SENIOR PLC

ANNUAL REPORT

& ACCOUNTS 2021

CONTENTS

STRATEGIC REPORT

IFC Financial Highlights

1 Our purpose

2 Group at a Glance

4 Chair’s Statement

6 Group Chief Executive Officer’s Statement

12 Sustainability

14 Environment

18 TCFD

24 Social

28 Governance

30 Our Business Model

32 Investment Case

34 Strategic Priorities

36 Our Technology Themes

38 Our Technology & Product Development

40 Stakeholder Engagement

44 Section 172 Statement

46 Key Performance Indicators

48 Risks and Uncertainties

56 Divisional Review – Aerospace

58 Divisional Review – Flexonics

60 Financial Review

64 Viability Statement

GOVERNANCE

65 Chairman’s Governance Letter

68 Board of Directors

72 Executive and HSE Committee

73 Governance and Report of the Directors

76 Nominations Committee Report

80 Audit Committee Report

87 Remuneration Report: Annual Statement

90 2021 Remuneration Report at a Glance

92 Remuneration Report: Policy

98 Annual Report on Remuneration

108 Statement of Directors’ Responsibility

109 Independent Auditor’s Report to the

Members of Senior plc

FINANCIAL STATEMENTS

116 Consolidated Income Statement

117 Consolidated Statement of Comprehensive Income

118 Consolidated Balance Sheet

119 Consolidated Statement of Changes in Equity

120 Consolidated Cash Flow Statement

121 Notes to the Consolidated Financial Statements

156 Company Balance Sheet

157 Company Statement of Changes in Equity

158 Notes to the Company Financial Statements

163 Five-year Summary

ADDITIONAL INFORMATION

164 Group Undertakings

166 Additional Shareholder Information

167 Officers and Advisers

FINANCIAL HIGHLIGHTS

Revenue

-10%

£658.7m

2020 – £733.6m

Adjusted operating margin

(1)

+40 bps

0.9%

2020 – 0.5%

Adjusted loss before tax

(2)

£(1.9)m

2020 – £(6.2)m

Proﬁt/(Loss) before tax

£23.7m

2020 – £(191.8)m

Adjusted earnings/(loss)

per share

(3)

0.17p

2020 – (0.84)p

Basic earnings/(loss)

per share

5.82p

2020 – (38.20)p

Return on capital employed

(4)

+50 bps

1.0%

2020 – 0.5%

Dividend per share

nil %

nil p

2020 – nil p

Free cash ﬂow

(5)

£14.0m

2020 – £46.5m

Net debt

(5)

£53m reduction

£153.1m

2020 – £205.9m

CDP

(climate disclosure project)

A-

Leadership rating

“Implementing best practices”

Total Carbon Dioxide Emissions

(tonnes CO

equivalent emitted)

46,540 tonnes

2020 – 46,747 tonnes

(Scope 1, Scope 2 -market based and Scope 3)

Lost time injury rate

(per 100 employees)

0.32 incidents

2020 – 0.32 incidents

Waste recylced

93%

2020 – 93%

Women in leadership

Board of Directors

50%

2020 – 43%

Executive Committee

38%

2020 – 38%

Engagement survey

(percentage of employees

completing the survey)

81%

2020 – 64% (Global Covid employee survey)

Ethics

(percentage of employees who completed

Annual Code of Conduct Training)

94%

2020 – 94%

NON FINANCIAL HIGHLIGHTS

Adjusted operating proﬁt and adjusted loss before tax are stated before £nil amortisation

of intangible assets from acquisitions (2020 – £7.7m), £4.4m net restructuring income

(2020 – £39.0m net restructuring cost) and £nil goodwill impairment and write-o

(2020 – £134.3m). Adjusted loss before tax is stated before income associated with

corporate undertakings of £21.2m (2020 – £4.6m cost). Adjusted earnings/loss per share

is stated before exceptional non-cash tax credit of £0.6m (2020 – £nil).

EBITDA is deﬁned as adjusted loss before tax, and before interest, depreciation,

amortisation, and proﬁt or loss on sale of property, plant and equipment. It also excludes

EBITDA from disposed businesses and 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/loss is shown in Note 9.

(2) A reconciliation of adjusted loss before tax to proﬁt/loss before tax is shown in

Note9.

(3) A reconciliation of adjusted earnings/loss per share to basic earnings/loss per

shareisshown in Note 12.

(4) See page 47 for the derivation of return on capital employed.

(5) See Notes 47 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 2021 was $1.38 (2020 – $1.29). The US Dollar

exchangerate applied to the balance sheet at 31 December 2021 was $1.35

(31December 2020 – $1.37).

Cautionary statement

The Annual Report & Accounts 2021 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.

Our purpose is to provide

safe and innovative

products for demanding

thermal management

and ﬂuid conveyance

applications

about how we

are performing

in Aerospace

Page 56

about how we

are performing

in Flexonics

Page 58

about our

investment case

Page 32

about our

people and

culture on

Pages 12, 24,

31, 35 & 41

about the

progress we

are making on

our purpose on

Pages 4, 12,

34, 36 & 38

about our

strategic priorities

Page 34

1SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

GROUP AT A GLANCE

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 purpose is to provide safe and innovative products for

demanding thermal management and ﬂuid conveyance applications.

The Group aims to create long-term sustainable growth in shareholder value through a culture that

empowers operations to work autonomously and collaboratively within an eective control framework.

OUR BUSINESS DIVISIONS

66%

(2020 – 70

(1)

Civil Aircraft 37%

Military/defence

aerospace 18%

Other aerospace

division 11%

34%

(2020 – 30

(1)

Land vehicles 18%

Power and energy 16%

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 on pages 36 to 39

(1) This number excludes Senior Aerospace Connecticut

2 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

OUR PEOPLE WORLDWIDE

North America

43%

UK and Europe

34%

Asia

20%

Rest of the world

Read more about our people and culture on page 24

Worldwide operating

businesses

Countries

Our Values set out the

principles and standards

ofbehaviour that drive

ourculture.”

David Squires

Group Chief Executive Ocer

3SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

• we held a Capital Markets Day (“CMD”)

presented by key business and technical

leadership from across the Group to

showcase our strategies and capabilities.

It was rewarding to see the support and

engagement fromour shareholders at

the session;

• our sector-leading sustainability credentials

and actions of the Group have always been

strong and Executive driven. Progress and

drive have been sustained by the Executive

throughout thisperiod; and

• how we execute our business and the

nature of our business strategies are

interlinked and synergistic.

The Board has a very strong understanding of

the business model and its intrinsic cash ﬂows.

In the ﬁrst half of 2021, Senior encountered

corporate action in the form of a conditional

proposal from LSF XI Investments, LLC,

acompany advised by Lone Star Global

Acquisitions, Ltd. The Board, fully aware of

its ﬁduciary responsibilities, and together with

its advisers, assessed the fundamental value

of theCompany in relation to the proposals.

Havingcarefully considered the oers, the

Board unanimously rejected them on the basis

they fundamentally undervalued Senior and

its futureprospects.

The Board was able to make a unanimous

decision as we are conﬁdent that we have

astrategy that will maximise value for

shareholders and deliver its target return on

capital employed of a minimum of 13.5%

(postIFRS 16) over the medium term.

Continued recovery in the Group’s end markets,

combined with our strong operating leverage

and augmented by the beneﬁts from the

restructuring programme, are foundations of

ourconﬁdence about our prospects. Our end

markets positions, capabilities, technologies and

trusted relationships forged with our customers

enable us to help them meet today’s challenges

and deliver solutions for future low carbon

requirements. The balance sheet remains robust

and was further strengthened by the divestiture

of Senior Aerospace Connecticut. We remain a

well-capitalised Group, with intrinsically strong

cash ﬂows and businesses that have capacity

tobeneﬁt from end market recoveries.

STAKEHOLDER ENGAGEMENTS

The long-term 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 40 to 43 explains more on this

SUSTAINABILITY PROGRAMME

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.

Read more on pages 12 to 29 on the scorecard

and progress achieved to date.

2021 has been a challenging year,

given the external global environment

we have had to address

There are a number of aspects of the year

Iwould like to draw out:

• the performance and behaviours of the

teamhas been exemplary during this

unprecedented challenging period. Our

people and their personal safety have been

paramount in all we do;

• the restructuring, announced in 2019,

has been completed and was thoughtful,

comprehensive and incisive. No stone was

left unturned but we were careful to preserve

organisational capability for the recovery

to come. We can already see the beneﬁts

of the action on the ﬂow through margins

of the business as volumes increase;

• we tested our end markets and strategies

forthe group against reasonable assumptions.

We determined that our capabilities, market

positions and technology are applicable

tothenet zero world we are increasingly

operating within;

The Company’s strategy continues to provide

asolid foundation to support our future growth

aspirations. When looking forward across the

portfolio, our businesses manufacture highly

engineered products and systems with

applications aligned to the low carbon economy.

These are pivotal technologies for emissions

reduction and environmental eciency.

We have identiﬁed signiﬁcant current and

future opportunities for the Group in ﬂuid

conveyance, thermal management and structural

components. These capabilities continue to be

highly relevant as the world transitions towards

a low carbon economy. Our products and

capabilities are relevant today and for the

longer term.

The Board has and will continue to evaluate

andreview the portfolio within the Group. The

Defence document issued on 22 June 2021

continues to best express the Boards position.

Our performance

In 2021, the Board and the Executive team

continued to be ﬂexible and adaptive to the

dynamics the Company was facing. As in 2020,

they illustrated that they could function well

during the challenging times of the pandemic.

The decisive actions taken to manage costs

hasdelivered savings of £50m realised in 2021.

These actions have meant that we are now an

even leaner and more ecient business and

we expect to see healthy near-term operating

leverage across the Group’s operating business

as sales recover.

The Group generated a free cash inﬂow of

£14.0m. The Group balance sheet remains

robust, with adequate headroom to our

committed facilities. We have well-structured

ﬁnancing arrangements in place and supportive

lenders, who agreed appropriate covenant

relaxations to December 2021, though our

strong cash performance in 2021 meant that

wedid not need to utilise those facilities.

While Group performance in 2021 has improved

compared to 2020, it was still impacted by the

pandemic, and as such, the Board believes it is

not appropriate to pay a ﬁnal dividend for the

year. The Board are optimistic that the recovery

currently underway in our core markets will

continue and therefore we currently expect to

resume dividend payments in 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.

CHAIR’S STATEMENT

Resilient in a challenging year

4 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

There are short- and long-term incentive

schemes that ensure the team at all levels

oftheGroup are focused on delivery of the

strategy for the beneﬁt of our stakeholders.

Short-term incentive schemes deliver the

foundation for longer-term recovery. It is

fundamentally important, given the

decentralised structure ofthe Group, that

we have an integrated and consistent set of

targets applying to all members of the schemes.

Our incentive targets are stretching, and the

longer term targets reﬂect the Board’s view

of the medium-term prospects for the Group.

Our purpose

Our purpose is to provide safe and innovative

products for demanding ﬂuid conveyance

and thermal management applications.

Our commitment to sustainability is rooted in

our core Values: it is highly complementary

to, and underpins, our purpose. As an

international, high value-added engineering and

manufacturing company, the Board recognises

the importance of adopting a market-leading

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 is an integral part of our strategy,

embedded within the behaviours of our people

and the culture of our organisation.

We provide products that operate in hard-to-

decarbonise sectors – such as aerospace,

transport and power. As an engineering

company with a strong heritage in relevant

domains created over almost 90 years,

innovation is in our DNA. We apply our

expertiseand technology across many

dierent applications, working in close

partnership withour customers, to develop

solutions thatsupportboth their commercial

and sustainability objectives.

It is this relevant engineering expertise that

hasgiven us an important role in helping

to tackle the climate change and clean air

challenge, as the world transitions to a lower

carbon economy.

In 2020 we became the ﬁrst, and remain the

only, company in our sector to have its scope 1,

2 and 3 greenhouse emissions reduction targets

approved and veriﬁed by the Science Based

Target Initiative (“SBTi”).

Amongst other sustainability successes,

in 2021, we maintained our CDP leadership

rating of A- for our climate disclosure, which

is deﬁned by CDP as “implementing current

best practices” and at the same time Senior is

described by CDP as “a trailblazer driving the

transition towards a sustainable net-zero future”.

Our Board

We have a cohesive, diverse and high

performing Board. Last year’s Board

Eectiveness review, given Celia Baxter’s

and Giles Kerr’s tenure, highlighted the need

to properly handle transition to maintain the

Board’s quality and standards. The Board felt,

recognising this, we should advance succession

planning and make sure there was more than

enough time to integrate the new Board. I am

delighted to say we are on plan with Mary and

Barbara, having joined the Board, and both

nowembracing their personal integration plans

in 2022. Celia and Giles remain fully committed

as highly valued members of the Board.

We willrecognise their contributions at the

appropriate time.

The Board has completed a comprehensive

Board evaluation during 2021. The main

recommendation centred around Board

succession, ensuring strategy form part of every

Board meeting agenda and that Directors have

good access to the Executive teams. Actions

are well underway to focus on these areas. To

ﬁnd more detail on these improvements, please

refer to page 77 in the Governance section.

The Board and I continue 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. Over the

course of the year, in light of the corporate

activity, our communication and engagement

with shareholders increased. This year we

invited all employees to participate in our

global employee engagement survey. We had

excellent participation and engagement, and

feedback was very positive, valuable, and

constructive. Celia Baxter, together with our

Director of HR, Jane Johnston, participated in

employee engagement focused groups with our

UK operating businesses. This engagement has

given the Board valuable insight and feedback

which will help it implement speciﬁc continuous

improvement plans across the business.

Our intention is to run this global survey

every 18months.

The Corporate Governance Report (pages 65

to108) examines how the Board sets the tone

from the top of the organisation. 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. The Group is focused on

aset of non-ﬁnancial metrics which range from

diversity, to greenhouse gas emissions, to water

consumed and how much waste is recycled

inthe businesses. The Sustainability Report

onpages 12 to 29 looks at how Senior has

achievedsigniﬁcant improvement against

our non-ﬁnancial targets in 2021.

Looking forward

Despite the ongoing challenges in 2021 and

notwithstanding near-term uncertainties in the

global economy, Senior is well placed to beneﬁt

from the recovery underway in our end markets.

The Group also has multiple opportunities to

leverage its capabilities and technology as the

world transitions to a low carbon economy

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.

As we enter 2022, we will continue to focus

ondelivering our strategy. We remain well

positioned to deliver improved returns for

our shareholders over the medium term.

Thank you all for your support.

Ian King

Chair

The long-term success of the Group is enabled by mature

and progressive engagement with all of our stakeholders.”

Ian King

Chair

5SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

GROUP CHIEF EXECUTIVE

OFFICER’S STATEMENT

It is heartening to see recovery

underway in our core markets including

civil aerospace and we anticipate

that continuing in 2022 and beyond.”

David Squires

Group Chief Executive Ocer

Overview of 2021 results

In 2021, Senior maintained a strong focus on

operational performance and delivered improved

proﬁtability, robust free cash ﬂow generation

and further strengthened the balance sheet.

This was despite the continued impact of the

coronavirus (COVID-19) pandemic on our

markets and customers.

With markets starting to recover, we saw order

intake increasing with a healthy book to bill ratio

of 1.16 for the Group, which underpins our

conﬁdence in a return to growth in 2022, 2023

and beyond. We announced notable contract

extensions and new contract wins including

new orders with Boeing and Honda which

help to demonstrate Senior’s reputation as a

reliable and innovative supplier to our blue-chip

customer base: attributes which are highly

valued during the uncertain times through which

we and our customers have been navigating.

In our Post-close Trading Update on 14 January

2022, we reported that, for the full year, both

Group revenue and adjusted loss before tax

were in line with management’s expectations.

Group revenue was 6% lower than the prior

year on a constant currency basis, part of

which was pre-COVID-19 and included Senior

Aerospace Connecticut (which was divested

on 22 April 2021) for the full year.

In Aerospace, revenue declined 12% year-on-

year on a constant currency basis, reﬂecting that

part of 2020 was pre-COVID and 2020 included

a full year contribution from Senior Aerospace

Connecticut. Excluding Senior Aerospace

Connecticut, revenue for the full year on an

organic, constant currency basis declined by

7%. The year-on-year decline reﬂected the

reduction in civil aircraft production rates,

partly oset by growth from semi-conductor

equipment, defence and space markets.

HIGHLIGHTS

Revenue

£658.7m

(2020 – £733.6m)

Adjusted loss before tax

£(1.9)m

(2020 – £(6.2)m)

Adjusted earnings/(loss) per share

0.17p

(2020 – (0.84)p)

In Flexonics, revenue grew 10% compared

toprior year, on a constant currency basis.

Theperformance in 2021 beneﬁted from the

recovery in heavy-duty truck and o-highway

and passenger vehicle markets, partially oset

by a decline in oil & gas and the closure of the

Senior Flexonics business in Malaysia.

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 decisive actions taken by the Group on

managing costs in 2021 have delivered

signiﬁcant beneﬁts and improved proﬁtability.

This has helped us to generate an adjusted

operating proﬁt of £6.1m (2020 – £3.7m),

despite the reduction in Group revenue.

Savings of £50m were realised in 2021. The

Group’s adjusted operating margin increased

by 40 basis points, to 0.9% for the year.

Adjusted loss before tax reduced to £1.9m

(2020 – £6.2m loss). The adjusted tax credit was

£2.6m (2020 – £2.7m). Adjusted earnings per

share increased to 0.17 pence (2020 – adjusted

loss per share of 0.84 pence).

Reported proﬁt before tax was £23.7m

(2020 – £191.8m loss). Basic earnings per share

was 5.82 pence (2020 – basic loss per share

of 38.20pence).

Maintaining a strong focus on cash generation

throughout 2021, the Group delivered free cash

ﬂow of £14.0m (2020 – £46.5m). Our diligent

management of working capital and capital

expenditure have beneﬁted this year’s free cash

ﬂow and net debt position. Gross investment in

capital expenditure was £21.3m (2020 –

£26.8m) and the Group incurred £2.6m cash

outﬂows (2020 – £32.3m inﬂows) from working

capital. Reﬂecting the actions taken, the Group

generated net cash ﬂow of £57.7m (2020 –

£23.2m) in the year, due to free cash ﬂow of

£14.0m (2020 – £46.5m) and £43.7m cash

inﬂows (2020 – £23.3m outﬂows) primarily

related to corporate undertakings and

restructuring activity.

(1) Adjusted loss before tax is before amortisation of

intangible assets from acquisitions, goodwill

impairment and write-o, net restructuring income/

costs and corporate undertakings.

6 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

The Group’s ﬁnancial position remains resilient,

with £208.0m of headroom on our committed

borrowing facilities at 31 December 2021.

Netdebt at the end of December 2021

was £153.1m (including capitalised leases

of £73.2m), a reduction of £52.8m from

December2020, after taking into account

favourable currency movements of £0.7m

and£5.6m increase for lease movements.

Considered and eective capital deployment is

astrategic priority for the Group and, in line with

our strategy to review the overall portfolio of our

businesses and evaluate their strategic ﬁt within

the Group, on 22 April 2021 we completed the

divestiture of our Senior Aerospace Connecticut,

USA, operating business. The net proceeds for

this divestiture were £49.7m. As previously

announced, in 2021, we closed our small oil

&gas operating business in Malaysia, Senior

Flexonics Upeca, and also our Senior Aerospace

Bosman operating business in the Netherlands

following the seamless transfer of production

from Rotterdam to our French Aerospace sites.

While Group performance in 2021 has improved

compared to 2020, it was still impacted by the

pandemic, and as such, the Board believes it is

not appropriate to pay a ﬁnal dividend for the

2021 ﬁnancial year. We are optimistic that the

recovery currently underway in our core markets

will continue and therefore, we currently expect

to resume dividend payments in 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.

Delivery of Group Strategy

Senior has a focused and compelling strategy

tomaximise value for shareholders, and is

conﬁdent of delivering its target return on

capitalemployed of a minimum of 13.5%

(postIFRS 16) over the medium term through

the following:

• a strategic focus on intellectual property

(“IP”) rich ﬂuid conveyance and thermal

management;

• organically growing our Aerostructures

business fully utilising our world class

globalfootprint;

• maintaining strong focus on eciencies

through our Senior Operating System

as endmarkets continue to recover;

• executing on its portfolio optimisation

strategy to maximise value creation; and

• driving intrinsic strong cash generation.

Senior has maintained its focus on IP-rich

technology and manufacturing, by developing

expertise in ﬂuid conveyance and thermal

management technology and capabilities.

These capabilities are supported by a strong

body of design and manufacturing process

intellectual property and know-how. Using these

technologies and capabilities, Senior is able

to develop and supply proprietary products,

sub-systems and systems for our customers’

demanding applications across a range of

diverse and attractive end markets.

Across the portfolio, our businesses

manufacture highly engineered products and

systems with applications that incorporate

pivotal technologies for emissions reduction

andenvironmental eciency. We have identiﬁed

signiﬁcant current and future opportunities

forthe Group in ﬂuid conveyance and thermal

management applications and these capabilities

continue to be highly relevant as the world

transitions towards a low carbon economy.

We have already developed novel solutions

forlow and zero carbon applications and 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 in the

“Technology and product design and

development” section below.

As well as our businesses being actively

focused on product oerings 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 eort 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.

In addition to our ﬂuid conveyance and thermal

management capabilities, we also have excellent

build-to-print precision machining and structural

assembly capabilities. These businesses focus

on a wide range of both complex airframe and

aeroengine applications. Examples include

compressor fan blades for multiple engine types,

wing ribs for narrow-body aircraft, complex

structures assemblies for wing and fuselage,

highly engineered engine casings and complex

machined products for satellites. Our Structures

businesses are well capitalised with state-of-the-

art equipment and operate across North

America, the UK and South-East Asia.

Our strategy for our Structures businesses

aswe emerge from the pandemic 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 remain conﬁdent that our Aerostructures

core market will recover, driving performance

improvement and providing the Group with

strategic optionality.

7SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

Power & Energy

• We continue to develop an 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.

Portfolio optimisation

The Group actively reviews its overall portfolio

of operating businesses and evaluates them

in terms of their strategic ﬁt within the Group.

Senior has continued its “Prune to Grow”

strategy of portfolio optimisation by divesting,

closing, or combining non-core or performance-

challenged assets. Most recently in 2021 we:

• successfully raised £49.7m from the strategic

divestment of the Senior Aerospace

Connecticut helicopter structures business;

• realised value from the sale of the property

following the closure of our oil and gas

machining Senior Flexonics Malaysia facility,

which oset some of the closure costs; and

• completed the transfer of production from

the Netherlands to France and closed the

Senior Aerospace Bosman facility.

Senior understands the importance of

considered and eective 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.

Technology and product design and

development

We continue to invest in new technology

and product development in the areas of

ﬂuid conveyance, thermal management and

Additive Manufacturing in support of our key

markets in Aerospace, Land Vehicles and

Power & Energy, as they transition towards

a low carbon economy.

Aerospace

• Our traditional ﬂuid conveyance products are

entirely compatible with sustainable aviation

fuels, the increasing use of which will 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.

• Our world-class capability in thermal

management and ﬂuid conveyance provides

opportunities to support the development

ofelectric/hybrid air vehicle applications.

• We are leveraging and building upon our

long experience of providing hydrogen

ﬂuid handling and distribution products for

industrial markets to support development

ofboth on-aircraft and o-aircraft hydrogen

technologies as this alternative propulsion

system 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 ecient

andlower their environmental impact.

• We focus on product oerings 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 electronics on the growing number

of electric/ hybrid vehicles.

• We are supporting the development of

commercial vehicle hydrogen fuel cell

cooling and conveyance by capitalising

on our experience of producing hydrogen

fuel cell products in the energy sector.

Restructuring

The decisive actions the Group took on

restructuring and cost management since 2019

have delivered the expected beneﬁts, with

savings of £50m realised in 2021. In 2021, net

restructuring income of £4.4m was recognised

as our operating businesses maximised

opportunities to realise income from assets

that had no alternative use.

Since its inception in 2019:

• the cumulative cost of the programme has

been £46.7m, (£6m lower than initially

expected);

• cumulative cash outﬂow has been £19.0m,

(£10m lower than expected); and

• savings delivered of £4m in 2019, £36m

in 2020 and £50m in 2021 (a year earlier

than initially expected).

These decisive actions, taken to insulate the

Group through the pandemic in 2020 and 2021

mean that we are now an even leaner and more

ecient business.

We continued to make good

progress on our

sustainability goals,

maintaining our sector

leading position.”

David Squires

Group Chief Executive Ocer

GROUP CHIEF EXECUTIVE

OFFICER’S STATEMENT

CONTINUED

8 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABILITY

Senior is a values driven organisation: we

believe with conviction that how you do

business is every bit as important as what

you do. We always put safety and ethics

ﬁrst and we strongly encourage and

promote diversity and inclusivity across our

international operations. For many years,

therefore, we have had a strong focus on

Environmental, Socialand Governance

(“ESG”). As sustainability themes and issues

become ever more important to our

stakeholder groups, our strong track record

means that we are well positioned to meet

and exceed their ESG expectations.

Our industry leading ESG disclosures and

ratings are evidence of Senior’s longstanding

approach to sustainability.

In 2021, we have again made good progress

with our key sustainability metrics

andactivities:

• Environment

– In 2020, Senior became the ﬁrst,

andremains the only, company in the

GlobalAerospace and Defence sector

tohave its Scope 1, 2 and 3 greenhouse

gas emissions targets approved and

veriﬁed through the Science-Based

Targets Initiative (“SBTi”) and in 2021,

these are now veriﬁed “Near Term

Net-Zero Targets” in line with the

updatedclassiﬁcationsystem.

– Maintained our CDP leadership rating of

A- for our climate disclosure, which is

deﬁned by CDP as “implementing current

best practices”.

– Achieved the highest CDP leadership

rating for the work with our supply chain.

Recently, Sonya Bhonsle, Global Head of

Value Chains & Regional Director

Corporations, CDP stated, “As a Supplier

Engagement Leader, Senior plc is a

trailblazer driving the transition towards

asustainable net-zero future”.

– Reduced our SBTi Scope 1 and 2 (market

based) carbon emissions by 18.9%

compared to our 2018 base year.

– 36% of our electricity was sourced from

renewable energy, an increase from 25%

in 2020.

– Recycled 93% of waste produced.

• Social

– Achieved an 81% response rate on our

global employee engagement survey in

May 2021. This response rate exceeded

the benchmark for manufacturing

companies.

– Reduced the number of lost time injuries

from 21 in 2020 to 18 in 2021. We remain

on track to meet our 2025 reduction target.

– The percentage of women on the Board

increased to 50% in 2021 from 43%

in2020.

– Donated £200,000 to UNICEF to support

its Covid-19 Vaccines appeal. Our donation

was the equivalent of providing

vaccinations for every Senior employee

and their families.

• Governance

– Updated the Group’s Code of Conduct

with a booklet issued to all employees

and provided training on it.

– Information security was a key area of

focus to safeguard the Group’s assets,

particularly as during the pandemic many

ofthe Group’s employees worked from

home. During the year, all sta 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.

– Training on Anti-Money Laundering and

the Corporate Criminal Oence Act was

also rolled out to all relevant sta.

9SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

GROUP CHIEF EXECUTIVE

OFFICER’S STATEMENT

CONTINUED

Senior is well placed with good content on

mature programmes such as the C-130

transport aircraft, the F-35 Joint Strike Fighter

aswell as new programmes such as the

USAFT-7A Red Hawk trainer.

Other Aerospace (11%

(2)

of Group)

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

continued to be strong in 2021, reﬂecting the

increase in global demand for microchips.

Robust consumer demand pushed double-digit

growth-rates, as a result of pandemic-related

consumer and work-from-home trends, and was

further strengthened by recovering industrial

markets such as automotive. According to

the World Semiconductor Trade Statistics

(“WSTS”), the global semi-conductor market

increased by 26% in 2021 and is forecasted

to grow by 9% in 2022.

Land Vehicle (18% of Group)

In Flexonics, Land Vehicle markets are expected

to continue to grow in 2022, as supply chain

constraints gradually ease through the year.

Americas Commercial Transportation (“ACT”)

Research reported that North American

heavy-duty truck production increased by 23%

in 2021. ACT Research is forecasting 2022

production to grow by 13% and envisage that

in2023, production will increase by 21%,

supported by the pent-up demand from the

2021/22 period and pre-buy activity ahead the

tightening of emission standards. IHS Markit

Inc. (“IHS”) reported that European truck and

bus production grew by 14% in 2021 and is

forecasting that it will grow by a further 7%

in2022.

Passenger vehicle production in 2021, especially

during the second half of the year, was impacted

by semi-conductor shortage. IHS reported that

MARKET OVERVIEW

Civil Aerospace (37%

(2)

of Group)

Production volumes for civil aerospace are

expected to be higher in 2022 than 2021, driven

by increasing single aisle rates.

Global air trac recovery in 2021 showed

ongoing progress as the COVID-19 vaccine

delivery gathered pace and travel restrictions

eased globally: in North America, US domestic

travel recovered strongly; in the Asia Paciﬁc

region we saw the start of the re-opening of

international travel in the second half of the year;

transatlantic travel opened up in November

2021; and there were signs of corporate travel

picking up. With travel restrictions being eased,

demand for air travel is increasing, driving the

recovery in air trac and this is expected to

improve further through 2022.

The most recent IATA forecast is that world

passenger ﬂows will return to 2019 levels by

theend of 2023. IATA expects domestic trac

to reach 2019 levels by 2022 and international

trac to return to 2019 levels by 2025.

Asdemand recovers, production of new aircraft

will be supported by the replacement cycle

driven by the retirement of older, less ecient,

aircraft. Beyond this, the drivers supporting air

trac growth over the long term of c. 4% per

annum remain in place.

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 expected medium-term

marketrecovery.

Defence (18%

(2)

of Group)

Defence markets are anticipated to remain

stable in 2022.

Senior’s sales to the Defence sector are

primarily focused on the US defence market,

which in ﬁscal year 2022 is likely to be in the

region of $770 billion following the bipartisan

USSenate support for the National Defence

Authorisation Act (NDAA) in December 2021.

European (including the UK) passenger vehicle

production decreased by 6% in 2021 and is

forecasted to grow by 20% in 2022.

According to the International Energy Agency

(“IEA”), in 2021, electric car sales more than

doubled to 6.6 million, representing close to 9%

of the global car market and more than tripling

their market share over two years. Furthermore,

all the net growth in global car sales in 2021

came from electric cars. 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 (16% of Group)

Some positive momentum is expected in power

& energy markets now that recovery in the

upstream oil & gas sector is underway.

Global oil demand is forecast to exceed

pre-pandemic levels before the end of 2022 and

to further strengthen in 2023, in the absence of

any further COVID-related disruption. Industry

macro fundamentals, for upstream oil and gas

inparticular, are looking very favourable due to

the combination of projected steady demand

recovery, an increasingly tight supply market,

and supportive oil prices. Nevertheless, the rise

in geopolitical tensions could have a potential

impact on the supply side.

Global reﬁning capacity, on the other hand,

fellfor the ﬁrst time in 30 years in 2021, as

newcapacity was outweighed by closures.

Weanticipate this stabilising in 2022

althoughdependent on geopolitical and

economicconditions.

In power generation, the IEA forecasts

electricity demand growing by 2.7% a year

on average in 2022-2024. It also forecasts an

acceleration in the growth of renewable capacity

in the next ﬁve years, accounting for almost

95% of the increase in global power capacity

through 2026.

We are ensuring we are appropriately resourced

to take advantage of the market recovery led

opportunities.

(2) This number is excluding Senior Aerospace Connecticut.

10 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

SOURCE: Data sourced from IHS Markit, Feb 2022.

Million units

Light Vehicles

Medium/Heavy Commercial Vehicles

20162015

2017

2019

2018

2020 2021 2022 2023 2024

100

105

SOURCE: IATA, “Air Passenger Forecasts: Air passenger recovery to begin in earnest in 2022”, November 2021 (right).

Global O-D passengers, billions

2024: 105% of 2019 level

2023: 98% of 2019 level

2022: 82% of 2019 level

2021: 45% of 2019 level

CAGR 2025-30: 4.8%

2018 2030

20282026202420222020

July 2021 forecast

November 2021 forecast

100

200

300

400

500

600

700

800

SOURCE: US Department of Defence, FY22 Budget Request, FY21 Green Book,

Biden April 2021 budget request, Federal Government Budget, Roland Berger.

Nominal DoD budget, USD bn

FY22 likely outcome:

c. USD 740-750 bn

Trump FY22 plan:

USD 722 bn

Biden FY22 request:

USD 715 bn

Obama presidency Trump presidency

2010 2011

20232012 2013

2014

2015 2016

2017

2018 2019

2020

2021 2022 2024

2025

2026

Actual

Extrapolation based on Biden FY22 request

SOURCE: IEA, “World Energy Outlook”, Oct 2021 – Describes

the Announced Pledges Scenario, which assumes that all climate

commitments made by governments around the world, including

Nationally Determined Contributions and longer term net zero

targets, will be met in full and on time.

Gt CO

20202010

2030

2040

2050

200

400

600

800

emissions (right axis)

Traditional use of biomass

Renewables

Nuclear Natural gas

Oil Coal

Outlook

Overall, we are seeing recovery underway

in our core markets, including civil aerospace,

and we anticipate that continuing in 2022

andbeyond.

While the impact of the pandemic and

industry-wide supply chain constraints are

still with us, we continue to manage these

diligently. The Board anticipates good

progress in 2022

(3)

, in line with previous

expectations, as we continue the multi-year

recovery back to pre-COVID levels

ofperformance.

Over the medium-term we remain committed

to delivering a strong recovery across our

two Divisions, driving the Group ROCE to a

minimum of 13.5% in line with our previously

stated ambition.

Looking ahead, our dierentiated oering in

ﬂuid conveyance and thermal management

products coupled with our global footprint

andpositioning in attractive and diverse

end markets, gives the Board conﬁdence

that Senior is well positioned to build on our

strongcapabilities and to capture growth

opportunities. Our continued investment

inlow carbon technology and advanced

manufacturing combined with our

commitment to the highest sustainability

standards provide additional foundations

forcontinued success.

David Squires

Group Chief Executive Ocer

World passengers ﬂows long run outlook

US defence spending continues to grow

World vehicles production forecast World Energy Demand

ONGOING MARKET RECOVERY ACROSS THE

GROUP WITH STRONG OPERATING LEVERAGE

(3) Currently assuming exchange rate for the US Dollar

to Pound Sterling of $1.34: £1 average for 2022.

11SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

SUSTAINABILITY

A COMMITMENT to sustainability is rooted

in our core Values: it is highly complementary

to, and underpins, our purpose. we believe

with conviction that how you do business

isevery bit as important as what you do.

Sustainability is an integral part of our strategy, embedded

within the behaviours of our people and the culture of our

organisation. We invest in our employees to help them

succeed and they are empowered within a well-deﬁned

governance framework.

For many years, therefore, we have had a strong focus

onEnvironmental, Social and Governance (“ESG”).

Assustainability themes and issues become ever more

important to our stakeholder groups, our strong track record

means that we are well positioned to meet and exceed their

ESG expectations. Our industry leading ESG disclosures and

ratings are evidence of Senior’s longstanding approach

tosustainability.

Our products operate in various hard-to-decarbonise sectors –

aerospace, transport and power. As an engineering company

witha strong heritage in relevant domains created over almost

90years, innovation is in our DNA. We apply our expertise and

technology across many dierent applications, working in close

partnership with our customers, to develop solutions that support

both their commercial and sustainability objectives.

Our engineering expertise has given us an important role in

helping to tackle the climate change and clean air challenge,

asthe world transitions toa lower carbon economy.

Learn more here

ADVANCED TECHNOLOGY

COLLABORATION FORUM

Senior’s Advanced Technology Collaboration

Forum underpins the identiﬁcation and delivery

of technologies that will support our

Customers’ and Senior’s needs as we adapt

our existing capability to deliver sustainable

growth as clean energy solutions are

increasingly adopted. Thepurpose of the

Forum is to identify investment opportunities

in new technologies, and to support the

development of our Technology Roadmaps

through the delivery of targeted R&D projects

aligned to our purpose to provide safe and

innovative products for demanding ﬂuid

conveyance and thermal management

applications. Key themes include:

• Developing products and capabilities for

Hydrogen applications in fuel cells,

infrastructure (electrolysers), propulsion

andland/sea transportation.

• Developing and implementing products

andcapabilities for electric propulsion

applications in land vehicles, Urban Air

Mobility (“UAM”) and civil aerospace.

• Development of new thermal management

product lines for aerospace applications,

building on current automotive and

o-highway product expertise.

• Expanding the use of Additive

Manufacturing as an enabling capability

across all product groups.

WE HAVE AN INCLUSIVE CULTURE

WITH CONTINUED INVESTMENT IN

OUR EMPLOYEES

Attracting, developing and retaining the right

people is fundamental to our long-term success.

Personal and professional development of

people throughout our business is a key part of

ensuring we have talented, committed people

with the right skills and experience.

Read more on Environment page 14 Read more on Social page 24 Read more on Governance page 28

12 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

BATTERY THERMAL

MANAGEMENT

One of the best examples of Senior’s

contributions to decarbonisation eorts

comes from a long-standing partnership with

an established industrial engine and power

solutions company. Building on a decades

long business relationship; Senior designs

and manufactures many key emissions

system components for their diesel engine

product lines in the areas of thermal

management and ﬂuid conveyance.

Intellectual Property (IP) and experience

developed for these product lines have now

been directly leveraged to develop and

produce new product technologies forazero

emissions future. Most notably, Senior

recently began volume production ofan

advanced battery cooling module for

application in fully electric trucks and buses.

Environment

19%

Reduction in Scope 1 (Direct) and Scope 2 (Indirect)

emissions from 2018 base year (2020 – 18.6%)

Waste

93%

Recycling Rate

(2020 – 3%)

Health and Safety

Lost time Injuries

(2020 – 21)

Engagement Survey

81%

Percentage of employees completing Employee

Engagement Survey (2020 – 64% response to

global Covid employee survey)

Diversity

50%

Percentage of women on Senior plc Board

(2020 – 43%)

Ethics

94%

Percentage of employees who completed

Annual Code of Conduct Training (2020 – 94%

of global workforce)

2021 Sustainability Progress

Local management is empowered within

awell-deﬁned governance framework that

emphasises safety, high ethical standards and

our Values, to embrace an entrepreneurial spirit

and foster an innovative and collaborative

approach withall our stakeholders.

DELIVERING SUSTAINABLE

SOLUTIONS

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. As the world transitions, Senior

ishelping its customers to develop ecient and

eective products that are more sustainable,

with lower environmental impact.

We think ahead, looking at challenges

holistically when developing solutions

forcustomers. The best example ofthis is

ourwork to enable customer technologies on

existing internal combustion technologies while

simultaneously helping these same customers

bring to market ecient and viable electric and

hydrogen powertrains. Further to this, the same

intellectual propertydevelopments from the

transportation sector are being applied to

stationary and industrial power generation

applications which are playing a key part in

overall decarbonisation of the economy.

We adopt new, more sustainable

production methods and materials

wherever possible. For example, embracing

Additive Manufacturing allows us to develop

complex products quickly, with reduced waste

and often at a reduced weight when compared

to traditional manufacturing methods. Even

when Additive Manufacturing is not suitable, we

have a continual focus on improving production

eciency, including reducing waste and the

consumption of electricity and water during

themanufacturing of the products. With

operations in 12countries, we are also able to

be geographically close to major customers

which can contribute to minimising the carbon

footprint of our products.

13SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

2010

First submission

to Carbon

Disclosure

Project

2020

“20/20 Vision for

Sustainability”

climate targets

achieved

2015

Launch of “20/20 Vision for

Sustainability” including

adopting climate targets for

carbon intensity, waste

recycling and water usage

STRATEGIC REPORT

ENVIRONMENT

SUSTAINABILITY

CONTINUED

In October 2021, the SBTi released guidance

ona science-based approach to Net Zero

emissions. A company reaches SBTi Net Zero

when it reduces emissions in line with keeping

global temperature increase to 1.5°C.

Senior remains the only company in the

global Aerospace & Defence sector to

haveits emissions reduction targets

independently veriﬁed and approved by

theSBTi. The targets covering GHG emissions

fromSenior’s operations are consistent with

reductions required to limiting climate warming

to 1.5°C. The Paris Agreement’s long-term

temperature goal is to keep the increase in

global average temperature to well below 2°C.

In the SBTi’s target assessment report, Senior’s

Scope 1 and 2 targets were considered

ambitious, as they track to a 1.5°C global

temperature increase. SBTi have approved

thefollowing targets:

• 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.

Next Steps in our climate Journey

In 2022 we plan to extend our reach,

adding to our Near-Term Science Based

Targets by formulating Long-Term

Science Based Targets, the initial focus

will be our Scope 1 and 2 emissions,

Scope 3 will follow.

Progress towards our

certiﬁed Science Based Targets

Scope 1 and 2

We continue to monitor our Scope 1 and 2

emissions. All of our business operations

haveprogrammes to increase energy eciency,

typical projects include more ecient air

compressor systems, energy ecient boilers

and LED lighting.

In addition, we are actively pursuing the

purchase of low carbon electricity to reduce

ourScope 2 (market based) carbon emissions:

• in 2021, 36% of our electricity was sourced

from renewable energy, an increase from

25% in 2020.

We are on track to meet our SBTi Scope

1and2(market based) 2025 target with a

19%reduction against our 2018 base year.

Scope 1 & 2 (Market Based) Emissions

10,000

20,000

30,000

40,000

50,000

60,000

2018 202120202019

Target Total tonnes CO

Scope 1 & 2 Market Based Emissions

57,418

56,992

46,747

46,540

Carbon emissions

(measured as Tonnes ofCO

Scope 1

Scope 2

(market based) Total

2018 10,414 47,0 0 4 57,418

2019 10,378 46,614 56,992

2020 8,731 38,016 46,747

2021 8,445 38,095 46,540

Science Based Targets

In 2020, we were successful in having our

carbon emission reduction targets veriﬁed by

the Science Based Target Initiative (“SBTi”).

TheSBTi is a partnership between CDP, the

United Nations Global Compact (“UNGC”),

World Resources Institute (“WRI”) and the

Worldwide Fund for Nature (“WWF”). The SBTi

call to action is one of the We Mean Business

Coalition commitments.

OBJECTIVE NET ZERO:

Senior is committed to

achieving Net Zero by 2050

THE ROUTE TO NET-ZERO

CDP – Carbon Disclosure Project

Senior maintained a “Leadership” rating

ofA- in 2021 from the globally recognised

CDP: the only UK company in our sector

toachieve a leadership rating. The

high-ranking score is a testament to the

importance we place on the environment

and communities in which we operate and

is a result of the continuing dedication of

our teams across our businesses to

reducing our environmental impact.

Senior plc received A-, which is in the

Leadership band and is deﬁned as “implementing

current best practices”. This is higher than the

European regional average of C, and higher than

the Powered machinery sector average of C.

CDP Climate Disclosure Score

A-

LEADERSHIP RATING

14 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

2021

DECEMBER

2022

2020

DECEMBER

Gap analysis undertaken to

assess the Company’s

alignment to TCFD

recommendations and to

identify areas for improvement

Senior’s 2021

CDP score A-

“Implementing

current best

practice”

Senior achieves

“Supplier

Engagement

Leadership”

status from CDP

Develop our

Long-Term Net

Zero Targets

2021

JULY

Reassessment of

climate-related

risks and

opportunities

Scope 1, 2 and 3

targets approved

by the Science

Based Targets

Initiative

2021

SEPTEMBER

Scenario analysis

undertaken

2020

JULY

Supplier engagement

CDP have recognised our eorts in 2021 by

awarding us Supplier Engagement Leader

status based on our Supplier Engagement

Rating (“SER”)

The companies with the best SER are

celebrated as Supplier Engagement

Leaders,which this year is comprised of

thetop8% ofcompanies who disclosed

tothefullclimatequestionnaire. These

companiesarethen included on CDP’s

SupplierEngagement Leader board, see:

https://bit.ly/SupplierEngagement2021.

In 2021, 94 of our key suppliers provided

information, 51% reported having active carbon

reduction targets with 43% reporting that they

engage with their own supply chain with

respect to carbon emissions.

Scope 3

To make truly meaningful reductions in harm

tothe environment, businesses must cascade

action down the entire supply chain.

In 2021, we commenced our work to achieve

our Scope 3 supplier engagement Science

Based Target.

We calculated that around 340 suppliers

account for 80% of our global spend.

This year we contacted all of these 340

suppliers to inform them of our Science Based

Targets and the approach we intend to take to

gather information from them.

In order to facilitate the data capture and to

ensure we were following best practice we

engaged CDP, joining their Supplier Programme.

CDP have a designated portal and we notiﬁed

suppliers asking them to provide data into

thisportal.

For many of our suppliers, Senior was the ﬁrst

customer to ask for detailed carbon emissions

data. This meant that we had to provide

assistance and expertise to help these suppliers.

Of the 340 suppliers, 94 completed a detailed

submission through this portal, helping us

tounderstand and assess how they

wereprogressing.

We believe this ﬁrst year has been a successful

start to our programme and we continue to

develop our approach.

Reporting Active Targets

51%

Suppliers Engaging

with their own

suppliers

43%

Estimated Annual

savings

4 3.1M

Suppliers submitted

detailed data to

Senior

Output from the CDP Supplier Portal estimates

that the targets set by our supply chain will give

an estimated saving of 43.1 million tonnes of

carbon per year.

Next steps

In 2022, we intend to increase participation

from our suppliers: to do this we will provide

more assistance and guidance principally

through virtual supplier group meetings.

Looking forward to 2023 we will extend

participation further by working more

closely with smaller suppliers to ensure that

we are on target to achieve the cascade of

carbon reduction into our supply chain in

line with our target to cover 80% of supplier

spend by 2025.

Task Force on Climate Related Financial

Disclosures (“TCFD”)

In addition to our operational climate disclosures

Senior is active in the requirements to disclose

in relation to the TCFD. The following section

covers our progress and disclosure for TCFD.

15SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

ENVIRONMENT CONTINUED

SUSTAINABILITY CONTINUED

Waste

Our objective

Our Objective; 95% Recycling

Rate by 2025

To reduce the overall quantity

ofwaste generated and improve

the proportion of materials reused

and recycled.

Water Consumption

Our objective

To limit the environmental impact

of our production processes

through the ecient use of water.

We monitor water usage by business on a

monthly basis. Ourbusinesses conserve

water byusing ecient production methods

and by using water harvesting processes in

areas ofwater scarcity.

Progress in 2021

In 2021, Senior were

successful in recycling

93%

of waste produced.

In 2021, 74% of our businesses

achieved a recycling rate of

90%

or higher.

50% of our operating

businesses are at

100%

recycling rate.

Progress in 2021

Water Usage in 2021

256megalitres

Reduction in usage of

86megalitres

compared to 2019 – the last full

year before COVID-19 related

impact to operations

Certiﬁcation

Our objective

All Senior

businesses are

accredited to

ISO14001

Senior 2025 Sustainability Targets

Direct GHG emissions

Indirect GHG emissions

(Combustion of fuel and operation of facilities)

Reduce the overall quality of waste generated

and improve the proportion ofmaterials

reusedand recycled

Indirect GHG emissions

Reduced Lost Time Injuries

Metrics

Scope 1 and 2

Carbon Emissions

Waste recycling

Scope 3

Health and Safety

Tonnes CO

% of waste

recycled

Supplier

engagement

Lost Time Injury

Rate

30%

From 2018 base year

> 95%

80% of suppliers by spend

will have climate science

based targets

<0.3

Lost Time Injuries and Illness

cases per 100 employees p.a.

Target Year 2025

Note: For information on hazardous waste, please see www.seniorplc.com/sustainability

16 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Carbon emmissions

In Compliance with Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 – Streamlined Energy and Carbon

Reporting (“SECR”)

1st Jan 2021 to 31st Dec 2021 1st Jan 2020 to 31st Dec 2020

UK and

Oshore

Global

excluding UK

and Oshore Total

UK and

Oshore

Global

excluding UK

and Oshore Total

Scope 1: Combustion of fuel and operation of facilities 1,244 7,201 8,445 1,267 7, 4 6 4 8,731

Scope 2: (location based) Electricty, heat and steam purchased

for own use 2,203 36,040 38,243 2,595 36,683 39,278

Scope 2: (market based ) Electricty 875 37,220 38,095 1,800 36,216 38,016

Total gross Scope 1 and 2 (location based) emissions / tCO2e 3,447 43,241 46,688 3,862 44,147 48,009

Energy consumed in MWh to calculate above emissions 17,171 126,996 144,167 17, 279 129,273 146,552

Scope 3: Business travel, waste, water 53 1,118 1,171 73 907 980

Total Gross emissions / tCO2e (Scope 2 location based). 3,500 44,359 47,859 3,935 45,054 48,989

Intensity measure / tonnes CO2 emitted per £m of revenue 34 80 73 37 72 67

Water usage (in megalitres) 37 219 256 27 214 241

Percentage of waste recycled or recovered 100% 89% 93% 96% 90% 93%

In Compliance with Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 – Streamlined Energy and Carbon Reporting (“SECR”)

Energy Eciency Actions

In the reporting year, Senior plc has implemented

energy eciency projects across the global

operating businesses. In total, Senior’s

improvements have the potential to reduce

GHGemissions by 1,200 tonnes of CO

These environmental improvements include

thecompletion of a 5 kW solar panel installation

in Asia. Other improvements include the

upgrading of Liquiﬁed Petroleum Gas (“LPG”)

powered fork lift trucks to electric. Heating,

Ventilation and Air Conditioning (“HVAC”)

improvements continue to be completed in

several businesses reducing emissions by

switching to favourable refrigerants lower in

Global Warming Equivalent Values (emission

factors). Senior’s operating businesses continue

to install electric vehicle charging points for

employees and visitors, encouraging the use

of‘zero emission’ transportation.

Senior has set out its year 2025 plan to reduce

scope 1 and 2 emissions by 30%. Key to this is

the purchase of 100% renewable electricity

contracts. Three of Senior’s UK operating

businesses have now contracted into the supply

of100% renewable electricity supply, avoiding

over 1,000 Tonnes of GHG emissions annually.

French and German operating businesses are

also supplied with 100% renewable energy.

Other Senior operating businesses continue to

make progress to achieving renewable energy

contracts and three more operating businesses

are conﬁrmed to move to renewable energy

contracts in 2022.

Methodology

The Group’s approach to calculating and reporting our

GHG emissions follows the Defra Guidance on how to

measure and monitor GHG emissions.

Three data sources used for GHG emissions;

1. UK Government GHG Conversion factors for company

reporting (DEFRA full set for advanced users 2021).

2. US EPA (eGRID) Emission factors for greenhouse gas

inventories for US electricity generation.

3. IEA (International Energy Agency) Emission factors year

2021 version.

2021’s reporting has incorporated Scope 2 greenhouse

gas emissions (associated with electricity consumption)

calculated using both the Location and Market-

basedmethods.

Each Senior business reports its environmental

performance monthly using the Group’s ﬁnancial

reportingprocess.

The Scope 1 and 2 emissions are independently veriﬁed

inaccordance with the International Standard on

Assurance Engagements 3410 ‘Assurance engagements

on greenhouse gas statements’ (ISAE 3410).

Carbon emissions

Our objective

To reduce Scope 1 and Scope 2

emissions by 30% by 2025.

Keytothis is the purchase of 100%

renewable electricity contracts.

Progress in 2021

Total gross Scope 1 and 2

(market based) emissions of

46,540tCO

in 2021

Scope 1 and 2 (market based)

emissions reduced by

207tCO

in 2021

Scope 1 and 2 (market

based) emissions reduced by

19%

against our 2018 base year

17SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”)

The Financial Stability Board (“FSB”) created the TCFD – a framework to help

companiesdisclose climate-related risks and opportunities. We have made disclosures

consistent with the TCFD framework which recommends 11 disclosure topics across

fourpillars – governance, strategy, risk management and metrics and targets.

(1)

GOVERNANCE

Oversight of climate-related risks and

opportunities

The Company’s Board of Directors has oversight

over climate-related matters. The Group Chief

Executive Ocer is ultimately responsible for

climate-related risks and opportunities.

Throughout the year, the Board was regularly

informed about climate-related issues aecting

the Group, as described below:

• the Group Chief Executive Ocer provided

updates on the Group’s progress against

Scope 1 and 2 emission targets, work carried

out to support Scope 3 targets, waste

recycling and water use, as well as the eect

of climate change on the Group’s operating

businesses. The Group Chief Executive

Ocer 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 2021

andprovided an in-depth review on the

progress in engaging with suppliers in

respectof theGroup’s Scope 3 targets.

Inaddition, theBoard received regular

progress updatesonthe implementation

ofTCFD recommendations, including

Scenario Analysis.

• The Group Company Secretary ensured that

the Board was kept informed of the regulatory

developments around climate change,

providing various resources designed to

enhance climate change competencies of the

Board directors.

• The Group Director of Risk and Compliance

presents the Group’s principal risks, including

climate change, to the Board on a biannual

basis. In July 2021, the Group re-assessed its

climate-related risks and opportunities, and

the results of this assessment were reported

to the Executive Committee and the Board.

• The Group divisional CEOs and the Group’s

Director of Business Development & Strategy

attended the Board Strategy meeting,

highlighting the latest developments in low

carbon technologies and the opportunities

these presented for Group.

SUSTAINABILITY CONTINUED

Senior’s climate-related governance framework

Group Chief Executive Ocer

Ultimate responsibility for management of

climate-related risks and opportunities

HSE Committee

Monitoring progress

onGHGemissions

Executive Committee

Leading the Group’s eorts

onclimatechange

Board of Directors

Oversight of climate-related matters

(1) In October 2021, the TCFD released additional guidance implementing the Recommendations of the Task Force on Climate-related Financial Disclosures (2021 TCFD Annex),

which supersedes the 2017 Annex of the same name (2017 TCFD Annex). In line with the current UK Listing Rules requirements, our TCFD-aligned disclosures take into account

theimplementation recommendations in the 2017 TCFD Annex. In addition, we have considered the 2021 TCFD Annex and applied it where possible.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202118

Assessing and managing climate-related

risks and opportunities

Management is responsible for assessing

andmanaging climate-related risks

andopportunities.

The Group Executive Committee, led by the

Group Chief Executive Ocer, 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 Ocer, monitors

the Group’s progress on its environmental

targets, including Scope 1, 2 and 3 emissions.

Focus areas for 2022 “Governance”

• Continue strengthening Senior’s

governance framework for the Board’s

oversight of climate-related matters by

including “Climate Change” as a separate

regular agenda item in Board meetings.

• Enhance monitoring of the Group’s

progress towards Scope 1 and Scope 2

targets through carbon emissions

tracking dashboard.

• Continue raising awareness of climate-

related matters across the Group with

particular focus on operating businesses

and net zero transition plans.

BOARD TECHNOLOGY PRESENTATIONS

In September 2021, a presentation was

madeto the Board, highlighting:

• the impact of technological changes,

particularly low carbon technologies,

onSenior’s market segments;

• initiatives by Senior’s customers

demonstrating environmental awareness;

• technological developments in Aerospace

and Senior’s engagement in various

projects aimed at reducing emissions

andimproving operational eciency;

• decarbonisation opportunities for the

FlexonicsDivision, especially in relation

toElectric Vehicle (“EV”) adoption for

passenger cars and commercial vehicles;

and

• hydrogen infrastructure opportunities.

Senior will maintain regular technology

discussions at the Board level in 2022,

including those presenting climate-related

opportunities and mitigating climate-related

risks for the Group. Along with improving

awareness and expertise of technology issues

at the Board level, such discussions place

theDirectors in a stronger position when

incorporating technology into strategic

planning and other major decisions such as

acquisitions, disposals and major investments.

19SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

TASK FORCE ON CLIMATE-RELATED FINANCIALDISCLOSURES (“TCFD”) CONTINUED

SUSTAINABILITY 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

Short term 2021 – 2024

Medium term 2024 – 2026

Long term 2026 – 2041

Climate change has been reported as one of the Group’s principal

risks since 2019. In 2021, we held an internal workshop to evaluate

climate-related risks and opportunities at a higher level of detail. We

have used comprehensive data sources for this review, such as climate

change-speciﬁc publications; relevant sector literature outlining the

potential impacts of climate change, including publications from peers,

investors, regulators and market stakeholders; guidance from the

TCFD on potential risks and opportunities for businesses; CDP risk

and opportunity disclosures from engineering sector companies.

The table below highlights the Group’s opportunities and material risks

before mitigation activities.

Category Sub category Risk/Opportunity Description

Indicative

time frame

Link to Senior's

Principal Risks

Opportunities Products and

Services

Development of new products

Development or expansion of low emissions products resulting in increased demand

forSenior’s products

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

Transition

Risks

Market 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.

Customer demand

and price down

pressure

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).

Strategy and portfolio

management

Financing & liquidity

Technology 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.

Innovation and

technological change

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

into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.

Policy & legal 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.

Inflation

Exposure to litigation

Failure to manage climate related issues may result in prosecution (fines and

reputationaldamage).

Corporate

governance breach

Reputation 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.

Strategy and portfolio

management

Stigmatisation of sector

Activism and protest against aviation, land vehicles and oil and gas market sectors

mightbecome a threat to the reputation of Senior.

Physical

Risks

Acute 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.

Climate change

Chronic 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.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202120

Products and Services

We recognise that climate change is one of the megatrends transforming our business environment. Senior’s purpose is to provide safe

andinnovative products for demanding thermal management and ﬂuid conveyance applications. As our customers move to a lower carbon

environment, we help to develop products that are more sustainable, with lower environmental impact.

Read more on page 12

Access to capital

In 2021, the Board agreed that a sustainability ﬁnance framework would be developed for Senior plc with the aim of working with the

Group’s lenders to support ESG linked debt when reﬁnancing committed facilities.

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

We shall continue to develop our approach in assessing the ﬁnancial impact of climate change. Actual and potential ﬁnancial impacts on

revenues, expenditures, assets and liabilities, and capital and ﬁnancing will be considered as part of the Group’s strategic and ﬁnancial

planning processes.

Resilience of the organisation’s strategy

with reference to three climate-related

scenarios, including a 2C or lower

scenario

In 2021, we carried out scenario analysis to

understand the potential impact of climate

change on the Group’s operations. We have

selected the three climate scenarios produced

by the Bank of England because:

• they meet TCFD recommendation to assess

business resilience at dierent climate-related

scenarios, including a 2C 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.

21SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

SUSTAINABILITY CONTINUED

SCENARIO 1 (<2C)

EARLY POLICY ACTION

– SMOOTH TRANSITION

• Decisive carbon action to reduce global

emissions starts in 2021;

• Carbon taxes and other policies intensify

gradually over the scenario horizon;

• Global warming is limited to 1.8C by

2050 compared to pre-industrial levels;

• Limited physical risks.

Opportunities

The ability to maximise returns on new

investments in the long term, once

transition has occurred and markets

have stabilised.

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 insucient

or ineective 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, droughts may increasingly provide

challenge for some of Senior’s sites and

supply chain.

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.

SCENARIO 2 (<2C)

LATE POLICY ACTION

– DISRUPTIVE TRANSITION

• Delay in implementing the policy required

to reduce global emissions by 10 years;

• Starting in 2031, signiﬁcant and rapid

policy action causing drastic bending

of emissions trajectory globally;

• Global warming is limited to 1.8C by

2050 compared to pre-industrial levels;

• Limited physical risks.

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.

SCENARIO 3 (>3C)

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

3.3C by 2050 compared to pre-industrial

levels;

• High physical risks.

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 allowed us to better understand howclimate-

related risks and opportunities could impact our businesses. The assessment indicated that

transitional risks could have a more signiﬁcant impact in scenarios 1 and 2, whereas the impact of

physical risks could be higher in scenario 3. We recognise that scenario analysis will be developed

over time, and we will continue to integrate the ﬁndings of more detailed climate-based scenario

analysis into Senior’s risk management framework to ensure that mitigation measures are in place

for any residual risks that could impact business resilience to climate change.

Senior’s commitment to the ambitious Science Based targets for 1.5C future and Business

Ambition for 1.5C Campaign demonstrates that we are aligning our strategy with transition to

aglobal net-zero economy. By taking action to reduce the greenhouse gas emissions within our

businesses and supply chain, we improve the eciency of our assets, encourage carbon-free

technologies across the Group and our supply chain, therefore, reducing environmental impact.

We are committed to working closely with all our stakeholders in taking action to combat

climatechange. We believe that the Group’s dierentiators, such as its global footprint, focus

oninnovation, strong relationships with customers and suppliers make it resilient in transitioning

toa lowcarbon economy.

Focus areas for 2022 “Strategy”

• Conduct further scenario analysis

tounderstand the potential impact of

climate change at a regional/operational

site level.

• Embed the ﬁndings of the scenario

analysis into Senior’s strategic decision-

making and risk management processes;

continue testingthe resilience of strategy

underdierent scenarios.

TASK FORCE ON CLIMATE-RELATED FINANCIALDISCLOSURES (“TCFD”) CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202122

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 risk owners and

time horizons for completion of the mitigating

action plan. Action plan progress is tracked

toensure timely implementation. The overall

eectiveness 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 an annual

review by the Executive Committee and the

Board. Climate change has been reported as

one of the Group’s principal risks since 2019.

2021 assessment

During 2021, we re-assessed the climate-

related risks to understand which risks are

likelyto be material across Senior’s entire value

chain, giving consideration to our operations,

suppliers,customers, as well as regulatory

andstakeholder expectations. The assessment

resulted in the development of a broad array

ofresponse actions to support the Group’s

climate-related initiatives.

Focus areas for 2022 “Risk

Management”

• Due to the evolving nature of climate-

related impacts, we aim to conduct the

risks assessment process on a biannual

basis to track changes in materiality.

• Continue reﬁning materiality process and

review emerging trends. Integrate this

process into Senior’s annual risk

management framework.

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

Read more on page 17

Focus areas for 2022 “Metrics and

Targets”

• Consider appropriate metrics and targets

relevant to the Company’s sustainability

strategy.

• Continue integrating the metrics into

business reporting processes.

• Develop the Company’s Net Zero

Transition Plan.

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 49. 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, as 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

eectiveness of key mitigating controls and

reporting of the risk and assurance environment

to the Executive Committee, the Audit

Committee and the Board.

Three stages to identify signiﬁcant

climate-related risks and opportunities –

methodology overview

Identiﬁcation – comprehensive list of climate-

related risks and opportunities relevant to Senior

developed using following data sources:

• climate change speciﬁc publications and data;

• CDP disclosures from peers;

• relevant sector literature; and

• guidance from TCFD for Senior’s sector.

Signiﬁcance assessment – material risks and

opportunities were identiﬁed by assessing and

scoring the following factors:

• likelihood;

• magnitude of impact;

• velocity of impact, if previously identiﬁed

asaprincipal risk by Senior; and

• strategic importance to the business.

Selection – a ﬁnal list of material risks and

opportunities is selected for further climate

scenario analysis. Risk assessed is inherent,

without consideration for existing controls.

23SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Participation

81%

Health and wellbeing

score (of a max of 10)

7.6

Engagement

score (of a max of 10)

7.1

Comments

32,507

STRATEGIC REPORT

SOCIAL

SUSTAINABILITY CONTINUED

The table below shows the Group’s Board of

Directors, Executive Committee andoperational

senior management in 2021 bygender.

Male Female

All employees 79% 21%

Operational senior

management

82% 18%

Executive Committee 62% 38%

Board 50% 50%

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.

Employee engagement

As the impact of the COVID-19 pandemic

continued through 2021, we maintained our

focus on newways of working, ensuring

eective communication and employee

engagement, while remaining COVID-19

secureand creating asafe and stable

environment for employees.

Building on the success of the global COVID-19

employee survey in 2020, we launched our

ﬁrstglobal employee engagement survey in

May 2021. The survey was split into three main

sections, Engagement, Values, and Health

andWellbeing, and was delivered electronically,

to all employees in multiple languages.

Theresponse rate of 81% exceeded our

expectations and the benchmark for

manufacturing companies, with a signiﬁcant

number of employees completing the survey

who do not have ready access to company

emails. The 81% response rate itself is a

positive indicator of engagement and our

employees desire to provide feedback.

Equality, diversity and inclusion

Our Core Values underpin our culture.

Senior promotes a culture and working

environment in which everyone can make the

bestuse of their skills, free from discrimination

or harassment. The value of “Respect and

Trust”deﬁnes how we treat people, and our

commitment to be open and straightforward

with colleagues, customers, suppliers and

other stakeholders. We recognise the beneﬁts

of dierent perspectives and local cultures

and encourage individuals to speak freely,

as diverse contributions lead to better solutions

and business outcomes.

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.

The Group’s Equality, Diversity and Inclusion

policy is contained within the Code of Conduct.

We expect people to treat everyone they meet

in the course of business with respect and

dignity and in support of this, during the year, all

employees undertook Preventing Harassment

and Promoting Respect training as part of our

annual, mandatory Code of Conduct training.

Employees are required to comply with the

Code of Conduct. 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 and business leaders continue

tofocus on providing a diverse and inclusive

workplace. Gender diversity remains a key area

for further improvement in our operating

business general management population.

Weare continuing our global participation in

Mission Gender Equity Mentoring (previously

the 30% Club cross company mentoring

scheme). Theprogramme supports and

encourages thedevelopment of talented

women. The employee Engagement Survey

also provided us with the opportunity to

understand engagement by gender.

Participation in the survey was higher for

women than men, good levels of participation

being a measure of positive engagement. In

addition, it was notable that women scored

higher than men on their overall engagement

score, indicating that they feel that Senior is

agreat place to work.

SENIOR EMPLOYEE ENGAGEMENT

SURVEY RESULTS

Max Score: 10 Max Score: 10

Values Health and Wellbeing

Safety

Respect

andTrust

Integrity

Excellence

Cutsomer

Focus

Accountability

Social

Wellbeing

Physical

Wellbeing

Organisational

Support

Mental

Wellbeing

Health and

Wellbeing

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202124

2017 2018 2019

Number of Lost Time Injuries

2020 2021

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2017 2018 202120202019

Total Recordable Injury Illness RateLost Time Injury Illness Rate

Number of Lost Time Injuries

0.66

1.78

0.50

1.48

0.44

1.69

0.32

1.09

0.32

1 .17

GOLDEN RULES TRAINING

In 2021 we initiated a major safety

programme around the “Senior Golden

Rules”. The 10 Senior Golden Rules for Safety

cover key health and safety activities around

the major risks we face in the business.

These include lock-out / tag-out, working from

height and similar high-risk activities.

A team of health and safety professionals

from our global businesses collaborated

totake our existing Golden Rules programme

andsigniﬁcantly update and refresh the

content, producing training materials in all

applicable languages. A key component is to

align the Senior Essential Behaviours with our

Golden Rules. The roll-out of this programme

is scheduled for completion in 2022.

Health and Safety

The health, safety and wellbeing of our

employees is 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

of our business.

No work-related employee or contractor

fatalities occurred in the Senior Group in 2021,

no major injuries (serious / life changing) injuries

to employees or contractors working on behalf

of Senior.

In 2021, the Senior Group had a reduction in

thenumber of lost time injuries to 18 from 21

in2020.

Senior has a Group-wide safety management

programme with all businesses complying to

the Group standard and all subject to an annual

audit. Seven of our business operations have

already transitioned from OHSAS 18001 to

ISO45001.

In 2020, we set a Target to reduce our Lost

Time Injury Rate to 0.3 by 2025, we remain

ontrack to achieve this target.

Lost Time Injury Illness Rate (“LTIIR”) is 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.

The LTIIR for 2021 was 0.32, a similar result

to2020 despite fewer injuries. This is a result

ofthe calculation being based on a reduced

headcount compared to 2020.

In terms of Total Recordable Injuries, we have

seen an increase in the calculated rate. As

activity levels increased during 2021, we have

experienced an increase in minor injuries; in

addition, as with LTIIR calculation, the ﬁgure

has been impacted by our reduced headcount.

Overall, the feedback was positive, with a

scoreof 7.4 for the question “Overall, how

satisﬁed are you working at Senior?”.

Otherhighlights included Management

Support,Peer Relationships, Goal Setting

andMeaningful Work. As expected, there are

areas for improvement. Across all of Senior, the

key themes for us to work on are enhancing

how the operating businesses communicate

their business strategy and mission, so that

people feel more inspired by what we do and

the value of their contribution. Reward was also

anarea for improvement, both in terms of how

individuals are rewarded but also the process

fordetermining pay.

Feedback and high-level action plans have been

shared with the Board and, in particular, Celia

Baxter, the non-executive Director for employee

engagement, who has spent time reviewing and

analysing the feedback including engagement

scores and the verbatim comments.

Celia Baxter and Jane Johnston, Group HR

Director have resumed their programme of

face-to-face Focus groups and visited four UK

businesses, holding 15 sessions in the autumn

of 2021. The sessions were interactive with a

cross section of employees, including employee

representatives, and provided an opportunity

toengage directly, asking andresponding to

questions. As well as holding the focus groups,

the site visits included factory tours and meeting

the leadership teams.

Our operations have remained vigilant in

communicating with their teams, in particular

focusing on dierent ways of engaging with

some employees working from home, and

leaders notbeing able to hold regular all hands

meetingsdue to Covid safe working protocols.

The methods for maintaining interaction and

providing information to employees onsite and

remote workers included, video messages,

utilising TV message-boards, increasing

newsletter frequency and using mobile

technology. Leaders ensured they were visible

in their businesses. In addition, we have been

encouraging employees and their families to be

vaccinated and have continued our support for

employees throughout the COVID-19 pandemic.

Number of lost time injuries

Injury rate

25SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

SOCIAL CONTINUED

I am delighted to have been able to visit some of our

sites and meet with employees to hear their feedback

and learn more about the culture across our businesses.”

Celia Baxter

Chair of the Remuneration Committee and designated NED for workforce engagement

SUSTAINABILITY CONTINUED

Communities

Across the world and in all parts of the

Group,Senior’s businesses undertake a

rangeof charitable activities to support the

communities in which they operate. Our

colleagues contribute their time, money

andeort in areas including educational

mentoring, encouraging the take up of

Science, Technology, Engineering and

Mathematics (“STEM”) subjects in schools,

helping support local sports teams and

partnerships with local charities.

As an advanced technology business, our

staare highly trained leaders in their ﬁeld.

Their knowledge and mentorship can

therefore be immensely valuable, and as

aGroup we encourage and support our

colleagues in sharing their expertise and in

particular, enthusing the next generation

aboutthe possibilities oered by science and

engineering. At Senior Flexonics Pathway, our

engineers volunteer across Texas schools and

support competitions to train young people

and help them start their journey into the

world of engineering. Qualiﬁed welders at

Flexonics Pathway volunteer at the Texas High

School Welding Series competitions, sharing

their knowledge and helping to judge weld

tests. Flexonics Pathway also held a welding

certiﬁcation event at their facility, which saw

60 young people receive coaching and the

opportunity to try their hand at welding.

Elsewhere, in the UK Senior Flexonics Crumlin

has embedded itself in its local community

through shirt sponsorship for the Whitehead

RFC Under-9 rugby team, a youth team based

in Bassaleg, South Wales. Crumlin’s

contribution has ensured that the team has a

kit in which they can play in with pride, with a

squad of 20 young rugby players beneﬁtting

from the business’ support.

At Senior India, meanwhile, the local team

partnered with the charity Anadi Seva Prakalp,

an organisation focused on improving the

quality of life for deprived senior citizens.

With Senior India’s help, Anadi Seva Prakalp

constructed a dining hall and kitchen at their

hospice near New Delhi, supporting the

charity’s core mission and the 37 senior

citizens living at the premises.

People and Culture

Our Values set out the principles and standards

of behaviour that drive our culture. As evidenced

by the feedback we received from the

Engagement Survey, the area we scored

highest in was Safety. 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 COVID-19 pandemic,

supporting employees through this dicult time.

In our autonomous and collaborative business

model, our operational business leaders are

empowered and accountable, setting the tone

for their operations. Our model has enabled

leaders to react to the ever-changing

environment we found ourselves in throughout

2021, taking measures to keep people safe,

maintain business continuity and to plan for

future recovery. Despite the challenges in 2021,

manyof our businesses have continued to

support our employees, their families and

localcommunities, for example, with charity

events, fund raising and by facilitating COVID-19

vaccinations with onsite sessions and

transportation to vaccination centres.

Across Senior, we have

continued to provide

opportunities for learning and

development, meeting both

skills and technical training across the Group.

Our now well-established eLearning platform,

Learn has enabled us to oer a wide range of

training to meet business needs, for example

Operational Excellence, Management and

Leadership skills, Health and Wellbeing and

Project Management. Learn is also used to

deliver compliance training and, despite the

challenges posed by COVID-19 pandemic, we

have continued to deliver compliance training

for example our Code of Conduct, a programme

of Cyber Security courses and Anti Money

Laundering training. 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. The feedback from the Engagement

Survey and focus groups conﬁrms that peer

relationships are positive and that colleagues

can count on each other for support. This

feedback highlights our open and honest culture

of respect and trust, and how much people

value teamwork.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202126

We have continued

toembed “Perform”,

ourPerformance and

Development system.

Perform 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. In addition, we continue to undertake a

robust succession planning review annually.

TheExecutive Committee scrutinises the talent

pipeline, identifying successors or interim cover

for key roles across the Group and ensuring

appropriate development plans are in place to

enable individuals to fulﬁl their potential. In 2021,

we have seen the positive outcome of this

process with three senior roles, including the

Director of Business Development and Strategy,

being ﬁlled by talented internal candidates

that were identiﬁed on the succession plans.

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.

The feedback from our survey tells us that

employees believe that people are treated

fairlyand that we do not tolerate misconduct.

When individuals have concerns, our culture

isto encourage open and honest feedback

onmatters being raised with their local

management. On the rare occasion when

thingscannot be resolved locally, we have our

third-party whistle-blowing service called Ethics

Point which along with our Code of Conduct,

was relaunched in 2021. All concerns raised are

investigated and learning points are actioned by

local leadership teams as appropriate.

During the year, we

haveseen an increase

inrecruitment activity

asbusiness conditions

improve. In order to meet this and future

demand we are focussing on building strong

relationships with local technical colleges,

universities and education establishments,

partnering with recruitment ﬁrms, extending

ouruse of job boards and other approaches to

advertising and attracting applicants. In the US,

Recruit, our online recruitment system, has

placed us in a much better position to attract

talent by enhancing the candidate experience,

including the ability to use mobile devices to

apply. In 2022, we are planning a further roll out

of Recruit.

UNICEF

Senior is committed to supporting the ﬁght

against the COVID-19 pandemic. Several of

our businesses have directly supported

vaccine rollout programmes in their local

communities and Senior plc has also donated

£200,000 to UNICEF in 2021 to support its

COVID-19 Vaccines appeal. Our donation will

help UNICEF to achieve its overall ambition to

vaccinate 70% of every country in the world

by the end of 2022. Our donation was the

equivalent of providing vaccinations for every

Senior employee and their families.

COVAX is the only truly global solution to

thepandemic because it is the only eort

toensure that people in all corners of the

world will get access to COVID-19 vaccines,

regardless of their wealth. As a global

business and employer, Senior recognises that

this global action is of paramount importance

which is why we were delighted to hear that

as of February 2022, the COVAX Facility had

delivered a staggering 1.1 billion doses of

vaccine to 144 countries around the world.

UNICEF’s role in the ﬁght against COVID-19

goes further than just delivering vaccines.

Aswell as helping UNICEF deliver vaccines,

our donation is also supporting the training of

health workers to safely carry out vaccination

campaigns, as well as providing access to

oxygen and other essential interventions to

help treat those suering from the disease.

UNICEF is also delivering millions of items

ofpersonal protective equipment to keep

frontline health workers safe whilst tackling

rumours and misinformation to boost vaccine

conﬁdence. We are pleased to have had the

opportunity to help UNICEF in its support of

the vital global COVAX programme to deliver

vaccines to some of the most remote parts

ofthe world, save lives and protect entire

communities.

Image: Wamala

in support of

27SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

GOVERNANCE

SUSTAINABILITY CONTINUED

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 incidents is maintained by the Group

Company Secretary and the Board receives

regular updates.

The Group recognises that the use of third-party

intermediaries can increase potential bribery and

corruption risks within the markets in which we

operate. All external sales agents working on

behalf of Senior across the world are required

tooperate in compliance with the Code of

Conduct. The Code requires a pre-appointment

due diligence and risk assessment to be

undertaken, prior to engaging or re-appointing

any sales agent and requires them to be issued

with the Code, ensuring that they understand,

acknowledge and accept its requirements.

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. In 2021, 94%

of total employees completed the training.

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 Head of Risk & Compliance are discussed

by the Audit Committee.

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 Gifts and Hospitality Policy.

Third party anti-corruption due diligence

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, to 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. The Code

also contains certain additional obligations which

only apply to PDMRs.

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.

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 too high. A more detailed

fraud risk assessment is also performed.

2021 update

In 2021, Information Security training was

delivered to all employees. Training on Money

Laundering and the Corporate Criminal Oence

Act was rolled out to Finance sta and those

with external-facing roles.

Our plans for 2022

Additional short refresher training courses on

appropriate topics will continue to be rolled out

during 2022.

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 hot line,

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 Ocer’s report to the Board.

28 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Board

Board gender diversity

The Board is supportive of the aim to increase

its diversity. Following Barbara Jeremiah’s

appointment, ﬁve of the nine Directors are

female (55%).

Board succession & Board eectiveness

Please see the Nominations Committee Report

on pages 76 and 77 in the Annual Report

&Accounts 2021 for details of the Board’s

succession planning and the annual review

of Board eectiveness.

Independence of Directors

Five of the Board members out of a total of eight

at the 2021 year-end were independent, these

were Celia Baxter, Susan Brennan, Giles Kerr,

Rajiv Sharma and Mary Waldner. In January

2022, Barbara Jeremiah was appointed to

the Board and is now the Company’s sixth

independent Director.

Shareholder Democracy

Restriction on Voting Rights

The Company has only one class of shares

with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 AGM are stated in the Notes

to the 2022 AGM Notice of Meeting, which

canbe found on the Company’s website.

Facilitation of shareholder participation

At the 2022 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 2022 AGM Notice of Meeting.

Internal Audit

The Internal Audit Manager reports to the Head

of Risk & Compliance. In 2021, the Internal Audit

Manager undertook nine Information Security

audits, 10 Risk-based audits and one Thematic

audit. Because of the COVID-19 pandemic, only

one of these audits was able to be carried out

on a physical site visit, the remainder were all

undertaken remotely.

Risk process

Please see the Risks and Uncertainties section

of the Annual Report & Accounts 2021 on

pages48 to 55.

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 2021, information security was a key area of

focus to safeguard the Group’s assets during the

pandemic, which forced many of the Group’s

employees 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 sta 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.

Targets and Objectives

The Group has a three-year rolling Information

Security plan, which documents its mission to

improve security maturity and reduce business

risk across the Group. As capabilities are

introduced, metrics are developed and routinely

reported (including to the Executive team) which

measure eectiveness and provide a feedback

loop to the ongoing plan.

Physical and Technical Safeguards

The three-year plan builds on existing physical

andtechnical safeguards already in place,

introducing a series of minimum Security

Standards and baselines applicable across

theGroup; for example, the introduction

ofaSecurity Operations Centre providing

standardised, monitoring capability for any

indicators of compromise for the Senior Group.

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 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 17 of the Annual Report

&Accounts 2021.

Product Safety Governance

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 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.

ADDITIONAL

RESOURCES

Read more about Our Technology Themes on

page 36

Read more about Our Technology & Product

Development on page 38

Read more about Stakeholder Engagement on

page 40

Learn more here

29SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

OUR BUSINESS MODEL

We aim to create value for all our stakeholders

through our business model.

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 servicing blue-chip customers.

HOW WE DO IT

Our strengths/dierentiators

Organisation

• A culture of autonomous collaboration

• Active sharing of best practices

• Complementary capabilities

• Leverage common customer and supplier

relationships

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

People and culture

• Integrity and high ethical standards

• Maintaining a safe and healthy workplace

• Empowerment of local management,

within a well-deﬁned control framework

• Ongoing investment in personal and

professional development at all levels

throughout the business

Read more about Flexonics on page 58

OUR PURPOSE

To provide safe and innovative products for demanding

thermal management and ﬂuid conveyance applications

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202130

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.

HOW WE DO IT

Our strategic priorities

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.

Focus on growth

We seek to outgrow our end markets,

whichhave structural long-term growth

drivers, bothorganically and through

acquisition.

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.

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.

Considered and eective capital

deployment

Senior understands the importance of

considered and eective 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.

Read more about our strategic priorities on

pages 34 and 35

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

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 opennes and

transparency are strongly encouraged and

areevident across all of our businesses.

Respect and trust

We work together with mutual

respect and trust.

Accountability

We do what we say.

Excellence

We continually strive to do better

inevery aspect of our business.

31SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

INVESTMENT CASE:

POSITIONED FOR GROWTH

Senior’s clear and focused strategy continues to maximise value for all its

stakeholders. With a strong focus on operational performance and growth in

our end markets, Senior is conﬁdent of delivering its target return on capital

employed of a minimum of 13.5% (post IFRS 16) over the medium term

OUR PURPOSE

To provide safe and innovative products for demanding

thermal management and ﬂuid conveyance applications.

AEROSPACE CLEAR STRATEGY TO MAXIMISE SHAREHOLDER VALUE

A DIFFERENTIATED

BUSINESS MODEL

STRATEGIC

PRIORITIES

FLEXONICS

STRONG CORE END MARKETS

TRUSTED AND COLLABORATIVE HIGH VALUE ADDED ENGINEERING AND MANUFACTURING COMPANY

DELIVERING MINIMUM 13.5% ROCE (RETURN ON CAPITAL EMPLOYED) OVER THE MEDIUM TERM

Read more about on page 10

Power & Energy

Market leader of complex ﬂuid

systems and products

Read more about on page 10

Land Vehicle

Demand driven by tightening

global emission control regulations

for truck, o-highway and

passenger vehicles

Read more about on page 10

Defence

Defence remains a priority for the

US. Senior has key positions on

major funded programmes

Read more about on page 10

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202132

Senior is well positioned to build

on our strong capabilities and to

capture growth opportunities.”

David Squires

Group Chief Executive Ocer

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.

LEADING POSITION IN

ATTRACTIVE MARKETS

LONG TERM GROWTH

AND VALUE CREATION

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

• Robust balance sheet

• Technology, product and process innovation

supporting transition to clean energy

• Considered and eective capital deployment

• Global footprint

Read more about on pages 12 to 29

33SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

STRATEGIC PRIORITIES

The following six strategic priorities are key elements of our business model, which

drive the creation of stakeholder value. Our progress since they were established

is noted below and they continue to receive speciﬁc attention and focus.

ENHANCE SENIOR’S

AUTONOMOUS AND

COLLABORATIVE BUSINESS

MODEL

Senior’s business model is one of empowering

and holding accountable our businesses,

operating within a clearly deﬁned control

framework to develop and deliver business plans

in line with overall Group strategy. Increasing

collaboration amongst businesses in the Group

is a priority to ensure economies of scale are

realised whilst maintaining the autonomous

business structure. Business leaders throughout

Senior are actively embracing collaboration

activities with priorities set atGroup level in

consultation with the businesses.

What we did in 2021:

• Implemented engagement guidelines to

help optimise the transfer of work to cost

competitive locations and to facilitate higher

level solutions to meet customer needs;

Our plans for 2022

• Enhance eectiveness of Group-wide

Procurement, Technology and IT Councils.

• Refocus our Advanced Technology Collaboration

Forum to align our technology investment with

our strategic purpose, focusing on research

and development that support growth in low

carbon technologies.

Governance

The Executive Committee and the Board regularly

review the organisational design of the Group to

ensure it is aligned to our strategic plan.

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 innovation;

• Geographical expansion;

• Seeking out and exploiting adjacent opportunities

organically and through acquisition.

What we did in 2021:

• Diversiﬁed into product manufacture for satellite

structures applications;

• Qualifyied a sophisticated bleed air system

for an upcoming ﬂight test programme using

our advanced Additive Manufacturing (“AM”)

capability;

• Development of high ﬂow hydrogen gas

compressors for clean energy applications and

battery and electric propulsion liquid coolant

volume compensators in the Urban Air Mobility

(“UAM”) market sector.

• Completed qualiﬁcation of our RT2i composite

thermoplastic aerospace ducting product and

successfully transitioned into series production

of a Business Jet LP duct system utilizing both

RT2i 3D Near Net Shape and Fusion Deposition

Modelling (“FDM”) non-metallic AM parts

within critical areas of the system.

• Completed the industrialisation of Electric Vehicle

(“EV”) 70kW cooler. Secured additional Fluid

Conveyance projects for Hybrid and EVs.

Our plans for 2022

• Continue product development projects to

support further diversiﬁcation in space and

defence that utilises available capacity in our

Aerospace structures operating businesses.

• Continue to pursue the utilisation of RT2i 3D

Near Net Shape and Fusion Deposition

Modelling (FDM) non-metallic AM parts for

ducting applications in the regional jet market.

• Continue to support our customers in the

development of thermal management projects

for passenger car and commercial vehicle

applications.

Governance

Growth opportunities are regularly reviewed by

the Executive Committee and Board. The

AdvancedTechnology Forum is in place under the

chairmanship of the Group Director of Business

Development and 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.

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 2021:

• Continued to implement the comprehensive

restructuring plan in response to global pandemic;

• Implemented APQP gated NPI processes across

75% of Aerospace operating business.

Our plans for 2022

• Ensure the organisation is suitably aligned for the

recovery that is undeway;

• Multiple lean events continue with focus on cycle

time reduction and cost reduction, together with

continued targeted inventory improvement

workshops;

• Complete the roll-out of APQP process standards

across remaining Aerospace operating businesss;

Governance

Our Vice President of Operational Excellence chairs

the Lean Council on a monthly basis.

The Executive Committee reviews operational

performance and the Group Chief Executive

Ocer reports progress to the Board at every

Board meeting.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202134

COMPETITIVE COST COUNTRY

STRATEGY

Enhance Senior’s global footprint to ensure our

businesses stay competitive at 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 demand.

What we did in 2021:

• Expanded capacity at our Mexican Aerospace

operation in support of increasing volumes.

• Successfully launched new programme for

production on new EU commercial aircraft business

class seat structures in Thailand and secured new

content on several OEM engine programs for

commercial aerospace platforms.

• Completed the transfer of production equipment

from the Paciﬁc Northwest to Thailand to support

wing-product series production activities in 2022.

• Secured additional high-volume land vehicle

contracts for ﬂuid conveyance products, including

Hybrid and EV applications in Mexico and Czech

Republic.

Our plans for 2022

• Continue Senior Aerospace Mexico investments

in talent and equipment to allow further production

transfers.

• Secure further contracts to ﬁll capacity in our cost

competitive country locations.

• Continue to transfer cost sensitive product lines to

locations where the cost structure would deliver

a more competitive advantage.

Governance

The Executive Committee conducts monthly

Business Reviews of all operations. The Group Chief

Executive Ocer 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.

CONSIDERED AND EFFECTIVE

CAPITAL DEPLOYMENT

Senior understands the importance of considered

and eective 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 2021:

• Successfully raised £49.7m from the strategic

divestment of the Senior Aeropsace Connecticut

helicopter structures business;

• Realised value from the sale of the property

following the closure of our oil and gas machining

Senior Flexonics Malaysia facility, which oset

the closure costs;

• Completed the transfer of production from Senior

Aerospace Bosman in the Netherlands to our

Aerospace facilities in France.

Our plans for 2022

• Maintain our pricing and return on capital

discipline when negotiating contracts and

assessing investments;

• Continue to actively manage portfolio;

• Currently expect to reintroduce dividend in 2022.

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 on-line 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 2021:

• We launched our ﬁrst Company-wide

Employee Engagement Survey;

• Developed and initiated action plans as a result

of the survey and other feedback

mechanisms, eg focus groups and employee

forums;

• Participated in the 30% club Mission Gender

Equity cross company mentoring Scheme

for the fourth year.

• Expanded our network of recruitment

Our plans for 2022

• Ongoing actions as a result of the

Engagement Survey feedback;

• Focus on attracting and developing talent.

To support this we will continue to implement

“Recruit”, our online recruitment system, and

supplement local training and development

activities by launching more skills and

personal development eLearning, via “Learn”,

our global learning management system;

• Continue to focus on diversity and inclusion

across the business with a particular focus

on gender;

• Undertake our second Global Employee

Engagement Survey to assess culture and

employee engagement across the Group.

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 and

ensuring appropriate development plans are in

place 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.

Read more about Risks and Uncertainties on pages 48 to 55

35SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Complex airframe

components & assembliest

STRATEGIC REPORT

OUR TECHNOLOGY THEMES

Senior’s ﬂuid conveyance and thermal management businesses have design IP (intellectual property)

and our structures businesses have manufacturing IP. Both types of IP are underpinned by our

investment in advanced manufacturing technology and supported by our extensive design and

engineering expertise. Our global footprint in Aerospace & Defence, Land Vehicle, Power & Energy

and other attractive and diverse end markets oer deliverable growth opportunities.

CASE STUDY

An aerospace OEM has dedicated signiﬁcant

funding and resources to develop a ground

demonstrator with a full hydrogen powertrain

by2025.

The concept is similar to land vehicle applications, and in this

particular case, the customer has chosen to run the system at

cryogenic temperatures for eciency.

Senior Flexonics has extensive experience with fuel cell battery

technologies. One of our core capabilities is the design and

development of cooling systems for batteries and electronics

that enable saafer and faster charging speeds. We also have

cryogenic experience from our medical products that use liquid

helium for cooling.

Through existing collaboration between Senior Aerospace and the

customer, we have already established ourselves as a trusted

aerospace supplier.

Beneﬁting from our synergies, Senior Aerospace and Senior Flexonics

collaborated to submit a thermal management proposal for this

emerging powertrain. The learnings from this project will prepare

us for future opportunities that involve similar technology.

FLUID CONVEYANCE AND THERMAL MANAGEMENT

Fluid conveyance is the ﬂow of ﬂuid, including both gases and liquids,

within a system. Senior has rich IP in ﬂuid conveyance applications; for

example, our ﬂuid conveyance designs have been key to maintaining

aircraft cabin air supply and thermal control for the crew and passengers

during ﬂight.

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; a key dierentiator

in electric and hybrid vehicle economics.

Capabilities highlights

• World class design capabilities

for complex ﬂuid conveyance

systems incorporating zero-

leakage ﬂexible joints 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, Computational

Fluid Dynamics 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

capabilities in both metal and

polymer materials as an enabling

technology for complex high-

pressure and low pressure

ducting systems and heat

exchanger designs

Ultra-lightweight

composite low

pressure ducting

Tubing for battery

ﬂuid handling

SAF-compatible aircraft

ducting system

Battery cooling plate

for electriﬁed vehicles

Electronics

cooling plate

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202136

Complex airframe

components & assembliest

CASE STUDY

Recently space launch and satellite applications

have expanded rapidly, creating new aerospace

opportunities.

A new customer presented Senior with a challenge to produce

complex 5-axis machined structural components for a prototype

platform, in a very short lead time.

Senior’s engineering team worked closely with the customer’s design

engineering team to identify maximum impact features for lead-time

reduction and developed a best-in-class process based on toolpath

simulation, in-cycle probing and cutting tool parameters optimised

for machine/spindle harmonics.

Backed by our footprint across regions and collaborative business

model, we strategically split the work package between two Senior

sites in the US with identical equipment, to concurrently manufacture

the initial production units.

As a result, First Article parts were delivered in record time with

100% quality compliance, earning customer accolades and new

business for follow-on production orders due in 2022/23.

STRUCTURES

Modern airframes and turbine engines require durable lightweight

components manufactured to close 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. Our capabilities and strong

customer relationships have secured substantial content on the key

aerospace platforms.

Capabilities highlights

• Deep expertise in

manufacturing, 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

optimization, on-machine

probing, and vibration

dampening

• Highly vertically integrated, with

wide-ranging process

qualiﬁcations across machining,

Non-Destructive Testing, 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

Complex airframe

components & assemblies

Precision-machined

aeroengine

components

Complex space

satellite structures

Fluid Conveyance &

Thermal Management

Product and System Design

& Manufacturing IP

Structures

Complex Machining and

Manufacturing Know-How:

Process IP

STRUCTURESFLUID CONVEYANCE

& THERMAL

MANAGEMENT

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021 37

STRATEGIC REPORT

OUR TECHNOLOGY AND

PRODUCT DEVELOPMENT

Electriﬁcation and hydrogen power are poised

toremainthe key technology themes in all our

end-markets in the decades to come.

2020 2030

AEROSPACE

LAND VEHICLES

POWER & ENERGY

Observation

Current generation engines

bring 15 to 25% of fuel

eciency improvements.

Smaller electriﬁed aircraft will

enter into service this decade.

Our response

We have signiﬁcant content in

current best-in-class engines.

We are designing and

manufacturing components

for electric vertical take-o

and landing (“eVTOL”) aircraft.

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.

Observation

Alternative fuels such as

natural gas and hydrogen are a

crucial engine bridge

technology prior to

widespread electriﬁcation of

commercial vehicles.

Our response

Upgraded and enhanced

versions of our components

such as the Radial Fin EGR

cooler are fuel agnostic and

ensure compliance and

eciency for all applications.

Observation

A COP26 declaration calls for

all new car sales to be zero

emission by 2035 in leading

markets.

Observation

Some countries recognise

the role of nuclear power to

reach net zero.

At COP26, world leaders

have agreed to phase out

fossil fuel subsidies.

Our response

We are supporting

engineering with active OEMs

of Small Modular Reactors.

Our ﬂue gas diversion

products are mitigating climate

impact for the timebeing.

Observation

The EU targets renewables

tobe ≥40% of energy mix

by2030.

The US eyes 100% carbon

pollution-free electricity

by2035.

Additive manufactured LEAP engine

oil bearing nozzle and distributor

Wye piping, reducer and crossover

expansion joint conveys ﬂuid in the

form of steam powering turbines

to generate electricity

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202138

Our ﬂuid conveyance and thermal management

technology, highly relevant to these market

development themes, will help us provide

customers with high-valued solutions in the future.

2040 2050

NET ZERO

Our response

Our current ﬂuid conveyance

technologies are compatible

withSAF.

We are supplying hoses

forelectrolysers that may

generate hydrogen for

SAFproduction.

Observation

Alternative-powered aircraft

will increase demand

for ourbattery thermal

management, fuel cell

andcryogenic ﬂuid

handling expertise.

Our response

Our Aerospace and Flexonics

divisions are teaming up to

develop cooling and ﬂuid

handling products for our

customer’s demonstrator

hydrogen powertrain units.

Our response

Our electric vehicle inverter

heat sink “Omega Fin” has

been awarded a patent.

We are in active customer

discussions on our battery

and electronics cooling and

ﬂuid handling products.

Observation

At COP26, ﬁfteen countries

have committed to 100%

zero-emission new truck and

bus sales by 2040.

Our response

We have commenced

production of our 70kW

battery cooler for e-buses.

We have numerous

developments with battery

manufacturers and OEMs.

Our response

Energy storage will be

required on a larger scale

asrenewables grow.

Senior has solutions for

thermal management for

energy storage applications.

Observation

Emerging economies will

catch up on renewables

share.

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 solid experience

instationary fuel cell backup

power for data centres and

hydrogen conveyance

solutions.

Stainless steel hoses for

hydrogen production

“Omega Fin” inverter heat sink Battery cooling plate for

electriﬁed vehicles

Heat exchanger for thermal

management

Fuel distribution anode

separator plate

Cryogenic products in medical

MRI liquid helium systems

39SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

STAKEHOLDER ENGAGEMENT

Engaging with our stakeholders

is fundamental to our business

success. Our stakeholders are

people, communities and

organisations with an interest or

concern in our purpose, strategy,

operations and actions.

WHY ARE THESE STAKEHOLDERS

IMPORTANT TO OUR VALUE

CREATION?

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

growsand delivers long-term

sustainable value.

EMPLOYEES

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

CUSTOMERS

Our Core Value of “Customer

Focus” recognises the

importance of customers

in oursuccess

COMMUNITIES

We recognise our responsibility

to the communities in which

we operate

SHAREHOLDERS

Senior strongly values the support

and engagement of its shareholder

community and understands the

importance of this in the future

success of the business

SUPPLIERS

Constructive engagement with

suppliers sets fair expectations on

safety, quality, ethical behaviour

and delivery performance

Skills, loyalty

and value

creation

Career

development

opportunities

Talent for recruitment

and sense of

community

Safe, quality and ethical

supplies and value creation

Respectful

relationships

and supply

chain stability

Trust and long-lasting

relationships

Safe and high

performance

products and

value creation

Corporate ﬁnance

and valuable

feedback

Sustainable

growth in

operating proﬁt,

cash ﬂow and

shareholder value

Local

support

and value

creation

OUR STAKEHOLDERS

Employees

Read more on page 43

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202140

Actively seeking feedback from our

customers is vital to ensure we are

aligned to their needs.”

Launie Fleming

Chief Executive of Aerospace Division

EMPLOYEES

How we engage

The global pandemic meant developing new

ways of working and ensuring we maintained

eective communication and employee

engagement, while remaining COVID secure

and creating an environment of stability

for employees.

We launched our ﬁrst global employee

engagement survey in May 2021. The

surveywas split into three main sections,

Engagement, Values and Health and

Wellbeing, and was delivered electronically,

toall employees in their preferred language.

Outcome of engagement

The response rate of 81% exceeded our

expectations and the benchmark for

manufacturing companies with a signiﬁcant

number of employees who do not have

readyaccess to company emails. The 81%

response rate in itself is a positive indicator

ofengagement and employees’ desire to

provide feedback.

Overall the feedback was positive, with a

score of 7.4 out of 10 for the question “Overall,

how satisﬁed are you working at Senior?”.

Other highlights included management

support, peer relationships, goal setting and

meaningful work. As expected, there are

areasfor improvement. Across all of Senior

the key areas we should work on are:

improved communication regarding the

operating business strategy and mission

CUSTOMERS

How we engage

We regularly engage with our customers at

operational and senior levels. Division-level

Customer Relationship Managers are in

placeto interact with and support our largest

customers, ensuring that we monitor and

workto understand what is happening in their

businesses, how it aects their end-markets,

and that we respond appropriately across

all ofSenior.

We actively seek feedback from our

customers via frequent, tactical interactions

between our operating business customer

account and buisness development managers,

with monthly reporting of activities and

monitoring of customer scorecards for Senior

businesses. Whilst Senior regularly receives

customer awards for operational excellence,

incases where our performance falls short of

expectations, we actively engage with the

customer to agree both improvement targets

and implementation schedules.

Outcome of engagement

We conducted multiple Senior Management

meetings with our major customers in 2021,

covering both normal business activities and

so thatpeople are inspired by what we do.

Rewardwas also anarea for improvement,

bothin terms of how individuals are rewarded

and the process fordetermining pay.

Company actions responding to

engagement outcome

Management-level actions

In our autonomous and collaborative business

model, the questions and feedback were

collected at an operating business level and

each operating business has analysed their

feedback, shared the feedback with their teams

and developed action plans. Action plans are

monitored by the Executive leadeship teams.

Board-level actions

Feedback and high level action plans have been

shared with the Board and in particular, Celia

Baxter, the non-executive Director designated

to provide focus on employee engagement, has

spent time doing a deeper dive on the feedback.

Celia Baxter and Jane Johnston, Group HR

Director, have resumed their programme of

face-to-face focus groups and visited four UK

businesses, holding 15 sessions in the autumn of

2021. The sessions were interactive and provided

an opportunity for Celia Baxter to engage directly

with a cross section of employees, including

employee and union representatives, asking

andanswering questions. As well as holding

thefocus groups, the site visits included

factorytours and meeting the leadership teams.

In addition, we consulted with UK employee

representatives on executive pay.

for dedicated purposes with our largest

customers to understand more clearly what

thecustomer perceptions were regarding

Seniorand how we could improve. This

resultedin Senior winning several large

packages of work in 2021; taking market

share from our competitors.

Company actions responding to

engagement outcome

Management-level actions

Listening to and understanding our customers

and their programme issues provides valuable

insight which helps inform future technology

and product development and innovation

investments and activities.

We conduct periodic, formal Senior

Management Meetings (“SMMs”) with

our largest customers. Operational metrics,

communications, growth strategies, and

market dynamics are frequently the main

topicsand help both Senior and the customer

Executives to understand each other better.

Board-level actions

Our Board receives detailed monthly updates

relative to customer activities.

Participation in ﬁrst global

employee opinion survey

81%

Engagement

score

Health and

Wellbeing score

out of a max of 10

7.1

out of a max of 10

7.6

41SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

I am pleased that we have continued

to engage with, and support

local communities, successfully

navigating the challenges posed

by the pandemic.”

Jane Johnston

Group HR Director

SUPPLIERS

How we engage

We engage with our suppliers in a variety

of ways, including during tender and bid

processes, site visits and audits, where

appropriate. In 2021, collaborative

communication with critical suppliers was key

to managing the eects of escalating supply

chain constraints impacting our operating

businesses, in some cases utilising weekly,

or even daily, status update meetings. 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 GHG 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.

COMMUNITIES

How we engage

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. Despite the

pandemic, where possible, community

engagement programmes were maintained.

Examples of our community engagement

programmes include:

• In 2021, SA Thailand provided Scholarship

to22 students in the Diploma Degree in

Aerospace Components Manufacturing

for two years. SA Thailand developed

the training programme with Thai-Austrian

technical college.

• SA Mexico supported women with cancer

this year and money was raised by selling

used plastic to recycling companies.

• Senior India collaborated with NGO Anadi

Seva Prakalp to construct a dining hall along

with a kitchen for a home for the elderly

and replaced the facility’s old inverter

batteries for power back-up.

• SF Pathway provided coaching to students

from local schools who have an interest

inwelding.

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.

Outcome of engagement

Our collaboration with suppliers to respond to

the increases in supply chain challenges during

2021 allowed the Group to manage lead times,

leverage long-term supply agreements,

consolidate supply requirements and identify

additional supply sources, where needed.

For the CDP’s supply chain engagement

programme, we identiﬁed around 340 suppliers,

accounting for 80% of the Group’s total spend.

In 2021, we engaged with all 340 suppliers

through CDP’s supply chain programme.

We have analysed and veriﬁed the results. The

insights from the engagement programme were

then used to set strategy and prepare for 2022.

For all our eorts in 2021, CDP have awarded

us Supplier Engagement Leader status based

on our Supplier Engagement Rating (“SER”).

Company actions responding to

engagement outcome

Management-level actions

The Executive Committee identiﬁed supply

chain challenges as a new principal risk to

the Group in 2021. In response, supply chain

concerns and mitigating actions have been

a focal point during operating business

reviews and Executive Committee meetings.

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.

Outcome of engagement

The ﬁrst group of students supported by

SAThailand will graduate in March 2022.

The collected donation from SA Mexico was

able to fund seven chemotherapy treatments.

The help from Senior India enabled food to

be prepared and served in the new kitchen

and dining hall in the home for the elderly,

improving the quality of life of senior residents.

Through engagement with local schools,

SFPathway identiﬁed talent in the local

community and inspired local students

to pursuetheir passion.

Company actions responding to

engagement outcome

Management-level actions

Looking forward, Group operations will continue

to support communities by contributing to

charities serving their local causes, including

fundraising for local hospitals, children’s homes,

cancer foundations, charities supporting mental

health and the elderly.

Board-level actions

The Board continues to focus on its responsibility

to our communities and aims to identify

those Environmental, Social and Governance

considerations that have the potential to impact

our long-term sustainability as a business.

Engaged with

340

suppliers through CDP’s

supply chain programme

Board-level actions

The Group Director of HSE & Sustainability

attended two Board meetings in 2021 and

provided an in-depth review on the progress

in engaging with suppliers in respect of the

Group’s Scope 3 targets.

Read more in the Risk & Uncertainties Section on

page52

Read more in the Sustainability Section on page 15

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202142

SHAREHOLDERS

How we engage

In 2021, in addition to the regular engagement

that we maintain with our major shareholders,

we had extra contact and consultation due

to the conditional proposals from LSF XI

Investments, LLC, a company advised by Lone

Star Global Acquisitions, Ltd. It was important

for us to communicate and engage with our

shareholders to answer all questions, queries

and concerns they had on the Company and

the Board’s decision around the proposal.

Twice this year, the Group Chief Executive

Ocer, Group Finance Director and Director

ofInvestor Relations & Corporate

Communications undertook a series of virtual

meetings (by video conference or conference

call) with our 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 well as to understand their views

and address any concerns they may have on

the Company.

In addition, we issued four market updates,

each time oering our major shareholders

theopportunity of a follow-up call with our

Group Chief Executive Ocer and Group

Finance Director.

Furthermore, we held an in-person CMD at

the London Stock Exchange on October 12,

where we showcased our strategy,

capabilities, and arange of our business

leaders. We also provided investors with a

deeper insight into our ﬂuid conveyance and

thermal management technology and how we

are future prooﬁng growth of the business as

wetransition to a low carbon economy.

The Company typically makes constructive

use of the Annual General Meetings (“AGM”)

to communicate with its private shareholders

as we value their engagement and the

opportunity for the Group Chief Executive

Ocer to present on the Group’s business.

InApril 2021, this process had to again be

limited, because of the UK Government’s

restrictions due to the pandemic; however,

weensured that private shareholders would

have live audio access to the proceedings

ofthe AGM and the opportunity to submit

questions to the Directors and listen to

theirresponses.

Throughout the year we responded to

requests for further information.

During 2021, the Company’s Chairman also

attended the full-year and interim results

announcements in March and August,

respectively. The Chairman undertook a series

of conference calls with the Company’s major

shareholders to discuss any queries they

may have regarding the corporate governance

of the Company. Furthermore, Celia Baxter,

the Senior Independent non-executive Director,

was also available to attend meetings with

major shareholders upon request, so providing

an alternative channel of communication

between the Company and its shareholders.

Regular investor updates were provided to the

Board as part of the reporting cycle, which

includes feedback on investor perceptions and

market environment. Updates from Company-

level engagement with shareholders are

provided to the Board as appropriate.

In 2021, Celia Baxter (acting in accordance

withher role as the Chair of the Remuneration

Committee) and our Director of HR engaged

andconsulted with major shareholders, key

proxy voting agencies and advisory bodies (ISS,

GlassLewis and the Investment Association)

throughout the year on key remuneration

topicsand to gather their views on their voting

preferences regarding the Remuneration Policy

and Report and potential future changes.

Outcome of engagement

• Shareholders were kept fully informed of the

performance, market dynamics and strategy

of the Group.

• Fully informed shareholders about the Board’s

decision in the corporate activity process.

• Followed up and engaged with major

shareholders on the changes to the

Remuneration Policy and the decisions

taken by the Board regarding the outcome

of the 2020 executive bonus relating to the

attainment of free cash ﬂow targets and to

penson alignment.

• 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,

remunerations and sustainability particularly

climate change risks and opportunities.

Company actions responding to

engagement outcome

Management-level actions

Engagement with shareholders during the

corporate activity bid process reconﬁrmed how

engaged our investors are with regard to the

Company’s performance and ensuring that

continuing our strategy will deliver signiﬁcant

shareholder value over the medium-term.

Questions focused on end-market recovery

andkey areas of Senior’s strategy. In response,

we provided a clear market and strategy update

at the CMD. This event focused speciﬁcally

on providing a deeper insight into ourﬂuid

conveyance and thermal management

technology and how we, as a business,

plan tofuture proof as we transition to a low

carboneconomy.

Management are continuing to meet

withshareholders and will be returning

toin-person meetings as part of the full year

2021 results roadshow.

Board-level actions

Feedback received from engagement with our

shareholders has been taken into consideration

as noted in the Remuneration Report.

The frequency of meetings with

major shareholders increased in

2021...these exchanges highlighted

the value of establishing and

maintaining close relationships.”

Ian King

Chair

43SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

SECTION 172 STATEMENT

In their discussions and decisions during 2021, 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 impact of Senior plc’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. Despite the

pandemic, where possible, community

engagement programmes were maintained.

Further details on the Group’s activities

are set out on page 26.

• A commitment to sustainability underpins

Senior’s purpose, and is a key objective of the

Directors and the Board. Senior’s programme

is well deﬁned and being delivered. Its

progress is measured by metrics, targets and

an annual scorecard. Senior’s industry leading

ESG disclosures and ratings are evidence

of the Group’s long-standing approach to

sustainability. Senior remains the only,

company in its sector to have its scope

1, 2 and 3 greenhouse emissions reduction

targets approved and veriﬁed by the SBTi.

Further detail on Senior’s sustainability

progress in 2021 are set out on page 13.

• Amongst other sustainability successes, in

2021, Senior maintained its CDP leadership

rating of A- for climate disclosure. CDP have

also recognised Senior’s eorts in 2021 by

awarding us Supplier Engagement Leader

status based on our Supplier Engagement

Rating (SER).

• We are also committed to implementing the

recommendations of the TCFD. See page

18to 23 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 26).

HOW THE BOARD CONSIDERED

STAKEHOLDERS DURING 2021

In accordance with Section 172 of the

Companies Act 2006, the Directors are

requiredto have regard to wider expectations

ofresponsible business behaviour, such as:

The likely consequences of any decision

inthe long term:

• The Directors recognise the decisions they

make today will aect Senior plc’s long-term

success. During the year, the Board had

particular regard to the long-term success

of the Company in its decision to conduct a

thorough review to assess the fundamental

value of Senior as well as the likely value to

becreated by the continued delivery of its

strategy when it faced corporate action

in theform of a conditional proposal from

LSF XI Investments, LLC, a company advised

by Lone Star Global Acquisitions, Ltd. Having

carefully considered this proposal, the Board

is unanimously conﬁdent that continuing

thefocus on our strategy will deliver

signiﬁcantly more value to shareholders

over the medium-term.

• The Directors also made the decision to divest

Senior Aerospace Connecticut, our stand

alone, build-to-print helicopter structures

operating business to PCX Aerosystems, LLC.

Upon evaluation, the Board felt that this

decision made sense in the long term as

Senior Aerospace Connecticut was the only

operating business in the Group whose

primary focus is build-to-print parts for the

rotary sector. Therefore, it was better suited

to a larger organisation, which is primarily

focused on that market. The divestiture of this

operating business is consistent with Senior’s

strategy to review the overall portfolio of our

businesses and evaluate their strategic ﬁt

within the Group. The net proceeds from the

sale were used to further strengthen Senior’s

balance sheet and provide greater ﬂexibility

for the Group to operate within its capital

deployment framework.

• Further details can be found on the

Investment Case (page 32), Business Model

(page 30) and Strategic Priorities (page 34).

• The Board is accountable for the oversight

ofa broad Corporate Framework which

establishes the unmistakable expectation

thatSenior will operate with integrity, respect

and morality 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 78 to 79 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.

Weacknowledge that not every decision

we make will necessarily result in a positive

outcome for all our stakeholders; the Board

therefore has to balance competing interests

in reaching its decisions.

• 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

aect 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 40 to 43.

Forfurther details on how the Board operates

and makes decisions, and its activities this

year, see pages 41 to 43.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202144

• Our colleagues are vital to our success and

they are always considered in the Board’s

discussions and decision-making process.

During 2021, the wellbeing of our colleagues

across the Group has remained a priority.

TheBoard continued to monitor the

organisation’s response to Covid, how the

Company continued to operate eectively

inthe ever-changing situation and created

asafe working environment in the various

jurisdictions in which we operate. Other than

ingeographies with government mandated

shutdowns, our operations have continued

tofunction throughout the pandemic and

wehave implemented 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. A key element

of this in 2021 was the wealth of information

provided by the global engagement survey.

TheGroup Chief Executive Ocer and Group

HR Director shared the survey feedback with

the Board, highlighting key themes, strengths,

areas for improvement and action plans.

In addition, Celia Baxter, the non-executive

Director designated to engage with

employees spent time reviewing the data

in more detail and has continued withour

programme of focus groups, managing to

engage in person while complying with Covid

guidelines. Read more on our employees

on pages 24 to 25 and 41.

The need to act fairly between members

of the Company (shareholders):

• During the year, the Board, the Group Chief

Executive Ocer and Group Finance Director,

and the Director of Investor Relations and

Corporate Communications held various

meetings with investors (see page 43

for more detail on our engagement with

shareholders). These meetings gave

investors the opportunity to discuss views

on ﬁnancial and operational performance,

capital investment, capital allocation policy,

end market fundamentals, and strategy.

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

and proportionate.

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 66 to 67.

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 12 to 29 and www.seniorplc.com/sustainability

• Health, Safety and Environment Policy www.seniorplc.com

Employees • Employee Engagement Pages 24 to 25, 35, 41, 54, 73

• Talent Management Pages 35, 42, 54, 77

• Equality, Diversity and Inclusion Pages 24, 27, 35

• Code of Conduct Pages 24, 26, 28, 55 and www.seniorplc.com

• Whistle-blowing Policy Pages 28, 75, 78 and www.seniorplc.com

Social Matters • Community Engagement Pages 26, 42, 67

Respect for Human Rights • Statement on Anti-Slavery and Human Tracking Page 78

• Anti-bribery and Anti-corruption Policy Pages 28, 44, 55, 78

• Modern Slavery Statement www.seniorplc.com

• Responsible Supply Chain Policy Page 78 and www.seniorplc.com

Business model

Principal risks

KPIs

• Business Model Pages 30

• Risks and Uncertainties Pages 48 to 55

• KPIs Page 47

• Non-Financial KPIs Page 46

For more information please visit: www.seniorplc.com

45SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

KEY PERFORMANCE

INDICATORS

The Group highlights ﬁve ﬁnancial and

two non-ﬁnancial metrics to measure

progress in implementing its strategy.

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; and

• 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:

• CO

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 collects its environmental data in

accordance with the guidelines speciﬁed by

the Global Reporting Initiative (“GRI”), to the

extent that this is currently practicable, and

hasapplied the greenhouse gas conversion

factors contained within the Energy Agency

and US EPA conversion factors 2021.

The Group has used the ﬁnancial control

approach to deﬁne its organisational boundary

and reports data from its wholly-owned or

majority-owned operations. Billed or metered

sources represent the basis of the majority

ofour greenhouse gas emissions.

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 record inthis regard, including

its long-term performance trends, areshown

on pages 14 to 17.

Carbon dioxide emissions

Scope 1 & 2 (market based)

(Total tonnes CO

19% decrease

from 2018 base year

10,000

20,000

30,000

40,000

50,000

60,000

2018 202120202019

Target Total tonnes CO

Scope 1 & 2 Market Based Emissions

57,418

56,992

46,747

46,540

In 2021, our absolute Scope 1 and 2 Greenhouse Gas (“GHG”) emissions reduced from

57,418 tCO

e (2018) to 46,540 tCO

e. We are on track to meet our SBTI 2025 target with

a 18.9% reduction against our 2018 base year.

Lost Time Injury Illness Rate

(incidents per 100 employees p.a.)

0.0

0.5

1.0

1.5

2.0

Total Recordable Injury Illness Rate Lost Time Injury Illness Rate

Rate per 100 employees

1.78

0.67

1.50

0.50

1.69

0.44

1.09

0.32

1.17

0.32

2017 2018 202120202019

We remain on track to reach our 2025 Target to reduce our Lost Time Injury Rate to 0.30.

In 2021 we reduced our lost time injuries from 21 to 18. The end of year Lost Time Injury Rate

was steady at 0.32, a similar result to 2020 as we had less employees in the Group as a

consequence of the divestiture of the Connecticut business and other stang changes.

Increased

Decreased

Unchanged

46 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL METRICS

The Group’s ﬁnancial objectives are as follows:

• to achieve organic 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 sucient 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:

• organic revenue growth is the rate of growth

of Group revenue, at constant exchange

rates, excluding the eect of acquisitions

and discontinued activities;

• 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).

Organic revenue

growth (£m)

-5.5%

-1.9% excluding

disposal

659

1,102

697

As discussed in the Group Chief Executive

Ocer’s Statement, the coronavirus pandemic

continued to impact on the Group’s end market

and customers, particularly in civil aerospace.

The impact on the Divisions is set out in the

Divisional Reviews, on pages 56 to 59. The

overall reduction in Group revenue was a result

of lower revenues in Aerospace partly oset

by higher revenues in Flexonics year-on-year.

Return on revenue margin (%)

+40bps

0.5

0.9

The Group’s adjusted operating margin

increased by 40 basis points, to 0.9% for the

full year. This improvement in proﬁtability

reﬂected the savings delivered from the

restructuring programme as well as our focus

on cost management activities and mitigated

the drop through impact of the reduction

inrevenue.

Adjusted earnings/(loss) per share

n/m

(0.84)

0.17

The weighted average number of shares,

for the purposes of calculating undiluted

earnings per share, increased to 415.7 million

(2020 – 414.9 million). The increase arose

principally due to vesting of shares held by

the employee beneﬁt trust during 2021. The

adjusted earnings per share was 0.17 pence.

The year-on-year improvement arose from

improved proﬁtability.

Net cash from operating

activities (£m)

-44.8%

27.0

48.9

Against the backdrop of the pandemic,

theGroup delivered robust net cash from

operating activities of £27.0m and is capitalised

and prepared for growth in the Group’s key

endmarkets.

Cash performance in 2020 beneﬁted from

signiﬁcant reductions in working capital as

customer demand reduced.

Return on capital employed (%)

+50bps

0.5

1.0

Return on capital employed (“ROCE”)

increased to 1.0%. The increase in ROCE was

mainly as a result of the increase in adjusted

operating proﬁt compared to prior year.

47SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

RISKS AND UNCERTAINTIES

The Group continues to leverage and adapt its risk

and assurance framework to meet new challenges

presented by the evolving COVID-19 pandemic.

OUR APPROACH TO RISK

MANAGEMENT

Identifying and eectively 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 30, our Strategic

Priorities are on page 34 and Sustainability

starts on page 12.

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 eectiveness 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 Head of Risk and

Compliance 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 an extended time horizon, with

some 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.

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 is assigned

to each action. 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, either on their own 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, utilising eective 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, IT,

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 various

factors, including site speciﬁc risks, prior audit

results and changes within local management.

Thematic reviews are deployed across 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 opposite.

2021 AT A GLANCE

Risk Management

• The Board completed two comprehensive

risk assessments, encompassing both

principal and emerging risks

• Completed “deep dive” Information

Technology/Information Security

assessments across nine critical Group

operating businesses and the Group

headoce

• Introduced new annual risk assessment

programmes focused on climate change

and tax evasion facilitation

Assurance

• Completed broad scope audits with

nine operating businesses (eight virtual,

one on site)

• Information Security assurance reviews

conducted across a cross section of the

Group businesses

• Deployed thematic audits to address

speciﬁc risks related to the Group’s

Controls Self Assessment process,

contract review and Divisional

Management approvals

Principal Risks (starts on page 50)

• Pandemic: The Group continues to

adapt its COVID-19 response, including

vaccination clinics for employees, ﬂexible

leave policies and adaptable “return to

oce” plans

• Cyber/Information Security: Vulnerability

management and threat monitoring systems

have been implemented to improve the

Group’s resilience to threats and attacks

LOOKING FORWARD

Risk Management

• Review our risk tolerance structure to

ensure tolerance thresholds remain

appropriate as the Group continues

through recovery and growth phases

for our end markets.

• Reﬁne our information security and

data privacy risk management process

• Expansion of risk management activities

related to climate change in support

of theGroup’s eorts to comply with

TCFDrequirements

Assurance

• Broad scope audits planned for 10

locations with a focus on resuming on-site

audits where possible

• Information Security assurance reviews to

be conducted with six operating businesses

• New thematic audits covering trade

compliance, supply chain challenges and

personal data protection

Principal Risks (starts on page 50)

• Supply Chain Challenges: Close co-

ordination with suppliers and customers

is critical to build resilience to ongoing

supply chain disruptions

• Inﬂation: Mitigating rising inﬂationary

pressures has come into sharp focus

• Talent and Skills: Labour market shortages

may challenge the Group’s ability to align

stang with production requirements

48 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

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.

Evaluate gross

(inherent) risks

The gross level of risk, considering

impact and likelihood, to the

achievement of the strategic

priorities is assessed.

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.

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 eective and risks

mitigated to an acceptable level.

Timely implementation

ofresultingactions

is monitored.

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.

Identify existing controls

and processes

The existing controls and processes

which mitigate the risks are

identiﬁed and assessed for

adequacy.

SENIOR’S RISK

MANAGEMENT

PROCESS

KEY RESPONSIBILITIES

WITHIN THE RISK

MANAGEMENT

STRATEGY

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

appetite 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 eectiveness 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

Risk Deﬁnitions

Strategic

1 Pandemic

2 Climate Change

3 Economic and Geopolitical

Impact

4 Implementation

ofStrategy

5 Innovation and

Technological Change

Operational

6 Supply Chain Challenges

7 Cyber/Information Security

8 Programme Management

9 Customer Demand and

Price-Down Pressures

People and Culture

10 Talent and Skills

Financial

11 Inﬂation

12 Financing and Liquidity

Compliance

13 Corporate Governance

Breach

RISK HEAT MAP (Residual risk after mitigations)

Impact of Occurrence

Likelihood of Occurrence

Low

High

Low

High

Increased Residual Risk Decreased Residual Risk

Residual Risk Unchanged

49SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2021

STRATEGIC

Pandemic

A pandemic, such as the current

COVID-19 pandemic, could have a

signiﬁcant impact on business

operations aecting 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 this 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.

This risk continues to have a signiﬁcant impact on the

Group, with new challenges arising as the current

pandemic evolves. Response measures enacted in 2020

have continued in 2021, including the ongoing activities

of the Group’s Coronavirus Oversight Committee.

The focus in2021 continued to be on:

• the health and safety of our employees. Various

operating businesses have and continue to host

vaccination clinics to support the rollout of global

vaccination programmes. The Group remains ﬂexible

and responsive to employee needs with regards to

localised leave policies and “return to oce” strategies;

• business continuity and ensuring that the business is

able to meet its ﬁnancial commitments and emerge

from the pandemic strongly. Further details are provided

against other principal risks as appropriate; and

• ongoing communications with suppliers and customers

as we adapt our business to address shifts in demand

created by the evolution of the pandemic. In addition,

our focus now includes careful management of the

Group’s response to demand increases to ensure the

cost savings measures implemented in 2020 and 2021

are not diluted.

The Group remains vigilant to the potential future impacts

offuture waves of the ongoing pandemic.

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 on 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.

• 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.

• In 2020, the Group became the ﬁrst company in the

global Aerospace & Defence sector to have its

emissions reduction targets independently veriﬁed

andapproved by the Science Based Target Initiative

(“SBTi”). The SBTi is a partnership between CDP,

the United Nations Global Compact (“UNGC”),

World Resources Institute (“WRI”) and the Worldwide

Fund for Nature(“WWF”). The 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 have 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.

In 2021, the Group maintained a “leadership” rating of

A- in 2021 from the globally recognised CDP for our

climate change disclosures.

In support of our Science Based Targets, the Group has

achieved an 19% reduction in combined Scope 1 and 2

carbon emissions through 2021, on track to meet the 2025

target deadline.

The Group engaged with over 300 of its leading suppliers

regarding climate change, with 94 of these suppliers

providing a full disclosure on their climate change

programmes. As a result, CDP named the Group as a 2021

Supplier Engagement Leader in recognition of our eorts

to raise the level of climate action across our supply chain.

A comprehensive climate change risk and opportunity

assessment exercise was conducted, addressing

transitional and physical risks, as well as resource

eciency opportunities. The assessment considered an

extended time horizon, with some elements contemplated

over a 20+ year time frame. The exercise also applied

Scenario Analysis to the most material transition and

physical risks as per TCFD.

For further details on Sustainability and TCFD, please see

pages 12 to 23.

PRINCIPAL GROUP RISKS

During 2021, an assessment of the principal risks and uncertainties,

including emerging risks, that could threaten the Group’s business model

or achievement of the strategic priorities has been performed. As a result

of this assessment, Supply Chain Challenges and Inﬂation were added to

the Group’s principal risks. Inﬂationary pressures on labour and material

costs are having an impact to varying degrees across the Group and

supply chain disruptions have developed due to labour shortages, logistical

delays and material availability constraints. The Group has responded

quickly with mitigating actions to manage these growing risks, primarily

through close communication with customers and suppliers, internal

eciency improvements and cost reduction initiatives. The remainder of

the principal risks remain unchanged since our 2021 Interim Statement.

50 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Principal Risk How we manage it Focus in 2021

Economic and geopolitical impact

There is a risk that there will be a

global economic downturn impacting

some or all of the sectors within which

the Group operates.

Trade relations, for example imposing

of taris in the US, the UK leaving the

EU and other likely geopolitical events

have created uncertainty over the

future impact on international trade

and the ability to retain and recruit

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 54.

• 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 has a Brexit Committee which continues

to monitor the ongoing impact of the Brexit transition

from regulatory, supply chain, people and ﬁnancial

perspectives.

• The Board ensures that it is kept informed of US trade

developments and Brexit so that it can assess the

impact on the Group and take action as appropriate.

• The Group monitors potential changes to international

tax regulations and taris to understand the likely impact.

The COVID-19 pandemic continues to have a signiﬁcant

impact on the global economy and sectors within which

we operate. As a result, the Group has continued to focus

on cash preservation, completion of restructuring projects,

as described in the Strategy and Portfolio Management

risk, and agreeing covenant relaxations with the Group’s

lenders, as described in the Financing and Liquidity risk.

The Group Brexit committee continues to monitor the

ongoing Brexit transition and review the appropriateness

of planning measures taken for people, regulatory and

other measures. The Group successfully implemented

the necessary procedural changes to ensure a

smooth transition, such as modiﬁed VAT and Customs

processes and support for employees applying to the

EU Settlement Scheme.

Implementation of Strategy

An inability to implement the Group’s

strategy and/or eectively 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 eciently 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 sucient focus remains on the Group’s core

strategic priorities while responding to critical operational,

strategic and ﬁnancial challenges.

The Board carried out a robust 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 has focused on:

• continued investment in new technology and product

development in the areas of ﬂuid conveyance, thermal

management and additive manufacturing which will

help us to emerge strongly as recovery from the

pandemic occurs;

• liquidity, eective cash management and further

strengthening of the balance sheet; and

• the Group’s Prune To Grow strategy with the transfer

of our Netherlands Aerospace business product lines

to our French Aerospace businesses, the closure of

our Flexonics business in Malaysia and the strategic

divestment of the Senior Aerospace Connecticut

helicopter business.

We hosted a CMD in October 2021 presented by key

business and technical leadership from across the Group.

This provided detailed insight into our strategic objectives

and capabilities.

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

Enhance business model

Focus on growth

High performance operating system

Competitive cost countries

Capital deployment

Talent and development

Key Performance Indicators

Organic Revenue Growth

Return on Revenue Margin

Adjusted Earnings per Share

Net Cash from Operating Activities

Return on Capital Employed

Carbon Dioxide Emissions

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 64.

51SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2021

Innovation and technological change

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

change.

• The Group has continued to invest in capabilities, (design

and advanced manufacturing “AM” processes), 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 ground tests. The AAMC team

also re-engineers 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, 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 eciency and reduce cost.

• The Senior Operating System continues to deliver best

practice tools for innovation and product development

across the Group.

Despite the ongoing challenges in its business environment

in 2021, the Group has continued to invest in new and

emerging technologies with progress being made on a

number of key projects:

• the Technology Collaboration forum’s charter has been

revitalised to support the Group’s strategic focus on

Thermal Management and Fluid Conveyance applications

for both Aerospace and Land Vehicles/Industrial markets;

• technology Roadmaps have been established for process

and product development for both Aerospace and

Flexonics divisions. These roadmaps and progress made

on current projects are reviewed on a quarterly basis;

• expanded use of non-metallic (polymer) AM for

low-pressure applications; and

• introduced several innovative products for battery and

fuel cell cooling, including ultra-thin patented designs

for very demanding environments.

Renewed focus 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.

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 diculties 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 30) emphasise operating

with integrity and respect, which allows the Group

to cultivate strong, long-term relationships with

critical suppliers.

The world is experiencing signiﬁcant supply chain

disruption resulting from labour challenges, material

shortages and transportation delays. Focus in 2021 has

been on:

• 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;

• leverage supplier relationships across the Group to

identify alternate supply sources and opportunities to

streamline or consolidate supply requirements;

• utilise the Senior Operating System and our engineering

expertise to generate innovative solutions to supply

chain challenges; and

• increased focus on supply chain challenges in operating

business reviews, as well as in Executive Committee

and Group Procurement Council meetings.

52 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Principal Risk How we manage it Focus in 2021

Cyber/information security

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.

• The Group has a roadmap to achieving improved

Information Security.

• The Group has security controls in place including

policies, standards and playbooks.

• Each operating business has a security champion to

assist in raising employee awareness to this risk.

• 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.

• The Group hosts an annual IT/IS conference with

participants from all operating businesses.

• Employees receive annual awareness training on

cyber-related issues.

Many of our employees continued to work from home

during 2021 and measures were taken to ensure that

the Group IT/IS policies continue to be followed.

These measures included the introduction of an IS audit

programme, as well as in-depth IS reviews of key operating

businesses. In addition, the global roll out of the Group’s

endpoint detection and response tool set has provided

additional monitoring of the environment.

Further progress was made in 2021 in implementing the

Group’s Information Security roadmap, including:

• completed the implementation of a third-party Managed

Security Service provider and deployment of vulnerability

management and cyber intelligence services, as well

as endpoint detection and response software;

• over 90% of employees completed on-line cyber/

information security training;

• continuation of the cyber awareness campaign,

consisting of cyber newsletters and posters to alert

employees to cyber threats;

• alerting IT teams across the Group to near misses and

incidents so they are aware of immediate threats; and

• all Information Security policies and standards

were updated.

Programme management

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, quality and cost

requirements resulting in delays,

penalties, cost overruns or asset

write-downs.

• The Group is experienced in bidding and launching

newproducts. Formal New Product Introduction “NPI”

processes, such as Advanced Product Quality Planning

“APQP”, are used in some parts of the Group and

are being rolled out.

• 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.

The ongoing pandemic continued to impact customer

demand in 2021, although the recovery is underway in

some end markets. Focus in 2021 has been on:

• 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 optimise inventory levels where there are delays in

ﬁrm orders;

• 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.

Customer demand and 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.

COVID-19 continues to impact our

end markets and there is a risk that

customers do not honour ﬁrm order

schedules, or in extreme cases,

go out of business.

• 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.

• 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.

• 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.

Customer demand strengthened during the year, driven

by the ongoing end-market recovery from the impacts of

the pandemic.

While price down pressures have continued in 2021 in

certain markets, other segments have been impacted

by supply chain disruptions, causing a shift in customer

focus from reducing price to meeting delivery schedules.

Focus in 2021 has been on:

• collaborating with our customers to continue to ensure

that, wherever possible, orders within ﬁrm windows can

be delivered;

• continuing to balance direct headcount with demand

whilst retaining the ability to meet increased demand in

the future and identifying overhead reductions through

eciency improvements where possible; and

• pursuing new opportunities with existing and new

customers, providing some market diversiﬁcation.

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

Enhance business model

Focus on growth

High performance operating system

Competitive cost countries

Capital deployment

Talent and development

Key Performance Indicators

Organic Revenue Growth

Return on Revenue Margin

Adjusted Earnings per Share

Net Cash from Operating Activities

Return on Capital Employed

Carbon Dioxide Emissions

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 64.

53SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2021

PEOPLE AND CULTURE

Talent and Skills

There is a risk that the group will have

diculty in retaining and recruiting

sucient skills to respond to a

recovery in our markets and/or wages

may have to be increased to 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.

Employees may leave the business

forbetter wages/opportunities

elsewhere.

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 insucient 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.

The Group conducted a global employee engagement

survey in 2021, with excellent participation and

engagement from employees. The feedback from the

survey was very positive, valuable and constructive and

will be used to help implement speciﬁc action plans to

improve engagement for each operating business.

Use of the Group’s online recruitment system, “Recruit,”

was embedded across our US operating businesses

andwill be expanded to operating businesses in the UK

in2022.

The Group responded to increasing challenges in

employee retention and recruitment in 2021 by:

• evaluating market labour rates at a local level, resulting

in higher wages for new employees and the execution

of o-cycle wage adjustments for existing employees,

where appropriate;

• enhancing wellbeing oerings, such as expanded

employee assistance programmes, to provide additional

resources employees can utilise to improve their overall

physical and mental health;

• expanding the Group’s network of reputable recruiting

partners and channels, including social media

campaigns and job fairs, to broaden the pool of

candidates for open positions; and

• increasing the level of cross training amongst the

current workforce to cover gaps in labour availability.

FINANCIAL

Inﬂation

A conﬂuence of labour constraints,

supply chain disruption and shifting

customer demand is increasing

inﬂationary pressures on earnings

from existing programmes.

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.

• The Group’s Treasury Committee actively monitors

the economic forces impacting the Group and

considers 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.

• A signiﬁcant portion of the Group’s external debt is at

ﬁxed rates of interest, which mitigates the eect of

higher benchmark interest rates that can result from

inﬂationary pressures.

The Group closely tracked the velocity of inﬂation escalation

during 2021 and responded quickly to mitigate its impact

on the Group’s ﬁnancial performance where necessary.

Our eorts in 2021 included:

• 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 continuing to maintain the Group’s inventory

optimisation progress from 2020; and

• utilise the Senior Operating System to deploy lean and

continuous improvement techniques with a focus on

improving labour eciencies and cost reduction initiatives.

54 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Principal Risk How we manage it Focus in 2021

Financing and liquidity

The Group could have insucient

ﬁnancial resources to fund its growth

strategy or meet its ﬁnancial

obligations as they fall due or

insucient 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).

• The Group’s overall treasury risk management

programme focuses on the unpredictability of ﬁnancial

markets, and seeks to minimise potential adverse eects

on the Group’s ﬁnancial performance.

• Compliance with ﬁnancial policies and exposure limits

are reviewed by the Group’s Treasury Committee on

a regular basis.

• The Group enters into forward foreign exchange

contracts to hedge the exchange risk arising on

operations’ trading activities in foreign currencies;

however, it does not enter into or trade ﬁnancial

instruments, including derivative ﬁnancial instruments,

for speculative purposes.

• The Group’s Treasury policy is updated and approved

by the Board regularly.

• The Group’s viability assessment process considers a

base case and risk case scenario, which considers the

principal risks and uncertainties.

The Group continued to focus on this risk during 2021 to

mitigate the ongoing impacts of the COVID-19 pandemic.

Actions taken included:

• worked with the Group’s lenders, both banks and US

private placement investors, during 2020 and through to

February 2021 to agree appropriate covenant relaxations

in relation to the June 2020 through to December 2021

testing periods. The Group continues to manage leverage

accordingly and will revert to original covenant limits

for the June 2022 testing period;

• continued focus on cash preservation; no Senior plc

dividends were paid in 2021, capital expenditure

remained subdued and some delegated authorities

remain restricted;

• while inventory optimisation eorts focused on reducing

inventory levels where appropriate are ongoing, eorts in

2021 also emphasised sustaining the beneﬁts achieved

in 2020 by responsibly managing growth in inventory

requirements where customer demand is recovering

and/or supply chain disruptions are occurring;

• extensive scenario testing was undertaken in 2021

based on a variety of end market assumptions taking

account of appropriate cost reduction and cash

preservation mitigating actions; and

• the Group’s Treasury Policy was updated and approved

by the Board in September 2021.

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 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.

• The Board receives regular updates on trade

compliancematters.

In 2021, the Code of Conduct was updated and relevant

training was rolled out to all employees, with 94% of

employees having completed the training.

Additional training was conducted for appropriate employee

groups on topics including anti-money laundering, tax

evasion facilitation, trade compliance, harassment and

protecting human rights.

The Group implemented an enhanced denied party

screening tool and added export license management

capability for the US operating businesses.

Updates have been issued to various Group policies.

The Group’s 2021 internal audit programme and Controls

Self Assessment were completed, providing a level of

assurance that the Group’s Code of Conduct, controls,

policies and procedures are being followed.

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

Enhance business model

Focus on growth

High performance operating system

Competitive cost countries

Capital deployment

Talent and development

Key Performance Indicators

Organic Revenue Growth

Return on Revenue Margin

Adjusted Earnings per Share

Net Cash from Operating Activities

Return on Capital Employed

Carbon Dioxide Emissions

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 64.

55SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Aerospace sales

across the Group

66%

37%

Civil

aircraft

18%

Defence

11%

other

STRATEGIC REPORT

DIVISIONAL REVIEW

– Aerospace

HEADLINES 2021

Revenue

£439.3m

(2020 – £498.0m)

Adjusted operating proﬁt

£ 7.9m

(2020 – £5.5m)

Adjusted operating margin

1.8%

(2020 – 1.1%)

TheDivision’s operating results on a constant

currency basis are summarised below:

2021

£m

2020

(3)

£m Change

Revenue 439.3 498.0 -11.8%

Adjusted

operating proﬁt 7.9 5.5 +43.6%

Adjusted

operating margin 1.8% 1.1% +70 bps

(1) This number is excluding Senior Aerospace

Connecticut

(2) This excludes Senior Aerospace Connecticut and

Senior Aerospace Bosman in The Netherlands.

(3) 2020 results translated using 2021 average exchange

rates – constant currency.

Divisional revenue decreased by £58.7m (11.8%)

to £439.3m (2020 – £498.0m) whilst adjusted

operating proﬁt increased by £2.4m (43.6%) to

£7.9m (2020 – £5.5m).

Revenue Reconciliation £m

2020 revenue 498.0

Civil aerospace (43.8)

Defence 1.0

Other 9.8

Disposal of business (25.7)

2021 revenue 439.3

Revenue in the Aerospace Division reduced

by11.8% year-on-year on a constant currency

basis, reﬂecting that part of 2020 was pre-

COVID and 2020 included a full year contribution

from Senior Aerospace Connecticut. Excluding

Senior Aerospace Connecticut, which was

divested on 22 April 2021, revenue for the

fullyear on an organic, constant currency

basisdeclined by 7.1%. The year-on-year

declinereﬂected the reduction in civil aircraft

production rates, partly oset by growth

fromsemi-conductor equipment, defence

andspace markets.

The civil aerospace sector was the most

impacted by the pandemic with Senior’s sales

decreasing by 15.2% compared to prior year.

This was reﬂective of aircraft production

ratesremaining lower in 2021 compared to

pre-pandemic levels including the impact of

lower 787 production as Boeing address the

quality issues.

Excluding the divestment of Senior Aerospace

Connecticut, total revenue from the defence

sector increased by £1.0m, 0.9% during the

year, as the F-35 production rate increase was

partly oset by the timing gap between the

completion of deliveries on parts for F-35 Lot 14

and the commencement of deliveries on Lot 15

and lower military aftermarket sales in 2021.

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 £9.8m as a result of the

increasing demand in the semi-conductor

equipment market and growth in the space

satellite sector.

Even though divisional revenue decreased in

2021, adjusted operating proﬁt increased by

43.6% to £7.9m (2020 – £5.5m). This reﬂected

the drop through impact of the reduction in

revenue, mitigated by additional savings

delivered from the restructuring programme.

Onan organic basis (excluding Senior Aerospace

Connecticut), the Divisional adjusted operating

margin increased by 140 basis points to 1.6%

(2020 – 0.2%).

In 2022, we expect production volumes for civil

aerospace to be higher than 2021, driven by

increasing single aisle rates. Positively, in 2021

both Airbus and Boeing conﬁrmed plans to ramp

up single aisle production in the near-term.

(1)

Global Aerospace operations

North America

(1)

United Kingdom 4

Continental Europe

(1)

Thailand 1

Malaysia 1

(1) In 2021, Senior Aerospace Connecticut was divested and

Senior Aerospace Bosman in The Netherlands was closed

Aerospace Division

The Aerospace Division represents 66%

(1)

(2020 – 70%

(1)

of Group revenue and consists

of 14

(2)

operations. 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 2020 results have been

translated using 2021 average exchange rates

and on an adjusted basis to exclude the charge

relating to amortisation of intangible assets from

acquisitions, goodwill impairment and write-o

and net restructuring income/costs.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202156

Adjusted operating

margin increased to

1.8%

• Airbus increased the A320 Family production

to 45 aircraft per month by the end of 2021.

They have stated that the ramp up is on

trajectory to achieve a monthly rate of 65

aircraft by summer 2023. For production rates

beyond 2023, Airbus is still in the assessment

phase and working with suppliers to

potentially enable an increase above rate 65;

recently, they have indicated that they expect

to have clarity on their 2024 and 2025

production targets by the middle of 2022.

• Boeing announced at their recent earnings

call that the 737 programme is currently

producing at a rate of 26 per month, reiterated

that it will continue to progress towards a

production rate of 31 per month in early 2022

and stated that the company is evaluating the

timing of further rate increases. Boeing have

an order backlog of around 3,400 aircraft and

there are currently 335 MAX aircraft in

inventory with the majority of these expected

to be delivered by the end of 2023. Boeing

also stated that since the FAA’s approval to

return the 737 MAX to operations in

November 2020, 299 737 MAX aircraft have

been delivered and that there are 36 operators

who have returned the 737 MAX to service.

Furthermore, the Civil Aviation Administration

of China (“CAAC”) has now issued the

appropriate airworthiness directives (“AD’s”),

clearing the way for the 737 MAX to return

to service in China in the near future.

• COMAC recently announced that its C919

aircraft is continuing its ﬂight certiﬁcation

programme and expect ﬁrst delivery in 2022.

Recovery in long-haul routes, which typically

use wide body aircraft, is expected to take

longer than short-haul routes. IATA has signalled

that this segment will return to 98% of 2019

levels by 2025 and 106% of 2019 levels by2026.

• Airbus continue to expect to increase the

A350 Family production rate, currently at an

average production rate of 5 per month, to

around 6 by early 2023. For the A330 Family,

production will increase from around 2 per

month to almost 3 per month at the end

of2022.

• On the 787 platform, Boeing continues to

perform rework on aircraft in inventory which

has led to production being reduced to a very

low rate. This will continue until deliveries

resume, with an expected gradual return to

5 per month over time. Boeing conﬁrmed

on their January 26, 2022 earnings call that

they will have 110 airplanes in inventory

at the end of the ﬁrst quarter of 2022.

• Production of the 767 will continue at a rate

of 3 per month.

• On the 777/777X combined production rate,

Boeing announced that they will be increasing

from 2 per month in H1 2021 to 3 per month

in 2022. They are still anticipating ﬁrst delivery

of the 777X in late 2023.

Business jet ﬂight activity was resilient in 2021,

with strong leisure demand as travel restrictions

loosened. With 3.3 million ﬂights from January

through December, business jet trac was 7%

higher than in 2019, the previous high point for

global business jet demand, according to WingX

Global Market Tracker. Activity in 2022 is also

continuing this upward trend, with January 2022

trac increasing 35% when compared to 2021.

In regional jets, the entry into service of

Embraer’s E175-E2 jet has been delayed

until 2027-28 although they continue to sell

the current E175 jet. Airbus rearmed that

production of the A220, which is currently at

around rate 5 aircraft per month, will rise to

around 6 per month in early 2022. Airbus is also

envisaging a monthly production rate of 14 by

the middle of the decade.

We expect defence revenue to be stable in

2022 with bipartisan support for US defence

spending. The strength in US military spending

can be primarily attributed to heavy investment

in research and development and long-term

projects such as the 5th generation F-35 Joint

Strike Fighter.

• Lockheed Martin delivered 142 F-35 aircraft

in 2021, which was higher than the range they

set out of 133-139. At their full year results

presentation, they reiterated their existing

production for F-35; 151-153 aircraft in 2022

and then 156 thereafter. They further stated

that the annual production may increase

beyond the planned full-rate production of

156aircraft per year given strong recent

international order intake.

Senior has a diversiﬁed product portfolio

in the aerospace sector and the potential to

add content on existing programmes as our

customers recognise and appreciate Senior’s

ﬁnancial resilience, stability, and global footprint.

Our businesses are well capitalised with

equipment that can be utilised across civil,

defence and space sectors. We have secured

new multi-year contracts and contract

extensions on defence and civil platforms

which, coupled with increasing production rates,

will help to underpin our return to growth in our

Aerospace Division in 2022 and beyond.

In2021, new contracts of note that were

signedinclude:

• Senior Aerospace was awarded a multi-year

contract to supply major ﬂoor beam structural

assemblies for the Boeing 767 platform.

Production of the structural assemblies

will be undertaken from the Senior Aerospace

AMT facility in Arlington, WA, USA with

deliveries commencing January 2022.

• Senior Aerospace won a multi-year contract

to supply quadrant assemblies for ﬂight

control systems on the Boeing 737 and

Boeing 777 platforms. The quadrant

assemblies for the Boeing 737 Elevator

Control and Boeing 777 Horizontal Stabilizer

ﬂight control system will commence in Q1

2022 from the Senior Aerospace Damar

facility in Monroe, WA, USA.

c. 28%

Boeing

c. 72%

Airbus

A B C D E F

£m

A 2020 revenue

B Civil aerospace

C Defence

D Other

E Disposal of business

F 2021 revenue

(43.8)

1.0

9.8

(25.7)

439.3

498.0

Revenue by large commercial platforms Revenue reconciliation (£m)

Sales in defence

increased by

+1%

A B C D E F

£m

A 2020 revenue

B Civil aerospace

C Defence

D Other

E Disposal of business

F 2021 revenue

(43.8)

1.0

9.8

(25.7)

439.3

498.0

A B C D E F

£m

A 2020 revenue

B Civil aerospace

C Defence

Other

E Disposal of business

F 2021 revenue

(43.8)

1.0

9.8

(25.7)

439.3

498.0

57SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

Flexonics sales

across the Group

34%

18%

Land

vehicles

16%

Power &

energy

12 Global Flexonics operations

(1)

North America 4

Continental Europe 2

United Kingdom 2

India 1

South Africa 1

Malaysia

(1)

China

(2)

(1) In 2021, Senior Flexonics Upeca in Malaysia was closed.

(2) Including joint venture.

STRATEGIC REPORT

DIVISIONAL REVIEW

– Flexonics

HEADLINES 2021

Revenue

£219.9m

(2020 – £200.0m)

Adjusted operating proﬁt

£12.9m

(2020 – £10.5m)

Adjusted operating margin

5.9%

(2020 – 5.3%)

Flexonics Division

The Flexonics Division represents 34% (2020

– 30%) of Group revenue and consists of 12

(1)

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, presented before the share

ofthe joint venture results, is on a constant

currency basis, whereby 2020 results have been

translated using 2021 average exchange rates

and on an adjusted basis to exclude the charge

relating to amortisation of intangible assets

fromacquisitions, goodwill write-o and net

restructuring income/costs. The Division’s

operating results on a constant currency basis

are summarised below:

2021

£m

2020

(2)

£m Change

Revenue 219.9 200.0 +9.9%

Adjusted

operating proﬁt 12.9 10.5 +22.9%

Adjusted

operating margin 5.9% 5.3% +60 bps

(1) This ﬁgure excludes Senior Flexonics Upeca, Malaysia

following its closure.

(2) 2020 results translated using 2021 average exchange

rates – constant currency.

Divisional revenue increased by £19.9m (9.9%)

to £219.9m (2020 – £200.0m) and adjusted

operating proﬁt increased by £2.4m (22.9%)

to £12.9m (2020 – £10.5m).

Revenue Reconciliation £m

2020 revenue 200.0

Land vehicles 33.5

Power & energy (13.6)

2021 revenue 219.9

Recovery is underway across some of our

Flexonics end-markets with sales in 2021

increasing by 9.9% compared to prior year.

Theperformance in the year beneﬁted from the

recovery in heavy-duty truck and o-highway

and passenger vehicle markets, partially oset

by a decline in oil & gas and the closure of the

Senior Flexonics business in Malaysia.

Group sales to land vehicle markets increased

by 39.3%. Senior’s sales to the North American

truck and o-highway market increased by

£19.6m (42.9%), as o-highway sales were

strong and market production of heavy-duty

diesel trucks increased by 23%. Sales to other

truck and o-highway regions, including Europe

and India, increased by £7.6m (41.1%). Group

sales to passenger vehicle markets increased

by£6.3m (29.9%) in the year, reﬂecting higher

demand in our core European and Indian markets.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202158

Revenue reconciliation (£m) Global energy usage will drive

increased demand for many of

the Flexonics Division’s products

A B C D

£m

A 2020 revenue

B Land vehicles

C Power & energy

D 2021 revenue

33.5

(13.6)

219.9

200.0

A B C D

£m

A 2020 revenue

B Land vehicles

C Power & energy

D 2021 revenue

33.5

(13.6)

219.9

200.0

A B C D

£m

A 2020 revenue

B Land vehicles

C Power & energy

D 2021 revenue

33.5

(13.6)

219.9

200.0

Sales to land vehicle markets

increased by +39%

In the Group’s power & energy markets,

sales decreased by £13.6m (11.9%) in the year.

Salesto oil and gas markets decreased by

£11.2m (26.7%), as a result of weaker demand,

particularly for upstream activity and also the

closure of our Senior Flexonics Upeca, Malaysia

business. Downstream oil and gas activity was

lower year-on-year because part of the prior

yearwas pre pandemic with higher levels of

economic activity. Some maintenance projects

continue to be deferred. Sales to other power

& energy markets decreased by £2.4m.

Adjusted operating proﬁt increased by £2.4m

compared to prior year and the divisional

adjusted operating margin increased by 60 basis

points to 5.9% (2020 – 5.3%). This reﬂected

the drop through impact of growth in revenue

coupled with additional savings delivered from

the restructuring programme which more than

oset the inﬂationary impact of freight and

commodity costs.

Land vehicle markets are expected to continue

to grow in 2022, as supply chain constraints

gradually ease through the year.

• ACT Research is forecasting a 13% increase

in North American heavy-duty truck

production in 2022, and further growth

of 21% in 2023.

• The North American medium-duty diesel

truck production is forecast to increase by

11% in 2022.

• IHS Markit Inc. forecasts that European truck

and bus production will grow by 7% in 2022

and that passenger vehicle production will

grow by 20% in 2022.

• Indian passenger vehicle production

is forecasted to grow by 7% in 2022.

Some positive momentum is expected in

power & energy markets now that recovery

in the upstream oil & gas sector is underway.

• Global oil demand is forecast to exceed pre

pandemic levels before the end of 2022 and

to further strengthen in 2023, in the absence

of any further COVID-related disruption.

Industry macro fundamentals, for upstream

oil and gas in particular, are looking very

favourable, due to the combination of

projected steady demand recovery, an

increasingly tight supply market, and

supportive oil prices. Nevertheless, the rise

in geopolitical tensions could have a potential

impact on the supply side.

• In power generation, the IEA forecasts

electricity demand growing by 2.7% a year on

average for 2022-2024. They also forecast the

growth of renewable capacity in the next ﬁve

years to accelerate, accounting for almost

95% of the increase in global power capacity

through 2026.

• According to the IEA, nuclear power

sustained signiﬁcant growth in 2021; output

from nuclear was 8% above 2019 levels, with

emerging market and developing economies

increasing their share of global nuclear output

to almost one-third.

We will continue to focus our development

eorts on dierentiated technology and

products, applicable across a diverse range

of attractive industrial markets. In 2021, new

contracts of note that were signed include:

• Senior Flexonics Canada was awarded an

additional contract with Bruce Power Limited

Partnership as a key supplier for their

Major Component Replacement (“MCR”)

Project to supply replacement bellows

expansion joints for critical equipment in the

primary and secondary circuits for Reactor

Units. The work will be performed at the

Senior Flexonics facility in Ontario, Canada

and Senior Flexonics Pathway facility

in Texas, USA.

• Senior Flexonics was awarded new

contracts to supply Honda with exhaust

ﬂexible connectors for the automotive

manufacturer’s 1.5L and 2.0L gasoline

engines. To meet Honda’s demanding

performance requirements, Senior Flexonics

undertook a rigorous development to ensure

the ﬂexible exhaust connectors met the

required durability, weight and emissions

standards. Manufacturing of these

components will be performed at Senior

Flexonics’ facilities in India and China and

deliveries have recently commenced.

• Senior Flexonics Olomouc in the Czech

Republic has secured the Group’s ﬁrst

contract for a fully electric heavy-duty truck

application for one of our large European truck

customers. We will be providing electronics

cooling components.

59SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

FINANCIAL REVIEW

Senior delivered improved

proﬁtability and strengthened

the balance sheet in 2021.”

Bindi Foyle

Group Finance Director

Financial detail

Group revenue

Group revenue was £658.7m (2020 – £733.6m).

Excluding the adverse exchange rate impact of

£36.4m, and the year-on-year eect of the

disposal of £25.7m, Group revenue decreased

by £12.8m (1.9%), with lower revenues in

Aerospace partly oset by higher revenues in

Flexonics year-on-year. In 2021, 60% of revenue

originated from North America, 15% from the

UK, 13% from theRest of Europe and 12% from

the Rest of the World.

HIGHLIGHTS

Adjusted Operating Proﬁt

£6.1m

2020 – £3.7m

Net Debt/EBITDA

1.9x

2020 – 2.8x

ROCE

1.0%

2020 – 0.5%

Operating proﬁt/loss

Adjusted operating proﬁt increased by £2.4m

(64.9%) to £6.1m (2020 – £3.7m). Excluding

theadverse exchange rate impact of £0.8m,

adjusted operating proﬁt increased by £3.2m

(110.3%) on a constant currency basis.

Afteraccounting for £nil amortisation of

intangible assets from acquisitions (2020 –

£7.7m), £nil goodwill impairment and write-o

(2020 – £134.3m) and £4.4m net restructuring

income (2020 – £39.0m net restructuring cost),

reported operating proﬁt was £10.5m (2020

– £177.3m loss).

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.

Revenue

Adjusted

operating proﬁt

(1)

Margin

2021

£m

2020

£m

2021

£m

2020

£m

2021

2020

Aerospace 439.3 526.2 7.9 5.9 1.8 1.1

Flexonics

(2)

219.9 208.3 12.9 11.0 5.9 5.3

Share of results of

joint venture – – 0.2 0.2 – –

Inter-segment sales (0.5) (0.9) – – – –

Central costs – – (14.9) (13.4) – –

Group total 658.7 733.6 6.1 3.7 0.9 0.5

(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:

2021

£m

2020

£m

Adjusted operating proﬁt 6.1 3.7

Amortisation of intangible assets from acquisitions – (7.7)

Goodwill impairment and write-o – (134.3)

Net Restructuring income/(costs) 4.4 (39.0)

Operating proﬁt/(loss) 10.5 (177. 3)

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202160

The Group’s adjusted operating margin

increased by 40 basis points, to 0.9% for the

full year. This improvement in proﬁtability

reﬂected the savings delivered from the

restructuring programme as well as our focus

on cost management activities, which more

than oset the drop through eect of the

reduction in revenue and the inﬂationary impact

of freight and commodity costs. While the

impact of the pandemic and industry wide

supply chain constraints are still with us,

we continue to manage these diligently.

As set out in Note 9, adjusted operating proﬁt

and adjusted loss before tax are stated before

£nil amortisation of intangible assets from

acquisitions (2020 – £7.7m), £nil goodwill

impairment and write-o (2020 – £134.3m) and

£4.4m net restructuring income (2020 – £39.0m

cost). Adjusted loss before tax is also stated

before corporate undertakings income of

£21.2m (2020 – £4.6m cost).

Restructuring

The Group 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.

At 31 December 2021, none of the Group’s

employees were on furlough (2020 – 7%).

The decisive actions taken on restructuring and

cost management over the last couple of years

has 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. Our

operating businesses have also worked hard to

maximise cash realised from disposal of assets

where there is no alternate use.

The restructuring, which involves business

closures and sale of associated assets,

headcount reductions and other beneﬁts, has

resulted in net income of £4.4m (2020 – £39.0m

net cost). Of this, £4.2m income (2020 – £nil)

related to an aerospace manufacturing grant,

£1.0m net income for closures of Senior

Flexonics Upeca and Senior Aerospace Bosman

(2020 – £10.5m cost), £0.4m cost related to

headcount reduction (2020 – £13.5m cost) and

£1.0m cost related to consultancy and other

activities (2020 – £1.5m cost). For certain

speciﬁc programmes, and in conjunction with

the focus on restructuring, management has

also identiﬁed inventory impairment reversals of

£1.4m (2020 – £8.5m charge) where customer

demand has increased, and further impairment

provisions on property, plant and equipment in

2021 with a charge of £0.8m (2020 – £5.0m

charge) to cover the risk where there are no

alternative uses and in part due to customers

choosing to cancel and/or signiﬁcantly reduce

future build rates.

Net cash outﬂow related to restructuring

activities was £0.9m (2020 – £15.2m), with

£50m of savings (2020 – £36m) delivered,

mainly related to lower headcount.

At 31 December 2021, a restructuring

provisionof £1.3m (31 December 2020 –

£8.9m) was recognised and is expected to

beutilised in 2022.

Finance costs and investment income

Finance costs, net of investment income

decreased to £8.0m (2020 – £9.9m) and

comprise IFRS 16 interest charge on lease

liabilities of £2.6m (2020 – £3.0m), net

ﬁnanceincome on retirement beneﬁts of £0.4m

(2020 – £0.9m) and net interest charge of £5.8m

(2020 – £7.8m). The decrease was mainly due

to lower borrowings including the repayment in

October 2020 of $20.0m (£14.6m) US Private

Placement Note carrying a high interest rate.

Corporate undertakings

Net income associated with corporate

undertakings was £21.2m in 2021, of which

£24.2m gain relates to the disposal of Senior

Aerospace Connecticut in April 2021, partly

oset by £3.0m bid defence and costs relating

to other corporate activities. In 2020, costs of

£4.6m were incurred relating to employee costs

and external professional fees for the potential

divestment of the Aerostructures business.

SeeNote 31 to the Financial Statements for

further details on the £24.2m gain on disposal.

Proﬁt/loss before tax

Adjusted loss before tax was £1.9m (2020 –

£6.2m). Reported proﬁt before tax was

£23.7m(2020 – £191.8m loss). The reconciling

items between adjusted loss and reported

proﬁt/loss before tax are shown in Note 9 to

theFinancial Statements.

Tax charge

The adjusted tax rate for the year was 136.8%

credit (2020 – 43.5% credit), being a tax credit

of £2.6m (2020 – £2.7m) on adjusted loss before

tax of £1.9m (2020 – £6.2m loss). The adjusted

tax rate beneﬁts from prior year items as well

as enhanced deductions for R&D expenditure

in the US and capital expenditure in the UK.

The 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 eective from 1 April 2023.

The 2020 reported tax rate was 17.4% credit,

being a tax credit of £33.3m on reported loss

before tax of £191.8m. This included the tax

credit of items excluded from adjusted proﬁt

before tax of £30.6m, of which £21.7m related

to the reversal of deferred tax liabilities held

against goodwill impaired in 2020.

Cash tax paid was £5.3m (2020 – £3.5m) and is

stated net of refunds received of £0.9m (2020

– £0.3m) of tax paid in prior periods, including

refunds arising from the oset of tax losses

against taxable proﬁts of prior periods. Tax

payments during the year are £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 aairs in a way

thatis ecient 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.

Revenue (£m)

658.7

733.6

Adjusted operating proﬁt (£m)

6.1

3.7

Free cash ﬂow (£m)

14.0

46.5

61SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

FINANCIAL REVIEW

CONTINUED

Earnings/loss per share

The weighted average number of shares, for the

purposes of calculating undiluted earnings/loss

per share, increased to 415.7 million (2020 –

414.9 million). The increase arose principally due

to exercising of share-based payment awards

during 2021. The adjusted earnings per share

was 0.17 pence (2020 – adjusted loss per share

of 0.84 pence). Basic earnings per share was

5.82 pence (2020 – basic loss per share of

38.20 pence). See Note 12 for details of the

basis of these calculations.

Return on capital employed (“ROCE”)

ROCE, a key performance indicator for the

Group as deﬁned above, increased by 50 basis

points to 1.0% (2020 – 0.5%). The increase in

ROCE was mainly a result of the increase in

adjusted operating proﬁt compared to prior year.

Research and design

The Group’s expenditure on research and design

was £19.2m during 2021 (2020 – £18.7m).

Expenditure was incurred mainly on funded

and unfunded work, which 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2021 was generated outside the UK and

consequently, foreign exchange rates, principally

the US Dollar against Sterling, can aect the

Group’s results.

The 2021 average exchange rate for the US

Dollar applied in the translation of income

statement and cash ﬂow items was $1.38

(2020– $1.29). The exchange rate for the

USDollar applied to the translation of Balance

Sheet items at 31 December 2021 was $1.35

(31 December 2020 – $1.37).

Using 2021 average exchange rates would

havedecreased 2020 revenue by £36.4m

anddecreased 2020 adjusted operating proﬁt

by£0.8m. A 10 cents movement in the £:$

exchange rate is estimated to aect full-year

revenue on average by £28m, adjusted

operating proﬁt by £1m and net debt by £7m.

Cash ﬂow

The Group generated robust free cash ﬂow of

£14.0m in 2021 (2020 – £46.5m) as set out in

the table below:

2021

£m

2020

£m

Operating proﬁt/(loss) 10.5 (177. 3)

Amortisation of intangible

assets from acquisitions – 7.7

Goodwill impairment

andwrite-o – 134.3

Net restructuring

(income)/costs (4.4) 39.0

Adjusted operating proﬁt 6.1 3.7

Depreciation (including

amortisation of software) 47.8 53.9

Working capital and

provisions movement,

netof restructuring items (2.6) 32.3

Pension payments above

service cost (5.1) (5.0)

Other items

(1)

2.2 2.0

Interest paid, net (8.0) (10.6)

Income tax paid, net (5.3) (3.5)

Capital expenditure (21.3) (26.8)

Sale of property, plant

andequipment 0.2 0.5

Free cash ﬂow 14.0 46.5

Corporate undertakings 46.9 (4.2)

Net restructuring

cashpaid (0.9) (15.2)

US Class action lawsuits (2.3) (3.9)

Net cash ﬂow 57.7 23.2

Eect of foreign exchange

rate changes 0.7 2.4

IFRS 16 non-cash

additions and

modiﬁcations after

disposals (5.6) (1.9)

Change in net debt 52.8 23.7

Opening net debt (205.9) (229.6)

Closing net debt (153.1) (205.9)

(1) Other items comprises £3.5m share-based payment

charges (2020 – £3.0m), £(0.2m) proﬁt on share of joint

venture (2020 – £(0.2m)), £(1.1m) working capital and

provision currency movements (2020 – £(0.7m) before

£0.5m foreign exchange loss recycled to the Income

Statement on restructuring activities) and £nil proﬁt on

sale of ﬁxed assets (2020 – £(0.1m) proﬁt).

Capital expenditure

Gross capital expenditure of £21.3m

(2020–£26.8m) was 0.6 times depreciation

excluding the impact of IFRS 16 (2020 – 0.6

times). The disposal of property, plant and

equipment raised £0.2m (2020 – £0.5m).

As previously advised, the Group’s operating

businesses are capitalised and prepared for

growth. Therefore, we can expect future capital

investment to be at more normal levels: 2022

capital investment is expected to be slightly

below 2022 depreciation (excluding the impact

of IFRS 16). We are prioritising new investment

on health and safety related items; important

replacement equipment for current production;

and growth projects where contracts have

beensecured.

Working capital

Working capital decreased by £3.0m in 2021

to£103.0m (2020 – £106.0m), reﬂecting our

relentless and eective focus on working capital

management. With demand recovery underway

in our key end markets, and some supply chain

lead times increasing, we may see an increase

in working capital over the coming months.

Wewill continue to manage this diligently.

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 2021 were £16.8m (31 December

2020 – £17.6m). The net impact of reverse

factoring on 2021 was a cash outﬂow in working

capital of £0.9m (2020 – £13.3m outﬂow) and

the discount interest presented within other

ﬁnance costs is a charge of £0.2m in 2021

(2020 – £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. While

Group performance in 2021 has improved

compared to 2020, it was still impacted by the

pandemic, and as such, theBoard believes it is

not appropriate to pay a dividend for the year.

Therefore, no cash outﬂow was incurred during

2021 in respect of dividends (2020 – £nil).

The Board recognises the importance of the

dividend for our shareholders and is optimistic

that the recovery currently underway in our core

end markets will continue. The Board therefore

expects to resume dividend payments in 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.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202162

Goodwill

The reduction in goodwill from £165.0m at

31December 2020 to £150.2m at 31 December

2021 reﬂects the disposal of Senior Aerospace

Connecticut in April 2021 (£15.1m reduction),

partly oset by foreign exchange dierences

(£0.3m increase).

Retirement beneﬁt schemes

The retirement beneﬁt surplus in respect of

theGroup’s UK deﬁned beneﬁt pension plan

(“the UK Plan”) increased by £25.7m to £72.2m

(31 December 2020 – £46.5m) due to £19.7m

net actuarial gains, £5.4m cash contributions

bythe Group, in excess of running costs, and

£0.6m net interest income. Retirement beneﬁt

deﬁcits in respect of the US and other territories

increased by £0.1m to £11.0m (31 December

2020 – £10.9m).

The latest triennial actuarial valuation of the

UKPlan as at 5 April 2019 showed a deﬁcit of

£10.2m (5 April 2016 – deﬁcit of £37.4m). As a

result, and eective from April 2019, the Group’s

deﬁcit reduction cash contributions to the UK

Plan have reduced from an annual amount

of£8.1m to an annual amount of £5.5m.

TheGroup continues to contribute £0.5m

perannum towards plan administration costs.

These contributions are payable over the

three-year period to March 2022 and are subject

to review and amendment as appropriate at the

next funding valuation in 2022.

Net debt

Net debt which includes IFRS 16 lease

liabilitiesdecreased by £52.8m to £153.1m

at31December 2021 (31 December 2020 –

£205.9m). As noted in the cash ﬂow above,

theGroup generated net cash ﬂow of £57.7m

(as deﬁned in Note 32(c) of the Financial

Statements) and beneﬁted from £0.7m

favourable foreign currency movements,

partially oset by £5.6m non-cash

changes inlease liabilities due to additions

and modiﬁcations.

Net debt excluding IFRS 16 lease liabilities

of£73.2m (31 December 2020 – £76.5m)

decreased by £49.5m to £79.9m at

31December 2021 (31 December 2020 –

£129.4m).

Funding and Liquidity

As at 31 December 2021, the Group’s gross

borrowings excluding leases and transaction

costs directly attributable to borrowings were

£132.0m (31 December 2020 – £154.4m),

with62% of the Group’s gross borrowings

denominated in US Dollars (31 December 2020

– 62%). Cash and bank balances were £51.1m

(31 December 2020 – £23.6m).

The maturity of these borrowings, together with

the maturity of the Group’s committed facilities,

can be analysed as follows:

Gross

borrowings

(2)

£m

Committed

facilities

£m

Within one year 14.8 14.8

In the second year – 35.9

In years three to ﬁve 71.5 191.5

After ﬁve years 45.7 45.7

132.0 287.9

(2) Gross borrowings include other loans and committed

facilities, but exclude leases of £73.2m and transaction

costs directly attributable to borrowings of £(1.0m).

At the year-end, the Group had committed

facilities of £287.9m comprising private

placement debt of £132.0m and revolving

credit facilities of £155.9m. The Group is in

a strong funding position, with headroom

at 31 December 2021 of £208.0m in cash

and undrawn facilities.

In April 2021, the Group reﬁnanced its US

revolving credit facility of $50.0m (£37.0m at

year end exchange rate) and extended the

maturity to June 2023.

The weighted average maturity of the Group’s

committed facilities at 31 December 2021 was

3.0 years.

The Group has £nil (2020 – £0.4m) of

uncommitted borrowings which are repayable

on demand.

The Group has two existing covenants

(“Existing 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 1) must not exceed 3.0x and interest

cover, the ratio of EBITDA to interest must be

higher than 3.5x. The Group’s lenders, both

banks and USprivate placement investors,

have been supportive and we agreed covenant

relaxations (“New Covenants”) in relation to the

June 2020, December 2020, June 2021 and

December 2021 testing periods and agreed an

additional September 2021 testing period to

provide ﬁnancial ﬂexibility for the Group through

this unprecedented period.

For the testing period ended 31 December

2021, the New Covenants required the Group’s

net debt to EBITDA must not exceed 4.5x,

interest cover must be higher than 3.5x and

liquidity headroom must be higher than £40.0m.

At 31 December 2021, the Group’s net debt to

EBITDA was 1.9x and interest cover was 7.3x,

both comfortably within the Existing (and New)

Covenants limits. The Group’s liquidity

headroom at £208.0m was also comfortably

within covenant limits.

UK withdrawal from the European Union

The Group’s Brexit Committee undertook

detailed reviews and continues to assess

theimpact of the UK’s decision to leave the

European Union including from a regulatory,

supply chain, people and ﬁnancial perspective.

Appropriate steps were taken to prepare for the

transition, particularly to minimise any potential

operational disruption, with limited impact on

the Group’s performance in 2021. While we do

not anticipate a signiﬁcant direct impact from

Brexit on the Group’s activities, we remain

alertto any long-term impact of Brexit on

macroeconomic conditions. Our assessment

remains that any direct or indirect impact

from Brexit will be limited given the Group’s

globalpositioning.

Bindi Foyle

Group Finance Director

Net debt/EBITDA

1.9x

2.8x

Funding headroom (£m)

208

157

63SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

STRATEGIC REPORT

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 now underway.

In determining a severe but plausible downside

scenario, the base case projections are ﬂexed to

reﬂect the probability weighted and cumulative

estimated eects of the Group’s principal risks

and uncertainties, as disclosed on pages 50 to

55, including but not limited to the risks related

to the pandemic and the impact on end market

demand, as well as inﬂation and programme

andsupplier management.

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 2021, the Group held

committed borrowing facilities of £287.9m with

liquidity headroom of £208.0m. The weighted

average maturity of the Group’s committed

facilities at the end of December 2021 was

3.0years. Net debt (deﬁned in Note 32(c)

was £153.1m, including £73.2m 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.

The Group has two Existing 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 1) and interest cover,

the ratio of EBITDA to interest. TheGroup’s

lenders, both banks and US privateplacement

investors, have been supportive and agreed

New Covenants in relation to the December

2020, June 2021 andDecember 2021 testing

periods, and an additional September 2021

testing period toprovide ﬁnancial ﬂexibility for

the Group through this unprecedented period.

However, this ﬂexibility was not utilised as

the Group’s performance in 2020 and 2021

was within the Existing Covenants.

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 2024.

While the impact of the pandemic and industry

wide supply chain constraints are still with us,

we continue to manage these diligently.

Notwithstanding near-term uncertainties in the

global economy, Senior is well placed to beneﬁt

from the recovery underway in our end markets.

However, the Board has maintained a higher

level of caution than years prior to 2020, in

evaluating the severebut plausible downsides.

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 sucient clarity to consider

the business prospects and potential recovery

from the pandemic under a base case, while

also assessing continued impacts under a

severe butplausible downside scenario.

The base case projections of the viability

assessment are based on the Group’s Budget

for 2022 and the Group’s Strategy for 2023 and

2024. Global air trac recovery in 2021 showed

ongoing progress as the COVID-19 vaccine

rollout & booster gathered pace and travel

restrictions eased globally. IATA reported that

overall travel demand in 2021 strengthened and

its current view is that world passenger ﬂows

will return to 2019 levels by the end of 2023.

IATA expects domestic trac to reach 2019

levels by 2022 and international trac 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 ecient, aircraft

duringthe pandemic. Beyond this, the drivers

supporting air trac 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, the

Board’s conclusion

Modelling the base case and severe but

plausible downside scenarios and

mitigationsindicate that the Group is in

compliance with alldebt covenants at all

measurement dates outto 31 December 2024.

The scenarios alsohighlight sucient 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 sucient 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 2024.

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 64

wasapproved by the Board of Directors on 25

February 2022 and signed on its behalf by

David Squires

Group Chief Executive Ocer

VIABILITY STATEMENT

Following a robust assessment, the Directors have concluded that

the Group and Parent Company have sucient funds to operate for

the foreseeable future (evaluated to 31 December 2024), even in a

severe but plausible downside scenario.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202164

CONTENTS

Board of Directors 68

Executive Committee and HSE

Committee

Report of the Directors 73

Directors’ duties 75

Nominations Committee Report 76

Audit Committee Report 80

Remuneration 87

2021 Remuneration Report at a Glance 90

Remuneration Report: Policy 92

Remuneration Report: Annual Report

on Remuneration

Independent Auditor’s Report to the

Members of Senior plc

109

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 2021, other than

the executive Directors’ pension

contributions, which will be aligned

with the rates available to the majority

of the UK workforce by the end of 2022.

Further details of how the Company

applied the Principles of the Code can

be found on pages 75 to107.

Dear Shareholders,

In another year of external events that

challenged the Company the Governance

Framework proved to be invaluable and robust.

The approach by LSF XI Investments, LLC,

acompany advised by Lone Star Global

Acquisitions, Limited, came at a time when the

Group continued to face challenging trading

conditions as a result of the continued COVID-19

pandemic. As we emerged from the dicult

conditions of last year, I look forward to leading

the Board in the next phase of the Company’s

development and growth and I am 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 have brought strong,

broad, professional and complementary qualities

to the Board, which proved invaluable during

2021. Despite the challenges, the Board

maintained its focus and progress 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 has always been given

prominence across the Senior plc 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.

I have summarised below the Company’s

approach to key governance matters.

CHAIR’S GOVERNANCE LETTER

A Governance Framework that has been

tested, challenged and has stood ﬁrm

and robust over an extended period of

external events and circumstances.”

Ian King

Chair

Board governance

Leadership

The Board is led by me, as the non-executive

Chair, together with two executive Directors

andsix independent non-executive Directors,

following Barbara Jeremiah’s appointment on

1January 2022. 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 Ocer, 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 68 to 72. Myrole as

Chairman includes:

(a) setting the Board’s agenda, 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

Ocer in the development of strategy and,

more broadly, to oer guidance to the Group

Chief Executive Ocer;

by facilitating the eective 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 Ocer, eective

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.

65SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

because of the UK Government’s restrictions

due to the pandemic; however, we chose to

oer private shareholders live audio access

tothe proceedings of the AGM and the

opportunity to submit questions to the Directors

and listen to their responses. In April 2022,

regulations permitting, we will be oering a

hybrid format for the AGM; this will involve

shareholders being able to physically attend

the Meeting to be held in London or gain audio

access to listen to the proceedings and submit

questions to the Board by email. A presentation

on the Company’s annual performance to be

made to shareholders by the Group Chief

Executive Ocer will be made available to all

shareholders choosing to attend either in person

or virtually; a copy of this presentation will also

be uploaded to the Company’s website. We will

continue to monitor the AGM structure as and

when circumstances change.

At our AGMs, we value the engagement with

shareholders and the opportunity for the Group

Chief Executive Ocer to present on the

Group’s business.

Employees

Celia Baxter is the Director designated by the

Board to engage with the Group’s workforce

and listen to any employee concerns. During the

year, she participated in 15 face-to-face Focus

Group meetings at four of the UK operating

businessses 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 and make

suggestions for improvement in 2022.

Further details on Employee Engagement

can be found on page 41.

Engagement with stakeholders

Shareholders

Each year, the Group Chief Executive Ocer,

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. Notwithstanding the restrictions

imposed as a result of the Coronavirus

pandemic, regular communication continued.

As the Company’s non-executive Chair, I also

attended the full-year 2020 and 2021 interim

results announcements made to analysts in

March and August 2021. I also met with the

Company’s major shareholders on a regular

basis, with a cycle that is complementary

to the executive Directors. In addition,

I led the shareholder consultation with

respect to the Lone Star bid.

The frequency of meetings with major

shareholders increased in 2021, to address

thechallenges faced by the Company as a

resultof the possible takeover bid by Lone Star

and the continued pandemic; these exchanges

highlighted the value of establishing and

maintaining close relationships.

We also further consulted on the 2021

Directors’ Remuneration Policy. Celia Baxter,

the Senior Independent non-executive Director,

wasalso available to attend meetings with

major shareholders upon request, so providing

an alternative channel of communication

between the Company and its shareholders.

The Company typically makes constructive use

of the Annual General Meetings (“AGM”) to

communicate with its private shareholders. In

April 2021, this process had to again be limited,

Board and Committee membership and attendance

As the pace of decision-making increased in 2021 as a result of the pandemic, the Board increased its frequency of meetings. The membership and

attendance record of the full Board Meetings and its full Committee Meetings during 2021 are shown in the table below:

Main Board

Audit

Committee

Nominations

Committee

Remuneration

Committee

Chair Ian King Giles Kerr Ian King Celia Baxter

Total number of meetings

Ian King 20/20 – 6/6 7/7

Celia Baxter 20/20 5/5 6/6 7/7

Susan Brennan 19/20 4/5 6/6 6/7

Bindi Foyle 20/20 – – –

Giles Kerr 18/20 5/5 6/6 7/7

Rajiv Sharma 19/20 4/5 6/6 6/7

David Squires 20/20 – – –

Mary Waldner

(1)

3/3 – 1/1 2/2

(1) Mary Waldner was appointed to the Board on 1 December 2021.

Barbara Jeremiah was appointed to the Board on 1 January 2022 and so has not been included in the table above.

CHAIR’S GOVERNANCE LETTER CONTINUED

The non-executive Directors have an

important role in reviewing and challenging

executive management’s decisions and actions.

The events of 2021, including the continuing

COVID-19 pandemic and the possible

takeover bid by Lone Star, have highlighted the

importance of having an eectively functioning,

ﬂexible and dedicated Board, with the Directors

working together to ensure the Group was able

to contend with the dicult and complex issues

that arose.

The Directors are conﬁdent that an eective

Board is in place, with clear division of

responsibilities between the running of the

Board and the running of the Group’s

businesses. In 2021, adetailed Board evaluation

review was undertaken with the assistance of

EquityCulture Limited which conﬁrmed that the

Board was performing well. The review found

that the Board had operated eectively and

robustly throughout the particularly dicult year.

A summary of the 2021 report on theBoard

evaluation ﬁndings and a list of recommended

actions are provided on page 77.

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. As Chair, I encourage open and

honest discussions between the Directors, both

within and outside Board meetings, and ensure

no Director or group of Directors exerts pressure

or dominates the Board’s decision-making.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202166

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 continuity of supply and

customer satisfaction. In 2021, it continued

tobe important for the Group’s operating

businesses to maintain regular contact with

theircustomers, as the Group’s supply chain

faced the dicult conditions created by the

COVID-19 pandemic.

The Group has dedicated account managers

todeal directly with key customers on existing

and new customer agreements. Relationships

with potential and new customers are also

established 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 41.

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 2021, it was particularly

important for the Group to maintain regular

contact with its suppliers and work together

constructively to ensure the Group’s supply

chain was able to maintain continuity of supply

during the challenging business environment

created by the pandemic.

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 utilised,

supplies may involve long lead times, and so

communication and managing good relations

with suppliers is paramount to the Group’s

operating businesses. In 2021, 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 CDP, who gave us a Supplier

Engagement Leadership A rating.

Further details on Supplier Engagement

can be found on page 42.

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. Despite the pandemic, where

possible, community engagement programmes

were maintained. 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 2021. InDecember 2021,

we were delighted to have again achieved a

Leadership rating of A- from the globally

recognised Carbon Disclosure Project (“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 oer training

or apprenticeship programmes.

Further details on Community Engagement and the

environment can be found pages 14 and 42.

2021 has been an extremely challenging year

forthe Board, the Company, its employees and

shareholders. We have shown resilience, made

dicult decisions, been agile in our responses

and not compromised the Group’s standards

and values. The Board ﬁrmly believes it is strong

and well-positioned to take the Group into

the next phase of growth. Our Governance

Framework has been strongly tested, stood ﬁrm

and is eective for today and for the next phase

of growth. I convey the Board’s thanks for

your support.

Ian King

Chair

25 February 2022

The Board was ﬂexible in its approach, embraced Video

Conferencing technology and met 20 times over the year.

The commitment of all members has been exemplary.”

Ian King

Chair

67SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

Ian King

Company Chair and Chair of the Nominations

Committee

Responsibilities

Leadership of the Board, setting its agenda

andensuring its eectiveness.

Qualiﬁcations

Fellow of the Chartered Institute of

Management Accountants.

Appointment to the Board

Ian King joined the Board on 13 November 2017

as a non-executive Director and became

Chairman in April 2018.

Committee membership

Nominations (Chair) and Remuneration.

Skills and experience

For more than 40 years Ian has held many

senior management and directorship roles,

including ﬁnance, executive management,

customer support and strategic planning.

Career experience

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.

Current directorships/business interests

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 advisor to the

Board of Gleacher Shacklock LLP.

Independence

Ian met the UK Corporate Governance Code’s

independence criteria on his appointment

asChairman.

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

Responsibilities

To support the Chairman 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.

Qualiﬁcations

BSc – Botany/Plant Biology and PhD and a

Member of the Chartered Institute of Personnel

and Development.

Appointment to the Board

Celia Baxter joined the Board on 2 September

2013, became Chair of the Remuneration

Committee in December 2013 and the Senior

Independent non-executive Director in April 2019.

Committee membership

Remuneration (Chair), Audit and Nominations.

Skills and experience

Celia is an experienced non-executive Director,

Remuneration Committee and Pension Trustee

Company Chair.

Career experience

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.

Current directorships/business interests

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.

BOARD OF DIRECTORS

The Board is responsible for

Group decisions aecting

governance, strategy and the

approval of annual operating

budgets and Financial

Statements.

Tenure – Board

Diversity – Board

(1)

Over six years 4

Over three and

up to six years 3

Up to three years 2

Female 55%

Male 45%

(1) Following Barbara Jeremiah’s appointment

to the Board on 1 January 2022

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202168

Bindi Foyle

Group Finance Director

Responsibilities

To manage the Group’s ﬁnancial aairs and to

contribute to the management of the Group’s

business and to the implementation of the

strategy and policies approved by the Board.

Qualiﬁcations

BSc (Hons) in Economics & Accounting and

aChartered Accountant.

Appointment to the Board

Bindi Foyle joined the Board as an executive

Director on 3 May 2017 and became Group

Finance Director on 1 July 2017.

Committee membership

Bindi sits on the Group Executive Committee

and the Treasury Committee, which is not

formally appointed as a Committee of the Board.

Skills and experience

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.

Career experience

Prior to joining Senior, Bindi held senior ﬁnance

roles at Amersham plc and GE, having

previously worked with BDO Stoy Hayward.

Current directorships/business interests

Bindi is a non-executive director of Avon

Protection plc; in January 2021 she became

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 Ocer in the

management of the Executive team.

Giles Kerr

Independent Non-Executive Director and Chair

of the Audit Committee

Responsibilities

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 eective internal controls.

Qualiﬁcations

BA (Hons) in Economics and a Chartered

Accountant.

Appointment to the Board

Giles Kerr joined the Board on 2 September

2013 and became Chair of the Audit Committee

in April 2014.

Committee membership

Audit (Chair), Nominations and Remuneration.

Skills and experience

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 oce and he gained considerable

experience of establishing and growing

technology-based companies.

Career experience

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.

Current directorships/business interests

Giles was appointed a non-executive director

and Chairman 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 chairman 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.

It is intended Giles will step down from the

Board following a suitable transition period

with Mary Waldner and the rotation of the lead

audit partner.

Susan Brennan

Independent Non-Executive Director

Responsibilities

To challenge the executive Directors and

monitor the delivery of the strategy within the

risk and control framework set by the Board.

Qualiﬁcations

BSc in Microbiology and MBA.

Appointment to the Board

Susan Brennan joined the Board in January 2016.

Committee membership

Audit, Nominations and Remuneration.

Skills and experience

Susan brings more than 25 years of

manufacturing experience, including automotive

vehicle, powertrain and components assembly.

Susan has dedicated her career to improving

American manufacturing and assuring that the

United States maintains a vital manufacturing

footprint. In her time as a manufacturing

practitioner, she has always been a strong

proponent of sustainability, starting in her ﬁrst

role as the Environmental and Coating Manager

with Douglas and Lomason, leading the plant to

the State of Iowa’s ﬁrst ever Waste Minimization

award and, more recently, launching the

all-electric Nissan Leaf in Smyrna, USA.

Career experience

Susan served as VP of Manufacturing at Nissan

North America, Inc. and as Director of global

manufacturing at Ford, where she led a global

business oce for Ford’s assembly, powertrain

and stamping plants. Until 5 August 2021, Susan

was the Executive Vice-President and Chief

Operations Ocer of Bloom Energy Corporation.

Current directorships/business interests

In August 2021, Susan was appointed the

President and Chief Executive Ocer of Romeo

Power, Inc., an energy technology company

delivering large-scale electriﬁcation solutions

for complex commercial vehicle applications

based in Los Angeles, California.

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.

69SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

Rajiv Sharma

Independent Non-Executive Director

Responsibilities

To challenge the executive Directors and

monitor the delivery of the strategy within the

risk and control framework set by the Board.

Qualiﬁcations

BTech in Mechanical Engineering and MBA,

Marketing & Strategy.

Appointment to the Board

Rajiv Sharma was appointed to the Board on

1January 2019.

Committee membership

Audit, Nominations and Remuneration.

Skills and experience

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.

Career experience

During his career, Rajiv has held senior roles

invarious companies including Honeywell,

GEand Shell.

Current directorships/business interests

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 make

his contribution to delivering the Company’s

long-term success an important one.

David Squires

Group Chief Executive Ocer

Responsibilities

To manage the Group’s business and to

implement the strategy and policies approved

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.

Appointment to the Board

David Squires was appointed to the Board on

1May 2015 and became Group Chief Executive

Ocer on 1 June 2015.

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.

Skills and experience

A graduate in business management, member

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.

Career experience

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 Ocer

of Cobham plc.

Current directorships/business interests

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.

Mary Waldner

Independent Non-Executive Director

Responsibilities

To challenge the executive Directors and

monitor the delivery of the strategy within the

risk and control framework set by the Board.

Qualiﬁcations

MA (Hons) in Physics and a Fellow of the

Chartered Institute of Management Accountants.

Appointment to the Board

Mary Waldner joined the Board on 1 December

2021. It is intended Mary will became Chair

of the Audit Committee upon Giles Kerr’s

retirement from the Board, following a suitable

transition period.

Committee membership

Audit, Nominations and Remuneration.

Skills and experience

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.

Career experience

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.

Current directorships/business interests

Mary is Chief Financial Ocer of Lloyd’s

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.

BOARD OF DIRECTORS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202170

Barbara Jeremiah

Independent Non-Executive Director

Responsibilities

To challenge the executive Directors and

monitor the delivery of the strategy within the

risk and control framework set by the Board.

Qualiﬁcations

BA in Political Science and a qualiﬁed lawyer.

Appointment to the Board

Barbara Jeremiah was appointed to the Board

on 1 January 2022. It is intended Barbara will

become the Chair of the Remuneration

Committee upon Celia Baxter’s retirement from

the Board, following a suitable transition period.

Committee membership

Audit, Nominations and Remuneration.

Skills and experience

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.

Career experience

Barbara was most recently a non-executive

Director and Remuneration Committee Chair of

Aggreko plc from March 2017 to August 2021.

Current directorships/business interests

Chair Designate and Senior Independent

Director of The Weir Group PLC; Barbara was

appointed Senior Independent Director on

1January 2020. She was previously a non-

executive Director of The Weir Group PLC

from 1 August 2017 until 31 December 2019.

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.

Andrew Bodenham

Group Company Secretary

Andrew Bodenham acts as Secretary

to the Senior plc Board and its Committees.

See biography on page 72.

71SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

EXECUTIVE COMMITTEE

The Executive Committee

oversees the running of all

Senior Group Operations.

1. David Squires

See biography on page 70.

2. Martin Barnes

Martin became the Director of Business

Development & Strategy in October 2021,

whenhe succeeded David Beavan; Martin 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.

3. Andrew Bodenham

Andrew was appointed Group Company

Secretary in 2002. He acts as Secretary to

theSenior plc Board and its Committees; he

also sits on the Group’s Treasury Committee.

Prior to joining Senior, Andrew had gained

experience working for businesses in

technology/software, manufacturing,

insuranceand aviation services sectors.

4. 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.

5. Bindi Foyle

See biography on page 69.

6. Jane Johnston

Jane joined the Group 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 dierent sectors, including

technology, drug development, construction,

and professional services and, prior to joining

Senior, was Group HR Director at Pace plc.

7. 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.

David Beavan

David was the Director of Business

Development & Strategy from April 2014 to

October 2021, he was succeeded by Martin

Barnes. David retired from the Group on

31 December 2021.

Michelle Yorke

Michelle was the Director of Risk and

Compliance from September 2018, retiring from

the Group on 31 December 2021. Michelle had

a broad portfolio and, upon her retirement from

the Executive Committee and the Group, a

decision was taken to restructure this role and

split the portfolio. The risk and compliance

duties have transferred to a newly created Head

of Risk and Compliance position and Michelle’s

other duties and responsibilities transferred to

the Director of Business Development &

Strategy. Michelle stepped down from the

Executive Committee on 31 December 2021.

Executive Committee

The purpose of the Executive Committee is

toassist the Group Chief Executive Ocer

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 Ocer 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 not formally appointed

as a Committee of the Board, but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 Ocer provides an HSE update at

every Board meeting and the Group Director

of HSE & Sustainability attends and presents

to the Board twice a year.

The members of this committee are David

Squires (Chairman of the Committee), Mike

Sheppard (Chief Executive of the Flexonics

Division) and Launie Fleming (Chief Executive

ofthe Aerospace Division). Mark Roden, the

Group Director of HSE & Sustainability, attended

all meetings held during the year. David Beavan

and Michelle Yorke were also members of the

Executive Committee until 31 October 2021

and 31 December 2021 respectively. The

Committee met three times during the year.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202172

REPORT OF THE DIRECTORS

The Directors present their Report and supplementary reports, together with the audited Financial

Statements for the year ended 31 December 2021.

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 1 to

64. Its Group undertakings are shown on pages

164 and 165. Six of the Company’s operating

businesses are located in the UK and 20 in the

Rest of the World.

The Strategic Report includes details of Senior’s

business model, strategic priorities, key

performance indicators, risks and uncertainties,

market overview, key growth drivers and a

summary of the Group’s 2021 performance.

Acquisitions and disposals

On 22 April 2021, divested Senior Aerospace

Connecticut; further details of this transaction

can be found on Note 31. As previously

announced, in 2021 we closed both our small

oil& gas business in Malaysia, Senior Flexonics

Upeca, and our Senior Aerospace Bosman

operating business in the Netherlands,

following the transfer of production to our

French Aerospace sites.

Results and dividends

The results for the year are shown in the

Consolidated Income Statement on page 116.

During 2021, no 2020 ﬁnal dividend was

proposed or paid to shareholders, as part

of theBoard’s cash preservation measures

taken in response to the COVID-19 pandemic.

Similarly, no 2021 interim dividend has been

paid to shareholders during the year (2020 – nil

pence) and the Directors do not propose payment

of a 2021 ﬁnal dividend (2020 – nil pence).

Share capital

The Company has one class of ordinary shares,

which carries no right to a ﬁxed income.

Each share carries the right to vote at general

meetings of the Company. The Company issued

no new shares in 2021; the total number of

shares in issue at 31 December 2021 was

419,418,082. Further details on the Company’s

share capital can be found in Note 25.

Diversity policy

Senior has an Equality, Diversity and Inclusion

policy which is contained within its Code of

Conduct. The policy states that we treat

everyone fairly, equally and value diversity.

Wewill not make employment decisions on the

basis of anything that does not have a direct

bearing on the ability of any individual to perform

a job. We value diversity and promote equal

opportunities for all employees in a workplace

free of discrimination. We are open, honest and

courteous in our working relationships and we

value individual dierences and believe that

creating an environment where everyone feels

included and diversity of thought are valued

strengths of Senior. Further details can be

found on page 24.

Engagement with employees

At Senior, everyone’s opinion matters and this is

reﬂected in how we engage with our employees.

The Group promotes the dissemination of

relevant information through workshops,

newsletters and a number of other methods,

sothat employees are kept regularly advised on

the Group’s and local operational developments.

Where appropriate, local brieﬁng sessions are

held concerning such matters as business

performance, corporate ethics, health and

safety. In 2021, the Group’s employees were

invited to complete a voluntary Employee

Engagement Survey. The survey had an 81%

completion rate and asked for employees’

viewsand recommendations for areas of

improvement. The feedback from employees

on our response was positive. For further

information, please see Employee Engagement

on pages 24 to 25.

At an Operating Business level, we continue

togather feedback through locally-managed

Engagement Surveys. While maintaining social

distancing and safety protocols where possible

other activities continued, for example, skip level

meetings, Value workshops, CEO Breakfasts

and All-hands meetings, sharing business

information and encouraging two-way

communication through questions and discussion.

We have also employed new ways of

encouraging two-way communication with

employees. As a result of our engagement with

employees in 2021, we were able to assess the

culture across much of the organisation, providing

feedback to the Board; since the sessions,

the operating businesses have been focusing

onareas for improvement. The Board’s usual

programme of visiting operating businesses

and taking the opportunity to meet with teams

at all levels had again to be undertaken virtually

in 2021. Celia Baxter was able to carry out a

number of UK site visits as part of her employee

engagement role in 2021.

Senior continues to invest in its workforce

through training and development opportunities,

including “Learn”, our global learning

management programme. In addition, the

ongoing roll-out of “Perform”, our performance

management system, ensures there is an

adequate focus on developing skills, abilities and

knowledge of our employees. Across the Group,

we have a range of rewards and recognition

initiatives to encourage employees’ involvement

in business performance. Whilst 2021 continued

to be a challenging year as a result of the

pandemic, engagement with employees was

considered by management to be invaluable and

allowed the Group’s businesses to continue to

operate and support their customers throughout

a number of locally imposed lockdown periods,

where this was permitted by governments.

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 eort to ensure they are

able to continue working for Senior in their

original or an alternative role.

Engagement with other stakeholders

Senior works hard to create value for all its

stakeholders. By engaging and collaborating

with the key groups of stakeholders, Senior

can ensure its business grows and delivers

long-term sustainable value. During 2021,

members of the Board and senior management

engaged with the Group’s customers, key

suppliers, local communities and shareholders

to seek their views on a number of matters

that may aect them or could be of potential

concern. Further details on this engagement

process can be found on page 40.

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 eect, 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 oce or employment that occurs

because of a takeover bid.

73SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REPORT OF THE DIRECTORS CONTINUED

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 2021, whilst cash preservation measures

were key to ensuring the Group’s stability during

the pandemic, investment for future business

activities was also viewed to be important by

the Board. In 2021, the Group incurred £19.2m

(2020 – £18.7m) 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.

Greenhouse gas emissions

Our report under the Streamlined Energy and

Carbon Reporting requirements can be found

onpage 17.

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

9 February

2022

Alantra Asset Management 18.48

Aberforth Partners 8.46

Heronbridge Investment Management 7.15

Columbia Threadneedle Investments 4.73

BlackRock 4.11

Legal & General Investment

Management 4.04

Vanguard Group 3.62

Janus Henderson Investors 3.38

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.

Compliance with the UK Corporate

Governance Code

The Company’s statement of compliance with

the provisions of the UK Corporate Governance

Code 2018 issued by the Financial Reporting

Council is set out on page 65. This Code is

publicly available on the Financial Reporting

Council’s website: www.frc.org.uk. The Chair’s

Governance Letter on pages 65 and 67 forms

part of this Report of the Directors.

Remuneration Report and Policy

The 2021 Annual Report on Remuneration is

tobe put to shareholder vote at the 2022 AGM.

Following a triennial review, the Directors’

Remuneration Policy was approved by

Risk management

The Board has ultimate accountability for the

Group’s risk management process, which is

described in detail on pages 48 to 49.

Financial instruments

Note 20 contains disclosures on the Company’s

ﬁnancial instruments.

Directors

Details of the Directors who served throughout

the year can be found on pages 68 to 71. The

Directors’ interests in the shares of the Company

are included in the Directors’ Remuneration

Report on page 104. NoDirector has any

interest in contracts with the Company or its

subsidiary undertakings. Asshown on page 69,

Susan Brennan was the former Executive Vice

President and the Chief Operations Ocer of

Bloom Energy Corporation, having stepped

down from this role on 5 August 2021. Note 51

provides details of the contract Bloom Energy

has with a Group subsidiary. Procedures were

adopted by Bloom Energy which meant Susan

Brennan had no involvement in this contract

during her period ofemployment with them.

The provisions of the Corporate Governance

Code require that all Directors of FTSE 350

companies should be subject to annual election

by shareholders. Mary Waldner and Barbara

Jeremiah were appointed to the Board in

December 2021 and January 2022, respectively;

they will stand for election at the AGM to be

held in April 2022. Celia Baxter, Susan Brennan,

Bindi Foyle, Giles Kerr, Ian King, Rajiv Sharma

and David Squires will all stand for re-election

at the 2022 AGM.

Board diversity

Senior remains committed to all aspects of

Board diversity, including gender, nationality,

experience, background and personal attributes,

and keeps under review its balance and

composition. The earlier appointments of

CeliaBaxter, Susan Brennan and Bindi Foyle

tothe Board, and more recently those of

MaryWaldner in December 2021 and Barbara

Jeremiah in January 2022, mean that Senior has

strong female representation on its Board. The

Board strongly believes that its composition is

well-balanced in terms of diversity, including

gender and ethnicity, and that this balance drives

the Group’s business performance and creation

of longer-term sustainable growth.

The Board’s Diversity and Inclusion Policy was

approved in February 2021. The Policy includes

the Board’s commitment to maintaining at least

one-third female representation and at least one

Director from a Black Asian and Minority Ethnic

background on the Board. Currently, 55% of

the Board Directors are female and two of the

Directors are from minority ethnic backgrounds.

The Nominations Committee annually reviews

and approves management development and

succession plans and makes recommendations

to the Board on its structure, size and

composition to ensure that it is appropriate

forthe Senior Group.

shareholders at the 2021 AGM and took eect

from 1January 2021. Details of the Directors’

Remuneration Policy can be found on pages

92to 97.

Annual General Meeting

The Notice of Annual General Meeting

describes the business to be considered

at the hybrid AGM to be held at 11.30 am on

Thursday 21April 2022 at Ironmongers’ Hall,

O Shaftesbury Pl, Aldersgate St, Barbican,

LondonEC2Y 8AA. The AGM can also be

attended virtually. Please see the Notice of

Annual General Meeting 2022 for the details

of the AGM; a copy may be found on the

Company’s website.

Acquisition of the Company’s own shares

The Company purchased no ordinary shares of

10 pence each in the capital of the Company;

noshares (2020 – 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 23 April 2021, to make market purchases

of the Company’s shares up to an aggregate

nominal amount of £42m (2020 – £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 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 2021 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

25 February 2022

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202174

Leadership and purpose

Company purpose, values and strategy

The Board is responsible for Group decisions

aecting 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 2021 and more fully describe the

responsibilities of the Board; the Matters

Reserved for the Board may be found on the

Company’s website.

The Company’s purpose is stated on page 1.

Senior aims to create long-term sustainable

value for all its stakeholders through its business

model. Six strategic priorities have been

identiﬁed as key elements of the Company’s

business model, in order to drive the creation

ofshareholder value. Details of the Group’s

Business Model and Strategic Priorities can be

found in the Strategic Report on pages 30 to 31,

34 to 35.

The Board recognises its role in assessing and

monitoring the Group’s culture. To that eect,

“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). During 2021,

where we were not able to rely solely on

face-to-face Board meetings, virtual meeting

methods wereused as an alternative and

proved to be veryeective.

The Board demonstrated its strength and

adaptability when guiding the Group during the

potential oer for the Company by Lone Star, as

well as its response to the continued pandemic.

At the Board’s Annual Strategic Review meeting

held in October 2021, the Group’s Strategy was

tested, taking into account recent events and

the impact of the pandemic on the Group’s end

markets, and was found to be still relevant by

the Board.

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 Ocer,

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.

In July 2018, The Financial Reporting

Council published a revised Corporate

Governance Code, which was designed

to set higher standards of corporate

governance to promote transparency

and integrity in business.

The 2018 Corporate Governance Code

established ﬁve new principles:

Leadership and purpose

Division of responsibilities

Composition, succession

and evaluation

Audit, risk and internal control

Remuneration

The Board meets formally on a regular basis,

20times in 2021; in addition, there were ﬁve

meetings of the Audit Committee in 2021,

together with seven meetings of the

Remuneration Committee and six meetings

ofthe Nominations Committee. A table showing

Board and Committee meeting membership

and attendance is shown on page 66. Other

Committees are appointed by the Board to

dealwith treasury matters, disclosure matters

and speciﬁc matters such as acquisitions

anddisposals.

During 2021, 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 2021, 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; this process continued to be held

by virtual meetings during 2021, in accordance

with COVID-19 travel restrictions imposed by

governments. Our Senior Independent Director,

Celia Baxter , who is the nominated Director

responsible for employee enaggement, was

able to visit a number of UK sites towards

the end of the year. In 2021, at every Board

meeting, there were reviews of health,

safety and environmental performance, and

operational, ﬁnancial and administrative matters.

Social andethical issues, reported whistle-

blowing incidents, and the agreement of

budgets and levels of insurance cover were

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 eectively,

the Chairman 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 eciently and eectively.

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.

75SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

DIRECTORS’ DUTIES CONTINUED

Mary Waldner was appointed to the Board on

1December 2021 and Barbara Jeremiah was

appointed to the Board on 1 January 2022.

Following the appointments of Mary and

Barbara, a full and comprehensive induction

programme is taking place. The induction

process includes areas such as ﬁnancial

forecasts, Group strategy and values; ethics

and training on the Code of Conduct, together

with other relevant topics. Visits to the Group’s

operations by the newlyappointed Directors

will also be undertaken.

The Nominations Committee and the Board

have been taking due regard of Lord Davies’

review into Women on Boards (February 2011),

the Hampton-Alexander Review: FTSE Women

Leaders (November 2016) and the Hampton-

Alexander Review: Improving Gender Balance

inFTSE Leadership (November 2017). I am

pleased to report that the Board is supportive

ofthe aim to increase diversity and the level

offemale representation in Board and senior

leadership positions. Following Barbara

Jeremiah’s appointment, ﬁve of the nine

Directors are currently 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 74.

Two of the seven members of the Executive

Committee are currently female (28%).

A third female member, MichelleYorke, retired

from the Executive Committee at the end of

December 2021, following ﬁve and a half years’

service with the Company, most recently as its

Director of Risk & Compliance.

The Board has been proactive in further

promoting diversity and equality of all kinds

throughout the Group, regardless of geography

or position. The Committee regularly discusses

the beneﬁts of diversity with regard to the Board

and its Committees.

Extension of appointments to the Board

In 2021, no Board Directors’ appointments were

extended.

Succession planning

The Committee regularly considers the

matter of succession planning for Board-level

and the Group’s senior management roles.

Cognisant of terms of Celia Baxter and

COMPOSITION, SUCCESSION

AND EVALUATION

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

when deemed appropriate. There were six

scheduled meetings of the Committee in 2021.

Two members constitute a quorum for the

Nominations Committee. The Committee’s

attendance records are shown on page 66.

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

Termsof Reference can be found on the

Company’s website.

Appointments to the Board

The Nominations Committee typically enlists

an external consultancy ﬁrm to assist with the

appointment of Directors to the Board. In 2021,

two consultancy ﬁrms, Korn Ferry and Sam Allen

Associates Limited, were engaged separately

to assist with the recruitment of the Board

members recently appointed. The Company

provided the relevant appointed ﬁrm with a role

description, together with the required skills and

personal attributes to be considered for the role.

The appointed ﬁrm ﬁltered a list of candidates

down to a number of those that they felt met the

skills and attributes required, then conducted

preliminary interviews with the selected

candidates. The candidates were then referred

toSenior for interview, together with a written

analysis on each candidate, with each candidate

being interviewed by a number of members of

the Board. The Nominations Committee also

took up references on the preferred candidates.

The ﬁnal recruitment decisions were taken

by the Board as a whole.

In addition, the Nominations Committee

soughtconﬁrmation that candidates under

consideration would have sucient time to

carry out 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.

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 70 to 71.

The Group continues to focus on maximising

thepotential of its employees and improving

succession planning. The 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 2021, the Nominations Committee reviewed

the Group and divisional 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 diculties whilst

carrying out 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 interests 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

25 February 2022

I am conﬁdent that Senior has the

requisite diversity of skills, people, and

experience that will guide the Company

indelivering value for all our stakeholders.”

Ian King

Chair

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202176

Board diversity and inclusion

The Group seeks to ensure diversity in the

composition of its Board, including, amongst

other qualities, diversity of gender, social and

ethnic backgrounds, cognitive and personal

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.

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 has arranged for Mary

Waldner and Barbara Jeremiah, our recently

appointed non-executive Directors, to receive

early and appropriate induction and all Directors

already in oce continued to receive regular

updates on statutory matters. 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 carry out their

duties eectively. 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 sucient time to Company matters.

Evaluation of the Board and the Directors

The Board felt that it was appropriate to

complete an external evaluation for the

second year running, given the extreme

challenges of operating in a COVID-19

environment. We again used EquityCulture

Limited (formerly Equity Communications

Limited) to maintain continuity. The evaluation

was carried out through individual conﬁdential

interviews with each Director.

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,

further details of which can be found on page

76. The Committee, which consists entirely of

non-executive Directors, is chaired by Ian King;

its composition is shown on page 66.

Details of the Directors’ external statutory

appointments can be found in their biographies

on pages 68 to 71. 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 continuing Directors oered

themselves for re-election at the Company’s

AGM 2021. All Directors will again oer

themselves for election or re-election at the

2022 AGM. The resolutions to be put to

shareholders at the 2022 AGM can be found

in the Notice of Annual General Meeting,

which is available on the Company’s website.

The Board conﬁrms that in 2021 all Directors

inoce at the time worked assiduously and

diligently, particularly in addressing the situation

arising from the potential Lone Star bid, as well

as the impact of the continued pandemic. Each

Board member made a positive contribution

to the running of the Company and the Board

conﬁrms that they will continue to work to

ensure its long-term success.

Remuneration

The Remuneration Report on pages 87 to 107

fully describes the Board’s approach to

remuneration matters.

Board eectiveness

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 eectively. The Nominations

Committee regularly reviews the composition

of the Board.

EquityCulture Limited was very positive

about the manner in which the Board had

operated and made only a limited number of

recommendations for the Board to consider.

TheBoard was found to have functioned well

during 2021, having met a total of 20 times.

It had made eective use of video conferencing

for the Board and its Committee meetings and

had been ﬂexible and adaptive to the dynamics

the Company was facing.

The 2021 evaluation ﬁndings showed that the

Board had operated eectively and robustly

throughout the particularly dicult year and

made some suggestions for additional focus.

The main recommendation centred around

Board succession, ensuring Mary Waldner and

Barbara Jeremiah were not rushed and given

appropriate time to complete their induction in

this challenging environment. We invested early

in succession planning for Celia Baxter and Giles

Kerr and have time to optimise the process.

The other points raised were ensuring strategy

forms part of every Board meeting agenda and

ensuring the Directors have good access to the

Executive teams, as we review performance

and strategy. The meeting structures of virtual,

hybrid and physical are also under review.

We have adapted to change well through 2020

and 2021, and as a Board and we must not lose

the momentum. The ﬁndings will add to the

Board’s development as we enter the recovery

phase of our end markets and strategic growth

of the Company.

EquityCulture 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.

Succession planning

The Nominations Committee met six 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 Ocer and Group HR Director

77SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

DIRECTORS’ DUTIES CONTINUED

advises the Board of Directors. The Audit

Committee Report on pages 80 to 86 describes

the role and activities of the Audit Committee,

together with the signiﬁcant risks and

judgments that it considered in relation to the

2021 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 48 to 49.

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 30.

The booklet includes a message from the Group

Chief Executive Ocer, 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 2021 Global Code of Conduct

online training course was rolled out across the

Group to all employees during the year. The

2021 course contained training modules on:

Global Anti-bribery, Preventing Harassment &

Promoting Respect and Protecting Human

Rights; 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 Ocer, theGroup

Finance Director or other members of the

Executive Commiittee 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.

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 2021 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. By utilised skills and talent

mapping this 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 dierent backgrounds and

experience across the organisation, including

Board members and senior managers.

In 2021, the Executive Directors undertook a

separate succession-planning exercise to ﬁnd

suitable successors for David Beavan, our Group

Director of Business Development & Strategy,

and Michelle Yorke, our Group Director of Risk &

Compliance, in preparation for their retirements

in late 2021. The current composition of the

Executive Committee can be found on page 72.

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,

Because of the travel restrictions imposed as

aresult of COVID-19, physical presentations

were not possible in 2021; however, the Code

was reinforced by the executive Directors and

Executive Committee by regular meetings and

the ongoing training of employees. 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 tracking 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 Ocer and was

published in March 2021, it is available

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 PLC ANNUAL REPORT AND ACCOUNTS 202178

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 plc 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.

Senior plc 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 oence.

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 ocer 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

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

Ocer or Group Finance Director have failed

to resolve the issues, or where such contact

with them is not appropriate.

Group information and operations business

security policy and data protection

The Group’s conﬁdential information is valued

highly by the Board, and in 2019 a Group Head

of Information Security was appointed. In 2019,

an Acceptable Use Policy was issued to provide

guidelines for the acceptable and appropriate

use of Information and Operational Technologies

by all Group employees. The policy sets out

thecontrols that are in place to help reduce

riskassociated with the inappropriate use of

Information and Operational Technologies,

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 Oce.

In 2021, all Group employees continued to

receive regular updates on information security,

supported by internal newsletters and posters,

alerting them to key current issues, such as

cyber security.

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 oences data on a

large scale, it is not required to appoint a data

protection ocer. 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.

79SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

DIRECTORS’ DUTIES CONTINUED

• 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 Head of Risk

&Compliance;

• reviewing the eectiveness of the internal

audit function (currently headed by the

Group’s 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 dierent functions

and that the internal audit function evaluates

the eectiveness 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;

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 eectiveness 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;

• 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

eectiveness of the internal audit function;

• reviewing the eectiveness 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 eective

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 eectively

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;

• 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;

In 2021, the Group further strengthened

its risk management procedures and

these have been reviewed by the

AuditCommittee.”

Giles Kerr

Chair of the Audit Committee

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202180

The Audit Committee is composed entirely of independent non-executive Directors,

asshownbelow:

Member Appointment date Retirement date

Giles Kerr (Committee Chair) 2 September 2013 –

Celia Baxter 2 September 2013 –

Susan Brennan 1 January 2016 –

Rajiv Sharma 1 January 2019 –

Mary Waldner 1 December 2021 –

Barbara Jeremiah was appointed to the Audit Committee on 1 January 2022.

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 2021.

Collectively, the members of the Audit

Committee have signiﬁcant commercial and

ﬁnancial experience at a senior management

level. Giles Kerr has the recent and relevant

ﬁnancial experience required by the UK

Corporate Governance Code to chair the Audit

Committee. For details of the qualiﬁcations of

members of the Audit Committee, please refer

to the Board of Directors’ biographies shown

on pages 68 to 71.

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 2021.

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.

• 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.

OneAudit Committee member, Susan Brennan,

was theExecutive Vice President and the Chief

Operations Ocer of Bloom Energy Corporation

until 5 August 2021, when she left to become

the President of Romeo Power. Note 51

provides details of the contract Bloom Energy

has with a Group subsidiary. Procedures were

adopted byBloom Energy which meant Susan

Brennan had no involvement in this contract.

81SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

Activities of the Audit Committee

The Audit Committee met on 23 February and 4 March 2021 to consider the 2020 year-end report and during the subsequent 12 months conducted

the following business on the three standard scheduled meeting dates, as indicated below:

28 July 2021 30 September 2021 22 February 2022

• Received and considered an Internal Audit

Report including Risk & Assurance and

Mapping reports presented by the Group’s

Director of Risk & Compliance.

• Noted the UK Government’s proposals

for strengthening the UK’s internal

controls framework.

• Noted the recommendations of UK

Government agencies, which related to the

Company’s Annual Report & Accounts 2020.

• Reviewed the accounting presentation and

judgemental issues, and the funding and

liquidity reports for the half-year ended

30June 2021, which included consideration

of compliance with all debt covenants

at all measurement dates out to

31 December 2022.

• Reviewed, challenged and agreed the basis

for going concern to be adopted for the 2021

Interim Results.

• Reviewed the assessment of goodwill at

30June 2021 agreeing it was no longer

considered to be a signiﬁcant risk, in line

with KPMG’s assessment.

• Reviewed the Tax Memorandum for the

half-year ended 30 June 2021.

• Reviewed and accepted KPMG LLP’s

Report to the Audit Committee on the

half-year review for the six months ended

30 June 2021.

• Noted the OECD’s Inclusive Framework

Agreement (“BEPS”) relating to a

reformation of international tax rules,

which may become eective in 2023.

• Reviewed and approved the terms of

the management representation letter

addressed to the External Auditor.

• Discussed the Group’s draft Announcement

of the 2021 Interim Results together with the

draft slides for the analysts’ presentation.

• Discussed and approved the external audit

plan and strategy proposed by KPMG LLP

for the 2021 audit, including scope,

signiﬁcant risks and other areas of audit

focus, the audit cycle and auditor reporting.

• Reviewed and approved the terms of the

letter of engagement addressed to the

External Auditor.

• Received and reviewed KPMG LLP’s

assessment on its objectivity and

independence.

• Discussed KPMG’s Lead Partner rotation

and conﬁrmed agreement with the proposed

successor to the current Lead Partner on the

Senior account.

• Held a private meeting with the External

Auditor, without executive management

being present.

• Held a private meeting with the Director

ofRisk & Compliance, without executive

management being present.

• Discussed and approved the External

Auditor’s conﬁrmation of the 2021 audit

scope, strategy, materiality and fee.

• Noted KPMG LLP’s Lead Partner succession

plan and U.S. Audit overview.

• Discussed the FRC’s report on ﬁndings on

key matters relevant to the audit quality at

KPMG LLP in relation to its audits of banks

and similar entities.

• Reviewed the eectiveness of the

external audit.

• Assessed the signiﬁcant risks that are

considered by the Audit Committee,

agreeing they would remain unchanged

from2020, with the exception of goodwill

which was no longer considered to be a

signiﬁcant risk.

• Addressed Government agency

recommendations on the Company’s Annual

Report & Accounts 2020, agreeing areas that

could be better signposted in the Annual

Report & Accounts 2021.

• Received and considered an Internal Audit

Report presented by the Group’s Director

of Risk & Compliance. The Audit Committee

was also updated on Deloitte’s Cyber Threat

Intelligence System which strengthened

the Group’s Cyber/Information

Securitymeasures.

• Received an update on the Group’s cyber

risk communications programme and on

2021 Code of Conduct training.

• Reviewed the eectiveness and quality

ofthe 2020 external audit.

• Noted the 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, which had been agreed

earlier in 2021 and no changes were

required to bemade.

• Reviewed the draft updated Terms of

Reference of the Audit Committee which

contained one minor amendment.

• Reviewed the output of the AQR review.

• Reviewed the accounting presentation

and judgmental issues, and the viability

assessment report for the year ended

31December 2021, which included

consideration of compliance with all debt

covenants at all measurement dates out

to31December 2024.

• Reviewed and approved the statements

included in the Annual Report & Accounts

2021 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

2021 Accounts.

• Reviewed the Tax Memorandum for the

yearended 31 December 2021.

• Reviewed and accepted KPMG LLP’s Report

to the Audit Committee on the audit of the

Financial Statements for the year ended

31December 2021.

• Reviewed KPMG LLP’s conﬁrmation of its

objectivity and independence.

• Reviewed and approved the terms of the

management representation letter addressed

to the External Auditor.

• Reviewed BDO LLP’s Independent Limited

Assurance Report on the Scope 1 and 2

(location based) GHG emissions data included

in the Annual Report & Accounts 2021.

• Approved the Audit Committee Report

for2021.

• Reviewed the eectiveness of the Group’s risk

management and internal control systems and

disclosures made in the Annual Report &

Accounts 2021.

• Reviewed the draft Annual Report & Accounts

2021 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 2021 Final Results together with the

draft slides for the analysts’ presentation.

• Reviewed the Notice of Meeting for the 2022

AGM and the Proxy Form for the 2022 AGM.

• Received and considered a report presented by

the Group’s Head of Risk & Compliance, which

included the proposed 2022 internal audit plan.

• Reviewed and approved the Internal

AuditCharter.

• Assessed the eectiveness of the internal

audit function.

• Held a private meeting with the External

Auditor, and a separate private meeting with

the Group’s Head of Risk & Compliance

without executive management being present.

DIRECTORS’ DUTIES CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202182

In addition to the three standard scheduled meetings summarised above, additional meetings were held in March 2021, to review documents in

relation to the disposal of Senior Aerospace Connecticut, and in April 2021, to review the draft Q1 2021 Trading Update. The Audit Committee also

discussed and approved the appointment of the Head of Risk & Compliance and reviewed her remuneration.

Audit Committee Attendance and Separate Discussions

The Audit Committee typically invites the non-executive Chair, Group Chief Executive Ocer, Group Finance Director, Group Financial Controller, the

Group’s Director of Tax & Strategic Finance, the Group’s Director of Risk & Compliance and, more recently, the Group’s Head of Risk & Compliance

(who, following the retirement of the Director of Risk & Compliance, heads upthe internal audit function) 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 2021, the Audit Committee also held separate discussions with the External Auditor, the Director of Riskand Compliance and, more recently,

with the Group’s Head of Risk & Compliance, 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 How the risk was addressed by the Audit Committee

Inventory net realisable value

Inventory held covers a wide range of products in both the Aerospace

and Flexonics Divisions. The ability of the Group to sell this inventory at

a value above its carrying value in the future can be adversely aected

by many factors. Accordingly, there is a risk that inventory is carried at

amounts that exceed net realisable value.

The global pandemic has continued to have an adverse impact on

demand levels in the short term from the OEMs that the Group serves.

In response, certain programmes on which the Group has content have

been cancelled or signiﬁcantly reduced. This continues to heighten the

exposure to any speciﬁc inventory or assets held where there is no

alternate use.

The Audit Committee recognises the risk that the Group may not recover

the full cost of inventory via future sales and may not hold appropriate

provisions against obsolete and slow-moving inventory.

Management included within the continued restructuring focus an

assessment of any actions required to address the exposures on

programmes where the end customer signiﬁcantly reduced or cancelled

demand. Management presented an analysis of proposed inventory and

asset impairments as well as reversals of previously impaired inventory

and assets. The Audit Committee challenged impairments to ensure

there was no alternative use, or that there was sucient committed

demand where impairments were reversed and agreed with the

proposals and accompanying disclosures.

The considerations above were presented to the Audit Committee within

the accounting presentation and judgmental issue paper for the related

reporting period from the Group Financial Controller.

These were further discussed with the External Auditor.

The Audit Committee believes there are no reportable issues arising from

this signiﬁcant risk.

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, restructuring,

product warranties; and

• tax provisions for uncertain risk exposures.

There is a risk that other provisions overstate or understate the

associated liability.

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.

Goodwill, which was a signiﬁcant risk in the Annual Report & Accounts 2020, is no longer considered a signiﬁcant risk by the Audit Committee

given suciency of headroom in the goodwill impairment assessment and no further identiﬁed impairment assessment triggering events in 2021

(See Note13).

83SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

Other judgments and estimates

The Audit Committee considered other areas of focus where judgments and estimates have a signiﬁcant eect on the amounts recognised in the

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 going concern and viability

(1)

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.

(1) In 2020, given the impact of the pandemic on macro-economic conditions, going concern and viability was considered a key focus area regarding the challenge of

management’s judgments by the Audit Committee. In 2021, although the review of going and viability will still be included within “other key judgments and estimates”

forconsideration by the Audit Committee, it is no longer considered a key focus area given the level of headroom on committed facilities and covenant compliance at

31December 2021 and positive market signals for future growth.

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.

Resilience through the pandemic

The ﬁnance community across Senior have

continued to demonstrate resilience throughout

the pandemic, and the Audit Committee has

valued the continued focus on maintaining an

eective control environment, addressing

the challenges presented by the globalised

lockdowns and new ways of remote working.

This supported the further strengthening of the

risk management framework, and delivery of the

key elements of the internal audit programme in

2021. Similarly, the external audit progressed as

planned and to the set timescales, with no

changes required to the strategy or scope

approved by the Audit Committee.

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;

• In December 2020, the Company adopted

anew 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

DIRECTORS’ DUTIES CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202184

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 2021, 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 2021 2020

Interim review £0.05m £0.09m

Auditor assessment of tax

incentives in Malaysia

andcertiﬁcation of

expenses in France £0.01m £nil

Total audit-related services: £0.06m £0.09m

Non-audit related services: £0.1m £nil

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 2021 that it was not

appropriate to do so. The Audit Committee

fullyevaluates auditor performance and

independence annually but does not favour

mandatory ﬁve-year rotation.

Assessment of external audit quality

andeectiveness

The Audit Committee reviewed the

eectiveness of the External Auditor and the

external audit process, including an assessment

of the quality of the audit, at itsSeptember

2021meeting.

In 2021, the eectiveness of the external audit

process was 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 2021 meeting and to

assist in assessing the level of external audit

eectiveness. 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 eectiveness

of the external audit process from the local

management teams was also considered by

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.

In July 2021, the Financial Reporting Council

(FRC) published the 2020/2021 Audit Quality

Inspection Reports (AQIR) for each of the “big

four” audit ﬁrms, including KPMG. The Audit

Committee challenged KPMG on the AQIR

ﬁndings and reviewed improvement proposals

outlined to the Committee to ensure they

had been addressed appropriately. The Audit

Committee Chair and the Group Finance

Director also had direct discussions with the

KPMG Head of Audit, UK, to discuss the ﬁrm’s

quality improvement plans. Following

completion of the assessment process outlined

above, the Audit Committee concluded that

itwas satisﬁed with the eectiveness of the

External Auditor; as a consequence, the Audit

Committee has recommended to the Board that

KPMG LLP be re-appointed as Auditor for 2022.

85SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

AQR review of the Senior 2020 audit

by KPMG

During the year, the 2020 audit of Senior plc by

KPMG was reviewed by the FRC’s Audit Quality

Review team (“AQR”).

The AQR highlighted speciﬁc areas for

improvement related to how KPMG challenged

and evidenced the audit team’s consideration of

all inputs to the Company’s impairment models

and cash ﬂow forecasts. The Audit Committee

Chair, together with the Chair of the Board and

the two Executive Directors, scheduled a

meeting to examine with KPMG the root cause

analysis and to understand the actions agreed

with the AQR to address the issue raised. The

Audit Committee considered the ﬁndings and

the identiﬁed improvement observations and are

satisﬁed that the actions will be implemented by

the External Auditor if similar circumstances

were to be encountered in future audits. The

AQR raised no concerns on the audit challenge

over revenue recognition and the signiﬁcant

risks referenced in the Audit Committee report.

No changes were required to the accounting

applied, or the disclosures presented in the

Annual Report & Accounts 2020.

Overall, the results of the review raised no

issues about Senior’s ﬁnancial reporting and

there were no issues identiﬁed which cast

doubt on the fundamental quality of Senior’s

external audit and the Committee remains

satisﬁed with the eciency and eectiveness

of the audit. KPMG have discussed more

generally the ﬁrm’s process for enhancing audit

quality which includes internal quality reviews,

and the Audit Committee Chair and Group

Finance Director had direct discussions with the

KPMG Head of Audit, UK to discuss the ﬁrm’s

quality improvement plans. KPMG reported to

the Audit Committee as part of their September

2021 report on these matters, with the Audit

Committee concluding that the ﬁndings were

being addressed appropriately.

Speciﬁc areas referred to the

ExternalAuditor

In 2021, the Audit Committee asked the

External Auditor to look into speciﬁc areas

of inventory net realisable value and other

provisions, given these areas are signiﬁcant

risks identiﬁed in this report on page 83.

Further details on the work performed by the

Auditor on the provision for uncertain tax

positions is disclosed on page 110. The Audit

Committee was satisﬁed with the results of

KPMG’s results and ﬁndings.

Internal audit

The Audit Committee is required to assist the

Board in fulﬁlling its responsibilities relating to

the eectiveness, resourcing and the plans of

the Group internal audit function, which were

headed by the Director of Risk & Compliance

until 30 October 2021. In preparation for

Michelle Yorke’s retirement from the Group, her

role was restructured and some duties allocated

elsewhere; a Head of Risk & Compliance was

appointed on 1 September 2021. The Internal

Audit Manager, who formally reported to the

Group Director of Risk & Compliance, now

reports to the Head of Risk & Compliance.

In 2021, as set out on pages 48 to 49, 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 response to constraints imposed

by the pandemic, the internal audit programme

was delivered remotely in 2021.

Under normal circumstances, the Chair and

non-executive Directors are actively encouraged

to visit the Group’s operating businesses

unaccompanied by executive Directors. This

enables them 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.

In2021, due to the restrictions imposed by

governments in order to deal with the pandemic,

no overseas site visits by the Chair and the

non-executive Directors were possible; a

number of UK site visits were undertaken by

Celia Baxter, in connection with her role as the

Director designated to engage with the Group’s

employees. The Board iskeen to resume more

site visits, as soon aspracticable.

Conclusion

As a result of its work during the year, the Audit

Committee has concluded that it has acted in

accordance with its Terms of Reference. At its

meeting held on 22 February 2022, the Audit

Committee considered each section of the

Annual Report & Accounts 2021, 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 2021 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. The Chair of the

Audit Committee will be available at the 2022

AGM to answer any shareholders’ questions

about the work of the Audit Committee, subject

to any Government restrictions on the holding

of such meetings inApril 2022.

Approval

This Report was reviewed and approved by the

Audit Committee and signed on its behalf by:

Giles Kerr

Chair of the Audit Committee

25 February 2022

DIRECTORS’ DUTIES CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202186

REMUNERATION: CHAIR’S

ANNUAL STATEMENT

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 2021. 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 delivering 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

introduced 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 is happy 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 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.

Having carefully considered shareholder

feedback, current market conditions and the

stage of recovery of the business, we believe it

is more important at this stage of our rebuilding

to incentivise the executives on delivering the

core ﬁnancial performance of EPS and Free

Cash Flow. 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;

rather it is something driven by our core values.

We have therefore decided once again not to

introduce a strategic metric for incentives related

to sustainability, but we will continue to keep

this matter under review.

Senior’s performance during 2021

As explained in the Chairman’s Statement and

the Group Chief Executive Ocer’s Statement,

Senior delivered a robust set of results in what

was another very challenging year. The Group

delivered improved proﬁtability, generated good

free cash ﬂow and maintained sector-leading

sustainability progress while navigating through

the impact of the pandemic on our markets and

customers. Key headlines included:

• the Group’s revenue decreased by 5.5%

(on a constant currency basis);

• adjusted operating proﬁt increased by 110.3%

(on a constant currency basis);

• the Group’s adjusted operating margin

increased by 40 basis points, to 0.9% forthe

full year;

• adjusted earnings per share was 0.17 pence;

and

• the Group generated robust free cash ﬂows

of £14.0m.

The restructuring of the Group to meet our

strategy and purpose continued in a focused

manner to provide a solid foundation to support

the Company’s future growth aspirations with

the divestiture of Senior Aerospace Connecticut,

the closure of our small oil and gas operating

business in Malaysia, and the closure of our

Senior Aerospace Bosman business in the

Netherlands following the successful

transfer ofproduct lines to our French

Aerospacebusinesses.

Consultation with stakeholders

duringthe year

Consultation with employees regarding

executive remuneration: During the year the

Group HR Director and I once again consulted

with employees by holding a video/telephone

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. Further we asked them

which of the beneﬁts received by employees

did they most value. It was agreed that the

retirement beneﬁts were appreciated by most

employees. Finally, we asked whether they

thought that our executive Directors should have

ESG targets linked to their bonus. There were

no strong views voiced on this topic. 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 third year of running employee

focus groups. Last year we undertook all of

the meetings by video and we wanted this year

to carry out focus groups face-to-face as the

information we gain is richer. Unfortunately,

we were unable to travel to the US when

we had planned due to travel restrictions. We

have therefore this year focused on the UK

operations. The Group HR Director and I have

undertaken 15 focus groups at four of our UK

locations. There were no questions raised

related to executive pay.

Consultation with shareholders: We

extensively consulted with major shareholders

and the major governance agencies during

2020on the Remuneration Policy and

subsequently made amendments to our policy

proposals relating to post employment

shareholding requirement and the alignment

ofDirector’s pension contributions to the

workforce. We also contacted them again

inearly 2021 to explain why, despite the

sensitivities, we wished to make a part

paymentof the 2020 executive bonus relating

tothe attainment of free cash ﬂow targets.

Atthe 2021 AGM the resolutions relating to

theRemuneration Report and Remuneration

Policy were approved by 74.23% and

74.18%respectively.

Our remuneration policy and practices

seek to incentivise during a critical stage

in our recovery.”

Celia Baxter

Chair of the Remuneration Committee

87SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION: CHAIR’S ANNUAL STATEMENT CONTINUED

Since then, the Committee has written again

toits largest shareholders and, also to a wider

group of smaller shareholders to further

understand and explore their views. I have

undertaken a number of discussions and will

continue to do so with individual shareholders as

per their request. The Committee acknowledges

the shareholders’ concerns around remuneration

decisions taken in 2020, which the Committee

believes were necessary to retain and

incentivise a strong management team. The

main reason why some shareholders voted

against the Remuneration Report was because

they did not agree with the Committee’s

decision to pay an annual bonus to the executive

Directors. On the Remuneration Policy, there

was a divergence of views. Although we had

stated that any new executive directors’ pension

contributions would be aligned on appointment

to that of the wider UK workforce and that

the incumbent executive Directors’ pension

contributions would be aligned by the start

of 2024, some shareholders felt that the

incumbent executive Directors’ pension

contributions should be aligned by the end

of2022.

The Committee were grateful for the feedback

that they received and have discussed it at

length with the executive Directors and the

following actions have been agreed:

• Pension Alignment: The executive Directors

have oered and the Committee agreed that

the alignment of their pension contributions

to that available to the UK workforce, will

be brought forward to the end of 2022. In

addition, through employee consultation we

are aware that retirement beneﬁts are highly

valued by our UK employee base and form an

essential part of our employee oering for

attracting and retaining skilled sta. With the

further recovery of the business during 2022

the viability of increasing the pension

contribution rate available to the UK workforce

(currently 10%) will be considered.

• Bonus payments: During 2021, we are

pleased that there has been no need for

any major restructuring programmes and we

have commenced hiring employees as our

orderbooks ﬁll. Although early in 2021, we

furloughed a small number of employees in

the UK, these monies were repaid to the UK

government in Q4 2021. Although we have

not reinstated the payment of dividends this

year, we are expecting payments to re-

commence in 2022. The Committee

continues to review the outcome of the

bonus with regard to the overall stakeholder

experience and has the ability to exercise

discretion if it feels that the formulaic

outcomes do not feel appropriate taken

in the round.

Executive Directors’ remuneration 2021

The basic salaries of the Group Chief Executive

Ocer, Group Finance Director, the rest of the

Board and the majority of senior management

across the Company were not increased from

1January 2021. For the wider workforce, pay

increases were applied to a limited extent in

some businesses to satisfy mandatory wage

increases and to address retention concerns.

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

2021 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 2020

60% and 40% respectively, reﬂecting the

continued importance of Free Cash Flow to

the business. Following the disposal of Senior

Aerospace Connecticut, which completed

on 22 April 2021, the 2021 bonus targets were

reviewed by the Committee; as the Group

would no longer beneﬁt from that operation’s

net Proﬁt before Tax and net Free Cash Flow for

the remaining 8 months and 1week of 2021.

The Committee concluded that the original 2021

bonus targets should be adjusted to reﬂect the

reduction in Adjusted EPS and Free Cash Flow,

as set out on page 102. The revised loss per

share target had arisen due to the sale of a

proﬁtable business which did not ﬁt our future

strategy, and the disposal of which provided

additional liquidity. The Committee considered

that the new targets were not materially easier

or harder to achieve than the original targets.

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 102.

LTIP awards were granted to both executive

Directors and senior management subject to

the satisfaction of challenging three-year targets

linked to Adjusted EPS growth, relative TSR

and for the ﬁrst time ROCE to align with our

business strategy and due to the importance

of building the business back to healthy levels

of returns. The 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

Ocer and the Group Finance Director were at

alevel of 150% of basic salary. The Committee

felt that this was appropriate as it further aligned

the executive Directors with shareholders.

We were aware that none of the inﬂight LTIPs

are likely to vest. We saw this LTIP award as

an important part of maintaining management

stability as we moved into the recovery stage.

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.

Incentive scheme outcomes for 2021

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 strongly:

• drive the recovery

• reshape the structure and strategy of the

business 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 2021

base salary), of which one third would be

delivered in shares deferred for three years

and two thirds would be delivered in cash.

Awards made under the LTIP in 2019 were

subject to Adjusted EPS and TSR performance

measured over three years up to the end of

2021. Unfortunately, the Adjusted EPS and the

TSR performance was below threshold 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.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202188

Implementation of the Policy for 2022

The basic salaries of the Group Chief Executive

Ocer and Group Finance Director were

increased by 3.15% and 4.99% respectively

with eect from 1 January 2022, broadly in line

with the increase applied to the widerworkforce.

During the Committee’s annual consideration

of how we implement our Policy, in light of

shareholder feedback described previously,

we reconsidered the alignment of the executive

Directors’ pension contributions with that

available to the majority of the UK workforce.

It was agreed that the pension contributions of

the incumbent executive Directors would be

aligned by the end of 2022 rather than the end

of 2023 as per the Remuneration Policy voted

on in the 2021 AGM.

The Committee has an obligation to set

stretching targets which balance shareholder

perspectives with the need to challenge,

engage and incentivise executive and senior

management to deliver the business recovery

and strategy. Withthis is mind the Committee

has concluded the following:

LTIP 2022:

Performance measures and weighting:

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%.

Adjusted EPS target has been set to be

stretching and challenging. In our deliberations

we ensured alignment with shareholders by

setting Threshold and Maximum taking into

consideration the conditional proposal that

hadbeen received from LSF XI Investments,

LLC, acompany advised by Lone Star Global

Acquisitions, Limited. The target is expressed

asan absolute number to be achieved in 2024

rather than a cumulative growth percentage.

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

broadly similar to those used in previous years

but have been re-mapped based on current

Industrial Classiﬁcation Benchmark sectors.

The vesting scale will remain the same as for

awards granted in 2021.

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 2022

LTIP award have been increased from those set

in 2021 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 Committee will continue to review annually

the targets for new awards to ensure that

they remain challenging and stretching as the

Company continues to rebuild, as its strategy

is implemented in recovering markets.

Further details of the targets to be set for the

2022 LTIP awards are set out in the Annual

Report on Remuneration on page 107.

Quantum of LTIP awards 2022:

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.

Annual bonus plan 2022:

Having considered the priorities for the year

wewill be maintaining the same bonus

performance conditions and weightings

as in2021: 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 2022, shareholders will

beasked to vote on the Annual Remuneration

Report. I hope that the decisions the

Committeehas taken in respect of 2021

willhave your support.

Celia Baxter

Chair of the Remuneration Committee

89SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

2021 REMUNERATION REPORT AT A GLANCE

Overview of our remuneration framework for 2021

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 Ocer 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 95

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 Target Actual

Achieved

(% of

maximum)

Performance condition

(1)

Free Cash Flow – full year £(2.0)m £14.0m 100%

Adjusted EPS – full year internal target

(2)

(1.69)p 0.34p 100%

Bonus award to Group Chief Executive Ocer and Group Finance Director: 100% of maximum

(1) The Committee set bonus targets in January 2021, but following the disposal of Senior Aerospace Connecticut, which completed on 22 April 2021, the 2021 bonus targets were

reviewed by the Committee, as the Group would no longer beneﬁt from that operation’s net Proﬁt before Tax and net Free Cash Flow for the remainder of 2021. The Committee

concluded that the original 2021 bonus targets should be adjusted to reﬂect the reduction in Proﬁt Before Tax and Free Cash Flow; the above table shows the revised targets.

The Committee considered that the new targets were not materially easier or harder to achieve than the original targets. A summary of the original and adjusted performance

measures, weightings and performance achieved is provided in the “Performance against performance targets for annual bonus” section on page 102.

(2) Adjusted EPS is measured on a constant currency basis to reduce the impact of exchange rate movements on bonus outcomes

Long-Term Incentive Plan (2019 award) Targets (threshold – maximum) Actual

Adjusted EPS (50%) 15% – 30% growth over three-year performance

period

-98.9% (below threshold)

Total Shareholder Return (50%) TSR ranking: 75th percentile (maximum threshold);

50th percentile (minimum threshold)

12th percentile (below threshold)

Targets for the 2019 Awards were not achieved and therefore the awards shall lapse in full.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202190

Below

Target

Max. Actual Below

Target

Max. Actual

Group Chief Executive Ocer Group Finance Director

500

1,000

1,500

2,500

£000s

Salary

Beneﬁts and Pension

Annual Bonus

Long-Term Share Awards

2,000

3,000

Long-Term Share Price Growth

80% 45% 25%

17%

38%

41%

80% 45% 25%

17%

38%

41%

27%

49%

49%30%

27%

31%

692

1,239

2,620

1,367

473

841

1,777

925

Application of Remuneration Policy

The chart below shows how the composition of each of the executive Directors’ packages varies at dierent 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:

Threshold Target Maximum

Fixed pay Salary is the 2022 basic salary

The value of Beneﬁts and Pension is taken from the single

total ﬁgure of remuneration for 2021

Annual

bonus

Nil 62.5% of 2021 basic

salary

125% of 2021 basic

salary

Long-term

awards

Nil 25% vesting under

the LTIP (i.e. 25% of

(150% x 2022 basic

salary)) and set out at

face value, assuming

no share price growth

or dividend.

100% vesting under

the LTIP (i.e. 100%

of (150% x 2022

basic salary)) and

set out at face value,

assuming 50% share

price growth and no

dividend.

Changes made in 2021

The revised Remuneration Policy was reviewed and agreed by shareholders at the 2021 AGM. The Pension section of the Remuneration Policy was

changed in 2021 in line with shareholder feedback. The details of the change are outlined in the Annual Statement from the Chair of the Remuneration

Committee on page 88 and in the full Remuneration Policy which for ease of reference is laid out on pages 93 to 95.

About this Report

The Report on Remuneration on pages 98 to 107 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

91SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION REPORT: POLICY

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 eect 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.

The policy was approved by shareholders at the AGM by 230,355,445

(74.18%) voting in favour and 80,193,440 (25.82%) voting against; with

22,432,322 votes withheld, being votes that are not recognised as a

votein law. That policy can be read in full in the 2020 Annual Report at

https://www.seniorplc.com/investors/reports.aspx. The Remuneration

Committee had consulted progressively in the months prior to the 2021

AGM with the Company’s largest shareholders and the major governance

agencies. Following the 2021 AGM, we consulted further with the

Company’s major shareholders and, as required by the UK Corporate

Governance Code 2018, the Company produced an Update Statement

which may be found at https://www.seniorplc.com/~/media/Files/S/

Senior-PLC/documents/update_statement_2021.pdf. Of those

shareholders who chose not to support the Remuneration Policy

resolution, there was a divergence of views. Although we had stated that

any new executive directors’ pension contributions would be aligned on

appointment to that of the wider UK workforce and that the incumbent

executive Directors’ pension contributions would be aligned by the start

of2024, some shareholders felt that the incumbent executive Directors’

pension contributions should be aligned by the end of 2022.

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.

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.

• Predictability – The Policy includes full details of the individual limits in

place for the incentive schemes as well as “scenario charts” on page

77 which set out potential pay-outs in the event of dierent 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 and

executive management (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.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202192

Policy for executive Directors

Below is the Policy which was approved by shareholders at the 2021 AGM. Following shareholder feedback after the AGM, the update to the

Policy is highlighted in bold in the table.

Element Purpose and link to strategy Operation Maximum Performance assessment

Salary • 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

• Will normally be reviewed

annually with eect 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

• 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

• Individual performance inthe

role and Group performance

are among thefactors taken

into consideration when

awarding increases

Bonus • Incentivises annual

delivery of corporate

ﬁnancial and non-

ﬁnancial goals

• Delivery of a proportion

of bonus in deferred

shares provides

alignment with

shareholders and

assists with retention

• Up to 83.3% of salary paid in

cash with up to a further 41.7%

of salary paid as a conditional

award of deferred shares

• 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

• Dierent 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

• Overall maximum of 125%

of salary

• 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

93SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

Element Purpose and link to strategy Operation Maximum Performance assessment

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

3-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

• 150% of salary

• 200% of salary in

exceptional circumstances,

such as upon recruitment

• 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.

All-

Employee

Schemes

• Employees including

executive Directors are

encouraged to become

shareholders through

the operation of the

Sharesave Plan, the

HMRC-approved

all-employee share plan

• The Sharesave Plan has

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

• Employees can normally

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

• N/A

Pension • Provides competitive

retirement beneﬁts for

the Group’s employees

• 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

• 20% of basic salary either as

a Company contribution to

Senior GFRP or as salary in

lieu of pension

• From the end of 2022,

the maximum pension

contribution or pension

allowance for executive

Directors will be the

maximum percentage

pension contribution

available to the majority

of the UK workforce.

• N/A

REMUNERATION REPORT: POLICY CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202194

Element Purpose and link to strategy Operation Maximum Performance assessment

Other

beneﬁts

• Provides a competitive

package of beneﬁts that

assists with recruitment

and retention

• 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

• 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

Shareholding

guidelines

• Aligns executive

Directors’ interests

withthose of other

shareholders in

theCompany

• 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.

• N/A • N/A

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 oer 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 oered to other employees,

with national or international relocation expenses/arrangements

(e.g.schooling, tax equalisation) provided for if necessary.

The aggregate incentive oered to new recruits will be no higher than

thatoutlined in the Policy on pages 93 to 95. The Remuneration

Committee has ﬂexibility to grant share awards of up to 200% of salary

upon recruitment. Dierent 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.

95SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION REPORT: POLICY CONTINUED

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.

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 dierences 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 dierent

levels of responsibility of employees across the Company and reﬂect

dierent market norms for dierent roles. The key dierences 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 at below 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 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.

As laid out in the Chair’s Annual Statement, the Company consulted

with employees in 2021 regarding executive Director remuneration.

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ocepayments

The table below summarises the key provisions of each executive

Director’s contract:

Provision Detailed terms

Employment

contract dates

David Squires – 5 January 2015

Bindi Foyle – 3 May 2017

Notice period 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

Change of control There are no enhanced provisions in relation

toa change of control

Copies of the executive Directors’ service contracts are available from the

Group Company Secretary at the Company’s Registered Oce during

normal business hours. The Committee’s policy in the event of early

termination of employment is set out below.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202196

Policy on payment for departure from oce

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

Voluntary resignation or

termination for cause Death, ill health, disability, retirement excluding redundancy Departure on agreed terms

Base salary,

pension and

beneﬁts

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

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

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

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

LTIP share

awards

Unvested LTIP share

awards will lapse

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

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.

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 further on the AGM

voting of the Remuneration Policy and Remuneration Report resolutions.

Consultation with shareholders has always been constructive. A further

amendment to the Remuneration Policy regarding pension alignment

was made as a result of the consultation.

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 ecient 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 93);

• adjusting the constituents of the TSR comparator group;

• 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.

97SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION

Policy for non-executive Directors

Element Purpose and link to strategy Operation Maximum

Performance

assessment

Non-executive

Directors and

Chairman fees

• Takes account of

recognised practice

andset at a level that

issucient to attract

and retain high calibre

non-executive Directors

• 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 eective 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

• 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

• N/A

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 Oce during normal business hours.

Non-executive Directors’ terms of appointment

Name Date original term commenced

Date current term

commenced

Expected expiry date of

current term

Ian King Joined the Board November 2017

and became Chairman in April 2018 – –

Celia Baxter September 2013 September 2019 September 2022

Susan Brennan January 2016 January 2022 December 2024

(1)

Barbara Jeremiah January 2022 January 2022 December 2024

(2)

Giles Kerr September 2013 September 2019 September 2022

Rajiv Sharma January 2019 January 2022 December 2024

(1)

Mary Waldner December 2021 December 2021 November 2024

(1) Rajiv Sharma’s ﬁrst three-year term of appointment and Susan Brennan’s second three-year term of appointment were both due to expire in December 2021. The terms of

appointment for both Directors have been extended for a further period of three years from the end of December 2021.

(2) Barbara Jeremiah was appointed to the Board with eect from 1 January 2022.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202198

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 and/or Group Chief Executive Ocer, as appropriate, determine

the total individual remuneration package of the Chair, 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;

• determine the policy for, and scope of, pension arrangements for

eachexecutive Director and other designated senior executives;

• ensure that contractual terms on termination, and any payments made,

are fair to the individual and the Company, that failure is not rewarded

and that the duty to mitigate loss is recognised; and

• oversee any major changes in employee beneﬁts structures

throughoutthe Group.

Members

The Remuneration Committee consists entirely

of non-executive Directors.

Member

Number of

meetings during

term

(1)

Number of

meetings

attended

Celia Baxter – Chair 7 7

Susan Brennan 7 6

Giles Kerr 7 7

Ian King 7 7

Rajiv Sharma 7 6

Mary Waldner

(2)

1 1

(1)

The full Committee met 7 times in 2021. In addition, authority was delegated to two

members of the Committee, Celia Baxter and Ian King, to hold 3 additional meetings

to conﬁrm the granting and vesting of share awards.

(2) Mary Waldner was appointed to the Board and to the Remuneration Committee on

1December 2021.

Barbara Jeremiah was appointed to the Board on 1 January 2022 and so

has not been included in the table above.

Other attendees at Remuneration Committee meetings

The Group Chief Executive Ocer 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 2021, the Company

incurred fees of £13,400 from Korn Ferry and of £4,613 from FIT

Remuneration Consultants, and these costs were based on a combination

of hourly rates and ﬁxed fees for speciﬁc items of work. During 2021,

Korn Ferry also supported the Company with the recruitment to the Board

of Barbara Jeremiah as a non-executive Director for which it received a

fee of £25,000.

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 2021

has been objective and independent.

99SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Principal activities and matters addressed during 2021

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, although additional meetings were held in 2021 as the Committee considered issues arising

from the disposal of a business and the AGM voting on the the Remuneration Policy and Remuneration Report resolutions. In addition, authority was

delegated to two members of the Committee, Celia Baxter and Ian King, to hold 3 additional meetings to conﬁrm the grant and vesting of share

awards. The table below shows the standard 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 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 for the ﬁnancial year including ﬁnalisation of targets.

February 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 next ﬁnancial year including ﬁnalisation of targets.

Review of draft Remuneration Report.

Approve launch of 2021 Sharesave

Review gender pay gap reporting

March (three

meetings)

Approve 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.

May Review of targets for bonus and LTIP

awards following disposal of Senior

Aerospace Connecticut.

Review of voting on AGM Resolutions

for the Directors’ Remuneration Policy

and the Directors’ Remuneration Report.

Conﬁrm scaling back of 2021

Sharesavegrant.

Conﬁrm vesting of Restricted

shareawards for leavers following

completion of disposal of Senior

Aerospace Connecticut.

September Discuss shareholder feedback from

consultation post-AGM

Approve the AGM Update Statement.

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 FTSE 250

salary market data.

Performance update on outstanding incentive and bonus awards.

Discussion on 2022 LTIP and bonus targets; and associated shareholder consultation.

Determine remuneration of Chairman.

Review of Committee’s Terms of Reference.

Discuss further shareholder feedback

and actions arising from AGM votes

onRemuneration Policy and Report.

Review feedback from

employeeconsultation.

Statement of voting at General Meeting

At the AGM held on 23 April 2021, shareholder votes on the Directors’ Remuneration Report and the Remuneration Policy were cast as follows:

Voting For Against Total Withheld

(1)

Reason for vote

against, if known)

Action taken by

Committee

Remuneration Report Votes 233,840,000 81,174,762 315,014,762 17,9 6 6, 4 4 5 See below See below

% 74.23% 25.77% 100% N/A

Remuneration Policy Votes 230,355,445 80,193,440 310,548,885 22,432,322 See below See below

% 74.18% 25.82% 100% 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.

The Committee consulted extensively with shareholders prior to the 2021 AGM concerning executive remuneration. Following the AGM, the

Committee wrote again to its larger shareholders and, also to a wider group of smaller shareholders to further understand and explore their views.

A number of discussions have been and will continue to be held with individual shareholders as per their request. The Committee acknowledges the

shareholders’ concerns and sensitivities around remuneration decisions taken in 2020, which the Committee believes were necessary to retain and

incentivise a strong management team. The main reason why shareholders voted against the Remuneration Report was because they did not agree

with the Committee’s decision to pay an annual bonus to the executive Directors for 2020.

On the Remuneration Policy, there was a divergence of views. Although it had already been stated that any new executive directors’ pension

contributions would be aligned on appointment to that of the wider UK workforce and that the incumbent executive Directors’ pension contributions

would be aligned by the start of 2024, some shareholders felt that the incumbent executive Directors’ pension contributions should be aligned by the

end of 2022. Since the AGM, the Committee also agreed that the executive Directors’ pension contributions or allowances would be aligned with the

rates available to the majority of the UK workforce at the end of 2022.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021100

Single total ﬁgure of remuneration (Audited information)

The following table shows a single total ﬁgure of remuneration in respect of qualifying service for the 2021 ﬁnancial year for each Director, together

with comparative ﬁgures for 2020. Aggregate Directors’ emoluments are shown at the end of the Single Total Figure of Remuneration section.

Salaries and

fees

(1)

£000s

Taxable beneﬁts

and allowances

(2)

£000s

Bonus

(3)

£000s

Long-term

incentives

(4)

£000s

Pension beneﬁts

including cash in

lieu of pension

£000s

Total ﬁxed

remuneration

£000s

Total variable

remuneration

£000s

Total

£000s

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2021 2021 2020

Executives

David Squires 540 513 27 26 675 270 0 0 108 108 675 675 1,350 917

Bindi Foyle 361 343 22 21 451 181 0 0 72 72 455 451 906 617

Total remuneration 901 856 49 47 1,126 451 0 0 180 180 1,130 1,126 2,256 1,534

Non-executives

Ian King (Chairman) 191 181 1 – – – – – – – 192 – 192 181

Celia Baxter

(6)

71 67 – – – – – – – – 71 – 71 67

Susan Brennan 53 50 – – – – – – – – 53 – 53 50

Giles Kerr 62 59 – – – – – – – – 62 – 62 59

Rajiv Sharma 53 50 – – – – – – – – 53 – 53 50

Mary Waldner

(6)

4 – – – – – – – – – 4 – 4 –

Total remuneration 434 407 1 – – – – – – – 435 – 435 407

(1) During 2020, the executive Directors, the Chairman and the non-executive Directors voluntarily reduced their salaries and fees by 20% for a three-month period. Without the

reductions, David Squires’ base salary would have been £540,000 and Bindi Foyle’s base salary would have been £361,000. The fees that the Chairman and the non-executive

Directors would have received, before reductions, are as stated in the table below.

(2) Taxable beneﬁts for executive Directors include the provision of a fully expensed company car or car allowance and private medical insurance. During 2020, David Squires

exchanged his company car for a car allowance. Taxable beneﬁts for non-executive Directors are travel expenses.

(3) Awards under the deferred bonus award, the Enhanced SMIS, in respect of 2021 performance will be granted following the announcement of the 2021 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 2021 results, is included in the Bonus ﬁgure and

will be equivalent in value to one-third of the Bonus ﬁgure, namely £225,000 and £150,417 respectively.

(4) The performance conditions attached to David Squires’ and Bindi Foyle’s 2019 LTIP Awards were not achieved, and this award will lapse in March 2022. Further details on the

performance conditions can be found on page 90.

(5) 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 £2,512,008.

(6) Mary Waldner was appointed to the Board on 1 December 2021 and her 2021 fee is the amount paid from that date. Celia Baxter’s 2020 salaries and fees ﬁgure includes the fee

for acting as the Senior Independent non-executive Director from 24 April 2020. Barbara Jeremiah was appointed to the Board on 1 January 2022 and so has not been included

in the table above.

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 eect from 1 May 2020 and retained fees of £59,205 for the year ending 31 December 2021 (£29,375 for the year

ended 31December 2020). 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 aairs 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 2021 outlook, and the

signiﬁcant re-structuring of the business that was then being undertaken, the Board agreed that the salaries and fees paid to the Directors would

notincrease in 2021.

Fees

2021

2020

(1)

Percentage

change

Chairman 191,000 191,000 0%

Non-executive Director 53,000 53,000 0%

Chair of Audit Committee 9,000 9,000 0%

Chair of Remuneration Committee 9,000 9,000 0%

Senior Independent Director 9,000 9,000 0%

(1) During 2020, the executive Directors, the Chair of the Board and the non-executive Directors voluntarily reduced their salaries and fees by 20% for a three-month period;

thetable above shows the fees that would have been paid had they not been reduced.

101SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

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. The

increase in the 2021 Short-term employee beneﬁts compared to the prior year was partly as a result of the senior managers voluntarily reducing their

salaries for a three-month period in 2020 in recognition of the disruption caused by the pandemic; and due to the stronger bonus performance in 2021.

2021

Total

£000s

2020

Total

£000s

Short-term employee beneﬁts 3,169 2,986

Post-employment beneﬁts 42 89

Share-based payments 933 887

Total 4,14 4 3,962

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 2021 have been determined by Adjusted EPS and Free Cash Flow performance as set out

in the table below.

The Committee set bonus targets in January 2021, but following the disposal of Senior Aerospace Connecticut, which completed on 22 April 2021,

the 2021 bonus targets were reviewed by the Committee in May 2021, as the Group would no longer beneﬁt from that operation’s net Proﬁt before

Tax and net Free Cash Flow for the remaining 8 months and 1 week of 2021. The Committee concluded that the original 2021 bonus targets should be

adjusted to reﬂect the reduction in Adjusted EPS and Free Cash Flow, as set out on page 88. The revised loss per share target had arisen due to the

sale of a proﬁtable business which did not ﬁt our future strategy, and the disposal of which provided additional liquidity. The Committee considered

that the new targets were not materially easier or harder to achieve than the original targets.

A summary of the adjusted measures, weightings and performance achieved is provided in the table below:

2021 2020

Threshold Target Maximum

Actual

achieved

Maximum

bonus

achievable

Percentage

of maximum

achieved

Bonus

payable

(% of 2021

salary)

(1)

Maximum

bonus

achievable

Percentage

of maximum

achieved

Bonus

payable

(% of 2020

salary)

(1)

Free Cash Flow targets – full year £(5.0)m £(2.0)m £10.0m £14.0m 50.00% 100% 50% 50.00% 100.00% 50.00%

Adjusted EPS targets

(2)

– full year

internal target (2.00)p (1.69)p 0.02p 0.34p 75.00% 100% 75% 75.00% 0.00% 0.00%

Totals 125.00% 100% 125% 125.00% 40.00% 50.00%

(1)

When bonus is payable, this is paid two-thirds in cash and one-third in deferred shares. The deferred share element of the 2020 bonus was awarded on 12 March 2021 based on

ashare price of £1.128 and shall ordinarily vest on the third anniversary of the award on 12 March 2024. The deferred element of any 2021 bonus shall be awarded following the

announcement of the 2021 annual results in 2022 and the details disclosed in the 2022 Remuneration Report.

(2) The bonus is calculated with regard to full-year Free Cash Flow, and internal Adjusted EPS targets on a constant currency basis.

(3) The performance measures originally set by the Committee in January 2021 for the 2021 bonus targets, before adjustment due to the disposal of Senior Aerospace Connecticut,

are set out in the table below:

Threshold Target Maximum

Free Cash Flow targets – full year – £3.0m £15.0m

Adjusted EPS targets(²) – full year

internal target (1.66)p (1.32)p 0.39p

Total pension entitlements (audited information)

The 2021 single ﬁgure remuneration for pension beneﬁts for David Squires and Bindi Foyle consisted of a cash allowance of £108,000 (2020 –

£108,000) and £72,200 (2020 – £72,200) respectively, this being 20% of the respective base salaries.

The Committee had previously stated that any new executive Directors’ pension contributions would be aligned on appointment to that of the wider

UK workforce and that the incumbent executive Directors’ pension contributions would be aligned by the start of 2024. However, during consultations

with shareholders during 2021, some felt that the incumbent executive Directors’ pension contributions should be aligned by the end of 2022. Since

the 2021 AGM, the Committee agreed that the executive Directors’ pension contributions or allowances would be aligned at the end of 2022 with the

maximum rate available to the majority of the UK workforce.

Further detail may be found on page 88 of the Chair’s Statement and page 94 of the Renumeration Report: Policy section.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021102

Payments for loss of oce (audited information)

There were no payments made in the year for loss of oce.

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 2019 LTIP award. Neither performance condition was achieved and therefore the 2019

LTIP awards shall lapse in full.

Performance condition

Target

(25%vesting)

Maximum

(100% vesting) Actual

Percentage

of total award

achieved

Total shareholder return percentile ranking (50% of Award) 50th 75th 12th 0%

Growth in adjusted earnings per share over performance period (50% of Award) 15% 30% -98.9%

(1)

(1) The growth in adjusted earnings per share was calculated after adjusting for the impact of IFRS 16.

Scheme interests awarded during the ﬁnancial year (audited information)

Directors Scheme Basis of award

Face value

£000s

Percentage vesting

at threshold

performance

Number of

Performance period

end date

David Squires

(1)

LTIP Annual award 810 25% 718,085 31 December 2023

Bindi Foyle

(1)

LTIP Annual award 542 25% 480,053 31 December 2023

(1) The face value of the awards represented 150% of the executive Directors’ respective 2021 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 2020 and 2021.

Conditional share awards granted in 2021 Conditional share awards granted in 2020

Performance condition

Target

(25% vesting)

Maximum

(100% vesting) Actual to date

Target

(25% vesting)

Maximum

(100% vesting) Actual to date

Total shareholder return ranking 50th percentile 75th percentile 99th percentile 50th percentile 75th percentile 17th percentile

Adjusted EPS performance for

the ﬁnal Financial Year of the

performance period 5.67p 7.56p 0.17p

(2)

13.5p 16.5p 0.17p

(1)

Return on Capital Employed

(3)

9.8% 11.0% 1.0%

(1) Actual to date ﬁgure of 0.17p represents the Adjusted EPS during the ﬁrst two years of the three-year performance period for the 2020 LTIP award.

(2) Actual to date ﬁgure of 0.17p represents the Adjusted EPS during the ﬁrst year of the three-year performance period for the 2021 LTIP award.

(3) In 2021, the Committee amended the performance conditions for LTIP awards, so that awards are based on three evenly weighted conditions, namely: TSR ranking, Adjusted

EPS performance, and Return on Capital Employed. Actual to date ﬁgure of 1.0% represents the Return on Capital Employed during the ﬁrst year of the three-year performance

period for the 2021 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 Committee reviewed the potential impact of the disposal of Senior Aerospace Connecticut on the three performance targets for the 2021 LTIP

awards: Total Shareholder Return; Earnings per Share; and Return on Capital Employed. The Committee concluded that the disposal should have

nomaterial impact on any of the three measures and agreed that the original targets for the 2021 LTIP awards should remain unaltered.

103SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Shareholder dilution

Percentage of issued shares

2.76% 2.24%

Discretionary

schemes

(maximum 5%)

All schemes

(maximum 10%)

3.79% 6. 21%

Shares awarded as % of issued shares

Headroom

The Company complies with the dilution guidelines contained within The Investment Association Principles of Executive Remuneration.

At 31 December 2021, awards outstanding and shares issued in the previous 10 years under all share plans (the Senior plc 2005 Long-Term Incentive

Plan (the 2005 LTIP), the Senior plc 2014 Long-Term Incentive Plan (the 2014 LTIP), the Restricted Share Award Plan and the 2006 Savings-Related

Share Option Plan (the Sharesave Plan)) amounted to 3.79% of the issued ordinary share capital of the Company. At 31 December 2021, awards

outstanding and shares issued in the previous 10 years under executive (discretionary) plans (the 2005 LTIP and 2014 LTIP) amounted to 2.76% of the

issued ordinary share capital of the Company.

During 2021, 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 and Enhanced SMIS deferred share awards, 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 290,000 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 2021 of 147.03p (31 December 2020 – 89.25p). No options under the Sharesave Plan were exercised by the executive Directors during

theyear.

Executive Directors

Number of shares

required to be held

(equivalent to 200%

of basic salary at

31 December 2021)

Number of shares

held (including

unvested deferred

shares net of tax) at

31 December 2021

Share ownership

requirements met

Unvested awards, subject to

performance conditions

Unvested awards, not subject

to performance conditions

LTIP award

(1)

Sharesave

Total deferred

share award

David Squires 734,544 639,708 No – 87.1% 1,554,257 4,10 3 240,723

Bindi Foyle 491,056 288,119 No – 58.7% 1,038,261 4,10 3 160,816

(1) The minimum thresholds were not reached for the two performance conditions attached to David Squires’ and Bindi Foyle’s 2019 LTIP awards over 353,340 shares, and

235,426 shares respectively (included within their respective LTIP award ﬁgures above) and therefore these awards shall lapse in full in March 2022.

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.

Number of shares

owned outright

(including connected

persons) at

1 January 2021

Shares vested

during 2021

(1)

Shares retained

from 2021

vested shares

Shares purchased

during 2021

Number of shares

owned outright

(including connected

persons) at

31 December 2021

(3)

Executive Directors

David Squires 394,377 62,748 62,748 55,000 512,125

Bindi Foyle 129,361 34,738 34,738 38,788 202,887

Non-executive Directors 

Ian King 414,297 – – 100,000 514,297

Celia Baxter 31,653 – – – 31,653

Susan Brennan 5,900 – – – 5,900

Giles Kerr 10,000 – – – 10,000

Rajiv Sharma – – – – –

Mary Waldner

(2)

– – – – –

(1) In 2021, the following gains were made by David Squires and Bindi Foyle: £73,283 and £40,570 respectively upon the vesting of their Enhanced SMIS deferred awards 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 18 March 2021 of116.79p.

(2) Mary Waldner was appointed to the Board on 1 December 2021.

(3) Barbara Jeremiah was appointed to the Board on 1 January 2022 and so has not been included in the table above.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021104

Performance graph

Share price performance

The closing middle market price of the shares at 31 December 2021 was 147.03p (2020 – 89.25p). During 2021, the shares traded in the range

of 89.5p to 181.1p.

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.

100

150

200

250

300

Dec 11 Dec 21Dec 20Dec 19Dec 18

Dec 17

Dec 16Dec 15Dec 14Dec 13Dec 12

FTSE All-Share A&DSenior FTSE250

Remuneration of Group Chief Executive Ocer

2012 2013 2014 2015

(1)

2016 2017 2018

(2)

2019 2020 2021

CEO single ﬁgure of total remuneration (£000s) 1,529 1,726 1,316 1,020 790 1,009 1,107 1,203 917 1,350

Annual variable element award rates against maximum

opportunity (%) 92 65 54 14 31 79 75 58 40 100

Long-term incentive vesting rates against maximum

opportunity (%) 100 100 91.8 21 0 0 0 28 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 2019 and 2020 and between 2020 and 2021

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.

2020 vs 2021 2019 vs 2020

Salary

Taxable beneﬁt

and allowances Bonus Salary

Taxable beneﬁts

and allowances Bonus

Percentage

change

Percentage

change

Percentage

change

Percentage

change

(1)

Percentage

change

(2)

Percentage

change

Executive Directors

David Squires 0% 3.4% 150.0% 2.8% -16.0% -28.6%

Bindi Foyle 0% 4.8% 150.0% 3.1% - 0.1% -28.4%

Non-executive Directors

Ian King 0% – – 3.2% – –

Celia Baxter 0% – – 6.7% – –

Susan Brennan 0% – – 2.9% – –

Giles Kerr 0% – – 2.5% – –

Rajiv Sharma 0% – – 2.9% – –

Mary Waldner

(1)

N/A – – N/A N/A N/A

Senior plc Employees, excluding Directors 3.3% 2.0% 158.6% -2.1% 2.6% - 30.1%

(1) The Salary Percentage change ﬁgure also includes any merit increases awarded to Directors and employees.

(2) The decrease in David Squires’ Taxable beneﬁts and allowances reﬂects the transition from using a company car in favour of taking a car allowance during 2020. Bindi Foyle’s

Taxable beneﬁts consisted solely of the receipt of private healthcare insurance.

(3) Celia Baxter was appointed the Senior Independent Director on 24 April 2019 and her fee was adjusted accordingly.

(4) Mary Walder was appointed to the Board on 1 December 2021.

105SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

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, furloughed employees and 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 2021 were calculated, and then reviewed to ensure that the selected

best equivalents were reasonably representative. Factors that contributed to the change in the CEO Pay Ratio from 2020 to 2021 included the Group

Chief Executive Ocer’s temporary salary reduction during 2020, and the number of shopﬂoor employees who were excluded from the data due

tofurlough.

Pay ratio

Year Method

(1)

25th percentile 50th percentile 75th percentile

2021 B 53 : 1 49 : 1 33 : 1

2020

(2)

B 25 : 1 20 : 1 16 : 1

2019 B 53 : 1 39 : 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.

(2) The pay ratios in 2020 had been impacted by the pandemic leading to signiﬁcant numbers of employees being on furlough and/or made redundant, as well as reduced total

remuneration for the CEO.

Year 2021 25th percentile 50th percentile 75th percentile

Base salary £18,471 £ 25,944 £ 34,254

Total £25,614 £ 27,797 £41,397

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 2021

compared with the ﬁnancial year ended 31 December 2020.

2021

£m

2020

£m

Percentage

change

Employee remuneration costs (excluding social security)

(1)

198.9 225.6 -11. 8%

Adjusted (loss)/ proﬁt before tax

(2)

(1.9) (6.2) N/A

Dividends paid – – 0%

(1) The 2021 Employee Remuneration costs include those incurred by Senior Aerospace Connecticut during the period until its disposal in April 2021.

(2) The loss before tax in 2021 reduced by 69.4% compared to the loss before tax in 2020.

2022 Remuneration (non-audited information)

Salaries and fees for 2022

2022

2021

Percentage

change

Executive Directors

David Squires 557,000 540,000 3.15%

Bindi Foyle 379,000 361,000 4.99%

Non-executive Directors

(1)

Chairman 197,000 191,000 3.14%

Non-executive Directors 54,500 53,000 2.83%

Chair of Audit Committee 9,000 9,000 0.0%

Chair of Remuneration Committee 9,000 9,000 0.0%

Senior Independent Director 9,000 9,000 0.0%

(1) No additional fees are payable for Committee membership.

Weighting of annual bonus KPIs for 2022

The individual weightings of the KPIs for the executive Directors for the annual bonus are set out below. The maximum bonus opportunity is 125%

ofbasic salary, with two-thirds payable in cash and one-third in deferred shares.

2022 2021

Maximum possible

cash award

Maximum share

award

Maximum

possible cash

award

Maximum share

award

Free Cash Flow target – full year 33.33% 16.67% 33.3% 16.67%

Adjusted EPS target – full year internal target 50.00% 25.00% 50.0% 25.0%

Totals 83.3% 41.7% 83.3% 41.7%

The actual targets are currently considered commercially sensitive because of the information that this provides to the Company’s competitors.

Fulldisclosure of the 2022 targets will be disclosed in the 2022 Annual Report.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021106

LTIP Awards for 2022

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%.

Adjusted EPS target has been set to be stretching and challenging. The target is expressed as an absolute number to be achieved in 2024 rather than

a cumulative growth percentage.

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 broadly similar to those used in previous years but have been re-mapped based on

current Industrial Classiﬁcation Benchmark sectors. The vesting scale will remain the same as for awards granted in 2020.

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 2022 LTIP award have been increased from those set in 2021 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 2021 and 2022 are set out in the table below:

2022 2021

Weighting

(%)

Threshold

(25% vesting)

Maximum

(100% vesting)

Weighting

(%)

Threshold

(25% vesting)

Maximum

(100% vesting)

Return on Capital Employed 33.33% 10.0% 13.5% 33.33% 9.8% 11.0%

Total Shareholder Return ranking 33.33%

Median

or higher

Upper quartile or

higher 33.33%

Median

or higher

Upper quartile

or higher

Adjusted earnings per share 33.33% 10.05p 12.35p 33.33% 5.67p 7.56 p

Approval of the Directors’ Remuneration Report

The Directors’ Remuneration Report was approved by the Board on 25 February 2022.

Signed on behalf of the Board

Celia Baxter

Chair of the Remuneration Committee

25 February 2022

107SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

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 sucient

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 dier 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.

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 aairs 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.

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 Bindi Foyle

Group Chief Executive Ocer Group Finance Director

25 February 2022 25 February 2022

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021108

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC

1. Our opinion is unmodiﬁed

We have audited the Financial Statements

ofSeniorplc (“the Company”) for the year

ended31 December 2021 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

fairview of the state of the Group’s and of the

parent Company’s aairs as at 31 December

2021 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 sucient 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

ﬁveﬁnancial years ended 31 December 2021.

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. Nonon-audit services prohibited

bythatstandard were provided.

Overview

Materiality:

group ﬁnancial

statements as

awhole

£3.2m (2020: £2.2m)

0.5% of Group revenue

(2020: 5% of normalised

Group proﬁt before tax)

Coverage

• 89% (2020: 87%) of Total losses/proﬁt

before tax

• 72% (2020: 76%) of Group revenue

• 82% (2020: 84%) of Group total assets

Key audit matters vs 2020

Recurring risks • Provision for

uncertain tax

positions



• Recoverability

of the Parent

Company’s

investment in

its subsidiary



109SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

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

eect on: the overall audit strategy; the allocation of resources in the audit; and directing the eorts 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.

The risk Our response

Provision for uncertain tax positions

The Group recorded a provision for

uncertain tax position totalling £16.7m

as at 31 December 2021 (2020: £19.5m)

Refer to the Audit Committee Report in

the Governance section on pages 80 to 86,

Note 2 (signiﬁcant accounting policies)

and Note 21 (tax balance sheet).

Subjective estimate

The Group operates in a number of dierent

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 eect 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.

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.

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.

(2020 result –acceptable.)

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 2021 (2020: £259.9m).

Refer to Note 36 (accounting policies)

and Note 38 (ﬁnancial disclosures) and

the Parent Company Balance Sheet

Low risk, high value:

The carrying amount of the Parent

Company’s investment in its subsidiary

represents 61% 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 eect on our overall Parent

Company audit

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; and

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 subsidiary

to be acceptable. (2020 result –acceptable.)

We continue to perform procedures over going concern and impairment of goodwill. However, the level of audit risk, and the associated audit eort

required, was signiﬁcantly reduced in 2021 due in part to the recovery of the Group’s end markets. We also continue to perform procedures over

restructuring costs excluded from adjusted proﬁt, however the nature and quantum has signiﬁcantly reduced in 2021, reducing the audit eort

required. Accordingly these matters are not assessed as the most signiﬁcant risks in our current year audit. Therefore, these are not separately

identiﬁed in our report this year.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021110

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 (2020: £2.2m), determined

with reference to a benchmark of Group revenue of

£658.7m, of which it represents 0.5%. Materiality for

2020 was set at £2.2m, determined with reference to

a benchmark of normalised Group proﬁt before tax

(PBT) of £44.1m, of which it represents 5%.

We consider total revenue to be the most appropriate

benchmark in 2021 as it provides a more stable

measure year on year than group proﬁt before

tax given the ongoing impact of the pandemic

which has distorted the reported proﬁts from the

historical proﬁle.

In 2020 we normalised PBT by adding back

adjustments that do not represent the normal,

continuing operations of the Group and by averaging

over 5 years. In 2020 the items we adjusted for were

impairment and write-o charges against goodwill of

£134.3m, disposal costs of £4.6m and restructuring

of £39.0m.

Materiality for the parent Company ﬁnancial

statements as a whole was set at £2.9m (2020: £2m),

by reference to component materiality. This is lower

than the materiality we would otherwise have

determined by reference to total Company assets

and represents 0.7% of the Company’s total assets

(2020: 0.5%).

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% (2020: 75%)

of materiality for the ﬁnancial statements as a whole,

which equates to £2.4m (2020: £1.65m) for the Group

and £2.2m (2020: £1.5m) 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.

We agreed to report to the Audit Committee any

corrected or uncorrected identiﬁed misstatements

exceeding £160,000 (2020: £110,000), in addition

to other identiﬁed misstatements that warranted

reporting on qualitative grounds

Of the Group’s 30 (2020: 31) reporting components

(excluding the Parent Company), we subjected 14

(2020: 17) to full scope audits for group purposes.

The components within the scope of our work

accounted for the percentages illustrated opposite.

Group materiality

Revenue Group materiality

Group revenue

£658.7m (2020:Normalised

group proﬁt before tax £44.1m)

£3.2m (2020: £2.2m)

£3.2m

Whole ﬁnancial statements

materiality (2020: £2.2m)

£2.4m

Whole ﬁnancial statements

performance materiality

(2020: £1.65m)

£1.76m

Range of materiality at 14

components (£0.4m – £1.76m)

(2020: £0.1m – £0.8m)

£0.16m

Misstatements reported to the

audit committee (2020: £0.11m)

Group revenue

72%

28%

24%

76%

72%

(2020 – 76%)

89%

11%

13%

87%

89%

(2020 – 87%)

Total proﬁts and losses that

made up Group proﬁt before tax

Full scope for group audit purposes 2020

Group total assets

82%

18%

16%

84%

82%

Full scope for group audit purposes 2021

Residual components 2021

Residual components 2020

(2020 – 84%)

111SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

3. Our application of materiality and an

overview of the scope of our audit

continued

The remaining 28% (2020: 24%) of total Group

revenue, 11% (2020: 13%) of total proﬁts and

losses that made up Group proﬁt before tax

and 18% (2020: 16%) of total Group assets

is represented by 16 (2020: 14) of reporting

components, none of which individually

represented more than 5% (2020: 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 (2020:

£0.1m to £0.8m), having regard to the mix

of size and risk proﬁle of the Group across

the components. The work on 9 of the 14

components (2020: 10 of the 17 components)

was performed by component auditors and the

rest, including the audit of the parent Company,

was performed by the Group team. The Group

team performed procedures on the items

excluded from adjusted Group proﬁt before tax.

The scope of the audit work performed was

fully substantive as we did not rely upon the

Group’s internal control over ﬁnancial reporting.

Telephone conference meetings and virtual site

visits were held with component auditors

throughout the audit. At these virtual meetings,

the ﬁndings reported to the Group audit team

were discussed in more detail, and any further

work required by the Group audit team was

then performed by the component auditor.

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, 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 aect the ﬁnancial

statements and our audit. We held discussions

with our own climate change professionals to

challenge our risk assessment. 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 based on the Group’s end markets.

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 18 to 23, and considered

consistency with the ﬁnancial statements and

our audit knowledge.

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

aect 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 aect the

Group’s and Company’s available ﬁnancial

resources and/or metrics relevant to debt

covenants over this period were:

• The uncertainty of the impact of COVID 19,

with future range of possible eects such as

further waves of global infections currently

unknown, given the rapidly evolving nature;

and

• The ability of the group to respond and adapt

to structural changes in the industry as a

result of COVID-19.

We considered whether these risks could

plausibly aect 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 64 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.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021112

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 recorded 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 provisions for uncertain tax provisions and

pension assumptions.

We did not identify any additional fraud risks.

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

eect 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 eect of these laws and

regulations on the ﬁnancial statements

varies considerably.

Firstly, the Group is subject to laws and

regulations that directly aect 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

eect 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 eect: health and safety, environmental

laws and regulations, anti-bribery and corruption,

employment law and export laws and

regulations, recognising the 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.

113SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE

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 64 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

Statementof 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 64 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 eectiveness 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.

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.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021114

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set

out on page 108, 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.

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.

Robert Brent

(Senior Statutory Auditor)

for and on behalf of KPMG LLP,

Statutory Auditor

Chartered Accountants

15 Canada Square, London, E14 5GL

25 February 2022

115SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2021

Notes

Year ended

2021

£m

Year ended

2020

£m

Revenue 3 6 5 8 .7 7 33.6

Trading proﬁt/(loss) 1 0.3 (17 7. 5)

Share of joint venture proﬁt 15 0.2 0.2

Operating proﬁt/(loss)

(1)

5 10 . 5 (17 7. 3 )

Investment income 7 0.5 1 .1

Finance costs 8 (8 . 5) (11 . 0)

Corporate undertakings 31 21. 2 (4.6)

Proﬁt/(loss) before tax

(2)

2 3.7 (1 91 .8)

Tax credit 10 0.5 33.3

Proﬁt/(loss) for the period 24.2 (15 8 . 5)

Attributable to:

Equity holders of the parent 24.2 (15 8 . 5)

Earnings/(loss) per share

Basic

(3)

12 5.82p (38 .20)p

Diluted

(4)

12 5.7 3p (38 .20)p

(1)

Adjusted operating proﬁt 9 6 .1 3 .7

(2)

Adjusted loss before tax 9 (1. 9) (6. 2)

(3)

Adjusted earnings/(loss) per share 12 0 .1 7p (0 .8 4)p

(4)

Adjusted and diluted earnings/(loss) per share 12 0 .1 7p (0 .8 4)p

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021116

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2021

Notes

Year ended

2021

£m

Year ended

2020

£m

Proﬁt/(loss) for the period 24.2 (15 8 . 5)

Other comprehensive income:

Items that may be reclassiﬁed subsequently to proﬁt or loss:

(Losses)/gains on foreign exchange contracts – cash ﬂow hedges during the period (2 .1) 2.0

Reclassiﬁcation adjustments for (gains)/losses included in proﬁt (1. 3) 0.6

(Losses)/gains on foreign exchange contracts – cash ﬂow hedges 28 (3 .4) 2.6

Foreign exchange (gain)/loss recycled to the Income Statement on disposal and restructuring

(business closures) 28 (2. 9) 0.5

Exchange dierences on translation of overseas operations 28

(3.8)

(3.6)

Tax relating to items that may be reclassiﬁed 10 0.8 (0.5)

(9. 3) (1. 0)

Items that will not be reclassiﬁed subsequently to proﬁt or loss:

Actuarial gains/(losses) on deﬁned beneﬁt pension schemes 34 19 .7 (11. 4)

Tax relating to items that will not be reclassiﬁed 10 (6 . 4) 1. 6

1 3.3 (9.8)

Other comprehensive income/(expense) for the period, net of tax 4.0 (1 0.8)

Total comprehensive income/(expense) for the period 28.2 (16 9. 3)

Attributable to:

Equity holders of the parent 28.2 (16 9. 3)

117SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

As at 31 December 2021

Notes

Year ended

2021

£m

Year ended

2020

£m

Non-current assets

Goodwill 13 150. 2 16 5 . 0

Other intangible assets 14 4.2 4.8

Investment in joint venture 15 3.9 3.6

Property, plant and equipment 16 2 94 .6 3 30.5

Deferred tax assets 21 5 .7 4 .7

Retirement beneﬁts 34 72. 2 46.5

Trade and other receivables 18 0 .1 0 .1

Total non-current assets 530. 9 555.2

Current assets

Inventories 17 14 5 . 2 1 4 7. 6

Current tax receivables 21 2.6 3.0

Trade and other receivables 18 9 8.0 85.3

Cash and bank balances 32c 5 1 .1 23.6

Total current assets 296.9 25 9.5

Total assets 8 2 7. 8 8 14 .7

Current liabilities

Trade and other payables 23 14 3 . 0 1 2 6 .1

Current tax liabilities 21 14. 6 19 . 8

Lease liabilities 22 0.4 0.5

Bank overdrafts and loans 19 14 . 8 0.4

Provisions 24 13 . 8 23.5

Total current liabilities 18 6 .6 17 0 . 3

Non-current liabilities

Bank and other loans 19 11 6 . 2 15 2 . 6

Retirement beneﬁts 34 11 . 0 1 0.9

Deferred tax liabilities 21 10 . 5 5.5

Lease liabilities 22 72 .8 76.0

Provisions 24 2.2 2. 3

Others 3.4 3.8

Total non-current liabilities 2 1 6 .1 2 5 1 .1

Total liabilities 4 0 2 .7 4 2 1. 4

Net assets 425. 1 393.3

Equity

Issued share capital 25 41. 9 4 1 .9

Share premium account 26 14 . 8 14 . 8

Equity reserve 27 5. 8 5 .1

Hedging and translation reserve 28 28.6 37 .9

Retained earnings 29 34 3. 2 3 0 5 .1

Own shares 30 (9. 2) (11. 5)

Equity attributable to equity holders of the parent 425. 1 393.3

Total equity 425. 1 3 93.3

The Financial Statements of Senior plc (registered number 282772) were approved by the Board of Directors and authorised for issue on

25 February 2022. They were signed on its behalf by:

David Squires Bindi Foyle

Director Director

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021118

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

All equity is attributable to equity holders of the parent

Notes

Issued

capital

£m

premium

account

£m

Equity

reserve

£m

Hedging

reserve

£m

Translation

reserve

£m

Retained

earnings

£m

Own

£m

Total

equity

£m

Balance at 1 January 2020 41. 9 14 . 8 5.5 (4 0.2) 7 9 .1 472.5 (14 . 0) 55 9 .6

Loss for the year 2020 – – – – – (15 8 . 5) – (15 8 . 5)

Gains on foreign exchange contracts –

cash ﬂow hedges 28 – – – 2. 6 – – – 2.6

Foreign exchange loss/(gain) recycled to the Income

Statement on restructuring (business closures) 28 – – – 0 .9 (0.4) – – 0 .5

Exchange dierences on translation

of overseas operations 28 – – – – (3.6) – – (3 .6)

Actuarial losses on deﬁned beneﬁt pension schemes 34 – – – – – (11 . 4) – (11 . 4)

Tax relating to components of other

comprehensive income 10 – – – (0.5) – 1. 6 – 1.1

Total comprehensive income/(expense)

for the period – – – 3 .0 (4.0) (16 8 . 3) – (16 9. 3)

Share-based payment charge 33 – – 3 .0 – – – – 3 .0

Tax relating to share-based payments – – – – – – – –

Purchase of shares held by employee beneﬁt trust 30 – – – – – – – –

Use of shares held by employee beneﬁt trust 30 – – – – – (2.5) 2.5 –

Transfer to retained earnings 29 – – (3.4) – – 3 .4 – –

Dividends paid 11 – – – – – – – –

Balance at 31 December 2020 41. 9 14 . 8 5 .1 (3 7. 2) 7 5 .1 3 0 5 .1 (11. 5) 39 3 . 3

Proﬁt for the year 2021 – – – – – 24. 2 – 24 .2

Losses on foreign exchange contracts –

cash ﬂow hedges 28 – – – (3 . 4) – – – (3. 4)

Foreign exchange loss/(gain) recycled to the

Income Statement on disposal 28 – – – 2. 6 (5 .5) – – (2. 9)

Exchange dierences on translation of overseas

operations 28 – – – – (3. 8) – – (3. 8)

Actuarial gains on deﬁned beneﬁt pension schemes 34 – – – – – 19 .7 – 19 .7

Tax relating to components of other comprehensive

income 10 – – – 0. 8 – (6. 4) – (5.6)

Total comprehensive income/(expense)

for the period – – – – (9 . 3) 3 7. 5 – 28.2

Share-based payment charge 33 – – 3 .5 – – – – 3 .5

Tax relating to share-based payments – – – – – 0 .1 – 0 .1

Purchase of shares held by employee beneﬁt trust 30 – – – – – – – –

Use of shares held by employee beneﬁt trust 30 – – – – – (2 . 3) 2 . 3 –

Transfer to retained earnings 29 – – (2 . 8) – – 2. 8 – –

Dividends paid 11 – – – – – – – –

Balance at 31 December 2021 41. 9 14 . 8 5 .8 (3 7. 2) 6 5.8 3 4 3. 2 (9. 2) 4 2 5 .1

119SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2021

Notes

Year ended

2021

£m

Year ended

2020

£m

Net cash from operating activities 32a 2 7. 0 48.9

Investing activities

Interest received 0 .1 0.2

Proceeds on disposal of property, plant and equipment 0.2 0. 5

Purchases of property, plant and equipment 16 (2 0. 2) (25. 2)

Purchases of intangible assets 14 (1 .1) (1. 6)

Proceeds on disposal activities net of cash balances 31 51. 7 0. 4

Net cash generated/(used) in investing activities 3 0.7 (2 5 .7)

Financing activities

Dividends paid 11

–

 –

New loans 20.0 13 5 .6

Repayment of borrowings (4 1 .1) (1 42 .8)

Repayment of lease liabilities (8 .4) ( 7. 9 )

Net cash used in ﬁnancing activities (2 9. 5) (1 5 .1)

Net increase in cash and cash equivalents 28.2 8 .1

Cash and cash equivalents at beginning of period 23. 2 15 .1

Eect of foreign exchange rate changes

(0.3)

–

Cash and cash equivalents at end of period 32c 5 1 .1 23.2

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021120

1. General information

Senior plc is a Company incorporated in England and Wales under the

Companies Act 2006. The address of the registered oce 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 64.

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 2021, 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 64.

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 existing covenants (“Existing 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. The Group’s lenders, both banks

and US private placement investors, have been supportive and we agreed

covenant relaxations (“New Covenants”) in relation to the June 2020,

December 2020, June 2021 and December 2021 testing periods and

agreed an additional September 2021 testing period to provide ﬁnancial

ﬂexibility for the Group through this unprecedented period.

For the testing period ended 31 December 2021, the New Covenants

required the Group’s net debt to EBITDA must not exceed 4.5x, interest

cover must be higher than 3.5x and liquidity headroom must be higher

than £40.0m. At 31 December 2021, the Group’s net debt to EBITDA was

1.9x and interest cover was 7.3x, both comfortably within the Existing

(and New) Covenants limits. The Group’s liquidity headroom at £208.0m

was also comfortably within covenant limits. For all testing periods within

the Going Concern Period, there is sucient headroom to remain within

the relevant covenant limits and the Group’s committed borrowing

facilities, even in a severe but plausible downside scenario.

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 the 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 eective for the year ended 31 December 2021.

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 2021. 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

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.

The results of subsidiaries acquired or disposed of during the year are

included in the Consolidated Income Statement from the eective date

of acquisition or up to the eective 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 dierence 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 o 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

121SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

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.

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 eective 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 aects 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 eective

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

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 dierences 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 dierences arising, if any,

are classiﬁed as equity and transferred to the Group’s translation reserve.

Such translation dierences 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:

Average

rates

2021

Average

rates

2020

Year-end

rates

2021

Year- end

rates

2020

US Dollar 1.38 1.29 1.35 1.37

2. Signiﬁcant accounting policies continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021122

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.

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

dierences 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 dierences, including for taxable temporary

dierences 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 dierence and it is probable that the temporary

dierence 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 dierences 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.

Deferred tax assets and liabilities are not recognised if the temporary

dierence 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 aects 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

sucient 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 eective 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 o 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 Nil

Freehold buildings 2%

Right-of-use land and

buildings

on the same basis as owned assets or,

where shorter, over the lease term

Leasehold building

improvements

on the same basis as owned assets or,

where shorter, over the lease term

Plant and equipment 5%–33%

Right-of-use plant and

equipment

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 oce 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 dierence 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

123SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

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 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 three

and ﬁve 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 suered 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

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 receivable, 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 eective 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

o against the loss allowance. The Group considers a trade receivable

to be in default when the customer is experiencing signiﬁcant ﬁnancial

diculties, 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 o 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

eective interest method. The eective interest method is a method of

calculating the amortised ﬁnancial liability and of allocating interest over

the relevant period. The eective interest rate is the rate that exactly

discounts estimated future cash payments through the expected life of

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.

Equity instruments

Equity instruments issued by the Company are recorded at the value

of the proceeds received, net of direct transaction costs.

2. Signiﬁcant accounting policies continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021124

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 eective in osetting 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 dierences, 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 eective as a cash ﬂow hedge are recognised directly

in equity and the ineective 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 aects proﬁt or loss.

For an eective 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

eective, these entries will oset 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 eect 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 aected 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 eect 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 eect

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 eect 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

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 2021, these extension options have an

approximate average remaining lease term of six years. These judgments

are reassessed at each reporting period, which could result in a

recalculation of the lease liability and a material adjustment to the

associated balances.

2. Signiﬁcant accounting policies continued

125SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

Key sources of estimation and uncertainty

When applying the Group’s accounting policies, Management must make

assumptions and estimates concerning the future that aect 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 diers 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 liability at 31 December 2021 was

£12.0m (2020 – £16.8m) and £4.8m (2020 – £0.8m), 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 aect the value of the carrying amount of the UK

Plan retirement beneﬁt obligation at 31 December 2021. 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 2021 was a surplus of £72.2m

(2020 – surplus of £46.5m), being the present value of the deﬁned beneﬁt

obligations of £294.9m (2020 – £317.7m) and fair value of plan assets

of £367.1m (2020 – £364.2m). Further details and sensitivities from

changes in estimates are set out in Note 34g.

Other estimates

The Board has considered the estimation applied to inventory and

concluded that there is not a signiﬁcant risk of a material adjustment

arising over the next ﬁnancial year. Management assesses the carrying

value of inventory to ensure that it is held at the lower of cost and net

realisable value. Where necessary, Management makes an estimate to

write down inventory to its net realisable value. The Group held a net

inventory balance at the year-end of £145.2m (2020 – £147.6m). In

determining an estimate of net realisable value, Management has made

assumptions in respect of the durability, quality, speciﬁcity and order

cover, which provide some protection against adverse market conditions,

and competitor product development and pricing activity. Inventory held is

typically built on a demand basis and is customer speciﬁc. In 2021, £1.5m

inventory impairments have been reversed (2020 – £9.3m impairment

charge) where demand has picked up on previously reduced or cancelled

speciﬁc programmes, only to the extent that there are conﬁrmed orders

in place. Management does not anticipate further material adjustments

to inventory to arise over the next ﬁnancial year, subject to further

unforeseen changes in market conditions.

The Board previously approved a restructuring plan that covered 2019, 2020

and 2021. In response to COVID-19, the Group implemented further cost

cutting actions which included asset write downs. At 31 December 2021,

aprovision of £1.3m (2020 – £8.9m) is recorded relating to committed

restructuring plans that have been communicated to those eected and

where the cash outﬂow is anticipated to occur in 2022. The restructuring

charges recorded in 2021 include asset impairments where demand on

speciﬁc programmes has ceased or signiﬁcantly decreased, and where

there is no alternate use. Management does not anticipate further material

adjustments to the restructuring provision recorded at 31 December 2021

over the next ﬁnancial year as the commitments are settled, subject to

unforeseen changes in market conditions.

Goodwill impairment assessment has been removed as a key estimate

in 2021 given suciency of headroom and no identiﬁed triggering events

at 31 December 2021 (see Note 13 for sensitivities). The Board does not

consider there to be a signiﬁcant risk of material adjustment arising for

goodwill impairment over the next ﬁnancial year.

The Directors have considered the impact of Climate Risk on the Financial

Statements for the year ending 31 December 2021 to be immaterial, given

the longer term view of Climate Risk compared to the short to mid-term

planning cycle on which asset and liability values are based upon.

3. Revenue

Total revenue is disaggregated by market sectors as follows:

Year ended

2021

£m

Year ended

2020

£m

Civil Aerospace 244.5 304.2

Defence 125.0 158.5

Other 69.8 63.5

Aerospace 439.3 526.2

Land Vehicles 118.8 89.2

Power & Energy 101.1 119.1

Flexonics 219.9 208.3

Eliminations (0.5) (0.9)

Total revenue 658.7 733.6

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.

2. Signiﬁcant accounting policies continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021126

4. Segment information continued

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:

Notes

Aerospace

Year ended

2021

£m

Flexonics

Year ended

2021

£m

Eliminations/

central

costs

Year ended

2021

£m

Total

Year ended

2021

£m

Aerospace

Year ended

2020

£m

Flexonics

Year ended

2020

£m

Eliminations/

central

costs

Year ended

2020

£m

Total

Year ended

2020

£m

External revenue 438.9 219.8 – 658.7 525.4 208.2 – 733.6

Inter-segment revenue 0.4 0.1 (0.5) – 0.8 0.1 (0.9) –

Total revenue 439.3 219.9 (0.5) 658.7 526.2 208.3 (0.9) 733.6

Adjusted trading proﬁt 7.9 12.9 (14.9) 5.9 5.9 11.0 (13.4) 3.5

Share of joint venture proﬁt – 0.2 – 0.2 – 0.2 – 0.2

Adjusted operating proﬁt 7.9 13.1 (14.9) 6.1 5.9 11. 2 (13.4) 3.7

Amortisation of intangible

assets from acquisitions – – – – (6.3) (1.4) – ( 7.7 )

Goodwill impairment

and write-o 9 – – – – (112.1) (22.2) – (134.3)

Net restructuring income/

(costs) 9 2.2 2.2 – 4.4 (32.5) (6.5) – (39.0)

Operating proﬁt/(loss) 10.1 15.3 (14.9) 10.5 (145.0) (18.9) (13.4) (17 7.3)

Investment income 0.5 1.1

Finance costs (8.5) (11.0 )

Corporate undertakings 9 21.2 (4.6)

Proﬁt/(loss) before tax 23.7 (191.8)

Tax 0.5 33.3

Proﬁt/(loss) after tax 24.2 (158.5)

Trading proﬁt and adjusted trading proﬁt is operating proﬁt/loss and adjusted operating proﬁt respectively before share of joint venture proﬁt. See

Note9 for the derivation of adjusted operating proﬁt.

Segment information for assets, liabilities, additions to non-current assets and depreciation and amortisation is presented below:

Assets

Year ended

2021

£m

Year ended

2020

£m

Aerospace 506.6 563.3

Flexonics 184.9 170.4

Segment assets for reportable segments 691.5 733.7

Unallocated

Central 4.6 2.9

Cash 51.1 23.6

Deferred and current tax 8.3 7.7

Retirement beneﬁts 72.2 46.5

Others 0.1 0.3

Total assets per Consolidated Balance Sheet 827.8 814.7

Liabilities

Year ended

2021

£m

Year ended

2020

£m

Aerospace 148 .1 153.9

Flexonics 63.9 55.7

Segment liabilities for reportable segments 212.0 209.6

Unallocated

Central 15.4 14.1

Debt 131.0 153.0

Deferred and current tax 25.1 25.3

Retirement beneﬁts 11.0 10.9

Others 8.2 8.5

Total liabilities per Consolidated Balance Sheet 402.7 421.4

127SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

4. Segment information continued

Additions to

non-current

assets

Year ended

2021

£m

Additions to

non-current

assets

Year ended

2020

£m

Depreciation

and

amortisation

Year ended

2021

£m

Depreciation

and

amortisation

Year ended

2020

£m

Aerospace 12.9 20.8 35.1 45.9

Flexonics 10.3 8.7 12.2 15.1

Sub total 23.2 29.5 47.3 61.0

Central 0.1 0.2 0.5 0.6

Total 23.3 29.7 47.8 61.6

The Group’s revenues from its major products is presented below:

Year ended

2021

£m

Year ended

2020

£m

Aerospace – Structures 178.9 234.4

Aerospace – Fluid Systems 260.0 291.0

Aerospace total 438.9 525.4

Land vehicles 118.8 89.2

Power & Energy 101.0 119.0

Flexonics total 219.8 208.2

Group total 658.7 733.6

No individual customer accounted for more than 10% of external revenue in 2021 or 2020

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.

Sales

revenue

Year ended

2021

£m

Sales

revenue

Year ended

2020

£m

Segment

non-current

assets

Year ended

2021

£m

Segment

non-current

assets

Year ended

2020

£m

USA 316.4 3 67. 4 202.5 239.7

UK 105.0 121.8 181.8 159.3

Rest of the World 237.3 244.4 140.9 151.5

Sub total 658.7 733.6 525.2 550.5

Unallocated amounts – – 5.7 4.7

Total 658.7 733.6 530.9 555.2

The unallocated amounts on non-current assets relate to deferred tax assets.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021128

5. Operating proﬁt

Operating proﬁt/(loss) can be analysed as follows:

Year ended

2021

£m

Year ended

2020

£m

Revenue 658.7 733.6

Cost of sales (555.7) (628.3)

Gross proﬁt 103.0 105.3

Distribution costs (5.4) (4.6)

Administrative expenses (87.3) (278.3)

Proﬁt on sale of ﬁxed assets – 0.1

Share of joint venture proﬁt 0.2 0.2

Operating proﬁt/(loss) 10.5 (177. 3)

Operating proﬁt/(loss) for the period has been arrived at after charging:

Year ended

2021

£m

Year ended

2020

£m

Net foreign exchange (gains)/losses (1.7) 3.1

Research and design costs 19.2 18.7

Depreciation of property, plant and equipment 46.3 52.1

Amortisation of intangible assets included in administration expenses 1.5 9.5

Cost of inventories recognised as expense 555.7 628.3

Provision for loss allowance against receivables 0.6 0.7

Restructuring: provision for impairment of property, plant and equipment and inventories 2.3 17. 3

Restructuring: sta and other costs 2.5 21.2

COVID-19 grant (income) (0.3) (9.0)

Aerospace manufacturing grant (income) (4.2) –

Sta 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. In 2021, government assistance schemes in response to the COVID-19 pandemic have beneﬁtted the Group through £0.3m

grant income (2020 – £9.0m grant income), to compensate for furloughing of employees, and have £2.4m of deferral of social security tax payments,

which is due for payment in 2022.

The analysis of the Auditor’s remuneration is as follows:

Year ended

2021

£m

Year ended

2020

£m

Fees payable to the Company’s Auditor and their associates for the audit of the Company’s annual accounts 0.3 0.2

Fees payable to the Company’s Auditor and their associates for other services to the Group

– The audit of the Company’s subsidiaries 1.5 1.3

Total audit fees 1.8 1.5

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 (2020 – £0.09m) to the Company’s Auditor for audit related services and £0.1m (2020 – £nil) for non-audit related services

during 2021, 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 80 to 86. No services were

provided pursuant to contingent fee arrangements.

129SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

6. Sta costs

The average monthly number of employees (including Directors) was:

Year ended

2021

£m

Year ended

2020

£m

Production 4,850 5,713

Distribution 63 72

Sales 252 285

Administration 473 564

Total 5,638 6,634

The actual number of employees at 31 December 2021 was 5,664 (2020 – 5,880).

Notes

Year ended

2021

£m

Year ended

2020

£m

Their aggregate remuneration comprised:

Wages and salaries 198.9 225.6

Social security costs 22.6 25.3

Termination beneﬁts 1.0 19.1

Other pension costs – deﬁned contribution 34a 8.6 9.2

Other pension costs – deﬁned beneﬁt 34e 0.7 0.9

Share based payments 33 3.5 3.0

Aggregate remuneration 235.3 28 3.1

The Group also incurred medical and other employee beneﬁt expenses during the year of £20.9m (2020 – £25.0m) and received £0.3m

(2020 – £9.0m) COVID-19 grant income related to government assistance schemes to compensate for furloughing of employees.

7. Investment income

Year ended

2021

£m

Year ended

2020

£m

Interest on bank deposits 0.1 0.2

Net ﬁnance income of retirement beneﬁts (Note 34e) 0.4 0.9

Total income 0.5 1.1

8. Finance costs

Year ended

2021

£m

Year ended

2020

£m

Interest on bank overdrafts and loans 1.0 1.9

Interest on other loans and other ﬁnance costs 4.9 6.1

Interest on lease liabilities 2.6 3.0

Total ﬁnance costs 8.5 11.0

9. Adjusted operating proﬁt and adjusted loss before tax

The presentation of adjusted operating proﬁt and adjusted loss 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, goodwill impairment and write-o,

net restructuring income/cost and the income and costs 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.

COVID-19 introduced unprecedented challenges and economic disruption. This has directly impacted the business performance of both the

Aerospace and Flexonics Divisions. The Board has not changed the policy for adjusted measures to present the COVID-19 ﬁnancial impact,

but instead, have described the impact within the narrative sections of the Strategic Report.

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 prior years’ acquisitions. It is charged on a straight-line basis and reﬂects a non-cash item for the reported year.

Goodwill impairment related to the Aerostructures group of cash generating units (CGU group), reﬂecting the signiﬁcant impact of the COVID-19

pandemic on the civil aerospace sector, where there has been a signiﬁcant reduction in the short-term demand for new aircraft on existing

programmes. Goodwill write-os related to operating business closures. The Group implemented a restructuring programme in 2019 which was

expanded further in 2020 and 2021 in response to the impact of COVID-19 on some of the Group’s end markets. 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

gain on disposal of a business, bid defence and other costs relating to corporate activities and are exceptional in nature, being presented outside

the normal operating results of the Group. None of these charges are reﬂective of in-year performance. They are therefore excluded by the Board

and Executive Committee when measuring the performance of the businesses.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021130

9. Adjusted operating proﬁt and adjusted loss before tax continued

Notes

Year ended

2021

£m

Year ended

2020

£m

Operating proﬁt/(loss) 10.5 (177. 3)

Amortisation of intangible assets from acquisitions – 7.7

Goodwill impairment and write-o 13 – 134.3

Net restructuring (income)/cost (4.4) 39.0

Adjusted operating proﬁt 6.1 3.7

Proﬁt/(loss) before tax 23.7 (191.8)

Adjustments to proﬁt/loss before tax as above (4.4) 181.0

Corporate undertakings 31 (21.2) 4.6

Adjusted loss before tax (1.9) (6.2)

Goodwill impairment and write-o

As previously reported, during the ﬁrst half of 2020, an impairment loss of £110.5m was recognised in relation to the goodwill allocated to the

Aerostructures CGU group (now within Aerospace CGU group – see Note 13 for details). This reﬂected the signiﬁcant impact of COVID-19 on the

short to medium-term outlook for Aerostructures, given the end market, which is focused on the civil aerospace sector. In the second half of 2020,

write-os of £1.6m and £22.2m were recognised in respect of the closures of Senior Aerospace Bosman and Senior Flexonics Upeca.

Net restructuring income/cost

The Group 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. At 31 December 2021, none of the Group’s employees were on furlough (2020 – 7%).

The decisive actions taken on restructuring and cost management over the last couple of years has 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. Our operating businesses have also

worked hard to maximise cash realised from disposal of assets where there is no alternate use.

The restructuring, which involves business closures and sale of associated assets, headcount reductions and other beneﬁts, has resulted in net

income of £4.4m (2020 – £39.0m net cost). Of this, £4.2m income (2020 – £nil) related to an aerospace manufacturing grant, £1.0m net income for

closures of Senior Flexonics Upeca and Senior Aerospace Bosman (2020 – £10.5m cost), £0.4m cost related to headcount reduction (2020 – £13.5m

cost) and £1.0m cost related to consultancy and other activities (2020 – £1.5m cost). For certain speciﬁc programmes, and in conjunction with the

focus on restructuring, management has also identiﬁed inventory impairment reversals of £1.4m (2020 – £8.5m charge) where customer demand

has increased, and further impairment provisions on property, plant and equipment in 2021 with a charge of £0.8m (2020 – £5.0m charge) to cover

the risk where there are no alternative uses and in part due to customers choosing to cancel and/or signiﬁcantly reduce future build rates.

Net cash outﬂow related to restructuring activities was £0.9m (2020 – £15.2m). At 31 December 2021, a restructuring provision of £1.3m

(31 December 2020 – £8.9m) was recognised and is expected to be utilised in 2022.

Corporate undertakings

Net income associated with corporate undertakings was £21.2m in 2021, of which £24.2m gain relates to the disposal of Senior Aerospace

Connecticut in April 2021, partly oset by £3.0m bid defence and costs relating to other corporate activities. In 2020, costs of £4.6m were incurred

relating to employee costs and external professional fees for the potential divestment of the Aerostructures business. See Note 31 to the Financial

Statements for further details on the £24.2m gain on disposal.

10. Taxation

Year ended

2021

£m

Year ended

2020

£m

Current tax:

Current year 7.0 3.1

Adjustments in respect of prior periods (6.0) (6.0)

1.0 (2.9)

Deferred tax (Note 21):

Current year (1.7) (31.3)

Adjustments in respect of prior periods 0.2 0.9

(1.5) (30.4)

Total tax credit (0.5) (33.3)

On 24th May 2021, a future increase in UK corporation tax rate from 19% to 25% was substantially enacted with an eective 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 net deferred tax liabilities being increased by

£2.1m with a credit of £0.6m recognised through the Income Statement and a charge of £2.7m through Other Comprehensive Income. Taxation for

other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

131SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

10. Taxation continued

The total charge for the year can be reconciled to the loss/proﬁt before tax per the Consolidated Income Statement as follows:

Year ended

2021

£m

Year ended

2021

Year ended

2020

£m

Year ended

2020

Proﬁt/(Loss) before tax 23.7 (191.8)

Expected tax charge/(credit) at the UK standard corporation tax rate 19% 4.5 (36.4)

Non-tax deductible goodwill impairments and write-os a - 12.7

Eect of dierent statutory rates in overseas jurisdictions b 0.9 (10.9)

Tax incentives and credits c (1.1) –

Tax losses not recognised d 0.3 3.0

Impact of share options e 0.1 0.4

Eect of dierence in treatment of ﬁnancing activities between jurisdictions f (0.3) (0.3)

Non-tax deductible expenses and other permanent dierences g 1.4 2.7

Eect of changes in UK tax rate on deferred tax items h (0.6) 0.4

Withholding taxes i 0.1 0.2

Adjustments in respect of prior periods – current tax items j (6.0) (6.0)

Adjustments in respect of prior periods – deferred tax items k 0.2 0.9

Tax credit and eective tax rate for the year (0.5) 2.1% (33.3) (17.4%)

a. Goodwill impairments and write-os on which no tax relief is available or deferred tax liability was held.

b. Mainly attributable to a higher rate of tax in the US.

c. Includes a £1.0m beneﬁt from enhanced US R&D deductions and the UK capital allowance superdeduction as well as the beneﬁt from speciﬁc projects eligible for tax incentives.

In 2020 the beneﬁt of enhanced deductions was fully oset by losses on projects subject to tax incentives which gave rise to a permanent dierence.

d. Tax losses not recognised comprise £0.5m of State tax losses in the US which have restricted use, net of tax losses utilised of £0.2m. Tax losses not recognised in 2020 mainly

related to Senior Aerospace Bosman and Senior Flexonics Upeca whose trades have ceased.

e. 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.

f. Eect of dierent rates of tax between jurisdictions on internal ﬁnancing activities.

g. Includes £1.5m in respect of non-tax deductible expenditure, the impact of minimum taxation rules in the US and a £2.0m charge in respect of uncertain tax positions. This is

reduced by the beneﬁt of non-taxable foreign exchange gains recycled to the Income Statement of £1.6m and other non-taxable gains on disposals.

h. 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 during the year.

i. Arises from irrecoverable withholding taxes.

j. 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 £5.1m as well as prior

year items arising from the true up of tax accruals following the submission of local tax ﬁlings which in many cases have an equal and opposite prior year item in deferred tax.

k. Arises from the true up of tax positions following the submission of tax returns.

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:

2021

£m

2020

£m

Deferred tax:

Items that will not be reclassiﬁed subsequently to proﬁt and loss

Tax on actuarial items (3.7) 1.6

Eect of change in UK tax rate (2.7) –

Items that may be reclassiﬁed subsequently to proﬁt or loss

Tax on foreign exchange contracts – cash ﬂow hedges 0.8 (0.5)

Total tax (charge)/credit recognised directly in other comprehensive income (5.6) 1.1

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:

Year ended

2021

£m

Year ended

2020

£m

Deferred tax:

Excess tax deductions related to share-based payments in exercised options 0.1 –

Total tax credit recognised directly in equity 0.1 –

Deferred tax (Note 21) (5.5) 1.1

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021132

11. Dividends

Year ended

2021

£m

Year ended

2020

£m

Amounts recognised as distributions to equity holders in the period:

Final dividend for the year ended 31 December 2020 of £nil (2019 – £nil) per share – –

Interim dividend for the year ended 31 December 2021 of £nil (2020 – £nil) per share – –

– –

Proposed ﬁnal dividend for the year ended 31 December 2021 of £nil (2020 – £nil) per share – –

12. Earnings/loss per share

The calculation of the basic and diluted earnings/loss per share is based on the following data:

Number of shares

Year ended

2021

£m

Year ended

2020

£m

Weighted average number of ordinary shares for the purposes of basic earnings/loss per share 415.7 414.9

Eect of dilutive potential ordinary shares:

Share options 6.8 –

Weighted average number of ordinary shares for the purposes of diluted earnings/loss per share 422.5 414.9

Year ended 2021 Year ended 2020

Earnings/loss and earnings/loss per share Notes

Earnings

£m

EPS

pence

Loss

£m

EPS

pence

Proﬁt/(loss) for the period 24.2 5.82 (158.5) (38.20)

Adjust:

Amortisation of intangible assets from acquisitions net of

tax of £nil (2020 – £2.0m) – – 5.7 1.38

Goodwill Impairment and write-o net of tax of £nil (2020 – £21.7m) 9 – – 112.6 27.14

Net restructuring (income)/cost and tax credit of £0.2m (2020 – £6.5m) 9 (4.6) (1.11) 32.5 7. 8 3

Corporate undertakings net of tax of £2.9m (2020 – £0.4m) 31 (18.3) (4.40) 4.2 1.01

Non-cash tax credit 10 (0.6) (0.14) – –

Adjusted earnings/(loss) after tax 0.7 0.17 (3.5) (0.84)

Earnings/(loss) per share

– basic 5.82p (38.20)p

– diluted 5.73p (38.20)p

– adjusted 0.17p (0.84)p

– adjusted and diluted 0.17p (0.84)p

The denominators used for all basic, diluted and adjusted earnings/loss per share are as detailed in the table above.

The presentation of adjusted earnings/loss 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, goodwill impairment and write-o, net restructuring income/cost,

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/loss 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

Year ended

2021

£m

Year ended

2020

£m

Cost

At 1 January 322.9 343.9

Corporate undertakings and write-o (15.1) (23.8)

Exchange dierences 0.7 2.8

At 31 December 308.5 322.9

Accumulated impairment losses

At 1 January 157.9 46.8

Impairment – 110.5

Exchange dierences 0.4 0.6

At 31 December 158.3 157.9

Carrying amount at 31 December 150.2 165.0

133SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

13. Goodwill continued

In 2021, goodwill has reduced by £14.8m, of which £15.1m relates to the disposal of Senior Aerospace Connecticut, partly oset by £0.3m foreign

exchange dierences.

In the ﬁrst half of 2020, the COVID-19 pandemic had direct impact on the Group’s end markets which led to an impairment triggering event.

Following a rigorous assessment, the Board concluded that Aerostructures CGU group (subsequently combined with Aerospace Fluid systems into

the Aerospace CGU group) recoverable amount fell below the carrying value by £110.5m, and this impairment was recorded in the half year ended

30 June 2020. In the second half of 2020, write-os of £1.6m and £22.2m were recognised in respect of the closures of Senior Aerospace Bosman

and Senior Flexonics Upeca.

Goodwill is allocated to the group of CGUs (CGU groups) within 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.

Year ended

2021

£m

Year ended

2020

£m

Aerospace 98.0 113 .3

Flexonics 52.2 51.7

Total 150.2 165.0

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 2021 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 2026 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

margins anticipated and the proportion of operating proﬁt converted into cash ﬂow in each year. The forecast compound annual growth rate in revenue

from 2021 to 2026 was 9% (2020 – 2019 to 2025 was – 1% to 4%), reﬂecting some 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 2026. These

estimates up to 2026, where appropriate, take account of the current economic environment as set out in the Strategic Report on pages 1 to 64.

Cash ﬂows after 2026 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 2026. For Aerospace, the long-term market

growth rate is 3.0% per annum (2020 – 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 1.4% per annum (2020 – 1.5%), 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 10.7% and 11.8% respectively (2020 – 10.5%

and 12.1%; 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.

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. This did not result

in the carrying amount of the CGU groups exceeding their recoverable amount.

Further to the 30 September 2021 annual impairment test, the Board considered whether there were any triggering events as at the 31 December

2021 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021134

14. Other intangible assets

Intangible

assets

from

acquisitions

Year ended

2021

£m

Computer

software

and others

Year ended

2021

£m

Total

Year ended

2021

£m

Intangible

assets

from

acquisitions

Year ended

2020

£m

Computer

software

and others

Year ended

2020

£m

Total

Year ended

2020

£m

Cost

At 1 January 121.0 23.0 144.0 131.0 21.8 152.8

Additions – 1.1 1.1 – 1.6 1.6

Disposals (3.5) (0.6) (4.1) – (0.1) (0.1)

Restructuring impairment and disposal – (0.6) (0.6) (7. 9) – (7.9)

Exchange dierences – (0.1) (0.1) (2.1) (0.3) (2.4)

At 31 December 117.5 22.8 140.3 121.0 23.0 144.0

Amortisation

At 1 January 121.0 18.2 139.2 123.5 16.4 139.9

Charge for the year – 1.5 1.5 7.7 1.8 9.5

Disposals (3.5) (0.6) (4.1) – (0.1) (0.1)

Restructuring impairment and disposal – (0.6) (0.6) (7. 9) 0.3 (7.6 )

Exchange dierences – 0.1 0.1 (2.3) (0.2) (2.5)

At 31 December 117.5 18.6 136.1 121.0 18.2 139.2

Carrying amount at 31 December – 4.2 4.2 – 4.8 4.8

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 £3.9m represents the Group’s share of the joint venture’s net assets as at 31 December 2021 (2020 – £3.6m).

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 2021 and December 2020.

2021

£m

2020

£m

Revenue 6.6 5.7

Expenses (6.1) (5.2)

Proﬁt 0.5 0.5

Total assets 10.0 9.3

Total liabilities (2.0) (1.9)

Net assets 8.0 7.4

Group's share of proﬁt 0.2 0.2

Group's share of net assets 3.9 3.6

135SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

16. Property, plant and equipment

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

Freehold

land and

buildings

Year ended

2020

£m

Leasehold

building

improve-

ments

Year ended

2020

£m

Plant

and

equipment

Year ended

2020

£m

Right-of-

use

Land and

Buildings

Year ended

2020

£m

Right-of-

use

Plant and

equipment

Year ended

2020

£m

Total

Year ended

2020

£m

Cost or

valuation

At 1 January 111.7 4.2 536.7 8 6.1 6.2 744.9 112.3 4.2 531.8 86.6 5.6 740.5

Additions 0.3 0.3 19.6 0.9 1.1 22.2 0.8 0.2 24.2 1.4 1.5 28.1

Lease

Modiﬁcations – – – 3.7 (0.2) 3.5 – – – (0.2) (0.8) (1.0)

Exchange

dierences (1.1) – (5.0) (0.5) – (6.6) (1.3) (0.1) (12.6) (1.7) (0.1) (15.8)

Disposed

on disposal

activities (3.1) – (16.6) – – (19.7) – – – – – –

Disposals (0.1) – (11.0) (0.4) (0.2) (11.7) (0.1) (0.1) (5.6) – – (5.8)

Restructuring

impairment and

disposal (3.1) – (4.9) (1.6) (0.4) (10.0) – – (1.1) – – (1.1)

At 31 December 104.6 4.5 518.8 88.2 6.5 722.6 111.7 4.2 536.7 86 .1 6.2 744.9

Accumulated

depreciation

and impairment

At 1 January 35.8 3.2 355.6 16.8 3.0 414.4 32.4 3.2 325.7 8.3 1.6 371.2

Charge for

the year 2.5 0.3 34.0 8.1 1.4 46.3 3.0 0.2 38.7 8.7 1.5 52.1

Lease

Modiﬁcations – – – – (0.1) (0.1) – – – – – –

Exchange

dierences (0.3) – (2.3) (0.1) – (2.7) (0.2) (0.1) (9.1) (0.5) (0.2) (10.1)

Eliminated

on disposal

activities (0.9) – (11.3) – – (12.2) – – – – – –

Eliminated on

disposals (0.1) – (10.8) (0.4) (0.2) (11.5) (0.1) (0.1) (5.2) – – (5.4)

Restructuring

impairment and

disposal (0.7) – (4.3) (0.8) (0.4) (6.2) 0.7 – 5.5 0.3 0.1 6.6

At 31 December 36.3 3.5 360.9 23.6 3.7 428.0 35.8 3.2 355.6 16.8 3.0 414.4

Carrying

amount at 31

December 68.3 1.0 157.9 64.6 2.8 294.6 75.9 1.0 181.1 69.3 3.2 330.5

In conjunction with the focus on restructuring described in Note 9, £3.8m (2020 – £7.7m) of property, plant and equipment has been impaired in 2021,

of which £1.0m relates to Aerospace and £2.8m 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 2021, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to £3.4m

(2020 – £1.9m)

17. Inventories

Year ended

2021

£m

Year ended

2020

£m

Raw materials 56.5 51.1

Work-in-progress 6 0.1 58.6

Finished goods 28.6 37.9

Total 145.2 147.6

Inventory write-downs recognised as an expense in 2021 were £2.5m (2020 – £17.3m), after write-down reversals of £1.5m (2020 – £9.3m

write-downs) relating to restructuring (see Note 9).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021136

18. Trade and other receivables

Trade and other receivables at 31 December comprise the following:

Year ended

2021

£m

Year ended

2020

£m

Non-current assets

Other receivables 0.1 0.1

0.1 0.1

Current assets

Trade receivables 85.2 71.5

Value added tax 1.9 1.6

Foreign exchange contracts 0.8 2.9

Prepayments 10.0 8.8

Other receivables 0.1 0.5

98.0 85.3

Total trade and other receivables 98.1 85.4

Other receivables includes £nil (2020 – £0.3m) of deferred consideration, £nil (2020 – £0.3m) as a current asset and £nil (2020 – £nil) as a

non-current asset.

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 52 days (2020 – 52 days). An allowance has been made for estimated irrecoverable amounts from

the sale of goods of £2.0m (2020 – £1.6m). 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 2021, the carrying amount of the receivable

from the Group’s most signiﬁcant customer was £6.7m (2020 – £8.3m 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.

Expected credit loss

Year ended

2021

£m

Year ended

2020

£m

Movements in loss allowance:

At 1 January 1.6 1.5

Provision for impairment 0.6 0.7

Disposal activities – –

Amounts written o as uncollectible (0.2) (0.2)

Amounts recovered – (0.3)

Exchange dierences – (0.1)

At 31 December 2.0 1.6

Ageing analysis of past due, net of loss allowance:

Up to 30 days past due 9.3 8.9

31 to 60 days past due 3.2 1.4

61 to 90 days past due 0.9 0.7

91 to 180 days past due 1.6 0.4

Total past due, net of loss allowance 15.0 11.4

Not past due 70.2 60.1

Total current trade receivables 85.2 71.5

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.

137SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

19. Bank overdrafts and loans

Year ended

2021

£m

Year ended

2020

£m

Bank overdrafts – 0.4

Bank loans (0.5) 20.9

Other loans 131.5 131.7

131.0 153.0

The borrowings are repayable as follows:

On demand or within one year 14.8 0.4

In the second year – 15.4

In the third to ﬁfth years inclusive 70.7 90.6

After ﬁve years 45.5 46.6

131.0 153.0

Less: amount due for settlement within 12 months (shown under current liabilities) (14.8) (0.4)

Amount due for settlement after 12 months 116.2 152.6

At 31 December 2021, bank loans are undrawn and there are £0.5m of capitalised revolving credit facility transaction costs. At 31 December 2020,

bank loans of £21.7m were drawn, oset by £0.8m of capitalised transaction costs.

Analysis of borrowings by currency

31 December 2021

Total

£m

Pound

Sterling

£m

Euros

£m

Dollars

£m

Bank overdrafts – – – –

Bank loans (0.5) (0.5) – –

Other loans 131.5 26.9 23.4 81.2

131.0 26.4 23.4 81.2

31 December 2020

Total

£m

Pound

Sterling

£m

Euros

£m

Dollars

£m

Bank overdrafts 0.4 – 0.4 –

Bank loans 20.9 3.7 1.8 15.4

Other loans 131.7 26.9 24.9 79.9

153.0 30.6 27.1 95.3

The weighted average interest rates paid were as follows:

Year ended

2021

Year ended

2020

Bank loans and overdrafts 1.51 1.66

Other loans 3.10 3.08

Bank loans and overdrafts of £nil (2020 – £21.3m) 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

2020 or 2021.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021138

19. Bank overdrafts and loans continued

The Directors estimate the fair value of the Group’s borrowings to be as follows:

Year ended

2021

£m

Year ended

2020

£m

Bank loans and overdrafts (0.5) 21.3

Other loans 133.8 131.9

133.3 153.2

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 eective interest rates on bank overdrafts are determined based on appropriate LIBOR and SONIA

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, 2021 £23.5m (2020 – £25.0m) 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, 2021 £14.8m (2020 – £14.6m) were taken out in October 2015 and are due for repayment in October 2022. The loan notes

carry interest at the rate of 3.42% per annum.

c) Loan notes of $60m, 2021 £44.5m (2020 – £43.8m) 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, 2021 £22.2m (2020 – £21.9m) 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 £0.5m, directly attributable to the GBP notes (£0.1m), the Euro notes (£0.1m) and the US Dollar notes (£0.3m), have been

deducted from their carrying value.

The Group also has two revolving credit facilities.

A committed multi-currency revolving credit facility in the UK of £120m (2020 – £120m) which matures in February 2024. At 31 December 2020,

£20.9m was outstanding under the £120m facility, comprising £4.5m, $20m (£14.6m) and €2.0m (£1.8m). At 31 December 2021, £nil was drawn

under the £120m facility.

A committed $50m single bank (£37.0m) loans and letter of credit facility was amended in April 2021 and matures in June 2023. There were $nil (£nil)

loans drawn under the facility on 31 December 2021 and $1.1m (£0.8m) loans drawn on 31 December 2020 and there were letters of outstanding

credit of $1.5m (£1.1m) (2020 – £2.3m).

As at 31 December 2021, the Group had available £155.9m (2020 – £132.5m) 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 3.0 years (2020 – 3.8 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 2021 was 19% (2020 – 33%).

All of the Group’s external borrowing facilities at 31 December 2021 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). The adoption of 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 existing covenants (“Existing 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. The Group’s lenders, both banks and US private placement investors, have been supportive and we agreed covenant relaxations

(“New Covenants”) in relation to the June 2020, December 2020, June 2021 and December 2021 testing periods and agreed an additional September

2021 testing period to provide ﬁnancial ﬂexibility for the Group through this unprecedented period.

For the testing period ended 31 December 2021, the New Covenants required the Group’s net debt to EBITDA must not exceed 4.5x, interest cover

must be higher than 3.5x and liquidity headroom must be higher than £40.0m. At 31 December 2021, the Group’s net debt to EBITDA was 1.9x

(31 December 2020 – 2.8x) and interest cover was 7.3x (31 December 2020 – 6.1x), both comfortably within the Existing (and New) Covenants limits.

The Group’s liquidity headroom at £208.0m (31 December 2020 – £157.1m) was also comfortably within covenant limits.

139SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

20. Financial instruments continued

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 eects 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 85% of its revenue from businesses outside the United Kingdom, with 60% 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 loss/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) 2021 Group adjusted operating

proﬁt by £1.9m (£1.0m of which would have been due to the US Dollar movement) and would have increased (or decreased) equity by £26.7m

(£15.1m 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 layer in hedges within policy guardrails up 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 after hedging in existence at 31 December 2021 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 £7.7m, £1.6m 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 eective hedge against the impact of interest

rate and foreign currency volatility on total interest costs. As at year end 2021, the percentage of debt at ﬁxed interest was 100% (2020 – 90%),

excluding IFRS 16 lease liabilities from debt.

The following sensitivity analysis of the Group’s exposure to interest rate risk in 2021 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 £2.5m. 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 ﬁve leases in the UK, three of which arose on the disposal of a former Group-owned subsidiary. 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 a low-cost ﬁnancing arrangement. The Group participates in reverse factoring schemes as a way of reducing

credit risk. The trade receivables reverse factored at 31 December 2021 were £16.8m (2020 – £17.6m). The net impact of reverse factoring on 2021

was a cash outﬂow in working capital of £0.9m (2020 – £13.3m outﬂow) and the discount interest presented within other ﬁnance costs is a charge

of £0.2m in 2021 (2020 – £0.2m).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021140

20. Financial instruments continued

Liquidity risk management

Liquidity risk reﬂects the risk that the Group will have insucient 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 60 to 63, the Group is currently in a well-funded position, with supportive lenders and has signiﬁcant

headroom under its committed borrowing facilities.

Categories of ﬁnancial instruments

Year ended

2021

£m

Year ended

2020

£m

Carrying value of ﬁnancial assets:

Cash and cash equivalents 51.1 23.6

Trade receivables 85.2 71.5

Other receivables 0.2 0.6

Financial assets at amortised cost 136.5 95.7

Foreign exchange contracts – cash ﬂow hedges 0.7 2.7

Foreign exchange contracts – held for trading 0.1 0.2

Total ﬁnancial assets 137.3 98.6

Carrying value of ﬁnancial liabilities:

Bank overdrafts and loans 131.0 153.0

Lease liabilities 73.2 76.5

Trade payables 68.3 57.8

Other payables 54.6 49.1

Financial liabilities at amortised cost 327.1 336.4

Foreign exchange contracts – cash ﬂow hedges 3.6 1.9

Foreign exchange contracts – held for trading – 0.5

Total ﬁnancial liabilities 330.7 338.8

Undiscounted contractual maturity of ﬁnancial liabilities at amortised cost:

Amounts payable:

On demand or within one year 152.3 121.1

In the second to ﬁfth years inclusive 118.8 125.8

After ﬁve years 108.7 144.8

379.8 391.7

Less: future ﬁnance charges (52.7) (55.3)

Financial liabilities at amortised cost 327.1 336.4

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.

141SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

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:

Year ended

2021

£m

Year ended

2020

£m

Notional amounts:

Foreign exchange contracts – cash ﬂow hedges 128.9 118.8

Foreign exchange contracts – held for trading 4.1 9.4

Total 133.0 128.2

Less: amounts maturing within 12 months (79.1) (75.0)

Amounts maturing after 12 months 53.9 53.2

Contractual maturity:

Cash ﬂow hedges balances due within one year:

Outﬂow (76.8) (64.6)

Inﬂow 75.2 66.2

Cash ﬂow hedges balances due between one and two years:

Outﬂow (22.4) (28 .1)

Inﬂow 22.0 27.3

Cash ﬂow hedges balances due between two and ﬁve years:

Outﬂow (32.1) (25.7)

Inﬂow 32.1 25.9

Held for trading balances due within one year:

Outﬂow (4.0) (9.4)

Inﬂow 4.1 9.1

Fair values:

Foreign exchange contracts – cash ﬂow hedges (2.9) 0.8

Foreign exchange contracts – held for trading 0.1 (0.3)

Total (liability)/asset (2.8) 0.5

These fair values are based on market values of equivalent instruments at the Balance Sheet date, comprising £0.8m (2020 – £2.9m) assets included

in trade and other receivables and £3.6m (2020 – £2.4m) liabilities included in trade and other payables. The fair value of currency derivatives that are

designated and eective as cash ﬂow hedges amounting to £2.6m loss (2020 – £0.8m gain) 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 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

Level 3 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).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021142

20. Financial instruments continued

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 dierence between contractual rates and observable

forward exchange rates.

31 December 2021

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Assets

Foreign exchange contracts – cash ﬂow hedges – 0.7 – 0.7

Foreign exchange contracts – held for trading – 0.1 – 0.1

Total assets – 0.8 – 0.8

Liabilities

Foreign exchange contracts – cash ﬂow hedges – 3.6 – 3.6

Foreign exchange contracts – held for trading – – – –

Total liabilities – 3.6 – 3.6

31 December 2020

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Assets

Foreign exchange contracts – cash ﬂow hedges – 2.7 – 2.7

Foreign exchange contracts – held for trading – 0.2 – 0.2

Total assets – 2.9 – 2.9

Liabilities

Foreign exchange contracts – cash ﬂow hedges – 1.9 – 1.9

Foreign exchange contracts – held for trading – 0.5 – 0.5

Total liabilities – 2.4 – 2.4

An amount of £0.1m (2020 – £nil) has been transferred to the Consolidated Income Statement, and is included within operating loss/proﬁt.

Hedge eectiveness is determined at the inception of the hedge relationship, and through periodic prospective eectiveness 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 eectiveness is performed.

If changes in circumstances aect 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 eectiveness.

Ineectiveness 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 aect proﬁt or loss, which is

generally within 12 months from the Balance Sheet date.

In 2021 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 remain at 31 December 2021 are presented in the balance

sheet as held for trading assets.

21. Tax balance sheet

Current tax

The current tax receivable of £2.6m (2020 – £3.0m) includes excess tax paid to tax authorities that is expected to be recovered within 12 months

by way of oset 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 £14.6m (2020 – £19.8m) includes £1.3m

(2020 – £1.4m) tax due on proﬁts of the current and prior years as well as £16.7m (2020 – £19.5m) 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 £3.4m (2020 –£1.1m)

that are considered to have a right of oset 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 £8.6m (2020 – £8.0m).

These uncertainties exist due to a number of factors including diering 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 diering 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.

143SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

21. Tax balance sheet continued

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

gains

£m

Goodwill and

intangible

amortisation

£m

Retirement

beneﬁts

£m

R&D

tax credits

£m

Tax

losses

£m

Other

temporary

dierences

£m

Total

£m

At 1 January 2020 19.4 (0.4) 25.6 7.2 (1.9) (0.2) (18.6) 31.1

(Credit)/charge to Consolidated

Income Statement (2.3) 0.5 (18.5) 0.5 (4.4) (3.2) (3.0) (30.4)

Charge/(credit) to other

comprehensive income – 0.5 – (1.6) – – – (1.1)

Balances acquired/disposed – – – – – – – –

Exchange dierences (0.4) 0.1 0.4 0.3 0.3 – 0.5 1.2

At 1 January 2021 16.7 0.7 7.5 6.4 (6.0) (3.4) (21.1) 0.8

(Credit)/charge to Consolidated

Income Statement (3.4) (0.3) (2.0) 2.8 0.3 (1.4) 2.5 (1.5)

Charge/(credit) to other

comprehensive income 0.1 (0.8) – 6.4 – – (0.1) 5.6

Charge/(credit) direct to equity – – – – – – (0.1) (0.1)

Exchange dierences (0.2) – 0.1 – (0.1) 0.2 – –

Liability/(asset) at 31 December 2021 13.2 (0.4) 5.6 15.6 (5.8) (4.6) (18.8) 4.8

Other temporary dierences include assets in the US of £13.6m (2020 – £16.1m) in respect of inventory provisions, accruals and other expenses

where tax relief is only available when items are realised or paid. Also included are assets held in respect of IFRS 16 of £1.5m (2020 – £1.1m) and share

based compensation (£1.1m) (2020 – £0.3m).

The deferred tax liability in respect of Retirement beneﬁts relates primarily to the Senior plc UK deﬁned beneﬁt pension plan £18.0m (2020 – £8.8m),

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 by £2.1m in the year with a £0.6m

credit in the Income Statement and a £2.7m charge through Other Comprehensive Income.

Certain deferred tax assets and liabilities have been oset. The following is the analysis of the deferred tax balances, after oset:

Year ended

2021

£m

Year ended

2020

£m

Deferred tax liabilities 10.5 5.5

Deferred tax assets (5.7) (4.7)

4.8 0.8

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 dierences, against which the assets can be utilised.

At the Balance sheet date the Group has recognised deferred tax assets in respect of losses of £4.6m (2020 – £3.4m), including £3.2m (2020 – £2.4m)

recognised against deferred tax liabilities and £1.4m (2020 – £1.0m) recognised based on anticipated proﬁts in the Group’s ﬁve year forecast to 2026

as approved by the Board.

Due to uncertainty as to the availability of future proﬁts against which tax losses may be utilised, £23.6m (2020 – £25.8m) of losses have not been

recognised. Included in unrecognised tax losses are losses of £13.8m (2020 – £9.6m) that will expire over a period of one to nine years. Other losses

may be carried forward indeﬁnitely.

At the Balance Sheet date, a deferred tax liability of £0.2m (2020 – £0.1m) has been recognised in respect of the aggregate amount of temporary

dierences associated with undistributed earnings of subsidiaries expected to reverse in the foreseeable future. No temporary dierence has been

recognised in respect of £34.5m (2020 – £38.7m) 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 dierences and it is not probable that such dierences will reverse in the foreseeable future.

At the Balance Sheet date, the Group had £5.0m (2020 – £5.0m) of surplus Advanced Corporation Tax (‘ACT’), previously written o, 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 (2020 – £18.0m) of unused capital losses.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021144

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:

Year ended

2021

£m

Year ended

2020

£m

Amounts payable:

On demand or within one year 10.8 10.3

In the second to ﬁfth years inclusive 35.6 30.9

After ﬁve years 60.9 67.3

107.3 108.5

Less: future ﬁnance charges (3 4.1) (32.0)

Lease liabilities 73.2 76.5

Amounts recognised in the Consolidated Income Statement:

Year ended

2021

£m

Year ended

2020

£m

Interest on lease liabilities 2.6 3.0

Income from sub-leasing right-of-use assets (0.1) (0.1)

Expenses relating to short-term leases 0.1 0.1

Expenses relating to low value leases – –

2.6 3.0

Amounts recognised in the Consolidated Cash Flow Statement

Year ended

2021

£m

Year ended

2020

£m

Cash outﬂow for leases 11.0 10.9

23. Trade and other payables

Trade and other payables at 31 December comprise the following:

Year ended

2021

£m

Year ended

2020

£m

Current liabilities

Trade payables 68.3 57.8

Social security and PAYE 5.7 7.9

Value added tax 1.6 2.4

Foreign exchange contracts 3.6 2.4

Accrued expenses 63.8 55.6

Total trade and other payables 143.0 126.1

The Directors consider that the carrying amount of trade payables approximates to their fair value.

The average credit period taken for trade purchases is 56 days (2020 – 55 days).

24. Provisions

Warranty

£m

Restructuring

£m

Legal claims

and contractual

matters

£m

Total

£m

At 1 January 2020 6.0 2.9 12.6 21.5

Additional provision in the year 1.9 21.2 3.1 26.2

Utilisation of provision (1.1) (15.2) (5.5) (21.8)

Release of unused amounts (0.1) – – (0.1)

Exchange dierences (0.1) – 0.1 –

At 1 January 2021 6.6 8.9 10.3 25.8

Additional provision in the year 1.3 2.8 2.1 6.2

Utilisation of provision (1.0) (9.8) (3.2) (14.0)

Release of unused amounts (0.1) (0.3) (1.3) (1.7)

Exchange dierences 0.1 (0.3) (0.1) (0.3)

At 31 December 2021 6.9 1.3 7.8 16.0

Included in current liabilities 4.9 1.3 7.6 13.8

145SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

Warranty

Provisions for warranty costs are based on an assessment of future claims with reference to past experience. £4.9m of costs are expected to settle

within the next 12 months.

Restructuring

The Group continued to implement further restructuring in 2021, discussed in further detail in Note 9. The amount recorded is expected to be fully

utilised in 2022.

Legal claims and contractual matters

During the year ended 31 December 2021, £2.3m settlement payments were paid relating to costs associated with class action lawsuits claiming

Ametek had polluted the groundwater during its tenure as owners of the site where Senior Aerospace Ketema is currently located, comprising £2.4m

provision at 1 January 2021 and £0.1m of exchange dierences. Other provisions at 31 December 2021 comprise £7.8m (2020 – £7.9m) 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 dier from the amount provided.

25. Share capital

Year ended

2021

£m

Year ended

2020

£m

Issued and fully paid:

419.4 million ordinary shares of 10p each 41.9 41.9

No shares were issued during 2021 and 2020.

The Company has one class of ordinary shares which carry no right to ﬁxed income.

26. Share premium account

Year ended

2021

£m

Year ended

2020

£m

Balance at 1 January 14.8 14.8

Movement in year – –

Balance at 31 December 14.8 14.8

27. Equity reserve

Year ended

2021

£m

Year ended

2020

£m

Balance at 1 January 5.1 5.5

Transfer to retained earnings reserve (2.8) (3.4)

Movement in year 3.5 3.0

Balance at 31 December 5.8 5.1

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 £3.5m (2020 – £3.0m) is in respect of the share-based payment charge for the year.

28. Hedging and translation reserves

Hedging

reserve

Year ended

2021

£m

Translation

reserve

Year ended

2021

£m

Total

Year ended

2021

£m

Hedging

reserve

Year ended

2020

£m

Translation

reserve

Year ended

2020

£m

Total

Year ended

2020

£m

Balance at 1 January (37.2) 75.1 37.9 (40.2) 79.1 38.9

Exchange dierences on translation of overseas operations – (3.8) (3.8) – (3.6) (3.6)

Foreign exchange losses/(gains) recycled to the Income

Statement on disposal 2.6 (5.5) (2.9) 0.9 (0.4) 0.5

Change in fair value of hedging derivatives (3.4) – (3.4) 2.6 – 2.6

Tax on foreign exchange contracts- cash ﬂow hedges 0.8 – 0.8 (0.5) – (0.5)

Balance at 31 December (37. 2) 65.8 28.6 (37.2) 75.1 37.9

Hedging Reserve

At 31 December 2021, the hedging reserve comprises net investment hedging losses of £35.2m (2020 – £37.8m), foreign exchange contracts – cash

ﬂow hedge losses of £2.6m (2020 – £0.8m gains) and related tax gains of £0.6m (2020 – £0.2m losses).

24. Provisions continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021146

28. Hedging and translation reserves continued

Movement in fair value of foreign exchange contracts – cash ﬂow hedges:

Derivatives at fair

value through

Hedging Reserve

Year ended

2021

£m

Derivatives at fair

value through

Income Statement

Year ended

2021

£m

Total

Year ended

2021

£m

Derivatives at fair

value through

Hedging Reserve

Year ended

2020

£m

Derivatives at fair

value through

Income Statement

Year ended

2020

£m

Total

Year ended

2020

£m

Balance at 1 January 0.8 (0.3) 0.5 (1.8) (0.3) (2.1)

Fair value movement recognised

in Hedging reserve (2 .1) – (2.1) 2.0 – 2.0

Fair value movement recognised

in Income Statement – (1.2) (1.2) – 0.6 0.6

Fair value movement recognised

in Hedging reserve and Income Statement (1.3) 1.3 – 0.6 (0.6) –

Balance at 31 December (2.6) (0.2) (2.8) 0.8 (0.3) 0.5

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 eective, 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

Year ended

2021

£m

Year ended

2020

£m

Balance at 1 January 305.1 472.5

Dividends paid – –

Proﬁt/(loss) for the year 24.2 (158.5)

Pension actuarial gain/(loss) 19.7 (11.4)

Transfer from equity reserve 2.8 3.4

Transfer from own share reserve (2.3) (2.5)

Tax on deductible temporary dierences (6.3) 1.6

Balance at 31 December 343.2 305.1

30. Own shares

Year ended

2021

£m

Year ended

2020

£m

Balance at 1 January (11.5) (14.0)

Transfer to retained earnings reserve 2.3 2.5

Purchase of new shares – –

Balance at 31 December (9.2) (11. 5)

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 2021, the number of own shares held by the Senior Plc Employee Beneﬁt Trust is 3,463,455 (2020 – 4,336,043).

31. Disposal activities

On 22nd April 2021, the Group sold its stand alone, build-to-print helicopter structures operating business, 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 (at 2021 exchange rate; 2020 – £36.2m at 2020 exchange rate)

and operating proﬁt was £0.8m (2020 – £5.1m).

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), oset by net cash consideration of £49.7m after £1.8m disposal costs, and the previously recorded foreign

exchange gain that has been recycled to the Income Statement of £2.9m.

In 2021, the Group received £0.2m (2020 – £0.4m) deferred consideration relating to the disposal of its Aerospace business Senior Aerospace

Absolute Manufacturing.

147SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

32. Notes to the consolidated cash ﬂow statement

A) Reconciliation of operating proﬁt/loss to net cash from operating activities

Year ended

2021

£m

Year ended

2020

£m

Operating proﬁt/ (loss) 10.5 (177. 3)

Adjustments for:

Depreciation of property, plant and equipment 46.3 52.1

Amortisation of intangible assets 1.5 9.5

Proﬁt on sale of ﬁxed assets – (0.1)

Share-based payment charges 3.5 3.0

Pension payments in excess of service cost (5.1) (5.0)

Corporate undertaking costs (4.8) (4.6)

Share of joint venture (0.2) (0.2)

(Increase)/decrease in inventories (7. 2) 19.6

(Increase)/decrease in receivables (16.1) 4 8.1

Increase/(decrease) in payables and provisions 11.6 (20.1)

Goodwill impairment – 134.3

Restructuring impairment of property, plant and equipment and software 3.8 8.0

US class action lawsuits (2.3) (3.9)

Working capital and provisions currency movements (1.1) (0.2)

Cash generated by operations 40.4 63.2

Income taxes paid (5.3) (3.5)

Interest paid (8.1) (10.8)

Net cash from operating activities 27.0 48.9

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:

Notes

Year ended

2021

£m

Year ended

2020

£m

Net cash from operating activities 27.0 48.9

Corporate undertaking costs 9 4.8 4.6

Net Restructuring cash paid 24 0.9 15.2

US class action lawsuits 24 2.3 3.9

Interest received 0.1 0.2

Proceeds on disposal of property, plant and equipment 0.2 0.5

Purchases of property, plant and equipment (20.2) (25.2)

Purchase of intangible assets (1.1) (1.6)

Free cash ﬂow 14.0 46.5

C) Analysis of net debt

Notes

1 January

2021

£m

Net

Cash

ﬂow

£m

Non

Cash

£m

Exchange

movement

£m

Other

Lease

Movements

£m

31 December

2021

£m

Cash and bank balances 23.6 27.8 – (0.3) – 51.1

Overdrafts (0.4) 0.4 – – – –

Cash and cash equivalents 23.2 28.2 – (0.3) – 51.1

Debt due within one year – – (14.5) (0.3) – (14.8)

Debt due after one year (152.6) 21.1 14.5 0.8 – (116.2)

Lease liabilities 22 (76.5) 8.4 – 0.5 (5.6) (73.2)

Liabilities arising from ﬁnancing activities (229.1) 29.5 – 1.0 (5.6) (204.2)

Total (205.9) 57.7 – 0.7 (5.6) (15 3.1)

Other lease movements include lease additions and modiﬁcations of £5.6m.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021148

32. Notes to the consolidated cash ﬂow statement continued

Notes

1 January

2020

£m

Net

Cash

ﬂow

£m

Non

Cash

£m

Exchange

movement

£m

Other

Lease

Movements

£m

31 December

2020

£m

Cash and bank balances 15.8 7.9 – (0.1) – 23.6

Overdrafts (0.7) 0.2 – 0.1 – (0.4)

Cash and cash equivalents 15.1 8.1 – – – 23.2

Debt due within one year (15.0) 15.7 – (0.7) – –

Debt due after one year (146.0) (8.5) -- 1.9 – (152.6)

Lease liabilities 22 (83.7) 7.9 – 1.2 (1.9) (76.5)

Liabilities arising from ﬁnancing activities (244.7) 15.1 – 2.4 (1.9) (229.1)

Total (229.6) 23.2 – 2.4 (1.9) (205.9)

Other lease movements include lease additions and modiﬁcations of £1.9m.

Year ended

2021

£m

Year ended

2020

£m

Cash and cash equivalents comprise:

Cash and bank balances 51.1 23.6

Overdrafts – (0.4)

Total 51.1 23.2

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:

Year ended

2021

£m

Year ended

2020

£m

Inventories 145.2 147.6

Trade and other receivables 98.0 85.3

Trade and other payables (143.0) (126.1)

Working capital, including derivatives 100.2 106.8

Items excluded:

Foreign exchange contracts 2.8 (0.5)

Deferred consideration relating to disposals – current – (0.3)

Total 103.0 106.0

Working capital and provisions movement, net of restructuring items, a non-statutory cash ﬂow item, is derived as follows:

Year ended

2021

£m

Year ended

2020

£m

(Increase)/decrease in inventories (7. 2) 19.6

(Increase)/decrease in receivables (16.1) 4 8.1

Increase/(decrease) in payables and provisions 11.6 (20.1)

Working capital and provisions movement, excluding currency eects (11.7) 47.6

Items excluded:

Decrease/(increase) in restructuring related inventory impairment 1.5 (9.3)

Decrease/(increase) in net restructuring provision and other receivables 7.6 (6.0)

Total (2.6) 32.3

149SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

33. Share-based payments

The Group recognised total expenses of £3.8m (2020 – £3.0m) related to share-based payments, of which £3.5m (2020 – £3.0m) related to equity-

settled share-based payments, and £0.3m (2020 – £nil) related to social security costs on share-based payments. As at 31 December 2021, the Group

had a liability of £0.3m (2020 – £0.1m) arising from share-based payments relating to social security costs.

A) 2005 Long-Term Incentive Plan

Equity-settled Long-Term Incentive Plans

On 12 March 2021, 4,396,538 shares were awarded under the 2005 Long-Term Incentive Plan. Awards made under this plan prior to 2021 have a

three-year vesting period, subject to earnings per share (EPS) and total shareholder return (TSR) performance conditions being met. Half the awards

have an attaching performance target for EPS growth over the three-year performance period of at least 4% per annum above RPI. The other half of

the awards begin to vest if the Group’s TSR falls in the top half of a comparator group at the end of the three-year performance period. For awards

made in 2021 Adjusted EPS and TSR metrics have been retained and ROCE added as a third performance measure, with each metric having an equal

weighting of one third. The EPS target is now expressed as an absolute number rather than a growth percentage. 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 conditions is 112.80p, 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 94.80p per share reﬂecting an adjustment of 16% 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 92.50p and 77.70p reﬂecting the two year retention period.

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 (112.80p for the main award), expected volatility

of 54% 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 2021 and 2020:

Year ended

2021

Number of

Year ended

2020

Number of

Outstanding at 1 January 7,089,567 6,370,205

Granted 4,455,281 3,576,238

Exercised (58,743) (6 63,104)

Forfeited (2,051,864) (2,19 3,772)

Outstanding at 31 December 9,434,241 7,0 8 9,5 67

B) Enhanced SMIS Deferred Share Award

On 12 March 2021, 694,536 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 112.80p per share, which is the share price at the date of grant.

The following share awards were outstanding as at 31 December 2021 and 2020:

Year ended

2021

Number of

Year ended

2020

Number of

Outstanding at 1 January 1,734,683 1,187,6 6 9

Granted 758,551 794,715

Exercised (425,422) (247,701)

Forfeited (64,121) –

Outstanding at 31 December 2,003,691 1,734,683

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021150

33. Share-based payments continued

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 2021 and 2020:

Year ended 2021 Year ended 2020

Number of

options

Weighted

average

exercise

price

Number of

options

Weighted

average

exercise

price

Outstanding at 1 January 1,94 4,121 217.67p 4,390,225 215.95p

Granted 3,247,159 118.40 p – –

Exercised – – – –

Forfeited (676,596) 204.63p (1,880,038) 212.34p

Expired (261,180) 207.20p (566,066) 222.00p

Outstanding at 31 December 4,253,504 144.61p 1,9 4 4,121 217.67p

Exercisable at 31 December – – 261,180 207.20p

No shares were exercised in 2021 and 2020. 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. The options outstanding at 31 December 2020 had exercise prices of 219.30p and

207.20p per share, and a weighted average remaining contractual life of 1.7 years.

D) Restricted Share Awards

On 12 March 2021, 110,000 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 112.80p per share, which is the share price at the date of grant.

The following share awards were outstanding as at 31 December 2021 and 2020:

Year ended

2021

Number of

Year ended

2020

Number of

Outstanding at 1 January 2,208,538 170,000

Granted 110,000 2,073,538

Exercised (388,423) (25,000)

Forfeited – (10,000)

Outstanding at 31 December 1,930,115 2,208,538

151SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

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 2019 and, for the purposes of accounting

under IAS19, this valuation has been rolled forward to 31 December 2021.

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

three 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 15 years and beneﬁts are expected to be paid for the next

60 to 70 years. These cash ﬂow payments are expected to reach a peak around 2029, 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 dierent asset classes. The primary

investment objective is implemented by setting strategic asset allocations using a “linear de-risking” approach. Under this approach, the Plan’s current

asset strategy of 77% invested in low-risk matching assets, such as ‘liability driven investments’ (LDI) and bonds, and 23% in higher-risk return

seeking assets, such as equities, is expected to be linearly moved into 100% matching assets over the period from April 2021 to April 2036. 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 has also implemented a switching mechanism to secure any

outperformances of equities relative to bonds, by selling equities to buy bonds.

While the UK Plan was in a deﬁcit position of £10.2m as at 5 April 2019 when measured on the Trustee’s funding basis, the UK Plan is in a surplus

position of £72.2m as at 31 December 2021 (2020 – £46.5m surplus) when measured on an IAS 19 basis. The dierence 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.

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 2019 and were based on a forecast deﬁcit at that time, as part of the 2019 triennial funding valuation.

TheCompany has agreed with the Trustee of the UK Plan to make scheduled deﬁcit reduction contributions over the three year period from April 2019

to March 2022. Annual cash funding contributions of £5.5m are expected over this period, subject to review and amendment as appropriate, at the

next funding valuation in 2022. The estimated contributions expected to be paid during 2022 in the US funded plans is £2.2m.

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 dierent 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021152

34. Retirement beneﬁt schemes continued

a) Deﬁned contribution schemes

The Group has a number of dierent 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 £8.6m (2020 – £9.2m).

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.

31 December 2021 31 December 2020

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

Present value of deﬁned

beneﬁt obligations (294.9) (56.2) (5.7) (356.8) (317.7) (58.8) (6.2) (382.7)

Fair value of plan assets 367.1 50.9 – 418.0 364.2 54.1 – 418.3

Plan surplus/(deﬁcit) per Consolidated Balance Sheet 72.2 (5.3) (5.7) 61.2 46.5 (4.7) (6.2) 35.6

c) Movements in the present value of deﬁned beneﬁt obligations were as follows:

31 December 2021 31 December 2020

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

At 1 January 317.7 58.8 6.2 382.7 285.8 54.6 6.9 3 47.3

Current service cost – 0.4 0.3 0.7 – 0.4 0.5 0.9

Past service cost – – – – 0.2 – – 0.2

Interest cost 3.8 1.5 – 5.3 5.7 1.8 0.1 7.6

Experience on beneﬁt obligations 2.5 – – 2.5 (1.2) 1.1 – (0.1)

Actuarial (gains)/losses – ﬁnancial (15.8) (1.8) – (17.6) 35.4 6.0 – 41.4

Actuarial (gains)/losses- demographic (0.3) 0.2 – (0.1) 3.8 (0.4) – 3.4

Beneﬁts paid (13.0) (3.7) (0.4) (17.1) (12.0) (2.7) (1.6) (16.3)

Disposal activities – – – – – – – –

Exchange dierences – 0.8 (0.4) 0.4 – (2.0) 0.3 (1.7)

At 31 December 294.9 56.2 5.7 356.8 317.7 58.8 6.2 382.7

d) Movements in the fair value of plan assets were as follows:

31 December 2021 31 December 2020

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

At 1 January 364.2 54.1 – 418.3 334.7 52.6 1.1 388.4

Interest on plan assets 4.4 1.3 – 5.7 6.8 1.7 – 8.5

Actual return on plan assets less interest 6.1 (1.6) – 4.5 29.6 3.7 – 33.3

Contributions from employer 6.0 – – 6.0 5.6 0.6 – 6.2

Beneﬁts paid (13.0) (3.7) – (16.7) (12.0) (2.7) (1.1) (15.8)

Running costs (0.6) – – (0.6) (0.5) (0.1) – (0.6)

Exchange dierences – 0.8 – 0.8 – (1.7) – (1.7)

At 31 December 367.1 50.9 – 418.0 364.2 5 4.1 – 418.3

e) Amounts recognised in the Consolidated Income Statement in respect of these deﬁned beneﬁt schemes are as follows:

31 December 2021 31 December 2020

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

Current service cost included within operating loss/proﬁt – 0.4 0.3 0.7 – 0.4 0.5 0.9

Running costs 0.6 – – 0.6 0.5 0.1 – 0.6

Past service cost – – – – 0.2 – – 0.2

Charge included within operating proﬁt/loss 0.6 0.4 0.3 1.3 0.7 0.5 0.5 1.7

Included within ﬁnance (income)/costs (0.6) 0.2 – (0.4) (1.1) 0.1 0.1 (0.9)

Amount recognised in the Income Statement – 0.6 0.3 0.9 (0.4) 0.6 0.6 0.8

153SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

34. Retirement beneﬁt schemes continued

f) Amounts recognised in other comprehensive income are as follows:

31 December 2021 31 December 2020

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

UK plans

funded

£m

US plans

funded

£m

Unfunded

plans

£m

Total

£m

Net actuarial gain/(losses) in the year due to:

– Change in ﬁnancial assumptions 15.8 1.8 – 17.6 (35.4) (6.0) – (41.4)

– Change in demographic assumptions 0.3 (0.2) – 0.1 (3.8) 0.4 – (3.4)

– Experience adjustments on beneﬁt obligations (2.5) – – (2.5) 1.2 (1.1) – 0.1

Actual return on plan assets less interest

on beneﬁt obligations 6.1 (1.6) – 4.5 29.6 3.7 – 33.3

Gains/(losses) recognised in other

comprehensive income 19.7 – – 19.7 (8.4) (3.0) – (11.4)

Actuarial gains of £19.7m (2020 – losses of £11.4m) 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 2021 is £23.0m (2020 – £42.7m).

g) Assets and assumptions in funded plans

UK plans funded US plans funded

2021

£m

2020

£m

2021

£m

2020

£m

Fair value of plan assets

Equities 28.6 32.9 – –

Bonds 126.6 127.5 50.9 5 4.1

Gilts 157.9 156.7 – –

Diversiﬁed growth fund 37.7 41.2 – –

Cash and net current assets 16.3 5.9 – –

Total 367.1 364.2 50.9 5 4.1

Actual return on plan assets 10.5 36.4 (0.3) 5.4

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 £4.7m (2020 – £5.5m). 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 equities are split between UK and overseas companies, with a larger allocation to the overseas market. The UK equities are passively

invested in line with the FTSE All-Share Index and the overseas equities are passively invested in line with the FTSE World ex-UK GBP Hedged Index.

Therefore, the Plan is exposed to a typical breakdown of industries within those equity indices. 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

oset by corresponding risks present within the pricing of the Plan’s beneﬁt obligations. The diversiﬁed growth fund is an investment in Pyrford’s

absolute return fund. This fund is composed of positions in a range of assets, including bonds and equities. These positions vary over time according

to Pyrford’s views. The fund looks to generate equity-like returns, with reduced volatility, whilst also providing diversiﬁcation beneﬁts to the Plan’s

other investments.

The UK Plan does not invest directly in property occupied by the Company or in ﬁnancial securities issued by the Company.

UK plans funded US plans funded

2021 2020 2021 2020

Major assumptions (per annum %)

Inﬂation 3.50% 3.00% N/A N/A

Increase in salaries N/A N/A N/A N/A

Increase in pensions 3.30% 2.90% 0.00% 0.00%

Increase in deferred pensions 3.50% 3.00% 0.00% 0.00%

Rate used to discount plan liabilities 1.90% 1.20% 2.76% 2.51%

Life expectancy of a male aged 65 at the year-end 20.8 20.8 19.6 19.5

Life expectancy of a male aged 65, 20 years after the year-end 22.2 22.2 21.2 21.1

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021154

34. Retirement beneﬁt schemes continued

g) Assets and assumptions in funded plans continued

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 dierence 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 standard mortality tables with an allowance for future improvements in line with the CMI 2020 enhanced projections, with a

long-term annual rate of improvement of 1.25% for males and for females, and currently with no explicit adjustment for the potential long-term impact

of Covid-19. The methodology used for determining the discount rate, in measuring the UK retirement beneﬁt scheme, has been updated in 2021

following actuarial advice to ensure that the discount rate remains robust to changes in the bond yields, which has increased the discount rate by 0.1%.

For the UK Plan, the estimated impact on the plan surplus at 31 December 2021 for changes in assumptions is as follows:

Decrease in

plan surplus

£m

0.5% decrease in the discount rate 20.7

One-year increase in life expectancy (14.0)

0.5% increase in inﬂation (13.2)

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 2021. 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 £3.3m (2020 – £3.7m), unfunded closed pension and post-retirement healthcare plans in

the US of £0.3m (2020 – £0.3m), a provision for post-retirement payments in France of £1.4m (2020 – £1.5m) and £0.7m for post-retirement payments

in Thailand (2020 – £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 2.8%

(2020 – 2.5%). No participants were eligible for medical beneﬁts under the healthcare plan in 2021. The German plan has been subject to formal

actuarial valuation on a Projected Unit Method with the following assumptions: discount rate 1.1%, salary growth 0.0% and pension increase 1.8%

(2020 – 1.0%, 0.0% and 1.5%). 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% (2020 – 2.2%, 2.8% and 6.0%).

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 2021 (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.

155SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

COMPANY BALANCE SHEET

As at 31 December 2021

Notes

Year ended

2021

£m

Year ended

2020

£m

Non-current assets

Investment in subsidiaries 38 259.9 259.9

Property, plant and equipment 39 1.3 1.5

Other intangible assets 37 0.1 0.1

Other receivables 40 25.7 27.2

Retirement beneﬁts 50 72.2 46.5

Total non-current assets 359.2 335.2

Current assets

Other receivables 40 65.4 78.6

Cash and bank balances 47 4.7 0.7

Current tax receivables 49 – –

Total current assets 70.1 79.3

Total assets 429.3 414.5

Current liabilities

Trade and other payables 42 70.1 91.8

Bank overdrafts and loans 41 14.8 –

Total current liabilities 84.9 91.8

Non-current liabilities

Bank and other loans 41 94.1 128.3

Lease liabilities 48 1.2 1.4

Deferred tax liabilities 49 14.2 6.9

Total non-current liabilities 109.5 136.6

Total liabilities 194.4 228.4

Net assets 234.9 18 6.1

Equity

Issued share capital 43 41.9 41.9

Share premium account 14.8 14.8

Equity reserve 5.8 5.1

Hedging and translation reserve 44 – –

Retained earnings 45 181.6 135.8

Own shares 46 (9.2) (11.5)

Total equity 234.9 18 6.1

The Proﬁt for the Company for the year ended 31 December 2021 was £31.9m (2020 – £13.7m Loss).

The Financial Statements of Senior plc (registered number 282772) were approved by the Board of Directors and authorised for issue on 25 February

2022. They were signed on its behalf by:

David Squires Bindi Foyle

Director Director

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021156

All equity is attributable to equity holders of the Company

Notes

Issued

capital

£m

premium

account

£m

Equity

reserve

£m

Hedging

and

translation

reserve

£m

Retained

earnings

£m

Own

£m

Total

equity

£m

Balance at 1 January 2020 41.9 14.8 5.5 (0.3) 156.5 (14.0) 204.4

Loss for the year 2020 – – – – (13.7) – (13.7)

Actuarial losses on deﬁned beneﬁt pension schemes – – – – (8.4) – (8.4)

Exchange dierences recycled to income statement – – – 0.3 – – 0.3

Tax relating to components of other comprehensive income – – – – 0.5 – 0.5

Total comprehensive income/(expense) for the period – – – 0.3 (21.6) – (21.3)

Share-based payment charge – – 3.0 – – – 3.0

Tax relating to share-based payments – – – – – – –

Purchase of shares held by employee beneﬁt trust 46 – – – – – – –

Use of shares held by employee beneﬁt trust 46 – – – – (2.5) 2.5 –

Transfer to retained earnings 45 – – (3.4) – 3.4 – –

Dividends paid 11 – – – – – – –

Balance at 31 December 2020 41.9 14.8 5.1 – 135.8 (11.5) 18 6.1

Proﬁt for the year 2021 – – – – 31.9 – 31.9

Actuarial gains on deﬁned beneﬁt pension schemes – – – – 19.7 – 19.7

Exchange dierences recycled to income statement – – – – – – –

Tax relating to components of other comprehensive income – – – – (6.4) – (6.4)

Total comprehensive income for the period – – – – 45.2 – 45.2

Share-based payment charge – – 3.5 – – – 3.5

Tax relating to share-based payments – – – – 0.1 – 0.1

Purchase of shares held by employee beneﬁt trust 46 – – – – – – –

Use of shares held by employee beneﬁt trust 46 – – – – (2.3) 2.3 –

Transfer to retained earnings 45 – – (2.8) – 2.8 – –

Dividends paid 11 – – – – – – –

Balance at 31 December 2021 41.9 14.8 5.8 – 181.6 (9.2) 234.9

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

157SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

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

Year ended

2021

Computer

software

£m

Year ended

2020

Computer

software

£m

Cost

At 1 January 1.0 0.9

Additions – 0.1

At 31 December 1.0 1.0

Amortisation

At 1 January 0.9 0.7

Charge for the year – 0.2

At 31 December 0.9 0.9

Carrying amount at 31 December 0.1 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

164 to 165.

Year ended

2021

£m

Year ended

2020

£m

At 1 January and 31 December 259.9 259.9

39. Property, plant and equipment

Year ended

2021

Plant and

equipment

£m

Year ended

2020

Plant and

equipment

£m

Cost

At 1 January 2.4 2.4

Additions – –

Disposals – –

At 31 December 2.4 2.4

Accumulated depreciation

At 1 January 0.9 0.7

Charge for the year 0.2 0.2

Eliminated on Disposals – –

At 31 December 1.1 0.9

Carrying amount at 31 December 1.3 1.5

The carrying amount includes £1.1m of right-of-use assets (2020 – £1.3m)

NOTES TO THE COMPANY FINANCIAL STATEMENTS

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021158

40. Other receivables

Other receivables comprise the following:

Year ended

2021

£m

Year ended

2020

£m

Other receivables: amounts due more than one year

Due from subsidiaries 25.7 27.2

25.7 27.2

Other receivables: amounts due within one year

Value added tax 0.2 0.1

Prepayments and accrued income 1.0 0.6

Due from subsidiaries 64.2 77.9

65.4 78.6

Total other receivables 91.1 105.8

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 (2020 – immaterial).

As at 31 December 2021, other receivables due in more than one year consist of £2.2m (2020 – £2.2m) due in accordance with the vesting periods

of share-based payments and £23.5m (2020 – £25.0m) of loans to subsidiaries at market rates of interest.

41. Bank overdrafts and loans

Year ended

2021

£m

Year ended

2020

£m

Bank overdrafts – –

Bank loans (0.5) 18.3

Other loans 109.4 110.0

Total 108.9 128.3

The borrowings are repayable as follows:

On demand or within one year 14.8 –

In the second year – 14.6

In the third to ﬁfth years inclusive 70.7 88.8

After ﬁve years 23.4 24.9

108.9 128.3

Less: amount due for settlement within 12 months (shown under current liabilities) (14.8) –

Amount due for settlement after 12 months 94.1 128.3

At 31 December 2021, bank loans are undrawn and there are £0.5m of capitalised revolving credit facility transaction costs. At 31 December 2020,

bank loans of £19.1m were drawn, oset by £0.8m of capitalised transaction costs.

Analysis of borrowings by currency

31 December 2021

Pound

Sterling

£m

Euros

£m

Dollars

£m

Total

£m

Bank overdrafts – – – –

Bank loans (0.5) – – (0.5)

Other loans 26.9 23.4 59.1 109.4

26.4 23.4 59.1 108.9

31 December 2020

Pound

Sterling

£m

Euros

£m

Dollars

£m

Total

£m

Bank overdrafts – – – –

Bank loans 3.7 – 14.6 18.3

Other loans 26.9 24.9 58.2 110.0

30.6 24.9 72.8 128.3

159SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

41. Bank overdrafts and loans continued

Analysis of borrowings by currency continued

The weighted average interest rates paid were as follows:

Year ended

2021

Year ended

2020

Bank loans and overdrafts 1.26 1.57

Other loans 2.88 2.86

Bank loans of £nil (2020 – £19.1m) 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 2020 or 2021.

Transaction costs of £0.5m (2020 – £0.8m) have been deducted from the bank loans carrying value. 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 the carrying value of Other loans.

The Directors estimate the fair value of the Company’s borrowings to be as follows:

Year ended

2021

£m

Year ended

2020

£m

Bank loans and overdrafts (0.5) 18.3

Other loans 110.4 109.4

109.9 127.7

42. Trade and other payables

Trade and other payables comprise the following:

Year ended

2021

£m

Year ended

2020

£m

Trade and other payables: amounts falling due within one year

Trade payables 0.9 0.6

Social security and PAYE 0.2 0.2

Other payables and accruals 6.8 4.6

Due to subsidiaries 62.2 86.4

Total trade and other payables 70.1 91.8

The Directors consider that the carrying amount of trade payables approximates to their fair value.

43. Issued share capital

Year ended

2021

£m

Year ended

2020

£m

Issued and fully paid:

419.4 million ordinary shares of 10p each 41.9 41.9

No shares were issued during 2020 and 2021.

The Company has one class of ordinary shares, which carry no right to ﬁxed income.

44. Hedging and translation reserves

Hedging

reserve

Year ended

2021

£m

Translation

reserve

Year ended

2021

£m

Total

Year ended

2021

£m

Hedging

reserve

Year ended

2020

£m

Translation

reserve

Year ended

2020

£m

Total

Year ended

2020

£m

Balance at 1 January – – – – (0.3) (0.3)

Exchange dierences recycled to Income Statement – – – – 0.3 0.3

Balance at 31 December – – – – – –

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021160

45. Retained earnings

Year ended

2021

£m

Year ended

2020

£m

Balance at 1 January 135.8 156.5

Dividends paid – –

Proﬁt/(loss) for the year 31.9 (13.7)

Pension actuarial gain/(loss) 19.7 (8.4)

Transfer from equity reserve 2.8 3.4

Transfer from own share reserve (2.3) (2.5)

Tax on deductible temporary dierences (6.3) 0.5

Balance at 31 December 181.6 135.8

£7.5m (2020 – £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.

46. Own shares

Year ended

2021

£m

Year ended

2020

£m

Balance at 1 January (11.5) (14.0)

Transfer to retained earnings 2.3 2.5

Purchase of new shares – –

Balance at 31 December (9.2) (11. 5)

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 (2020 – £0.1). The total number of treasury shares at 31 December 2021 is 3,463,455 (2020 – 4,336,043).

47. Cash and bank balances

Year ended

2021

£m

Year ended

2020

£m

Cash and cash equivalents comprise:

Cash 4.7 0.7

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.

48. 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:

Year ended

2021

£m

Year ended

2020

£m

Amounts payable:

On demand or within one year 0.2 0.2

In the second to ﬁfth years inclusive 0.9 0.9

After ﬁve years 0.2 0.4

1.3 1.5

Less: future ﬁnance charges (0.1) (0.1)

Lease liabilities 1.2 1.4

In 2021, the Company recognised income of £0.1m (2020 – £0.1m) in the Company Income Statement from sub-leasing right-of-use assets and had

lease cash outﬂow of £0.2m (2020 – £0.2m).

As at the date of approving the accounts, the Company has guaranteed £0.5m (2020 – £0.5m) of annual lease commitments of certain current and

previous subsidiary entities.

161SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

FINANCIAL STATEMENTS

49. Tax balance sheet

Current tax

The current tax receivable is £nil (2020 – £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:

Accelerated

tax

depreciation

£m

Retirement

beneﬁts

£m

based

payments

£m

Tax

Losses

£m

Total

£m

At 1 January 2020 (0.1) 8.2 (0.1) – 8.0

Credit to income (0.1) 1.0 – (1.5) (0.6)

Charge to equity – – – – –

Credit to other comprehensive income – (0.5) – – (0.5)

At 1 January 2021 (0.2) 8.7 ( 0.1) (1.5) 6.9

Charge to income (0.1) 2.9 (0.2) (1.6) 1.0

Charge to equity – 6.4 (0.1) – 6.3

Credit to other comprehensive income – – – – –

As at 31 December 2021 (0.3) 18.0 (0.4) (3.1) 14.2

Deferred tax assets and liabilities are oset where the Company has a legally enforceable right to do so. The following is the analysis of the deferred

tax balances, after oset:

Year ended

2021

£m

Year ended

2020

£m

Deferred tax liabilities 14.2 6.9

At the Balance Sheet date, the Company has unused capital losses of £15.6m (2020 – £15.6m) available for oset against future capital gains.

No deferred tax asset has been recognised as no such capital gains are anticipated to arise in the foreseeable future.

50. Retirement beneﬁt scheme

The Company’s deﬁned beneﬁt scheme is shown in Note 34 in the “UK plans funded” column.

51. 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 87 to 107. In 2021, the Company recognised share-based payment expense of £0.7m (2020 – £0.5m) 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

Bloom Energy Corporation is a related party of the Group as Susan Brennan, an independent non-executive Director of the Group, was its Executive

Vice-President and Chief Operations Ocer until resignation date of 5 August 2021.

In 2021, the Group sold £2.7m (2020 – £2.2m) of components to Bloom Energy Corporation. The gross receivable position as at 31 December 2021

was £0.4m (2020 – £0.4m).

52. Share-based payments

The Company has a number of share-based payment arrangements that existed during 2021, the details of which can be found in Note 33.

For the savings-related share option plan, no shares were exercised in 2021 or 2020. 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. The options outstanding at 31 December

2020 had exercise prices of 219.30p and 207.20p per share, and a weighted average remaining contractual life of 1.7 years.

Share-based payment costs relating to subsidiaries are recharged from the Company.

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021162

2021

£m

2020

£m

2019

£m

2018

£m

2017

£m

Group income statement

Revenue

Continuing operations 658.7 733.6 1,110.7 1,082.1 1,023.4

Adjusted operating proﬁt

Continuing operations 6.1 3.7 89.4 91.6 82.6

Amortisation of intangible assets from acquisitions – ( 7.7 ) (13.1) (15.4) (17.1)

Goodwill impairment and write-o – (134.3) – – –

Net restructuring income/(cost) 4.4 (39.0) (12.1) – –

US class action lawsuits – – (2.6) (3.9) –

Operating proﬁt/(loss) 10.5 (177.3 ) 61.6 72.3 65.5

Investment income/ﬁnance costs, net (excluding lease liabilities) (5.8) (7.8) (8.1) (8.8) (9.3)

Interest on lease liabilities (2.6) (3.0) (3.5) – –

Net ﬁnance income/(cost) of retirement beneﬁts 0.4 0.9 0.7 0.2 (0.2)

Corporate undertakings 21.2 (4.6) (22.0) – (3.8)

Proﬁt/(loss) before tax 23.7 (191.8) 28.7 63.7 52.2

Tax 0.5 33.3 0.5 (7.8) 8.1

Proﬁt/(loss) for the year 24.2 (158.5) 29.2 55.9 60.3

Depreciation and amortisation of intangibles excluding right-of-use assets 38.3 51.4 57.5 56.9 57. 9

Depreciation on right-of-use assets 9.5 10.2 10.2 – –

Gross capital expenditure 21.3 26.8 64.8 56.3 54.8

Basic earnings/(loss) per share 5.82p (38.20)p 7.0 4p 12.81p 14.39p

Diluted earnings/(loss) per share 5.73p (38.20)p 7.01p 12.63p 14.30p

Adjusted earnings/(loss) per share 0.17p (0.84)p 16.17p 16.08p 14.39p

Dividends in respect of years – per share 0.0p 0.0p 2.28p 7.42p 6.95p

– value – – 9.5 30.9 29.0

Group Balance Sheet

Non-current assets excluding right-of-use assets 463.5 482.7 651.4 662.0 624.3

Right-of-use assets IFRS 16 67.4 72.5 82.3 – –

Non-current assets 530.9 555.2 733.7 662.0 624.3

Net current assets 110.3 89.2 102.5 131.0 66.0

Non-current liabilities (216.1) (251.1) (276.6) (221.2) (158.7)

Net assets 425.1 393.3 559.6 571.8 531.6

Net debt pre IFRS 16 (79.9) (129.4) (145.9) (153.0) (155.3)

Lease liabilities IFRS16 (73.2) (76.5) (83.7) – –

Net debt (153.1) (205.9) (229.6) (153.0) (155.3)

Group cash ﬂow

Net cash from operating activities 27.0 48.9 115.9 100.7 110. 9

Corporate undertaking costs 4.8 4.6 3.4 – –

Net Restructuring cash paid 0.9 15.2 2.9 – –

US class action lawsuits 2.3 3.9 – – –

Interest received 0.1 0.2 0.2 0.4 0.4

Proceeds from disposal of property, plant and equipment 0.2 0.5 0.7 0.5 1.8

Purchase of property, plant and equipment – cash (20.2) (25.2) (63.0) (54.6) (52.3)

Purchase of intangible assets (1.1) (1.6) (1.8) (1.7) (2.5)

Free cash ﬂow 14.0 46.5 58.3 45.3 58.3

Dividends paid – – (31.2) (29.6) (27.9 )

Disposal proceeds 51.7 0.4 2.9 – 0.4

Corporate undertaking costs (4.8) (4.6) (3.4) – –

Net Restructuring cash paid (0.9) (15.2) (2.9) – –

US class action lawsuits (2.3) (3.9) – – –

Loan to joint venture – – – 0.5 0.3

Purchase of shares held by employee beneﬁt trust – – (6.3) (7. 2) (0.1)

Decrease in loans (21.1) ( 7.2) (3.2) (2.4) (37.1)

Decrease in lease liabilities (8.4) ( 7.9) (7.8) (0.3) (0.5)

Increase/(decrease) in cash and cash equivalents 28.2 8 .1 6.4 6.3 (6.6)

FIVE-YEAR SUMMARY

163SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

ADDITIONAL INFORMATION

GROUP UNDERTAKINGS

Operating Companies Business Units Locations Country of Incorporation

Senior UK Limited Senior Aerospace Bird

Bellows

Congleton England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Aerospace BWT Macclesﬁeld

Senior Flexonics Crumlin Crumlin

Senior Aerospace Weston Colne

Senior Aerospace Thermal

Engineering

Royston

Lymington Precision Engineers

Co. Limited

Senior Flexonics Lymington Lymington England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Flexonics Czech s.r.o. Senior Flexonics Czech Olomouc, Czech Republic Czech Republic Olomouc, Průmyslová 733/9,

postcode 779 00, Czech Republic

Senior Aerospace Ermeto SAS Senior Aerospace Ermeto Blois, France France Z.A Euro Val de Loire, 8 rue du

ClosThomas, 41330 Fosse, France

Senior Calorstat SAS Senior Aerospace Calorstat Dourdan, France France 11 Rue des Souets, 91410,

Dourdan, France

Senior Flexonics GmbH Senior Flexonics Kassel Kassel, Germany Germany Frankfurter Strasse 199, 34121

Kassel, Germany

Senior India Private Limited Senior Flexonics New Delhi New Delhi, India India 4th, Floor, Rectangle No.1,

Commercial Complex D-4,

Saket-New Delhi-110017, India

Senior Aerospace Bosman B.V. Senior Aerospace Bosman Rotterdam, Netherlands Netherlands Bergen 6, 2993 LR Barendrecht,

Netherlands

Senior Operations (Canada)

Limited

Senior Flexonics Canada Brampton, Ontario Canada 134 Nelson Street West, Brampton,

Ontario, L6X 1C9, Canada

Senior Flexonics SA (Pty)

Limited

Senior Flexonics Cape Town Cape Town, South Africa South Africa 11 Thor Circle, Viking Place,

Thornton, Cape Town, 7460,

SouthAfrica

Senior Operations LLC Senior Aerospace AMT Arlington, Washington USA Corporation Trust Center, 1209

Orange Street, Wilmington,

DE19801, USA

Senior Aerospace Jet

Products

San Diego, California

Senior Aerospace Ketema El Cajon, California

Senior Aerospace Metal

Bellows

Sharon, Massachusetts

Senior Aerospace Damar Monroe, Washington

Senior Aerospace SSP Burbank, California

Senior Flexonics Bartlett Bartlett, Illinois

Senior Flexonics GA Franklin, Wisconsin

Senior Flexonics Pathway New Braunfels, Texas &

Maine, Delaware

Steico Industries, Inc. Senior Aerospace Steico

Industries

Oceanside, California USA 818 West Seventh St., Ste. 930,

LosAngeles, CA90017

Senior Aerospace (Thailand)

Limited

Senior Aerospace Thailand Chonburi, Thailand Thailand 78 9 /115 -116 Moo1, Pinthong

Industrial Estate, Sainhongkor-

Lamchabang Road, Tambol

Nhongkham, Amphur Sriracha,

ChonBuri Province 20230, Thailand

Upeca Aerotech Sdn Bhd Senior Aerospace Upeca Selangor, Malaysia Malaysia 10th Floor, Menara Hap Seng,

No1&3, Jalan P. Ramlee, 50250

W.P – Kuala Lumpur, Malaysia

Upeca Flowtech Sdn Bhd Senior Flexonics Upeca Selangor, Malaysia Malaysia 10th Floor, Menara Hap Seng,

No1&3, Jalan P. Ramlee, 50250

W.P – Kuala Lumpur, Malaysia

Upeca Engineering (Tianjin) Co LtdSenior Flexonics Upeca

(China)

Tianjin, China China No. 12 QuanHe Road, Wu Qing

Development Area, Tianjin 301700,

PR China

Flexonics Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Lymington Precision Engineering

(LPE) Limited

England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Aerospace Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021164

Operating Companies Business Units Locations Country of Incorporation

Senior Americas One Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Americas Two Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Automotive Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Atlas Composites Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Engineering Investments

Limited

England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Five Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Finance Four Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Finance Six Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Finance Seven Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Flexonics Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior Trustee Limited England & Wales 59/61 High Street, Rickmansworth,

Hertordshire, WD3 1RH, UK

Senior France SAS France 11 Rue des Souets, 91410,

Dourdan, France

Senior Investments (Deutschland)

GmbH

Germany Frankfurter Strasse 199, 34121

Kassel, Germany

Senior Holdings LLC USA Corporation Trust Center, 1209

Orange Street, Wilmington,

DE19801, USA

Senior Investments GmbH Switzerland Fronwagplatz 10, CH-8200,

Schahausen, Switzerland

Senior IP GmbH Switzerland Fronwagplatz 10, CH-8200,

Schahausen, Switzerland

Flexonics, Inc. USA Corporation Trust Center, 1209

Orange Street, Wilmington,

DE19801, USA

Senior US Holdings Inc USA Corporation Trust Center, 1209

Orange Street, Wilmington, DE

19801, USA

Upeca Technologies Sdn Bhd Malaysia 10th Floor, Menara Hap Seng,

No1&3, Jalan P. Ramlee, 50250

W.P – Kuala Lumpur, Malaysia

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.

GROUP UNDERTAKINGS CONTINUED

165SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021

ADDITIONAL INFORMATION

ADDITIONAL SHAREHOLDER INFORMATION

Analysis of shareholders at 31 December 2021

Shareholders

Number

Shareholders

Issued Shares

Millons

Issued Shares

By category

Corporate bodies 556 24.53 410.70 97.92

Other shareholders 1,711 75.47 8.72 2.08

2,267 100.00 419.42 100.00

By range of holdings

1 – 24,999 1,947 85.88 7.02 1.68

25,000 – 49,999 83 3.66 2.80 0.67

50,000 – 249,999 109 4.81 12.96 3.09

250,000 – 499,999 38 1.68 13.80 3.29

500,000 – 999,999 31 1.37 22.04 5.25

1,000,000 – and over 59 2.60 360.80 86.02

Operating (loss)/proﬁt 2,267 100.00 419.42 100.00

Trading proﬁt and adjusted trading proﬁt is operating loss/proﬁt and adjusted operating proﬁt respectively before share of joint venture proﬁt.

See Note 9 for the derivation of adjusted operating proﬁt. The number of shares in issue at 31 December 2021 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 2022 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 2022 AGM Notice of Meeting and Form of Proxy.

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2021166

Secretary and registered oce

Andrew Bodenham

Senior plc

59/61 High Street, Rickmansworth, Hertfordshire WD3 1RH

Registered in England and Wales No. 00282772

Registrars

Equiniti

Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA

Auditor

KPMG LLP

15 Canada Square, London E14 5GL

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.

Solicitors

Slaughter and May

One Bunhill Row, London EC1Y 8YY

Principal UK clearing bankers

Lloyds Bank plc

25 Gresham Street, London EC2V 7HN

Financial advisers

Lazards & Co., Limited

50 Stratton Street, London W1J 8LL

Financial Public Relations

Finsbury Glover Hering

The Adelphi

1-11 John Adam Street

London WC2N 6HT

Joint corporate brokers

Jeeries International Limited

100 Bishopsgate

London EC2N 4JL

Credit Suisse International

One Cabot Square

London E14 4QJ

Design and production

Printed by Park Communications

OFFICERS AND ADVISERS