Page 136 - Sigmaroc Annual-Report 2023

SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT
Chief Technical Officer’s risk report
Risk
Description
Mitigation
M&A
Overpay; fail to integrate; fail to deliver the expected returns from an acquisition.
Failure to identify potential acquisitions to sustain our growth strategy or not be an acquirer of choice.
Strong acquisition track record supported by our specialist advisers and rigorous due diligence processes.
All acquisitions are approved by the Board and all acquisitions are subject to detailed due diligence processes which are executed by project teams, with progress monitored by the Board.
We have developed a management structure which facilitates our growth strategy and, where appropriate, we make arrangements to retain acquired senior management and minimise negative change upon acquiring businesses.
The Board uses its networks and reputation to review wider acquisition opportunities and our businesses are all tasked with bringing forward potential acquisition targets for review at Group level.
Operational disruption and key equipment failure
A material disruption at one of the Group’s operational sites or at one of the Group’s suppliers’ facilities, could prevent the Group from meeting customer demand.
The Group has the ability to transfer some of its production across its network of plants and is able to engage subcontractors to reduce the impact of certain production disruptions. In relation to supplier disruption or failure, further third-party suppliers have been identified who can maintain service in the event of a disruption.
The Group’s wide geographical spread mitigates this risk to some extent and allows it to manage its production facilities to mitigate the impact of such disruption.
Quality
The nature of the Group’s business may expose it to warranty claims and to claims for product liability, construction defects, project delay, property damage, personal injury and other damages. Any damage to the Group’s brands, including through actual or alleged issues with its products, could harm our business, reputation and the Group’s financial results.
The Group operates comprehensive quality control procedures across its sites with both internal and external audit reviews of product quality completed to ensure conformance with internationally recognised standards. All accredited staff undergo rigorous training programmes on quality and the technical teams carry out regular testing of all of our products to provide full technical data on our product range.
Raw Materials sourcing
and internal resources
The Group is susceptible to significant increases in the price of raw materials, utilities, fuel oil and haulage costs and decreases in availability.
Risks exist around our ability to pass on increased costs through price increases to our customers.
Resource expansion plans developed at all sites to ensure timely access to future materials.
The Group focuses on its multiple supplier relationships, flexible contracts and the use of hedging instruments.
Ensure businesses are self-sufficient with ability to increase resources through subcontractors during peak demands.
Recruitment and retention
Failure to recruit, develop and retain the right people.
Failing to create a corporate culture that is based upon ethical values and behaviours.
The Board, Nominations Committee and senior management teams conduct reviews and plan succession for key roles.
The Board and the Remuneration Committee review all key aspects of remuneration to ensure appropriate packages are in place to assist in the attraction and retention of key employees.
Each business has a grading and employee benefit structure with review of incentive plans underway to give help and support long term employee commitment.
A focus on identifying internal talent and recruitment of upcoming talent is under review to ensure succession planning and maintain a dynamic talent pool which is supported with development plans.
Technology and New Business Models
Reduction in demand for traditional products.
Risk of new competitors and new substitute products appearing.
Failure to react to market developments, including digital and technological advances.
Digital and product development groups that work locally and cross business reviewing both our industry and external offerings and opportunities.