
26.4
Euros
£m
0.5
–
24.7
25.2
Euros
£m
–
–
23.4
23.4
US
Dollars
£m
–
18.6
74.2
92.8
US
Dollars
£m
–
–
81.2
81.2
Year ended
2022
%
Year ended
2021
%
3.64
3.07
1.51
3.10
Bank loans and overdrafts of £19.1m (2021 – £nil) are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. Other
borrowings are mainly arranged at fixed interest rates and expose the Group to fair value interest rate risk. No interest rate swaps were taken out in
2021 or 2022.
The Directors estimate the fair value of the Group’s borrowings to be as follows:
Bank loans and overdrafts
Other loans
Year ended
2022
£m
Year ended
2021
£m
17.9
116.3
134.2
(0.5)
133.8
133.3
The fair value of Other loans has been determined by applying a make-whole calculation using the prevailing treasury bill yields plus the applicable
credit spread for the Group (level 2 of the fair value hierarchy as defined in Note 20).
The other principal features of the Group’s borrowings are as follows:
Bank overdrafts are repayable on demand. The effective interest rates on bank overdrafts and loans are determined based on SONIA, SOFR and
appropriate LIBOR rates plus applicable margins.
The Group’s main loans are unsecured guaranteed loan notes in the US private placement market and revolving credit facilities.
a) Loan notes of €28m, 2022 £24.8m (2021 – £23.5m) were taken out in January 2017, carry interest at the rate of 1.51% and mature on
1 February 2027.
b) Loan notes of $20m, 2022 £nil (2021 – £14.8m) were taken out in October 2015 and were repaid in October 2022. The loan notes carried interest at
the rate of 3.42% per annum.
c) Loan notes of $60m, 2022 £49.6m (2021 – £44.5m) were taken out in October 2015 and are due for repayment in October 2025. The loan notes
carry interest at the rate of 3.75% per annum.
d) Loan notes of £27m were drawn down in January 2018, carry interest at a rate of 2.35% and are due for repayment in January 2025.
e) Loan notes of $30m, 2022 £24.8m (2021 – £22.2m) were taken out in September 2018, carry interest at the rate of 4.18% and are due for
repayment in September 2028.
Transaction costs of £0.4m, directly attributable to the GBP notes (£0.1m), the Euro notes (£0.1m) and the US Dollar notes (£0.2m), have been
deducted from their carrying value.
The Group also has two revolving credit facilities.
164
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 19. Bank overdrafts and loans continued
A committed multi-currency revolving credit facility in the UK of £115m (2021 – £120m) was amended and extended in November 2022 and matures
in November 2026. At 31 December 2022, a loan of $20m (£16.5m) with reference to USD LIBOR was outstanding under the £115m facility. At 31
December 2021, £nil was drawn under the £120m facility. The refinancing of the Group’s main UK revolving credit facility demonstrates the strong
ESG commitments made by Senior and its lenders in agreeing appropriate sustainability linked Key Performance Indicators (“KPIs”). The first testing
period on these KPIs is not until the year ended 31 December 2023, which could have a small impact on the UK RCF interest margin.
A committed $50m single bank (£41.3m) loans and letter of credit facility was extended in June 2022 and matures in June 2025. There were $2.6m
(£2.1m) loans with reference to Term SOFR which are drawn under the facility on 31 December 2022 and $nil (£nil) loans drawn on 31 December 2021
and there were letters of outstanding credit of $3.1m (£2.6m) (2021 – £1.1m).
As at 31 December 2022, the Group had available £135.1m (2021 – £155.9m) of undrawn committed borrowing facilities in respect of which all
conditions precedent had been met. The weighted average maturity of the Group’s committed facilities at 31 December is 3.5 years (2021 – 3.0 years).
20. Financial instruments
Capital risk management
The Group manages its capital structure to safeguard its ability to continue as a going concern whilst maximising the return to stakeholders through the
optimisation of the balance between debt and equity. In considering the appropriate level of net debt, the Group pays close attention to its level as
compared to the cash generation potential of the Group, measured by EBITDA (defined in the Notes to the Financial Headlines). The Group also
monitors capital on the basis of a gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is derived in Note 32c. Lease
liabilities are excluded from net debt in calculating the gearing ratio. Total capital is the equity shown in the Consolidated Balance Sheet.
The Group’s strategy in respect of gearing is to target a long-term gearing ratio within the range of 30% to 60%. The gearing ratio for the Group at the
end of 2022 was 22% (2021 – 19%).
All of the Group’s external borrowing facilities at 31 December 2022 have a requirement for the ratio of net debt to EBITDA to be less than 3.0x (US
Private Placements) or 3.5x (UK RCF and US RCF). IFRS 16 does not impact the Group’s lending covenants as these are currently based on frozen
GAAP, hence figures quoted below exclude the impact of IFRS 16 on net debt, interest and EBITDA. As required by the covenant definition, net debt is
restated using 12-month average exchange rates (consistent with EBITDA definition).
The Group has two covenants for committed borrowing facilities, which are tested at June and December: the Group’s net debt to EBITDA (defined in
the Notes to the Financial Headlines) must not exceed 3.0x and interest cover, the ratio of EBITDA to interest must be higher than 3.5x.
At 31 December 2022, the Group’s net debt to EBITDA was 1.47x (31 December 2021 – 1.87x) and interest cover was 9.4x (31 December 2021 –
7.3x), both comfortably within the covenants limits.
Financial risk management
The Group’s activities expose it to a variety of financial risks including foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Group’s
overall treasury risk management programme focuses on the unpredictability of financial markets, and seeks to minimise potential adverse effects on
the Group’s financial performance.
The Group uses derivative financial instruments to hedge certain risk exposures. The use of financial derivatives is governed by the Group’s policies
approved by the Board, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and
non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the Group’s
Treasury Committee on a regular basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
Foreign exchange risk management
The Group enters into forward foreign exchange contracts to hedge the exchange risk arising on the operations’ trading activities in foreign currencies.
Where commented on below, the sensitivity analysis of the Group’s exposure to foreign currency risk at the reporting date has been determined based
on the change taking place at the beginning of the financial year and left unchanged throughout the reporting period, with all other variables held
constant (such as interest rates). The sensitivity assumptions are based on analysis reviewed by the Group’s Treasury Committee.
Translation risk
The Group derived 83% of its revenue from businesses outside the United Kingdom, with 59% relating to operations in North America. Fluctuations in
the value of the US Dollar and other currencies in relation to Pound Sterling have had, and may continue to have, a significant impact on the results of
the Group’s operations when reported in Pound Sterling. The Group decided not to hedge this translation risk. In addition, the majority of assets are
denominated in foreign currency, particularly in US Dollars. In order to provide a hedge against volatility in the value of these assets compared to the
Group’s earnings, and hence provide a natural hedge against the Group’s principal lending covenant (the ratio of net debt to EBITDA), the Group aims
to borrow in foreign currencies in similar proportions to its generation of foreign currency EBITDA, where practical and economic. A 10% appreciation
(or depreciation) of all other currencies against the Pound Sterling would have increased (or decreased) 2022 Group adjusted operating profit by £4.3m
(£2.6m of which would have been due to the US Dollar movement) and would have increased (or decreased) equity by £31.1m (£18.9m of which
would have been due to the US Dollar movement).
Transaction risk
The Group has a number of transaction-related foreign currency exposures, particularly between the US Dollar and the Pound Sterling, Thai Baht and
Malaysian Ringgit. The Group seeks to hedge between 0% to 100% of transaction-related exposures mainly on a rolling 15 to 18-month forward basis,
but in some cases for periods of up to 60 months and applies hedge accounting where the forwards can be designated in a qualifying cash flow hedge
relationship. Based on the net of the annual sales and purchase-related exposures, all transaction-related foreign currency exposures to Group profit
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
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165
165
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 20. Financial instruments continued
after hedging in existence at 31 December 2022 are immaterial. The impact on equity is determined by the unrecognised portion of open forward
contracts at the year-end. A 10% appreciation (or depreciation) of the US Dollar against the Pound Sterling, Thai Baht and the Malaysian Ringgit would
have decreased (or increased) equity by £5.3m, £2.0m and £1.3m, respectively.
Interest rate risk management
The Group has a policy of maintaining approximately 60% of its borrowing costs at fixed interest rates. The Group generally borrows long-term in fixed
rates but at times may borrow at floating rates and swap into fixed depending on credit market conditions. Occasionally a portion of fixed debt interest
is swapped into floating rates. The combination of maintaining an acceptable balance of fixed and floating rate debt, and the Group’s policy of
borrowing in foreign currency in proportion to its generation of foreign currency earnings, provides an effective hedge against the impact of interest
rate and foreign currency volatility on total interest costs. As at year end 2022, the percentage of debt at fixed interest was 87% (2021 – 100%),
excluding IFRS 16 lease liabilities from debt.
The following sensitivity analysis of the Group’s exposure to interest rate risk in 2022 has been retrospectively determined based on the exposure to
applicable interest rates on financial assets and liabilities held throughout the financial year, with all other variables held constant (such as foreign
exchange rates). The sensitivity assumptions are based on analysis reviewed by the Group’s Treasury Committee. If variable interest rates had been
0.5% lower (or higher), the Group’s profit before tax would have increased (or decreased) by £0.1m. Any fixed interest debt is held to maturity and not
fair value adjusted through the Consolidated Income Statement. An increase (or decrease) of 0.5% in the market interest rate for the fixed rate debt
held up to maturity would have decreased (or increased) the fair value of the Group’s borrowings by £1.8m. The Group’s sensitivity to interest rates has
remained broadly consistent with prior period due to the high proportion of fixed debt.
Credit risk management
The Group’s credit risk is primarily attributable to its trade receivables. The credit quality of customers is assessed taking into account their financial
position, past experience and other factors. Further details on determining the recoverability of trade receivables is provided in Note 18. The Group is
guarantor under one lease of a current subsidiary entity in the UK. Credit risk on liquid funds and derivative financial instruments is limited because the
counterparties are financial institutions with high credit ratings assigned by international credit rating agencies. The carrying amount of financial assets
recorded in the Financial Statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk.
The Group participates in some non-recourse reverse factoring schemes which are arranged by customers. These are a form of non-recourse factoring
that are common practice within the aerospace sector and with large customers in the Flexonics Division. In a reverse factoring scheme, a financial
counterparty commits to pay supplier invoices ahead of due date in exchange for a discount interest charge. It is a funding solution initiated by the
customer to provide the supplier with an alternative financing arrangement. The Group participates in reverse factoring schemes as a way of reducing
credit risk. The trade receivables reverse factored at 31 December 2022 were £24.9m (2021 – £16.8m). The net impact of reverse factoring on 2022
was a cash inflow in working capital of £6.2m (2021 – £0.9m outflow) and the discount interest presented within other finance costs is a charge of
£0.6m in 2022 (2021 – £0.2m).
Liquidity risk management
Liquidity risk reflects the risk that the Group will have insufficient resources to meet its financial liabilities as they fall due. The Group manages liquidity
risk by maintaining adequate reserves, banking facilities and revolving credit facilities, by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities. Cash flow forecasts are produced monthly, together with appropriate capacity planning
and scenario analysis, to ensure that bank covenant and liquidity targets will be met. The Directors also regularly assess the balance of capital and debt
funding of the Group, as part of a process to satisfy the Group’s long-term strategic funding requirements.
As noted in the Financial Review on pages 78 to 81, the Group is currently in a well-funded position, with significant headroom under its committed
borrowing facilities. It is considered unlikely that the Group will face any significant funding issues in the foreseeable future.
166
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 20. Financial instruments continued
Categories of financial instruments
Carrying value of financial assets:
Cash and cash equivalents
Trade receivables
Other receivables
Financial assets at amortised cost
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total financial assets
Carrying value of financial liabilities:
Bank overdrafts and loans
Lease liabilities
Trade payables
Deferred consideration
Other payables
Financial liabilities at amortised cost
Contingent Consideration - fair value through profit or loss
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total financial liabilities
Undiscounted contractual maturity of financial liabilities at amortised cost:
Amounts payable:
On demand or within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Financial liabilities at amortised cost
Year ended
2022
£m
Year ended
2021
£m
43.2
110.6
0.2
154.0
2.5
0.2
156.7
143.7
78.4
103.4
23.4
65.1
414.0
28.9
8.5
0.1
451.5
228.9
149.1
81.5
459.5
(45.5)
414.0
51.1
85.2
0.2
136.5
0.7
0.1
137.3
131.0
73.2
68.3
–
54.6
327.1
–
3.6
–
330.7
152.3
118.8
108.7
379.8
(52.7)
327.1
The contingent consideration which is potentially payable in more than one year but less than five years has a gross value at 31 December 2022 of
$40m (£33.1m) and a discounted value of $35m (£28.9m). There was no contingent consideration payable as at 31 December 2021.
The carrying amount is a reasonable approximation of fair value for the financial assets and liabilities, excluding leases, noted above except for bank
overdrafts and loans, disclosure of which are included within Note 19.
An ageing analysis of trade receivables is disclosed within Note 18.
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167
167
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 20. Financial instruments continued
Forward foreign exchange contracts
The Group enters into forward foreign exchange contracts to hedge the exchange risk arising on the operation’s trading activities in foreign currencies
in accordance with the Group’s accounting policy as set out in Note 2. At the Balance Sheet date, total notional amounts and fair values of outstanding
forward foreign exchange contracts that the Group have committed are given below:
Notional amounts:
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total
Less: amounts maturing within 12 months
Amounts maturing after 12 months
Contractual maturity:
Cash flow hedges balances due within one year:
Outflow
Inflow
Cash flow hedges balances due between one and two years:
Outflow
Inflow
Cash flow hedges balances due between two and five years:
Outflow
Inflow
Held for trading balances due within one year:
Outflow
Inflow
Fair values:
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total liability
Year ended
2022
£m
Year ended
2021
£m
159.4
0.5
159.9
(99.4)
60.5
128.9
4.1
133.0
(79.1)
53.9
(101.5)
99.9
(76.8)
75.2
(22.9)
22.0
(22.4)
22.0
(42.5)
38.6
(32.1)
32.1
(0.5)
0.5
(4.0)
4.1
(6.0)
0.1
(5.9)
(2.9)
0.1
(2.8)
These fair values are based on market values of equivalent instruments at the Balance Sheet date, comprising £2.7m (2021 – £0.8m) assets included in
trade and other receivables and £8.6m (2021 – £3.6m) liabilities included in trade and other payables. The fair value of currency derivatives that are
designated and effective as cash flow hedges amounting to £4.9m loss (2021 – £2.6m loss) has been deferred in equity.
Fair values
The following table presents an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels
1–3 based on the degree to which the fair value is observable:
Level 1
those fair values derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2
Level 3
those fair values derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
those fair values derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
There has not been any transfer of assets or liabilities between levels. There are no non-recurring fair value measurements. Level 2 fair values are
derived from future cash flows, of open forward contracts at 31 December, translated by the difference between contractual rates and observable
forward exchange rates.
168
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 20. Financial instruments continued
31 December 2022
Assets
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total assets
Liabilities
Contingent Consideration – fair value through profit or loss
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total liabilities
31 December 2021
Assets
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total assets
Liabilities
Contingent Consideration – fair value through profit or loss
Foreign exchange contracts – cash flow hedges
Foreign exchange contracts – held for trading
Total liabilities
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
–
2.5
0.2
2.7
–
8.5
0.1
8.6
–
–
–
28.9
–
–
28.9
Level 1
£m
Level 2
£m
Level 3
£m
–
–
–
–
–
–
–
0.7
0.1
0.8
3.6
–
3.6
–
–
–
–
–
–
–
Total
£m
2.5
0.2
2.7
28.9
8.5
0.1
37.5
Total
£m
0.7
0.1
0.8
–
3.6
–
3.6
An amount of £0.8m loss (2021 – £0.1m gain) has been transferred to the Consolidated Income Statement, and is included within operating profit.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument. The Group enters into hedge relationships where the critical
terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If
changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the
hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness.
Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the designated component value of the hedging instrument
exceeds on an absolute basis the change in value of the hedged item attributable to the hedged risk. In hedges of the above foreign exchange
contracts this may arise if the timing of the transaction changes from what was originally estimated.
The hedged forecast transactions denominated in foreign currency are expected to occur at various dates during the next 60 months. Amounts
deferred in equity are recognised in the Consolidated Income Statement in the same period in which the hedged items affect profit or loss, which is
generally within 12 months from the Balance Sheet date.
In 2021 and 2022 some cash flow hedging relationships were discontinued because forecast foreign currency transactions were no longer highly
probable and no longer expected to occur. Previously accumulated gains or losses on the forward contracts were immediately reclassified to the
income statement. These forward contracts, and the forward contracts entered to unwind the position, that remained at 31 December 2021 and
31 December 2022 were presented in the balance sheet as held for trading assets.
The fair value of contingent consideration is based on the expected present value technique, using risk-adjusted discount rate to discount probability
weighted cashflows.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
169
169
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 21. Tax balance sheet
Current tax
The current tax receivable of £2.1m (2021 – £2.6m) includes excess tax paid to tax authorities that is expected to be recovered within 12 months by
way of offset against future tax liabilities or refund.
The majority of the Group’s taxable profits arise in countries, including the US, where the estimated tax liabilities are paid in on-account instalments
during the year to which they relate and are largely paid at the Balance Sheet date. The current tax liability of £17.7m (2021 – £14.6m) includes £1.5m
(2021 – £1.3m) tax due on profits of the current and prior years as well as £16.2m (2021 – £16.7m) provisions for tax uncertainties that represent
amounts expected to be paid but by their nature, there is uncertainty over timing and eventual settlement. Amounts receivable of £2.8m (2021 –
£3.4m) that are considered to have a right of offset against provisions for tax uncertainties are also included within the current tax liability.
The Group recognises provisions for tax items which are considered to have a range of possible tax outcomes and separately accounts for interest that
may be due thereon. The range of reasonably possible outcomes considered by the Board could increase those tax liabilities by £10.4m (2021 –
£8.6m). These uncertainties exist due to a number of factors including differing interpretations of local tax laws and the determination of appropriate
arm’s length pricing in accordance with OECD transfer pricing principles on internal transactions and financing arrangements. In calculating the carrying
amount of provisions, Management estimates the tax which could become payable as a result of differing interpretations and decisions by tax
authorities in respect of transactions and events whose treatment for tax purposes is uncertain. In accordance with IFRIC 23, individual provisions are
established based on an assessment of whether it is the most likely individual outcome, or the expected outcome on a probability basis that is likely to
best reflect the resolution of the uncertainty.
Deferred tax liabilities and assets
The following are the deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period:
Accelerated
tax
depreciation
£m
Unrealised
FX
gains
£m
Goodwill and
intangible
amortisation
£m
Retirement
benefits
£m
R&D
tax credits
£m
At 1 January 2021
(Charge)/credit to Consolidated
Income Statement
(Charge)/credit to other
comprehensive income
(Charge)/credit direct to equity
Exchange differences
At 1 January 2022
(Charge)/credit to Consolidated
Income Statement
(Charge)/credit to other
comprehensive income
(Charge)/credit direct to equity
Exchange differences
Asset/(liability) at
31 December 2022
(16.7)
(0.7)
3.4
(0.1)
–
0.2
(13.2)
(2.6)
–
–
(1.7)
(17.5)
0.3
0.8
–
–
0.4
–
0.7
–
–
1.1
(7.5)
2.0
–
–
(0.1)
(5.6)
(1.4)
–
–
(0.7)
Tax
losses
£m
3.4
1.4
–
–
(0.2)
4.6
Other
temporary
differences
£m
21.1
(2.5)
0.1
0.1
–
18.8
(6.4)
(2.8)
(6.4)
–
–
(15.6)
6.0
(0.3)
–
–
0.1
5.8
(0.6)
(3.1)
0.3
11.5
5.7
–
0.3
–
–
–
–
–
(0.7)
–
–
3.3
(7.7)
(10.2)
2.7
4.2
33.6
Total
£m
(0.8)
1.5
(5.6)
0.1
–
(4.8)
4.1
6.4
–
0.5
6.2
Other temporary differences include assets in the US of £15.6m (2021 – £13.6m) in respect of inventory provisions, accruals and other expenses
where tax relief is only available when items are realised or paid as well other timing differences for interest costs of £2.3m (2021 – £nil) and R&D
expenditure expected to be deductible in future periods of £4.8m (2021 – £nil). Also included are assets held in respect of IFRS16 of £1.9m (2021
– £1.5m) and share based compensation of £1.9m (2021 – £1.1m).
The deferred tax liability in respect of Retirement benefits relates primarily to the Senior plc UK defined benefit pension plan £12.9m (2021 – £18.0m),
net of deferred tax assets on other schemes.
UK deferred tax assets and liabilities at the Balance Sheet date have been stated at the future rate of UK corporation tax of 25% at which assets are
expected to be realised or liabilities settled. This has resulted in an overall increase in the net deferred tax liability at 31 December 2022 of £0.9m with
a current year charge of £0.2m in the Income Statement, £1.4m credit through Other Comprehenisive Income and a £2.1m charge recognised in the
opening balance at 1 January 2022.
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances, after offset:
Deferred tax assets
Deferred tax liabilities
170
170
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Year ended
2022
£m
Year ended
2021
£m
10.9
(4.7)
6.2
5.7
(10.5)
(4.8)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 21. Tax balance sheet continued
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available, including those arising from the reversal
of other taxable temporary differences, against which the assets can be utilised.
At the Balance sheet date the Group has recognised deferred tax assets in respect of losses of £4.2m (2021 – £4.6m), including £3.1m (2021 – £3.2m)
recognised against deferred tax liabilities and £1.1m (2021 – £1.4m) recognised based on anticipated profits in the Group’s five year forecast to 2027 as
approved by the Board. Due to uncertainty as to the availability of future profits against which tax losses may be utilised, £24.0m (2021 – £23.6m) of
losses have not been recognised. Included in unrecognised tax losses are losses of £12.2m (2021 – £13.8m) that will expire over a period of one to
nine years. Other losses may be carried forward indefinitely. Also, at the Balance Sheet date, a deferred tax liability of £0.2m (2021 – £0.2m) has been
recognised in respect of the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries expected to reverse in
the foreseeable future. No temporary difference has been recognised in respect of £35.1m (2021 – £34.5m) of undistributed earnings, which may be
subject to a withholding tax, as the Group is in a position to control the timing of the reversal of the temporary differences and it is not probable that
such differences will reverse in the foreseeable future.
At the Balance Sheet date, the Group had £5.0m (2021 – £5.0m) of surplus Advanced Corporation Tax (‘ACT’), previously written off, for which no
deferred tax asset has been recognised as it is unlikely to be recovered in the foreseeable future due to the UK earnings profile. The Group also has
£18.0m (2021 – £18.0m) of unused capital losses.
22. Lease liabilities
When measuring lease liabilities, the Group discounts lease payments using incremental borrowing rates, determined on a lease portfolio basis.
Undiscounted contractual maturity of lease liabilities:
Amounts payable:
On demand or within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Lease liabilities
Amounts recognised in the Consolidated Income Statement:
Interest on lease liabilities
Income from sub-leasing right-of-use assets
Expenses relating to short-term leases
Expenses relating to low value leases
Amounts recognised in the Consolidated Cash Flow Statement
Cash outflow for Leases (including interest)
23. Trade and other payables
Trade and other payables at 31 December comprise the following:
Current liabilities
Trade payables
Social security and PAYE
Value added tax
Foreign exchange contracts
Accrued expenses
Total trade and other payables
Year ended
2022
£m
Year ended
2021
£m
12.9
38.1
55.7
106.7
(28.3)
78.4
10.8
35.6
60.9
107.3
(34.1)
73.2
Year ended
2022
£m
Year ended
2021
£m
2.5
(0.1)
0.1
–
2.5
2.6
(0.1)
0.1
–
2.6
Year ended
2022
£m
11.6
Year ended
2021
£m
11.0
Year ended
2022
£m
Year ended
2021
£m
103.4
4.8
1.6
3.9
77.5
191.2
68.3
5.7
1.6
3.6
63.8
143.0
Foreign exchange contracts of £4.7m (2021 - £nil) is included in Others, under Non-current liabilities on the Consolidated Balance Sheet.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
The average credit period taken for trade purchases is 63 days (2021 – 56 days).
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
171
171
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 24. Provisions
At 1 January 2021
Additional provision in the year
Utilisation of provision
Release of unused amounts
Exchange differences
At 1 January 2022
Additional provision in the year
Utilisation of provision
Release of unused amounts
Exchange differences
At 31 December 2022
Included in current liabilities
Warranty
£m
Restructuring
£m
Legal claims
and contractual
matters
£m
6.6
1.3
(1.0)
(0.1)
0.1
6.9
3.7
(0.1)
(0.3)
0.6
10.8
8.1
8.9
2.8
(9.8)
(0.3)
(0.3)
1.3
1.2
(2.3)
–
–
0.2
0.2
10.3
2.1
(3.2)
(1.3)
(0.1)
7.8
6.2
(2.5)
(3.3)
0.4
8.6
8.4
Total
£m
25.8
6.2
(14.0)
(1.7)
(0.3)
16.0
11.1
(4.9)
(3.6)
1.0
19.6
16.7
Warranty
Provisions for warranty costs are based on an assessment of future claims with reference to past experience. £8.1m of costs are expected to settle
within the next 12 months.
Restructuring
The Group continued to implement further restructuring in 2022, discussed in further detail in Note 9. The amount recorded is expected to be fully
utilised in 2023.
Legal claims and contractual matters
Provisions at 31 December 2022 comprise £8.6m (2021- £7.8m) relating to contractual matters that have arisen in the ordinary course of business, the
settlement of which are subject to ongoing discussions. Management exercises judgment to determine the best estimate of the most likely outcome,
having considered each provision separately and the possible range of outcomes. Amounts are recorded for known issues based on past experience
of similar items and other known factors and circumstances. As with any judgment there is a high degree of inherent uncertainty, particularly with legal
proceedings and claims, and the actual amounts of the settlement could differ from the amount provided.
25. Share capital
Issued and fully paid:
419.4 million ordinary shares of 10p each
No shares were issued during 2022 and 2021.
The Company has one class of ordinary shares which carry no right to fixed income.
26. Share premium account
Balance at 1 January
Movement in year
Balance at 31 December
27. Equity reserve
Balance at 1 January
Transfer to retained earnings reserve
Movement in year
Balance at 31 December
The transfer to retained earnings reserve is in respect of equity-settled share-based payments that vested during the year.
The movement in the year of £4.3m (2021 – £3.5m) is in respect of the share-based payment charge for the year.
172
172
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Year ended
2022
£m
Year ended
2021
£m
41.9
41.9
Year ended
2022
£m
Year ended
2021
£m
14.8
–
14.8
14.8
–
14.8
Year ended
2022
£m
Year ended
2021
£m
5.8
(3.7)
4.3
6.4
5.1
(2.8)
3.5
5.8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 28. Hedging and translation reserves
Balance at 1 January
Exchange differences on translation of overseas operations
Foreign exchange losses/(gains) recycled to the Income
Statement on disposal
Change in fair value of hedging derivatives
Tax on foreign exchange contracts – cash flow hedges
Balance at 31 December
Hedging
reserve
Year ended
2022
£m
Translation
reserve
Year ended
2022
£m
Total
Year ended
2022
£m
Hedging
reserve
Year ended
2021
£m
Translation
reserve
Year ended
2021
£m
Total
Year ended
2021
£m
(37.2)
–
–
(2.3)
0.7
(38.8)
65.8
24.5
–
–
–
90.3
28.6
24.5
–
(2.3)
0.7
51.5
(37.2)
–
2.6
(3.4)
0.8
(37.2)
75.1
(3.8)
(5.5)
–
–
65.8
37.9
(3.8)
(2.9)
(3.4)
0.8
28.6
Hedging Reserve
At 31 December 2022, the hedging reserve comprises net investment hedging losses of £35.2m (2021 – £35.2m), foreign exchange contracts – cash
flow hedge losses of £4.9m (2021 – £2.6m) and related tax gains of £1.3m (2021 – £0.6m).
Movement in fair value of foreign exchange contracts – cash flow hedges:
Balance at 1 January
Fair value movement recognised in Hedging reserve
Fair value movement recognised in Income Statement
Fair value movement recognised in Hedging reserve
and Income Statement
Balance at 31 December
Derivatives at
fair value
through
Hedging
Reserve
Year ended
2022
£m
Derivatives at
fair value
through
Income
Statement
Year ended
2022
£m
(2.6)
(4.5)
–
2.2
(4.9)
(0.2)
–
1.4
(2.2)
(1.0)
Derivatives at
fair value
through
Hedging
Reserve
Year ended
2021
£m
Derivatives at
fair value
through
Income
Statement
Year ended
2021
£m
0.8
(2.1)
–
(1.3)
(2.6)
(0.3)
–
(1.2)
1.3
(0.2)
Total
Year ended
2022
£m
(2.8)
(4.5)
1.4
–
(5.9)
Total
Year ended
2021
£m
0.5
(2.1)
(1.2)
–
(2.8)
The Group uses foreign currency forward contracts to manage its foreign currency risk associated with its highly probable forecast transactions. These
contracts are designated as cash flow hedge relationships. To the extent these hedges are effective, the change in fair value of the hedging instrument
is recognised in the hedging reserve. The sum of the fair value of foreign exchange contracts deferred in the hedging reserve and recognised in the
Income Statement is presented as foreign exchange contracts – cash flow hedges. See Note 20 for further details.
Costs of Hedging
The group designates the forward component of foreign currency forward contracts as hedging instruments in cash flow hedge relationships.
29. Retained earnings
Balance at 1 January
Dividends paid
Profit for the year
Pension actuarial (loss)/gain
Transfer from equity reserve
Transfer from own share reserve
Tax on deductible temporary differences
Balance at 31 December
Year ended
2022
£m
Year ended
2021
£m
343.2
(1.2)
20.2
(23.1)
3.7
(2.0)
5.7
346.5
305.1
–
24.2
19.7
2.8
(2.3)
(6.3)
343.2
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
173
173
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 30. Own shares
Balance at 1 January
Transfer to retained earnings reserve
Purchase of new shares
Balance at 31 December
Year ended
2022
£m
Year ended
2021
£m
(9.2)
2.0
(4.5)
(11.7)
(11.5)
2.3
–
(9.2)
The own shares reserve represents the cost of shares purchased in the market and held by the Senior plc Employee Benefit Trust to satisfy options
under the Group’s share option schemes (see Note 33).
At 31 December 2022, the number of own shares held by the Senior Plc Employee Benefit Trust is 5,716,834 (2021 – 3,463,455).
31. Acquisition and disposal activities
Acquisition of Spencer Aerospace Manufacturing, LLC
On 25 November 2022, the Group acquired substantially all of the assets of Spencer Aerospace Manufacturing, LLC, a leading manufacturer of highly
engineered, high-pressure hydraulic fluid fittings for use in commercial and military aerospace applications, located in Valencia, California, USA. This
acquisition enhances Senior’s industry leading fluid conveyance capabilities and is an important step in our strategy to optimise our portfolio and
maximise value for shareholders.
The initial consideration was $30m (£24.8m) paid in cash at completion, with a net working capital adjustment of $0.2m (£0.2m), of which $0.6m
(£0.5m) was paid in cash initially and $0.4m (£0.3m) cash adjustment was received in January 2023. A further $30m (£24.8m) is to be paid 12 months
after completion. Additionally, there is contingent consideration of $40m (£33.1m) potentially payable, in milestone amounts, dependent on the
financial performance of Spencer Aerospace during the period between completion and 31 December 2026. The most likely range of this contingent
element is estimated between $30m and $40m. The amortised cost of deferred consideration is £23.2m and the fair value of contingent consideration
is £28.7m at the acquisition date. The fair value of contingent consideration assumes expanding the relationship with Spencer’s established customers
and leveraging Senior’s strong relationships with OEMs, Tier 1 integrators, and aftermarket customers around the world to exploit opportunities for
Spencer Aerospace. The acquisition was funded using the Group’s existing borrowing facilities.
Set out below is a summary of the fair value of identified assets acquired and liabilities assumed:
Identifiable intangible assets
Property, plant and equipment
Inventories
Financial assets, excluding cash and cash equivalents
Cash and cash equivalents
Lease liabilities
Other Financial liabilities
Net Assets Acquired
Goodwill
Total Consideration
Consideration satisfied by:
Cash paid
Working capital adjustment receivable
Deferred and Contingent consideration payable
Total Consideration
Net cash outflow arising on acquisition:
Cash consideration
Less: Cash and cash equivalents acquired
Net cash outflow arising on acquisition
£m
31.0
5.8
2.2
1.7
–
(4.7)
(1.1)
34.9
42.0
76.9
25.3
(0.3)
51.9
76.9
25.3
–
25.3
The goodwill of £42.0m represents the premium paid in anticipation of future profitability from assets that are not capable of being separately identified
and separately recognised such as the assembled workforce as well as the expectation that the Group will be able to leverage its wider market access
and strong financial position to generate sustainable financial growth beyond what Spencer would have potentially achieved as a stand-alone company.
The strong customer relationships that the Group has with OEMs, Tier 1 integrators, and aftermarket customers around the world, will open new
opportunities for Spencer Aerospace. The combined capabilities will provide greater access to developing market opportunities such as hydrogen
infrastructure and fluid handling. There are strong synergies with Senior’s existing fluid conveyance businesses, and the combination of expertise will
accelerate growth in aerospace and adjacent markets. Goodwill is expected to be fully tax deductible in accordance with US tax rules.
The intangible assets acquired as part of the acquisition relate mainly to qualified parts lists and customer relationships, the fair value of which is
dependent on estimates of attributable future revenues, profitability and cash flows, and are being amortised over 18 and 16 years (see Note 14). The
174
174
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 31. Acquisition and disposal activities continued
fair value has also been assigned to the order backlog which are being amortised over 1 year.
The financial assets acquired include trade receivables with a fair value of £1.6m and a gross contractual value of £1.6m, all of which is currently
expected to be collectible.
Acquisition-related costs of £1.2m are included within corporate undertakings in the Group’s Consolidated Income Statement for the 12 months ended
31 December 2022 (See Note 9).
From the date of acquisition to 31 December 2022, Spencer contributed £0.7m of external revenue and £(0.1)m to the Group’s operating profit before
amortisation of intangible assets from the acquisition of £0.2m. If the acquisition had been completed on 1 January 2022, Group revenue for the 12
months ended 31 December 2022 would have been £855.9m and Group operating profit would have been £31.2m.
Disposal activities
On 22nd April 2021, the Group sold its stand alone, build-to-print helicopter structures operating company, Senior Aerospace Connecticut, based in the
USA. The decision to sell was based on its primary focus on build-to-print parts for the rotary sector, with proceeds from the sale strengthening the
Group’s balance sheet and providing greater flexibility for the Group to operate within its capital deployment framework. For the year ended 31
December 2021, Senior Aerospace Connecticut external revenue was £8.1m and operating profit was £0.8m.
A gain of £24.2m arose on disposal after taking fair value of net assets disposed (£28.4m including £15.1m of goodwill, £7.5m property, plant and
equipment and £5.8m of working capital), offset by net cash consideration of £49.7m after £1.8m disposal costs, and the previously recorded foreign
exchange gain that had been recycled to the Income Statement of £2.9m.
In 2021, the Group received £0.2m deferred consideration relating to the disposal of its Aerospace business Senior Aerospace
Absolute Manufacturing.
32. Notes to the consolidated cash flow statement
A) Reconciliation of operating profit to net cash from operating activities
Operating profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Profit on sale of fixed assets
Share-based payment charges
Pension payments in excess of service cost
Corporate undertaking costs
Share of joint venture
Increase in inventories
Increase in receivables
Increase in payables and provisions
Restructuring impairment of property, plant and equipment and software
US class action lawsuits
Working capital and provisions currency movements
Cash generated by operations
Income taxes paid
Interest paid
Net cash from operating activities
Year ended
2022
£m
Year ended
2021
£m
32.5
10.5
48.1
1.7
(0.1)
4.3
(1.4)
(1.4)
(0.4)
(34.2)
(18.8)
37.5
1.3
–
1.8
70.9
(3.5)
(9.7)
57.7
46.3
1.5
–
3.5
(5.1)
(4.8)
(0.2)
(7.2)
(16.1)
11.6
3.8
(2.3)
(1.1)
40.4
(5.3)
(8.1)
27.0
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
175
175
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 32. Notes to the consolidated cash flow statement continued
B) Free cash flow
Free cash flow, a non-statutory item, enhances the reporting of the cash-generating ability of the Group prior to corporate activity such as acquisitions,
restructuring, disposal activities, financing and transactions with shareholders. It is used as a performance measure by the Board and Executive
Committee and is derived as follows:
Net cash from operating activities
Corporate undertaking costs
Net Restructuring cash (received)/paid
US class action lawsuits
Interest received
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchase of intangible assets
Free cash flow
C) Analysis of net debt
Cash and bank balances
Overdrafts
Cash and cash equivalents
Debt due within one year
Debt due after one year
Lease liabilities (1)
Liabilities arising from financing activities
Total
Notes
9
24
Year ended
2022
£m
Year ended
2021
£m
57.7
1.4
(2.1)
–
0.7
0.5
(28.7)
(1.8)
27.7
27.0
4.8
0.9
2.3
0.1
0.2
(20.2)
(1.1)
14.0
Notes
22
At
1 January
2022
£m
51.1
–
51.1
(14.8)
(116.2)
(73.2)
(204.2)
(153.1)
Net
Cash
flow
£m
(10.8)
(0.5)
(11.3)
17.2
(17.6)
9.1
8.7
(2.6)
Non
Cash
£m
Exchange
movement
£m
Other
Lease
Movements
£m
At
31 December
2022
£m
–
–
–
–
–
–
–
–
2.9
–
2.9
(2.4)
(9.4)
(5.3)
(17.1)
(14.2)
–
–
–
–
–
(9.0)
(9.0)
(9.0)
43.2
(0.5)
42.7
–
(143.2)
(78.4)
(221.6)
(178.9)
(1) The change in lease liabilities in the year ended 31 December 2022 includes lease rental payments of £11.6m (£2.5m of these payments relates to lease interest), £5.3m
exchange movement and £9.0m other movements, which comprise £4.3m related to lease additions and modifications and £4.7m related to lease acquired on acquisition.
Following a review of the lease liability disclosures in 2022, the presentation of current and non-current liabilities within the Consolidated Balance Sheet for 31 December 2022
now reflects the timing of the underlying lease payments. Comparative information has not been restated as the adjustment is not deemed material.
Cash and bank balances
Overdrafts
Cash and cash equivalents
Debt due within one year
Debt due after one year
Lease liabilities
Liabilities arising from financing activities
Total
Notes
22
At
1 January
2021
£m
23.6
(0.4)
23.2
–
(152.6)
(76.5)
(229.1)
(205.9)
Net
Cash
flow
£m
27.8
0.4
28.2
–
21.1
8.4
29.5
57.7
Non
Cash
£m
–
–
–
(14.5)
14.5
–
–
–
Exchange
movement
£m
Other
Lease
Movements
£m
At
31 December
2021
£m
(0.3)
–
(0.3)
(0.3)
0.8
0.5
1.0
0.7
–
–
–
–
–
(5.6)
(5.6)
(5.6)
51.1
–
51.1
(14.8)
(116.2)
(73.2)
(204.2)
(153.1)
Other lease movements include lease additions and modifications of £5.6m.
176
176
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 32. Notes to the consolidated cash flow statement continued
Cash and cash equivalents comprise:
Cash and bank balances
Overdrafts
Total
Year ended
2022
£m
Year ended
2021
£m
43.2
(0.5)
42.7
51.1
–
51.1
Cash and cash equivalents (which are presented as a single class of assets on the face of the Consolidated Balance Sheet) comprise cash at bank and
other short-term highly liquid investments with a maturity of three months or less. The Directors consider that the carrying amount of cash and cash
equivalents approximates to their fair value.
D) Analysis of working capital and provisions
Working capital comprises the following:
Inventories
Trade and other receivables
Trade and other payables
Working capital, including derivatives
Items excluded:
Foreign exchange contracts
Total
Working capital and provisions movement, net of restructuring items, a non-statutory cash flow item, is derived as follows:
Increase in inventories
Increase in receivables
Increase in payables and provisions
Working capital and provisions movement, excluding currency effects
Items excluded:
Decrease in restructuring related inventory impairment
Decrease in net restructuring provision and other receivables
Total
Year ended
2022
£m
Year ended
2021
£m
194.3
126.7
(191.2)
129.8
1.5
131.3
145.2
98.0
(143.0)
100.2
2.8
103.0
Year ended
2022
£m
Year ended
2021
£m
(34.2)
(18.8)
37.5
(15.5)
2.7
0.7
(12.1)
(7.2)
(16.1)
11.6
(11.7)
1.5
7.6
(2.6)
33. Share-based payments
The Group recognised total expenses of £4.6m (2021 – £3.8m) related to share-based payments, of which £4.3m (2021 – £3.5m) related to equity-
settled share-based payments, and £0.3m (2021 – £0.3m) related to social security costs on share-based payments. As at 31 December 2022, the
Group had a liability of £0.6m (2021 – £0.3m) arising from share-based payments relating to social security costs.
A) 2014 Long-Term Incentive Plan
Equity-settled Long-Term Incentive Plans
On 8 March 2022, 4,307,035 shares were awarded under the 2014 Long-Term Incentive Plan. Awards made under this plan have a three-year vesting
period, and are subject to the following equally weighted performance conditions: adjusted earnings per share (EPS), total shareholder return (TSR),
and for awards granted from 2021, there is also a return on capital employed (ROCE) performance condition. The adjusted EPS and ROCE
performance conditions’ targets are expressed as absolute numbers for the final financial year of the three-year performance period. The threshold
of the TSR performance condition requires the Company’s TSR performance to fall within the top half of a comparator group at the end of the
three-year performance period. Vesting levels increase with higher performance. The awards are settled by delivering shares to the participants.
The estimated fair value for the awards granted in the year, excluding for the Executive Directors, with EPS and ROCE conditions is 121.00p, which
is the share price at the date of grant. The estimated fair value for the awards granted in the year, excluding for the Executive Directors, with TSR
conditions is 81.30p per share reflecting an adjustment of 33% to the fair value of the awards with EPS conditions due to the stringent TSR condition.
The respective fair values for awards made to the Executive Directors is 96.80p and 65.00p reflecting the two year retention period.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
177
177
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 33. Share-based payments continued
These fair values were calculated by applying a binomial option pricing model. This model incorporates a technique called “bootstrapping”, which
models the impact of the TSR condition. The model inputs at the date of grant were the share price (121.00p for the main award), expected volatility of
59% per annum, and the performance conditions as noted above. Expected volatility was determined by calculating the historical volatility of the
Group’s share price over the previous three years.
The following share awards were outstanding as at 31 December 2022 and 2021:
Outstanding at 1 January
Granted
Exercised
Forfeited
Outstanding at 31 December
Year ended
2022
Number of
shares
Year ended
2021
Number of
shares
9,434,241
4,307,035
–
(2,703,064)
11,038,212
7,089,567
4,455,281
(58,743)
(2,051,864)
9,434,241
B) Enhanced SMIS Deferred Share Award
On 8 March 2022, 1,333,546 shares were awarded under the Enhanced SMIS Deferred Share Award. Shares earned under this award have a
three-year deferral period and would be subject to forfeiture by a “bad leaver” over that deferral period. There are no performance criteria for this
award. The awards are settled by delivering shares to the participants.
The estimated fair value for the awards granted in the year is 121.00p per share, which is the share price at the date of grant.
The following share awards were outstanding as at 31 December 2022 and 2021:
Outstanding at 1 January
Granted
Exercised
Forfeited
Outstanding at 31 December
Year ended
2022
Number of
shares
2,003,691
1,353,612
(677,193)
(137,747)
2,542,363
Year ended
2021
Number of
shares
1,734,683
758,551
(425,422)
(64,121)
2,003,691
C) Savings-Related Share Option Plan
The Company operates a Savings-Related Share Option Plan for eligible employees across the Group. There are no performance criteria for this
arrangement and options are issued to all participants in accordance with the HM Revenue & Customs rules for such savings plans. Savings-Related
Share Options were last issued on 26 May 2021.
The following options were outstanding as at 31 December 2022 and 2021:
Outstanding at 1 January
Granted
Exercised
Forfeited
Expired
Outstanding at 31 December
Exercisable at 31 December
Year ended 2022
Year ended 2021
Number of
share
options
4,253,504
–
(1,905)
(545,138)
(749,847)
2,956,614
190,580
Weighted
average
exercise
price
144.61p
–
118.40p
148.81p
219.30p
124.90p
219.30p
Number of
share
options
1,944,121
3,247,159
–
(676,596)
(261,180)
4,253,504
–
Weighted
average
exercise
price
217.67p
118.40p
–
204.63p
207.20p
144.61p
–
1,905 shares were exercised in 2022. No shares were exercised in 2021. The options outstanding at 31 December 2022 had exercise prices of
118.40p and 219.30p per share, and a weighted average remaining contractual life of 1.8 years. The options outstanding at 31 December 2021 had
exercise prices of 118.40p and 219.30p per share, and a weighted average remaining contractual life of 2.4 years.
178
178
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 33. Share-based payments continued
D) Restricted Share Awards
On 8 March 2022, 205,000 shares were awarded under this plan. Shares granted under this award have a three-year deferral period and would be
subject to forfeiture by a “bad leaver” over that deferral period. There are no performance criteria for this award. The awards are settled by delivering
shares to the participants.
The estimated fair value for the awards granted in the year is 121.00p per share, which is the share price at the date of grant.
The following share awards were outstanding as at 31 December 2022 and 2021:
Outstanding at 1 January
Granted
Exercised
Forfeited
Outstanding at 31 December
Year ended
2022
Number of
shares
1,930,115
205,000
(60,000)
(251,165)
1,823,950
Year ended
2021
Number of
shares
2,208,538
110,000
(388,423)
–
1,930,115
34. Retirement benefit schemes
The Group operates a number of pension plans in the UK, North America and Europe. These include both defined contribution arrangements and
defined benefit arrangements. The Senior plc Pension Plan (”the UK Plan”), which is a funded scheme in the UK and closed to future accrual at the
end of 6 April 2014, has the largest pension obligation in the Group and Company. This plan provides benefits based on final pensionable emoluments
for the employees of the Group and Company. The latest full actuarial valuation was carried out as at 5 April 2022 and, for the purposes of accounting
under IAS19, this valuation has been rolled forward to 31 December 2022.
In addition, the Group operates two defined benefit plans in the US, one of which was closed to future accrual from October 2009. The second plan
was closed to future participants from September 2013, and the Executive section was also closed to future accruals from December 2013. Separate
disclosure is made for the funded UK and US defined benefit arrangements. In both the UK and US, the assets of funded plans are held in separate
trustee administered funds managed by independent financial institutions and have pension costs assessed by consulting actuaries using the
Projected Unit Method. The Trustees are required to act in the best interests of the plans’ beneficiaries.
The Group also has a small number of unfunded post-retirement plans, including a closed healthcare scheme in the US. Separate disclosure is provided
for these arrangements.
Further details on the arrangement of the UK Plan are given below.
The Trustee of the UK Plan is Senior Trustee Limited. The appointment of the Directors to the Board is determined by the Articles of Association of
Senior Trustee Limited. There are seven Trustee Directors in total and in accordance with statutory requirements under the Pensions Act 2004, at least
one-third of trustees must be a Member Nominated Director. Currently, there are three Member Nominated Directors and four Directors who have
been nominated by the Company, of which the Chairman and one other Director are viewed as independent.
The UK Plan exposes the Company to a number of risks. In particular:
• Uncertainty in benefit payments – the value of the obligations will ultimately depend on the amount of benefits paid out. This in turn will depend on
factors such as the level of inflation and how long individuals live.
• Volatility in asset values – the value of the assets held to meet future benefit payments is volatile, for example due to changes in stock markets and
interest rates.
• Uncertainty in cash funding – movements in the value of the UK Plan’s obligations or assets may result in the Company being required to provide
higher levels of cash funding.
The investment strategy for the UK Plan is decided by the Trustee in consultation with Senior plc. The primary investment objective is for the Plan to
be able to meet benefit payments as they fall due. The UK Plan’s average duration is around 12 years and benefits are expected to be paid for the next
60 years. These cash flow payments are expected to reach a peak around 2031, and gradually decline thereafter as the membership matures. In
setting this strategy, the Trustee considers a wide range of asset classes, the risk and rewards of a number of possible asset allocation options, the
sustainability of each asset class within each strategy, and the need for appropriate diversification between different asset classes. The Trustee’s
current investment strategy is to invest 100% in lower risk assets, consisting of corporate bonds, liability driven investments (‘LDI’), gilts and cash. The
LDI allocation helps to mitigate investment risk for the UK Plan by minimising the fluctuations in the UK Plan’s funding levels arising from changes in
the value of the liabilities. This is achieved through hedging movements in the funding liabilities caused by changes in interest rates and inflation
expectations. The Trustee continues to review its investment strategy and adjust it in response to changes in the Plan’s funding position and/or
market conditions.
The UK Plan was in a surplus position of £24.5m as at 5 April 2022 when measured on the Trustee’s funding basis and is in a surplus position of
£51.8m as at 31 December 2022 (2021 – £72.2m surplus) when measured on an IAS 19 basis. The difference between the triennial funding and
annual IAS 19 valuation relates to the assumptions used. For example, the funding discount rate is based on the UK Plan’s stated investment strategy,
as opposed to the yields available on corporate bonds for the IAS 19 discount rate.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
179
179
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 34. Retirement benefit schemes continued
The IAS 19 surplus position on the UK Plan is recognised as an asset in the Consolidated and Company Balance Sheet, with no requirement to
recognise an additional liability on the UK Plan, on the grounds that the Company has an unconditional right to a refund, assuming the gradual
settlement of Plan liabilities over time until all members have left. In considering this, the Company has taken into account that the Trustees do not
have unilateral powers to wind up the Plan or modify benefits.
Cash contributions to the UK Plan are set by agreement between the Company and the Trustee of the UK Plan. These are set in accordance with
legislation and take account of the intention to further reduce the risk associated with the UK Plan’s investment strategy, as set out above. The
contributions were last reviewed as at 5 April 2022 and were based on a forecast surplus at that time, as part of the 2022 triennial funding valuation.
The Company agreed with the Trustee of the UK Plan to make scheduled contributions in respect of administrative expenses and PPF levies from 5
April 2022 until 30 June 2022, with no further contributions after this date. The estimated contributions expected to be paid during 2023 in the US
funded plans is £2.3m.
The Group is ultimately responsible for making up any shortfall in the UK Plan over a period agreed with the Trustees. To the extent that actual
experience is different from that assumed, the funding position will be better or worse than anticipated. As such, the contributions required by the
Group could vary in the future.
a) Defined contribution schemes
The Group has a number of different defined contribution and government-sponsored arrangements in place in the countries in which it operates.
None of these are individually material to the Group and the aggregate cost of such schemes for the period was £8.9m (2021 – £8.6m).
b) Defined benefit schemes
The amount included in the Consolidated Balance Sheet arising from the Group’s obligations in respect of its defined benefit plans is set out below.
Present value of defined benefit obligations
Fair value of plan assets
Plan surplus/(deficit) per Consolidated
Balance Sheet
31 December 2022
UK plans
funded
£m
US plans
funded
£m
Unfunded
plans
£m
(198.4)
250.2
(49.4)
42.7
(5.4)
–
Total
£m
(253.2)
292.9
UK plans
funded
£m
(294.9)
367.1
31 December 2021
US plans
funded
£m
Unfunded
plans
£m
(56.2)
50.9
(5.7)
–
Total
£m
(356.8)
418.0
51.8
(6.7)
(5.4)
39.7
72.2
(5.3)
(5.7)
61.2
c) Movements in the present value of defined benefit obligations were as follows:
At 1 January
Current service cost
Past service cost
Interest cost
Experience on benefit obligations
Actuarial (gains)/losses – financial
Actuarial (gains)/losses – demographic
Benefits paid
Disposal activities
Exchange differences
At 31 December
31 December 2022
UK plans
funded
£m
US plans
funded
£m
Unfunded
plans
£m
294.9
–
–
5.5
0.8
(89.6)
(1.4)
(11.8)
–
–
198.4
56.2
0.5
–
1.7
1.2
(12.1)
–
(4.3)
–
6.2
49.4
5.7
0.3
–
–
–
(0.5)
–
(0.4)
–
0.3
5.4
Total
£m
356.8
0.8
–
7.2
2.0
(102.2)
(1.4)
(16.5)
–
6.5
253.2
UK plans
funded
£m
317.7
–
–
3.8
2.5
(15.8)
(0.3)
(13.0)
–
–
294.9
31 December 2021
US plans
funded
£m
Unfunded
plans
£m
58.8
0.4
–
1.5
–
(1.8)
0.2
(3.7)
–
0.8
56.2
6.2
0.3
–
–
–
–
–
(0.4)
–
(0.4)
5.7
Total
£m
382.7
0.7
–
5.3
2.5
(17.6)
(0.1)
(17.1)
–
0.4
356.8
180
180
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 34. Retirement benefit schemes continued
d) Movements in the fair value of plan assets were as follows:
At 1 January
Interest on plan assets
Actual return on plan assets less interest
Contributions from employer
Benefits paid
Running costs
Exchange differences
At 31 December
31 December 2022
UK plans
funded
£m
US plans
funded
£m
Unfunded
plans
£m
367.1
6.9
(113.4)
2.1
(11.8)
(0.7)
–
250.2
50.9
1.5
(11.3)
0.4
(4.3)
–
5.5
42.7
–
–
–
–
–
–
–
–
Total
£m
418.0
8.4
(124.7)
2.5
(16.1)
(0.7)
5.5
292.9
UK plans
funded
£m
364.2
4.4
6.1
6.0
(13.0)
(0.6)
–
367.1
31 December 2021
US plans
funded
£m
Unfunded
plans
£m
54.1
1.3
(1.6)
–
(3.7)
–
0.8
50.9
–
–
–
–
–
–
–
–
e) Amounts recognised in the Consolidated Income Statement in respect of these defined benefit schemes are as follows:
31 December 2021
31 December 2022
Current service cost included within operating
profit
Running costs
Past service cost
Charge included within operating profit
Included within finance income
Amount recognised in the Income Statement
UK plans
funded
£m
US plans
funded
£m
Unfunded
plans
£m
–
0.7
–
0.7
(1.4)
(0.7)
0.5
–
–
0.5
0.2
0.7
0.3
–
–
0.3
–
0.3
Total
£m
0.8
0.7
–
1.5
(1.2)
0.3
UK plans
funded
£m
US plans
funded
£m
Unfunded
plans
£m
–
0.6
–
0.6
(0.6)
–
0.4
–
–
0.4
0.2
0.6
0.3
–
–
0.3
–
0.3
f) Amounts recognised in other comprehensive income are as follows:
Net actuarial (losses)/gain in the year due to:
– Change in financial assumptions
– Change in demographic assumptions
– Experience adjustments on benefit obligations
Actual return on plan assets less interest on
benefit obligations
(Losses)/gains recognised in other
comprehensive income
31 December 2022
UK plans
funded
£m
US plans
funded
£m
Unfunded
plans
£m
89.6
1.4
(0.8)
12.1
–
(1.2)
0.5
–
–
Total
£m
102.2
1.4
(2.0)
UK plans
funded
£m
15.8
0.3
(2.5)
31 December 2021
US plans
funded
£m
Unfunded
plans
£m
1.8
(0.2)
–
(113.4)
(11.3)
–
(124.7)
6.1
(1.6)
(23.2)
(0.4)
0.5
(23.1)
19.7
–
–
–
–
–
–
Total
£m
418.3
5.7
4.5
6.0
(16.7)
(0.6)
0.8
418.0
Total
£m
0.7
0.6
–
1.3
(0.4)
0.9
Total
£m
17.6
0.1
(2.5)
4.5
19.7
Actuarial losses of £23.1m (2021 – gains of £19.7m) have been recognised in the Statement of Comprehensive Income. The cumulative amount of
actuarial losses recognised in the Statement of Comprehensive Income as at 31 December 2022 is £46.1m (2021 – £23.0m).
g) Assets and assumptions in funded plans
Fair value of plan assets
Equities
Bonds
Gilts
Diversified growth fund
Cash and other assets
Total
UK plans funded
US plans funded
2022
£m
2021
£m
–
102.4
139.3
–
8.5
250.2
28.6
126.6
157.9
37.7
16.3
367.1
2022
£m
–
42.7
–
–
–
42.7
2021
£m
–
50.9
–
–
–
50.9
Actual return on plan assets
(106.5)
10.5
(9.8)
(0.3)
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
181
181
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 34. Retirement benefit schemes continued
The UK Plan’s assets are invested in pooled funds, which are invested exclusively within instruments with quoted market prices in an active market,
with the exception of the Plan’s holdings in insurance annuity policies, valued at £4.0m (2021 – £4.7m). The value of the invested assets has been
measured at bid value and the value of the scheme benefits covered by the insurance annuity policies has been set equal to the value of the
corresponding obligations.
The Plan’s corporate bond allocation is split between an actively managed mandate and a “buy and maintain” mandate, which seeks to hold a high
quality portfolio while minimising portfolio turnover. Both mandates are predominantly invested in investment grade UK corporate bonds and are
exposed to a fairly typical range of UK businesses. The majority of the Plan’s gilts are passively invested in a range of UK fixed-interest and
index-linked government bonds, with the remainder actively invested in a range of swap instruments linked to movements in government bond
prices. The risks associated with the Plan’s bond and gilt investments are largely offset by corresponding risks present within the pricing of the
Plan’s benefit obligations.
The UK Plan does not invest directly in property occupied by the Company or in financial securities issued by the Company.
Major assumptions (per annum %)
Inflation
Increase in salaries
Increase in pensions
Increase in deferred pensions
Rate used to discount plan liabilities
UK plans funded
US plans funded
2022
2021
2022
2021
3.40%
N/A
3.20%
3.40%
4.80%
3.50%
N/A
3.30%
3.50%
1.90%
N/A
N/A
0.00%
0.00%
4.78%
N/A
N/A
0.00%
0.00%
2.76%
Life expectancy of a male aged 65 at the year-end
Life expectancy of a male aged 65, 20 years after the year-end
20.6
22.0
20.8
22.2
19.7
21.2
19.6
21.2
Benefits under the US funded plans are not linked to inflation.
The UK Plan retirement benefit obligation is discounted at a rate set by reference to market yields at the end of the reporting period on high quality
corporate bonds. Estimation is required when setting the criteria for bonds to be included in the population from which the yield curve is derived. The
most significant criteria considered for the selection of bonds include the issue size of the corporate bonds, quality of the bonds and the identification
of outliers which are excluded. The assumption for estimating future Retail Prices Index (RPI) inflation is based on the difference in yields on fixed-
interest and index-linked gilts. Demographic assumptions are set broadly in line with the most recent actuarial valuation of the UK plan. The mortality
assumption is 95% of the standard mortality tables with an allowance for future improvements in line with the CMI 2021 enhanced projections, with a
long-term annual rate of improvement of 1.25% for males and for females, with no weighting on 2020 mortality data and a 10% weighting on 2021
mortality data to make an allowance for the impact of Covid-19.
For the UK Plan, the estimated impact on the plan surplus at 31 December 2022 for changes in assumptions is as follows:
0.5% decrease in the discount rate
One-year increase in life expectancy
0.5% increase in inflation
Increase/
(decrease)
in plan surplus
£m
(11.7)
(7.7)
(7.2)
These sensitivities have been calculated to show the movement in the surplus, including allowance for an increase to the value of insured annuity
assets, but assuming no other changes in assets as at 31 December 2022. This is unlikely in practice – for example, a change in discount rate is
unlikely to occur without any movement in the value of the assets held by the Plan.
h) Other post-retirement liabilities
This balance comprises an unfunded German pension plan of £2.7m (2021 – £3.3m), unfunded closed pension and post-retirement healthcare plans in
the US of £0.3m (2021 – £0.3m), a provision for post-retirement payments in France of £1.5m (2021 – £1.4m) and £0.9m for post-retirement payments
in Thailand (2021 – £0.7m).
The closed pension and post-retirement healthcare plans in the US have been valued on a Projected Unit Method using a discount rate of 4.8% (2021
– 2.8%). No participants were eligible for medical benefits under the healthcare plan in 2022. The German plan has been subject to formal actuarial
valuation on a Projected Unit Method with the following assumptions: discount rate 3.5%, salary growth nil% and pension increase 2.2% (2021 –
1.1%, nil% and 1.8%). In France, the provision arises from a legal obligation to make payments to retirees in the first two years post-retirement. Hence,
it is not subject to discounting to the same extent as the other longer-term post-retirement liabilities. The Thailand plan has been subject to a formal
actuarial valuation on a Projected Unit Method with the following assumptions: discount rate 2.8%, inflation rate 2.8% and salary growth 6.0% (2021
– 2.8%, 2.8% and 6.0%).
182
182
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS
35. Contingent liabilities
The Group is subject to various claims which arise from time to time in the course of its business including, for example, in relation to commercial
matters, product quality or liability, and tax audits. Where the Board has assessed there to be a more likely than not outflow of economic benefits,
provision has been made for the best estimate as at 31 December 2022 (see Note 24). For all other matters, the Board has concluded that it is not
more likely than not that there will be an economic outflow of benefits. While the outcome of some of these matters cannot be predicted with any
certainty, the Directors do not expect any of these arrangements, legal actions or claims, after allowing for provisions already made where appropriate,
to result in significant loss to the Group.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
183
183
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
Non-current assets
Investment in subsidiaries
Property, plant and equipment
Other intangible assets
Other receivables
Retirement benefits
Total non-current assets
Current assets
Other receivables
Cash and bank balances
Total current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Bank overdrafts and loans
Total current liabilities
Non-current liabilities
Bank and other loans
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued share capital
Share premium account
Equity reserve
Retained earnings
Own shares
Total equity
Year ended
2022
£m
Year ended
2021
£m
Notes
38
39
37
40
49
40
46
42
47
41
41
47
48
43
44
45
259.9
1.1
0.1
3.3
51.8
316.2
121.1
1.6
122.7
438.9
61.8
0.2
–
62.0
116.4
0.9
8.8
126.1
188.1
250.8
41.9
14.8
6.4
199.4
(11.7)
250.8
259.9
1.3
0.1
25.7
72.2
359.2
65.4
4.7
70.1
429.3
70.1
–
14.8
84.9
94.1
1.2
14.2
109.5
194.4
234.9
41.9
14.8
5.8
181.6
(9.2)
234.9
The Profit for the Company for the year ended 31 December 2022 was £34.8m (2021 – £31.9m).
The Financial Statements of Senior plc (registered number 282772) were approved by the Board of Directors and authorised for issue on 24 February
2023. They were signed on its behalf by:
David Squires
Director
Bindi Foyle
Director
184
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
FINANCIAL STATEMENTS /
COMPANY STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Balance at 1 January 2021
Profit for the year 2021
Actuarial gains on defined benefit pension schemes
Tax relating to components of other comprehensive income
Total comprehensive income for the period
Share-based payment charge
Tax relating to share-based payments
Use of shares held by employee benefit trust
Transfer to retained earnings
Dividends paid
Balance at 31 December 2021
Profit for the year 2022
Actuarial losses on defined benefit pension schemes
Tax relating to components of other comprehensive income
Total comprehensive income for the period
Share-based payment charge
Purchase of shares held by employee benefit trust
Use of shares held by employee benefit trust
Transfer to retained earnings
Dividends paid
Balance at 31 December 2022
All equity is attributable to equity holders of the Company
Issued
share
capital
£m
Share
premium
account
£m
Notes
Equity
reserve
£m
Retained
earnings
£m
41.9
–
–
–
–
–
–
–
–
–
41.9
–
–
–
–
–
–
–
–
–
41.9
14.8
–
–
–
–
–
–
–
–
–
14.8
–
–
–
–
–
–
–
–
–
14.8
5.1
–
–
–
–
3.5
–
–
(2.8)
–
5.8
–
–
–
–
4.3
–
–
(3.7)
–
6.4
135.8
31.9
19.7
(6.4)
45.2
–
0.1
(2.3)
2.8
–
181.6
34.8
(23.2)
5.7
17.3
–
–
(2.0)
3.7
(1.2)
199.4
45
44
11
45
45
44
11
Own
shares
£m
(11.5)
–
–
–
–
–
–
2.3
–
–
(9.2)
–
–
–
–
–
(4.5)
2.0
–
–
(11.7)
Total
equity
£m
186.1
31.9
19.7
(6.4)
45.2
3.5
0.1
–
–
–
234.9
34.8
(23.2)
5.7
17.3
4.3
(4.5)
–
–
(1.2)
250.8
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
185
185
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
36. Accounting policies
Basis of accounting (company only)
These Financial Statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). In
preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted international
accounting standards (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act 2006 and has taken
advantage of the FRS 101 disclosure exemptions for share-based payments, financial instruments, fair value measurements, capital management,
presentation of a cash flow statement and disclosure of related party transactions.
The Financial Statements have been prepared on the historical cost basis. They have also been prepared on the going concern basis, as set out in the
basis of preparation, Note 2 to the Consolidated Financial Statements. The principal accounting policies adopted are the same as those set out in Note
2 to the Consolidated Financial Statements, except in respect of investments in subsidiaries, which are stated at cost less, where appropriate,
provisions for impairment. The carrying values of investments in subsidiaries are reviewed for impairment if events or changes in circumstances
indicate the carrying values may not be recoverable.
The Company is incorporated in England and Wales under the Companies Act.
37. Other intangible assets
Cost
At 1 January
Additions
Disposal
At 31 December
Amortisation
At 1 January
Charge for the year
Disposals
At 31 December
Carrying amount at 31 December
Year ended
2022
Computer
software
£m
Year ended
2021
Computer
software
£m
1.0
–
(0.2)
0.8
0.9
–
(0.2)
0.7
0.1
1.0
–
–
1.0
0.9
–
–
0.9
0.1
38. Investments in subsidiaries
A list of the significant investments in subsidiaries, including the name, country of incorporation, and proportion of ownership interest is given on pages
194 to 195.
At 1 January and 31 December
Year ended
2022
£m
Year ended
2021
£m
259.9
259.9
186
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
FINANCIAL STATEMENTS /
39. Property, plant and equipment
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated depreciation
At 1 January
Charge for the year
Eliminated on Disposals
At 31 December
Carrying amount at 31 December
The carrying amount includes £1.0m of right-of-use assets (2021– £1.1m)
40.Other receivables
Other receivables comprise the following:
Other receivables: amounts due more than one year
Due from subsidiaries
Other receivables: amounts due within one year
Value added tax
Prepayments and accrued income
Due from subsidiaries
Total other receivables
Year ended
2022
Plant and
equipment
£m
Year ended
2021
Plant and
equipment
£m
2.4
0.1
(0.2)
2.3
1.1
0.3
(0.2)
1.2
1.1
2.4
–
–
2.4
0.9
0.2
–
1.1
1.3
Year ended
2022
£m
Year ended
2021
£m
3.3
3.3
0.3
1.1
119.7
121.1
124.4
25.7
25.7
0.2
1.0
64.2
65.4
91.1
The Directors consider that the carrying amount of debtors approximates to their fair value. The maximum exposure to credit risk at the reporting date
is the fair value of each class of receivable above. The Company does not hold any collateral as security.
The carrying amounts due from subsidiaries approximates to their fair value. There are no past due receivable balances and expected credit losses are
immaterial (2021 – immaterial).
As at 31 December 2022, other receivables due in more than one year consist of £3.3m (2021 – £2.2m) due in accordance with the vesting periods of
share-based payments and £nil (2021 – £23.5m) of loans to subsidiaries at market rates of interest.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
187
FINANCIAL STATEMENTS / 41. Bank overdrafts and loans
Bank overdrafts
Bank loans
Other loans
Total
The borrowings are repayable as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
After five years
Less: amount due for settlement within 12 months (shown under current liabilities)
Amount due for settlement after 12 months
Year ended
2022
£m
Year ended
2021
£m
–
15.3
101.1
116.4
–
–
116.4
–
116.4
–
116.4
–
(0.5)
109.4
108.9
14.8
–
70.7
23.4
108.9
(14.8)
94.1
At 31 December 2022, bank loans are £16.5m and there are £1.2m of capitalised revolving credit facility transaction costs. At 31 December 2021, bank
loans were undrawn, and there were £0.5m of capitalised revolving credit facility transaction costs.
Analysis of borrowings by currency
31 December 2022
Bank overdrafts
Bank loans
Other loans
31 December 2021
Bank overdrafts
Bank loans
Other loans
The weighted average interest rates paid were as follows:
Bank loans and overdrafts
Other loans
Pound
Sterling
£m
–
(1.2)
26.9
25.7
Pound
Sterling
£m
–
(0.5)
26.9
26.4
Euros
£m
–
–
24.7
24.7
Euros
£m
–
–
23.4
23.4
US
Dollars
£m
–
16.5
49.5
66.0
US
Dollars
£m
–
–
59.1
59.1
Total
£m
–
15.3
101.1
116.4
Total
£m
–
(0.5)
109.4
108.9
Year ended
2022
%
Year ended
2021
%
3.93
2.83
1.26
2.88
Bank loans of £16.5m (2021 – £nil) are arranged at floating rates, thus exposing the Company to cash flow interest rate risk. Other borrowings are
mainly arranged at fixed interest rates and expose the Company to fair value interest rate risk. No interest rate swaps were taken out in 2021 or 2022.
Transaction costs of £1.2m (2021- £0.5m) have been deducted from the bank loans carrying value. Transaction costs of £0.3m (2021- £0.4m),
directly attributable to the GBP notes (£0.1m), the Euro notes (£0.1m) and the US Dollar notes (£0.1m) have been deducted from the carrying value
of Other loans.
The Directors estimate the fair value of the Company’s borrowings to be as follows:
Bank loans and overdrafts
Other loans
188
188
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
Year ended
2022
£m
Year ended
2021
£m
15.3
93.4
108.7
(0.5)
110.4
109.9
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS 42. Trade and other payables
Trade and other payables comprise the following:
Trade and other payables: amounts falling due within one year
Trade payables
Social security and PAYE
Other payables and accruals
Due to subsidiaries
Total trade and other payables
The Directors consider that the carrying amount of trade payables approximates to their fair value.
43. Issued share capital
Issued and fully paid:
419.4 million ordinary shares of 10p each
No shares were issued during 2021 and 2022.
The Company has one class of ordinary shares, which carry no right to fixed income.
44. Retained earnings
Balance at 1 January
Dividends paid
Profit for the year
Pension actuarial (loss)/gain
Transfer from equity reserve
Transfer from own share reserve
Tax on deductible temporary differences
Balance at 31 December
Year ended
2022
£m
Year ended
2021
£m
1.6
0.2
7.1
52.9
61.8
0.9
0.2
6.8
62.2
70.1
Year ended
2022
£m
Year ended
2021
£m
41.9
41.9
Year ended
2022
£m
Year ended
2021
£m
181.6
(1.2)
34.8
(23.2)
3.7
(2.0)
5.7
199.4
135.8
–
31.9
19.7
2.8
(2.3)
(6.3)
181.6
£7.5m (2021 – £7.5m) of the Company’s retained earnings are considered undistributable.
In accordance with Section 408 of the Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income, including
the Income Statement and related Notes.
45. Own shares
Balance at 1 January
Transfer to retained earnings
Purchase of new shares
Balance at 31 December
Year ended
2022
£m
Year ended
2021
£m
(9.2)
2.0
(4.5)
(11.7)
(11.5)
2.3
–
(9.2)
The own shares reserve represents the cost of shares purchased in the market and held by the Senior plc Employee Benefit Trust to satisfy options
under the Group’s share option schemes (see Note 33).
The nominal value of each share is £0.1 (2021 – £0.1). The total number of treasury shares at 31 December 2022 is 5,716,834 (2021 – 3,463,455).
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
189
189
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS 46. Cash and bank balances
Cash and cash equivalents comprise:
Cash
Year ended
2022
£m
Year ended
2021
£m
1.6
4.7
Cash and bank balances held by the Company (which are presented as a single class of assets on the face of the Balance Sheet) comprise cash at
bank and other short-term highly liquid investments with a maturity of three months or less. The Directors consider that the carrying amount of cash
and cash equivalents approximate to their face value.
47. Lease liabilities
When measuring lease liabilities, the Company discounts lease payments using incremental borrowing rates, determined on a lease portfolio basis.
Undiscounted contractual maturity of lease liabilities:
Amounts payable:
On demand or within one year
In the second to fifth years inclusive
After five years
Less: future finance charges
Lease liabilities
Year ended
2022
£m
Year ended
2021
£m
0.2
0.9
–
1.1
–
1.1
0.2
0.9
0.2
1.3
(0.1)
1.2
In 2022, the Company recognised income of £0.1m (2021 – £0.1m) in the Company Income Statement from sub-leasing right-of-use assets and had
lease cash outflow of £0.2m (2021 – £0.2m).
As at the date of approving the accounts, the Company has guaranteed £0.4m (2021 – £0.5m) of annual lease commitments of a current
subsidiary entity.
48. Tax balance sheet
Current tax
The current tax receivable is £nil (2021 – £nil).
Deferred tax liabilities
The following are the major deferred tax liabilities and assets recognised by the Company and movements thereon during the current and prior
reporting period:
At 1 January 2021
Charge to income
Charge to equity
Credit to other comprehensive income
At 1 January 2022
Charge to income
Charge to equity
Credit to other comprehensive income
As at 31 December 2022
Accelerated
tax
depreciation
£m
Retirement
benefits
£m
Share
based
payments
£m
(0.2)
(0.1)
–
–
(0.3)
–
–
–
(0.3)
8.7
2.9
6.4
–
18.0
0.7
(5.7)
–
13.0
(0.1)
(0.2)
(0.1)
–
(0.4)
(0.4)
–
–
(0.8)
Tax
Losses
£m
(1.5)
(1.6)
–
–
(3.1)
–
–
–
(3.1)
Total
£m
6.9
1.0
6.3
–
14.2
0.3
(5.7)
–
8.8
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right to do so. The following is the analysis of the deferred
tax balances, after offset:
Deferred tax liabilities
Year ended
2022
£m
Year ended
2021
£m
8.8
14.2
At the Balance Sheet date, the Company has unused capital losses of £15.6m (2021 – £15.6m) available for offset against future capital gains. No
deferred tax asset has been recognised as no such capital gains are anticipated to arise in the foreseeable future.
190
190
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUEDFINANCIAL STATEMENTS / FINANCIAL STATEMENTS
49. Retirement benefit scheme
The Company’s defined benefit scheme is shown in Note 34 in the “UK plans funded” column.
50. Related party transactions
The remuneration of the Directors and Senior Managers, who are the key management personnel of the Group, is set out in the Remuneration Report
on pages 108 to 128. In 2022, the Company recognised share-based payment expense of £1.1m (2021 – £0.7m) in relation to the executive Directors.
The Group has related party relationships with a number of pension schemes. Transactions between the Group and these pension schemes are
disclosed in Note 34.
51. Share-based payments
The Company has a number of share-based payment arrangements that existed during 2022, the details of which can be found in Note 33.
For the savings-related share option plan, 1,905 shares were exercised in 2022 and no shares were exercised in 2021. The options outstanding at 31
December 2022 had exercise prices of 118.40p per share, and a weighted average remaining contractual life of 2.0 years. The options outstanding at
31 December 2021 had exercise prices of 118.40p and 219.30p per share, and a weighted average remaining contractual life of 2.1 years.
Share-based payment costs relating to subsidiaries are recharged from the Company.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
191
191
FINANCIAL STATEMENTS / FINANCIAL STATEMENTS FIVE-YEAR SUMMARY
Group income statement
Revenue
Continuing operations
Adjusted operating profit
Continuing operations
Amortisation of intangible assets from acquisitions
Goodwill impairment and write-off
Net restructuring income/(cost)
US class action lawsuits
Operating profit/(loss)
Investment income/finance costs, net (excluding lease liabilities)
Interest on lease liabilities
Net finance income of retirement benefits
Corporate undertakings
Profit/(loss) before tax
Tax
Profit/(loss) for the year
Depreciation and amortisation of intangibles excluding right-of-use assets
Depreciation on right-of-use assets
Gross capital expenditure
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Adjusted earnings/(loss) per share
Dividends in respect of years – per share
– value
Group Balance Sheet
Non-current assets excluding right-of-use assets
Right-of-use assets IFRS 16
Non-current assets
Net current assets
Non-current liabilities
Net assets
Net debt pre IFRS 16
Lease liabilities IFRS16
Net debt
Group cash flow
Net cash from operating activities
Corporate undertaking costs
Net Restructuring cash (received)/paid
US class action lawsuits
Interest received
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment – cash
Purchase of intangible assets
Free cash flow
Dividends paid
Acquisition costs/Disposal proceeds
Corporate undertaking costs
Net Restructuring cash received/(paid)
US class action lawsuits
Loan to joint venture
Purchase of shares held by employee benefit trust
Increase/(decrease) in loans
Decrease in lease liabilities
(Decrease)/increase in cash and cash equivalents
192
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
848.4
658.7
733.6
1,110.70
1,082.10
28.5
(0.2)
–
4.2
–
32.5
(7.4)
(2.5)
1.2
(1.4)
22.4
(2.2)
20.2
39.5
10.3
30.5
4.86p
4.73p
4.36p
1.30p
5.3
539.8
70.8
610.6
104.1
(265.3)
449.4
(100.5)
(78.4)
(178.9)
57.7
1.4
(2.1)
–
0.7
0.5
(28.7)
(1.8)
27.7
(1.2)
(25.3)
(1.4)
2.1
–
–
(4.5)
0.4
(9.1)
(11.3)
6.1
–
–
4.4
–
10.5
(5.8)
(2.6)
0.4
21.2
23.7
0.5
24.2
38.3
9.5
21.3
5.82p
5.73p
0.17p
0.0p
–
463.5
67.4
530.9
110.3
(216.1)
425.1
(79.9)
(73.2)
(153.1)
27.0
4.8
0.9
2.3
0.1
0.2
(20.2)
(1.1)
14.0
–
51.7
(4.8)
(0.9)
(2.3)
–
–
(21.1)
(8.4)
28.2
3.7
(7.7)
(134.3)
(39.0)
–
(177.3)
(7.8)
(3.0)
0.9
(4.6)
(191.8)
33.3
(158.5)
51.4
10.2
26.8
(38.20)p
(38.20)p
(0.84)p
0.0p
–
482.7
72.5
555.2
89.2
(251.1)
393.3
(129.4)
(76.5)
(205.9)
48.9
4.6
15.2
3.9
0.2
0.5
(25.2)
(1.6)
46.5
–
0.4
(4.6)
(15.2)
(3.9)
–
–
(7.2)
(7.9)
8.1
89.4
(13.1)
–
(12.1)
(2.6)
61.6
(8.1)
(3.5)
0.7
(22.0)
28.7
0.5
29.2
57.5
10.2
64.8
7.04p
7.01p
16.17p
2.28p
9.5
651.4
82.3
733.7
102.5
(276.6)
559.6
(145.9)
(83.7)
(229.6)
115.9
3.4
2.9
–
0.2
0.7
(63.0)
(1.8)
58.3
(31.2)
2.9
(3.4)
(2.9)
–
–
(6.3)
(3.2)
(7.8)
6.4
91.6
(15.4)
–
–
(3.9)
72.3
(8.8)
–
0.2
–
63.7
(7.8)
55.9
56.9
–
56.3
12.81p
12.63p
16.08p
7.42p
30.9
662.0
–
662.0
131.0
(221.2)
571.8
(153.0)
–
(153.0)
100.7
–
–
–
0.4
0.5
(54.6)
(1.7)
45.3
(29.6)
–
–
–
–
0.5
(7.2)
(2.4)
(0.3)
6.3
FINANCIAL STATEMENTS / I
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ADDITIONAL
INFORMATION
IN THIS SECTION
194 Group Undertakings
196 Additional Shareholder Information
197 Officers and Advisers
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
193
ADDITIONAL INFORMATION / GROUP UNDERTAKINGS
GROUP UNDERTAKINGS
Operating Companies
Senior UK Limited
Lymington Precision Engineers
Co. Limited
Senior Flexonics Czech s.r.o.
Business Units
Senior Aerospace Bird
Bellows
Senior Aerospace BWT
Senior Flexonics Crumlin
Senior Aerospace Weston
Senior Aerospace Thermal
Engineering
Senior Flexonics Lymington
Lymington
England & Wales
Senior Flexonics Czech
Olomouc, Czech Republic Czech Republic
Country of Incorporation
England & Wales
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
Locations
Congleton
Macclesfield
Crumlin
Colne
Royston
Senior Aerospace Ermeto SAS
Senior Aerospace Ermeto
Blois, France
Senior Calorstat SAS
Senior Aerospace Calorstat Dourdan, France
France
France
Senior Flexonics GmbH
Senior Flexonics Kassel
Kassel, Germany
Germany
Senior India Private Limited
Senior Flexonics New Delhi New Delhi, India
India
Senior Operations (Canada)
Limited
Senior Flexonics SA (Pty)
Limited
Senior Flexonics Canada
Brampton, Ontario
Canada
Senior Flexonics Cape Town Cape Town, South Africa South Africa
Senior Operations LLC
Senior Aerospace AMT
Arlington, Washington
USA
Senior Aerospace Jet
Products
Senior Aerospace Ketema
Senior Aerospace Metal
Bellows
Senior Aerospace Damar
Senior Aerospace SSP
Senior Flexonics Bartlett
Senior Flexonics GA
Senior Flexonics Pathway
Senior Aerospace Spencer
Senior Aerospace Steico
Industries
Senior Aerospace Thailand
San Diego, California
El Cajon, California
Sharon, Massachusetts
Monroe, Washington
Burbank, California
Bartlett, Illinois
Franklin, Wisconsin
New Braunfels, Texas &
Lewiston, Maine
Valencia, California
Oceanside, California
USA
Chonburi, Thailand
Thailand
Steico Industries, Inc.
Senior Aerospace (Thailand)
Limited
Upeca Aerotech Sdn Bhd
Senior Aerospace Upeca
Selangor, Malaysia
Malaysia
Upeca Flowtech Sdn Bhd
Senior Flexonics Upeca
Selangor, Malaysia
Malaysia
Upeca Engineering (Tianjin) Co Ltd Senior Flexonics Upeca
Tianjin, China
China
(China)
194
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
Olomouc, Průmyslová 733/9,
postcode 779 00, Czech Republic
Z.A Euro Val de Loire, 8 rue du
Clos Thomas, 41330 Fosse, France
11 Rue des Soufflets, 91410,
Dourdan, France
Frankfurter Strasse 199, 34121
Kassel, Germany
4th, Floor, Rectangle No.1,
Commercial Complex D-4,
Saket-New Delhi-110017, India
134 Nelson Street West, Brampton,
Ontario, L6X 1C9, Canada
11 Thor Circle, Viking Place,
Thornton, Cape Town, 7460,
South Africa
Corporation Trust Center, 1209
Orange Street, Wilmington,
DE 19801, USA
818 West Seventh St., Ste. 930,
Los Angeles, CA 90017, USA
789/115-116 Moo1, Pinthong
Industrial Estate, Sainhongkor-
Lamchabang Road, Tambol
Nhongkham, Amphur Sriracha,
Chon Buri Province 20230, Thailand
10th Floor, Menara Hap Seng,
No 1&3, Jalan P. Ramlee, 50250
W.P – Kuala Lumpur, Malaysia
10th Floor, Menara Hap Seng,
No 1&3, Jalan P. Ramlee, 50250
W.P – Kuala Lumpur, Malaysia
No. 12 QuanHe Road, Wu Qing
Development Area, Tianjin 301700,
PR China
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Operating Companies
Business Units
Locations
Atlas Composites Limited
Flexonics Limited
Lymington Precision Engineering
(LPE) Limited
Senior Aerospace Limited
Senior Americas One Limited
Senior Americas Two Limited
Senior Automotive Limited
Senior Engineering Investments
Limited
Senior Finance Four Limited
Senior Finance Seven Limited
Senior Finance Six Limited
Senior Five Limited
Senior Flexonics Limited
Senior Trustee Limited
Senior France SAS
Senior Investments (Deutschland)
GmbH
Upeca Technologies Sdn Bhd
Senior Aerospace Bosman B.V.
Senior Investments GmbH
Senior IP GmbH
Flexonics, Inc.
Senior Holdings LLC
Senior US Holdings Inc
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
France
Germany
Malaysia
Netherlands
Switzerland
Switzerland
USA
USA
USA
Country of Incorporation
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
59/61 High Street, Rickmansworth,
Hertfordshire, WD3 1RH, UK
11 Rue des Soufflets, 91410,
Dourdan, France
Frankfurter Strasse 199, 34121
Kassel, Germany
10th Floor, Menara Hap Seng,
No 1&3, Jalan P. Ramlee, 50250
W.P – Kuala Lumpur, Malaysia
Bergen 6, 2993 LR Barendrecht,
Netherlands
Fronwagplatz 10, CH-8200,
Schaffhausen, Switzerland
Fronwagplatz 10, CH-8200,
Schaffhausen, Switzerland
Corporation Trust Center,
1209 Orange Street, Wilmington,
DE 19801, USA
Corporation Trust Center,
1209 Orange Street, Wilmington,
DE 19801, USA
Corporation Trust Center,
1209 Orange Street, Wilmington,
DE 19801, USA
Senior Aerospace and Flexonics Business Units in Mexico are operated by a third party under contract manufacturing agreements.
The Group has a 49% interest in Senior Flexonics Technologies (Wuhan) Limited, a jointly controlled entity incorporated in China.
All Group undertakings are wholly and directly owned by subsidiary undertakings of Senior plc, and in every case the principal country of operation
is the country of incorporation.
Senior Aerospace Bosman ceased trading in 2021, and Senior Flexonics Upeca, Malaysia ceased manufacturing in 2021.
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
195
ADDITIONAL INFORMATION / ADDITIONAL SHAREHOLDER INFORMATION
ADDITIONAL SHAREHOLDER INFORMATION
Analysis of shareholders at 31 December 2022
By category
Corporate bodies
Other shareholders
By range of holdings
1 – 24,999
25,000 – 49,999
50,000 – 249,999
250,000 – 499,999
500,000 – 999,999
1,000,000 – and over
Operating (loss)/profit
Shareholders
Number
Shareholders
%
Issued Shares
Millons
Issued Shares
%
402
1,659
2,061
1,758
71
106
34
34
58
2,061
19.51
80.49
100.00
85.30
3.45
5.14
1.65
1.65
2.81
100.00
411.05
8.37
419.42
6.15
2.48
12.23
12.61
23.93
362.02
419.42
98.00
2.00
100.00
1.46
0.59
2.92
3.01
5.71
86.31
100.00
The number of shares in issue at 31 December 2022 was 419,418,082.
Share Registrars
All shareholder records are maintained by Equinti and all correspondence should be addressed to the Registrar, Senior plc at the Equniti address
shown on the inside back cover, quoting the reference number starting with 0228 detailed on your dividend vouchers. The registrar should be notified
regarding changes to name or address, loss of share certificate, or request for, or change to, a dividend mandate.
Equiniti provides a range of shareholder information on-line. Shareholders can check their holdings, update details and obtain practical help on
transferring shares at: www.shareview.co.uk.
Instead of payment by post to your registered address, dividends can be paid through the BACS system direct into a UK bank or building society
account, with the dividend voucher still sent to your registered address. If you wish to use this facility and have not previously applied, then please
apply direct to Equiniti and request a dividend mandate form. Shareholders who are currently receiving duplicate sets of Company mailings, as a result
of any inconsistency in name or address details, should write direct to Equiniti so holdings can be combined, if appropriate.
CREST Proxy Voting
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General
Meeting to be held on 21 April 2023 and any adjournment(s) thereof by using the procedures described in the CREST manual. Further details relating
to voting via CREST may be found on the 2023 AGM Notice of Meeting and Form of Proxy.
196
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
OFFICERS AND ADVISERS
Secretary and registered office
Secretary and registered office
Andrew Bodenham
Senior plc
59/61 High Street, Rickmansworth, Hertfordshire WD3 1RH
Registered in England and Wales No. 00282772
Registrars
Equiniti Ltd
Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
Auditor
KPMG LLP
15 Canada Square, London E14 5GL
Solicitors
Slaughter and May
One Bunhill Row, London EC1Y 8YY
Bankers
HSBC UK Bank plc
71 Queen Victoria Street, London EC4V 4AY
KBC Bank NV, London Branch
111 Old Broad Street, London EC2N 1BR
Financial advisers
Lazards & Co., Limited
50 Stratton Street, London W1J 8LL
Sharegift
If you have only a small number of shares which would cost more for
you to sell than they are worth, you may wish to consider donating
them to the charity ShareGift (Registered Charity 1052686) which
specialises in accepting such shares as donations. The ShareGift
Transfer Form may be obtained from Equiniti, the Company’s Registrars,
at www.shareview.co.uk. There are no implications for Capital Gains
Tax purposes (no gain or loss) on gifts of shares to charity and it is also
possible to obtain income tax relief. Further information about ShareGift
may be obtained on 020 7930 3737 or from www.ShareGift.org.
Financial Public Relations
FGS Global
The Adelphi
1-11 John Adam Street
London WC2N 6HT
Corporate Brokers
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
Design and production
Printed by Park Communications
SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022
197
SENIOR PLC
59/61 High Street,
Rickmansworth,
Hertfordshire
WD3 1RH
United Kingdom
www.seniorplc.com
T +44 (0) 1923 775547