DJ Travis Perkins: Publication of 2020 Annual Report
Travis Perkins (TPK)
Travis Perkins: Publication of 2020 Annual Report
02-March-2021 / 19:55 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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Publication of the Annual Report 2020
Further to the release of its results announcement this morning, Travis Perkins plc (the "Company") announces that it
has today published its Annual Report for the year ended 31 December 2020. The Company's Annual Report 2020 can be
viewed on the Company's website - https://www.travisperkinsplc.co.uk/investors/results-reports-and-presentations/year/
2021
In accordance with rule 9.6.1 of the Listing Rules, copies of the following documents have been submitted to the
National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/
nationalstoragemechanism
- Annual Report and Accounts 2020;
A condensed set of the Company's financial statements and information on important events that have occurred during the
year and their impact on the financial statements were included in the Company's announcement. That information
together with the information set out below which is extracted from the Annual Report constitute the requirements of
Disclosure and Transparency Rule ("DTR") 6.3.5 which is to be communicated via a Regulatory Information Service in
unedited full text. This announcement is not a substitute for reading the full Annual Report. Page and note references
in the text below refer to page numbers in the Annual Report. To view the preliminary announcement, visit the Company's
website: www.travisperkinsplc.co.uk
Enquiries:
Matt Worster
Matt.worster@travisperkins.co.uk
+44 (0) 7990 088548
Robin Miller
Robin.miller@travisperkins.co.uk
+44 (0) 1604 592533
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
For the year ended 31 December 2020
In an exceptional year dominated by the global pandemic, we have demonstrated a clear understanding of the risks we
face and taken a proactive approach to risk management to identify and pursue opportunities, drive better decision
making and, most importantly, prioritise the safety and well-being of the Group's colleagues and customers.
The pandemic has required an ongoing and agile assessment of risks, challenges and issues, adjusting to the development
of Covid-19 in real time. The pandemic and its wider economic effects continue to bring uncertainty to our operations
and the delivery of our strategic objectives. Even with a mass vaccination programme, this uncertainty is likely to
persist.
Risk management framework
We operate in an industry and markets which, by their nature, are subject to a number of inherent risks. In common with
most large organisations we are also subject to general commercial, political and economic risks. We are able to
mitigate those risks by adopting different strategies and by maintaining a strong system of internal control which is
routinely tested and assured.
Our risk management framework has three pillars:
* Top down - activities at the Board and Group Leadership Team levels, focused on material risks to the strategy and
operations.
* Bottom up - activities across the Group that capture risk perspectives that are significant at a business unit,
programme or functional level.
* Emerging risk - new and emerging risks are considered through the regular risk activities above, the results of
assurance activities, and, at least twice a year, through a process that assesses our risk set against external
benchmarks.
The output from each pillar informs the process to determine our principal risks.
Responsibility and oversight
The Board has overall responsibility for risk management and internal controls, and for reviewing their effectiveness
at least annually. The Board is supported in its assessment by the work of the Audit Committee, which regularly
assesses the risk framework and the results of key assurance processes, including the work of Internal Audit, to
provide assurance to the Board that risk is being effectively managed throughout the Group. Further details on risk
management responsibilities and oversight are given in the Corporate Governance Report on page 79.
Risk appetite
The Board accepts that, in order to achieve its strategic objectives, and generate suitable returns for shareholders,
it must accept, and manage, a certain level of risk. It undertakes an exercise, at least annually, to consider the
nature and level of risk it is prepared to accept to deliver the strategy. Risk appetite is set across a suite of risk
categories directly relevant to the Group, supported by high-level risk statements which set out the expectations for
the management and control of each category of risk. The resulting assessment of risk appetite has been set to balance
opportunities for growth and business development in areas of potentially higher risk and return, whilst prioritising
safety and maintaining the Group's reputation, legal and regulatory compliance and the desired high levels of customer
service and satisfaction.
In addition to its annual review in September, earlier in the year the Board also assessed whether the level of change
prompted by Covid-19 might lead it to revise its risk appetite.
This review concluded that the Group's response to Covid-19 had not sought to take additional risk and that its risk
appetite in related risk categories was already, and remained, one of low risk.
Risk assessment and reporting
Our risk management processes aim to identify and assess risks before they impact on activities, position the
businesses and support functions to effectively manage those risks and leverage related opportunities.
The Board has developed a risk reporting framework that ensures it has visibility of key risks, the potential impacts
on the Group and how and to what extent those risks are mitigated.
Our risk management activities continue to be developed to support management's assessments of threats and
opportunities that could materially impact strategic delivery, performance, compliance and reputation. Whilst Covid-19
has dominated risk activities for much of 2020, there has also been a focus on developing and delivering the risk
assessments required by the newly developed minimum standards that underpin our 12 material ESG focus areas. This work
will continue into 2021. In addition, a plan has been developed to further embed risk assessment into key strategic and
performance reviews in 2021, bringing an increased and regular focus on risk and opportunity management at key decision
points.
Risk assurance
We operate a "three lines of defence" model to obtain assurance that major risks are adequately mitigated and
controlled, as set out below. Oversight is provided by the Group Leadership Team and the Audit and Stay Safe
Committees, which includes review of progress against agreed improvement actions. Regular updates on assurance
activities are provided to the Board.
Line of Source of assurance Nature of assurance
defence
Business operations
& operational
1st management Direct assurance - execution of policies and procedures, training completion,
management controls and monitoring, key performance indicators and self-assessments
Branches &
distribution centres
Central functions
Includes Safety, Management assurance - risk management programme, compliance and monitoring
2nd Fleet, Legal, activities, central governance processes (including the setting of policies,
Finance, IT procedures and training)
and HR
Independent reviews
Independent assurance - internal audit activities and third party audits and reviews
3rd Internal audit, that objectively assess the adequacy and effectiveness of governance, risk
management and controls and support continuous improvement
external audit and
other third parties
Principal risks
The Board and Group Leadership Team robustly assesses the Group's principal and emerging risks at least twice a year. During 2020 the Board has considered principal risks at four meetings, including detailed assessments of the impact of Covid-19 on the risk set. The principal risks that we consider to have a potentially material impact on the Group's operations and the achievement of its strategic objectives are set out below. They are ordered by risk category rather than relative size of risk. The inherent risk (before the operation of mitigating controls) is stated for each risk together with an indication of the current trend for that risk and strategic objectives that are potentially impacted. Further detail in respect of the potential impact of these risks and the mitigating actions taken are explored on the following pages. The scope and potential impact of risks will change over time. As such the risks set out below should not be regarded as a comprehensive statement of all potential risks and uncertainties that may manifest in the future. Additional risks and uncertainties that are not presently known to us, or which are currently deemed immaterial, could also have an adverse effect on the Group's future operating results, financial condition or prospects.
Risk category Principal risks Strategic Risk trend - Risk trend - Inherent risk
objective objective 2020 2019
- -
Market conditions
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Pandemic NEW ABC High
External AE N High
Changing customer & competitor ABC ABDE - High Medium
landscape -
Supplier risks -
-
- Medium
Portfolio management -
Strategic Change management BCDE ACDE ABCE - High
ESG NEW - High
N
IT systems and infrastructure AD - - High
Technological Cyber threat and data security AE High
- -
- -
People ABC
Operational AE Medium Medium
Health, safety & well-being Legal ABCDE - - Medium
compliance
- -
Key A. Best-in-class services B. Focus on trade C. Advantaged businesses D. Simplify the Group E. Financial strength
N New
- Increasing
- Decreasing
- Limited change year-on-year
Key disruptive risks that may impact the viability of a strategy or business model are also identified and managed. Whilst several principal risks, including market conditions, supplier risks and the changing customer and competitor landscape, include elements that are considered disruptive in nature, they are categorised above according to the primary driver of the risk.
Key changes in the year
The risk environment in which we operate does not remain static and the Board has made the following changes to the principal risk set in 2020:
* Covid-19 was identified as an emerging risk in the 2019 report and has been the dominant area of focus for our risk management activities throughout 2020. Pandemic risk, specifically in relation to Covid-19, is now recognised as a new principal risk due to the inherent uncertainty associated with it. A pandemic is one of the very few risks that could result in the complete shutdown of our operations. Covid-19 has the potential to amplify or accelerate the onset of certain of our other principal risks and this potential for risk interdependencies has been kept under review during 2020, alongside the additional mitigation measures implemented.
* Brexit risk assessment and contingency planning remained a focus in 2020. In preparation for the end of the transition period, to offset potential disruption to the flow of goods in the event of "no deal", the business units again built targeted contingency stocks in the categories deemed most at risk, to ensure stock remained available to customers. To date, there has been little Brexit-related impact to the flow of goods although Covid-19 related disruption at certain ports has impacted us in a limited way. The Board no longer considers Brexit to be a principal risk.
Management have prepared for, and will continue to implement, the required changes to customs procedures, product standards and the recruitment of EU citizens, which remain the more significant areas of Brexit impact for the Group. Where relevant, Brexit-related risks have been incorporated into our other principal risks, and the underlying "bottom up" risk management processes.
* ESG is an area of increasing importance, as we recognise our impact and potential influence on the environment, the construction industry and wider society. We are seeking to take a leading position on ESG matters, which both addresses our responsibilities and an increasing level of interest and expectations from our customers, investors and other stakeholders. Accordingly ESG matters have been added as a principal risk.
* The risks in relation to Portfolio Management and Capital Allocation have been combined.
* In relation to principal risks brought forward from 2019, the Board considers that the market conditions risk, supplier risks and the changing customer and competitor landscape risk are increasing. All other risk trends are unchanged.
Emerging risks
As part of the overall risk assessment process, and in line with the requirements of the UK Corporate Governance Code, we capture and monitor areas of uncertainty that do not currently present a significant risk but which have the potential to adversely impact the Group in the future. These emerging risks are identified from regular reviews of risk research and other publications, alongside perspectives on emerging risks collated from assessments made by the business unit and functional leadership teams and the results of assurance activities. The emerging risks considered by the Board during 2020 included sustainability and climate change matters, digital technologies and, as a result of the pandemic, the impacts of changes to working locations and ways of working.
Market conditions
Impact Risk description Risk mitigation
Our markets are highly fragmented and cyclical in
nature and performance is affected by general
economic conditions and a number of specific
drivers of construction, repairs, maintenance and
improvement and DIY activity. These include the Our businesses all hold #1 or #2 positions in their
volume of housing transactions, driven by chosen markets.
mortgage availability and affordability, house-
price inflation, the timing and nature of
government activity to stimulate activity, net
disposable income, consumer confidence, interest We maintain a comprehensive tracking system for lead
rates and unemployment levels. indicators that influence the market for the
consumption of building materials in the UK.
The fundamental long-term market drivers remain
robust despite Covid-19 related uncertainty in The Board conducts an annual review of strategy,
the short-term. Whilst a number of longer-term which includes an assessment of likely competitor
themes are beginning to impact the industry, activity, market forecasts and possible future
- Adverse these present us with both opportunities and trends in products, channels of distribution and
effect on risks in responding to the changes: customer behaviour.
financial
results - Traditional ways of working in the industry
- Loss of will change, driven by technology and an
market share increasing move to modern methods of Significant events that may affect the Group are
construction. monitored by the Group Leadership Team and reported
- There is a need to address a growing to the Board monthly by the Group CEO. Should market
productivity challenge in the construction conditions deteriorate then the Board has a range of
sector alongside an increasing scarcity of options dependent upon the severity of the change.
technical knowledge, which will hinder Historically these have included amending the
industry growth if unaddressed. Group's trading stance, cost reduction, changing the
- There is a drive for greater digitisation, focus or lowering capital investment and reducing
which has accelerated as a result of the the dividend.
pandemic.
- The ability to deliver and measure social
value will become fundamental to long-term
success. We have established a number of partnerships to
explore opportunities to work with companies
involved in modern methods of construction.
We must also manage the impacts of changing
building standards and the UK Government's future
framework for heat in buildings through the
products and services that we offer.
Pandemic
Impact Risk description Risk mitigation
The Covid-19 pandemic has significantly impacted
our operations and results in 2020. It is not
clear how long the pandemic will last, how much We acted quickly to respond to the challenges posed
more extensive it may yet become, what impact by Covid-19 with the safety and well-being of
further virus variants could have, how quickly colleagues and customers our overriding priority in
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approved vaccines will be distributed and how our continued response to the pandemic.
effective they prove to be, or what further
measures may be introduced by governments to
mitigate the associated health, economic and
societal impacts. Tiered crisis response teams were mobilised before
the first UK lockdown to coordinate activity. These
teams continue to monitor the situation closely,
with regular oversight from the Board, and update
Central UK Government, and the devolved measures, advice and communications as required.
authorities in other parts of the UK, have deemed
the Group to be an essential provider to ensure
critical national infrastructure remains
operational and homes remain warm and dry. Any Colleagues have been regularly consulted with
change to this status would significantly impact throughout the pandemic and are empowered to call
- Detrimental our operations and results. out unsafe practices. Several incidents in recent
impact to months suggest that Covid-19 has been an influencing
health and factor both in terms of the physical and mental
well-being impacts to colleagues of adapting to changed ways of
- Adverse The pandemic may lead to a significant and working, and as a necessary area of focus which may
effect on prolonged impact for the Group in respect of: divert attention from more typical operational
operations, hazards. Organisation-wide safety stand down
financial - Operational disruption resulting from high briefings were run in 2020 for colleagues to reflect
condition levels of colleague absence, attempts to and consider individual and collective actions that
and results contain an outbreak at a Group location or can be undertaken to take responsibility for their
further measures taken to contain virus own and each other's safety. Other major response
peaks, whether localised or national. This measures include:
could impact our ability to operate our
branch and distribution network, or provide - Rapid changes to the network to enable
functional support to the business, if this contactless collections and socially distanced
cannot be delivered remotely. service.
- Pressure on colleagues to adapt to rapidly - Enhanced hygiene routines and provision of PPE.
changing circumstances, ways of working and - Supporting all colleagues able to work from home
resourcing levels, which may impact their to do so, which will continue for the
health and well-being. foreseeable future.
- Disruption to our supply chain, which - Active, detailed management of cost and cash
operates across multiple territories. In flow, including the suspension of the 2019 final
addition to the proximate disruptive effects dividend, a 20% reduction in Board and Executive
of the pandemic, the supply chain may also be pay for three months and the deferral of rates
impacted by business closures and and VAT payments.
consolidation activity.
Regular communications to colleagues including a
Levels of consumer confidence in an uncertain weekly pulse survey and extended well-being support.
economic environment, which may adversely impact
demand for our products and services.
Changing customer & competitor landscape
Impact Risk description Risk mitigation
The evolution of customer behaviours has
accelerated through the pandemic and this is
expected to continue. Forced to move to more
remote transactions, customers looked for
digitally-enabled solutions. Whilst this drove an The Board is cognisant of the risks presented by the
immediate focus on our digital transaction changing customer and competitor landscape and
capabilities, the ability of these platforms to evaluates developments both in terms of threats and
meet customer demand and keep pace with opportunities for the Group. Competitor activity is
competitor developments will impact longer-term closely monitored, including potential consolidation
growth and delivery of our strategy. activity.
The process of digitisation introduces We have made significant progress in 2020 towards
alternatives beyond our traditional competitors digitising key customer journeys and building tools
and, through the move to more online purchasing, that complement our existing operations and enable
there is increasing price transparency. This puts customers to transact with us through channels that
pressure on the margin that can be achieved on best suit their needs. Initially focused on the
distributed products in some instances. General Merchant business, these tools build on the
existing high levels of digital engagement enjoyed
by the Wickes and Toolstation businesses.
The balance of delivered sales has moved
- Adverse significantly during the pandemic and our ability
effect on to develop this area and provide innovative High quality fulfilment of customer orders remains
financial fulfilment solutions will be a key the main service differentiator across Trade
results differentiator. Customers also increasingly value businesses. This is an area of ongoing focus for us
- Loss of the ability to procure services that complement and will combine with the digital enablement
market share their project, presenting us with both an initiatives to give better visibility and more
opportunity and risk to meet that expectation. choice to customers. The Group appointed a
Fulfilment Director in 2020 to focus these efforts.
Increased focus on delivery and fulfilment may
draw other new entrants into the market who We are able to use our sites flexibly to respond to
operate business models which differ changes. Alternative space utilisation models are
significantly from the traditional merchanting, possible, including maintaining smaller stores and
retail and online formats from which we currently implanting additional services into existing
operate. There is also an ongoing level of branches. The programme of restructuring announced
portfolio change among our more established in June 2020 progressed our existing strategy to
competitors. Both present potential threats to operate from fewer, larger branches with a greater
the leading market share positions of our breadth and depth of product range.
businesses.
Pricing strategies across the Group are regularly
These changes in the customer and competitor reviewed and refined to ensure they remain
landscape, individually or in combination, may competitive.
adversely impact the profitability of
branch-based operations, impact pricing
perceptions and, as a result, negatively impact
our overall performance.
Supplier risks
Impact Risk description Risk mitigation
Making decent returns is one of our cornerstones and
drives us to treat both customers and suppliers
fairly. We have established strong relationships
with our key suppliers and work closely with them to
We face a number of risks in relation to key agree contracts that are mutually beneficial. We
supplier dependencies and relationships, overseas conduct due diligence in line with our commitment to
sourcing and disintermediation, all of which responsible sourcing, and to ensure a continuous
could adversely impact upon ranging and price. supply of quality materials.
We are the largest customer to a number of our Where possible, contracts exist with more than one
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suppliers. In some cases, those suppliers are supplier for key products, to reduce the risks of
large enough to cause us significant difficulties dependency on a sole supplier.
and disruption if they are unable to meet their
supply obligations, whether due to economic or
operational factors.
Activities undertaken in preparation for Brexit and
- Adverse Alternative sourcing may be available, but the the end of the transition period, including
effect on volumes required and the time it may take those increased supplier liaison, mapping in-bound supply
financial suppliers to increase production could result in chains to identify potential exposures and holding
results significant and prolonged stock-outs, adversely buffer stocks in certain categories, has assisted in
- Adverse impacting customer service and, potentially, the understanding and mitigation of our supplier
effect on leading customers to switch to a competitor in risks.
reputation the short- or long-term.
We have made a significant investment in our Far
We source a number of products from overseas East infrastructure to support our direct sourcing
factories, which increases our exposure to operation. This allows the development of own brand
quality, warranty, ethical and currency issues. products, thereby reducing the reliance on branded
This again may adversely impact customer service suppliers. We have also adopted a conservative
and choice. hedging policy to reduce our exposure to currency
fluctuations.
Manufacturers of the materials and products that
we sell may also look to sell directly to end Independent checks are undertaken on the factories
customers in the future, diminishing the role of producing products for the Group, including the
distributors. ethical, safety and environmental performance of the
site and the quality and suitability of products
before they are shipped to the UK. The results of
these checks are kept under review with action taken
as necessary to address any concerns.
Portfolio management
Impact Risk description Risk mitigation
All merger, acquisition and disposal activities are
subject to a detailed appraisal process and ultimate
approval by the Board.
We manage a number of businesses in the UK which
operate in different, but complementary sectors.
As the markets we serve continue to develop, we
are investing to enhance our existing businesses We put in place a formal programme of work, with
and also to develop new propositions to better dedicated resources, for larger-scale transactions.
serve our customers. External expertise and advisors are involved as
required to support the programme teams.
We undertake acquisition and disposal activity to
optimise our portfolio of businesses and drive All activity of this kind is supported by robust
shareholder returns. In December 2018, we governance and monitoring. The largest programmes
announced a strategy to simplify the Group and are closely monitored by a programme Steering
concentrate on our trade-focused businesses. Committee, with sponsorship and representation from
Although the members of the Group Leadership Team and, when
- Adverse appropriate based on the significance of a
effect on Covid-19 pandemic led us to pause the planned transaction, the Board. Both the Group Leadership
financial demerger of Wickes during 2020, we completed the Team and the Board receive regular updates on all
results disposal of the Tile Giant retail business in portfolio management activities.
- Adverse September 2020.
effect on
shareholder
value Responsibility for identifying and implementing
- Adverse Programmes to separate and prepare businesses for opportunities to expand, improve or modify our
effect on sale or demerger can be complex given the many operations rests with each of the business unit
reputation linkages to our systems and processes. More leadership teams. We deploy or redeploy capital
generally, the projected benefits, costs and through a Group-level forum to strategically-aligned
timescale for portfolio management activities may projects expected to achieve the best return on
deviate from those originally planned, which capital. Projects are required to present a
could in turn impact the progression of the comprehensive business case and, for the largest
process and the value realised or price paid. investments, Board approval is sought.
Although we operate a disciplined capital Major projects are reviewed monthly by the Group
allocation process, there is a risk that we Leadership Team.
over-invest in channels which may decline or are
non-core. It is also possible that we may not
allocate sufficient capital to new propositions
and advantaged businesses resulting in suboptimal Post implementation reviews are undertaken of all
returns on capital. major projects and returns are monitored on an
on-going basis to ensure that the expected returns
are achieved, but also to allow us to modify the
allocation of capital when appropriate.
Change management
Impact Risk description Risk mitigation
All potentially significant projects are subject to
detailed investigation, assessment and approval
prior to commencement.
We allocate dedicated teams, including finance
colleagues, to each project, with additional
We undertake a variety of projects throughout our expertise being brought in to supplement existing
businesses in order to generate returns for our resources when necessary. Regular communications are
shareholders. These projects include the undertaken to keep colleagues informed.
modernisation of the Group's core IT systems and
infrastructure and, in direct response to the
- Adverse challenges of the pandemic, changes to methods of
effect on customer fulfilment and a drive for process All major programmes are supported by an appropriate
financial simplification in relation to rebates and governance structure and are closely monitored
results simplified pricing templates. through the Group Leadership Team's monthly
- Adverse programme review with regular reporting to the
effect on Board. When projects do not deliver against
shareholder expectations, we undertake exercises to capture the
value By their nature, major change programmes are 'lessons learned' which are fed into future
- Adverse often complicated, interlinked and may require projects.
effect on considerable resource or specialist expertise to
colleague deliver. As a result, the expected benefits,
engagement. timescale for delivery and the costs of
implementation of each project may deviate from Recent enhancements of the Group's digital
those anticipated at the outset. Colleague capabilities have been delivered using a more agile,
engagement may be impacted during a period of incremental approach to change.
significant change and cost-focus.
Whilst we continue to embed the approach, it has
been successful in supporting a more rapid
development of solutions which can be ring-fenced,
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trialled and assessed before wider deployment.
Although this approach is lighter on formal project
management and governance in the earlier stages, we
have implemented robust gateways to manage the risks
of wider deployment.
ESG
Impact Risk description Risk mitigation
Our operations are impacted by, and impact upon, A Group Code of Conduct is in place, underpinned by
the environment, society and the economy and we policies, which cover our ESG and ethical
are committed to the promotion of sustainable, requirements.
ethical and inclusive business practices amongst
our customers, suppliers and colleagues. This
commitment promotes a sustainable and
- Adverse value-generating business model, underpinning our Our Head of Sustainability undertakes regular
effect on strategy, and more fundamentally recognises our materiality assessments, consulting with broad
reputation responsibility to take action and influence the stakeholder groups, to determine the most material
- Competitive wider industry now, to mitigate the significant ESG risks and opportunities facing the Group. These
disadvantage threats to the planet posed by climate change. are agreed by the Group Leadership Team and the
- Adverse Board. We have determined accountabilities
effect on throughout our businesses to manage ESG material
financial focus areas, including Group Leadership Team
and Growing risks in relation to Environmental, sponsorship of each topic. A suite of Minimum
operational Social and Governance ("ESG") matters require us Standards is being implemented to maintain a strong
performance to regularly identify our most material core.
- Less responsibilities and challenges in order to
attractive target investment and manage them well. This
as an includes investment in the decarbonisation of the
investment fleet and estate, and engagement with the wider We have set commitments for each focus area
proposition construction products industry to reduce including an industry-leading commitment on carbon
- Potential supply-chain and product carbon, taking action to reduction. We allocate budget to meet the stated
legal prevent the worst impacts of climate change. commitments and progress on key strategic
action, initiatives is regularly monitored by the Group
fines and Leadership Team.
penalties
In addition, ESG matters are increasingly of
interest to our customers, investors and other
stakeholders, driving changes to demand and We have put in place a programme of independent
expectations, which we must identify and respond audits to assure compliance with our most
to. significant regulatory requirements in relation to
ESG matters.
IT systems and infrastructure
Impact Risk description Risk mitigation
Whilst we are currently reliant on older
infrastructure and applications, adequate resources
and processes are in place to keep the current state
well maintained and operational.
In our day-to-day operations we are dependent on
a wide range of IT systems and supporting
infrastructure and technology plays a significant
role in our strategic ambitions. To mitigate the risk of disruption in the event of a
system failure, an IT disaster recovery plan is in
place, together with broader business continuity
plans. Arrangements are in place for alternative
Our current IT landscape is complex and includes data sites. Off-site back-up routines are in place.
legacy systems that lack the functionality of Plans are regularly tested and the results assessed
modern software and where expertise is to drive further improvements. Our incident
diminishing. management process is designed to prioritise and
respond to any incident quickly and effectively,
- Adverse with escalation and communication protocols.
effect on Recovery targets are in place and are designed to
financial Whilst older systems present an increasing risk minimise the operational and customer impact.
and of failures or outages and require more effort to
operational maintain, of greater significance is the risk
performance that our current systems hinder the delivery of
- Adverse the strategy, whether technologically or in We have an evolving modernisation plan that will
effect on diverting resources. drive business benefits and lead to the replacement
delivery of of a number of legacy systems. This will bring
strategy greater capability and longevity to our systems and
- Competitive infrastructure.
disadvantage In adopting a more agile, incremental approach to
business change, enabled by technology, we will
need to manage an extended period of change where
old and new technologies must successfully A governance structure is in place for IT change
co-exist. There is significant risk associated programmes from idea generation through to
with IT-enabled business change programmes deployment. This includes protocols, to ensure that
including risks in relation to prioritisation and upgrades and improvements are delivered to the
sequencing, resource allocation, cost and time business in a controlled manner that limits the
overruns, testing and business acceptance. These potential for disruption. The Group Leadership Team
risks, alone or in combination, could impact our receives regular progress reports and larger
short-term performance and achievement of our programmes are reported to the Board.
longer-term strategy.
Every programme is assessed at completion as to the
lessons learned. Insights are rolled into future
change programmes.
Cyber threat & data security
Impact Risk description Risk mitigation
We take our responsibilities and legal obligations
Incidents of sophisticated cyber-crime represent in respect of data security and protection seriously
a significant and increasing threat to all and continue to focus on a combination of people,
businesses including the Group. As we seek to process and technology to help minimise the
meet our customers' increasing digital likelihood and impact of cyber incidents.
expectations and drive competitive advantage in
this area, the underlying data is attractive to
external attackers whose methods and global
footprint are rapidly evolving. There is Alongside user awareness and education, best of
therefore a balance to be struck between breed security controls and technologies are key to
increased digitisation and availability of data reducing the likelihood of an attack and are
against the risks that such activities introduce. regularly tested. These include firewalls, virus
protection, email threat protection, intrusion
detection and vulnerability scanning. All changes to
technology solutions require Information Security
Incidents impacting the confidentiality, review and approval.
integrity and availability of our data and
- Operational systems could result in disruption to
disruption customer-facing, supplier-facing and financial
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