ANNUAL

REPORT &

ACCOUNTS

2022

WE ARE

SENIOR

We are an international, market-leading,

engineering solutions provider with

26 operating businesses in 12 countries.

OUR PURPOSE

We help engineer the transition to a sustainable world for

the benefit of all our stakeholders.

We do this by:

• Using our technology expertise in fluid conveyance and

thermal management to provide safe and innovative

products for demanding applications in some of the

most hostile environments.

• Enabling our customers, who operate in some of the

hardest-to-decarbonise sectors, to transition to low

carbon and clean energy solutions.

• Staying at the forefront of climate disclosure and

actionby ensun by ensuring our own operations achieve our

NetZero comNet Zero commitments.

Group at a Glance

Group Chief Executive

Officer’s Statement

Chair’s Statement

1SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Governance

Investment Case

Technology

Divisional Review:

Aerospace

Sustainability

STRATEGIC REPORT

IFC Our Purpose

2 Financial Highlights

3 Non-Financial Highlights

6 Group at a Glance

8 Chair’s Statement

10 Group Chief Executive Officer’s Statement

14 Market Overview

16 Sustainability

20 Our Technology and Product

Development on the Road to Net Zero

22 Environment

26 TCFD

32 Social

36 Governance

38 Our Business Model

40 Investment Case

42 Strategic Priorities

44 Technology

46 Our Technology Themes

48 Our Enabling Technology

50 Stakeholder Engagement

56 Section 172 Statement

58 Key Performance Indicators

60 Risks and Uncertainties

72 Divisional Review – Aerospace

76 Divisional Review – Flexonics

78 Financial Review

82 Viability Statement

GOVERNANCE

86 Chair’s Governance Letter

89 Board at a Glance

90 Board of Directors

94 Executive and HSE Committees

95 Report of the Directors

97 Nominations Committee Report

100 Audit, Risk and Internal Control

102 Audit Committee Report

108 Remuneration Committee Report

111 2022 Remuneration Report at a Glance

113 Remuneration Report: Policy

119 Annual Report on Remuneration

129 Statement of Directors’ Responsibilities

130 Independent Auditor’s Report to the

Members of Senior plc

FINANCIAL STATEMENTS

140 Consolidated Income Statement

141 Consolidated Statement of

Comprehensive Income

142 Consolidated Balance Sheet

143 Consolidated Statement of Changes

in Equity

144 Consolidated Cash Flow Statement

145 Notes to the Consolidated

Financial Statements

184 Company Balance Sheet

185 Company Statement of Changes in Equity

186 Notes to the Company Financial

Statements

192 Five-year Summary

ADDITIONAL INFORMATION

194 Group Undertakings

196 Additional Shareholder Information

197 Officers and Advisers

Divisional Review:

Flexonics

HIGHLIGHTS

FINANCIAL

HIGHLIGHTS

Revenue

+29%

£848.4m

2021 – £658.7m

Adjusted operating margin

(1)

+250 bps

3.4%

2021 – 0.9%

Adjusted profit before tax

(2)

£20.1m

2021 – £(1.9)m loss

Profit before tax

£22.4m

2021 – £23.7m

Adjusted earnings per share

(3)

4.36p

2021 – 0.17p

Basic earnings per share

4.86p

2021 – 5.82p

Return on capital employed

(4)

+370 bps

4.7%

2021 – 1.0%

Dividend per share

1.30p

2021 – nil p

Free cash flow

(5)

£ 27.7m

2021 – £14.0m

Net debt

(5)

£26m increase

£178.9m

2021 – £153.1m

Adjusted operating profit and adjusted profit/loss

before tax are stated before £4.2m net restructuring

income (2021 – £4.4m) and £0.2m amortisation of

intangible assets from acquisitions (2021 – £nil).

Adjusted profit/loss before tax is also stated before

costs associated with corporate undertakings of £1.7m

(2021 – £21.2m income). In 2021, Adjusted earnings

per share is also stated before exceptional non-cash tax

credit of £0.6m.

EBITDA is defined as adjusted profit/loss before tax,

and before interest, depreciation, amortisation, and

profit or loss on sale of property, plant and equipment.

It also excludes EBITDA from businesses which have

been disposed and includes 12 months EBITDA for

businesses acquired and it is based on frozen GAAP

STRATEGIC REPORT / FINANCIAL HIGHLIGHTS

(pre-IFRS 16). This measure is used for the purpose of

assessing covenant compliance and is reported to the

Group Executive Committee.

(1) Adjusted operating margin is the ratio of adjusted

operating profit to revenue. A reconciliation of adjusted

operating profit to operating profit is shown in Note 9.

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

profit before tax is shown in Note 9.

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

earnings per share is shown in Note 12.

(4) See page 59 for the derivation of return on capital

employed.

(5) See Notes 32b and 32c for the derivation of free cash

flow and of net debt respectively.

The US Dollar exchange rate applied in the translation of

revenue, profit and cash flow items at average rates for

2022 was $1.24 (2021 – $1.38). The US Dollar exchange

rate applied to the balance sheet at 31 December 2022

was $1.21 (31 December 2021 – $1.35).

Cautionary statement

The Annual Report & Accounts 2022 contains certain

forward-looking statements. Such statements are made

by the Directors in good faith based on the information

available to them at the date of this Report and they

should be treated with caution due to the inherent

uncertainties underlying any such forward-looking

statements.

2 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

3SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Read more about the progress we are making on our

purpose on pages 8, 11, 12, 16, 18, 20 & 42

Read more about our people and culture on pages 18,

34, 39, 42 & 51

Read more about our investment case

on page 40

Read more about our strategic priorities on page 42

Read more about how we are performing in

Aerospace on page 72

Read more about how we are performing in Flexonics

on page 76

CDP

(climate disclosure project)

(2021 A-)

Leadership rating “Implementing best practices”

Total Scope 1 and 2 Carbon Dioxide Emissions

(tonnes CO

equivalent emitted)

44,878 tonnes

2021 – 46,540 tonnes

(Scope 1, Scope 2 – market based)

Lost time injury rate

(per 100 employees)

0.38

2021 – 0.32

Waste recycled

94.8%

2021 – 93.1%

Women in leadership – Board of Directors

55%

2021 – 50%

Women in leadership – Executive Committee

29%

2021 – 38%

Global Employee Opinion Survey

(percentage of employees completing the survey)

81%

2021 – 81%

Ethics

(percentage of employees who completed Annual Code

of Conduct Training)

94%

2021 – 94%

NON-FINANCIAL

HIGHLIGHTS

STRATEGIC REPORT /

STRATEGIC

REPORT

IN THIS SECTION

“Senior has continued to make good strategic,

operational and financial progress, with

strong delivery across the Group, in2022.”

David Squires

Group Chief Executive Officer

6 Group at a Glance

8 Chair’s Statement

10 Group Chief Executive Officer’s Statement

14 Market Overview

16 Sustainability

20 Our Technology & Product Development

on the road to Net Zero

22 Environment

26 TCFD

32 Social

36 Governance

38 Our Business Model

40 Investment Case

42 Strategic Priorities

44 Technology

46 Our Technology Themes

48 Our Enabling Technology

50 Stakeholder Engagement

56 Section 172 Statement

58 Key Performance Indicators

60 Risks and Uncertainties

72 Divisional Review – Aerospace

76 Divisional Review – Flexonics

78 Financial Review

82 Viability Statement

Ducting

Intermediate Case (IMC) for

Aerospace Turbine Engine

A modern turbofan engine is

ahighly complex assembly

ofstationary and rotating

components. Various casings

arefundamental structural

components of the engine core,

and as such, have complicated

geometries with thousands of

veryclose-tolerance features.

Veryfew suppliers have the

technical competence to be

strategic suppliers of casings

tomajor engine OEMs.

4 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

5SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT /

Ducting

In order for people to be able

towithstand the extreme

temperatures and pressures

encountered in flight, aerospace

ducting facilitates the distribution

ofcritical fluids and air throughout

the aircraft, thus ensuring proper

temperature regulation, ventilation,

humidity, and/or containment

control, anti-icing and

noiseattenuation.

Modern flight would not be

possible without high- and

low-pressure ducting throughout

theaircraft.

Ducting

Bellows

Every aircraft has hundreds, if

notthousands of bellows used

extensively in expansion joints,

actuators, mechanical seals,

exhaust systems, manifolds,

fluidmanagement devices

(i.e.accumulators, volume

compensators and reservoirs).

These critical components absorb

vibration, compensate for both

lineal and radial movements,

absorb thermal expansion and

contraction and precisely

measuremovement.

These bellows come in all

varietyofshapes including

circular,rectangular and even

ovalshapedbellows in a single

ormulti-plyconfiguration.

Business Class Seat Frames

Every long-haul airline regards

itsbusiness class seats as its

premium offering. As airlines

realised that passengers were

requiring seats that easily

convertinto lie-flat beds, the seat

manufacturers updated their old

designs with both minor and major

changes. The exact specifications

change not only from one airline

toanother, but also from one

aircraft type to another. In addition,

some airlines will have one type

ofseat on one aircraft variant,

andacompletely different type

onanother.

Flexibility in manufacturing

multipledesigns is paramount

tocompetitiveness.

STRATEGIC REPORT / GROUP AT A GLANCE

GROUP AT A GLANCE

OUR PURPOSE

We help engineer the transition

to a sustainable world for the

benefit of all our stakeholders

WE DO THIS BY:

• Using our technology expertise influid conveyance and thermal

management to provide safe and innovative products for demanding

applications in some of the most hostile environments.

• Enabling our customers, whooperate in the hardest-to-decarbonise

sectors, to transition tolow carbon and clean energysolutions.

• Staying at the forefront of climate disclosure and action by ensuring

ourown operations achieve our Net Zero commitments.

AEROSPACE

Providing high technology products

and systems for demanding

applications in civil aerospace &

defence and adjacent markets.

The Aerospace portfolio spans

awide range of fluid conveyance

and thermal management

components and sub-systems,

aswell as complex structural parts

and assemblies, for fixed-wing

androtary aircraft, aero-engines,

spacecraft and a variety of other

industrial applications.

Read more on pages 44 to 49

35%

(2021 – 34%)

Land vehicles 19%

Power and energy 16%

OUR VALUES

“Our Core Values

underpin our culture.”

David Squires

Group Chief Executive Officer

STRATEGIC REPORT / CHAIR’S STATEMENT

CHAIR’S STATEMENT

CONTINUED RECOVERY

AND GROWTH DURING

A CHALLENGING YEAR

Overview

Our consistent resolute approach to managing

the effects of significant external factors

continued through 2022 and enabled us to

deliver a strong operational and financial

performance in the year. We continued to

contend with the effects of the pandemic and

the disruption and deglobalisation of the supply

chain was also exacerbated by the conflict in

Ukraine and the consequent energy crisis.

Theresulting major inflationary pressures across

our cost base continue to be managed diligently

and proactively by the business, whilst also

recognising the impact that the pressures

haveon the cost of living for our employees.

Once again, the operating businesses under

David and Bindi’s leadership have risen to the

occasion and delivered significantly improved

profitability during the period, exceeding market

expectations. Attractive and structurally resilient

core markets, evidenced by increasing

production volumes in both Aerospace and

Flexonics, underpinned a Group revenue growth

of 29% and a healthy order intake. The book to

bill ratio of 1.24 is strong.

The Group’s strategy continues to be compelling

and along with our well-capitalised businesses

provides a solid foundation to support our future

growth aspirations. The acquisition of Spencer

Aerospace is a very considered step in this

direction. Spencer’s capabilities in highly

engineered, high-pressure hydraulic fluid fittings

for use in commercial and military aerospace

applications have strong synergies with Senior’s

existing fluid conveyance business; the

opportunities for further growth in this sector

areexciting.

The Board revisited Senior’s Purpose this year

and aligned it further with our ongoing strategy.

Ourrenewed Purpose is "we help engineer the

transition to a sustainable world for the benefit

of all our stakeholders". We do this by:

• Using our technology expertise in fluid

conveyance and thermal management to

provide safe and innovative products for

demanding applications in some of the

mosthostile environments.

• Enabling our customers, who operate in the

hardest-to-decarbonise sectors, totransition

to low carbon and clean energy solutions.

• Staying at the forefront of climate disclosure

and action by ensuring our own operations

achieve out Net Zero commitments.

What Senior offers is pivotal technologies

foremissions reduction and environmental

efficiency; capabilities that continue to be highly

relevant as the world transitions towards a low

carbon economy. Our continued investment in

the right technologies ensures that we not only

provide solutions for today’s challenges but

equally for future requirements.

Our strategy and our positioning in attractive

andstructurally resilient core markets, combined

with sector-leading sustainability credentials

andhighly relevant technical capabilities,

deliversa strong financial recovery across

bothAerospace and Flexonics Divisions.

Withmarkets recovering, we will continue

tosee improving profitability through volume

related operating leverage, while managing

inflationary impacts through our focus on

costand pricing management.

We are a well-capitalised Group, with

intrinsically strong cash flows and operating

businesses that have capacity to benefit from

end marketrecoveries. The Group maintains a

strong financial position and the balance sheet

remains robust, further enhanced by the

renewal of the UK revolving credit facility and

the well-funded nature of the UK pension plan.

The Board continues to review the portfolio

within the Group, understanding the importance

of considered and effective capital deployment

to maximise shareholder value creation.

Expanding Senior’s high-quality fluid

conveyance and thermal management

businesses remains an ongoing priority.

Investments are supported by a business case

and are assessed using a rigorous investment

appraisal process.

The Board is confident in our strategy and that it

will deliver enhanced value for all stakeholders.

“We remain confident in delivery

ofour strategy and that it will

maximise value for shareholders,

asour markets recover, over the

medium term.”

Ian King

Chair

8 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

9SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / CHAIR’S STATEMENT

STAKEHOLDER

ENGAGEMENT

The success of the Group is enabled by mature

andprogressive engagement with all of our

stakeholders. A key priority for the Group is

ensuringthat their viewpoints are fully considered

when assessing the impact of our decisions

andstrategies.

Pages 50 to 57 explain more on this

SUSTAINABILITY

REPORT

A commitment to sustainability underpins our

purpose, and is a key objective of the Executive and

the Board. Our programme is well defined and being

delivered. Our progress is measured by metrics,

targets and an annual scorecard.

To find out more on our sector leading

sustainability programme read pages 16 to 37.

Our performance

In 2022, the Board and the Executive team

continued to make good strategic, operational,

and financial progress. With strong delivery

across the Group, we significantly improved

profitability, generated excellent free cash

flow and further strengthened of our

balancesheet.

Group revenue increased 29% to £848.4m,

withgrowth in both divisions. Our adjusted

operating profit increased to £28.5m which

resulted in the Group’s adjusted operating

margin increasing by 250 basis points,

to3.4%.

We generated an excellent free cash inflow

of£27.7m. The Group’s financial position

remains robust, with a healthy balance sheet

and period end net debt to EBITDA of 1.47x,

after taking into account the consideration

forthe acquisition of Spencer Aerospace.

In line with the Board’s decision from earlier in

the year to reinstate dividends, and reflecting

confidence in the Group’s performance,

financial position and future prospects, the

Board is proposing a final dividend of 1.00

pence per share (2021 – nil pence). This would

bring total dividends, paid and proposed for

2022 to 1.30 pence per share. The Board will

continue to follow a progressive dividend

policy reflecting earnings per share, free cash

flow generation, market conditions and

dividend cover over the medium term.

Our sector leading

sustainabilitycredentials

Our Purpose underpins our commitment to

sustainability. The Board continues to recognise

the importance of adopting a bold and

comprehensive sustainability programme.

Wefirmly believe that our leadership in this

areaprovides a distinct commercial competitive

advantage as the world transitions to a low

carbon economy. Sustainability remains an

integral part of our strategy, embedded within

the behaviours of our people and the culture

ofour organisation.

In 2022, we have again made good progress

with our key sustainability metrics and activities.

We were awarded the top ‘A’ score by CDP

inits global annual ranking for transparency

onclimate change, putting us in the top 2%

ofdisclosing companies. We were the only

Aerospace and Defence company to achieve an

A rating in 2022. In addition, we have submitted

our Long Tern Net Zero Targets to the Science

Based Targets Initiative for validation. The

targets, to be achieved by 2040, are aligned to

keep global warming to 1.5 degrees centigrade,

the most ambitious goal of the Paris Agreement.

The Sustainability Report on pages 16 to 37

explains how Senior has achieved significant

improvement against our non-financial targets

in2022.

Our Board

I remain confident we have a cohesive, diverse

and high performing Board in place to work with

the Executive Leadership Team to implement

the Company’s strategy. The non-executive

Directors continued to bring very strong, broad,

professional and complementary qualities to the

Board in 2022, and I look forward to continue

working with the Board in 2023 to deliver

long-term sustainable growth.

As previously highlighted, this year we thank

Celia Baxter and Giles Kerr for their tenure as

highly valued members of the Board; having

reached their nine-year anniversaries on the

Board in 2022, in order to ensure a suitable

transition period with their successors, it was

agreed they remain in office until the conclusion

of the 2023 AGM. Mary Waldner and Barbara

Jeremiah, having joined the Board at the end of

2021 and the beginning of 2022 respectively,

have been given a full and comprehensive

induction programme and are now fully

established members of the Board.

The Board has completed a comprehensive

externally conducted Board evaluation during

2022. The Board was found to be functional,

effective, engaged and motivated and with

clearprogress being made against prior actions.

Non-Executive Director (NED) succession

hadbeen handled smoothly and it was agreed

that the process should be extended to hire

anadditional NED with relevant industrial and

business experience aligned to our strategy.

TheBoard is to also review the structure of the

Board meetings schedule and agenda to ensure

more time is allocated on the agenda to achieve

debate and engagement. To find more detail on

these improvements, please refer to page 99 in

the Governance section.

The Corporate Governance Report pages 86

to129 explains how the Board sets the tone

andtakes the lead on governance matters.

Wecontinue to ensure the health, well-being

and safety of our employees is a priority and

thatour operations conduct themselves with

integrity and in an ethical, sustainable and

socially responsible manner.

Stakeholder Engagement

The Board continues to focus on our

responsibility to all of Senior’s stakeholder

groups – our employees, customers, suppliers,

communities and shareholders. We believe that

engaging with our stakeholders is key to the

long-term success of the Group.

In 2022, the Group increased its engagements

with shareholders, both by the Executive team,

the Group Chair and the Chair of the

Remunerations Committee, through a diverse

and tailored range of channels.

This year we launched our second Global

Employee Opinion Survey. We had excellent

participation and engagement, and feedback

was positive, valuable, and constructive. Celia

Baxter, together with our Group HR Director,

Jane Johnston, participated in 19 employee

engagement focused groups with four of our US

operating businesses and our German business.

Feedback from the meetings was provided to

local Management, the Executive Leadership

Team and to the Company’s Board of Directors,

who were given the opportunity to ask

questions on the findings.

Looking forward

Our compelling strategy and positioning in

attractive and structurally resilient core markets,

combined with our sector leading sustainability

credentials and highly relevant technical

capabilities, underpins our commitment to

continuing to deliver a strong recovery across

our Aerospace and Flexonics Divisions, which

inturn will deliver enhanced value for

ourstakeholders.

As we enter 2023, we will continue to focus

ondelivering good strategic, operational, and

financial progress. We remain on track to drive

the Group ROCE to a minimum of 13.5% in line

with our previously stated ambition.

On behalf of the Board, I would like to thank all

of our people for their substantial contribution

toSenior over the last year. I would also like to

extend this to all of our stakeholders for their

continued support.

Ian King

Chair

STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT

GROUP CHIEF EXECUTIVE

OFFICER’S STATEMENT

STRONG RESULTS AS

RECOVERY CONTINUES

“We have delivered a strong

setofresults for 2022.

Wesignificantly improved

profitability, generated excellent

free cash flow, strengthened

ourbalance sheet and continued

to make very good progress on

oursustainabilitygoals.”

David Squires

Group Chief Executive Officer

Overview of 2022 results

Senior has continued to make good strategic,

operational, and financial progress, with strong

delivery across the Group reflected in

significantly improved profitability, excellent free

cash flow generation and further strengthening

of our balance sheet.

With commercial aerospace markets recovering

and other important end markets remaining

buoyant, we saw order intake increase and

abook to bill ratio of 1.24 for the Group,

whichunderpins our confidence in continued

growth in2023 and beyond. Both divisions

recorded good order intake demonstrating

thebroad, diversified, and high-quality nature

ofourbusiness.

Senior’s Purpose is "we help engineer the

transition to a sustainable world for the benefit

of all our stakeholders." Our strategic focus and

industry-leading expertise in fluid conveyance

and thermal management technology was

enhanced by the acquisition of Spencer

Aerospace in November 2022. Additionally,

wemade good progress on our technology

roadmap with many new products in

development and significant technology and

engineering milestones achieved: for example,

the development of the bleed air system for the

supersonic X-59 flight demonstrator utilising

ouradvanced additive manufacturing capability.

(This is discussed further in the Technology

section on page 48.)

In our Post-close Trading Update on 24 January

2023, we reported a strong end to the year with

outperformance in the Flexonics Division and

the Aerospace Division performing in line with

expectations. During 2022, Group revenue

increased 20% on a constant currency basis

to£848.4m, with growth in both divisions.

Theyear-on-year increase reflected the ongoing

recovery in our core markets as well as recent

programme wins entering series production.

The Group benefited from the increase in civil

aircraft production rates, growth in land vehicle,

power & energy, semi-conductor equipment

and space markets, as well as price increases

of£28.6m to offset inflationary costs.

Additionally, favourable exchange rates

added£46.3m (9%) to total sales.

In Aerospace, revenue increased 18% year-on-

year on a constant currency basis. Excluding

Senior Aerospace Connecticut, which was

divested in April 2021, revenue for the full year

on a constant currency basis increased by 20%.

The year-on-year increase reflected the ramp

upin civil aircraft production rates, growth from

semi-conductor equipment markets and higher

volumes for space programmes. This more than

offset the decline in defence, which was

affected by the delay in spending as a

consequence of the Continuing Resolution

being in place in the USA during the first half

ofthe year.

In Flexonics, revenue grew 26% compared

toprior year, on a constant currency basis.

Theperformance in 2022 was driven by strong

customer demand in the land vehicle and

power& energy markets. In land vehicles,

Senior outgrew end market demand due to

recent contract wins entering series production.

Inpower & energy markets, activity increased

inupstream oil and gas and levels of

maintenance and overhaul activity improved.

We measure Group performance on an adjusted

basis, which excludes items that do not directly

reflect the underlying in-year trading

performance (see Note 9). References below

therefore focus on these adjusted measures.

The Group generated an adjusted operating

profit of £28.5m (2021 – £6.1m), an increase of

367% over the prior year. This resulted in the

Group’s adjusted operating margin increasing by

250 basis points, to 3.4% in 2022 (2021 – 0.9%).

Overall, in 2022, price increases of £28.6m

offset material and other inflationary cost

increases of £26.0m. The improved profitability

principally reflected the volume-related

operating leverage across our businesses.

Supply chain constraints and inflationary

pressures persisted throughout 2022: our

operating businesses worked diligently and

proactively to navigate these challenges,

mitigate their impact on the business and

ensure service levels for customers were

maintained to the best extent possible. As we

enter 2023, supply chain constraints have eased

somewhat in our Flexonics Division but continue

to require relentless management in a number

Revenue

£848.4m

(2021 – 658.7m)

Adjusted profit before tax

£20.1m

(2021 – £(1.9)m loss)

Adjusted earnings per share

4.36p

(2021 – 0.17p)

10 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

11SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT

of our Aerospace businesses. We see that

continuing to be the situation for some time

given the welcome increase in civil aircraft

production rates required by the industry to

satisfy the strong demand from airlines and

aircraft lessors. We continue to work closely

with our suppliers and customers to minimise

any potential disruption. Very recently, the

situation has been compounded by a fire at

one of our key suppliers in Thailand. We are

working closely with the supplier and our

customers to assess and mitigate the specific

impact of the fire.

Adjusted profit before tax increased to

£20.1m (2021 – £(1.9)m loss). The adjusted

tax charge was £2.0m (2021 – £2.6m credit).

Adjusted earnings per share increased to

4.36pence (2021 – 0.17 pence).

Reported profit before tax was £22.4m. The

2021 reported profit before tax was £23.7m,

having benefited from the profit on the sale of

our Senior Aerospace Connecticut business

during that period. Basic earnings per share

was 4.86 pence (2021 – 5.82 pence).

The Group delivered an excellent cash

performance in 2022 generating free cash

inflow of £27.7m (2021 – £14.0m), an

increaseof 98% over the prior year, driven

bythe significant increase in profits.

Grossinvestment in capital expenditure

was£30.5m (2021 – £21.3m), which was

0.8times depreciation excluding the impact

ofIFRS 16 (2021 – 0.6 times). Cash outflows

from working capital were £12.1m (2021 –

£2.6m) reflecting increased activity levels and

the need to hold some tactical buffer stocks.

However, our effective management of

working capital helped to deliver a small

decrease as a percentage of sales to 15.5%

(2021 – 15.6%). The Group had net cash

outflow of £2.6m (2021 – £57.7m inflow)

in2022, due to free cash inflow of £27.7m

(2021 – £14.0m), offset by £30.3m cash

outflows related to corporate undertakings

and restructuring activity, interim dividend

payments and purchase of own shares

(2021– £43.7m inflows).

Net debt at the end of December 2022

was£178.9m (including capitalised leases

of£78.4m), an increase of £25.8m from

December 2021, after taking into account

£25.3m consideration for the acquisition of

Spencer Aerospace, adverse currency

movements of £14.2m and a £9.0m increase

for lease movements. The Group’s financial

position remains robust, with a healthy

balance sheet and period end net debt to

EBITDA of 1.47x (December 2021 – 1.87x).

Return on capital employed (ROCE) increased

by 370 basis points to 4.7% (2021 – 1.0%).

The increase in ROCE reflected the significant

increase in profitability, while managing the

increase in capital employed which was

mainly due to the acquisition of Spencer

Aerospace. This improvement in ROCE is an

important step to delivering our Group ROCE

target of 13.5% over the medium term.

In line with the Board’s decision from earlier in

the year to reinstate dividends, and reflecting

confidence in the Group’s performance, financial

position and future prospects, the Board is

proposing a final dividend of 1.00 pence per

share (2021 – nil pence) and this will be paid on

26 May 2023 to shareholders on the register at

close of business on 28 April 2023. This would

bring total dividends, paid andproposed for

2022 to 1.30 pence per share. Wewill continue

to follow a progressive dividend policy reflecting

earnings per share, free cash flow generation,

market conditions and dividend cover over the

medium term.

Delivery of Group Strategy

Senior has a compelling strategy to maximise

value for shareholders.

Our renewed Purpose is "we help engineer the

transition to a sustainable world for the benefit

of all our stakeholders". We do this by:

• Using our technology expertise in fluid

conveyance and thermal management to

provide safe and innovative products for

demanding applications in some of the

mosthostile environments.

• Enabling our customers, who operate in the

hardest-to-decarbonise sectors, to transition

to low carbon and clean energy solutions.

• Staying at the forefront of climate

disclosureand action by ensuring

ourownoperations achieve our

NetZerocommitments.

Complementing this, our vision is to be a trusted

and collaborative high value-added engineering

and manufacturing company producing

sustainable growth in operating profit, cash flow

and shareholder value.

To achieve our strategy, we will:

• strengthen our strategic focus on IP-rich

fluidconveyance and thermal

managementproducts;

• organically grow the Aerostructures

businessby fully utilising our world class

globalfootprint;

• maintain a strong focus on lean

manufacturingand operational efficiency

through our Senior Operating System;

• execute on our portfolio optimisation

strategyto maximise value creation;

• maintain our sector leading

sustainabilityperformance;

• drive intrinsic strong cash generation

anddeliver a minimum of 13.5% ROCE

overthe medium term.

Our strategic focus and expertise in fluid

conveyance and thermal management

technology and capabilities is supported by

extensive design and manufacturing process

intellectual property and know-how. We develop

and supply proprietary products, sub-systems

and systems for our customers’ demanding

applications across a range of diverse and

attractive end markets. Our products are key

enablers of pivotal technologies which are

delivering emissions reduction and

environmental efficiency and are highly relevant

as the world transitions towards a low-carbon

economy. Senior has developed novel solutions

for low and zero carbon applications and we are

involved in a range of research and development

projects that support the drive for electrification

and hydrogen propulsion systems on land and

inthe air. This is discussed further on pages 18

to 21 and 44 to 49.

As well as our businesses being actively

focused on new product offerings for the

transition to a low carbon world, we continue

tobe actively involved in making conventional

technology cleaner to bridge the gap between

both worlds. In addition, Senior's end-markets

are evolving to reflect the global effort to

achieve net zero carbon emissions. Senior's

technology and product roadmap is aligned

tothese trends with a product development

strategy that is compatible with our focus

onsustainability.

This well-defined strategy, along with

ourwell-capitalised businesses, provides

asolidfoundation to support our future

growthaspirations.

In June 2022, we announced the strategic

acquisition of substantially all of the assets

ofSpencer Aerospace Manufacturing, LLC

(“Spencer Aerospace”), which completed

inNovember. The acquisition marks a further

step in our well-defined strategy and is part of

our wider objective of optimising our portfolio

and maximising value for shareholders.

Theacquisition enhances Senior's industry-

leading fluid conveyance capabilities, expanding

our capability to produce higher level assemblies

and sub-systems and with the potential to

penetrate new markets such as hydrogen

fittings for power and infrastructure applications.

While Senior has existing hydraulic fluid fittings

expertise, our customers have been strongly

encouraging us to increase our presence and,

following the acquisition, our combined

expertise and market reach will allow us to

respond decisively and accelerate growth as

weleverage Senior’s strong relationships with

OEMs, Tier 1 integrators, and aftermarket

customers around the world to open new

opportunities for Spencer Aerospace.

The strategy for Aerostructures asits core

markets continue to recover is to focus

anddrive:

• filling our existing capacity;

• pursuing some further diversification

intoSpace and Defence; and

• growing market share profitably

inCivilAerospace.

We saw good progress in our Aerostructures

businesses in 2022 and remain confident of

further performance improvement as production

volumes continue to ramp.

STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

SUSTAINABILITY

A commitment to sustainability is rooted in

ourcore values and underpins our Purpose.

Sustainability is an integral part of our strategy,

embedded within the behaviours of our people

and the culture of Senior. We believe with

conviction that how you do business is every bit

as important as what you do. Across the Group

we always put safety and ethics first, and we

strongly encourage and promote diversity and

inclusivity across our international operations.

We continuously aim to deliver our products

inamanner that is both environmentally

sustainable and supports economic growth

andlong-term value creation for shareholders

through sustainable methods. In implementing

our strategy, we are committed to using

naturalresources responsibly, investing for the

long-term wellbeing of the planet and ensuring

that all people involved in our business process’

are treated fairly. Our Environmental, Social and

Governance (“ESG”) programmes continue

toevolve; this year we have been awarded a

class leading “A” rating by CDP for our work

onclimate disclosure and action, having already

previously achieved the highest leadership

ratingfor our Supplier Engagement programme.

We were also highly commended by the UK

Investor Relations Society in their annual best

practice awards for how we communicate our

sustainability programmes and commitments

toour stakeholders.

Our engineering expertise is key in helping to

tackle the climate change and clean air challenge

as the world transitions to a lower carbon

economy. We achieve this by applying our

expertise and technology across many different

applications, in hard-to-decarbonise sectors

ranging from aviation through to land vehicle

andpower & energy markets. We work in close

partnership with our customers' developing

solutions which support both their commercial

and sustainability objectives as we all strive to

achieve our individual Net Zero goals.

In 2022, we have again made good progress

with our key sustainability metrics and activities:

Environment

• Awarded the top ‘A’ score by CDP in its global

annual ranking for transparency on climate

change – Senior is one of only 283 companies

which achieved an A out of nearly 15,000

scored, putting us in the top 2% of disclosing

companies. We were the only Aerospace and

Defence company to achieve an A rating in

2022. In February 2022, we were informed

byCDP that Senior was awarded the highest

leadership status in its annual supplier

engagement ratings, putting us in the top 8%

of companies on this metric.

• We remain on track to achieve our Scope 1, 2

and 3 Science Based Target Initiative (“SBTi”)

verified Near Term Targets.

• We have submitted our Long-Term Net Zero

Targets to SBTi for validation. The targets,

tobe achieved by 2040, are aligned to keep

global warming to 1.5 degrees centigrade, the

most ambitious goal of the Paris Agreement.

• 41% of our electricity was sourced from

renewable energy, an increase from 36%

in2021.

• Recycled 94.8% of waste produced.

Social

• Recognising the impact of high rates of

inflation, Senior has taken steps to help

thebroader workforce including salary

settlements that reflected regional cost of

living pressures, a more flexible approach

toworking hours and promoting employee

assistance and wellbeing initiatives.

• Building on the success of our first Global

Employee Opinion Survey in 2021 and the

actions taken as a result of the feedback,

weundertook our second Global Employee

Opinion Survey in September 2022.

• We remain on track to achieve our 2025

LostTime Injury Rate reduction target.

• In 2022, we introduced additional safety

initiatives involving ergonomics and hand

protection to support our 2025 Lost Time

Injury Rate reduction goal.

• Currently, 55% of the Board Directors are

female and two of the Directors are from

ethnic minority backgrounds.

Governance

• In 2022, employees received refresher

training on Senior’s Code of Conduct.

• Employees continue to receive training and

regular reminders about the risks related to

information/cyber security.

• In 2022, we developed our Climate Change

training to improve awareness of climate

related matters across the Group.

“We continued to make

good progress on our

sustainability goals,

maintaining our sector

leading position.”

David Squires

Group Chief Executive Officer

12 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

13SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

David Squires

Group Chief Executive Officer

Outlook

As we start 2023, our order book is healthy,

reflecting favourable market dynamics,

withcommercial aerospace recovery in

fullswing with other important markets

remaining buoyant. Demand is currently

holding up well, though we remain mindful

of the potential impact of the ongoing

supply chain pressures in aerospace,

aswell as the broader macro-economic

situation and geopolitical uncertainty.

Withaircraft build rates increasing through

the year, and the continuing supply chain

challenges in aerospace, including the

recent fire at one of our key suppliers, we

anticipate trading inour Aerospace Division

to be more weighted to the second half

ofthe year. Overall, the Board anticipates

strong growth for the Group in2023 in line

with itsexpectations.

We remain on track to drive the Group

ROCE to a minimum of 13.5% in line with

our previously stated ambition.

Our strategy and positioning in attractive

and structurally resilient core markets,

combined with our sector-leading

sustainability credentials and highly

relevanttechnical capabilities, is delivering

astrong recovery across our Aerospace

andFlexonics Divisions and enhanced

valuefor our stakeholders.

Aerospace

• Our traditional fluid conveyance products are

entirely compatible with sustainable aviation

fuels, the increasing adoption of which

appears to be the fastest route to lowering

aviation emissions.

• Our Additive Manufacturing capabilities are

enabling advances in complex product design

for improved performance and weight

reduction for the benefit of our customers

across a number of product applications.

• Our world-class capability in thermal

management and fluid conveyance

providesopportunities to support the

furtherdevelopment of electric/hybrid

airvehicleapplications.

• We are building upon our longexperience

ofproviding hydrogen fluid handling and

distribution products for industrial markets

tosupport development ofboth on-aircraft

and off-aircraft hydrogen technologies as this

alternative propulsion ecosystem evolves.

Land Vehicles

• Our current exhaust gas recirculation and

waste heat recovery products continue to

support evolving Land Vehicle propulsion

systems as they become more efficient

andlower their environmental impact.

• We are focusing on new product offerings

forthe transition to a low carbon economy

and engage with our customers’ new product

development programmes by providing

design and engineering support for cooling

and fluid-handling solutions for batteries and

power electronics on the growing number

ofelectric/hybrid vehicles.

• We are supporting the development of fuel

cell cooling and associated fluid conveyance

for commercial vehicle applications by

capitalising on our experience of producing

hydrogen fuel cell products in the

energysector.

Power & Energy

• We continue to develop our well-established

wide range of fluid conveyance products,

bellows and expansion joints for harsh

environments in carbon-free energy

generation including solar farms, wind power

plants, hydroelectric, geothermal, fuel cell

andnuclear power applications.

• Our extensive experience of providing fluid

conveyance products for demanding

environments, and specifically hydrogen

fuelcell cooling and conveyance, opens up

opportunities in hydrogen production and

infrastructure applications.

Technology and product design and

development on the road to Net Zero

Senior’s fluid conveyance and thermal

management businesses have design IP

(intellectual property) and our structures

businesses have manufacturing IP and know-

how. Both are underpinned by our investment

inadvanced manufacturing technology and

supported by our extensive design and

engineering expertise, and collaboration

throughour Technology Council.

In support of our core technology themes,

Senior has identified two key enabling

technologies that underpin innovation

throughout our product development and

manufacturing lifecycle: Additive Manufacturing

and Digitisation. Our Technology Council

ensures that these technologies are

collaboratively developed for the benefit

ofallbusiness in the Group.

Electrification and hydrogen power are poised

toremain the key technology themes in many

ofour end markets in the decades to come.

Ourfluid conveyance and thermal management

technology, highly relevant to these themes,

willcontinue to help us support our customers

with high-valued solutions in the medium- and

long-term to bridge the transition to sustainable

technologies for the future in a low

carboneconomy.

Considered and effective

capitaldeployment

We understand the importance of

considered and effective capital

deployment towards maximising

shareholder value creation. The Group has

afinancial objective to maintain an overall

ROCE in excess of the Group’s cost of

capital and to target a minimum pre-tax

return on capital employed of 13.5% on

apost IFRS 16 basis. Our strategy of

expanding Senior’s high-quality fluid

conveyance and thermal management

businesses remains a priority. All significant

investments are supported by a business

case and are assessed using a rigorous

investment appraisal process.

To maximise the Group’s operating

efficiency and overall effectiveness we

actively review our overall portfolio of

operating businesses and evaluate them in

terms of their strategic fit within the Group.

In December 2019, Senior confirmed that

itwas reviewing strategic options for its

Aerostructures business, which included a

potential divestment. Although we received

strong interest for the business, the Group

determined that, with the onset of the

pandemic, it was in the best interests of

Senior and its stakeholders for the

Aerostructures business to remain within

the Group at that time. We are considering

the best time to relaunch the process to

ensure we optimise value for shareholders,

taking into account financing markets and

end market conditions.

SOURCE: Data sourced from IHS Markit, Feb 2022.

Million units

Light Vehicles

Medium/Heavy Commercial Vehicles

2025

100

105

2017

2019

2018

2020 2021 2022 2023 2024

2016

Gt CO

emissions (right axis)

Traditional use of biomass

Renewables

Nuclear Natural gas

Oil Coal

SOURCE: IEA, “World Energy Outlook”, Oct 2022 – Describes the

total energy supply by fuel and CO2 emissions by each scenario –

Stated Policies Scenario, Announced Pledges Scenario and Net

Zero Emissions Scenario by 2050. Illustrates that renewable energy

increases more than any other energy source in each scenario.

200

400

600

800

2021 STEPS APS

2030

NZE STEPS APS

2050

NZE

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%

2019 2040

2034 20372031202820252022

STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

MARKET OVERVIEW

CIVIL

AEROSPACE

The rebound in flight departure levels in 2022

was testament to the resilience of global air

travel demand, with the subsequent recovery

across commercial aerospace now in full

swing. The strong growth in passenger

numbers seen in most domestic markets

andother short-haul routes was sustained

throughout 2022 and is expected to continue.

International, long-haul traffic has been

accelerating, particularly between North

America and Europe and the recent easing

oftravel restrictions in China has immediately

provided added momentum. IATA continues

to expect domestic passenger numbers to

reach 2019 levels by 2024 and international

passenger numbers to return to 2019 levels

by 2025.

Production volumes for civil aerospace

accelerated in 2022 driven by increased

singleaisle build rates. Both Boeing and

Airbus announced production rate increases

for wide-bodies starting from the end of

2022and further increases on single-aisle

rates in 2023 and beyond.

In the medium and longer term, structural

growth in air travel of c. 4% per annum is

expected to be driven by growing air traffic

demand in Asia and supported by the

replacement of older aircraft with latest

generation, more fuel-efficient models.

IATAanticipates that Asia Pacific will be the

fastest growing region over the next two

decades, buoyed by favourable income

growth and demographic factors.

With our diversified product portfolio in

theaerospace sector, including attractive

positions across the newest generation of

single aisle aircraft platforms, Senior is well

positioned to benefit from the ongoing market

recovery, and increased aircraft build rates.

ONGOING MARKET RECOVERY

ACROSS THE GROUP WITH STRONG

OPERATING LEVERAGE

World passengers flows long run outlook

World vehicles production forecast

World Energy Demand

14 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Our core markets across the Group proved resilient in 2022 andare

buoyant as we commence 2023 despite ongoing macro-economic

challenges and geopolitical uncertainty.

DEFENCE

Senior’s sales to the Defence sector are

primarily focused on the US defence market.

The approved budget for US defence in Fiscal

Year 2022 was $778bn. However, the 2022

Appropriations Bill was not passed until March

2022 which meant that up to that point,

spending was restricted to 2021’s levels under

aContinuing Resolution which led to a delay in

some ordering activity. For Fiscal Year 2023,

theNational Defense Authorisation Act has

approved $858bn of spend, 10% higher than

the budget in 2022.

Senior is well placed with good content on the

F-35 Joint Strike Fighter, mature programmes

such as the C-130 transport aircraft, and newer

programmes such as the T-7A Red Hawk trainer.

OTHER

AEROSPACE

Sales from our Aerospace operating businesses

into end markets outside of the civil aerospace

and defence markets are classified under

“Other Aerospace” and include sales into

thespace, semi-conductor equipment and

medical markets. Using our world class bellows

technology, we manufacture highly engineered

proprietary products to provide unique solutions

for semi-conductor manufacturing equipment.

The semi-conductor equipment market reached

a new sales record in 2022, growing by an

estimated 4%, reflecting the increase in global

demand for microchips. While wafer fab,

foundry and logic equipment sales increased,

memory and storage demand weakened as

post-pandemic related consumer and work-

from-home trends normalise and inflation rises.

According to the World Semiconductor Trade

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

market is forecast to contract by 4% in 2023

asa result of challenging macroeconomic

conditions, leading to weaker end

marketdemand.

The galactic low earth orbit satellites market

revenue is expected to accelerate at a

compound annual growth rate of 15%

between2022 and 2030. Rising demand for

high-speed and low-cost broadband, growing

advancements in satellite network and

potentialuses for laser-based space optical

communications are key factors driving

revenuegrowth of the market.

15SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

40% of

Group

14% of

Group

11% of

Group

19% of

Group

16% of

Group

STRATEGIC REPORT / CHIEF EXECUTIVE OFFICER’S STATEMENT CONTINUED

POWER

& ENERGY

Power & energy markets grew in 2022, and

inparticular, activity in upstream oil and gas

increased and the levels of maintenance

andoverhaul improved.

The Ukraine crisis brought pressure to energy

supply in key markets, adding political impetus

to build energy security and to accelerate the

energy transition to renewables.

Electricity demand is forecast to continue

growing steadily and the IEA predicts an even

stronger push for renewables in the power

sector and faster electrification of industrial

processes and heating. In 2022, 30% of global

electricity generation came from renewable

sources and the IEA predicts this rising to

about50% by 2030 and 80% by 2050.

According to the IEA, in 2022, world oil demand

grew 2% and is expected to surpass pre-

pandemic levels in 2023 and subsequently

grow1% per year until 2030. Global refining

capacity expanded slightly in 2022 with similar

growth anticipated in 2023, although shortages

in individual products may well persist due to

uneven rates of demand growth and limits in

therefining system. This tight supply, coupled

with a limited appetite for new US refining

capacity due to the US federal government’s

policies onenergy, has led businesses to focus

on upgrading and expanding existing facilities,

thereby increasing maintenance and

overhaulwork.

Amid soaring fuel prices and growing energy

security concerns, momentum is building

fornuclear power in many countries.

Accordingto the IEA, nuclear power generation

has the potential to play a significant role in

helping countries to securely transition to

energysystems dominated by renewables.

Intheir global pathway to reach Net Zero

Emissions by 2050, the IEA predicts that

nuclearpower generation will double between

2020 and 2050, with construction of new

plantsneeded in all countries that are open

tothe technology. Whilst extending lifetimes

ofnuclearplants will be an indispensable part

ofacost-effective path to Net Zero by 2050,

itisfeasible that half of the emission reductions

by 2050 may come from small modular reactors

(SMRs) due to their lower cost, smaller size,

andreduced projectrisks.

LAND

VEHICLE

The land vehicle market experienced good

momentum in 2022. All segments grew

in2022, as markets in North America and

Europe were buoyant, aided by signs of

supply chain constraints easing compared

toprior year.

According to Americas Commercial

Transportation (“ACT”) research, the heavy

duty truck market grew by 19% in 2022

compared to 2021. The market is expected

todecline by 3% in 2023 as pent-up demand

for more fuel efficient engines and modest

pre-buy activity ahead of tighter emission

standards coming to be introduced in 2024

are expected to be offset by slowing

macroeconomic indicators in the US.

According to IHS Markit Inc. (“IHS”),

European truck and bus market production

declined by 1% and is forecast to decline

byafurther 1% in 2023.

Light vehicle production in 2022 continued

tobe impacted by semi-conductor shortages,

although this is showing signs of

improvement. Production rates were further

impacted by interruptions in the supply of

wireharnesses due to the Ukraine crisis.

According to IHS, European light vehicle

production grew by 5% in 2022 compared

to2021, despite being forecasted to decline.

Itis forecast to grow by 6% in 2023 as

semiconductor availabilityimproves.

According to the International Energy

Agency(“IEA”), global electric car sales

havecontinued their strong growth in 2022.

TheBloomberg NEF Electric Vehicle Outlook

2022 report predicts that by 2025, plug-in

vehicles will represent 23% of new passenger

vehicle sales globally and electric vehicles will

represent 6% of the fleet. With the increasing

adoption of electrification for both land vehicle

and stationary power applications continuing,

this market is fast growing and represents

amajor opportunity for Senior in the

mediumand long term, particularly for our

proprietary battery cooling technology

We are ensuring we are appropriately resourced to

take advantage of the market-led opportunities across

our Flexonics and Aerospace Divisions.

CIVIL AEROSPACE

OTHER AEROSPACE

LAND VEHICLE

POWER & ENERGY

DEFENCE

STRATEGIC REPORT / SUSTAINABILIT Y

SUSTAINABILITY

IN THIS SECTION

“A commitment to sustainability is rooted in

our core values and underpins our purpose.

We believe with conviction that how you do

business is every bit as important as what

you do. Across the Group we always put

safety and ethics first, and we strongly

encourage and promote diversity and

inclusivity in all of our operations.”

David Squires

Group Chief Executive Officer

20 Our Technology and Product Development

on the Road to Net Zero

22 Environment

26 TCFD

32 Social

36 Governance

Sustainability remains an indispensable part

ofour overall strategy. We always aim to

deliver our products in a manner that is both

environmentally sustainable and supports

economic growth through sustainable

methods as opposed to focusing solely on

short-term financial gains. In implementing

ourstrategy, we are committed to using

natural resources responsibly, investing for

thelong-term wellbeing of the planet and

ensuring that all people involved in and with

our business process are treated fairly.

We continue to enhance our long-term focus on

Environmental, Social and Governance (“ESG”). This year,

for example, we have achieved a class leading “A” rating

inour CDP climate disclosure.

We apply our expertise and technology across different

applications, working in close partnership with our

customers, to develop solutions that support both

theircommercial and sustainability objectives.

We remain ever responsive to the climate change and

clean air challenge, as the world and our customers

transition to a lower carbon economy.

16 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y

17SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Rotation Flex

Rotation Flexes are deployed in

Concentrated Solar Powerplants

globally. They create a leak tight

joint while enabling the trough

tofollow the rotation of the sun.

Solar Bellows

Solar Bellows are deployed in

Concentrated Solar Powerplants

globally. They act as a seal and

compensate for the different

thermal expansion of glass

andmetal.

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

SUSTAINABILITY

OUR SUSTAINABILITY

FRAMEWORK

GOVERNANCE

UPHOLD HIGH

STANDARDS OF

ETHICALINTEGRITY

Bribery & Corruption

Ensure our policies and

practices deliver the highest

standards of integrity, avoiding

the possibility of bribery

andcorruption

Human Rights

Uphold international standards

on human rights

Modern Slavery

Prevent slavery and human

trafficking in the Group’s

activities and its supply chain

Responsible Sourcing

Promote the use of responsible

practices with a supply chain

Responsible Taxation

Fully comply with the tax laws,

regulations and disclosure

requirements in the countries

we operate in

Whistle-blowing

Encourage the reporting of

wrongdoing in the organisation

CYBER SECURITY &

DATA PROTECTION

Reduce the risk of cyber

attacks and ensure protection

of all confidential data

PRODUCT SAFETY

Ensure that Senior products are

certified to the required

International Standards

SOCIAL

HEALTH & SAFETY

Reduce Lost Time Injury Rate

to 0.3 by 2025

DIVERSITY & INCLUSION

Develop greater diversity and

inclusion within the Group

PEOPLE & CULTURE

Create a working environment

that enables our employees to

achieve their full potential

EMPLOYEE WELLBEING

Support physical and mental

health of employees. Create

the environment that leads to

ahighly engaged workforce

COMMUNITY INITIATIVES

Bring positive change to

the communities in which

weoperate

ENVIRONMENT

SUSTAINABLE PRODUCTS

Support our customers in

developing products that help

reduce the impact on the

environment.

ENVIRONMENTAL

FOOTPRINT

Carbon

• Reduce Scope 1 and Scope

2 emissions by 30% by 2025

from 2018 base year

• 80% of the Group’s suppliers

by spend, covering

purchased goods and

services and capital goods,

to have science based

targets by 2025

Waste

• Achieve 95% recycling rate

by 2025

Water

• Limit the environmental

impact of our production

processes through the

efficient use of water

Our sustainability framework

Our sustainability framework emphasises

safety, high ethical standards, care for

theenvironment and our overall

businessvalues.

We believe this framework and the high

standards we set, helps us to attract,

develop and retain the right people, and

thatthis is fundamental to our long-term

success. We have talented, committed

people with the right skills and experience

across our businesses, and we continue

tosupport the personal and professional

development of our staff.

Delivering sustainable solutions

As the world transitions to a low carbon

economy, Senior is helping its customers

todevelop efficient and effective products

that are more sustainable and have

lowerenvironmental impact during the

manufacture process and in use.

Our success is built on developing

long-term partnerships with our customers,

which enable us to help them meet today’s

challenges and deliver solutions for future

low carbon requirements. An example of

this is our work to provide customers with

more energy efficient solutions on existing

internal combustion technologies while

simultaneously helping these same

customers bring to market efficient and

viable electric and hydrogen power trains.

We have continued to reduce our carbon

emissions (market based Scope 2)

usingmore renewable energy and more

sustainable production methods and

materials wherever possible. Our advances

in additive manufacturing are a good

example of this, as we are now able to

design and manufacture complex products

quickly, with reduced waste and often at

areduced weight when compared to

traditional manufacturing methods.

Reducing waste and the consumption

ofelectricity and water during the

manufacturing of the products remains

akey focus. In 2022 we achieved a waste

recycling rate of 94.8%. With operations

in12 countries, we are also able to be

geographically close to major customers

which helps to minimise the carbon

footprint of our products.

18 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

19SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

CDP – CARBON DISCLOSURE

PROJECT

Senior has been awarded an ‘A’ by CDP

forits 2022 Climate Change disclosure.

CDP is a global environmental non-profit

charity that provides a global disclosure

system for investors, companies, cities,

states andregions.

Based on CDP’s thorough assessment

ofcomprehensive climate change data,

Senior is the only Company in the

Aerospace & Defence Sector to achieve

thehighest ‘A’ rating. A total of nearly

15,000 companies were scored, putting

usin the top 2% of disclosing companies.

Phoebe Duke-Wallace (The Group

Sustainability Co-ordinator) and Mark

Roden (The Group Director of HSE &

Sustainability) accept the award from CDP.

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

Environment

22%

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

emissions (market based) from 2018 base year

(2021 – 18.9%)

Waste

94.8%

Recycling rate

(2021 – 93.1 %)

Diversity

55%

Percentage of women on Senior plc Board

(2021 – 50%)

Employee Opinion Survey

81%

Percentage of employees completing

Employee Opinion Survey

(2021 – 81% of Senior employees completed survey)

“Sustainability remains a core focus in Senior. We continuously

improve our programmes, following global best practice standards.

Inclusion in the CDP “A” list for Climate Disclosure is a highlight

for2022, placing us at the forefront of companies taking action.

Weremain committed to building on this success in 2023.“

Mark Roden

Group Director of HSE & Sustainability,

2020 2030

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

OUR TECHNOLOGY AND

PRODUCT DEVELOPMENT

ON THE ROAD TO NET ZERO

Electrification and hydrogen power

are likely to remain the key

technology themes in all our

end-markets in the decades

tocome.

Our fluid conveyance and thermal

management technology, highly

relevant to these applications,

willallow us to support our

customers with high-value

solutions in the medium and

longterm as they transition to

sustainable technologies.

Observation

Nuclear is increasingly

seenas vital for a low carbon

future. The European

Parliament voted to

classifynuclear as

agreeninvestment.

World leaders have agreed

to phase out fossil fuel

subsidies at COP26.

Our response

We are supporting

engineering and/or fabrication

with all active OEMs of Small

Modular Reactors (SMR).

Our flue gas diversion

products are mitigating

climate impact of

conventionalenergy.

Observation

The EU increased its

renewables target to ≥45%

ofenergy mix by 2030.

The US eyes 100% carbon

pollution-free electricity

by2035.

Wye piping,

reducer and

crossover

expansion joint

for small modular

reactor (SMR)

Observation

Semiconductor content in

carsis increasing, especially

inEVs. The US passed the

CHIPS act to secure supply,

EU/India considering

similarplans.

California Air Resources

Boardrequires – 75% NOx

reductions by 2024. Euro VII

and Bharat V (India)

standardsareplanned.

The Inflation Reduction Act

will extend incentives for EVs.

Our response

We have become a key

supplier to microchip

equipment makers, a market

with high barriers to entry.

Our emission control

products help vehicles meet

transitionary regulations.

Observation

The US EPA will tighten

emissions rules countrywide

from 2027.

Major car markets are

implementing a COP26

agreement to ban new

fossilfuel cars by 2035.

Bellow

actuatorfor

semiconductor

equipment

application

Observation

Current generation engine

technology enhancements

expected to deliver maximum

5 – 25% fuel efficiency

improvements, with the latest

proposed designs. Urban Air

Mobility (UAM) operators

planning to start operations

from 2024, but widespread

acceptance unlikely

before2030.

Our response

We have significant content

incurrent best-in-class

engines, and work closely

with customers to further

enhanceourproducts.

We are working with multiple

UAM providers on prototype

solutions for thermal

management solutions.

Observation

The US aims to supply ≥3 bn

gallons of sustainable aviation

fuels (SAF) per year by 2030.

The EU plans for SAF to be

≥5% of aviation fuels, and

plans to end free CO

credits

for airlines by 2026.

LEAP-1B

engineoil

bearingnozzle

and distributor

AEROSPACE

LAND

VEHICLES

POWER &

ENERGY

20 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

21SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

2040 2050

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

Our response

Energy storage will be

required on a larger scale

asrenewables grow.

Senior offers multiple

solutions for thermal

management within various

energy storage applications.

Observation

IEA forecasts global wind

and solar photo-voltaic

energy demand to grow

nearly 700% on 2021

in2050 in its Stated

Policiesscenario.

Ensuring stable power

supply for critical

infrastructure such as data

centres will be important.

Our response

We will continue to grow

ourlow carbon business

including solar and wind.

We have extensive

experience in land based

SOFC fuel cell components

used in backup power

unitsfor data centres

andhydrogen

conveyancesolutions.

Heat exchanger

forthermal

management

Fuel distribution

anode separator

plate

Our response

Our electric vehicle inverter

heat sink “Omega Fin”

hasbeen patented.

We are in active customer

discussions on our battery

and electronics cooling and

fluid handling products.

Observation

16 countries have committed

to 100% zero-emission new

truck and bus sales by 2040.

Our response

We are in series production

of our 70kW battery cooler

for e-buses.

We won our first contract

tosupply a cooling pipe

assembly for an electric

motor on a heavy-duty

Battery Electric Vehicle and

are working on H₂ fuel cells

for HDVs.

“Omega Fin”

inverter heat sink

Battery cooling

plate for

electrified

vehicles

Our response

Our current fluid conveyance and

structural components solutions

are fully compatible with SAFs.

We are collaborating with

multiplecustomers on developing

components for carbon capture,

energy storage and

electrolyzersystems for

greenhydrogenproduction.

Observation

Alternative-powered aircraft

will increase demand for

ourbattery thermal

management, fuel cell

andcryogenic expertise.

AirbusZEROe H₂ aircraft

planned for service in 2035.

Our response

Our Aerospace and Flexonics

divisions are working

together to develop various

demonstrator hydrogen

powertrain components

forOEM customers.

Cryogenic

productsfor

LH2systems

Stainless

steelhoses

forhydrogen

production

Cooling pipe

assembly for

anelectric

motor on a

fullyelectric

(BEV)truck

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

ENVIRONMENT

SENIOR HAS COMMITTED TO

ACHIEVE NET ZERO BY 2040

In Senior we follow the Net Zero guidance as

defined by SBTi*. Put simply this means cutting

greenhouse gas emissions to as close to zero

aspossible, with a removal strategy for any

remaining emissions.

The SBTi Net-Zero Standard is consistent with

societal climate and sustainability goals and

within the biophysical limits of the planet.

The SBTi Net-Zero Standard defines corporate

net-zero as:

• Reducing scope 1, 2, and 3 emissions to zero

or to a residual level that is consistent with

reaching net-zero emissions at the global or

sector level in eligible 1.5°C-aligned pathways.

• Neutralising any residual emissions at the

net-zero target year and any GHG emissions

released into the atmosphere thereafter.

Senior was the first company in the global

Aerospace & Defence sector to have its

emissions reduction targets independently

verified and approved by the SBTi. In 2020 SBTi

approved our Near-Term Net Zero Targets.

These are:

• Senior commits to reduce its absolute Scope

1 and 2 GHG emissions by 30% by 2025

compared to a 2018 base year.

• For Scope 3 GHG emissions, Senior also

commits that 80% of its suppliers by spend,

covering purchased goods and services and

capital goods, will have science based targets

by 2025.

In July 2022 Senior applied to the Science

Based Target Initiative (SBTi) for approval of our

Net Zero Targets for Scope 1, 2 and 3 emissions.

The SBTi Net Zero criteria requires a near-term

and long-term science based target.

Scope 3 Emissions

Scope 3 emissions are the result of activities

from assets not owned or controlled by Senior,

emissions of carbon outside of Scope 1 and 2

which Senior indirectly affects in the value chain.

In order to reduce Scope 3 emissions, we know

that it is vital to engage with our supply chain as

purchased goods and capital goods are our

major sources of Scope 3 emissions.

In 2021, we commenced our work to achieve

our Scope 3 (supplier engagement) SBTi Target.

In order to facilitate the data capture and to

ensure we were following best practice we

partnered with CDP becoming a member of

theCDP Supplier Programme.

SENIOR HAS COMMITTED

TO ACHIEVE NET ZERO BY 2040

The target, to be achieved by 2040 is aligned

to 1.5 degrees centigrade for all scopes.

We have followed the cross-sector pathway

using modelling from the Intergovernmental

Panel on Climate Change (IPCC) and the

International Energy Authority (IEA).

We expect to achieve Net Zero approval in 2023.

PROGRESS TOWARDS OUR

CERTIFIED SCIENCE BASED

TARGETS

Scope 1 and 2 carbon emissions

Scope 1 emissions are greenhouse gas

emissions released directly from a business

– this includes natural gas combustion,

ownedtransport and refrigerant use.

Scope 2 emissions are indirect GHG

emissions released from energy purchased

byan organisation, principally electricity.

Business activity continued to recover in

2022, as a result we experienced an increase

in electricity usage of around 12%. To mitigate

the potential increase in Scope 2 emissions,

we increased our sourcing of low carbon/

renewable electricity, in combination with our

existing on-site solar generation (Thailand,

Malaysia, India businesses) we achieved:

• 3.6% reduction in total Scope 1 and 2

emissions (market based) in 2022

compared to 2021.

• 4.9% reduction in Scope 2 emissions in

2022 (market based) compared to 2021.

• 41% of our electricity sourced from

renewable supply (36% in 2021).

*The Science Based Targets initiative (SBTi) is a

globalbody enabling businesses to set ambitious

emissions reductions targets in line with the latest

climatescience.

2010 2015 2020 2020

JULY

2020

DECEMBER

2021

JULY

2021

SEPTEMBER

2021

DECEMBER

2022 2022

JULY

2022

DECEMBER

2023

First submission to the

Carbon Disclosure

Project

Launch of “20/20 Vision

for Sustainability”

including adopting

climate targets for

carbon intensity, waste

recycling and water

usage

“20/20 Vision for

Sustainability” climate

targets achieved

Scope 1, 2 and 3 targets

approved by the Science

Based Targets Initiative

Gap analysis undertaken

to assess the Company’s

alignment to TCFD

recommendations and to

identify areas for

improvement

Re-assessment of

climate-related risks

andopportunities

Scenario analysis

undertaken

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

Submit application to

SBTi for verification of

our Long-Term Net Zero

Targets

Senior Achieve “A”

rating for Climate

Disclosure

Anticipated SBTi

approval for our

Long-Term Net Zero

Targets

THE ROUTE TO NET ZERO

Senior energy hierarchy

TRANSITION FROM

GAS TO RENEWABLE

RENEWABLE/LOW

CARBON ENERGY

PROCUREMENT

ON-SITE RENEWABLE

ENERGY

REDUCE ENERGY

CONSUMPTION

In 2022

41%

of our electricity was sourced from

renewable energy, an increase from

36% in 2021

22 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

23SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Scope 1 & 2 Market Based Emissions

10,000

20,000

30,000

40,000

50,000

60,000

2018 2019 202220212020

Target Total tonnes CO

Scope 1 & 2 Market Based Emissions

56,99257,418

46,747

46,540

44,878

Carbon emissions

(measured as Tonnes ofCO

Scope 1

Scope 2

Electricity

+ District

Heating

(market based) Total

2018 10,414 47,0 0 4 5 7,418

2019 10,378 46,614 56,992

2020 8,731 38,016 46,747

2021 8,445 38,095 46,540

2022 8,629 36,249 44,878

SUPPLIER

ENGAGEMENT

CDP recognised our efforts

by awarding us Supplier

Engagement Leader status

based on our Supplier

Engagement Rating

(“SER”). The 2022 score

will be released in

March2023.

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

Suppliers reporting operational emissions

Suppliers reporting active targets

Suppliers with validated near-term SBTi targets

Estimated annual CO2 savings

Suppliers reporting emission reduction projects

Suppliers reporting renewable energy usage

Suppliers engaging their own suppliers

Supplier

Response Rate

160 Suppliers

Supplier Engagement

2022 key statistics

Emission

reporting

64%

45%

14%

Targets

65 MMT

53%

Emission

reduction

37%

Renewable

energy

41%

Engagement

Of the 160 Suppliers who responded:

Data taken from CDP 2022 supplier portal extract

22%

reduction in total

Scope 1 and 2

emissions from our

2018 baseline

We remain

on track to

achieve our

30%

SBTi reduction

target by 2025

Note: The Scope 1 and 2 emissions Location Based

andMarket Based (FY22) are independently verified in

accordance with the International Standard on Assurance

Engagements ISAE3410 (limited assurance).

2010 2015 2020 2020

JULY

2020

DECEMBER

2021

JULY

2021

SEPTEMBER

2021

DECEMBER

2022 2022

JULY

2022

DECEMBER

2023

First submission to the

Carbon Disclosure

Project

Launch of “20/20 Vision

for Sustainability”

including adopting

climate targets for

carbon intensity, waste

recycling and water

usage

“20/20 Vision for

Sustainability” climate

targets achieved

Scope 1, 2 and 3 targets

approved by the Science

Based Targets Initiative

Gap analysis undertaken

to assess the Company’s

alignment to TCFD

recommendations and to

identify areas for

improvement

Re-assessment of

climate-related risks

andopportunities

Scenario analysis

undertaken

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

Submit application to

SBTi for verification of

our Long-Term Net Zero

Targets

Senior Achieve “A”

rating for Climate

Disclosure

Anticipated SBTi

approval for our

Long-Term Net Zero

Targets

In 2022 we engaged with around 340 of

oursuppliers.

In 2021, 94 of our suppliers provided data to

us; in 2022, we were successful in increasing

this response to 160suppliers, a considerable

increase. Weachieved this through an

extended engagement programme including

a series of Supplier Webex meetings as well

as assisting suppliers with calculations.

Data from the CDP portal shows that on

average 20% of a participating company’

suppliers are first time disclosers. For Senior

in 2022 this percentage was much higher at

49%, a strong indication of the success of our

engagement activities, support andapproach.

70%

increase in supplier responses in 2022

compared to 2021

49%

of suppliers were first time responders

compared with a CDP programme

average of 20%

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

Objective: limit the

environmental impact of our

production processes through

the efficient use of water,

particularly in places of high-

water scarcity.

With the increased importance of freshwater

reserves being more strained we are looking

into areas of water scarcity and assessing

howwe can limit the use of freshwater from

theseareas.

We have used the World Wildlife Fund (WWF)

water filter tool to identify the businesses in

areas of water scarcity. The plan is to target

these businesses in 2023.

For information on water, please see

www.seniorplc.com/sustainability

Objective: 95% recycling

rate by 2025.

To increase the amount of waste that is

recycled on site and provide efficient ways

torecycle the waste that is produced.

With continued progression with business

level actions to increase our overall recycling

rate, we have achieved a recycling rate of

94.8% in 2022, an increase from 93.1%

in2021.

For information on hazardous waste, please see

www.seniorplc.com/sustainability

Our objective: all Senior

businesses are accredited

to ISO14001.

WASTE CERTIFICATION

Energy Efficiency Actions

In the reporting year Senior plc has implemented

energy efficiency projects across the global

operating businesses. In total, Senior’s

environmental improvements have the potential

to reduce GHG emissions by 2,284 tonnes

ofCO

These environmental improvements include

improving the energy efficiency in buildings,

including heating, ventilation and air conditioning

improvements, as well as further installation

ofLED lighting. Senior has also looked carefully

atenergy efficiency in production processes,

including machine/equipment replacement and

compressed airefficiency. Senior has set out

itsyear 2025 plan and is on target to reduce

Scope 1 and 2 emissions by 30%. Key to this

isthe purchase of 100% renewable electricity

contracts. Six of Senior’s UK operating

businesses have now contracted into the supply

of 100% renewable electricity, avoiding over

2,000 Tonnes of GHG emissions annually.

Also,one US business has entered into a

100%renewable energy contract. Other Senior

operating businesses continue to make progress

to achieving renewable energy contracts.

OneUSA business has entered into a25%

renewable energy contract with theirsupplier.

WATER

Water usage

in 2022

266megalitres

Reduction in

usage of

76megalitres

compared to 2019 (342 ML),

the last full year before COVID-19

related impact to operations

In 2022, Senior was

successfulinrecycling

94.8%

of waste produced

In 2022, 74% of our businesses

achieved a recycling rate of

90%

or higher

24 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

25SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y CONTINUED

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

Streamlined Energy and Carbon Reporting (“SECR”)

1st Jan 2022 to 31st Dec 2022 1st Jan 2021 to 31st Dec 2021

UK and

Offshore

Global

excluding UK

and Offshore Total

UK and

Offshore

Global

excluding UK

and Offshore Total

Scope 1: Combustion of fuel and operation of facilities 1,224 7,405 8,629 1,244 7,201 8,445

Scope 2: (location based) Electricity, heat and steam

purchased for own use 2,159 39,550 41,709 2,203 36,040 38,243

Scope 2: (market based) Electricity + District Heating 1,085 35,107 36,249 875 37,2 20 38,095

Total gross Scope 1 and 2 (location based) emissions/tCO

e 3,383 46,955 50,338 3,447 43,241 46,688

Energy consumed in MWh to calculate above emissions 17,198 138,029 155,227 17,171 126,996 144,167

Scope 3: Business travel, waste, water 103 1,995 2,098 53 1,118 1,171

Total Gross emissions/tCO

e (Scope 1, Scope 2 location

based, Scope 3 ; Business travel, waste , water) 3,486 48,950 52,436 3,500 44,359 47,859

Intensity measure/tonnes CO

emitted per £m of revenue 25 69 62 34 80 73

Water usage (in megalitres) 32 235 266 37 219 256

Percentage of waste recycled or recovered 100% 94% 95% 100% 89% 93%

CARBON EMISSIONS

Methodology

The Group’s approach to calculating and reporting our

GHG emissions follows the GHG Protocol on how to

measure and monitor GHG emissions.

Three data sources used for GHG emissions.

1. UK Government GHG Conversion factors for

company reporting (DEFRA full set for advanced

users 2022).

2. US EPA (eGRID) Emission factors for greenhouse

gas inventories for US electricity generation

(2022Version).

3. IEA (International Energy Agency) Emission factors

year 2022 version.

2022’s reporting has incorporated Scope 2

greenhousegas emissions (associated with

electricityconsumption) calculated using both

theLocation and Market-based methods.

Data for the market-based, utility emission rates has

been collated during the period December 2022 –

January 2023, as best available information to

represent the emissions during the year. It should be

noted that these vary and are periodically updated, so

are representative of our best endeavour to determine

market-based emissions at the time of collating data

forthis report.

In 2022, there was one acquisition. Spencer Aerospace,

located in California was acquired on 25 November 2022.

As there were only 5 weeks of GHG emissions until the

endof year 2022, it was decided that GHG emissions

willbereported from January 2023. Therefore, Spencer

Aerospace is omitted from our 2022 reporting.

Each Senior business reports its environmental

performance monthly using the Group’s financial

reportingprocess.

The Scope 1 and 2 emissions Location Based and

MarketBased (FY22) are independently verified in

accordance with the International Standard on

AssuranceEngagements ISAE 3410 (limited assurance).

In calculating GHG emissions, the Group has used the

control approach and more specifically the financial

control approach under which a company accounts for

100% of the GHG emissions from operations over which

it has control. This covers all wholly owned operations and

subsidiaries of the Group for financial reporting purposes.

Limited Scope 3 emissions are reported in the table

above, they are not externally verified at the time of

publication of this Annual Report. A full disclosure of

the2022 Scope 3 emissions, externally verified, will be

made publicly available within our CDP Climate Change

later in2023.

Total waste includes the reported production and

non-production-related hazardous and non-hazardous

solid, sludge and liquid materials (including wastewater

since 2019) that is sent off site for disposal, treatment,

reprocessing, recycling or reuse by others. Waste

materials do not include by-products or scrap from

aSenior business process which are re-used in a

production process. Similarly, wastes that arise from

construction and other maintenance / remediation

works performed by third party contractors are not

included in the scope of reporting where the contractor

is responsible for the disposal of the waste. DEFRA

conversion factors are used worldwide for waste data

as means to determine a reasonable carbon

conversionfactor.

Water volumes are obtained from meter readings

andfrom supplier invoices. All water consumption

isconverted to megalitres, carbon is derived using

recognised and appropriate DEFRA conversion factors.

Senior uses DEFRA conversion factors to calculate

carbon based on distance and class of travel.

STRATEGIC REPORT / SUSTAINABILIT Y / TCFD

TASK FORCE ON CLIMATE-RELATED

FINANCIALDISCLOSURES (‘TCFD’)

This section summarises

theGroup’s climate-related

financial disclosures

consistent with the TCFD

framework recommending

11disclosure topics across

four pillars – governance,

strategy, risk management

and metrics and targets.

TCFD compliance statement

In accordance with the Listing Rule 9.8.6 R(8),

we confirm that the Company has made

climate-related financial disclosures for the

year ending 31 December 2022 which are

consistent with the TCFD Recommendations

and Recommended Disclosures.

GOVERNANCE

Oversight of climate-related risks

andopportunities

The Company’s Board of Directors has oversight

over climate-related matters. The Group Chief

Executive Officer is ultimately responsible for

climate-related risks and opportunities.

Reporting to the Group Chief Executive Officer,

the Group Director of HSE & Sustainability is

responsible for Senior’s sustainability and

climate-related strategies. During 2022, the

Board discussed climate-related matters as part

of the regular scheduled Board meetings as

outlined below:

• During every Board meeting, the Group Chief

Executive Officer provided updates to the

Board on a wide range of sustainability

matters, including climate-related issues. Our

newly developed carbon emissions tracking

dashboard has been incorporated into the

Chief Executive Officer’s report to the Board

and enabled improved visibility, monitoring

and oversight over the Group’s performance

in meeting its climate-related sustainability

targets by the Board. The Group Chief

Executive Officer also regularly reports to the

Board on other climate matters discussed

during the Executive Committee and HSE

Committee meetings.

• The Group Director of HSE & Sustainability

attended two Board meetings in 2022 to

update on the progress of meeting Senior's

Near-Term Scope 1 and 2 targets, report on

the initiatives taken tomeet the existing

Scope 3 targets and to present the business

case for Long-Term Net Zero climate targets.

In June 2022, the Board approved the

submission of Senior's Long-Term Net Zero

targets for Scope 1, 2 and 3 to the SBTi for

verification and approval, committing Senior

to a long-term target to reach Net Zero GHG

emissions across the value chain by 2040.

• Recognising that climate considerations are

an important factor in capital expenditure

decisions, we have started work on

enhancing the Group’s Capital Expenditure

Request process by incorporating calculations

and accounting of carbon which would result

from the purchase and operations of the

newequipment. This is an important step

towards developing the Group’s internal

carbon price mechanism.

• The Audit Committee considered the TCFD

disclosures included in the Annual Report &

Accounts 2021 during its meeting in February

2022. The Committee will also be responsible

for reviewing the TCFD disclosures proposed

for the Annual Report &Accounts 2022.

• Following the Group’s annual identification

and assessment of climate-related risks and

opportunities, the Executive Committee

andthe Board received and reviewed the

summary of findings during their respective

meetings in October and December 2022.

• The Group continued its focus on Board

technology presentations made by the

Group’s members of the Technology Council

in September and October 2022, highlighting,

among other matters, climate-related

megatrends likely to affect the Group in

thenext 5-10 years, regulatory government

commitments impacting the Company’s

endmarkets and development of new

technologies by the customers.

We recognise the importance of ensuring that

the Board of Directors has the necessary

knowledge and skills to understand and address

the impact of climate change on the Group.

Wemaintained the Board’s climate competence

through regulatory and legal updates as part of

regular secretarial reports to the Board. In

Senior’s climate-related governance framework

Group Chief Executive Officer

Ultimate responsibility for management of

climate-related risks and opportunities

HSE Committee

Monitoring progress

onGHGemissions

Executive Committee

Leading the Group’s efforts

onclimatechange

Board of Directors

Oversight of climate-related matters

26 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

27SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y / TCFD

addition, all Board directors will be offered

toundertake climate-related training in 2023,

covering the range of topics shown in the

graph below.

The Board’s strategic discussions always

consider global megatrends expected to

shape the Company’s future operating

environment. During the Board Strategy

meeting in October 2022, matters such as the

impact of global warming, increased pressure

on scarce mineral resources and

decarbonisation trends informed the Board’s

strategic conversations around Senior’s ability

to take advantage of such macro and end

market trends.

CLIMATE

CHANGE

TRAINING

Recognising the importance of raising

awareness of climate-related matters across the

Group, we developed our Climate Change

training course in 2022, which focused on the

following key areas:

• interrelation between climate change and

financial stability;

• differentiating between transition and physical

climate risks;

• introduction to TCFD and the recommended

disclosures;

• climate-related scenario analyses; and

• Scope 1, 2 and 3 emissions and Science-

Based Targets.

We acknowledge that achieving Net Zero

GHG emissions across all of our value chain

requires meaningful understanding of

strategic risks and opportunities arising due to

climate change, as well as practical skills to

implement the change needed to transition to

low carbon future and to meet the Group’s

sustainability objectives.

The training will be rolled out in 2023.

Assessing and managing climate-related

risks and opportunities

Senior's management is responsible for

assessing and managing climate-related risks

and opportunities.

The Group Director of HSE & Sustainability has

direct oversight over Senior's operations on the

matters of climate change, ensuring that data,

such as Scope 1, 2 and 3 emissions, waste

recycling and water consumption, is collated,

monitored, presented and reported to the

Executive Committee and the Board on a

regular basis. Responsibility for carbon emisison

management and the development of the

Energy Efficiency programme also resides with

this position.

Chief Executives of the Aerospace and the

Flexonics divisions have direct responsibility for

ensuring that their divisions meet the Group's

carbon reduction targets and supplier

engagement responsibilities. They constantly

monitor customer demands and are best placed

to ensure that these requrements are reflected

in future programmes as customers transition

tolow carbon products.

The Group Executive Committee, led by the

Group Chief Executive Officer, ensures that

material climate-related risks form part of the

Group’s overall risk management framework,

and that climate-related opportunities are

incorporated into the Group’s strategic and

financial planning. The HSE Committee, chaired

by the Group Chief Executive Officer, monitors

the Group’s progress on its environmental

targets, including Scope 1, 2 and 3 emissions.

STRATEGIC REPORT / SUSTAINABILIT Y / TCFD CONTINUED

STRATEGY

Climate-related risks and opportunities

identified over the short, medium and

longterm

In considering climate-related risks and

opportunities, Senior has selected the

following time horizons to align with the

current Group internal risk management

andplanning time frames:

Rating Range

Short term 2022 – 2025

Medium term 2025 – 2027

Long term 2027 – 2042

Climate change has been reported as one of

the Group’s principal risks since 2019. In 2022,

we performed our annual assessment of

climate-related risks and opportunities taking

into consideration legislative frameworks on

climate change, expectations from regulators

and market stakeholders, changes in weather

patterns as well as the latest technological

trends related to climate change.

The results of the assessment, presented

inthe table below, indicate that the Group’s

material risks remain unchanged from the

2021 assessment, with one risk moving from

long-term into medium-term horizon, reflecting

the increasing focus of credit rating agencies

on ESG. The assessment also identified one

new opportunity related to reduced reliance

onfossil fuels for energysources.

Furthermore, in 2022 we analysed each of

ourbusinesses using the Worldwide Fund for

Nature (WWF) Water Risk Filter. This indicated

that 8 of the 26 operating businesses were in

areas of potential water scarcity. These are our

business in India, South Africa, California

(Senior Aerospace SSP, Senior Aerospace

JetProducts, Senior Aerospace Ketema,

Senior Aerospace Steico Industries), as well

asour Flexonics and Aerospace businesses

inMexico. Our businesses use water in the

production process to dilute coolant used in

machining as well as cleaning and chemical

treatment processes; in addition, water is

required for staff hydration and hygiene. To

date, Senior has not been subject to conditions

where water scarcity had led to interruptions

inoperations, however we are aware of the

possibility of operational interruption and the

potential of interrupted supply of products to

our customers in the case of a severe localised

water shortage. We are targeting these

businesses on an individual basis to

understand where we can reduce overall

water consumption. Senior Aerospace

Spencer, located in California, the acquisition

of which was completed in November 2022,

will be assessed using the WWF Water Risk

Filter in 2023.

Category Sub category Risk/Opportunity Description

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.

Resilience Resource substitutes/diversification

Reduced reliance on fossil fuel for energy sources resulting in reduced costs and a more

resilient energy supply programme.

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.

Climate change

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).

Implementation

ofstrategy

Financing and

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 into

fossil-fuel reliant assets over the long term, or require additional investment costs to pivot

away from assets before the end of their useful life.

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.

Implementation

ofstrategy

Stigmatisation of sector

Activism and protests against aviation, land vehicles and oil and gas market sectors might

become a threat to the reputation of Senior.

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.

28 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

29SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y / TCFD CONTINUED

IMPACT OF CLIMATE-RELATED RISKS AND OPPORTUNITIES ON THE

ORGANISATION’S BUSINESSES, STRATEGY AND FINANCIAL PLANNING

Products and Services

We recognise that climate change is one of the megatrends transforming our business environment. Senior’s purpose – “we help

engineer the transition to a sustainable world for the benefit of all our stakeholders" – is aligned with the Group’s environmental

sustainability objectives to support our customers moving to a lower carbon environment in developing products that are more

sustainable and have lower environmental impact.

Climate change regulation and understanding are driving changes in consumer preferences and increasing demand for energy efficient

transportation. This will mean the extended use of hybrid, fully electric and hydrogen powered vehicles. Senior is currently active in this

area with products including innovative thermal management solutions for large battery packs (initially for public transport vehicles).

Examples of the products include battery cooling, electronics cooling, electric vehicle fluid handling and flex for vehicle range extenders.

A dedicated team of Senior Flexonics businesses are collaborating with their customers on Exhaust Gas Recirculation (EGR) systems to

ensure these meet European EU7 standards expected in 2022/2023.

Our investment in specialised additive manufacturing equipment in some of our aerospace businesses is aimed at developing and

manufacturing lighter metallic components that reduce weight and, ultimately, save fuel and reduce carbon emissions during flight.

Read more on pages 20 to 21 and 46 to 49

Operations and supply chain

We are committed to continuously reducing our environmental footprint. In 2022, we revised our Group Energy Policy with an Energy

Hierarchy model including internal reduction targets. In addition, numerous energy conservation projects were implemented in the

Group’s operating businesses across the world, including improving building insulation, upgrading energy efficient lighting, installing heat

recovery systems.

The Group’s progress on reducing its carbon emissions, increasing waste recycling and its initiatives in promoting the efficient use

ofwater, are described on pages 22 to 25.

Each site within the Group has a scenario-based Business Continuity Plan which is tested on an annual basis.

In 2022, we continued working with around 340 suppliers through the Carbon Disclosure Project, asking them to align with Senior’s

environmental goals and set emissions reduction targets by 2025.

Read more on page 42

Access to capital

In November 2022, the Group successfully refinanced its main UK Revolving Credit facility (“RCF”). In support of the strong ESG

commitments made by the Group, Senior and its lenders jointly agreed appropriate sustainability KPIs linked to the RCF.

Acquisitions or divestments

Portfolio optimisation is a central pillar of our strategy. We look to incorporate sustainability considerations when assessing strategic

acquisitions in our target areas of fluid conveyance and thermal management.

Financial planning process

It is important that the potential of climate-related risks and opportunities is considered in the Group's financial planning, so that adequate

strategies are developed to manage such risks and seize opportunities. We recognise that climate-related risks and opportunities can

influence financial planning in a number of ways. One of them is that climate change can alter demand for certain products and services.

Although we are seeing some negative effects from the decreasing market trend for diesel passenger vehicles in Europe and a

consequent reduction in demand for some products, the overall impact on the Group is not significant, with other product lines filling the

demand. Changes in climate-related regulations and policies can also impact the financial planning, for example through the introduction

of carbon pricing. In support of our SBTi targets, our operating businesses have initiated energy conservation projects (as described on

page 24). Climate-related risks such as extreme weather events and water shortages could potentially disrupt operations. The investment

of around £30,000 in a water filtration project in Cape Town was initiated in response to the extreme water shortages in the region.

Thewater filtration system was installed to reduce the amount of main water needed by recycling some wastewater sources. Thishas

resulted in a greater than 30% reduction in metered water usage and enabled the business to continue operating as usual. OurMexico

businesses also operate in a region of water scarcity. We invested around £10,000 in water harvesting and saw around 10%reduction

inwater usage with potential benefits to business continuity as the harvested water acts as a buffer supply.

STRATEGIC REPORT / SUSTAINABILIT Y / TCFD CONTINUED

Potential impact

Policy changes start to accelerate, and

consumer and investor preferences evolve

rapidly to facilitate decarbonisation.

In the short and medium term, Senior needs

to ensure that its investment decisions are

consistent with its Science Based Targets and

deliver expected results.

In the long term, it is important to keep pace

with changing market demand for low

emission products and remain consistent

between Senior’s public commitments and

market expectations.

Potential impact

A sudden increase in the intensity of climate

policy in 2031, following an initial period which

is characterised by insufficient or ineffective

emission reducing policies.

Senior needs to ensure that it takes action

over this time period to avoid disruption in the

long term as mature economies make rapid

strides to cut emissions.

Potential impact

Absence of transition policies result in a

growing concentration of greenhouse gas

emissions in the atmosphere.

Increased exposure to heatwaves, tropical

cyclones and droughts may increasingly

provide challenge for some of Senior’s sites

and supply chains.

With less policy action and investment driving

forward technology development, the costs

of transitioning to the new technologies may

be higher, the likelihood of successful

implementation and the relative rewards for

the investment may be lower.

Resilience statement

The output of forward-looking scenario analysis

indicated that transition risks could have more

significant impacts in scenarios 1 and 2. The

Group’s application to the SBTi for the approval

of Long-Term Net Zero Targets, aligned to 1.5ºC

for all scopes, can help build resilience to the

effects of policy, legal, reputation and taxation

risks expected under scenarios 1 and 2. The

Group’s focus on innovation and strong

relationships with customers means we are well

positioned to maximise opportunities offered by

smooth and disruptive transition scenarios. We

are proactively assessing the way climate

change affects market demand for our products

as part of our annual strategic meetings. Under

scenario 3, the physical impacts of climate

change could be more significant. The Group’s

robust business continuity plans, tailored to the

specific risks and vulnerabilities of a given area,

help us become more resilient against the

potential physical impacts of climate change.

We recognise that scenario analysis will be

developed over time,and we shall continue to

ingrate the findings into Senior's risk

management framework.

SCENARIO 1

(<2ºC)

SCENARIO 2

(<2ºC)

SCENARIO 3

(>3ºC)

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 1.8ºC by

2050 compared to pre-industrial levels;

• Limited physical risks.

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 1.8ºC by

2050 compared to pre-industrial levels;

• Limited physical risks.

NO POLICY ACTION:

BUSINESS AS USUAL

• Governments fail to introduce further

policies to address climate change

beyond those already implemented;

• Increase in global temperatures reach

3.3ºC by 2050 compared to pre-industrial

levels;

• High physical risks.

Opportunities

The ability to maximise returns on new

investments in the long term, once

transition has occurred and markets have

stabilised.

Opportunities

Early investment can set the Group up to

be ready for the swift changes to the

disrupted economy after 2030.

Opportunities may materialise over the long

term, due to the late policy action and the

abrupt transition to low carbon economy.

Opportunities

The Group’s continued investments and its

ability to diversify business activities can

help Senior be more resilient to changes in

the markets and adapt to the impacts of

climate change.

Resilience of the organisation’s strategy

with reference to three climate-related

scenarios, including a 2ºC or lower scenario

In 2021, we carried out scenario analysis to

understand the potential impact of climate

change on the Group’s operations. We selected

the three climate scenarios produced by the

Bank of England because:

• they meet TCFD recommendation to assess

business resilience at different climate-related

scenarios, including a 2ºC or lower scenario;

• these scenarios are used by the Bank of

England to explore resilience of the UK

financial system to climate change;

• the scenarios are modelled to a thirty-year

timespan, out to 2050 to align to the Paris

Agreement and other net zero 2050 targets;

• they consider the macroeconomic impacts

with more granularity and within a more

applicable business context than climate

scenarios based on temperature increases;

and

• multiple high transition scenarios provide

diversity in stress test.

Further information on the assumptions and

parameters used in the scenarios can be found

on the Company's website.

30 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

31SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y / TCFD CONTINUED

The organisation’s processes for

identifying, assessing and managing

climate-related risks

Climate risks are identified, assessed and

managed using Senior’s risk management

process as shown on page 62 on an annual

basis. The Committee of Sponsoring

Organizations of the Treadway Commission

(“COSO”) enterprise risk management

integrated framework serves as the

foundation of the Group’s risk management

process, tailored to reflect Senior’s culture

and values. The process includes

identification of relevant risks, risk scoring,

development and assignment of response

actions, monitoring the effectiveness of key

mitigating controls and reporting of the risk

and assurance environment to the Executive

Committee, the Audit Committee and

theBoard.

During 2022, the multi-disciplinary team

including the Group Director of Risk and

Assurance, the Group Director of HSE &

Sustainability, the Divisional CFOs, the

Director of Investor Relations and Corporate

Communications, the Director of Business

Development & Strategy, the Head of

Treasury and the members of the Secretarial

team, re-assessed the climate-related risks,

taking into account the evolving landscape

associated with climate change in the areas of

existing and expected legislation, supplier and

consumer preferences, government policies

and commitments, as well as changes in

weather patterns. The results of the

assessment were reviewed by the Executive

Committee and the Board.

Climate-related risks and opportunities are

identified using a wide range of data sources,

such as climate change specific publications

and data, CDP disclosures from peers,

relevant sector literature and guidance from

TCFD for Senior’s sector. Materiality of

climate-related risks is assessed by

considering such factors as likelihood,

magnitude of impact and the strategic

importance to the business. For our 2022

assessment, risks were assessed as residual,

having considered existing controls

andmitigations.

Mitigating action plans are developed for all

climate-related risks where the risk scoring

exceeds the Group’s tolerance level for that

risk. The action plans include a detailed

description of the response actions (assigned

to the members of the Executive Committee

and other senior members of staff) as well as

time horizons for completion of the mitigating

action plans. Action plan progress is tracked

to ensure timely implementation. The overall

effectiveness of the risk control environment

is closely monitored through assurance and

audit activities to assess if critical risks are

being mitigated within the Group’s

risktolerance.

Integration of processes for identifying, assessing, and managing climate-related

risks into the organisation’s overall risk management framework

Climate-related risks form part of the Group’s risk register and will be subject to the annual

review by the Executive Committee and the Board. Climate change has been reported as one

of the Group’s principal risks since 2019.

RISK

MANAGEMENT

METRICS AND TARGETS

Metrics used to assess climate-related risks and opportunities

Targets used to manage climate-related risks and opportunities and performance

against targets

The below table illustrates the metrics we have selected to measure our climate-related risks

andopportunities. We selected these metrics because we consider that they are relevant to

theclimate-related risks and opportunities facing Senior, as well as regulatory and stakeholder

expectations; in addition, these metrics are measurable, transparent, comparable and actionable.

Our Near-Term Scope 1, 2 and 3 targets were verified by SBTi in 2021. In July 2022, Senior

applied to the SBTi for verification and approval of its Long-Term Net Zero climate targets for

Scope 1, 2 and 3 emissions. The targets, to be achieved by 2040, are aligned to 1.5ºC for

allscopes.

Although the Company's Remuneration Policy allows the Remuneration Committee to include in

the bonus, strategic measures limited to 25% of the bonus opportunity, this facility has not been

used nor have we included an ESG target within the long term incentive plan. Part of our thinking

is that it is clear from past and current performance, that our sector-leading ESG metrics and

progress has been achieved without the need to incentivise, due to our corevalues.

Climate-related target

Target

year

Base

Year Progress in Metric Link to material climate risk

Reduce absolute

Scope 1and 2 GHG

emissions by 30%

2025 2018 22% decrease

(2021 – 19%

decrease)

Tonnes CO

e Increased pricing of GHG

emissions/cost of carbon offset

Increased stakeholder concern or

negative stakeholder feedback/

Stigmatisation of sector

For Scope 3 GHG

emissions, 80% of

suppliers by spend to

have climate Science

Based Targets

2025 160

(2021 – 94)

Supplier

Engagement

(response rate)

Increased pricing of GHG

emissions/cost of carbon offset

Increased stakeholder concern or

negative stakeholder feedback/

Stigmatisation of sector

Achieve a recycling

rateof 95%

2025 94.8%

(2021 – 93.1%)

% of waste

recycled

Increased stakeholder concern or

negative stakeholder feedback/

Stigmatisation of sector

Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (“GHG”) emissions

The details of our Scope 1, 2 and 3 emissions, in compliance with SECR, can be found on page 25.

Focus areas for 2023

Governance Develop, review and approve the actions required to implement Senior's

Long-Term Net Zero targets

Strategy Incorporate the risks and opportunities presented by Senior’s Long-Term

Net Zero Targets into the 2023 annual risk assessment

Perform annual assessment of climate-related risks and opportunities at the

operational level

Review the impact of Senior’s Long-Term Net Zero targets on its strategy

and businessmodel

Risk Management Continue to enhance the Group’s risk management process in respect of

climate-related risks

Metrics and Targets Develop interim milestones to achieve Senior’ Long-Term Net Zero targets

and consider additional metrics and targets to assess climate-related risks

andopportunities

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2017 2018 20222020 20212019

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

1.09

0.32

1.17

0.38

0.93

100

120

140

160

2017 2018 20222020 20212019

Total Recordable Injury Illness CasesLost Time Injury Illness Cases

Number of Lost Time Injuries

136

119

136

STRATEGIC REPORT / SUSTAINABILIT Y / SOCIAL

SOCIAL

HEALTH & SAFETY

The health and safety of our employees

remains a core focus for Senior. The pursuit

of world class health and safety in all of our

undertakings is a recognised priority at all

levels in our business.

We ask all our employees to be proactive

inidentifying and reporting unsafe work

practices or potentially hazardous situations,

in 2022 we received 12,615 such “near

miss” reports, an improvement from 11,556

in 2021 (which help to prevent recordable

safety incidents). We actively share

goodpractices and learnings across our

operations with regional meetings and

onour intranet.

Senior has a Group-wide Environment,

Health & Safety (EHS) Management

Framework encompassing risk evaluation

and operational controls for all our facilities.

This is subject to an annual audit by ISO-

trained staff. Seven of our operating

businesses have already transitioned from

OHSAS 18001 to ISO 45001.

Employees at our operating businesses are

required to take regular environment, health

and safety training determined by their

specific roles, areas where they work,

jobfunctions and responsibilities.

No work-related employee or contractor

fatalities occurred in the Senior Group in

2022 with no major (serious / life changing)

injuries to employees or contractors working

on behalf of Senior.

We experienced a reduction in the Total

Recordable Injury and Illness Rate of around

21% compared to 2021 underpinning the

positive, downward trajectory of safety

incidents. However, there was a small

increase in the Lost Time Injury and Illness

Rate emphasising the need for continuous

improvement. With this in mind, in 2022 we

initiated three major global safety initiatives

in addition to the routine auditing and

support activities. Twoof these – hand

safety and ergonomics – are aimed at the

most frequent causes of lost time injuries

across Senior whilst the Golden Rules

update is designed to prevent major injuries.

Lost Time Injury and Illness Rate (“LTIIR”), defined as the

number of work-related lost time injury or illness cases

(losing more than one complete shift) per 100 employees.

The Total Recordable Injury Illness Rate is defined as the

number of cases of lost workdays, restricted work activities,

job transfers, medical care beyond first aid and work-related

illnesses expressed per 100 employees.

Senior Group Injury cases Senior Group Injury rates

These initiatives are:

1) Senior Golden Rules for Safety

– refresh and roll out.

Work commenced on this

programme in 2021, our Golden

Rules have been enhanced by

incorporating elements of our

behavioural safety programme and

updated best practices. Multi-lingual

training material has been produced

and all of our businesses have

completed the programme this year.

2) “Hand Injury” reduction

Cuts and injuries to hands have

beena common source of injury

inSenior for many years. The parts

we produce often have sharp edges

and hand finishing of the high-quality

components remains a part of

ourprocess in many businesses.

In2022, we took a fresh look at

these risks and rolled out a global

programme to address the main

causes after an exhaustive

evaluation of the detailed causes

ofinjury over the last five years.

Itistoo early to report on the

success ofthe programme as yet,

an update will follow in 2023.

3) A New Ergonomic assessment

programme

Ergonomic injuries are the second

most common type of injury in

Senior (just behind hand injuries).

Tocounter this, we have engaged

aleading global consultancy and

started to roll out a programme,

initially in North America – see the

case study.

SENIOR AEROSPACE MEXICO

CELEBRATES HEALTH & SAFETY

ACHIEVEMENT

Senior Aerospace Mexico recognises

fiveyears with no lost time injuries.

Over 200 senior employees joined local

officials from the health & safety secretary

office and civil protection office, together

withgeneral managers of other companies

from the local industrial park for a celebratory

lunch andpresentation.

32 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

33SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y / SOCIAL

SENIOR PARTNERS WITH LEADING CONSULTANCY TO REDUCE

ERGONOMIC RISKS

Ergonomic injuries account for around 40% of

our safety-related incidents in Senior. To reduce

these incidents, we have engaged a leading

global expert consultancy and have piloted

“Industrial Ergonomics”, an online ergonomics

training, assessment, and management

solution in 10 of our manufacturing operations

in the US and Mexico.

“One thing that differentiates Industrial

Ergonomics from other software solutions is

the e-learning made available to the teams”

says Nick De Bruyne, Senior’s Group Safety,

Health and Environmental Manager.

Nick conducted a roll-out programme in our

Bartlett facility, training around 20 Senior

staffhow to use the bespoke software.

Whileassessing a job, workshop attendees

enter the data into the bespoke portal. When

data entry for all body segments is complete,

the application generates a colour-coded image

of the human body, indicating low-risk (green),

medium-risk (yellow), and high-risk (red) on

affected body segments. An overall risk score

for the job is also calculated. These dashboards

act as our status report and are reviewed at our

monthly leadership meeting. They allow us to

see the issues we have at each site, and

proactively calculate where we want to be in

the future. The ability to filter the data by site,

state, or country is especially helpful to the

team. The data will help our businesses

establish local action plans to eliminate risk.

Ona global level, we can track the businesses

performance and establish areas of common

risk and best practice.

“Senior promotes an inclusive

culture and working

environment where

individuals can thrive,

anddiversity isvalued.“

Jane Johnston

Group HR Director

EQUALITY, DIVERSITY AND INCLUSION

Our Core Values underpin our culture.

Senior’s leaders are committed to ensuring

equal opportunities, fairness of treatment,

work-life balance, and the elimination of all

forms of discrimination in the workplace for

employees and job applicants. We aim to

create a working environment in which

everyone can thrive, achieve their full

potential, and contribute to the success of

Senior, and where all decisions are based on

skills and merit. We recognise the benefits

of different perspectives and local cultures

and encourage individuals to speak freely,

asdiverse contributions lead to better

solutions and business outcomes.

TheGroup’s Equality, Diversity and

Inclusionpolicy is contained within the

Codeof Conduct, and every employee

receives a personal copy ofthe booklet.

Senior promotes a culture and working

environment in which everyone can make

the best use of their skills, free from

discrimination or harassment. In 2022,

allemployees undertook Preventing

Harassment and Promoting Respect training

as part of our annual, mandatory Code of

Conduct training. Our Values define how we

treat people, and reinforce our commitment

to be open and straightforward with

colleagues, customers, suppliers and

otherstakeholders.

We expect people to treat everyone they

meet in the course of business with

respectand dignity. The right behaviours

areunderpinned by our Values, policies

andprocedures that support our people

processes, for example talent acquisition,

succession planning, promotions and

learning and development opportunities.

The Executive Committee and business

leaders continue to focus on providing a

diverse andinclusive workplace. Gender

diversity receives much attention in Senior,

however we believe that it remains an

opportunity for further improvement,

particularly in our operating businesses

general management. We are continuing our

global participation inMission Gender Equity

Mentoring. Theprogramme supports and

encourages the development of talented

women. In2022, we analysed the 2022

Global Employee Opinion Survey feedback

by gender. The participation in the survey

was higher for women than men, levels of

participation being a measure of positive

engagement. Inaddition, it was notable

thatwomen again scored higher than men

on their overall engagement score and

organisational fit, indicating that they feel

that Senior is a great place to work.

The table below shows the Group’s Board

ofDirectors, Executive Committee and

operational senior management in 2022

bygender.

Male Female

All employees 78% 22%

Operational senior

management

82% 18%

Executive

Committee

71% 29%

Board 45% 55%

We strive to reflect the diversity of the

communities we work in at all levels

acrossour workforce. Senior is an equal

opportunities employer. The Board seeks

toensure a diverse workforce that supports

all employees, irrespective of age, disability,

gender reassignment, marriage and civil

partnership, race, religion or belief, sex or

sexual orientation. We will not tolerate any

form of unlawful discrimination against

ourcolleagues, or any third parties be

theypotential employees, customers,

subcontractors, suppliers or members

ofthepublic.

In accordance with the Equality Act 2010

(Gender Pay Gap Information) Regulations

2017, Senior publishes its Gender Pay

GapReport, as required on the

Company’swebsite.

STRATEGIC REPORT / SUSTAINABILIT Y / SOCIAL CONTINUED

PEOPLE AND CULTURE

In our autonomous and collaborative

business model, our operational business

leaders are empowered and accountable,

setting the tone for their operations guided

by our Values. As we emerge from the

pandemic, we have seen a change in

emphasis during 2022 as the business

recovers. In a challenging employment

market, we have been focusing on retaining

and recruiting talent to meet business

growth requirements. We have done this

bybenchmarking pay rates in local markets,

making adjustments if appropriate, and

ensuring we are paying people fairly for the

work they do. We have seen operations

providing one off payments or allowances

tosupport employees with the increased

cost of living. We have remained vigilant

regarding changing pay expectations and

supporting employees through these

challenging times. Examples include,

promoting our employee assistance

programmes which cover areas such

asdebt management, legal advice and

counselling services, promoting saving for

retirement and flexible working. We have

also strengthened our links with technical

colleges and universities close to our

operations, providing opportunities for

students to visit Senior, apprenticeships,

andfor Senior to build a longer-term

talentpipeline.

We continue to view the provision of

development opportunities and training

across the group as vital to our success.

Thisyear we have seen an increase in

face-to-face and on the job training and

workshops as COVID-19 restrictions have

eased. This includes Toolbox talks,

supervisor and leadership skills training,

“lunch and learns” as well as technical

training. We continue to sponsor individuals

undertaking external and more academically

orientated courses and training, for example

engineering degree courses. Across Senior,

we have continued to provide opportunities

for learning and development, meeting both

skills and technical training across the Group.

In 2022 we enhanced our skills training

content in Learn, our best in class eLearning

platform, expanding the catalogue and

providing the training in all our languages.

Individuals can select courses and manage

their own learning, covering areas such as

ITskills, Leadership and Management,

Project Management, Health & Wellbeing

and Communication skills. Learn also

enables usto deliver our Code of Conduct

training and other compliance training such

as Cybersecurity. A significant proportion

oflearning is on the job and our culture

ofsharing knowledge and supporting

colleagues is central to developing

technicalcompetencies in our operations.

As evidenced in the Global Employee

Opinion Survey, peer relationships remain

astrength and colleagues help and support

each other. We have an open and honest

culture of respect and trust and people value

teamwork and the teams they work in and

with. This has been particularly important

when we welcomed new employees to our

operations and support them to become

valued teammembers.

“Perform”, our Performance and

Development system, provides a framework

for managers and team members to discuss

feedback, performance, behaviours linked

directly to our Values, set clear objectives,

both business and personal development

and create development plans. These

discussions are designed to be constructive,

open two-way dialogues. This year we have

changed our succession planning cycle to

align with year-end Perform reviews and

have improved the process, introducing

updated leadership indicators and the use of

high-performance indicator tool for our top

talent. The Executive Committee scrutinises

the succession plans and talent pipeline,

identifying successors or interim cover for

key roles across the Group. During these

discussions we focused on functional

capability, for example engineering, as

wellas operational leadership. Personal

development plans are recorded and

monitored in Perform to enable individuals

tofulfil their potential. The Board reviews

thesuccession plans for the Executive Team

and their direct reports on a regular basis,

with a special emphasis on encouraging

diversity and inclusion.

As outlined in our Values and Code of

Conduct, we work together with mutual

trust and respect and operate with integrity

and in an ethical manner. The feedback from

our survey is consistent with this and

confirms that employees believe that people

are treated fairly and that we do not tolerate

misconduct. Our culture is to encourage

open and honest feedback with potential

issues or concerns being raised with local

management. However, on the rare

occasion when things cannot be resolved

locally, employees are encouraged to

raisetheir concerns through our third-party

whistle-blowing service, Ethics Point.

Allconcerns raised are investigated and

learning points are actioned by local

leadership teams as appropriate.

In order to meet the increased demand

fromcustomers, we have seen an increase

in recruitment activity. In order to meet

demand, we are continuing to focus on

building strong relationships with local

technical colleges, universities and

education establishments, partnering with

recruitment firm. We are extending our

useof job boards and other approaches to

advertising and attracting applicants, and are

continuing the roll out of Recruit, our talent

acquisition system, to our UK businesses

aswell as focusing on our employer brand.

EMPLOYEE WELLBEING

The health and wellbeing of our colleagues

remains a priority. Included in our Global

Employee Opinion Survey is a specific

Health and Wellbeing section and the score

across all ofSenior was 7.5 out of 10. The

wellbeing section of the survey looks at four

key drivers of health and wellbeing and in

addition to the question scores, we have

received over 3,000 comments which are

analysed by leadership teams, and provide

further insights into how we can support

ouremployees.

Our operating businesses provide support

and education to employees as appropriate

to their local needs and have promoted

specific health drives, for example, breast

cancer awareness and fund raising, prostate

cancer testing, menopause awareness,

health checks, providing vitamin pack to

employees and flu vaccinations. We have

anumber of individuals specially trained

tosupport colleagues with mental health

issues and employee assistance

programmes in many of our businesses.

Incommon with many businesses, where

possible, we are offering employees more

flexibility with working patterns by offering

hybrid working and changing shift patterns,

thereby improving individual work life

balance. Other examples of how we support

employees include offering subscriptions to

wellbeing apps, sports activities and team

building events.

During the year we have enhanced our

eLearning content to now include a number

of focused wellbeing modules such as

Mindfulness at Work and Positive Mental

Health delivered in multiple languages.

Weremain vigilant regarding occupational

health, for example ergonomics, supported

by our Health and Safety frameworks.

34 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

35SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y / SOCIAL CONTINUED

PEOPLE AND CULTURE

In our autonomous and collaborative

business model, our operational business

leaders are empowered and accountable,

setting the tone for their operations guided

by our Values. As we emerge from the

pandemic, we have seen a change in

emphasis during 2022 as the business

recovers. In a challenging employment

market, we have been focusing on retaining

and recruiting talent to meet business

growth requirements. We have done this

bybenchmarking pay rates in local markets,

making adjustments if appropriate, and

ensuring we are paying people fairly for the

work they do. We have seen operations

providing one off payments or allowances

tosupport employees with the increased

cost of living. We have remained vigilant

regarding changing pay expectations and

supporting employees through these

challenging times. Examples include,

promoting our employee assistance

programmes which cover areas such

asdebt management, legal advice and

counselling services, promoting saving for

retirement and flexible working. We have

also strengthened our links with technical

colleges and universities close to our

operations, providing opportunities for

students to visit Senior, apprenticeships,

andfor Senior to build a longer-term

talentpipeline.

We continue to view the provision of

development opportunities and training

across the group as vital to our success.

Thisyear we have seen an increase in

face-to-face and on the job training and

workshops as COVID-19 restrictions have

eased. This includes Toolbox talks,

supervisor and leadership skills training,

“lunch and learns” as well as technical

training. We continue to sponsor individuals

undertaking external and more academically

orientated courses and training, for example

engineering degree courses. Across Senior,

we have continued to provide opportunities

for learning and development, meeting both

skills and technical training across the Group.

In 2022 we enhanced our skills training

content in Learn, our best in class eLearning

platform, expanding the catalogue and

providing the training in all our languages.

Individuals can select courses and manage

their own learning, covering areas such as

ITskills, Leadership and Management,

Project Management, Health & Wellbeing

and Communication skills. Learn also

enables usto deliver our Code of Conduct

training and other compliance training such

as Cybersecurity. A significant proportion

oflearning is on the job and our culture

ofsharing knowledge and supporting

colleagues is central to developing

technicalcompetencies in our operations.

As evidenced in the Global Employee

Opinion Survey, peer relationships remain

astrength and colleagues help and support

each other. We have an open and honest

culture of respect and trust and people value

teamwork and the teams they work in and

with. This has been particularly important

when we welcomed new employees to our

operations and support them to become

valued teammembers.

“Perform”, our Performance and

Development system, provides a framework

for managers and team members to discuss

feedback, performance, behaviours linked

directly to our Values, set clear objectives,

both business and personal development

and create development plans. These

discussions are designed to be constructive,

open two-way dialogues. This year we have

changed our succession planning cycle to

align with year-end Perform reviews and

have improved the process, introducing

updated leadership indicators and the use of

high-performance indicator tool for our top

talent. The Executive Committee scrutinises

the succession plans and talent pipeline,

identifying successors or interim cover for

key roles across the Group. During these

discussions we focused on functional

capability, for example engineering, as

wellas operational leadership. Personal

development plans are recorded and

monitored in Perform to enable individuals

tofulfil their potential. The Board reviews

thesuccession plans for the Executive Team

and their direct reports on a regular basis,

with a special emphasis on encouraging

diversity and inclusion.

As outlined in our Values and Code of

Conduct, we work together with mutual

trust and respect and operate with integrity

and in an ethical manner. The feedback from

our survey is consistent with this and

confirms that employees believe that people

are treated fairly and that we do not tolerate

misconduct. Our culture is to encourage

open and honest feedback with potential

issues or concerns being raised with local

management. However, on the rare

occasion when things cannot be resolved

locally, employees are encouraged to

raisetheir concerns through our third-party

whistle-blowing service, Ethics Point.

Allconcerns raised are investigated and

learning points are actioned by local

leadership teams as appropriate.

In order to meet the increased demand

fromcustomers, we have seen an increase

in recruitment activity. In order to meet

demand, we are continuing to focus on

building strong relationships with local

technical colleges, universities and

education establishments, partnering with

recruitment firm. We are extending our

useof job boards and other approaches to

advertising and attracting applicants, and are

continuing the roll out of Recruit, our talent

acquisition system, to our UK businesses

aswell as focusing on our employer brand.

COMMUNITIES

Senior’s businesses actively supported

theircommunities in which they operate by

undertaking a range of charitable activities.

In the UK four operations sponsored local

community sports teams with Senior

Aerospace Thermal Engineering in Royston

providing uniforms to a girls football team.

InJune, a small team of dedicated cyclists

rode the 260 miles from Senior Aerospace

Weston in Earby, Lancashire to our

Rickmansworth head office, visiting

colleagues at Senior Aerospace BWT,

SeniorAerospace Bird Bellows and

SeniorAerospace Thermal Engineering

onroute– “Tour de Senior”. The trip was

completed over four days raising money

tosupport youth programmes in the

community local to Weston.

At Senior Flexonics India, we have again

collaborated with a non-government

organisation, "PRAKASH DEEP" to help

support the provision of quality education

tounderprivileged children.

All our operations support their local

communities and to name some examples:

Senior Metal Bellows is a long-standing

sponsor of HESSCO’s (Health and Social

Services Consortium) St Patrick’s Day 5K

race. HESSCO’s mission is to help older

adults and individuals living with a disability

remain safe and independent at home for

aslong as possible. The team was placed

1st inthe Race with additional accolades to

one Team Member who finished 1st overall.

Senior Flexonics Lymington and Senior

Aerospace Metal Bellows supported the

Empty Bowls campaign that encourages

members of the local community to support

their local food bank or any initiative that

provides food to those in need and educates

people about the issue of hunger. Senior

Flexonics Upeca (China) held a parent-child

outward bound training for employees.

Aswell as having fun, the event developed

communication and cooperation skills,

andwas a great team building event.

Many of our businesses have also been

supporting food banks, donating to local

andnational charities and have a regular

programme of supporting local

communityefforts.

Our colleagues contribute their time,

moneyand effort in areas including

educational mentoring and encouraging

thetake-up of Science, Technology,

Engineering and Mathematics (“STEM”)

subjects in schools. Across the Group

weencourage and support our colleagues

insharing their expertise and in particular,

enthusing the next generation about

thepossibilities offered by science and

engineering. Forexample, by working

withtechnical colleges and education

establishments localto ouroperations.

SENIOR FLEXONICS CRUMLIN

ENVIRONMENTAL IMPROVEMENT

PROJECT

The team at Senior Flexonics Crumlin

participated in a Community based project at

a Primary School local to their site to renovate

an area for the children to utilise for learning.

The team invested their time, resources and

funds into this community project, and

managed to source materials for the

improvements for free or at discounted rates.

The forest school area was in a poor state,

with limited areas for the children to use due

to overgrown brambles, broken rocks, trip

hazards and rubbish thrown into the area off

the street. The Senior Flexonics Crumlin team

cleared the area and rebuilt it to make it an

amazing place for the children to enjoy for

many years to come. The team-built mud

kitchens, rope climbs, a new path, a water

feature, imagination area and even a fire pit.

The project was a great success, both in

terms of enhancing the area for the benefit

ofthe school and team building for the

teamatCrumlin.

STRATEGIC REPORT / SUSTAINABILIT Y / GOVERNANCE

GOVERNANCE

Ethics Governance

Our Core Value of “Integrity” is essential

toour success

Senior remains committed to the highest

standards of ethics, promoting the culture of

zero tolerance towards bribery and corruption.

Employees can give honest feedback, express

concerns if there are any practices that they

feeluncomfortable with allowing us to take

corrective actions when mistakes happen.

Ourethics and business conduct programme

commits us to conducting business fairly,

impartially and in compliance with local laws

andregulations and to acting with integrity

andhonesty in our business relationships.

Theprogramme is underpinned by the Code

ofConduct, which provides a clear framework

onwhich to base decisions when conducting

day-to-day business. It does this by:

• clearly setting out the behaviour expected

ofall employees;

• providing guidelines which help employees

toapply our Values; and

• enabling employees to raise a concern or

aska question if in doubt.

Acting ethically is fundamental to our business

success; it enables us to strengthen long-term

relationships and protect the Group’s reputation.

We use various forms of communication and

training materials, both in person and through

electronic media, to embed the ethics and

integrity requirement across the Group. We

investigate any alleged violations or complaints

and take the necessary action. A register of

reported whistle-blowing incidents is maintained

by the Group Company Secretary and the Board

receives regular updates.

In July 2021, all employees were issued with

apersonal copy of the Group’s updated Code

ofConduct booklet and provided with training

onthe revised Code of Conduct. All new joiners

are issued with a copy of the booklet and

provided with training on the Code. In 2022,

allemployees received refresher training on

Senior’s Code of Conduct. The completion rates

typically run at around 94% allowing for new

starters who have not completed their training

immediately on joining.

The Code of Conduct booklet is available in all

languages applicable to the Group’s employees.

Any fraud issues that have come to the attention

of the Director of Risk and Assurance (formerly

the Head of Risk & Compliance) are discussed

by the Audit Committee, noting the cause, the

action taken and any improvements to internal

controls implemented as a result.

Gifts and hospitality

The Group’s Code of Conduct contains specific

provisions on Gifts and Hospitality. Employees

must declare any gift or hospitality provided or

received with the individual or annual aggregate

value in excess of £200 (or lower amount) as

specified in the Group Gifts and

HospitalityPolicy.

Anti-bribery & Corruption

The Group recognises that the use of third-party

intermediaries can increase potential bribery and

corruption risks within the markets in which we

operate. The Company conducts appropriate

due diligence and ongoing monitoring of third

parties with which it works, including regular

screening, risk assessments, and compliance

health checks. The Company also subscribes

tothird-party rating organisations to support

itsdue diligence process, particularly when

appointing agents and distributors. The

Company has a Responsible Sourcing Policy

which includes a structured approval process for

all key suppliers and those with additional risks.

The Group’s Code of Conduct clearly states

thatSenior will follow all applicable laws and

regulations, including the UK Bribery Act, etc.

Other Group policies, such as The Use of

Agents, reinforce this.

Insider dealings

The Company has a Dealing Code (the “Code”),

aimed at ensuring that the Directors of the

Company, and employees identified as persons

discharging managerial responsibilities

(“PDMRs”) of the Company and its subsidiaries,

do not abuse, and do not place themselves

under suspicion of abusing, Inside Information

and comply with their obligations under the

Market Abuse Regulation. The Code contains

the dealing clearance procedures which must

beobserved by the Company’s PDMRs and

those employees who have been told that

theclearance procedures apply to them.

Thismeans that there will be certain times

when these employees cannot deal in the

Company’s securities. The Code also contains

certain additional obligations which only apply

toPDMRs. Failure to observe and comply

withtherequirements of the Code may result

indisciplinary action.

Compliance risk assessments and audits

The Company conducts annual Control Self

Assessments at all of the Group’s operating

businesses, which include questions related

tothe Code of Conduct. The Company also

conducts Internal Audits which include testing

on areas of governance, including the Code and

the prominent display of the Group’s whistle-

blowing procedures at all of the Group’s sites.

Risk assessments are conducted at operating

business and Group level. Risks related to

areascontained in the Code of Conduct are

considered, with follow up actions where

residual risk is deemed high. A more detailed

fraud risk assessment is also performed.

Whistle-blowing

As part of our internal control procedures, the

Group has a Whistle-blowing Policy that is

communicated across all our operations. This

Policy provides employees with the opportunity

to report suspected unethical or illegal corporate

conduct confidentially and anonymously.

The third-party whistle- blowing free, secure

reporting service, which is externally hosted,

isavailable in all languages appropriate to our

global locations.

The Group Company Secretary provides

information on any reported whistle-blowing

cases in monthly Secretarial reports to the

Board of Directors. This is a standing agenda

item at every Board meeting. In addition, the

Group HR Director summarises the total

casesand assesses if any patterns or trends

areemerging. This is included in every Group

Chief Executive Officer’s report to the Board.

Information Security update and our

plans for 2023

In 2022, Information Security training continued

to be delivered to all employees. Further details

of the training courses provided during 2022 can

be found on page 37. Training courses planned

to be rolled out in 2023 include: Secure Use

ofEmail and Instant Messaging; Using Mobile

Computing Securely; and Working Securely

inPublic Places.

Board

Board gender diversity

The Board is supportive of the aim to improve

diversity in public companies. In 2022, five of

the nine Directors were female (55%).

Board succession & Board effectiveness

Please see the Nominations Committee

Reporton pages 97 to 99 in the Annual Report

&Accounts 2022 for details of the Board’s

succession planning and the annual review

ofBoard effectiveness.

Independence of Directors

Six of the Board members out of a total of

nineat the 2022 year-end were independent.

These were Celia Baxter, Susan Brennan,

BarbaraJeremiah, Giles Kerr, Rajiv Sharma

andMaryWaldner.

36 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

37SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SUSTAINABILIT Y / GOVERNANCE

Shareholder Democracy

Restriction on Voting Rights

The Company has only one class of shares;

these are ordinary shares which carry no right

to fixed income and have equal voting rights.

The Company does not apply any voting

rightsceilings.

Size of shareholding necessary to

introduce a new Resolution

Threshold requirements to introduce a new

Resolution at the forthcoming AGM are

stated in the Notes to the 2023 AGM Notice

of Meeting, which can be found on the

Company’s website.

Facilitation of shareholder participation

At the 2023 AGM, shareholders will be

ableto vote in person, or by proxy, on

resolutions by post or electronically by visiting

www.sharevote.co.uk. Further details can be

found in the Notes to the 2023 AGM Notice

ofMeeting.

Internal Audit

The Internal Audit Manager reports to the

Director of Risk and Assurance (formerly

theHead of Risk and Compliance). In 2022,

the Internal Audit Manager undertook four

Information Security audits, 10 Internal

Control audits, one Trade Compliance

auditand three Thematic audits.

Risk process

Please see the Risks and Uncertainties

section of the Annual Report & Accounts

2022 on pages 60 to 71.

Data Protection and Information

Security

Information security risk assessments are

routinely conducted across the Group, an

example of which includes assessing

third-party suppliers to ensure systems are

secure by design. Where a system is unable

to comply fully with Senior’s security policy

orminimum standards, the risk is identified

bysubject matter experts, reviewed with

applicable risk owners and steps agreed

tomanage any risks identified.

In 2022, information security continued to be

a key area of focus to safeguard the Group’s

assets, with some of the Group’s employees

continuing to work from home in

environments that could not be directly

controlled by the Group’s Head of Information

Security. Working from home was facilitated

by secure remote access to the operating

businesses’ computer networks. During the

year, all staff received training and regular

reminders about the risks related to

information security and the importance

ofawareness of matters such as fraud,

scammers and ransomware, proper use

ofthe internet and smart downloading.

The Group’s Head of Information Security

provides regular updates to the Board and

attended the September 2022 Board meeting

to formally present a report on information

security issues identified during the year,

theimprovements to security made and

theplans for the future.

Targets and Objectives

In 2019, the Group implemented a three-year

rolling Information Security plan, which

documented its mission to improve security

maturity and reduce business risk across

theGroup. As capabilities were introduced,

metrics were developed and routinely reported

(including to the Executive Committee) which

measured effectiveness and provided a

feedback loop to the ongoing plan. In July 2022,

the Executive Committee approved a new

Information Security strategy, with the objective

of further maturing the Group’s cyber defences

for the next three years.

Physical and Technical Safeguards

The new three-year Information Security

strategy builds on existing physical and technical

safeguards already in place by creating a more

mature security infrastructure with growing

capability, using a risk-based approach.

Certification

The Group’s Information Security policy is based

upon a number of recognised, international

standards, including ISO 27001, NIST CSF and

the CIS top 20 controls, which all the Group

operating businesses are required to follow.

Procedures for Outsourced Data Processing

Where third-party data processing is utilised, the

Group follows its internal data protection policies

and risk assessment procedures, including

reviewing contractual provisions for both

existing and new providers.

Sustainability Governance

Internal governance of the Group’s Sustainability

factors is reviewed at both Executive

Committee and Board level and the factors are

externally verified, where applicable. Further

details can be found on page 25 of the Annual

Report & Accounts 2022.

Product Safety

Product quality is absolutely core in all of

Senior’s businesses and activities. All of Senior’s

businesses have ISO 9001 accreditation for

manufacturing. The operating businesses

haveadditional aerospace and automotive

accreditations, dependent upon their intended

markets. Ultimate responsibility for product

quality and safety lies with the senior manager

of each business unit.

All products undergo service/safety risk

assessments, as required in Senior’s demanding

markets. Employees receive regular training

onproduct and service safety. All the Group’s

operating businesses have in place incident

investigation and corrective action policies and

procedures and quality testing programmes.

Product/service objectives or targets are

setbythe operating businesses to meet

customer requirements and regular external

product/service safety audits are conducted,

where standards require.

Tax Transparency

Senior’s ‘Approach to Tax’ document can

befound on the Company’s website.

ADDITIONAL RESOURCES

Read more about Stakeholder Engagement

on page 50 to 55

STRATEGIC REPORT / OUR BUSINESS MODEL

OUR BUSINESS MODEL

OUR PURPOSE

We help engineer the transition to a sustainable

world for the benefit of all our stakeholders.

We do this by:

• Using our technology expertise in fluid

conveyance and thermal management to

provide safe and innovative products for

demanding applications in some of the most

hostile environments.

• Enabling our customers, who operate in the

hardest-to-decarbonise sectors, to transition

to low carbon and clean energy solutions.

• Staying at the forefront of climate disclosure

and action by ensuring our own operations

achieve our Net Zero commitments.

We aim to create

value for all our

stakeholders through

our business model.

WHAT

WE DO

HOW WE DO IT

OUR STRENGTHS/DIFFERENTIATORS

Organisation

• A culture of autonomous collaboration

• Active sharing of best practices

• Complementary capabilities

• Leverage common customer and

supplierrelationships

• Strong Divisions provide additional focus

ongrowth, performance and governance

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 76

The Group

has a global

footprint with

operating

businesses

Located in

countries

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 SENIOR WAY”

Safety

We operate safely, protecting people

andtheenvironment.

Integrity

We operate with integrity and in an

ethicalmanner.

Customer focus

We put the customer at the heart

of everything we do.

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.

OUR CORE VALUES

38 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

39SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / OUR BUSINESS MODEL

OUR LONG-

TERM

SUSTAINABLE

VALUE

OUR STRATEGIC PRIORITIES

Focus on growth

We seek to outgrow our end markets, which

havestructural long-term growth drivers,

bothorganically and through acquisition.

Considered and effective

capitaldeployment

Senior understands the importance of

considered and effective capital deployment

inthe interest of maximising the creation of

shareholder value.

Talent development

Senior has a skilled workforce and highly

experienced entrepreneurial business leaders.

Weinvest continuously in technical skills and

professional and leadership development.

Autonomous and collaborative

businessmodel

Senior’s business model is one of empowering

and holding accountable ourbusinesses,

operatingwithin a clearly defined divisional

structure, to develop and deliver business plans

inline with overall Group strategy.

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.

OUR EMPLOYEES

Inspiring entrepreneurial

and operational leadership

directs a highly motivated

and skilledworkforce

OUR CUSTOMERS

Continuously delivering

competitiveproducts and solutions

to customers with outstanding

quality and delivery performance

OUR SUPPLIERS

Developing reliable, ethical

andsustainable supply chains

ensuring we can meet our

customers’ requirements

OUR COMMUNITIES

Actively participating and helping

toimprove the quality of life in our

local communities. Minimising our

environmental impact through peer

leading sustainability programmes

OUR SHAREHOLDERS

Generating value through

sustainable growth in

operatingprofit, cash flow

andshareholder value

PLANET

Caring for our planet by reducing

greenhouse gas emissions,

beneficially using our water

andrecycling our waste

In our autonomous andcollaborative business

model, our operational business leaders are

empowered and accountable, and set

thetone for their operations. The principles

ofopenness and transparency are strongly

encouraged andareevident across all of

ourbusinesses.

Competitive cost country strategy

Senior has a global footprint to ensure we

staycompetitive at a capability and cost level.

Inaddition to our North American

andEuropean footprint, we have facilities

inThailand, Malaysia, China, India, Mexico,

South Africa and the Czech Republic which

help to ensure we meet our customers’

costand price challenges whilst enhancing

returns on investment.

High performance operating system

Senior has implemented a high performance

operating system, drawing on the many

excellent practices from across the Group,

through the Senior Operating System and

acomprehensive business review process.

Sustainability

We continuously aim to deliver our products

in a manner that is both environmentally

sustainable and supports economic growth

and long-term value creation for shareholders

through sustainable methods. We help tackle

climate change by applying our expertise and

technology across many different applications

in hard to decarbonise sectors.

Read more about our strategic priorities on

pages 42 and 43

OUR 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.

STRATEGIC REPORT / INVESTMENT CASE

INVESTMENT CASE

POSITIONED

FOR GROWTH

OUR PURPOSE

We help engineer the transition to

asustainable world for the benefit

ofall our stakeholders

DIFFERENTIATED

BUSINESS MODEL

FOCUSED STRATEGIC

PRIORITIES

AEROSPACE

FLEXONICS

CLEAR STRATEGY TO MAXIMISE SHAREHOLDER VALUE

Read more about Risks

and Uncertainties on

pages 60 to 71

FOCUS ON

GROWTH

Senior’s end markets have structural

long-term growth drivers. We believe

it is possible to outgrow our end

markets and we seek to do that

bothorganically and through

acquisitionby:

• Growing market share, particularly

with key customers;

• Focusing on technology and

product innovation;

• Geographical expansion;

• Seeking out and exploiting

adjacent opportunities organically

and through acquisition.

What we did in 2022:

• Succeeded in expanding our

Space business for both low orbit

satellites and launch vehicles;

• Secured higher share of dual

sourced content as a result of

strong operational performance;

• Senior Flexonics Bartlett launched

EGR cooler production for heavy

duty truck engine replacing

anincumbent;

• Completed the acquisition

ofSpencer Aerospace

Manufacturing;

• Continued to pursue the utilisation

of Additive Manufacturing ("AM"),

both non-metallic and metallic, in

our product offerings. Senior now

has AM products on both civil and

military programmes;

• Developed new material

technologies in support of our

customers’ requirements for

thermal management applications

for passenger car and commercial

vehicles.

Our plans for 2023

• Develop capability for the

manufacture of highly engineered

standard parts, which will include

hydraulic fittings, metallic flanges

and clamps to vertically integrate

and support our customers’ high

rate production requirements;

• Establish and develop capability

forthe design, qualification,

manufacture and supply of

hydraulic fittings in Europe to

support European OEMs;

• Develop products for battery

cooling, thermal management

ofinverters, hydrogen gas

compression and fuel cells;

• Develop fluid distribution systems

for hydrogen powered fuel cells

&electrolysers.

Governance

Growth opportunities are

regularlyreviewed by the

ExecutiveCommittee and Board.

TheTechnology Council is in place

under the chairmanship of the

GroupDirector of Business

Development &Strategy and

progress on strategic technology and

product developments are regularly

presented to, and discussed by, the

Executive Committee and the Board.

The long-term strategic growth

planis evaluated at the annual

BoardStrategy Review and

monitored continuously.

TALENT AND

DEVELOPMENT

Senior has a skilled workforce and

highly experienced entrepreneurial

business leaders. It aims to further

develop and attract new talent,

supporting employees with online

tools to enable personal and skills

development. The Group has

astrong focus on diversity and

inclusion across the business

including on our Board and Executive

Team. We were early adopters of

Hampton Alexander and Parker

Review recommendations on

genderand ethnic diversity targets.

What we did in 2022:

• Ongoing actions as a result of

theGlobal Employee Opinion

Survey feedback;

• Focused on attracting and

developing talent. To support

this,we continued to implement

“Recruit”, our online recruitment

system, and supplemented local

training and development activities

by launching more skills and

personal development eLearning,

via “Learn”, our global learning

management system;

• Continued to focus on diversity

and inclusion across the business

with a particular focus on gender;

• Undertook our second Global

Employee Opinion Survey to

assess culture and employee

engagement across the Group.

Our plans for 2023

• Developing and implementing

action plans following the Global

Employee Opinion Survey run

inOctober 2022;

• Relaunching our Group Leadership

Development Programme;

• Continue to focus on diversity

andinclusion across the business

with a particular focus on gender;

• Focus on talent acquisition and

retention plans, and future skills.

Governance

The Executive Committee conducts

an extensive review of operating

businesses leadership succession

plans. The review scrutinises our

talent pipeline, identifying successors

or interim cover for key roles across

our businesses. Appropriate

development plans are in place and

recorded in "Perform", our

performance management system,

to enable individuals to fulfil their

potential. The Board formally reviews

the succession plans for the

Executive Team and their direct

reports on a bi-annual basis.

CONSIDERED AND

EFFECTIVE CAPITAL

DEPLOYMENT

Senior understands the importance

of considered and effective capital

deployment in the interest of

maximising the creation of

shareholder value. All significant

investments undertaken by Senior

are assessed using a rigorous

investment appraisal process and

aresupported by a business case.

The Group has a financial objective

tomaintain an overall return on

capitalemployed in excess of the

Group’s cost of capital and to target

aminimum pre-tax return on capital

employed of 13.5% on a post IFRS

16 basis.

What we did in 2022:

• Increased ROCE by 370 bps

through significantly improved

profitability;

• Maintained our pricing and

returnon capital discipline

whennegotiating contracts

andassessing investments;

• Acquired Spencer Aerospace a

Fluid Systems fittings business,

acompany specialising in highly

engineered, high-pressure

hydraulic fittings for fluid

conveyance applications;

• Continued to actively manage

theportfolio by reviewing our

operating businesses and

evaluating them in terms of

strategic fit within the Group;

• Reinstated dividend in 2022.

Our plans for 2023

• Continue to increase the

Group'sROCE;

• Integrate and grow Spencer

Aerospace in line with the

business plan;

• Continue to drive working capital

efficiencies at all operations;

• Continue to actively

manageportfolio.

Governance

The Board regularly reviews its

portfolio to ensure that long-term

value is being generated for

shareholders. Where appropriate,

divestments will be considered.

M&A opportunities are evaluated and

discussed at each Board meeting, as

appropriate, and the M&A and Prune

To Grow strategies are reviewed at

the Board’s Strategic Review.

42 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

43SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / STRATEGIC PRIORITIES

ENHANCE SENIOR’S

AUTONOMOUS AND

COLLABORATIVE

BUSINESS MODEL

Senior’s business model is one

ofempowering and holding

accountable our operating

businesses to operate within a

clearly defined control framework

todevelop and deliver business

plans in line with overall Group

strategy. Increasing collaboration

amongst operating businesses in

the Group isa priority to ensure

profitable, risk-reduced solutions are

created toaddress our customers’

needs whilst maintaining the

autonomous business structure.

Business leaders throughout Senior

are actively embracing collaboration

activities with priorities set at both

divisional and Group level in

consultation toaddress and

expandin our evolvingmarkets.

What we did in 2022:

• In line with customer

expectations, we established an

AS 13100 Council to share best

practice and co-ordinate efforts

toensure on time completion of

the certification;

• Refocused our Technology

Council to align our technology

investment with our purpose,

focusing on research and

development that supports

growth in low carbon

technologies, completing projects

aligned to renewables;

• Participated on R&D projects

withour customers, focusing on

new technologies that will be

employed on future programmes.

Our plans for 2023

• Form a new Global Market Team

(GMT) for Hydrogen with both

Flexonics and Aerospace

participants.

• Launch inaugural Group-wide

Innovation Competition

sponsored by the Technology

Council aimed at inspiring

innovation and encouraging

greater collaboration and

participation with our wider

Technology Councilactivities;

• Further enhance effectiveness of

the IT Council through quarterly

conferences to share best

practice and collaborate on

initiatives that support our InfoSec

Strategy for 2023 to 2025.

Governance

The Executive Committee and

theBoard regularly review the

organisational design of the Group

toensure it is aligned to our

strategicplan.

INTRODUCED A HIGH

PERFORMANCE

OPERATING SYSTEM

Senior has implemented a high

performance operating system,

drawing on the many excellent

practices from across the Group.

Thekey elements include:

• The Senior Operating System: an

operational toolkit incorporating

best practice processes such as

lean and continuous improvement

techniques, supplier management,

new product introduction, 5/6S

methodology, factory visual

management systems, risk and

financial management;

• A comprehensive business review

process utilising a balanced

scorecard incorporating KPIs with

focus on performance, growth,

operational excellence and talent

development.

What we did in 2022:

• Our Aerospace Division Lean

Council met monthly to collaborate

and share best practices, while our

Flexonics Division lean champions

continued to leverage the Senior

Operating System tools;

• Added continuous improvement

champions to key Aerospace

businesses to drive faster

improvements;

• Both divisions conducted multiple

lean events with continuing focus

on cycle time reduction and cost

reduction, together with continued

targeted inventory improvement

workshops;

• Completed the roll-out of APQP

process standards across our

Aerospace operating businesses.

• Mitigated freight, materials,

labour,and energy inflation with

appropriate pricing actions.

Our plans for 2023

• Continue to diligently manage

supply chain and inflationary

pressures by having active

dialogue with our customers

andsuppliers and mitigating for

inflation where possible as part of

negotiations in contract renewals;

• Continue events focused on

improving efficiencies and output

as demand increases;

• Work to improve capacity and

throughput in our Aerospace

operating businesses;

• Establish a supplier council

focused on improving supplier

on-time delivery, risk of supply

reduction, cost reduction and

insourcing opportunities;

• Continue to work to improve the

SOS Lean skill set of new

Continuous Improvement leaders

and Manufacturing Engineers

across the business;

• Continue to focus on improving

working capital efficiencies.

Governance

Our Vice President of Operational

Excellence chairs the Aerospace

Lean Council on a monthly basis.

TheExecutive Committee reviews

operational performance and the

Group CEO reports progress to the

Board at every Board meeting.

COMPETITIVE COST

COUNTRY STRATEGY

Enhance Senior’s global footprint to

ensure our operating businesses stay

competitive at both a capability and

cost level, with key investments

made in Thailand, Malaysia, China,

India, Mexico, South Africa, and the

Czech Republic to help ensure we

meet our customers’ cost and price

challenges whilst enhancing returns

on investment. Establishing

increasingly sophisticated capabilities

in these competitive cost countries

and optimising production capacity

toalign with growing demand.

What we did in 2022:

• Doubled the production volume

ofSenior Aerospace Mexico by

transferring key EBU assemblies

from our US businesses;

• Continued to invest and enhance

the capability of Senior Aerospace

Mexico to support production of

Fluid Systems products including

machining, welding and assembly;

• Secured contracts to fill capacity

inour cost competitive country

locations;

• Continued to transfer product lines

to locations where our customers

operate reducing supply chain risk

and supporting customer cost

expectations.

Our plans for 2023

• Continue investing and transferring

Fluid Systems product to Senior

Aerospace Mexico;

• Invest in more machining capacity

to support the production ramp

inMalaysia;

• Investing in machining to support

recently awarded A320 contracts

as rates increase in Malaysia

andThailand;

• Continue to transfer cost sensitive

product lines to competitive cost

locations to support customer rate

increase where appropriate;

• Launch production of products

being relocated from a Western

European truck customer’s facility

to our plant in the Czech Republic;

• Relocate industrial products from

our operation in France to Czech

Republic, driven by customer’s

assembly being in the Czech

Republic. This will allow for

planned growth of aerospace

fittings in France.

Governance

The Executive Committee conducts

quarterly Business Reviews of all

operations. The Group Chief

Executive Officer and Group Finance

Director report and discuss progress

at each Board meeting. The overall

progress of the competitive cost

country strategy is reviewed at the

Board Strategy Review on a

regularbasis.

SUSTAINABILITY

Sustainability is an integral part of our

strategy. We continuously aim to

deliver our products in a manner that

is both environmentally sustainable

and supports economic growth and

long-term value creation for

shareholders through sustainable

methods. Our engineering expertise

is key in helping to tackle the climate

change and clean air challenge as the

world transitions to a lower carbon

economy. We achieve this by

applying our expertise and

technology across many different

applications in hard to decarbonise

sectors.

What we did in 2022:

• Awarded the top ‘A’ score by

CDPin its global annual ranking

fordisclosure and actions on

climate change.

• In February 2022, Senior was

awarded the highest leadership

status in CDP’s annual supplier

engagement ratings.

• CO

emissions were reduced

further in our operations, keeping

us on track to deliver our Scope 1,

2 and 3 Science Based Target

Initiative (“SBTi”) verified Near

Term (2025) Targets.

• We have submitted our long-term

Scope 1,2 and 3 Net Zero Targets

to SBTi for validation.

• 41% of our electricity was

sourcedfrom renewable energy,

an increase from 36% in 2021.

• We secured multiple

developmentcontracts for

cleanenergy projects.

Our plans for 2023

• Continue to deliver our Scope 1,

2and 3 Science Based Target

Initiative (“SBTi”) verified Near

Term (2025) Targets.

• Maintain our CDP leadership

status.

• Achieve verification from SBTi of

our long-term Scope 1,2 and 3

NetZero targets.

• Secure additional development

and production clean energy

contracts.

Governance

The Executive Committee and the

Board reviews progress against our

sustainability targets at the regular

Board meetings, through the CEO’s

monthly report and during the annual

strategy review. The Board also

receives presentations from key

engineering and technology leaders

explaining progress with product

development aligned to our

customers decarbonisation goals.

STRATEGIC REPORT / TECHNOLOGY

TECHNOLOGY

IN THIS SECTION

“We continue to work collaboratively across

Senior to progress the key technology

themes that future-proof our product

portfolio and enable sustainable growth

across our endmarkets.”

Martin Barnes

Director of Business Development & Strategy

46 Our Technology Themes

48 Our Enabling Technology

Refractory Lined

LouverDamper

Dampers are flow control devices

that are used in Thermal Oxidizers,

which convert hazardous volatile

organic compounds (VOCs) and

other pollutants into CO

and H₂O

before emission into the

atmosphere.

44 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

45SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / TECHNOLOGY

Universal Expansion Joint

Expansion Joint assemblies act as

a thermal compensator for fluid and

gas conveyance ducts. These are

used in Petrochemical processing

plants, such as Catofin®

applications.

Pressure Balance

ExpansionJoint

Expansion Joint assemblies

compensate for mechanical or

thermal expansion & movement in

fluid and gas ducts. These are used

in Boiler Feed pump exhaust

system in Power Generation plants.

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 and know-how.

Both are underpinned by our

investment in advanced

manufacturing technology and

supported by our extensive design

and engineering expertise, and

collaboration through our Technology

Council. Our core technologies

support deliverable growth

opportunities in all our end markets.

FLUID CONVEYANCE AND

THERMAL MANAGEMENT

PROOF OF CONCEPT DEVELOPMENT FOR

AEROSPACE HEAT EXCHANGERS

Senior’s extensive experience in the design and

manufacture of fluid conveyance applications provides

significant insight into the system requirements for various

aerospace applications. Our fluid conveyance products

frequently connect to heat exchangers within airframe and

engine applications and, in response to customer requests

for a single-source system provider, we are investing in

thedesign and manufacture of a proof of concept high

temperature heat exchanger for aerospace applications,

building on our extensive experience gained in producing

high performance heat exchangers for land vehicles and

battery thermal management.

We have been able to demonstrate significant

performance and weight advantages by leveraging our

Additive Manufacturing (AM) expertise to outperform

“conventional“, commonly available, heat exchanger

designs. Developing this new product capability will open

significant new markets for Senior and complements our

existing expertise and knowledge in fluid conveyance

system and component design, demonstrating how we

can leverage AM techniques and apply our land vehicles

expertise to new aerospace applications.

Fluid conveyance is the flow of fluid,

including both gases and liquids, within

a system. Senior has extensive

background IP in fluid conveyance

applications. For example, Senior is a

market leading design and manufacturer

of bleed-air systems on modern

turbofan engines for commercial

aerospace applications. For land vehicle

and industrial applications, we have

applied our extensive expertise in

fluidconveyance systems on multiple

exhaust gas ducting applications,

ranging from half-inch diameter

passenger car systems to large size

power plant applications which are

uptotwo metres (80 inch) diameter.

In thermal management, as the pace of

electrification picks up, our technology

and IP can be used to develop products

that can prolong the life of the battery

and increase charging speed. Senior has

already developed custom solutions for

both passenger car and heavy duty

Battery Electric Vehicles. As the market

moves towards zero-carbon solutions

for propulsion and energy generation,

we are leveraging our core thermal

management expertise for fuel cell

applications, such as recuperators (for

polymer membrane or PEM fuel cell

systems), and dielectric compensators

(for solid oxide fuel cell systems).

Capability highlights

• World class design capability

forcomplex fluid conveyance

systemsincorporating zero-leakage

flexible joints and couplings to

compensate for vibration and

thermaldisplacement.

• Industry leader in the design and

fabrication of highly engineered

edge-welded and formed bellows

devices and components from

3.2millimetres to 5.1 metres

diameterfor various applications,

including frictionless servo-

pneumaticactuators.

• Component and system level

simulation and analysis, including

Finite Element Analysis (FEA),

Computational Fluid Dynamics (CFD)

and vibration analysis, plus verification

and qualification testing.

• Extensive expertise with thin-wall

aluminium, copper and stainless steel

structures for demanding thermal

management solutions for battery

cooling, fuel cells and cryogenic

applications.

• Additive Manufacturing (AM)

capabilities in both metal and polymer

materials as an enabling technology

for complex high-pressure and

low-pressure ducting systems

andheat exchanger designs.

Senior is developing a new heat exchanger product

linefocused on aerospace applications, combining our

traditional experience from land vehicle applications

anddesign freedom enabled by our Additive

Manufacturingcapability.

OUR TECHNOLOGY THEMES

46 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

47SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / OUR TECHNOLOGY THEMES

STRUCTURES

ON-MACHINE PROBING FOR COST AND

QUALITY IMPROVEMENTS

Senior manufactures some of the most complex

machinedparts for various airframe and engine platforms.

A good example is an extremely complex engine casing

manufactured from the heaviest single piece titanium

investment casting in the world. This part has over three

thousand machined features, many of which have very

tight tolerances.

Senior uses the most advanced mill-turn machine

technology available to manufacture the part, however,

tolerances on the component are at the edge of the

machine’s capabilities. Maximum use is made of in-

process probing to precisely measure feature dimensions

automatically and adjust the depth of finishing cuts to

account for part-to-part variation as well as any process

drift without operator intervention. This allows us to

maintain high levels of conformance, minimise errors,

deliver customer efficiencies and improve operator safety.

Over the last 18 months, Senior has applied on-machine

probing routines across multiple complex machined

components, resulting in cycle time savings and

significantly improved quality and process capability.

Capability highlights

• Extensive 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

optimisation, robotics, on-machine

probing, and vibration dampening.

• Highly vertically integrated, with

wide-ranging process qualifications

across machining, Non-Destructive

Testing (NDT), special processes,

welding and forming.

• High level of collaboration between

operations in North America,

theUKand Southeast Asia

includingsoftware model-based

engineeringcapabilities.

32%

Structures

Complex Machining and

Manufacturing Know-How:

Process IP

68%

Fluid Conveyance &

Thermal Management

Product and System Design

& Manufacturing IP

GROUP REVENUE BY TECHNOLOGY THEME

Modern airframes and turbine engines

require durable lightweight components

manufactured to extremely tight

tolerances that operate in extreme

environments. Senior is a trusted

partner for high value-added engineering

and manufacturing of critical structural

components for the leading OEMs in

the civil and military aviation sectors.

Our capabilities and strong customer

relationships have secured substantial

content on the key aerospace platforms.

By using on-machine probing extensively, Senior has

significantly improved quality and process capability

onhighly complex machined components.

STRATEGIC REPORT / OUR ENABLING TECHNOLOGY

ADDITIVE MANUFACTURING

Additive Manufacturing (AM), sometimes

referred to as 3D printing, is a key enabling

technology for Senior that underpins the

development of novel product designs across

our product portfolio. AM offers boundless

possibilities for designers to develop unique

andinnovative product designs unconstrained

by traditional manufacturing process limitations,

enabling the design to be optimised for a

multitude of different characteristics such as

weight, performance parameters and

physicalenvelope.

Senior has made significant investments in AM,

both from a hardware and infrastructure

perspective as well as a capability and expertise

perspective. In 2017 Senior established our

Advanced Additive Manufacturing centre at our

Senior Aerospace SSP facility in Burbank, CA.

Since then, we have established a highly

integrated AM process capability covering every

aspect of AM design, build, post-processing,

and material characterisation – including a fully

equipped and accredited materials laboratory.

Inaddition, we have made significant

investments in building AM design expertise,

which is vital to take full advantage of the

freedom that AM processes can offer. These

include AM process simulation tools and an

in-depth knowledge of what features can be

produced reliably withAM.

Capability highlights

• Nadcap certification for metal AM process

capability – significant achievement

highlighting the robustness of our AM

production system.

• Full vertical integration of the AM design and

manufacturing process, including all post-

processing and finishing steps. Achieved

significant experience integrating AM-derived

subcomponents into subsystems and

modules with traditional fabricated i.e.

welding and brazing methods.

• AM process simulation and extensive process

parameter dataset allows us to predict and

subsequently optimise various design

candidates for predictable build performance

inproduction.

OUR ENABLING TECHNOLOGY

ADDITIVE COMPONENTS

FORSUPERSONIC FLIGHT

DEMONSTRATOR

Senior Aerospace SSP (SSP) is working on

NASA's Quiet SuperSonic Technology

(QueSST) programme. The research aircraft

will be used to collect data of a quiet sonic

boom generated by the unique design of the

aircraft aimed at lifting the ban on commercial

supersonic travel over land; a breakthrough

that would open the door to an entirely new

global market for aircraft manufacturers. SSP

has successfully designed and manufactured

the bleed air duct system for the research

aircraft using both conventional manufacturing

methods as well as advanced Additive

Manufactured (AM) for critical portions of the

system. The bleed air duct system comprises

several hundred individual part numbers, of

which over 40 were made via AM.

The use of AM in combination with

conventional machining and welding

processes allowed the SSP design team

tocreate an innovative, complex system.

AMbuilds components layer-by-layer without

the need for either special forming tools or

dedicated fixturing, creating design

opportunities to enable multiple components

to be consolidated into single assemblies

thusreducing part count, creating shorter

leadtimes and lighter weight components,

whilst improving the system's operating

performance compared to a conventional

bleed air duct system.

Manufacturing such a large number of

components with very complex features,

thinwalls, and previously "unprintable"

characteristics required significant

collaboration between SSP and the AM

machine builder and raw material (i.e., metal

powder) providers, and showcases Senior's

Additive Manufacturing design and build

expertise for complex aerospace

productionapplications.

Our team has skillfully optimised the AM

machine and process parameters, based on

real-world aerospace production applications.

We have built an unparalleled, proprietary

dataset of AM process parameters that allows

our customers to have complete confidence

in our ability to produce AM parts that are fully

qualified for series aerospace production. In

conjunction with our robust quality system,

Senior obtained Nadcap certification for AM

processes in 2022, which only a handful of

other companies have achieved worldwide.

We are currently working with a number of

Aerospace OEMs and Tier 1 suppliers on

qualifying various AM components for

production applications. These range from

fuel and oil flow components for high volume

single-aisle aerospace applications, to critical

structural components for next generation

defence platforms. In all these cases, our

customers have chosen to work with

Seniordue to our proven pedigree on

AMproduction capability, as well as our

widerdesign expertise.

We consider our AM capability to be an

integral part of our product design and

manufacturing technology toolkit. We are

prioritising investment to enable the

development of process parameters to

perfect the build process, as well as

developing design expertise to take full

advantage of AM’s ability to enhance

productperformance.

• Internal design simulation and analysis

capabilities have helped us fully

demonstrate the benefits AM can offer,

such as part consolidation, performance

improvement and weight reduction in

avariety of demanding aerospace

applications.

• Additive Manufacturing capabilities in both

metal and polymer materials as an enabling

technology for complex high-pressure and

low-pressure ducting systems and heat

exchanger designs.

In support of our core technology

themes, Senior has identified two

key enabling technologies that

underpin innovation throughout

our product development and

manufacturing lifecycle: Additive

Manufacturing and Digitisation.

Our Technology Council ensures

that these technologies are

collaboratively developed to ensure

that we continue to provide safe

andinnovative products that meet

customer needs.

48 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

49SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / OUR ENABLING TECHNOLOGY

DIGITISATION

Capability highlights

• PLM solutions in use across multiple

operating businesses, especially in the

build-to-spec environment

• Standardised capability to use rich model data

(e.g. ISO 10303-242 STEP AP 242 standard)

natively for all aspects of downstream

engineering dataprocessing.

Digitisation, or the fourth industrial revolution,

isa broad field with multiple definitions

coveringthe adoption of digital technologies

inmanufacturing. Multiple OEMs are already

focusing on operational data collection for

valuegeneration throughout the entire product

lifecycle. To this end, we have seen increased

efforts by OEMs to ensure a minimum level

ofdigital capabilities throughout their supply

chainsthrough supplier focus groups, and

regular scorecards grading suppliers’ capabilities

in terms of digital readiness, automated data

exchange and native product data formats.

Accordingly, Senior’s focus on Digitisation

relates to three specific focus areas:

1. Design and Engineering development

toolsets to standardise the design and

simulation/analysis tools used within a

number of Senior’s Operating Businesses

toachieve manufacturing cost synergies

andaccelerated adoption across our

business units.

• Standard database of engineering

simulation and analysis tools with cross-

functional team looking to optimise usage

of these tools across Senior as part of the

Digitisation technology focus.

DIGITAL PLATFORM

FORENGINEERING

PROJECT MANAGEMENT

One of Senior’s Aerospace businesses has

successfully implemented a cloud-based

software solution for engineering project

portfolio management. The key driver was the

need to update and modernise the existing

processes for managing engineering resource

allocation, project portfolio management and

task prioritisation across multiple projects

operating under significant resource

constraints. Historically, Senior has used

various standalone project management

toolssuch as MS Project and bespoke

spreadsheets to manage these tasks.

As part of our Technology focus on

Digitisation as an Enabling Technology,

Seniorimplemented a cloud-based work

management platform focused primarily on

engineering project management. Automated

resource management, workflows and task

notifications have significantly improved

engineering resource efficiency and allowed

significantly higher throughput even in the

face of challenging personnel constraints.

Thecloud based software gives users an

easy-to-use visual interface to interact with

collaborators across multiple locations. A key

advantage with the new work management

platform is the ability to develop customised

workflows to automate typical engineering

processes such as review and approval

cycles, status rollups and summary data

forpresentations and dashboards. This has

significantly improved the level of

collaboration between various project teams,

as well as enabling automated email

notifications and reminders to allow scarce

technical resources to focus on value-added

tasks rather than reporting and status

reporting to management.

Future uses of the platform include the ability

to conduct brainstorming and visualisation

sessions during the initial discovery phases

ofthe project to help tighten project scopes

and improve on-time delivery of new

productdevelopment.

Additive Manufacturing

Our internal expertise in

Additive Manufacturing allows

us to overcome constraints

oftraditional manufacturing

processes in developing

innovative, high-performance

solutions for demanding

applications.

Digitisation

We are actively pursuing

Digitisation as an enabling

technology across all our

product and process technology

development processes to

improve efficiencies and

promote collaboration at

alllevels.

2. Project management & Engineering

Data management, covering PLM

(Product Lifecycle Management) and

MBD (Model Based Design). Adoption

and implementation of PLM is essential

to streamline our product development

cycles by encouraging reuse of common

engineering data and eliminating

inefficiencies and lost time due to design

data change/version control issues. Our

MBD efforts are focused on using “rich“

models with embedded manufacturing

andquality control information and

requirements, removing the need for

additional documents and drawings.

3. Operational Technology and Process

Management. Our operating businesses

are working on monitoring real-time

process data with the use of IIOT

(Industrial Internet of Things) and

machine monitoring to optimise

resource usage andproduction planning.

Multiple sites areconnecting the

machine/resource monitoring data

directly into their ERP systems, moving

towards a true Manufacturing Execution

System approachto resource planning.

STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT

STAKEHOLDER ENGAGEMENT

Senior’s engagement with stakeholders is a continual

process which embeds the highest standards to ensure

the business's success. Our stakeholders are people,

communities and organisations with an interest or

concern in our purpose, strategy, operations and actions.

Senior engages with five key groups – our employees,

customers, suppliers, communities and shareholders.

Byengaging and collaborating with our stakeholders

wecan ensure our business delivers long-term

sustainable value.

OUR STAKEHOLDERS

CONTINUOUS

STAKEHOLDER

ENGAGEMENT

Career development opportunities

EMPLOYEE ENGAGEMENT

The calibre and capabilities of the people within the Group

drive our success and we recognise the importance of

attracting the best talent into the business and retaining and

developing individuals to enable them todotheir best work.

Read more on page 55

Talent for recruitment and

sense of community

50 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

51SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT

EMPLOYEE ENGAGEMENT

How we engage

During 2022, we placed great emphasis

onemployee engagement which was

particularly important as we emerged from

the impact of the COVID-19 pandemic.

Gradually we were able to return to more

normal working conditions, with business

leaders able to hold all-hands meetings to

communicate business objectives and

answer questions from employees. We also

reintroduced smaller group meetings,

question and answer sessions, skip level

meetings and employee focus groups. We

continued to utilise some of the new ways

of engaging and communicating with

employees that we had developed during

the pandemic, for example employee apps,

TV information screens, video messages,

and tried and tested methods like

newsletters and employee representative

bodies such as works councils.

A key area of focus during the year was

implementing the action plans following the

successful 2021 Global Employee Opinion

Survey. 2021 was the first time wehad

runaglobal survey and the output provided

a rich source of employee feedback,

suggestions for improvement and

affirmation of what we do well. Thesurvey

provided feedback on three keyareas;

Engagement, Values, and Healthand

Wellbeing. Each operating business

developed their own action plans and

communicated them to their teams.

Actionsincluded skills training for managers

and supervisors to improve personal

development, an increase in focused

technical training, enhanced wellbeing

offerings such as wellness apps, employee

recognition and social activities, and

reviewing pay, benefits and resourcing

levelspost pandemic.

In the 2021 survey “Mission”, which is

linked to strategy and indicates whether

people are inspired by the purpose of the

business, was identified as an area for

improvement, and an area that our

operations worked on following the 2021

survey. Business leaders will continue to

focus on communicating their strategy

andmission to their teams.

For much of the year, and depending on

geographical location, our operations had

toremain vigilant regarding COVID-19

outbreaks and supported employees by

continuing COVID-19 safe working protocols

andby encouraging them tobe vaccinated.

Outcome of engagement

At the end of September 2022, we

launchedour second Global Employee

Opinion Survey. We once again asked our

employees for their opinions and we saw

asmall improvement in the overall

engagement score compared to May 2021,

when we ran our first global survey. Using

the same questions enabled us to review

the feedback in comparison to the first

survey. As in 2021, the response rate was

81%, which for manufacturing companies,

with a significant number of employees

completing the survey, who do not have

ready access to company emails, is a high

participation rate, and in itself is a positive

indicator of engagement and our employees

desire toprovide feedback.

Our overall engagement score improved

slightly from 7.1 to 7.2 out of a possible

maximum of 10. The main engagement

question, “Overall, how satisfied are you

working at Senior?”, score increased from

7.4 to 7.5. Goal setting, peer relationships,

organisational fit and meaningful work,

remain our best scoring areas. Compared

tothe previous survey the score for Reward

improved, however it was still highlighted

inthe 2022 survey as an area for further

improvement both in terms of how

individuals are rewarded but also the

process for determining pay. It was not

unexpected that Reward is still an area

forimprovement, when considered in

thecontext of the current economic

environment. Similarly, there was an

improvement in our score for “Mission”,

although it remains an area of focus.

Company actions responding

toengagement outcome

Management-level actions

Action plans developed following the 2021

Global Employee Opinion Survey, were

monitored and updates provided by the

operating businesses throughout the year

via business reviews. Operating business

leadership teams and the Executive

Committee are analysing their 2022 Global

Employee Opinion Survey feedback and

action planning is underway across the

Group. There is a framework in place for

thebusinesses to provide regular updates

tothe Executive Committee and the Board

throughout 2022. The next global survey

willbe in 2024.

Board-level actions

Celia Baxter, the Non-executive Director

with responsibility for employee

engagement, and Jane Johnston, Group HR

Director have continued their programme

offace-to-face focus groups. As well as

holding the focus groups, site visits included

factory tours and meeting leadership teams.

They visited four US operations and our

German business, holding 19 sessions in

2022. The sessions afford an opportunity

toengage directly with a cross section of

employees, allowing them to ask questions

and provide feedback. As always, the

discussions were positive, enthusiastic

andinteractive.

The Board reviewed progress against the

2021 Global Employee Opinion Survey

action plans and were provided with high

level feedback from the 2022 survey during

the Board meeting inDecember.

Overall engagement score

(of a max of 10)

7.2

Employee participation

81%

SENIOR GLOBAL EMPLOYEE OPINION SURVEY RESULTS

Health and Wellbeing Values

Safety

Respect

&Trust

Integrity

Excellence

Customer

Focus

Accountability

Social

Wellbeing

Physical

Wellbeing

Organisational

Support

Mental

Wellbeing

Overall Health

& Wellbeing

Max Score: 10

All comments

39,020

Health and Wellbeing score

(of a max of 10)

7.5

SENIOR AEROSPACE THAILAND AWARDED MEMBERSHIP

OF ROLLS-ROYCE’S “HIGH PERFORMING SUPPLIER GROUP”

The growth of Senior Aerospace Thailand

(SAT) in recent years is due in no small part

tothe level of engagement SAT has built

withstakeholders, particularly suppliers and

customers. This was exemplified by the award

of a place in Rolls-Royce’s “High Performing

Supplier Group” in 2022. Membership is

gained by the attainment of “class leading”

scorecard status. SAT achieved this

recognition through sustained improvement

inperformance and customer collaboration

using formal engagement plans, and now

benefits from additional executive contact and

prioritisation for new sourcing opportunities.

The relationship with Rolls-Royce started in

2013, when SAT began supplying aerofoils

forRolls-Royce’s (Trent XWB, Trent 1000

andV2500 ) engines, building on the existing

aerofoil supply relationship between SAT’s

sister company, Senior Aerospace Weston,

and the customer.

Using best in class processes for aerofoil

machining, from 2014 to 2018, the SAT

teamrapidly increased its production output.

Collaborative management of the forging

supply, machining capacity and engineering

approvals between SAT and the Rolls-Royce

teams in the UK and Singapore created a

strong and trusting working relationship,

addressing challenges as they arose. In 2019,

SAT’s performance was recognised by being

awarded the “Most Improved Supplier”

awardby the customer.

SAT has a strong engineering capability

andisan active and recognised member

oftheRolls-Royce “Supply Chain Digital

Transformation Focus Group”. Through

collaboration in this group, SAT has

developedareas of innovation including

automating the creation of programmes

forinspection equipment directly from

thecustomer’s digitalmodel.

STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT CONTINUED

CUSTOMERS

How we engage

We maintain an ongoing dialogue with our

customers across Senior, including at the

operating business, Division and Group senior

management levels. Division-level Customer

Relationship Managers and Global Marketing

Teams are in place in Europe, the UK, and the

USA to interact with and support all levels of our

largest customers, ensuring that we monitor and

understand as much as possible the fundamental

dynamics impacting their businesses and the

potential knock-on effects on their end-markets.

This regular and cross-functional insight gives us

the ability to respond appropriately when issues

arise and to quickly capitalise on opportunities

across the wholeGroup. These interactions also

provide the information necessary for Senior to

develop strategies that link up with our

customers' forward-focused efforts, such as

their sustainability goals, including the transition

to a zero carbon economy, their new competitive

offerings to the market place, and mutual

investments in research and technology.

We actively seek feedback from our customers

via frequent interactions between our operating

business's customer account and business

development managers, with monthly reporting

of activities and monitoring of customer

performance scorecards across the Senior

businesses. Whilst Senior regularly receives

customer awards for operational excellence, in

those caseswhere our performance falls short

ofexpectations, we actively engage with the

customer to agree improvement targets,

implementation schedules, resource dedication,

and executive involvement.

Furthermore, we continued to conduct regular

Senior Management Meetings, including at

CEOlevel, with our major customers in 2022

aswell as frequent interactions regarding supply

chain andlabour issues, operational metrics,

communications, growth strategies, and market

dynamics. These executive-level meetings,

aswell as forming a vital part of our ongoing

relationship management, helped to clarify

andfocus our mutual activities towards driving

both our success. Remaining close to our

customers helped us to support them through

achallenging supply chain and operational

environment, which has helped to position

Senior as a valued andtrusted supply partner.

Outcome of engagement

The close partnerships we have nurtured with

our customers allowed us to mitigate operational

challenges, which stemmed from industry-wide

supply chain and labour shortages. Together,

wehave worked to solve these challenges,

supporting our customers production and

development programmes to the maximum

extent possible.

As the opportunity for face to face meetings

improved post pandemic, we were able to have

much stronger engagement with customers

particularly in relation to clean energy product

and technology development.

Company actions responding to

engagement outcome

Management-level actions

Listening to and understanding our customers,

their programme/market issues and

opportunities provides valuable insight to Senior,

which helps to inform our future technology,

product development, and innovation

investments and activities towards ensuring

Senior remains a healthy, vibrant, and reliable

supplier in all the industries we operate in.

Board-level actions

Our Board receives detailed monthly updates

relative to customer activities.

"Actively seeking

feedback from our

customers is vital

toensuring we are

aligned to their needs,

and that we work

closely with them

toprovide solutions,

resulting in long-term,

positive relationships.”

Launie Fleming

Chief Executive of Aerospace Division

52 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

53SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT CONTINUED

SUPPLIERS

How we engage

We engage with our suppliers in a variety of

ways, including during tender and bid processes,

as well as on-site visits and audits where

appropriate. As supply chain constraints

persisted through 2022, the Group continued to

employ two-way communication channels with

its supplier base to help mitigate the impacts of

material availability and inflationary pressures

across operating businesses. Our efforts

included supplier surveys and close co-ordination

with suppliers regarding lead times, demand

changes, transportation options and other

sources of volatility. The Executive Committee

continues to closely monitor the health and

performance of critical Group suppliers and

supports the operating businesses in their

engagement with suppliers where necessary.

In line with our Contract Review Policy, which

ismandatory for all operating businesses, we

continue to communicate the requirements of

the Group Responsible Sourcing Policy to key

suppliers, and provide feedback to our suppliers

on their performance and, where necessary,

willagree improvement action plans.

The Group also completes bi-annual reporting

pursuant to The Reporting on Payment

Practicesand Performance Regulations (2017),

demonstrating our commitment to remain a

strong financial partner with our suppliers.

TheBoard reviews the bi-annual reports for

ourUK subsidiaries to monitor compliance

withnegotiated vendor payment terms.

For Scope 3 Greenhouse Gas emissions, Senior

committed that 80% of its suppliers by spend,

covering purchased goods and services and

capital goods, will have science based targets

by2025. We identified suppliers to respond to

CDP’s questionnaires through an online platform.

We arranged webinars and video calls with

suppliers to provide support, communicate

expectations and exchange best practice ideas.

In 2022, we increased the number of webinars

and video calls and were successful in engaging

with significantly more of our supply base as

aresult.

Outcome of engagement

During 2022, our collaboration with suppliers

enabled the operating businesses to mitigate

ongoing supply chain volatility through lead time

management, order flexibility and other

cooperative solutions.

As part of CDP’s supply chain engagement

programme, we identified and engaged

witharound 340 suppliers, accounting for

approximately 80% of the Group’s total spend.

We increased the number of companies

responding from 94 in 2021 to 160 in 2022.

Asignificant number of our suppliers were

responding to CDPfor the first time, a positive

reflection of ourincreased engagement activity.

The insights from the engagement programme

are being used to set strategy and prepare for

the 2023 supplier climate programme.

In February 2022, we were informed by CDP

that Senior was awarded the highest leadership

status in its annual engagement ratings based

onour Supplier Engagement Rating (“SER”).

This put us in the top 8% of companies on

thismetric.

Company actions responding to

engagement outcome

Management-level actions

Supply chain challenges and inflation remained

principal risks to the Group in 2022. As a result,

supply chain and inflationary concerns, as well as

related mitigating actions, continued to be focal

points during operating business reviews and

Executive Committee meetings throughout

theyear.

The Group Chief Executive is directly engaged

with our largest suppliers on our Scope 3

greenhouse gas emission targets and provides

regular updates to the Board on progress.

Board-level actions

The Group Director of HSE & Sustainability

attended two Board meetings in 2022 and

provided an in-depth review on the progress in

engaging with suppliers in respect of the Group’s

Scope 3 targets. When necessary the Group

CEO has actively intervened at executive level

with critical under-performing suppliers.

Read more in the Risk & Uncertainties Section on

page60

Read more in the Sustainability Section on page 16

Engaged with around

340

suppliers through CDP’s

supply chain programme

"Our collaboration with

suppliers enabled the

operating businesses

to mitigate ongoing

supply chain volatility."

Mike Sheppard

Flexonics Division Chief Executive

Officer

STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT CONTINUED

SHAREHOLDERS

How we engage

In 2022, the Group increased its engagement

with shareholders, both by the Executive team

and the Group Chair.

The Group’s Chair attended the full-year and

interim results announcements inFebruary and

August 2022, respectively. Additionally, the Chair

undertook a series of solo meetings with the

largest shareholders to receive feedback on

strategy, capital allocation andmanagement.

As the Group resumed its normal active Investor

Relations programme, we kept an ongoing

dialogue and engaged with shareholders

throughout the year using adiverseand tailored

range of channels:

• Twice in the year, the Group Chief Executive

Officer, Group Finance Director and Director

ofInvestor Relations & Corporate

Communications undertook a series of mostly

face-to-face as well as some virtual meetings

(by video conference or conference call) with

our major shareholders, following the

announcement of the full-year and interim

results. These meetings centred around the

detailed performance of the business, the

Group’s strategic objectives and how Senior’s

fluid conveyance and thermal management

capabilities are key enablers as we transition

toa low carbon economy. We used these

meetings to understand our shareholders’

views and address any concerns they may

have about the Company.

• In addition, we issued three market updates,

on each occasion offering major shareholders

the opportunity of a follow-up call

withmanagement.

• The Group resumed its overseas roadshows,

with trips to the US in April (New York) and

September (Chicago). The Group Chief

Executive Officer, Group Finance Director and

Director of Investor Relations & Corporate

Communication met with current shareholders

as well as potential shareholders to update on

Senior’s investment case, performance and

strategy. These roadshows were well

attended and greatly appreciated, with

attendees positively noting that Senior was

one of the first companies to resume

face-to-face meetings.

• In our efforts to return to in-person

engagements, the Group ran three investor

site visits during the year to showcase our

fluidsystem businesses: two in the UK to our

Senior Aerospace Bird Bellows and Senior

Aerospace BWT facilities and one in the US

toour Senior Aerospace Metal Bellows facility.

In attendance were the management teams

ofthe operating businesses and members of

the wider Executive team (Chief Executive

ofthe Aerospace Division and Group Director

of Business Development & Strategy).

Thesevisits were well-received by the

shareholders who had the opportunity to

further understand the fluid conveyance

andthermal management capabilities of the

Groupand see practical applications of our

products and services.

• The Group Chief Executive Officer hosted

theGroup’s inaugural virtual fireside chat.

Investors were able to hear strategic insights

on Senior and to pose questions to the Group

Chief Executive Officer. The event allowed

attendees togain a better understanding of

the Group’s evolution, near-term risks and

opportunities, and the longer-term vision and

strategy of helping customers operating in

sectors that are hard tode-carbonise, as they

transition to a low carbon economy.

• The Group has also leveraged digital platforms

to keep our investors up to date. Tools such as

our newly upgraded website homepage and

more widespread use of LinkedIn, provided

investors with updates on the Group covering

a range of topics (from performance to

sustainability, community case studies and

ourcapabilities).

Throughout the year we responded to requests

for further information and addressed any

questions or concerns.

The Group typically makes constructive use

ofthe Annual General Meetings (“AGM”) to

communicate with its private shareholders as

wevalue their engagement and provide them

with the opportunity to hear directly from the

Group Chief Executive Officer about the

performance of the business. In April 2022, we

were once again able to host an in-person event

for those who wanted to attend as well as a live

audio access to the proceedings of the AGM.

Private shareholders had the opportunity to

submit questions to the Directors and listen

totheir responses.

54 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

55SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

SHAREHOLDERS CONTINUED

STRATEGIC REPORT / STAKEHOLDER ENGAGEMENT CONTINUED

"In 2022, the Group

increased its

engagements with

shareholders, both by

the Executive team

andthe Group Chair.”

Ian King

Chair

Following on from the relationships built during

the Remuneration consultation process last year,

in 2022, Celia Baxter (our Senior Independent

non-executive Director and Chair of the

Remuneration Committee) made herself

available throughout the year for discussions

onkey remuneration topics, and continues to

have regular interaction as appropriate with

majorshareholders. Regular investor updates

were provided to the Board as part of the

reporting cycle, which includes feedback on

investor perceptions and market environment.

The feedback was provided either directly

fromshareholders, from the Group’s Investor

Relations function or from our corporate broker.

Updates from Company-level engagement

withshareholders are also provided to the

Boardas appropriate (i.e investor site visits,

fireside chats, etc.).

Outcome of engagement

• Increased engagement via the Investor

Relations function & Management with

current and potential shareholders both

through regular reporting and off-cycle

• Shareholders were kept fully informed of the

market dynamics and strategy and progress

ofthe Group through various channels

including in-person meetings, investor site

visits, a fireside chat and via social platforms

(i.e. website/LinkedIn).

• Maintained open channel of communications

with our shareholders on key topics such as

remuneration and targets.

• Focused engagement with selected ESG

ratings providers to ensure shareholders

viewing this information have accurate

andup-to-date insight

• Provided reassurance that the Group continues

to be in a strong position and remains a good

investment opportunity.

• Received better understanding of shareholder

expectations in respect to strategic decisions

and sustainability, including climate change

risks and opportunities.

Company actions responding to

engagement outcome

Management-level actions

Engagement with shareholders during 2022

emphasised how focused they are on the

Group’s performance, strategy, end-market

recovery, and fluid conveyance and thermal

management capabilities. In response, we

resumed our normal active Investor Relations

engagement programme with in-person

meetings, investor site visits, fireside chats

andsocial platforms. The investors were able

togain an appreciation for the wider Senior

leadership team and a practical understanding

ofthe fluid conveyance and thermal

management applications.

Board-level actions

Feedback received from engagement

withourshareholders has been taken into

consideration when making decisions on

Executive remuneration.

COMMUNITIES

How we engage

Our Group’s operations continue to support their

local communities and nurture good relationships

with their stakeholders, finding ways to

contribute to local society, in addition to providing

employment opportunities. Examples of our

community engagement programmes include:

• At the end of 2021, our Malaysian operation

provided support to employees and local

communities that had been impacted by

flooding. Our employees donated their time to

help with clean-up operations and we provided

food, bottled water, cleaning equipment,

clothes, bedding and power banks to staff

andtheir families, helping them get back on

their feet.

• Senior Aerospace Bird Bellows sponsored

alocal college’s Student Award.

• Senior Aerospace Thailand supports education

through its “Senior Aerospace Academy"

• Continuing our work with Prakash Deep a

non-governmental, not for profit organisation

set up with the objective of providing free

quality education, Senior Flexonics India

donated laptops for their computer lab,

23bicycles and school bags to top

performingstudents.

Outcome of engagement

• With our support we helped employees,

andtheir families recover from the floods

inMalaysia.

• Senior Aerospace Thailand has helped

30students to study for their High Diploma

degree and two students to study for a

bachelor degree in Aerospace Component

Manufacturing.

• By sponsoring a student award Senior

Aerospace Bird Bellows is supporting

vocational and lifeskills programmes.

• Through their donation Senior Flexonics India

helped underprivileged children develop to

succeed in mainstream education.

Company actions responding to

engagement outcome

Management-level actions

Group operations continue to support

communities by contributing to charities serving

their local causes, including fundraising for local

hospitals, children’s homes, education

programmes, cancer foundations and charities

supporting mental health and the elderly.

Board-level actions

The Board is cognisant of its responsibility to

thecommunities in which we operate and the

need to have a positive impact and strong

employer brand.

Read more in the Social Section on page 32

"We encourage our

operating businesses

to engage with their

local communities to

make apositive impact”

Jane Johnston

Group HR Director

STRATEGIC REPORT / SECTION 172 STATEMENT

SECTION 172 STATEMENT

This section describes how the Directors have had regard to the

matters set out in section 172 (1)(a) to (f) when performing their

duties under section 172 of the Companies Act 2006.

In their discussions and decisions during 2022, the Directors of

Senior plc have acted in the way they consider, in good faith,

would most likely promote the success of the Company for the

benefit of its members as a whole.

• Senior was the first company in its sector

tohave its scope 1, 2 and 3 greenhouse

emissions reduction targets approved and

verified by the SBTi. In 2022, we were

recognised by CDP for our work on climate

disclosure and action and awarded an ‘A,

putting us in the top 2% of disclosing

companies. Further detail on Senior’s

sustainability progress in 2022 are set out

onpage 19.

• We have also continued our commitment to

implementing the recommendations of the

TCFD. See page 26 to 31 for our update

onTCFD.

The desirability to maintain a reputation

for high standards of business conduct:

• The Board acknowledges its responsibility for

setting and monitoring the culture, values and

reputation of the Company. For Senior, our

core Values underpin our culture. During the

year, the Board considered Senior’s culture in

its decision-making and discussions (further

details on this can be found on page 34).

• The Board is accountable for the oversight

ofa robust Corporate Framework which

establishes the unequivocal expectation

thatSenior will operate with integrity and

respect in every aspect of its business.

Theframework includes a comprehensive

Code of Conduct, which provides clear

guidance on behavioural expectations across

multiple facets of the business, including a

zero tolerance towards bribery and corruption,

adherence to all applicable trade compliance,

competition and anti-trust regulations, a safe,

diverse and inclusive workplace, accurate and

complete business records and protection of

company data and assets. The framework

also provides for a whistle-blowing channel

that allows stakeholders to confidentially

andanonymously report suspected unethical

or illegal corporate conduct. All reported

whistle-blowing incidents and any resulting

actions are reviewed and monitored by the

Board and Audit Committee. The Board, via

the Audit Committee, also receives regular

reports regarding compliance training

programmes, Corporate Framework updates,

sanctions and trade compliance matters and

incidents of fraud or suspected fraud. Read

more on pages 100 and 101 for our Corporate

Governance Report.

The likely consequences of any decision

inthe long term:

• The Directors recognise the decisions they

make today will affect Senior’s long-term

success. During the year, the Board had

particular regard to the long-term success

ofthe Company in its discussion on the

evolution of the Group’s purpose. Our

Company Purpose is highly relevant for all

ofour stakeholders and guides the Board’s

decisions towards investments, both short

and longerterm.

• In 2022, the Directors decided to acquire

Spencer Aerospace. The Board believed that

Spencer’s capabilities in highly engineered,

high-pressure hydraulic fluid fittings for use

incommercial and military aerospace

applications have strong synergies with

Senior’s existing fluid conveyance business

and recognised the opportunity presented

bySenior's global reach beyond Spencer's

current North American customer base.

Thisdecision was a considered step in the

Group’s overall strategy.

• Further details can be found on the

Investment Case (page 40), Business Model

(page 38) and Strategic Priorities (page 42).

The impact of Senior’s operations

on thecommunity and environment:

• Many of the Group’s operations are major

employers within their local communities

andnurture good relationships with their

stakeholders, finding ways to contribute

tolocal society, in addition to providing

employment opportunities. In 2022, the

operating businesses continued their focus

oncommunity engagement programmes

andfurther details on the Group’s activities

are set out on page 55.

• Senior's sector-leading performance and

accreditations on sustainability are testament

to the great importance the Board and

Executive Committee places on ESG matters.

Senior’s programme is well defined and

beingdelivered. Its progress is measured by

metrics, targets and a monthly scorecard.

Sustainability is a standing agenda item in

theCEOs report at every Board meeting.

TheHSE Committee monitors and updates

on the progress being made on the strategy

set forth by the Group in terms of health,

safety and environment.

Interests of the Company’s employees

and the need to foster the Company’s

business relationships with customers,

suppliers andothers:

• The Board and its committees understand

thestrategic importance of stakeholders to

Senior’s business. When making decisions,

the Directors have regard to the interest of

colleagues, and the need to foster business

relationships with other key stakeholders.

• While the Board engages directly on some

issues with stakeholders, there are other

engagements that happen below Board level.

Nevertheless, the Board is well informed of

these engagements and this helps it

understand how our operating businesses

affect our stakeholders’ interests and views.

More detail on how we engage with our key

stakeholders (including our customers and

suppliers) can be found on pages 50 to 55.

For further details on how the Board operates

and makes decisions, and its activities this

year, see page 93.

• Our colleagues are vital to our success and

they are always considered in the Board’s

discussions and decision-making process.

During 2022, the wellbeing of our colleagues

across the Group continued to be a priority,

especially in light of the cost of living crisis.

Asinflation continued to rise over the course

of 2022, the Board were cognisant of the

potential impact on our employees and their

families, and ensured that wage settlements

were fair, taking into account the cost of living

challenges and prevailing regional conditions.

The Board continued to monitor the

organisation’s response to COVID-19 and how

theCompany maintained operational delivery

in the ever-changing situation. Operational

leadership continued to maintain appropriate

measures and protocols to keep people safe.

• In order to ensure that the Board considers

the impact of their decisions on employees

across the Group, the Board receives regular

feedback regarding people and culture.

In2021, the Board received a wealth of

information provided by the Senior’s first

global employee engagement survey.

Operating business actions plans and

progress against them were reviewed

regularly throughout 2022 by the Executive

Committee. In addition, a summary of the

56 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

57SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / SECTION 172 STATEMENT

actions was reviewed by the Board

throughout 2022. The survey was repeated

towards the end of 2022 and the Group

Chief Executive Officer and Group HR

Director shared initial feedback from the

2022 Survey with the Board in December

2022 highlighting key themes, strengths,

areas recommended for improvement. In

addition, Celia Baxter, the non-executive

Director designated to engage with

employees has continued with our

programme of focus groups and with

COVID-19travel restrictions lifting, the

Board has visited operating businesses,

andmet with management teams and

employees. Readmore on our employees

on pages 32 to 34and 51.

The need to act fairly between

members of the Company

(shareholders):

• During the year, the Group Chair, Senior

Independent Director, Group Chief

Executive Officer, Group Finance Director,

and the Director of Investor Relations and

Corporate Communications held various

meetings with investors (see page 54 for

more detail on our engagement with

shareholders). These meetings gave

investors the opportunity to discuss views

onthe Group’s financial and operational

performance, strategy, end-market recovery,

fluid conveyance and thermal management

capabilities and capital deployment.

In discharging our section 172 duties, the

Directors have regard to the factors set out

above and any other factors which we consider

relevant to the decision being made. We

acknowledge that every decision we make will

not always result in a positive outcome for all of

our stakeholders. However, by considering the

Company’s Purpose, Vision and Values, together

with our Strategic Priorities and having a process

in place for decision-making, we aim to ensure

that our decisions are considered, proportionate

and balanced.

Further details on how the Board operates and

reflects stakeholder views in its decision-making

are set out in the Corporate Governance Report

on pages 87 and 88.

NON-FINANCIAL INFORMATION STATEMENT

In compliance with the Non-Financial Reporting requirement set out in sections 414CA and 414CB of the Companies Act 2006, the table below

illustrates where our stakeholders can find information in respect of non-financial matters. The due diligence carried out for each policy is

contained within each policy’s documentation.

Reporting Where to find it

Environmental Matters • Sustainability: Environmental, Social and Governance (ESG) Pages 16 to 37 and www.seniorplc.com/sustainability

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

Employees • Employee Engagement Pages 51, 56 and 88

• Talent Management Pages 33 to 34, 42, 69

• Equality, Diversity and Inclusion Page 33

• Code of Conduct Pages 33 to 34, 36, 56, 71, 100 to 101 and

www.seniorplc.com

• Whistle-blowing Policy Pages 34, 36, 56, 100 and www.seniorplc.com

Social Matters • Community Engagement Pages 35, 55 to 56, 88

Respect for Human Rights • Statement on Anti-Slavery and Human Trafficking Page 100

• Anti-bribery and Anti-corruption Policy Pages 36 and 71

• Modern Slavery Statement www.seniorplc.com

• Responsible Supply Chain Policy Pages 53, 100 and 101 and www.seniorplc.com

Business model

Principal risks

KPIs

• Business Model Page 38

• Risks and Uncertainties Pages 60 to 71

• Financial and Non-Financial KPIs Pages 58 to 59

For more information please visit: www.seniorplc.com

0.0

0.5

1.0

1.5

2.0

Total Recordable Injury Illness Rate Lost Time Injury Illness Rate

Rate per 100 employees

1.48

1.78

0.66

0.50

1.69

0.44

1.09

0.32

1.17

0.32

0.93

0.38

2017 2018 2021 202220202019

STRATEGIC REPORT / KEY PERFORMANCE INDICATORS

KEY PERFORMANCE INDICATORS

The Group highlights five financial and two non-financial

metrics to measure progress in implementing its strategy.

Increased

Decreased

Unchanged

NON-FINANCIAL

METRICS

The Group’s non-financial objectives are

asfollows:

• To reduce the Lost Time Injury Illness Rate

(per 100 employees) to 0.3 by 2025;

• To reduce the absolute Scope 1 and 2

Greenhouse Gas (“GHG”) emissions

by30% by 2025 (compared to 2018

baseyear).

The key performance indicators (“KPIs”)

aredetermined as follows:

• 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’s approach to calculating and

reporting our GHG emissions follows the

GHG Protocol.

2022’s reporting has incorporated Scope 2

greenhouse gas emissions (associated with

electricity consumption) calculated using both

the Location and Market-based methods.

The Scope 1 and 2 emissions Location Based

and Market Based (FY22) are independently

verified in accordance with the International

Standard on Assurance Engagements ISAE

3410 (limited assurance).

In calculating GHG emissions, the Group has

used the financial control approach under

which a company accounts for 100% of the

GHG emissions from operations over which

ithas control. This covers all wholly owned

operations and subsidiaries of the Group for

financial reporting purposes.

Senior is on track to meet our 2025 targets

forScope 1 & 2 GHG emissions and lost

timeinjury illness rate. Further details of the

Group’s performance, including its long-term

performance trends, are shown on pages 22

to 23. More detail on the Methodology can

befound on page 25.

Carbon dioxide emissions Scope 1 & 2 (market based)

(Total tonnes CO

22% decrease

from 2018 base year

In 2022, our absolute Scope 1 and 2 Greenhouse Gas (“GHG”) emissions reduced from

57,418 tCO

e (2018) to 44,878 tCO

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

a 22% reduction against our 2018 base year.

We experienced an increase in the Lost Time Injury and Illness Rate from 0.32 in 2021 to 0.38

in2022. The total number of injuries has fallen as indicated by the Total Recordable Injury and

Illness Rate reduction from 1.17 in 2021 to 0.93 in 2022, a reduction of around 21%.

The small increase in the Lost Time Injury and Illness Rate emphasises the need for continuous

improvement. With this in mind, in 2022 we initiated three major global safety initiatives in

addition to the routine auditing and support activities. More details can be found onpage 32.

Lost Time Injury Illness Rate

(incidents per 100 employees p.a.)

0.38

10,000

20,000

30,000

40,000

50,000

60,000

2018 2019 202220212020

Target Total tonnes CO

Scope 1 & 2 Market Based Emissions

56,99257,418

46,747

46,540

44,878

Scope 1 & 2 Market Based Emissions

58 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

59SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

848

1,10 2

705

1.0

4.7

0.9

3.4

4.36

0.17

57.7

27.0

STRATEGIC REPORT / KEY PERFORMANCE INDICATORS

Revenue growth

(£m)

+20.3%

+21.9%

excluding

disposal

Net cash from operating

activities (£m)

+113.7%

Return on revenue margin

(%)

+250bps

Return on capital employed

(%)

+370bps

Adjusted earnings per share

2,464.7%

As discussed in the Group Chief Executive

Officer’s Statement, the year-on-year

increase reflected the ongoing recovery in our

core markets as well as recent programme

wins entering series production. The impact

on the Divisions is set out in the Divisional

Reviews, on pages 72 to 77. The overall

increase in Group revenue was a result of

higher revenues in both Aerospace and

Flexonics year-on-year.

The Group delivered an excellent cash

performance in 2022 driven by the significant

increase in profits. Net cash from operating

activities of £57.7m funded gross capital

expenditure of £30.5m in 2022.

The Group’s adjusted operating margin

increased by 250 basis points, to 3.4% for

thefull year. This improvement in profitability

principally reflected volume related operating

leverage across our businesses. Inflationary

pressures were successfully mitigated by

diligently managing costs and by increasing

prices and surcharges where possible.

The year-on-year improvement arose from

improved profitability.

Return on capital employed (“ROCE”)

increased to 4.7%. The increase in ROCE

reflected the significant increase in

profitability, while managing the increase

incapital employed which was mainly due

totheacquisition of Spencer Aerospace.

FINANCIAL

METRICS

The Group’s financial objectives are

asfollows:

• to achieve revenue growth (at constant

exchange rates) in excess of the rate

ofinflation;

• to increase the Group’s return on revenue

margin each year;

• to increase adjusted earnings per share

on anannual basis;

• to generate sufficient cash to enable the

Group to fund future growth and to follow

aprogressive dividend policy; and

• to maintain an overall return on capital

employed in excess of the Group’s cost

of capital and to target a pre-tax return in

excess of 13.5% on a post IFRS 16 basis.

The key performance indicators (“KPIs”)

are determined as follows:

• revenue growth is the rate of growth of

Group revenue, at constant exchange rates;

• return on revenue margin is the Group’s

adjusted operating profit divided by

revenue;

• adjusted operating profit is defined in

Note9;

• adjusted earnings per share is defined in

Note12;

• net cash from operating activities is

available from the Consolidated Cash Flow

Statement; and

• return on capital employed is the Group’s

adjusted operating profit divided by the

average of the capital employed at the start

and end of the period, capital employed

being total equity plus net debt (defined

in Note 32c).

STRATEGIC REPORT / RISKS AND UNCERTAINTIES

RISKS AND UNCERTAINTIES

Risk Management

• The Board, Executive Committee and

operating businesses completed two

comprehensive risk assessments,

encompassing both principal and

emergingrisks

• Refined the climate change risk

assessment process to establish a

multi-disciplinary participant team and

further clarify the Group’s strategy to

embed climate change risk consideration

throughout the organisation

Assurance

• Completed ten broad scope internal audits

and four Information Security assurance

reviews across various operating

businesses and corporate offices

• Piloted a new Trade Compliance

“deepdive” assessment

• Deployed thematic audits to address

specific risks related to supply chain

disruption,inflation challenges and the

impacts from the crisis in Ukraine, talent

and skills management and software

compliance

Principal Risks (starts on page 64)

• Supply Chain Challenges: The Group

successfully implemented a variety of

mitigating actions to counteract supply

chain disruptions, including increased safety

stock of critical materials and components,

expanding our supply base to provide

alternate material sources and enhancing

communication with customers and

suppliers regarding changes in demand,

lead times and other production factors

• Inflation: A variety of measures were

deployed to mitigate escalating inflationary

pressures, including negotiating selling

price escalations with customers, efficiency

improvements to contain labour and energy

cost escalations and utilising alternate

supply arrangements

• Talent and Skills: The Group responded

toregional labour market challenges

withenhanced retention and

recruitmentstrategies

Risk Management

• Conduct a focused risk assessment and

scoping exercise to guide the Group’s

response to the BEIS consultation

Restoring Trust in Audit and

CorporateGovernance

• Review and enhance our Information

Technology/Information Security risk

management process throughout the

Group and complete the deployment of

expanded threat and security monitoring

tools across all operating businesses

andcorporate offices.

• Implement a climate change risk

assessment process at the operating

business level to further embed climate

change risk into the Group’s risk

management structure

Assurance

• Reassess the Group’s assurance

framework in consideration of the proposed

requirements in response to the BEIS

consultation Restoring Trust in Audit and

Corporate Governance

• Broad scope internal audits and Information

Security assurance reviews planned across

14 locations

• Trade Compliance “deep dive”

assessments to be conducted with three

operating businesses and a thematic

assurance review completed for the

remaining locations

• New thematic audits covering payment

fraud controls, Information Security patch/

vulnerability management and personal

data protection

Principal Risks (starts on page 64)

• Economic and Geopolitical Impact:

Remainvigilant to the potential impacts

onthe Group from fluctuating global

economicconditions

• Customer Disruption: Strengthen our

adaptable response to customer

demandvariability

• Pandemic: Conduct a post incident review

to assess the Group’s response to the

COVID-19 pandemic

“Our risk management process has

proved vital in helping effectively

identify and manage ongoing

supply chain challenges,

inflationary pressures and

challenging labour markets. The

complex geopolitical environment

has introduced further uncertainty

and intensified the risk profile

across the Group. These key

principal risk areas are expected

topersist through the yearahead.”

Amy Legenza

Group Director of Risk and Assurance

LOOKING

FORWARD

2022 KEY

FOCUS

60 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

61SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / RISKS AND UNCERTAINTIES

Identifying and effectively managing risks is

essential to the achievement of the Group’s

strategic priorities and supporting the Group’s

sustainability initiatives. The Group’s Business

Model is described on page 38, our Strategic

Priorities are on page 42 and Sustainability

startson page 16.

The Board is responsible for the Group’s

integrated risk and assurance framework,

ensuring that the Group risk process and

systems of internal control are robust,

continuously monitored and evolve to address

changing business conditions and threats.

TheBoard also provides direction and sets the

tone on the importance of risk management.

Responsibility for the monitoring and review

ofthe effectiveness of the Group’s risk and

assurance framework has been delegated by

the Board to the Audit Committee. The risk

process is reviewed and agreed annually with

the Audit Committee. The Director of Risk and

Assurance delivers a comprehensive report

ofrisk, assurance and compliance activities

ateach Audit Committee meeting.

The Group embeds risk management within

itsexisting business processes across all levels

within the Group. Risk tolerance is reflected

throughout our control framework by way

oftheGroup’s delegation of authority, code

ofconduct and internal controls system.

Acatalogue of approximately 50 identified risks

encompassing strategic, financial, operational,

environmental and other external risks serves

asthe foundation for comprehensive risk

assessments completed by every operating

business and by the Executive Committee as

part of the annual strategic planning process.

The risk assessments also consider emerging

risks as detected through internal workshops

and external sources. Emerging risks are risks

which may develop but have a greater

uncertainty attached to them in terms of

likelihood, timing and velocity. Emerging risks

are monitored and formally added to the

identified risk catalogue when the risk solidifies

within the Group’s strategic planning horizon.

The Group also conducts functional risk

assessments, targeting areas such as fraud, tax

evasion facilitation and climate change. The risk

assessment specific to climate change follows

the Group’s standard risk assessment process

but considers multiple time horizons, with some

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 and due date are

assigned to each action and progress toward

completion is closely monitored. The operating

business risk registers are refreshed regularly

and reviewed by Divisional Management and

the Executive Committee. The Executive

Committee conducts its risk assessment

twicea year and the principal risks are

discussedat each Executive Committee

meeting. Every principal risk is assessed for

ourfinancial viabilityscenarios to see if they

could have a material financial impact

individuallyor if they materialised together.

The Board performs robust, semi-annual

assessments of the principal and emerging risks

facing the Group. In addition, the Board regularly

assesses outputs from the integrated risk and

assurance framework and takes comfort from

the “three lines of defence” risk assurance

model. The first line represents operational

management who own and manage risk on

aday-to-day basis through effective internal

controls. The Group Executive Committee and

Divisional Management monitor and oversee

these activities, representing governance and

compliance at the second line.

The third line is the independent assurance over

these activities provided by internal and other

external assurance. The internal assurance

programme includes a combination of broad

scope internal audits, evaluating financial,

Information Security, HR and other operational

controls, plus limited scope thematic reviews

designed to provide assurance over targeted

riskareas. Internal audits are conducted either

inperson or virtually, with all Group businesses

audited on a multi-year rotational schedule

based on a variety of factors, including site

specific risks, prior audit results and changes

within local management. Thematic reviews are

deployed across the entirety or a cross section

of the Group dependent on the risk being

targeted. In addition, all Group businesses must

complete an annual Controls Self Assessment,

allowing the Group to identify and address gaps

in compliance with the Group’s governance

policies and internal control standards. Divisional

Management, the Executive Committee and

theAudit Committee monitor the completion

progress of improvement actions resulting

frominternal audits, thematic reviews and

theControls Self Assessment.

The key elements of the Senior risk

management process are shown on

thefollowing page.

OUR APPROACH TO

RISK MANAGEMENT

STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

The Board

• Has overall responsibility for ensuring

the Group risk management process

and systems of internal controls are

robust and continually monitored

• Formulates the Group’s strategy and

defines the Group’s risk tolerance

andculture

• Monitors the nature, extent and

management of risk exposure for the

Group’s principal and emerging risks

• Provides direction and sets the tone

onthe importance of risk management

Audit

Committee

• Supports and challenges the Board in

monitoring risk exposure in line with

itsTerms of Reference

• Reviews the effectiveness of the

Group’s risk management and internal

control systems and reports to the

Board for consideration

Executive

Committee

and

Divisional

Management

• Development and implementation of

strategy, operational plans, policies,

procedures and budgets

• Monitoring of operating and financial

performance including prioritisation

and allocation of resources

• Assessment and control of risk –

including emerging risks

Group

Corporate

Functions

• Lead and co-ordinate Group risk

andcontrol related processes

• Assesses and supports the Group in

mitigating the Group’s risks through

policies and procedures, control

self-assessments, specialist support,

business reviews and other activities

Operating

Units

• Operational units identify, assess

andmitigate their key risks

• Risk assessments are reviewed and

discussed by Divisional Management

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.

Identify existing controls and processes

The existing controls and processes which mitigate the risks

are identified and assessed for adequacy.

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.

Monitor and assure

The most significant risks are regularly reviewed. Second

line assurance and internal audit activity is conducted to

assess whether key controls are effective and risks

mitigated to an acceptable level. Timely implementation

ofresultingactions is monitored.

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.

KEY RESPONSIBILITIES

WITHIN THE RISK

MANAGEMENT

STRATEGY

SENIOR’S RISK

MANAGEMENT PROCESS

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STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

RISK DEFINITIONS

Strategic

1 Economic and Geopolitical Impact

2 Climate Change

3 Implementation of Strategy

4 Innovation and Technological

Change

5 Pandemic

Operational

6 Supply Chain Challenges

7 Customer Disruption

8 Cyber/Information Security

9 Programme Management

10 Price-down Pressures

People and Culture

11 Talent and Skills

Financial

12 Inflation

13 Financing and Liquidity

Compliance

14 Corporate Governance Breach

Impact of Occurrence

Likelihood of Occurrence

Low

High

Low

High

Increased Residual Risk Decreased Residual Risk

Residual Risk Unchanged

RISK HEAT MAP (Residual risk after mitigations)

Principal Risk How we manage it Focus in 2022

STRATEGIC

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.

Changes in critical trade relations

factors, such as tariffs, sanctions and

exchange rates, resulting from

geo-political events have created

uncertainty over the future impacts on

international trade, including export

revenues, material availability and cost

and the ability to employ foreign

nationals. Shifts in political regimes

and government spending

programmes can lead to higher

taxation and have an impact

onearnings.

These events may result in supply

chain disruptions, rising energy prices

and labour shortages which can

escalate inflationary pressure on

earnings. Additional detail regarding

our inflation risk and responses can

befound on page 70.

Divisional Management and the Executive Committee

closely monitor economic and geopolitical trends that may

impact the operating businesses through regular business

reviews. Contingency planning is undertaken to minimise

operations disruption where necessary.

The Group employs tax, treasury and trade compliance

specialists who maintain the Group’s trade-related

compliance programmes and continually monitor the

impacts of evolving trade relations fromregulatory, supply

chain, people and financialperspectives.

The Board ensures that it is kept informed ofsignificant

trade developments in order to assessthe impact on the

Group and take action asappropriate.

The Group monitors potential changes to international tax

regulations and tariffs to understand the likely impact.

The COVID-19 pandemic continues to impact the global

economy and certain sectors within which we operate.

Ongoing supply chain constraints and inflationary

pressures added to the economic uncertainty during 2022.

As a result, the Group remained focused on delivering

profitable growth and generating free cash flow, as

described in the Financing and Liquidity risk, and

completion of restructuring projects, as described in the

Implementation of Strategy risk.

In response to heightened trade tensions resulting from

the crisis in Ukraine, the Group conducted a targeted

assurance review across the operating businesses which

confirmed the Group has identified and is continuing to

monitor and mitigate the impacts of the crisis on our

operating businesses. The assurance review also

confirmed that our relevant trade compliance controls

areoperating effectively.

STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

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82.

PRINCIPAL GROUP RISKS

During 2022, assessments of the principal

risks and uncertainties, including emerging

risks, that could threaten the Group’s business

model or achievement of the strategic

priorities were performed.

As a result of the most recent assessment, the

name of the Customer Demand principal risk

was updated to Customer Disruption to better

reflect the nature of the risk. The remainder of

the principal risks remain unchanged since our

2022 Interim Statement.

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STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2022

CLIMATE CHANGE

There is a risk that climate change

and/or the measures taken to address

it may have an adverse impact on the

Group. Climate change may result in

extreme weather events that may

impact our ability, or that of a supplier,

to meet our customers’ requirements.

Our customers’ products may evolve

to require new technology, such as

electrification. This also presents an

opportunity to the Group to be

involved in replacement technologies.

Increasing legislation aimed at

accelerating decarbonisation may

increase our operating costs. It may

also change consumer behaviours

impacting on our end markets.

Forexample, consumers may fly

lessoften.

To mitigate the impact of catastrophic events, suchas an

extreme weather event, each site has ascenario-based

Business Continuity Plan which istested on an annual

basis. The Group also has insurance which helps to protect

profits in suchsituations.

The Group continues to invest in and develop solutions

relevant to changing end markets. Examples include our

battery cooling, waste heat recovery, heat sink in hybrid

cars technologies, and additive manufacturing solutions

foraerospace.

A comprehensive climate change risk and opportunity

assessment exercise is conducted annually by a multi-

disciplinary team to evaluate transitional and physical

risks,as well as resource efficiency opportunities. The

assessment considers mulitple time horizons, with some

elements contemplated over a 20+ year time frame.

Theexercise also applies Scenario Analysis to the most

material transition and physical risks as per TCFD. The

Group's SBTi approved emissions reductions targets

covering GHG emissions from the Group’s operating

businesses are consistent with reductions required to

limiting climate warming to 1.5°C and are aligned with

NetZero as Near-Term Targets. SBTi has approved the

following targets:

• The Group commits to reduce its absolute Scope

1and2 GHG emissions by 30% by 2025 compared

to a2018 base year; and

• For Scope 3 GHG emissions, The Group also commits

that 80% of its suppliers by spend, covering purchased

goods and services and capital goods, willhave science

based targets by2025.

In 2022, the Group was awarded the highest possible

“leadership” rating of A from the globally recognised CDP

for our climate change disclosures.

In support of our Science Based Targets, the Group has

achieved a 22% reduction in combined Scope 1 and 2

carbon emissions through 2022 compared with the 2018

base year, on track to meet the 2025 target deadline.

During 2022, the Group engaged with over 350 of its

leading suppliers regarding climate change, accounting for

approximately 80% of the Group’s total spending. 160 of

these suppliers provided a full disclosure on their climate

change programmes, representing a significant increase

from the level of response in 2021. As a result, CDP once

again awarded the Group with the status of Supplier

Engagement Leader in 2022 in recognition of our

increased efforts to raise the level of climate action

acrossour supply chain.

The Group submitted our 2040 Net Zero targets to SBTi

in2022 with validation expected in the first half of 2023.

For further details on TCFD and Sustainability, including

how the Group is leveraging our technology and product

development to drive progress towards net zero, please

see pages 16 to 31.

IMPLEMENTATION OF STRATEGY

An inability to implement the Group’s

strategy and/or effectively manage

the Group’s portfolio could have a

significant impact on the Group’s

ability to generate long-term value

forshareholders.

Ambiguity surrounding the Group’s

strategy and strategic priorities may

result in investors failing to recognise

the value of the Group’s

investmentcase.

The Group regularly reviews its strategy and portfolio to

ensure that long-term value is maximised for shareholders.

Where appropriate, divestments will be considered.

M&A opportunities continue to be evaluated and discussed

at the Board’s strategic review. Processes are in place to

ensure that the Group is aware of emerging acquisition

opportunities.

The Group has a well-established M&A framework that

includes proven valuation, due diligence and integration

processes designed to be efficiently executed by an

experienced cross-functional team.

Post-acquisition reviews are conducted asappropriate.

The Group has incorporated the experiences gained from

navigating strategic challenges, such as the COVID-19

pandemic, into an adaptable response framework to ensure

sufficient focus remains on the Group’s core strategic

priorities while responding to critical operational, strategic

and financial challenges.

The Board carried out its annual assessment of our

strategic objectives, end markets, capabilities and

technologies and determined that the Group is well

positioned to deliver its strategy and continue the transition

through the evolving net zero world.

The Group continues to focus on:

• investment in new technology and product development

in our core markets, including fluid conveyance and

thermal management, and expand our additive

manufacturing capabilities;

• targeting new markets with structural growth potential,

such as space and semiconductor, through leveraging

the expertise we have developed in our traditional core

markets; and

• liquidity, effective cash management and a healthy

balance sheet.

The Group acquired substantially all of the assets of

Spencer Aerospace Manufacturing, LLC, a leading

manufacturer of highly engineered, high-pressure

hydraulicfluid fittings for commercial and military

aerospace applications. The acquisition supports the

Group’s strategic priorities through expansion our fluid

conveyance capabilities.

STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2022

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

changes across our various businesses and markets.

The Group has continued to invest in additive

manufacturing “AM” capabilities as an enabling

technology, design and simulation capabilities, AM process

certifications and equipment at its Advanced Additive

Manufacturing Centre “AAMC”. Multiple AM parts have

been qualified and delivered to customers for both

production platforms and technology demonstrators,

suchas the NASA sponsored supersonic X59 platform.

The AAMC team has also developed significant design

capability to re-engineer existing product designs to

deliversignificant weight savings and

performanceenhancements.

The Group continues to develop products to support

themove to low carbon technologies and sustainability,

both inthe land vehicle and aerospace markets.

Global Marketing Teams are engaged to ensure that

customer requirements and priorities are considered.

The Group continues to invest in machining and fabrication

technology enhancements to improve process efficiency

and reduce cost.

The Senior Operating System continues to deliver best

practice tools for innovation and product development

across the Group.

The Technology section, starting on page 44, details the

Group's technology themes and product development

case studies.

In 2022, we identified five specific Technology Focus

areas – Hydrogen, Electrification, Aerospace Heat

Exchanger development, Additive Manufacturing and

Digitisation. The Group has continued to invest in new

product development and emerging technologies within

these focus areas, with significant progress being made

ona number of key projects:

• development of high-pressure flexible hoses for

industrial hydrogen applications;

• introduction of several innovative products for battery

and fuel cell cooling, including ultra-thin patented

designs for very demanding environments;

• development of an extensive process parameter

datasetfor complex metallic AM component design

andmanufacture, including full vertical integration of the

complete AM process chain. Senior’s process quality

and expertise was recognised in 2022 as one of the

fewcompanies in the world to have achieved Nadcap

certification for AM; and

• significantly expanded the use of non-metallic (polymer)

AM for low-pressure ducting applications, including

development of innovative knitting technology for

thermoplastic composite components.

The Group remains focused on sustainability as a driver for

new product development and market expansion through

leveraging existing capabilities, expertise and products in

Thermal Management and Fluid Conveyance into new

adjacent markets such as space, hydrogen etc. Additional

detail on how the Group is leveraging our technology and

product development to drive progress towards net zero

can be found on pages 20 and 21.

PANDEMIC

A pandemic, such as the current

COVID-19 pandemic, could have

asignificant impact on business

operations affecting our employees,

our supply chain and ultimately our

ability to meet customer

requirements. There is also the

potential for a pandemic to create

aglobal slowdown in demand

impacting our end markets.

An adverse indirect consequence

may result from our customers

having to reduce production rates

even where our supply chain and

production remains intact.

The Group has an Incident Response Plan and it is

beingused to manage the Group’s response to the

currentpandemic.

Emerging threats are monitored and advice provided

toemployees as appropriate. This may include travel

restrictions, temporary site closures and additional

safetymeasures when at work.

Where a pandemic threat does emerge, we liaise with

oursuppliers and customers to manage the situation

tothegreatest extent possible.

The pandemic continues to impact the Group, though to

alesser degree in many locations and markets. Response

measures enacted throughout the COVID-19 pandemic

remain in effect, with many of the actions now embedded

into the Group’s standard policies and procedures.

Theseinclude:

• the ongoing activities of the Group’s Coronavirus

Oversight Committee;

• flexible and responsive localised leave policies and

“return to office” strategies to ensure the health and

safety needs of our employees continue to be met;

• business continuity and ensuring that the business is

able to meet its financial commitments while continuing

to navigate the impacts of the ongoing pandemic.

Further details are provided against other principal risks

as appropriate;

• close communication with suppliers and customers as

we continue to adapt our business to address shifts in

demand, supply chain capabilities and labour availability

created by the evolution of the pandemic; and

• careful management of the Group’s response to

demand recovery to ensure the cost savings measures

implemented in recent years are not diluted.

The Group remains vigilant to the potential impacts

offuture waves of the COVID-19 pandemic.

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Principal Risk How we manage it Focus in 2022

OPERATIONAL

SUPPLY CHAIN CHALLENGES

Suppliers may be unable or unwilling

to respond to increases or decreases

in demand, impacting our ability to

supply our customers and/or our

ability to optimise inventory held.

Critical materials or components may

become temporarily or permanently

unavailable, leading to an inability to

meet production commitments.

Supply chain disruption can lead to

higher volatility in delivery schedules

as customers adjust demand to

protect their production capabilities.

This may challenge the Group’s ability

to meet customer schedule, quality

and cost requirements, resulting

inpotential delays, penalties and

costoverruns.

In extreme cases some suppliers

may face financial difficulties and

goout of business.

The resilience of the supply chain is monitored and, where

possible, over-reliance on individual suppliers is reduced.

The Group closely monitors the resource required to deliver

customer demand.

The Group has deployed the Senior Operating System to

provide operating businesses with a toolkit to optimise the

use of lean and continuous improvement techniques,

supplier management and other operational best practice

processes.

Operating businesses are required to maintain strong

internal controls over supplier management from new

supplier selection to performance monitoring and

management of existing suppliers.

Our core Values (see page 38) emphasise operating with

integrity and respect, which allows the Group to cultivate

strong, long-term relationships with critical suppliers.

Significant supply chain disruption driven by ongoing

labourchallenges, material shortages and transportation

delays persisted throughout 2022, with the crisis in

Ukraine adding further complexity in the year. In response,

the Group has maintained the initiatives previously

deployed,including:

• maintaining close and frequent communication with

customers regarding delivery schedules, the need to

qualify additional supply sources and potential

incremental costs to mitigate supply chain disruptions;

• working with suppliers to manage lead times and

maximise the benefits from long-term supply

agreements, where applicable;

• leveraging supplier relationships across the Group to

identify alternate supply sources and opportunities

tostreamline or consolidate supply requirements;

• applying the Senior Operating System and our

engineering expertise to generate innovative solutions

to supply chain challenges; and

• highlighting supply chain challenges in operating

business reviews and Executive Committee meetings.

To gain additional comfort over our management of the

intensifying supply chain challenges in 2022, the Group

conducted a supply chain assurance review across the

operating businesses to assess the scope and severity

ofsupply chain constraints, as well as the effectiveness

ofmitigating actions employed to navigate the current

operating environment.

CUSTOMER DISRUPTION

Supply chain constraints, staffing

shortages and other labour

disruptions may leave customers

unable to meet current sales

commitments and/or respond to

increases in market demands. As a

result, there is a risk that customers

do not honour firm order schedules,

delay programme ramp-up, postpone

new programmes.

The Group has fostered long-lasting and cooperative

relationships across its customer base.

In furtherance to its strategic priorities, the Group actively

seeks to grow the business through diversification of its

customer base and new product innovation.

The Group closely monitors market trends and

developments through in-house market research analysis.

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.

Customer demand continued to strengthen during the year

driven by the resilience of the Group’s end-markets in the

post-pandemic recovery. However, supply chain and labour

issues have challenged some customers’ ability to meet

market demand increases, suppressing demand down

through their supply base.

Focus in 2022 has been on:

• collaborating with our customers to understand their

demand variability and potential schedule changes;

• diligently managing supply chain challenges to meet

ourproduct delivery objectives in support of customer

operations; and

• continuing to balance direct headcount with demand

whilst retaining the ability to meet increased demand in

the future and identifying overhead reductions through

efficiency improvements where possible.

STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2022

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 strategic roadmap to continually improve

Information Security.

The Group has dedicated and robust Information Security

capability in place with a wide range of proactive and

reactive security controls, including up-to-date antivirus

capability across our operating businesses and network

and system monitoring to identify vulnerabilities and

potential threats.

A multi-year rotational Information Security (IS) assurance

review programme is in place to assess and enhance

compliance with established IS controls, policies

andprocedures.

Vulnerability metrics have been developed and are

activelyreviewed by Divisional Management and the

ExecutiveCommittee.

The Group has a risk management framework specific to

Information Technology “IT”/Information Security “IS”.

Each operating business deploys a suite of protection

andmonitoring services, including endpoint detection

andresponse, vulnerability management and cyber

threatintelligence. These are fully monitored by our

centralised Group Information Security team to ensure

consistency, continuity and rapid remediation

Technology-led security controls are further supported

byaclear and documented series of policies, standards

andplaybooks.

Employees receive annual awareness training on

cyber-related issues and the Group maintains a cyber

awareness campaign to alert employees to cyber threats.

A near miss and incident reporting process is deployed

across the Group to alert IT/IS teams of immediate

cyberthreats.

Remote, hybrid and other flexible work arrangements

arenow common in many locations across the Group.

These types of alternate work arrangements can

increaseInformation Security risks so the Group remains

committed to full compliance to our IT/IS policies and

diligent monitoring of the IS environment. 2022

actionsincluded:

• approval of a new three-year IS strategy and roadmap

toaccount for the dynamic nature of the cyber

threatlandscape;

• selected and transitioned to a new Managed Security

Service provider offering enhanced visibility and security

monitoring across the entire organisation;

• introduced new, market-leading security systems and

software to provide real-time security event monitoring

via a single portal. This includes increased protection

against the latest cyber threats, such as ransomware

and other destructive attacks;

• deployed proactive threat hunting capabilities and

userbehavioural scanning capabilities to enable

defenceagainst the latest methods of attacks

usedbycybercriminals;

• implemented a new external scanning capability

allowing the Group to see the security posture of the

organisation through the eyes of a cybercriminal; and

• completion of comprehensive IS assurance reviews

across multiple operating businesses.

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 and cost requirements

resulting in delays, penalties, cost

overruns or asset write-downs.

Changes across a variety of production

requirements, such as fluctuations in

material supplies, volatility in customer

ordering and employee retention and

training, may challenge the Group’s

ability to maintain programme quality

specifications, leading to the potential

for higher costs of quality or greater

risk of product defects.

The Group is experienced in bidding and launching new

products. Formal New Product Introduction “NPI”

processes, such as Advanced Product Quality Planning

“APQP”, are in use across many operating businesses

with full adoption in process across the Group.

There is a Group Contract Review policy which is

mandatory for all operating businesses and requires

comprehensive financial modelling and sensitivity analysis

of contractual terms and assumptions.

NPI programmes are subject to regular review by divisional

and Group management to ensure that schedule, cost or

quality issues are identified and dealt with promptly.

The Group monitors market and customer data so that we

can be prepared to respond to changing market dynamics.

A variety of tools are deployed throughout the Group to

prevent, detect and manage quality issues, including

supplier audits, comprehensive quality management

systems, internal quality audits, Gemba walks and

documented root cause analysis.

The ongoing pandemic continued to impact customer

demand in 2022 to some degree but supply chain

constraints and labour availability created substantial

programme management challenges during the year.

Inresponse, the Group has maintained its focus on:

• continuing to work with our customers to ensure that,

wherever possible, orders within firm windows can

bedelivered;

• working with our suppliers and managing inventory to

balance inventory levels where there are delays in firm

orders and/or ensure adequate supply to meet

production demands;

• maintaining flexible labour resource plans to adapt to

variations in demand and production schedules; and

• responding to the ongoing elevated level of new

requests for quotation.

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Principal Risk How we manage it Focus in 2022

PRICE-DOWN PRESSURES

Customer pricing pressure is an

ongoing challenge within our

industries, driven by the expectations

of airlines, land vehicle operators and

governments seeking to purchase

more competitively priced products

inthe future. This may put some

pressure on the Group’s future

operating margins.

The Group works closely with its customers to find

innovative ways to produce products at a lower cost,

thushelping them to meet pricing challenges.

The Group is able to consider bundles of products that

intotal help achieve customer pricing challenges.

Where appropriate, the Group will actively pass work

tosome of its cost competitive facilities such as

Mexico,Thailand, the Czech Republic, South Africa,

India,ChinaandMalaysia with a view to helping satisfy

customerchallenges.

There is a Group Contract Review policy which is

mandatory for all operating businesses and requires

comprehensive financial modelling and sensitivity

analysisof contractual terms and assumptions

Disruptive supply chain challenges and escalating

inflationary pressures converged during 2022 to force

many customers to strike a balance between prioritising

delivery schedules, which may require higher freight,

material and other costs, and managing programme

coststo mitigate inflation impacts. In 2022, the Group

focusedon:

• formalising a pragmatic and adaptable pricing response

framework across the Group;

• working in partnership with customers to support

theirpriorities within the contractual terms of

existingagreements;

• facilitating alignment between supplier and customer

agreements to stabilise material costs; and

• identifying labour and overhead cost reductions through

efficiency improvements where possible.

PEOPLE AND CULTURE

TALENT AND SKILLS

There is a risk that the Group,

particularly in the US and UK, is

unable to attract sufficient skills and

talent and/or is unable to retain the

skills and talent it has in order to meet

demand. Margins may be impacted

by higher wage rates necessary to

retain current employees and/or

attract new employees.

As demand increases there may be

adisproportionate increase in the

number of indirect heads, undoing

some of the cost savings that the

Group has achieved through its

restructuring programme.

A notable portion of the Group’s

workforce may reach retirement age

at the same time, creating a gap in

skills and labour availability.

The Group may have insufficient

talent to respond to all

strategicpriorities.

Employee retention and recruitment challenges are

regularly discussed within the operating businesses,

Divisional Management and the Executive Committee.

The Group HR Director hosts focus groups across a cross

section of the operating businesses to solicit constructive

feedback from employees and foster open communication.

Operating businesses partner with technical colleges

andapprenticeship schemes to create talent

pipelineprogrammes.

A groupwide succession planning exercise is conducted

annually to identify successors or interim cover for key roles

and ensure appropriate development plans are in place to

support employees in meeting their career goals.

The Nominations Committee reviews management

development and succession plans twice a year, making

recommendations to the Board regarding size, structure

and composition where applicable.

The “Perform” performance and development system

isutilised across the Group to facilitate objective setting,

development planning and performance and

behaviourassessment.

The Group HR Director regularly provides people

andculture feedback to the Board.

2022 presented a uniquely challenging labour market as

wage inflation and a post-pandemic increase in hiring

demand converged with subdued labour availability

creating fierce competition amongst employers to attract

and retain employees. The Group responded to the

escalating challenges in employee retention and

recruitment in 2022 by:

• softening the effects of inflation on our workforce

through off-cycle wage increases or lump sum inflation

payments to support employees with the impact of

increased costs of living;

• offering new incentive opportunities such as sign-on

bonuses to attract new employees and enhancing

recruiting bonuses to existing employees for

candidatereferrals;

• promoting opportunities for remote, hybrid and flexible

work arrangements;

• implementing additional employee engagement actions,

such as employee activities, newsletters, employee

suggestion/feedback channels and management

meetings; and

• expanding in-house training programmes.

The Group conducted its second Global Employee Opinion

Survey in 2022. Additional detail regarding the2022

employee engagement survey can be found on page51.

An expansion of the Group’s online recruitment system,

“Recruit,” commenced in 2022 for operating businesses

inthe UK

A talent and skills assurance review was completed across

the Group to assess the scope and severity of employee

recruitment and retention concerns, as well as the

effectiveness of mitigating actions implemented to

counteract the effects of the challenging labour market.

STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2022

FINANCIAL

INFLATION

Inflationary pressures stemming from

a confluence of labour constraints,

supply chain disruption and shifting

customer demand could result in a

reduction of earnings from existing

programmes if the Group is unable to

secure mitigating price adjustments

from customers.

Higher production costs resulting

from material, energy and labour

costinflation can reduce our ability

toremain cost competitive and win

newbusiness.

Inflationary pressures may result in

higher interest rates, which could

impact the Group’s earnings.

The Group’s Treasury Committee actively monitors the

economic forces impacting the Group and consider a variety

of viable containment strategies where necessary.

There is a Group Contract Review policy which is

mandatory for all operating businesses and requires

comprehensive financial modelling and sensitivity analysis

of contractual terms and assumptions.

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

fixedrates of interest, which mitigates the effect of

higherbenchmark interest rates that can result from

inflationarypressures.

The Group utilises the Senior Operating System to

deploylean and continuous improvement techniques

withafocuson improving labour efficiencies and cost

reductioninitiatives.

Inflationary pressures continued to escalate in 2022

asongoing supply chain issues, wage inflation, labour

disruptions and the crisis in Ukraine combined to fuel

ahistoric surge in labour, energy, transportation and

material costs. The Group expanded efforts to monitor

andmitigate inflation impacts during 2022 through the

followingactions:

• spotlight inflationary impacts and evaluate potential

mitigating actions in operating business reviews and

Executive Committee meetings;

• where inflationary pressures have increased, the Group

has worked closely with customers to secure price

increases, delay contractual price decreases and/or pass

through higher production costs to mitigate the impact

on Group margins;

• leverage existing fixed-price supply agreements to

secure lower pricing across as much supply as possible

while maintaining a focus on inventory optimisation;

• seek out alternate sources of energy supply to reduce

the possibility of energy supply disruption and slow

escalating costs; and

• assess the impacts of inflation and effectiveness of

actions deployed to mitigate those impacts across the

Group through a targeted assurance review.

FINANCING AND LIQUIDITY

The Group could have insufficient

financial resources to fund its growth

strategy or meet its financial

obligations as they fall due or

insufficient liquidity to meet

financingcovenants.

Foreign exchange movements could

have a material impact on the Group’s

financial performance, both on the

balance sheet (translation risk) and

income statement (transaction risk).

The Group’s overall treasury risk management programme

focuses on the unpredictability of financial markets, and

seeks to minimise potential adverse effects on the Group’s

financial performance.

The Group enters forward foreign exchange contracts to

hedge the transactional exchange risk arising on operations’

trading activities in foreign currencies; however, it does not

enter or trade financial instruments, including derivative

financial instruments, for speculative purposes.

The Group monitors liquidity risks monthly and ensures

sufficient headroom in its committed borrowing facilities to

meet financial obligations across the Group as they fall due.

The Group’s Treasury policy is updated and approved by the

Board regularly.

Compliance with financial policies, exposure limits and

headroom/liquidity limits are reviewed by the Group’s

Treasury Committee on a regular basis.

The Group’s viability assessment process considers a base

case and risk case scenario, which considers the principal

risks and uncertainties.

Financing and liquidity initiatives continued to play a critical

role during 2022 to mitigate the ongoing impacts of the

COVID-19 pandemic, supply chain challenges and inflation.

Actions taken included:

• after a period of covenant relaxation through 2020 and

2021 in agreement with the Group’s lenders, the Group

reverted to original covenant limits in 2022. A strong

focus on free cash flow generation has continued

into2022;

• both main committed revolving credit facilities (in UK

and US) were refinanced during 2022 and the tenors

extended to 2026 and 2025, respectively;

• a global notional cash pooling solution was implemented

in 2022 to enable the Group to make better use of cash

in the operations for working capital needs to minimise

central borrowings;

• responsibly managing growth in inventory requirements

where customer demand is recovering and/or supply

chain disruptions are occurring;

• continued compliance with transactional foreign

exchange hedging policy to mitigate income statement

volatility from currency movements; and

• the Group’s Treasury Policy was updated and approved

by the Board in December 2022.

70 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

71SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / RISKS AND UNCERTAINTIES CONTINUED

Principal Risk How we manage it Focus in 2022

COMPLIANCE

CORPORATE GOVERNANCE BREACH

Corporate governance legislation

(such as the UK Bribery Act and the

US Foreign Corrupt Practices Act),

regulations and guidance (such as the

UK Corporate Governance Code and

global health and safety regulations)

are increasingly complex and

onerous. A serious breach of these

rules and regulations could have a

significant impact on the Group’s

reputation, lead to a loss of

confidence on the part of investors,

customers or other stakeholders

andultimately have a material

adverse impact on the Group’s

enterprisevalue.

The Group has well-established governance policies and

procedures in all key areas, including a Group Code of

Conduct, anti-bribery procedures, a Health & Safety

Charter, an Agent’s Policy and various policies and

procedures over the review and reporting of risk

management and internal control activities.

Governance and regulatory compliance updates are

provided to the Board and the Executive Committee at

appropriate intervals, and to key operational management.

All employees are required to complete annual Code

ofConduct training.

All EU sites have received training on the General Data

Protection Regulations and employees in other locations

have received training as appropriate to their roles.

Employees received annual refresher training on our

Codeof Conduct during 2022. The completion rates

typically hover around 94%, allowing for new starters

whohave notyet completed their training immediately

onjoining. The course included content related to

conflictsof interest, anti-bribery, general business

ethicsand preventingharassment.

Additional training was conducted for appropriate

employee groups on topics including prevention of

payment fraud and information security related topics.

The Group expanded its trade compliance capabilities

through the addition of an internal classification specialist

and enhanced legal entity due diligence procedures.

Updates have been issued to various Group policies.

The Group’s 2022 internal audit programme and Controls

Self Assessment were completed as planned, providing

alevel of assurance that the Group’s Code of Conduct,

controls, policies and procedures are being followed.

STRATEGIC REPORT / DIVISIONAL REVIEW

Revenue

+18%

£553.6m

(2021 – £471.0m)

Adjusted operating profit

+142%

£20.3m

(2021 – £8.4m)

Adjusted operating margin

+190 bps

3.7%

(2021 – 1.8%)

Revenue by large commercial platforms

Aerospace sales across the group

33%

Boeing

67%

Airbus

40%

Civil aircraft

11%

Other

14%

Defence

65%

The Aerospace Division represents 65%

(2021– 66%) of Group revenue and consists of

14 operating businesses. These are located in

North America (six), the United Kingdom (four),

continental Europe (two), Thailand and Malaysia.

This Divisional review is on a constant currency

basis, whereby 2021 results have been

translated using 2022 average exchange rates

and on an adjusted basis to exclude the charge

relating to amortisation of intangible assets

fromacquisitions and net restructuring income.

The Division’s operating results on a constant

currency basis are summarised below:

2022

£m

2021

(1)

£m Change

Revenue 553.6 471.0 +18%

Adjusted

operating profit 20.3 8.4 +142%

Adjusted

operating margin 3.7% 1.8% +19 0 b ps

(1) 2021 results translated using 2022 average exchange

rates - constant currency.

“Revenue in the Aerospace

Division increased by 17.5%

year-on-year, reflecting the

recovery now well underway

incommercial aviation.“

Launie Fleming

Aerospace Division Chief Executive

DIVISIONAL REVIEW

AEROSPACE

DIVISION

72 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

73SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

A FB C D E

£m

471.0

81.4

(6.6)

16.8

(9.0)

553.6

STRATEGIC REPORT / DIVISIONAL REVIEW

During the period, adjusted operating profit

increased by 141.7% to £20.3m (2021 - £8.4m)

and the adjusted operating margin increased

by190 basis points to 3.7% (2021 – 1.8%).

Theimproved profitability reflected the

volumerelated operating leverage across our

businesses, while price increases helped offset

the impact of material and other inflationary cost

increases. Our operating businesses worked

hard to address the persistent supply chain

challenges and mitigate their impact, ensuring

service levels for customers were maintained

tothe best extent possible. These supply chain

constraints are likely to be evident throughout

2023 and continue to require relentless

management in a number of our operations.

These challenges are a function of the welcome

increase in civil aircraft production rates required

by the industry to satisfy the strong demand

from airlines and aircraft lessors. We will

continue to work closely with our suppliers and

customers to minimisedisruption. Very recently,

the situation has been compounded by a fire at

one of our key suppliers in Thailand. We are

working closely with the supplier and our

customers to assess and mitigate the specific

impact of the fire.

Both Airbus and Boeing are planning further

increases in aircraft production programmes in

2023 and beyond which gives confidence that

civil aerospace revenue will continue to grow

in2023. With aircraft build rates increasing

through the year, and the continuing supply

chain challenges in aerospace, including the

recent fire at one of our key suppliers, we

anticipate Aerospace Division trading to be

moreweighted to the second half of the year.

The most fuel-efficient single aisle aircraft

areinhigh demand which underpins planned

rateincreases:

• Airbus announced at their FY 2022 results

that on the A320 Family programme, they

arenow progressing towards a monthly

production rate of 65 aircraft by the end of

2024 and 75 in 2026. For the entry-into-

service of the A321XLR, Airbus announced

that they expect this to take place in Q2 2024.

Airbus ended 2022 with a backlog of 6,093

A320 Family (2021: 5,839).

• Boeing announced at their full year results

that the 737 programme is stabilising

production rate at 31 per month, which is on

steady course to being achieved, with plans

toramp production to approximately 50 per

month in the 2025/2026 timeframe. At their

Investor Day in November 2022, they

announced a target of 400-450 737 MAX

deliveries in 2023, rising from the low 30s

deliveries per month in the beginning of

theyear and reaching near 40 deliveries per

month in H2 2023. As at the end of 2022,

Boeing had a 737 firm order backlog of

around 3,653 units (2021: 3,414) and 250 737

MAX aircraft ininventory.

Divisional revenue increased by £82.6m (17.5%)

to £553.6m (2021 – £471.0m) whilst adjusted

operating profit increased by £11.9m (141.7%)

to£20.3m (2021 – £8.4m).

Revenue Reconciliation £m

2021 revenue 471.0

Civil aerospace 81.4

Defence (6.6)

Other 16.8

Disposal of business (9.0)

2022 revenue 553.6

Revenue in the Aerospace Division increased

by17.5% year-on-year on a constant currency

basis, reflecting the overall recovery in demand.

Excluding the prior year £9.0m revenue

fromSenior Aerospace Connecticut, which

wasdivested in April 2021, revenue on a

constant currency basis increased by 19.8%.

The year-on-year increase reflected the ramp

upin civil aircraft production rates, growth from

semi-conductor equipment markets and ramp

up inspace programmes reflecting end market

growth. This more than offset the decline in

defence, which was affected by the delay in

spending as a consequence of the Continuing

Resolution being in place in the USA during

thefirst half of the year.

The civil aerospace sector had the strongest

growth during the period with Senior’s sales

increasing by 31.6% compared to prior year.

Thiswas reflective of the significant ramp up

inaircraft production rates from the OEMs

resulting in rates being higher in 2022 compared

to 2021, driven particularly by single aisle aircraft

including regional and large business jets, with

widebody production rate increases announced

towards the end of the year. In 2022, 21% of

civil aerospace sales were from widebody

aircraft, with the other 79% sales being from

single aisle, regional and business jets.

Excluding the divestment of Senior Aerospace

Connecticut, total revenue from the defence

sector decreased by £6.6m (5.1%) as purchase

orders were delayed due to the late approval of

the Appropriations Bill which resulted in the

Continuing Resolution coming into force as well

as our sales to F-35 programme being impacted

by customer inventory levels of some of the

parts we supply.

Revenue derived from other markets such as

space, power & energy, medical and semi-

conductor equipment, where the Group

manufactures products using very similar

technology to that used for certain aerospace

products, increased by £16.8m as a result of

increased demand in the semi-conductor

equipment market and the ramp up in space

satellite programmes reflecting end

marketgrowth.

14 Global Aerospace operations

Revenue reconciliation (£m)

Sales in civil aerospace

increased by

32%

(2021 – 15% decrease)

North America 6

United Kingdom 4

Continental Europe 2

Thailand 1

Malaysia 1

A 2021 revenue

B Civil aerospace

C Defence

D Other

E Disposal of business

F 2022 revenue

"The ramp up in large

commercialaircraft

productionrates reflected

therecovery in domestic

andinternational flights.”

• During 2022, the first customer delivery of the

COMAC C919 was completed. COMAC

announced that they have received orders for

more than 1200 units and expect to reach

annual production capacity of 150 aircraft in

five years.

Recovery in long-haul routes, which typically

use widebody aircraft, has been accelerating

in2022. With the easing of travel restrictions

inAsia, especially recently in China, this is

expected to provide added momentum over

thecoming year. IATA has signalled that this

segment will return to 92% of 2019 levels by

2025 and 104% of 2019 levels by 2026. As a

result, both Boeing and Airbus have announced

production rate increases for wide bodies

starting from the end of 2022.

• On widebody aircraft, Airbus announced at

their FY 2022 results that the A330 monthly

production rate increased to around 3 at the

end of 2022 as planned and they are now

targeting to reach a monthly production rate

of4 in 2024. On the A350 platform, Airbus

confirmed the monthly rate is now around 6

aircraft. In order to meet growing demand for

widebody aircraft as international air travel

recovers, and following a feasibility study with

the supply chain, it is now targeting a monthly

production rate of 9 A350s at the end of 2025

The company’s total widebody backlog was

619 at the end of 2022 (2021: 766).

• Boeing resumed 787 programme deliveries

inAugust 2022, after receiving approval from

the FAA for their plan on inspections and

retrofit work. The 787 programme continues

at alow production rate with plans to ramp up

tofive per month in late 2023 and to 10 per

month in the 2025/2026 timeframe. At their

Investor Day in November 2022, they

announced a target of 70-80 787 deliveries

for2023. Boeing confirmed at the full year

earnings call that they had 100 787 aircraft

ininventory at the end of 2022, which they

stated will be delivered by the end of 2024.

• Boeing reaffirmed on their full year earnings

call that the 777X programme timeline is

holding for delivery of the first plane in 2025.

Global business jet activity in 2022 was resilient,

continuing the pandemic bounce. According to

WingX Advance, 2022 was a record year as

sales were up 10% year-on-year and 14% above

pre-pandemic 2019 levels. In 2023, demand is

forecast to normalise to 2019 levels in Europe,

with North America sustaining higher than

pre-pandemic activity. Airbus continues to

ramp-up A220 production, having increased to

6per month during 2022. They announced at

their FY 2022 results that they are still on track

for rate 14 which they envisaged by the middle

of the decade.

We expect defence revenue to be stable in

2023 compared to prior year.

• Lockheed Martin delivered 141 F-35 aircraft

in2022, below its stated target of 147-153,

asthey experienced supplier performance

challenges and a delivery pause & suspension

of the Government Furnished Equipment

(GFE) engine. At their full year results, they

announced an intention of producing 147-153

aircraft in 2023 and 2024, although deliveries

in 2023 will be determined pending the

resumption of engine deliveries and other

factors. They continue to anticipate annual

deliveries of 156 aircraft in 2025 and for the

foreseeable future. In Q4 2022, they finalised

the F-35 Low-Rate Initial Production (LRIP)

Lots 15-17 production contract with the U.S.

Government for up to 398 aircraft.

In November 2022, Senior completed its

acquisition of Spencer Aerospace, expanding

Senior’s presence in hydraulic fluid fittings and

allowing Senior to meet customer demand in

anarea that closely complements existing fluid

conveyance products. Initial integration activities

are proceeding well.

Senior Aerospace has a diversified product

portfolio of innovative offerings with many

growth opportunities as our customers value

Senior’s financial resilience, stability, design and

manufacturing expertise and global footprint.

We continue to secure new contracts and

contract extensions on civil platforms and other

aerospace markets that will drive our growth.

In2022, new contracts of note that were

signedinclude:

• Senior Aerospace Ketema was awarded

multi-year contracts worth in excess of

$30mto supply cryogenic valves for space

launch vehicles

• Senior Aerospace AMT was awarded repeat

production contracts worth c.$10m to supply

floor beam assemblies and frames for large

commercial aircraft.

• Senior Aerospace Jet Products increased

market share for v-blade production for large

commercial aircraft.

• Senior Metal Bellows won a development

andcertification contract for implantable

medication delivery pumps. This included

aproof-of-design bellow for an intra-aortic

balloon pump assembly.

"Improved profitability reflected

volume related operating

leverage across our businesses,

while price increases helped

offset the impact of inflationary

cost increases.“

Launie Fleming

Aerospace Division Chief Executive

STRATEGIC REPORT / DIVISIONAL REVIEW CONTINUED

Adjusted operating

margin increased to

3.7%

(2021 – 1.8%)

"Both Airbus and Boeing are

planning further increases in

aircraft production programmes

in 2023 and beyond which gives

confidence that civil aerospace

revenue will continue to grow

in2023.”

74 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022 75

Senior Aerospace Metal Bellows provides custom engineered

bellows-based mechanical and electromechanical component

and assembly solutions, by applying its technologies to

applications requiring hydraulic system pressure and flow

control, dynamic sealing, precision sensing and actuation

(pressure and thermal), and flexible coupling.

STRATEGIC REPORT / DIVISIONAL REVIEW CONTINUED

The Flexonics Division represents 35%

(2021– 34%) of Group revenue comprising 12

operations which are located in North America

(four), continental Europe (two), the United

Kingdom (two), South Africa, India, and China

(two) including the Group’s 49% equity stake

ina land vehicle product joint venture. This

Divisional review is on a constant currency

basis

(1)

, whereby 2021 results have been

translated using 2022 average exchange rates

and on an adjusted basis to exclude net

restructuring income/costs. The Division’s

operating results on a constant currency basis

are summarised below:

2022

£m

2021

(2)

£m Change

Revenue 295.6 234.6 +26%

Adjusted

operating profit 25.4 13.9 +83%

Adjusted

operating margin 8.6% 5.9% +270bps

(1) The divisional review is presented before the share

ofthe joint venture results.

(2) 2021 results translated using 2022 average exchange

rates - constant currency.

DIVISIONAL REVIEW

FLEXONICS

DIVISION

Revenue

+26%

£295.6m

(2021 – £234.6m)

Adjusted operating profit

+83%

£25.4m

(2021 – £13.9m)

Adjusted operating margin

+270 bps

8.6%

(2021 – 5.9%)

Flexonics sales across the group

19%

Land vehicles

35%

“In Flexonics, strong customer

demand in the land vehicle and

power & energy markets in 2022

drove an increase in sales of

26.0% compared to prior year.“

Mike Sheppard

Flexonics Division Chief Executive

16%

Power & Energy

SENIOR PLC ANNUAL REPORT AND ACCOUNTS 202276

Revenue reconciliation (£m)

77SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

£m

A B C D

234.6

37.1

23.9 295.6

STRATEGIC REPORT / DIVISIONAL REVIEW CONTINUED

• The North American medium-duty diesel

truck production is forecast to be stable

in2023 as backlogs remain elevated,

indicating solid pent-up demand.

• IHS Markit Inc. forecasts that European truck

and bus production will fall by 1% in 2023

inline with the slowing macroeconomic

indicators, while light vehicle production

isforecast to grow by 6% in 2023 with

semiconductor availability improving.

• Indian light vehicle production is forecasted

togrow by 8% in 2023.

Positive momentum is expected in power

&energy markets given higher activity levels

inthe upstream oil & gas and nuclear sectors:

• The IEA expects world oil demand in 2023

tosurpass pre-pandemic levels.

• According to the IEA, global refining capacity

is anticipated to expand slightly in 2023. Tight

supply, coupled with a limited appetite for

new refining capacity due to the US federal

government’s policies on energy, has led

businesses to focus on upgrading and

expanding existing facilities, thereby

increasing maintenance and overhaul work.

• In power generation, the IEA forecasts global

electricity demand growth in 2023 to be

similar as 2022, albeit with some uncertainty

around how macroeconomic growth rates

willimpact demand.

• In the nuclear sector, 2023 will see nations

focus on energy security through ensuring

thesmooth operating of existing powerplant

and look to further develop SMRs.

Our innovative technology is a key point of

differentiation for the Group, and we continue

tofocus our development efforts, with our

products applicable across a diverse range of

attractive industrial markets. In 2022, we made

good progress with new product development:

• Senior Flexonics Crumlin supplied prototype

Battery Cooling Plates to several European

carcompanies.

• Senior supplied Prototype Heat Sinks to

several tier one electric vehicle inverter

suppliers.

• Senior Flexonics Crumlin secured a production

order for Battery Cooling Plates for a premium

sports car manufacturer.

• Senior Flexonics Kassel was named as

apartner for the development of a marine

hydrogen powered fuel cell fluid

managementsystem.

• Senior Flexonics Bartlett was nominated

tosupply assemblies for a Solid Oxide Fuel

Cell being developed to replace diesel

poweredgenerators.

Divisional revenue increased by £61.0m (26.0%)

to £295.6m (2021 – £234.6m) and adjusted

operating profit increased by £11.5m (82.7%)

to£25.4m (2021 – £13.9m).

Revenue Reconciliation £m

2021 revenue 234.6

Land vehicles 37.1

Power & energy 23.9

2022 revenue 295.6

In Flexonics, strong customer demand in the

land vehicle and power & energy markets in

2022 drove an increase in sales of 26.0%

compared to prior year.

Group sales to land vehicle markets increased

by 29.2% as Senior outgrew end market

demand due to higher market share. Senior’s

sales to the North American truck and off-

highway market increased by £18.7m (25.8%),

with strong demand for on-highway vehicles

asproduction of heavy-duty trucks increased

by19%. Sales to other truck and off-highway

regions, including Europe and India, increased

by£12.0m (45.6%), helped by recent contract

wins entering series production, and end market

production growth as supply chain constraints

eased through the year. Group sales to

passenger vehicle markets increased by £6.4m

(22.8%) in the year, benefiting from recent

contract wins entering series production in

North America and Europe.

In the Group’s power & energy markets, sales

increased by £23.9m (22.2%) in the year. Sales

to power generation and nuclear markets

increased by £9.3m (26.7%) as efforts to extend

powerplant life and maintenance grew. Sales to

oil and gas markets increased by £8.8m (27.1%),

as a result of higher production volumes for

upstream. Sales to other power & energy

markets increased by £5.8m.

Adjusted operating profit increased by £11.5m

compared to prior period and the divisional

adjusted operating margin increased by 270

basis points to 8.6% (2021 – 5.9%). This

significant improvement in profitability reflected

the volume related operating leverage across

our operating businesses and agreed price

increases to offset the impact of inflationary

cost increases.

In 2023, Senior’s overall sales to land vehicle

markets are expected to outperform end

markets due to the launch and ramp up of new

programmes. In terms of the end markets:

• ACT Research is forecasting a 3% decline in

North American heavy-duty truck production

in 2023. Pent-up demand for more fuel

efficient engines and modest pre-buy activity

ahead of tighter emission standards coming

to be introduced in 2024 are expected to be

offset by slowing macroeconomic indicators

in the US.

(1) Including joint venture.

North America 4

Continental Europe 2

United Kingdom 2

India 1

South Africa 1

China

(1)

A 2021 revenue

B Land vehicles

C Power & energy

D 2022 revenue

12 Global Flexonics operations

Increasing global energy

consumption will drive

higher demand for

manyof the Flexonics

Division’s products.

Sales to power & energy

markets increased by

+22%

(2021 – 12% decrease)

STRATEGIC REPORT / FINANCIAL REVIEW

FINANCIAL REVIEW

GOOD FINANCIAL

PROGRESS

Adjusted Operating Profit

+367%

£28.5m

2021 – £6.1m

Free Cash Flow

+98%

£ 27.7m

2021 – £14.0m

ROCE

+370 bps

4.7%

2021 – 1.0%

"Senior delivered significantly

improved profitability, generated

excellent free cash flow and

further strengthened the

balancesheet.”

Bindi Foyle

Group Finance Director

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

2022

£m

2021

£m

2022

£m

2021

£m

2022

2021

Aerospace 553.6 439.3 20.3 7.9 3.7 1.8

Flexonics

(2)

295.6 219.9 25.4 12.9 8.6 5.9

Share of results of

joint venture – – 0.4 0.2 – –

Inter-segment sales (0.8) (0.5) – – – –

Central costs – – (17.6) (14.9) – –

Group total 848.4 658.7 28.5 6.1 3.4 0.9

(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:

2022

£m

2021

£m

Adjusted operating profit 28.5 6 .1

Amortisation of intangible assets from acquisitions (0.2) –

Net restructuring income 4.2 4.4

Operating profit 32.5 10.5

Financial detail

Group revenue

Group revenue was £848.4m (2021 – £658.7m).

Excluding the favourable exchange rate impact

of £46.3m, Group revenue increased by

£143.4m (20.3%), of which £28.6m related to

pricing. Revenue grew in both Aerospace and

Flexonics year-on-year. In 2022, 59% of revenue

originated from North America, 17% from the

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

the Rest of the World.

Operating profit

Adjusted operating profit increased by £22.4m

(367.2%) to £28.5m (2021 – £6.1m). Excluding

the favourable exchange rate impact of £1.3m,

adjusted operating profit increased by £21.1m

(285.1%) on a constant currency basis. After

accounting for £0.2m amortisation of intangible

assets from acquisitions (2021 – £nil) and £4.2m

net restructuring income (2021 – £4.4m),

reported operating profit was £32.5m (2021 –

£10.5m).

The Group’s adjusted operating margin

increased by 250 basis points, to 3.4% for the

full year. This improved profitability principally

reflected volume related operating leverage

across our businesses. Inflationary pressures

were successfully mitigated by diligently

managing costs and by increasing prices

andsurcharges where possible. Overall price

increases of £28.6m offset material and

otherinflationary cost increases of £26.0m.

78 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

79SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

848.4

658.7

28.5

6.1

27.7

14.0

STRATEGIC REPORT / FINANCIAL REVIEW

Revenue (£m)

+29%

Adjusted operating profit (£m)

+367%

Free cash flow (£m)

+98%

As set out in Note 9, adjusted operating profit

and adjusted profit/loss before tax are stated

before £0.2m amortisation of intangible

assets from acquisitions (2021 – £nil) and

£4.2m net restructuring income (2021 –

£4.4m). Adjusted profit/loss before tax is also

stated before costs associated with corporate

undertakings of £1.7m (2021 – £21.2 income).

Restructuring

In 2020 the Group had focused on taking

actions to conserve cash to manage through

the pandemic, including curtailing capital

expenditure, tightly managing working capital

and implementing further cost cutting actions.

In 2022 there were still some residual

activities associated with that.

The decisive actions which we took on

restructuring and cost management delivered

the expected benefits. In addition, the Group

has continued to reviewinventory and asset

exposures on programmes that have been

reduced, cancelled or where the Group will no

longer participate. As part of the restructuring

focus, we have assessed critically any

inventory or asset exposures on these

programmes and written down the carrying

values on excess holdings and assets where

there is no alternate use. Where demand has

picked up on previously reduced or cancelled

programmes, inventory impairments have

been reversed to the extent that there are

confirmed orders in place.

The restructuring resulted in net income of

£4.2m (2021 – £4.4m). Of this, £4.0m income

(2021 – £4.2m) related to an aerospace

manufacturing grant and £1.2m net charge

related to consultancy and other costs

(2021– £0.4m net charge). For certain

specific programmes, and in conjunction

withthe focus on restructuring, management

has also identified inventory impairment

reversals of £2.7m (2021 – £1.4m) where

customer demand has increased, and further

impairment provisions on property, plant and

equipment in 2022 with a charge of £1.3m

(2021 – £0.8m) to cover the risk where there

are no alternative uses. Net cash inflow

related to restructuring activities was

£2.1m(2021 – £0.9m net cash outflow).

At31December 2022, a restructuring

provision of £0.2m (31 December 2021:

£1.3m) was recognised and is expected

tobeutilised in2023.

Finance costs and investment income

Finance costs, net of investment income and

before interest unwind of deferred and

contingent consideration increased to £8.4m

(2021 – £8.0m) and comprise IFRS 16 interest

charge on lease liabilities of £2.5m (2021 –

£2.6m), net finance income on retirement

benefits of £1.2m (2021 – £0.4m) and net

interest charge of £7.1m (2021 – £5.8m). This

increase was mainly due to higher underlying

interest rates on variable rate debt and foreign

exchange movements on fixed rate USD Private

Placement Notes denominated in US Dollars.

Gross finance costs, including interest unwind

ofdeferred and contingent consideration were

£10.6m (2021 – £8.5m) and investment income

was £1.9m (2021 – £0.5m).

Corporate undertakings

Costs associated with corporate undertakings

were £1.7m in 2022, of which £1.2m of

acquisition costs and £0.3m interest unwind

ofdeferred and contingent consideration

relatestothe acquisition of Spencer Aerospace

in November 2022 and £0.2m costs relate to

othercorporate activities. In 2021, net income

of£21.2m was recognised, of which £24.2m

gain relates to the disposal of Senior Aerospace

Connecticut in April 2021, partly offset by

£3.0mbid defence and costs relating to other

corporate activities. See Note 31 to the Financial

Statements for further details on the £24.2m

gain on disposal.

Net cash outflow related to corporate

undertakings in 2022 was £26.7m,

comprising£25.3m for the acquisition of

Spencer Aerospace and £1.4m of acquisition

related costs and other corporate activities.

In2021, netcash inflow related to corporate

undertakings was £46.9m, comprising

£51.7mproceeds from disposal activities,

offsetby £1.8m disposal costs and £3.0m

biddefence and other costs.

Profit/loss before tax

Adjusted profit before tax was £20.1m (2021 –

£1.9m loss). Reported profit before tax was

£22.4m (2021 – £23.7m). The reconciling items

between adjusted profit/loss and reported

profitbefore tax are shown in Note 9 to the

FinancialStatements.

Tax charge

The adjusted tax rate for the year was 10.0%

(2021 – 136.8% credit), being a tax charge of

£2.0m (2021 – £2.6m credit) on adjusted profit

before tax of £20.1m (2021 – £1.9m loss).

Theadjusted tax rate benefitted from enhanced

deductions for R&D expenditure in the US,

thesuper-deduction for capital expenditure

inthe UK, as well as prior year items.

The reported tax rate was 9.8% charge, being

atax charge of £2.2m on reported profit before

tax of £22.4m. This included £0.2m net tax

charge against items excluded from adjusted

profit before tax, of which £0.7m charge related

to net restructuring income and a £0.5m credit

related to corporate undertakings in the year.

The 2021 reported tax rate was 2.1% credit,

being a tax credit of £0.5m on reported profit

before tax of £23.7m. This included £2.1m net

tax charge against items excluded from adjusted

loss before tax, of which £2.9m related to the

corporate undertakings in the year and £0.6m

credit to the revaluation of UK deferred tax

assets at the substantially enacted 25%

corporation tax rate effective from 1 April 2023.

Cash tax paid was £3.5m (2021 – £5.3m)

andisstated net of refunds received of £1.1m

(2021– £0.9m) of tax paid in prior periods,

including refunds arising from the offset of tax

losses against taxable profits of prior periods.

Tax payments in 2021 were £2.3m higher than

they would otherwise have been as a result of

coronavirus relief measures in some countries

which allowed the deferral of tax bills normally

due in 2020 into 2021.

Tax policy

The Group acts with integrity in all tax matters,

in accordance with the Group’s ethics and

business conduct programme. It is the Group’s

obligation to pay the amount of tax legally

dueand to observe all applicable rules and

regulations in the jurisdictions in which it

operates. While meeting this obligation, the

Group also has a responsibility to manage and

control the costs of our business, including

thetaxes we pay for the benefit of all our

stakeholders. The Group seeks to achieve this

by conducting business affairs in a way that

isefficient from a tax perspective, including

maintaining appropriate levels of debt in the

countries we operate in and claiming available

tax reliefs and incentives. The Group is

committed to building and maintaining

constructive working relationships with the

taxauthorities of the countries in which it

operates. Further details on our approach

totaxmay be found on Senior’s website

atwww.seniorplc.com.

Earnings per share

The weighted average number of shares, for

thepurposes of calculating undiluted earnings

per share, decreased to 415.3 million (2021–

415.7million). The decrease arose principally

due to the purchase of shares held by the

employee benefit trust during 2022. The

adjusted earnings per share was 4.36 pence

(2021 – 0.17 pence). Basic earnings per share

was 4.86 pence (2021– 5.82 pence). See Note

12 for details of the basis of these calculations.

STRATEGIC REPORT / FINANCIAL REVIEW CONTINUED

Return on capital employed (“ROCE”)

ROCE, a key performance indicator for the

Group as defined above, increased by 370 basis

points to 4.7% (2021 – 1.0%). The increase in

ROCE was mainly a result of the significant

increase in adjusted operating profit compared

to prior year.

Research and design

The Group’s expenditure on research and design

was £19.8m during 2022 (2021 – £19.2m).

Expenditure was incurred mainly on funded

andunfunded work, which primarily relates

todesigning and engineering products in

accordance with individual customer

specifications and investigating specific

manufacturing processes for their production.

The Group also incurs costson general

manufacturing improvement processes

whichare similarly expensed. Unfunded costs

inthe year have been expensed, consistent

withtheprior year, as theydid not meet the

strict criteria required forcapitalisation.

Exchange rates

A proportion of the Group’s operating profit

in2022 was generated outside the UK and

consequently, foreign exchange rates,

principallythe US Dollar against Sterling,

canaffect the Group’s results.

The 2022 average exchange rate for the US

Dollar applied in the translation of income

statement and cash flow items was $1.24

(2021– $1.38). The exchange rate for the

USDollar applied to the translation of

BalanceSheet itemsat 31 December 2022

was$1.21 (31December 2021 – $1.35).

Using 2022 average exchange rates would

haveincreased 2021 revenue by £46.3m

andincreased 2021 adjusted operating profit

by£1.3m. A 10 cents movement in the £:$

exchange rate is estimated to affect forecast

full-year revenue on average by £44m, adjusted

operating profit by £2m and net debt by £11m.

Cash flow

The Group generated excellent free cash flow

of£27.7m in 2022 (2021 – £14.0m) as set out

inthe table below:

2022

£m

2021

£m

Operating profit 32.5 10.5

Amortisation of intangible

assets from acquisitions 0.2 –

Net restructuring income (4.2) (4.4)

Adjusted operating profit 28.5 6.1

Depreciation (including

amortisation of software) 49.6 47.8

Working capital and

provisions movement, net

of restructuring items (12.1) (2.6)

Pension payments above

service cost (1.4) (5.1)

Other items

(1)

5.6 2.2

Interest paid, net (9.0) (8.0)

Income tax paid, net (3.5) (5.3)

Capital expenditure (30.5) (21.3)

Sale of property, plant and

equipment 0.5 0.2

Free cash flow 27.7 14.0

Corporate undertakings (26.7) 46.9

Net restructuring

proceeds/(cash paid) 2.1 (0.9)

US Class action lawsuits – (2.3)

Dividends paid (1.2) –

Purchase of shares held

by employee benefit trust (4.5) –

Net cash flow (2.6) 57.7

Effect of foreign exchange

rate changes (14.2) 0.7

IFRS 16 non-cash

additions and

modifications including

acquisition (9.0) (5.6)

Change in net debt (25.8) 52.8

Opening net debt (15 3.1) (205.9)

Closing net debt (178.9) (153.1)

(1) Other items comprises £4.3m share-based payment

charges (2021 – £3.5m), £(0.4m) profit on share of joint

venture (2021 – £(0.2m)), £1.8m working capital and

provision currency movements (2021 – £(1.1m)) and

£(0.1m) profit on sale of fixed assets (2021 – £nil).

Capital expenditure

Gross capital expenditure of £30.5m (2021 –

£21.3m) was 0.8 times depreciation excluding

the impact of IFRS 16 (2021 – 0.6 times). The

disposal of property, plant and equipment raised

£0.5m (2021 – £0.2m). 2023 capital investment

is expected to be in line with depreciation

(excluding the impact of IFRS 16). We are

prioritising new investment on sustainability

related items; important replacement equipment

for current production; and growth projects

where contracts have been secured.

Working capital

Working capital increased by £28.3m in 2022

to£131.3m (2021 – £103.0m), of which £9.3m

related to foreign currency movements.

Asexpected, the underlying increase was

reflective of increased activity in our key end

markets along with some supply chain lead

times increasing. In 2022, our effective

management of working capital reduced it as a

percentage ofsales by 10 basis points to 15.5%

(2021 – 15.6%). Although we may continue to

see an increase in working capital over the

coming year, we will continue our relentless and

effective focus on working capital management.

The Group participates in some non-recourse

reverse factoring schemes which are arranged

by our customers as a way of reducing credit

risk. The trade receivables reverse factored

under such non-recourse schemes at

31December 2022 were £24.9m (31 December

2021 – £16.8m). The net impact of reverse

factoring on 2022 was a cash inflow in working

capital of £6.2m (2021 – £0.9m outflow) and the

discount interest presented within other finance

costs is a charge of £0.6m in 2022 (2021 –

£0.2m). These arrangements follow standard

market terms and conditions and, as noted

above, are 100% non-recourse to the Group,

thereby transfer all credit risk to the financial

institutions who provide the factoring schemes.

Dividend

The Group had a long and stable track record

ofdividend growth prior to 2020. Reflecting

confidence in the Group’s performance,

financialposition and future prospects, the

Board reinstated dividend payments in 2022 and

is proposing a final dividend of 1.00 pence per

share (2021 – nil pence). If approved, it would

bepaid on 26 May 2023 to shareholders on

theregister at the close of business on 28 April

2023 and payment would total £4.1m. This

would deliver total dividends paid and proposed

in respect of 2022 of 1.30 pence per share

(2021 – nil pence). At the level recommended,

the full year dividend would be covered 3.4

times by adjusted earnings per share. The cash

outflow incurred during 2022 in respect of

dividends was £1.2m (2021 – £nil) relating to

theinterim dividend for 2022.

We will continue to follow a progressive

dividend policy reflecting earnings per share,

free cash flow generation, market conditions

and dividend cover over the medium term.

80 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

81SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

1.47x

1.87x

179

208

1.0

4.7

STRATEGIC REPORT / FINANCIAL REVIEW CONTINUED

Goodwill

The increase in goodwill from £150.2m

at31December 2021 to £199.7m at

31December 2022 reflects the acquisition

ofSpencer Aerospace in November 2022

(£42m increase) and foreign exchange

differences (£7.5m increase).

Retirement benefit schemes

The retirement benefit surplus in respect of

the Group’s UK defined benefit pension plan

(“the UK Plan”) decreased by £20.4m to

£51.8m (31 December 2021 – £72.2m) due

to£23.2m net actuarial losses, partly offset

by£1.4m cash contributions by the Group,

inexcess of running costs, and £1.4m net

interest income. Retirement benefit deficits

inrespect of the US and other territories

increased by £1.1m to £12.1m (31 December

2021 – £11.0m).

The latest triennial actuarial valuation of the

UK Plan as at 5 April 2022 showed a surplus

of £24.5m (5 April 2019 – deficit of £10.2m).

As a result, and effective from April 2022, the

Group’s deficit reduction cash contributions,

including administration costs, to the UK Plan

ceased on 30 June 2022.

The estimated cash contributions expected

tobe paid during 2023 in the US funded

plansis£2.3m (£0.4m was paid in 2022).

Net debt

Net debt which includes IFRS 16 lease

liabilities increased by £25.8m to £178.9m

at31 December 2022 (31 December

2021– £153.1m). As noted in the cash flow

above, the Group generated net cash outflow

of £2.6m (as defined in Note 32(c) of the

Financial Statements), after £14.2m adverse

foreign currency movements and £9.0m

non-cash changes in lease liabilities due to

additions and modifications of which £4.7m

relates to acquisition leases.

Net debt excluding IFRS 16 lease liabilities

of£78.4m (31 December 2021 – £73.2m)

increased by £20.6m to £100.5m at 31

December 2022 (31 December 2021 –

£79.9m), due to free cash inflow of £27.7m

being more than offset by £26.7m cash

outflow in respect of corporate undertakings,

£9.1m capital repayment of leases, £3.6m net

cash outflows for dividends and purchase of

shares net of restructuring income and £8.9m

adverse foreign currency movements.

Funding and Liquidity

As at 31 December 2022, the Group’s gross

borrowings excluding leases and transaction

costs directly attributable to borrowings were

£145.3m (31 December 2021 – £132.0m),

with64% of the Group’s gross borrowings

denominated in US Dollars (31 December

2021– 62%). Cash and bank balances were

£43.2m (31 December 2021 – £51.1m).

The maturity of these borrowings, together with

the maturity of the Group’s committed facilities,

can be analysed as follows:

Gross

borrowings

(2)

£m

Committed

facilities

£m

Within one year 0.5 –

In the second year – –

In years three to five 120.0 255.1

After five years 24.8 24.8

145.3 279.9

(2) Gross borrowings include other loans and committed

facilities, but exclude leases of £78.4m and transaction

costs directly attributable to borrowings of £(1.6)m.

At the year-end, the Group had committed

facilities of £279.9m comprising private

placement debt of £126.2m and revolving

creditfacilities of £153.7m. The Group is in

astrong funding position, with headroom

at31December 2022 of £179.4m in cash

andundrawn facilities.

During the first half of 2022, the Group

refinanced its US revolving credit facility of

$50.0m (£41.3m at year end exchange rate) and

extended the maturity to June 2025. In October

2022, the US private placement debt of $20m

(£16.5m at year end exchange rate) was repaid.

In November 2022 the Group refinanced its

UKrevolving credit facility and extended the

maturity to November 2026 with a commitment

of £115m and in support of the strong ESG

commitments made by Senior and its lenders,

we have jointly agreed appropriate sustainability

linked key performance indicators.

The weighted average maturity of the Group’s

committed facilities at 31 December 2022

was3.5 years.

The Group has £0.5m (2021 – £nil) of

uncommitted borrowings which are repayable

on demand.

The Group has two covenants for committed

borrowing facilities, which are tested at June

and December: the Group’s net debt to EBITDA

(defined in the Notes to the Financial Headlines

on page 2) must not exceed 3.0x and interest

cover, the ratio of EBITDA to interest must

behigher than 3.5x. At 31 December 2022,

theGroup’s net debt to EBITDA was 1.47x

andinterest cover was 9.4x, both comfortably

within covenant limits.

During the year the Group implemented a global

cash pooling structure which has enhanced

liquidity and cash management, reduced gross

debt levels and will help mitigate rising interest

costs moving forward.

Bindi Foyle

Group Finance Director

Net debt/EBITDA Funding headroom (£m) Return on capital employed (%)

STRATEGIC REPORT / VIABILITY STATEMENT

VIABILITY STATEMENT

Following a robust assessment, the Directors have concluded

that the Group and Parent Company have sufficient funds to

operate for the foreseeable future (evaluated to 31 December

2025), even in a severe but plausible downside scenario.

has significant content, will continue to be a

necessity for the airline industry. In the Group’s

other key markets, defence is anticipated to

remain stable over themedium term, the

Flexonics land vehicle markets are expected to

continue to grow through the medium term and

in the power andenergy markets, recovery in

the oil and gassector is underway and demand

for power generation is expected to grow

through the medium term.

In determining a severe but plausible downside

scenario, the base case projections are flexed to

reflect the weighted probability and cumulative

estimated effects of all the Group’s principal

risks and uncertainties, as disclosed on pages

60 to 71. This scenario reflects the combined

probabilistic effect of all principal risks, rather

than individual scenarios for each risk, according

to impact and likelihood of occurrence and

include mitigations where appropriate to

maintain liquidity. These effects drive key

metrics in revenue growth, operating profit

margin and borrowing rates. The top 3 principal

risks with the highest estimated effect on key

metrics include Economic and Geopolitical

impact, Inflation, and Supply chain challenges.

The remaining risks, such as Pandemic and

Climate Change, have relatively equal weighting

in the scenario, with Corporate Governance

Breach and Innovation & Technological Change

having the lowest estimated effect.

To address the impacts under the severe but

plausible downside, the Board has considered

the mitigating actions within the Group’s direct

control. These include a continued focus on

conserving cash through vigilant management

of capital expenditure and working capital

together with further restructuring actions

andlimiting non-critical discretionary spend.

Committed facilities and debt covenants

At 31 December 2022, the Group held

committed borrowing facilities of £279.9m with

liquidity headroom of £179.4m. The weighted

average maturity of the Group’s committed

facilities at the end of December 2022 was

3.5years. Net debt (defined in Note 32c) was

£178.9m, including £78.4m of capitalised leases

which do not form part of the definition of debt

under the committed facilities and do not impact

the Group’s lending covenants.

In accordance with provisions 30 and 31 of

the2018 UK Corporate Governance Code,

published by the Financial Reporting Council

in2018, the Directors have assessed the

prospects of the Group over the three-year

period to 31 December 2025.

As we start 2023, markets remain favourable,

with commercial aerospace recovery in full

swing and other important markets remaining

buoyant. Demand is currently holding up well,

though we remain mindful of the potential

impact of the broader macro-economic situation

and geopolitical uncertainty. Notwithstanding

near-term uncertainties in the global economy,

Senior is well placed to benefit from the

recovery underway in our end markets. The

Board hasconsidered a three-year period, as

this reflects the normal mid-term planning cycle

ofits business operations while adequately

covering customer lead times for both new

andexpansion investment. In addition, this

period provides sufficient clarity to consider the

business prospects and continued recovery

from the pandemic under a base case, while

also assessing impacts under a severe

butplausible downside scenario.

The base case projections of the viability

assessment are based on the Group’s Budget

for 2023 and the Group’s Strategy for 2024 and

2025. The rebound in flight departure levels in

2022 was testament to the resilience of global

air travel demand, with the recovery across

commercial aerospace underway. The strong

growth in passenger numbers seen in most

domestic markets and other short-haul routes

was sustained throughout 2022 and is expected

to continue. International, long-haul traffic has

been accelerating, particularly between North

America and Europe and the recent easing of

travel restrictions in China has immediately

provided added momentum. IATA continues to

expect domestic passenger numbers to reach

2019 levels by 2024 and international passenger

numbers to return to 2019 levels by 2025. As

demand recovers, production of new aircraft will

be supported by the replacement cycle driven

by the accelerated retirement of older, less

efficient, aircraft duringthe pandemic. Beyond

this, the drivers supporting air traffic growth

over the long term of c. 4% per annum remain

inplace. The lower operating cost and better

sustainability of new aircraft, on which Senior

The Group has two covenants for committed

borrowing facilities, which are tested at June

and December: the Group’s net debt to EBITDA

(defined in the Notes to the Financial Headlines

on page 2) must not exceed 3.0x and interest

cover, the ratio of EBITDA to interest must be

higher than 3.5x. At 31 December 2022, the

Group’s net debt to EBITDA was 1.47x and

interest cover was 9.4x, both comfortably

withincovenant limits.

Board’s conclusion

Modelling the base case and severe but

plausible downside scenario and mitigations

indicate that the Group is in compliance with

alldebt covenants at all measurement dates

outto 31 December 2025. The scenarios

alsohighlight sufficient liquidity headroom

throughout the period in light of the committed

facilities available. Accordingly, following a

robust assessment the Directors have

concluded that the Group and Parent Company

have sufficient funds to operate for the

foreseeable future, even in a severe but

plausible downside scenario. For the going

concern assessment, the foreseeable future

covers a minimum period of 12 months from the

date of approval of these Financial Statements,

and with the viability period evaluated out to

31December2025.

Going concern

As a consequence of the work undertaken

tosupport the viability statement above, the

Directors have, at the time of approving these

Financial Statements, a reasonable expectation

that the Group and Parent Company have

adequate resources to continue in operational

existence for the foreseeable future, being

aperiod of at least 12 months from the date

ofapproval of these Financial Statements.

Accordingly, they continue to adopt the going

concern basis of accounting in preparing these

Financial Statements, having undertaken a

rigorous assessment of the financial forecasts.

Approval

The Strategic Report from pages 1 to 83

wasapproved by the Board of Directors on

24February2023 and signed on its behalf by

David Squires

Group Chief Executive Officer

82 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

The rebound in flight

departure levels in 2022

was testament to the

resilience of global air

travel demand, with

therecovery across

commercial aerospace

underway. Defence is

anticipated to remain

stable over the

mediumterm.

Land vehicle markets are

expected to continue to

grow through the medium

term. In the power and

energy markets, recovery

in the oil and gas sector

isunderway and demand

for power generation is

expected to grow through

the medium term.

83SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

STRATEGIC REPORT / VIABILITY STATEMENT

GOVERNANCE /

GOVERNANCE

IN THIS SECTION

86 Chair's Governance Letter

“In 2022, the Group's Corporate

GovernanceFramework has supported

alldecisions made by the Board and

theExecutiveCommittee.”

97 Nominations Committee Report

90 Board of Directors

94 Executive and HSE Committees

95 Governance and Report of the Directors

“Collectively, the members of the

AuditCommittee have significant

commercial andfinancial experience

atasenior management level.”

Giles Kerr

Chair of the Audit Committee

“The implementation of our

RemunerationPolicy seeks to motivate

andsupport outperformance.”

Celia Baxter

Chair of the Remuneration Committee

“The Group seeks to ensure diversity in the

composition of its Board, including gender,

ethnicity and personal and cognitive skills.”

Ian King

Chair

111 2022 Remuneration Report at a Glance

113 Remuneration Report: Policy

119 Annual Report on Remuneration

129 Statement of Directors’ Responsibilities

130 Independent Auditor’s Report to the

Members of Senior plc

108 Remuneration Committee Report

102 Audit Committee Report

Bellows for Land Vehicles

Bellows are used in fluid

conveyance to hermetically

sealpiping systems that

connectdifferent propulsion

components moving in different

motions. Acritical component

neededtomeet leak tight

emissionsstandards.

84 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

8585SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Battery cooling plates Battery cooling plates

GOVERNANCE / GOVERNANCE /

Electronic Thermal

Management

Thermal management of critical

electronic components is required

for all new land vehicles. Newer

more efficient vehicles require

more electronic systems for engine

management and therefore need

advanced thermal management

forelectronic durability.

EGR Cooler

Aids in reducing combustion

temperatures, thereby reducing

NOx (which creates smog) and

improving fuel economy (which

results in lower CO

). In order to

meet tightening emissions

standards, EGR Coolers will be

required for diesel, natural gas and

synthetic fuel combustion engines.

EV Fluid Conveyance

Engineered fluid conveyance

tubesand assemblies are critical

for both EVs and ICE vehicles.

Optimized coolant management

and delivery enhances the

performance and durability of

theentire propulsion system.

GOVERNANCE / CHAIR’S GOVERNANCE LETTER

CHAIR’S GOVERNANCE LETTER

AN INVALUABLE AND

ROBUST FRAMEWORK

“In 2022, the Group's Corporate

Governance Framework

hassupported alldecisions

madebytheBoard and the

ExecutiveCommittee.”

Ian King

Chair

Dear Shareholders,

In another year of external events that

challenged the Company, the Governance

Framework once again proved to be invaluable

and robust. Throughout 2022, it has been my

privilege to lead the Board in the next phase

ofthe Company’s development and growth

andwe have delivered a year of strong progress.

Iremain confident we have the right Board of

Directors in place, working with the Executive

Leadership Team, to implement the Company’s

strategy. The non-executive Directors continued

to bring strong, broad, professional and

complementary qualities to the Board in 2022.

Ilook forward to working with the Board in 2023

to continue to deliver long-term sustainable

growth. The acquisition of Spencer Aerospace

and the opportunities it will bring to our Fluid

Conveyance business have heightened my

confidence and outlook for the Group.

In 2022, the Board has maintained its focus on

sustainability, both in terms of environmental,

social and governance (“ESG”) across the

operations, as well as those relevant to the

Group’s products, technologies and capabilities.

Corporate governance continues to have

prominence across the Senior Group; the Board

sets the tone and takes the lead on governance

matters. The Governance section of this

AnnualReport is intended to provide Senior’s

shareholders with a clear and meaningful

explanation of what governance means to

theBoard and how this guides its decision-

making processes.

The Board remains firmly committed to

ensuring the long-term sustainable growth

ofthe Group, generating value for

shareholders,whilst considering the

needsofallitsstakeholders.

On the following pages, I have summarised

theCompany’s approach to key

governancematters.

Statement of compliance with

theCorporate Governance Code

The Company is subject to the UK Corporate

Governance Code 2018 (theCode), which is

published by the Financial Reporting Council

and available on their website: www.frc.org.

uk/directors/corporate-governance-and-

stewardship/uk-corporate-governance-code.

We have been fully compliant with theCode

throughout 2022 apart from the executive

Directors’ pension contributions, which

werealigned with the rates available to the

majority of the UK workforce in December

2022. Further details of how the Company

applied the Principles of the Code can be

found on pages 86 to 107.

Application of the five principles

of the Code

Leadership, Company purpose,

values and strategy

The role of the Board Page 93

Division of responsibilities:

theChair, the non-executive

Directors and the

CompanySecretary

Page 93

Purpose Page 6

Core Values Page 38

Strategic Priorities Pages 42

to43

Effectiveness: Board composition,

evaluation and succession

Composition of the Board Page 89

Nominations Committee Report,

including appointments to the

Board and succession planning

Pages 97

to99

Skills, experience and

knowledge of the

Board of Directors

Pages 90

to92

Board evaluation Page 99

Accountability: Audit, risk and internal

control

Audit, risk and Internal Control Pages 100

to 101

Audit Committee Report Pages 102

to 107

Risks and Uncertainties Pages 60

and 61

Remuneration

Remuneration Committee

Report

Pages 108

to 128

Relations with Shareholders

Shareholder engagement Pages 54

Other stakeholder engagement Pages 50 to

53 and 55

86 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

87SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / CHAIR’S GOVERNANCE LETTER

Board governance

Directors’ duties

Under the Companies Act 2006, each

ofour Directors must: act within their

powers, promote the success of the

Company, exercise independent

judgment, exercise reasonable care,

skilland diligence, and avoid conflicts

ofinterest.

Role of the Board

The Board is responsible for Group

decisionsaffecting governance, strategy

andthe approval of annual operating budgets

and Financial Statements. It also approves

significant financial and contractual

commitments made by the Group. The

Board’s Terms of Reference were updated

in2022 and more fully describe the

responsibilities of the Board; the Matters

Reserved for the Senior plc Board may be

found on the Company’s website.

The Board recognises its role in assessing

andmonitoring the Group’s culture. To that

effect, “Culture” has been made a regular

Board agenda item. The Board deploys

various initiatives to monitor culture, from

participating in site visits to reviewing

qualitative and quantitative evidence of culture

(succession plans, Health & Safety reporting,

whistle-blowing notifications, payment

practices reports and training completion

rates). In 2022, a Global Employee Opinion

Survey was undertaken. The results were

positive and shared with employees;

furtherdetails can be found on page 51.

At the Board’s Annual Strategic Review

meeting held in October 2022, the Group’s

Strategy was tested, taking into account

recent events on the Group’s end markets,

and was found to be still relevant by

theBoard.

Leadership

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

Chair, together with two executive Directors

and six independent non-executive Directors.

All Directors were selected for appointment

because of their wide industrial and

commercial experience; we have an excellent,

well-balanced Board. In addition, the Group’s

Executive Committee, chaired by the Group

Chief Executive Officer, comprises the two

executive Directors and other key executives.

Details of the members of the Board and

ofthe Executive Committee can be found

onpages 90 to 92 and 94. My role as

Chairincludes:

(a) setting the Board’s agenda, the style

andtone of Board discussions and

ensuring that adequate time is available

fordiscussion of all agenda items,

inparticular strategic issues;

(b) supporting the Group Chief Executive

Officer in the development of strategy

and,more broadly, to offer guidance to

theGroup Chief Executive Officer;

debate by facilitating the effective

contribution of non-executive Directors,

and ensuring constructive relations

between non-executive Directors

andexecutive management;

(d) ensuring that the Directors receive accurate,

timely and clear information;

(e) ensuring, in conjunction with the Group Chief

Executive Officer, effective communication

with shareholders; and

(f) ensuring that the performance of the Board,

its main committees and individual Directors

are formally evaluated on an annual basis.

The non-executive Directors have an important

role in reviewing and challenging executive

management’s decisions and actions. Global

events over the last couple of years, including

the COVID-19 pandemic, supply chain issues

and the war in Ukraine have highlighted the

importance of having an effectively functioning,

flexible and dedicated Board, with the Directors

working together to ensure the Group was

ableto contend with the difficult and complex

issues that arose.

The Directors are confident that an effective

Board is in place, with a clear division of

responsibilities between the running of the

Board and the running of the Group’s

businesses. In 2022, Clare Chalmers Limited

was engaged to undertake a detailed Board

evaluation review which found the Board to

befunctional and effective. A summary of the

2022 report on the Board evaluation findings

areprovided in the Nominations Committee

Report on page 99.

I was independent upon appointment as Chair

of the Company in 2018. The Board considers

allnon-executive Directors of the Company

continue to be independent, having taken into

account a list of relationships and circumstances

that may appear relevant in determining

independence; the Group Company Secretary

maintains a register of the Directors’ potential

conflicts of interest. As Chair, I encourage open

and honest discussions between the Directors,

both within and outside Board meetings, and

Iensure no Director or group of Directors

exertspressure or dominates the Board’s

decision-making.

Division of responsibilities

The Board delegates a certain number of its

responsibilities to the Audit, Remuneration,

Nominations, and Health, Safety & Environment

Committees. The Group Chief Executive

Officer, together with the Executive Committee,

is responsible for the implementation of the

decisions made by the Board and for the

day-to-day conduct of the Group’s operations.

The Board meets formally on a regular basis,

12times in 2022; in addition, there were four

meetings of the Audit Committee in 2022,

together with five meetings of the

Remuneration Committee and four meetings

ofthe Nominations Committee. A table

showingBoard and Committee meeting

membership and attendance is shown on

page89. Other Committees are appointed

bythe Board to deal with treasury matters,

disclosure matters and specific matters such

asacquisitions and disposals.

During 2022, the Chair met with the non-

executive Directors to discuss matters in

confidence, without the executive Directors

being present; this is in line with good practice.

In 2022, the minutes arising from all Committee

meetings are made available to the Board. There

are procedures in place to ensure that all

Directors are properly briefed, so that decisions

taken by the Board are based on the fullest,

up-to-date, available information. The non-

executive Directors are encouraged to visit

theGroup’s operations to meet the local

management teams and discuss any issues

thatthey may face. In 2022, as COVID-19 travel

restrictions were lifted, the Directors were able

to recommence some site visits. Our Senior

Independent Director, Celia Baxter, who is the

nominated Director responsible for employee

engagement, visited a number of sites during

the year to meet employees. In 2022, at every

Board meeting, there were reviews of health,

safety and environmental performance,

operational, financial and administrative matters,

social and ethical issues, and reported whistle-

blowing incidents. The agreement of budgets

and levels of insurance cover were also

reviewed whenever appropriate.

There is a procedure by which all Directors can

obtain independent professional advice at the

Company’s expense in furtherance of their

duties, if required, and they have been made

aware of this.

To enable the members of the Board and its

Committees to discharge their duties effectively,

the Chair ensures that accurate and clear

information is provided to all Directors in a timely

manner in advance of meetings. The Group

Company Secretary supports the Board to

ensure that it has in place appropriate policies,

processes, time and resources to enable it to

operate efficiently and effectively.

Engagement with stakeholders

Shareholders

Each year, the Group Chief Executive Officer,

Group Finance Director and Director of Investor

Relations & Corporate Communications

undertake a series of meetings with the

Company’s major shareholders following the

announcement of the full-year and interim

results, to discuss both the Board’s strategic

objectives and the detailed performance of

thebusiness.

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

attended the 2021 full year and 2022 interim

results announcements made to analysts in

March 2022 and August 2022 respectively.

Ialso met with the Company’s major

shareholders on a regular basis, with a cycle that

is complementary to the executive Directors.

Meetings with major shareholders in 2022

continued to address the challenges faced

bythe Company, but also conveyed positive

messages around improved margins and

profitability, robust end markets and a healthy

order book.

The Company typically makes constructive

useof the Annual General Meetings (“AGM”)

tocommunicate with its private shareholders.

InApril 2022, following the lifting of the UK

Government’s restrictions imposed during the

pandemic, we were able to offer shareholders

the opportunity to attend the AGM in person in

London, or to listen to the AGM proceedings,

submit questions and view David Squires'

GOVERNANCE / CHAIR’S GOVERNANCE LETTER CONTINUED

presentation on the Company’s 2021

performance. In April 2023, our forthcoming

AGM will be held as a face-to-face meeting

and I look forward to meeting shareholders

inperson again. A presentation on the

Company’s annual performance will be made

to shareholders by the Group Chief Executive

Officer. A copy of this presentation will also

be uploaded to the Company’s website.

At our AGMs, we value the engagement

withshareholders and the opportunity for the

Group Chief Executive Officer to present on

the Group’s business and answer questions

on the Group's 2022 performance.

Employees

Celia Baxter is the Director designated by the

Board to engage with the Group’s people and

listen to any concerns. During the year, as in

2021, she participated in 15 face-to-face focus

group meetings at four of the US operating

businesses, together with four focus group

meetings in Germany, with the Group HR

Director, Jane Johnston. Feedback from the

meetings was provided to local Management,

the Executive Leadership Team and to the

Company’s Board of Directors, who were

given the opportunity to ask questions on

thefindings. As announced, Celia is to retire

from the Board and her role in employee

engagement at the conclusion of the 2023

AGM having completed her nine-year term

ofoffice. Barbara Jeremiah will succeed Celia

as Chair of the Remuneration Committee and

Mary Waldner will be appointed the Director

designated to engage with the Group's

employees upon Celia's retirement. Employee

engagement will continue to be given high

importance by the Board and the structure

ofthe engagement will be developed under

Mary's leadership.

Further details on Employee Engagement

can be found on page 51.

Customers

Due to the nature of the business, the Group

has well-established relationships with all its

keycustomers. These relationships are

maintained on an ongoing basis and managed

ina transparent and constructive manner;

anycustomer concerns are addressed in a

timely manner, to ensure customer satisfaction.

In 2022, it remained important for the Group’s

operating businesses to maintain regular contact

with their customers, as the Group’s supply

chain continued to face difficult conditions

created by, for example, global events such as

the conflict in Ukraine. Our operating businesses

are supported by their Divisional Vice Presidents

of Business Development to ensure good

relations are maintained with their customers

and address any concerns that may arise

beforethey escalate.

The Group has dedicated account managers

todeal directly with key customers on existing

and new customer agreements. Relationships

with existing and potential new customers

areestablished and maintained on an open

andprofessional basis, and in compliance with

the Group’s Corporate Framework and Code

ofConduct.

Further details on Customer Engagement

can be found on page 52.

Suppliers

Maintaining a good relationship with Senior’s

supply chain is fundamental to providing

customers with products in a timely manner

andto a high standard. In 2022, it was

particularly important for the Group to maintain

regular contact with its suppliers, and for us

towork together constructively to ensure

theGroup’s supply chain was able to maintain

continuity of supply during the challenging

business environment.

Agreements with major suppliers have, in many

cases, been arranged to support long-term

agreements with the Group’s key customers.

Due to the nature of the materials used,

suppliesmay involve long lead times, and so

communication and managing good relations

with suppliers is paramount to the Group’s

operating businesses. In 2022, we engaged

with the top 80% of our suppliers by value,

toencourage and help them to analyse their

sustainability performance and goals in relation

to greenhouse gas reduction. This was

recognised by the globally recognised CDP

(formally known as the Carbon Disclosure

Project) who gave us an 'A' rating for

transparency on climate change. In 2022,

Seniorwas also recognised by CDP as

asupplierengagement leader, ranked in

thetop8% of companies worldwide and

awarded the highest level in the rankings.

Further details on Supplier Engagement

can be found on page 53.

Community and the environment

Many of the Group’s operations are major

employers within their local communities and

nurture good relationships with their

stakeholders, finding ways to contribute to local

society, in addition to providing employment

opportunities. The Group’s commitment to, and

focus on, the environment continued following

our greenhouse gas emission reduction targets

being independently verified and approved by

the Science Based Targets initiative (“SBTi”)

in2022. In December 2022, we were delighted

to have again achieved a Leadership rating of

Afrom CDP. All of the Group’s operating

businesses take stakeholder engagement very

seriously, ensuring they adhere to the highest

ofstandards for the protection of health, safety

and the environment. In many cases, they have

established or maintained close relationships

with local schools and colleges to offer training

or apprenticeship programmes.

Further details on Community Engagement and the

environment can be found pages 55 and 22 to 25.

2022 has been an improving year for the

Company, its employees and shareholders.

Whilst we have had to face the challenges

ofthe macroeconomic and geopolitical

environment, supply chain issues and rising

inflation, we have risen to the challenges and

shown resilience and resourcefulness, without

compromising the Group’s high standards and

values. The Group’s Corporate Governance

Framework has supported all decisions made

bythe Board and the Executive Committee,

andwill continue to guide us as we go about

ourday-to-day business in 2023. I convey

theBoard’s thanks for your support.

Ian King

Chair

24 February 2023

88 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

89SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / CHAIR’S GOVERNANCE LETTER CONTINUED

Board and Committee membership as at 31 December 2022 and meeting attendance in 2022

The membership and attendance record of the full Board Meetings and its full Committee Meetings during 2022 are shown in the table below:

Main Board Audit Committee Nominations Committee Remuneration Committee

Chair Ian King Giles Kerr Ian King Celia Baxter

Ian King 12/12 - 4/4 5/5

Celia Baxter 12/12 4/4 4/4 5/5

Susan Brennan 11/12 4/4 3/4 5/5

Bindi Foyle 12/12 - - -

Barbara Jeremiah 10/12* 4/4 4/4 5/5

Giles Kerr 12/12 4/4 4/4 5/5

Rajiv Sharma 12/12 4/4 4/4 5/5

David Squires 12/12 - - -

Mary Waldner 12/12 4/4 4/4 5/5

Total number of meetings 12 4 4 5

* In advance of her appointment in January 2022, Barbara Jeremiah notified the Board she would be unable to attend two of the 2022 Board meetings due to

priorcommitments.

Board composition as at 31 December 2022

Gender

Number of

Board members

Percentage of

the Board

Number of senior positions

on the Board

(Group CEO, Group FD,

SID,Chair)

Men 4 45% 2.

Women 5 55% 2

Not specified - -

Ethnicity

Number of

Board members

Percentage of

the Board

Number of senior

positions on the Board

(Group CEO, Group FD,

SID,Chair)

White British or other White

(including minority-white groups)

7 78% 3

Mixed/Multiple Ethnic groups - - -

Asian/Asian British 2 22% 1

Black/African/Caribbean/Black British - - -

Other ethnic group, including Arab - - -

Not specified - - -

Tenure

Number of

Board members

Percentage of

the Board

Over six years 4 45%

Over three and up to six years 3 33%

Up to three years 2 22%

BOARD AT A GLANCE

The Board is responsible for Group decisions affecting governance, strategy

and the approval of annual operating budgets and Financial Statements.

GOVERNANCE / BOARD OF DIRECTORS

BOARD OF DIRECTORS

The Board is responsible for Group decisions affecting

governance, strategy and the approval of annual operating

budgets and Financial Statements.

Company Chair

andChairof the

NominationsCommittee

Committee membership:

Nominations and Remuneration.

Independence

Ian met the UK Corporate Governance Code’s

independence criteria on his appointment as

Company Chair.

Qualifications

Fellow of the Chartered Institute of

Management Accountants.

Skills and experience

Ian King joined the Board in November 2017

asa non-executive Director and became Chair

inApril 2018. For more than 40 years Ian has

held many senior management and directorship

roles, including finance, executive management,

customer support and strategic planning.

Ianjoined Marconi in 1976 and held a number

ofroles with them. He was Chief Executive

ofAlenia Marconi when Marconi and British

Aerospace merged in 1999 to form BAE

Systems plc. He then became Group Strategy

and Planning Director of BAE Systems;

Ianwasits Chief Executive from 2008 until

hisretirement in June 2017. He was also the

seniorindependent director of Rotork plc

untilJune 2014.

External appointments

Ian is the Senior Independent Director of

Schroders plc, having been appointed to

itsBoard on 1 January 2017, the lead non-

executive director of the Department for

Transport, a non-executive director of

HighSpeed Two (HS2) Limited, and is a

senioradviser at Gleacher Shacklock LLP.

Specific contribution to the Company’s

long-term success

Ian leads the Board in defining the strategy of

the Group and driving the Company’s vision to

produce sustainable growth in operating profit,

cash flow and shareholder value. Ian has

relevant direct experience in Aerospace,

akeyelement of Senior’s strategy.

Senior Independent

Non-Executive Director,

Chair of the Remuneration

Committee and Director

designated to engage with the

Group’s employees

Celia is to retire from the Board following

theconclusion of the 2023 AGM.

Committee membership:

Remuneration, Audit and Nominations.

Qualifications

BSc – Botany/Plant Biology and PhD and

aMember of the Chartered Institute of

Personnel and Development.

Skills and experience

Celia Baxter joined the Board in September

2013, became Chair of the Remuneration

Committee in December 2013 and the Senior

Independent non-executive Director in April

2019. Celia is an experienced non-executive

Director, Remuneration Committee and Pension

Trustee Company Chair. Celia’s early HR career

was with Ford Motor Company and KPMG.

Shehas held executive HR positions with

Haysplc, Enterprise Oil Plc and Tate & Lyle Plc,

and most recently was Director of Group HR

and responsible for all areas of sustainability for

Bunzl plc. Celia was a non-executive director

ofRHI Magnesita until June 2021.

External appointments

Celia is a non-executive Director

ofDSSmithplc.

Specific contribution to the Company’s

long-term success

Celia brings extensive experience of working

ininternational, decentralised businesses

andmanaging HR departments to the

Board.She holds a key role in engaging

withtheGroup’s stakeholders, particularly

itsemployees.She advises and guides

onsuccession planning matters. Celia

demonstrates valuable knowledge of

sustainability policies and practices.

Independent Non-

Executive Director

Committee membership:

Audit, Nominations

and Remuneration.

Qualifications

BSc in Microbiology and MBA.

Skills and experience

Susan Brennan joined the Board in January

2016. Susan has more than 30 years of

manufacturing experience, including commercial

vehicle electric battery, fuel cell, automotive

vehicle, powertrain, and component assembly.

Susan has dedicated her career to improving

American manufacturing. In her time as a

manufacturing practitioner, she has always

beena strong proponent of sustainability.

Today, Susan is the President of her own

consulting company, Susan Brennan

Leadership, which advises companies on

energy, emerging technology scale and

automotive-based technologies. From August

2021 to October 2022, she was the President

and Chief Executive Officer of Romeo Power,

Inc., leading Romeo’s mission of advancing

andcommercialising high-density battery

technology for heavy-duty commercial vehicles.

In the past, she has served as Chief Operations

Officer of Bloom Energy and in a variety of

leadership roles for major automakers,

includingNissan and Ford.

Susan led Nissan’s launch of the all-electric

Nissan Leaf in Smyrna, Tennessee and led the

transformation of the facility to a sustainable

future. She has created and supported

organisations that encourage young women

topursue careers in STEM as a pathway for

future generations of technological research,

development and manufacturing in the United

States and the globe. She is the founder and

aboard member of the Southern Automotive

Women’s Forum and is an advisor to many

other women’s empowerment groups.

Specific contribution to the Company’s

long-term success

Susan brings valuable manufacturing experience

to the Board, especially in areas of key

technological advances. Her operational and

executive experience, particularly in automotive

and component assembly, means she is well

placed to understand issues at both operational

and strategic levels.

IAN

KING

SUSAN

BRENNAN

CELIA

BAXTER

90 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

91SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / BOARD OF DIRECTORS

Tenure – BoardEthnic diversity – Board

Over six years 4

Over three and 3

up to six years

Up to three years 2

White British or 7

other White (including

minority-white groups)

Asian/Asian British 2

Gender diversity – Board

Female 55%

Male 45%

Group Finance Director

Committee

membership:

Group’s Executive Committee

and the Treasury Committee, which is

notformally appointed as a Committee

oftheBoard.

Qualifications

BSc (Hons) in Economics & Accounting

andaChartered Accountant.

Skills and experience

Bindi Foyle joined the Board as an executive

Director in May 2017 and became Group

Finance Director in July 2017. Bindi joined Senior

as Group Financial Controller in January 2006,

arole she held until July 2014 when she

became responsible for the Group’s Investor

Relations activities. Prior to her appointment

asan executive Director, Bindi was Director

ofInvestor Relations and Corporate

Communications for the Group. Prior to

joiningSenior, Bindi held senior finance roles

atAmersham plc and GE, having previously

worked with BDO Stoy Hayward.

External appointments

Bindi is a non-executive director of

AvonProtection plc and is the Chair

ofitsAuditCommittee.

Specific contribution to the Company’s

long-term success

Bindi’s experience of financial control and

investor relations and communications means

that she is ideally placed to implement the

strategy and policies approved by the Board.

Since joining the Group in 2006, she has gained

extensive knowledge of the running of all the

Group’s operations and is instrumental in

managing the Group’s finances and assisting

the Group Chief Executive Officer in the

management of the Executive team.

Independent non-

Executive Director and

Chair of the Audit

Committee

Giles is to retire from the Board following

theconclusion of the 2023 AGM.

Committee membership:

Audit, Nominations and Remuneration.

Qualifications

BA (Hons) in Economics and a Chartered

Accountant.

Skills and experience

Giles Kerr joined the Board in September 2013

and became Chair of the Audit Committee in

April 2014. Giles has over 35 years’ experience

in finance across a broad range of industrial

sectors. During his tenure as Director of

Financeat Oxford University, he established

asuccessful investment office and he gained

considerable experience of establishing

andgrowing technology-based companies.

Giles is aformer Director of Finance of Oxford

University and non-executive director of BTG Plc

and Victrex plc, Adaptimmune Therapeutics plc

and Arix Bioscience plc. Giles held a number of

positions with Amersham plc, including Group

Finance Director. He was formerly a Partner

with Arthur Andersen & Co.

External appointments

Giles was appointed a non-executive director

ofPayPoint plc in November 2015. He is also

anon-executive director of Abcam plc.

Specific contribution to the Company’s

long-term success

Giles’ extensive experience as a chair and senior

independent director, and as the chair of several

UK and US listed company audit committees,

enables him to make a strong contribution to

theBoard and he has ensured strong financial

governance of the Group.

BINDI

FOYLE

GILES

KERR

Independent Non-

Executive Director

Committee membership:

Audit, Nominations

and Remuneration.

Upon the retirement of Celia Baxter following

the conclusion of the 2023 AGM, Barbara will

be appointed the Chair of the Remuneration

Committee and the Senior Independent

Non-Executive Director.

Qualifications

BA in Political Science and a qualified lawyer.

Skills and experience

Barbara Jeremiah was appointed to the Board

on 1 January 2022. Barbara is a US citizen and

has over 30 years’ experience with Alcoa Inc,

ina number of positions, including Executive

Vice President, Corporate Development

andChairman’s Counsel. She was formerly

Chairwoman of Boart Longyear Limited and

anon-executive director of Premier Oil plc and

Russel Metals Inc. Barbara was most recently

anon-executive director and Remuneration

Committee Chair of Aggreko plc from March

2017 to August 2021.

External appointments

Chair of The Weir Group PLC since April 2022,

having been appointed a non-executive director

of that company in August 2017.

Specific contribution to the Company’s

long-term success

Barbara’s extensive experience in a number

ofSenior’s key markets as an executive and

anon-executive director will complement

thoseof the existing members of the Board.

BARBARA

JEREMIAH

Andrew was appointed Group Company

Secretary in 2002. He acts as Secretary to

the Senior plc Board and its Committees;

heisalso a member of the Group’s Executive

Committee and of the Treasury Committee.

Prior to joining Senior, Andrew had gained

experience working for businesses in

technology/software, manufacturing,

insurance and aviation services sectors.

ANDREW

BODENHAM

GOVERNANCE / BOARD OF DIRECTORS CONTINUED

Group Chief Executive

Officer

Committee membership:

David chairs the Group’s

Executive Committee. He is also the Chair of

the Health, Safety & Environment Committee,

which meets formally three times a year to

formulate the Group’s HSE strategy and

objectives for approval by the Board.

Qualifications

BA in Business Management Studies,

aFellowof the Chartered Institute of

Purchasingand Supply and Fellow

oftheRoyalAeronauticalSociety.

Skills and experience

David Squires was appointed to the Board in

May 2015 and became Group Chief Executive

Officer in June 2015. A graduate in business

management, a Fellow of the Chartered

Institute of Purchasing and Supply and Fellow of

the Royal Aeronautical Society. David has held

senior posts in operations and procurement,

business development, programme

management and general management.

Davidstarted his career in the oil industry

working for Shell; however, most of his working

life has been spent in the aerospace industry,

initially with Hughes Aircraft Company (now

Raytheon), then GEC-Marconi/BAE Systems

and EatonCorporation. Prior to joining Senior

plcinMay 2015, David was Chief Operating

Officerof Cobham plc.

External appointments

David holds no other directorships.

Specific contribution to the Company’s

long-term success

David has a long- established career in

manufacturing, for the most part having

specialised in the aerospace sector. He brings

extensive knowledge of the aerospace industry

and understanding of procurement and business

development to the Board. David has been

theguiding force in driving the Group’s vision

and operating in a safe and ethical manner.

Independent Non-

Executive Director

Committee membership:

Audit, Nominations and

Remuneration.

Upon the retirement of Giles Kerr and Celia

Baxter following the conclusion of the 2023

AGM, Mary will be appointed the Chair of the

Audit Committee and the Director designated

toengage with the Group's employees.

Qualifications

MA (Hons) in Physics and a Fellow of the

Chartered Institute of Management

Accountants.

Skills and experience

Mary Waldner joined the Board in December

2021. Mary held a number of senior roles within

the aerospace and automotive sectors at British

Airways, General Motors and Vauxhall Motors.

At Ultra Electronics, Mary gained experience of

working within the defence, security and energy

markets. She was previously the Group Finance

Director of Ultra Electronics Holdings plc, the

Director of Group Finance at QinetiQ Group plc

and Group Financial Controller of 3i Group plc.

External appointments

Mary is Chief Financial Officer of Lloyd’s

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.

MARY

WALDNER

DAVID

SQUIRES

Group Company

Secretary

Independent non-

Executive Director

Committee membership:

Audit, Nominations

and Remuneration.

Qualifications

BTech in Mechanical Engineering and MBA,

Marketing & Strategy.

Skills and experience

Rajiv Sharma was appointed to the Board

inJanuary 2019. Rajiv has nearly 30 years’

experience which includes commercial,

operations, M&A, strategy, digital and general

management. Rajiv joined Coats Group plc in

November 2010 as Global CEO Industrial and

was responsible for developing and executing

agrowth strategy. He has lived and worked in

the US, Europe and Asia and has multi-industry

global experience. He has managed complex

businesses with blue-chip companies. The

majority of his career has been dedicated to

growing or turning around businesses and he

has been on the board of joint ventures. During

his career, Rajiv has held senior roles in various

companies including Honeywell, GE and Shell.

External appointments

Rajiv has been the Group Chief Executive

ofCoats Group plc since January 2017,

havingserved as an executive director

sinceMarch 2015.

Specific contribution to the Company’s

long-term success

Rajiv has had a long career running and growing

multinational companies across the world,

particularly in South East Asia. His background

in mechanical engineering means that he

bringsoperational and technical understanding

to the Board’s discussions. His experience

ofdeveloping and executing growth

strategymakes his contribution to delivering

theCompany’s long-term success an

importantone.

RAJIV

SHARMA

92 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

93SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / BOARD OF DIRECTORS CONTINUED

Governance structure

Role Director Key responsibilities

Company Chair

and Chair of the

Nominations

Committee

Ian King Leadership of the Board, setting its agenda

and ensuring its effectiveness. Ian chairs the

Nominations Committee.

Group Chief Executive

Officer

David Squires To manage the Group’s business and to

implement the strategy and policies approved

bythe Board.

Group Finance Director Bindi Foyle To manage the Group’s financial affairs and to

contribute to the management of the Group’s

business, and the implementation of the strategy

and policies approved by the Board.

Senior Independent

Non-Executive

Director, Chair of

the Remuneration

Committee and

Director designated

to engage with the

Group’s employees

Celia Baxter To support the Chair and to act as an intermediary

for other non executive Directors, if necessary.

Celia chairs the Remuneration Committee and

isalso the Director designated to engage with

theGroup’s employees.

Independent Non-

Executive Director and

Chair of the Audit

Committee

Giles Kerr To challenge the executive Directors and monitor

the delivery of the strategy within the risk and

control framework set by the Board. To Chair the

Audit Committee and focus its agenda on its key

matters: quality, financial accounting, corporate

reporting and effective internal controls.

Independent Non-

Executive Directors

Susan Brennan,

Barbara

Jeremiah, Rajiv

Sharma and

Mary Waldner

To challenge the executive Directors and monitor

the delivery of the strategy within the risk and

control framework set by the Board.

Group Company

Secretary

Andrew

Bodenham

To provide advice to the Directors on all corporate

governance matters and ensure the Company

complies with legal and regulatory matters and

good practice. Andrew acts as Secretary to the

Senior plc Board and its committees.

Board evaluation

The 2022 external Board evaluation process was undertaken by Clare Chalmers Limited.

Asummary of the 2021 Board evaluation findings and the progress made in 2022 are

providedbelow.

2021 actions 2022 progress

To ensure Mary

Waldner and Barbara

Jeremiah were given

appropriate time

to complete their

induction

Mary and Barbara were appointed to the Board in December 2021

and January 2022, respectively. Both were recruited at an early

stage, to allow a suitable induction period and handover prior to

theretirements of Celia Baxter and Giles Kerr from the Board.

Maryand Barbara also received support from the Nominations

Committee and guidance from Celia Baxter and the Group

HRDirector, Jane Johnston.

To ensure strategy

forms part of every

Board meeting agenda

Strategy was discussed at every Board meeting in 2022 and this

willcontinue in 2023.

To ensure the Directors

have good access to

the Executive teams,

as performance and

strategy are reviewed

The Directors had good access to the Group’s Executive Committee

throughout 2022. They also met local management teams when

Board meetings were able to be resumed at some of the Group’s

operating businesses in 2022. In addition, Martin Barnes, Launie

Fleming, Jane Johnson and Mike Sheppard separately attended

anumber of 2022 Board meetings.

To review Board

meeting structures

(virtual, hybrid and

physical)

For 2022, Board meetings were largely held as physical meetings,

following the lifting of COVID-19 restrictions. However, on occasion,

Directors who were not able to physically attend, were able to

participate by videoconference and so some meetings were held

as hybrid participation. Whilst the Directors appreciate the benefits

of holding physical Board meetings, they have found the flexibility

to participate by videoconference, if necessary, useful and it has

enabled our Directors to attend the majority of meetings. The

Directors will continue to keep the Board and Committee meeting

structures under review.

A summary of the findings of the 2022 external Board evaluation can be found in the

Nominations Committee Report on page 99.

Board activities

Board meetings and site visits

In mid 2022, the Directors were able to restart

visits to some of the Group’s operating

businesses and held Board meetings at Senior

Flexonics Kassel and Senior Aerospace SSP;

these visits included site tours and discussions

with local management. Board meetings

throughout the rest of the year were held as

face-to-face or hybrid meetings. The Group

Director of HSE & Sustainability, the Group HR

Director, the Director of Business Development

& Strategy, the Director of Risk and Assurance

(formerly the Head of Risk & Compliance),

theDirector of Trade Compliance and the

Headof Treasury were invited to separately

attend certain Board meetings during the year,

to provide updates to the Directors and

answertheir questions.

Strategy

At every Board meeting held in 2022, the

Directors discussed the Board’s Strategy. This

included topics such as the Group’s markets and

technologies, the divisional strategies, the key

risks that could impact on the Board’s strategy,

people planning, divestments and acquisitions

and forecasting and scenario planning.

Financial and contractual matters

During the year, the Board meeting agendas

included financial and contractual matters such

as the Group’s trading and performance, the

refinancing of the Group's Revolving Credit

Facilities, the 2022 full-year and interim results,

Going Concern and Viability, the 2021 and draft

2022 Annual Report & Accounts, including the

TCFD disclosures made, the reinstatement of

dividends to shareholders, and the approval of

major capital expenditure for projects over £2m.

Operational management

In December 2021, the Board approved the

Group’s 2022 annual operating budget. It was

kept informed of operational management’s

activities through receipt of the Group Chief

Executive Officer’s Board report at every

meeting; his reports include updates on: the

market backdrop, HSE and sustainability, people,

investor relations, the Company’s share price

performance and analysts’ expectations on

theCompany’s performance. At every Board

meeting, the Directors were given the

opportunity to put questions on these reports

toDavid Squires and Bindi Foyle. In December

2022, the Board approved the Group’s 2023

annual operating budget.

Governance

The Group Company Secretary advises the

Directors on all corporate governance matters

and updates them on statutory and regulatory

developments at every Board meeting. Strong

corporate governance is of key importance to

the Board. This includes Board effectiveness,

adherence to the Group’s policies and

procedures and stakeholder engagement.

Risk and compliance

Amy Legenza, the Director of Risk and

Assurance (formerly the Head of Risk &

Compliance), advises the Board on all risk and

compliance matters across the Group. Amy also

attends all Audit Committee meetings held in

ayear. In 2022, the Board reviewed the Group’s

approach to risk management and monitored

allprincipal risks.

GOVERNANCE / EXECUTIVE COMMITTEE

EXECUTIVE COMMITTEE

The Executive Committee oversees the running

of all Senior Group Operations.

Executive Committee meeting

attendance

The Executive Committee met nine times

during 2022.

David Squires

See biography on page 92.

Martin Barnes

Martin became the Director of Business

Development & Strategy in October 2021 and

was appointed to the Executive Committee on

that date. Prior to this appointment, Martin was

the CEO of Senior Flexonics Lymington and of

Senior Flexonics Upeca. Martin joined the

Senior Group in April 2016.

Andrew Bodenham

See biography on page 92.

Launie Fleming

A US citizen, he has worked for the

Group for over 20 years. Launie joined the

Executive Committee upon his appointment

as Chief Executive of Aerospace Fluid Systems

in September 2008. In October 2020,

Launiewas appointed Chief Executive of

theAerospace Division, formed by the

consolidation of the Aerospace Fluid Systems

division and Aerospace Structures division.

Prior to these divisional roles, Launie was the

Chief Executive of Senior Aerospace SSP.

Bindi Foyle

See biography on page 91.

Jane Johnston

Jane joined Senior as Group HR Director

inMay2016. A Fellow of the Chartered

InstituteofPersonnel and Development,

Janehas considerable experience heading

upHR functions across a range of global

geographies. She has worked in a number

ofdifferent sectors, including technology,

drugdevelopment, construction, professional

services and, prior to joining Senior, was

GroupHR Director at Pace plc.

Mike Sheppard

A US citizen, Mike has worked for the Group

forover 30 years and is the Chief Executive

ofthe Flexonics Division. A qualified engineer,

Mike’s previous positions within the Group

included operational roles at the two largest

Flexonics businesses, Pathway and Bartlett.

Amy Legenza

A US citizen, Amy became the Director of Risk

and Assurance on 1 January 2023 and was

appointed to the Executive Committee on that

date, having previously served as the Group's

Head of Risk & Compliance. A Certified Public

Accountant, Amy joined the Group in 2008 and

has broad experience in senior finance and

accounting roles.

DAVID

SQUIRES

LAUNIE

FLEMING

MARTIN

BARNES

BINDI

FOYLE

ANDREW

BODENHAM

JANE

JOHNSTON

MIKE

SHEPPARD

Executive Committee composition as at 31 December 2022

Gender

Number of Executive

management members

Percentage of

Executive management

members

Men 5 71%

Women 2 29%

Not specified - -

Ethnicity

Number of Executive

management members

Percentage of

Executive management

members

White British or other White

(including minority-white groups)

6 86%

Mixed/Multiple Ethnic groups - -

Asian/ Asian British 1 14%

Black/African/Caribbean/Black British - -

Other ethnic group, including Arab - -

Not specified - -

AMY

LEGENZA

94 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

95SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / REPORT OF THE DIRECTORS

REPORT OF THE DIRECTORS

Activities and business review

Senior plc is a holding company. The nature of

the Group’s operations and its principal activities

are set out in the Strategic Report on pages 2 to

81. Its Group undertakings are shown on pages

194 and 195. Six of the Company’s operating

businesses are located in the UK and 20 in the

Rest of the World.

Dividends

An interim dividend of 0.30 pence per share

(2021 – nil pence) has already been paid and the

Directors recommend a 2022 final dividend of

1.00 pence per share (2021 – nil pence). The

final dividend, if approved, will be payable on 26

May 2023 to shareholders on the Register of

Members at the close of business on 28 April

2023. This would bring the total dividend for the

year to 1.30 pence per share (2021 – nil pence).

Policy on employee disability

Senior provides support, training and

development opportunities to all our employees

irrespective of any disabilities they may have.

We give full and fair consideration to disabled

applicants, and where an existing employee

becomes disabled during their employment,

wewill make every effort to ensure they are

able to continue working for Senior in their

original or an alternative role.

Employee share plans

Details of employee share plans are set out

inNote 33.

There are no specific restrictions on the size of

aholding nor on the transfer of shares, which

are both governed by the general provisions

ofthe Company’s Articles of Association and

prevailing legislation. The Directors are not

aware of any agreements between holders

ofthe Company’s shares that may result in

restrictions on the transfer of securities or on

voting rights. No person has any special rights

ofcontrol over the Company’s share capital,

andall issued shares are fully paid.

With regard to the appointment and

replacement of Directors, the Company is

governed by its Articles of Association, the

UKCorporate Governance Code 2018, the

Companies Act 2006 and related legislation.

TheArticles may be amended by special

resolution of the shareholders. The powers of

Directors are described in the Matters Reserved

for the Senior plc Board, which may be found

onthe Company’s website. Each year,

shareholder approval is sought to renew the

Board’s authority to allot relevant securities.

There are also a number of other agreements

that take effect, alter or terminate upon a

change of control of the Company, such as

commercial contracts, bank loan agreements,

property leasearrangements, and employee

share plans. None of these are considered to be

significant interms of their likely impact on the

business ofthe Group as a whole. Furthermore,

the Directors are not aware of any agreements

between the Company and its Directors or

employees that provide for compensation for

loss of office or employment that occurs

because of a takeover bid.

Conflicts of Interest

The Board has a procedure for identifying

andmanaging Directors’ potential conflicts

ofinterest. The Group Company Secretary

maintains the Register of Directors’ Potential

Page

Acquisitions and disposals 174

Corporate governance statement

ofcompliance 86

Directors 90

Directors’ share interests 125

Employee engagement 51

Future developments 20

Greenhouse gas emissions 25

Anti-bribery 36

Modern slavery 100

Related-party transactions 191

Risk management 61

Section 172 statement 56

Share capital 172

Use of Financial Instruments 165

Whistle-blowing 36

Disclosures located elsewhere in the

Annual Report & Accounts 2022

The Strategic Report on pages 2 to 81 includes

details of Senior’s business model, strategic

priorities, financial and non-financial key

performance indicators, risks and uncertainties,

market overview, key growth drivers and a

summary of the Group’s 2022 performance.

The Directors present their Report and supplementary reports,

together with the audited Financial Statements for the year

ended 31 December 2022.

Executive Committee Activities

The purpose of the Executive Committee is

toassist the Group Chief Executive Officer

inthe performance of his duties, including:

• the development and implementation

ofstrategy, operational plans, policies,

procedures and budgets;

• the monitoring of operating and financial

performance;

• the assessment and control of risk;

• the prioritisation and allocation of resources;

and

• the monitoring of competitive forces in

each area of operation.

The Committee is also responsible for

theconsideration of all other matters not

specifically reserved for consideration by

theBoard. A report on the activities of the

Executive Committee is provided to the

Boardby the Group Chief Executive Officer

ateach Board meeting.

The Committee is comprised of two

members of the Board, David Squires and

Bindi Foyle, together with Launie Fleming

(Chief Executive of the Aerospace Division),

Mike Sheppard (Chief Executive of the

Flexonics Division), Martin Barnes (Director

ofBusiness Development & Strategy),

Andrew Bodenham (Group Company

Secretary) and Jane Johnston (Group

HRDirector).

Health, Safety & Environment (“HSE”)

Committee

The HSE Committee is appointed by the

Executive Committee; it oversees all health,

safety and environmental matters across

theGroup. Its Terms of Reference can be

found on the Company’s website.

There is a process in place for the Board to

bekept regularly informed of all matters

discussed by the HSE Committee. The Group

Chief Executive Officer provides an HSE

update at every Board meeting.

The members of this committee are David

Squires (Chair of the Committee), Mike

Sheppard (Chief Executive of the Flexonics

Division) and Launie Fleming (Chief Executive

of the Aerospace Division). The Committee

met three times during the year and there

was full attendance at every Committee

meeting. Mark Roden, the Group HSE &

Sustainability Director, attended all of the

meetings held during the 2022.

GOVERNANCE / REPORT OF THE DIRECTORS CONTINUED

Authority to purchase the Company’s

own shares

The Company purchased no ordinary shares

of 10 pence each in the capital of the Company;

2,992,477 shares in the Company (2021– nil

shares) were purchased by the Senior plc

Employee Benefit Trust in the year to satisfy

thefuture vesting of executive share awards

andemployee share plans. At the end of the

year, the Directors had authority, under a

shareholders’ resolution dated 21 April 2022,

to make market purchases of the Company’s

shares up to an aggregate nominal amount

of£42m (2021 – £42m), which represented

approximately 10% of the issued share

capitalofthe Company. A resolution to

renewthis authority will be proposed at

theforthcomingAGM.

Auditor

• Each of the persons who is a Director of

theCompany at the date of approval of this

Annual Report & Accounts confirms that

sofar as the Director is aware, there is no

relevant audit information of which the

Company’s Auditor is unaware; and

• the Director has taken all steps that he/she

ought to have taken as a Director in order

tomake himself/herself aware of any

relevantaudit information and to establish

thatthe Company’s Auditor is aware of

thatinformation.

This information is given and should be

interpreted in accordance with the provisions

ofSection 418 of the Companies Act 2006.

In 2016, the Group undertook a formal tender

process for its external audit function, which

resulted in KPMG LLP being appointed the

Group’s External Auditor for the financial year

commencing 1 January 2017. KPMG’s

re-appointment was last approved by the

Company’s shareholders at the 2022 AGM. In

accordance with Section 489 of the Companies

Act 2006, a resolution for the re-appointment

ofKPMG LLP as Auditor of the Company is to

be proposed at the forthcoming AGM.

By Order of the Board

Andrew Bodenham

Group Company Secretary

24 February 2023

Conflicts of Interest. Directors are required to

declare their own potential conflicts, together

with those of their close family members, their

partners, any trust to which they are a

beneficiary, a corporate body in which they have

a 20% interest or above, or a firm in which they

are a partner. The Directors review and confirm

their Register entries at least annually. At every

Board meeting, the Directors are required to

declare if they have any potential conflicts of

interest in the business to be discussed at the

meeting. In 2022, the Directors confirmed there

were no potential or actual conflicts of interest.

Directors’ indemnities

Qualifying third-party indemnity provisions for

the benefit of the Directors were renewed by

the Company during the year and remain in

force at the date of this Report.

Research and Design

In 2022, the Group incurred £19.8m (2021 –

£19.2m) on research and design. Product

development and improving manufacturing

processes represent the primary focus of the

Group’s research and design activities.

Political donations

No political donations were made by the

Company or any of the Group’s operations

during the year.

Major shareholdings

The Company has been notified that

the following shareholders were interested

in 3% or more of the issued share capital

oftheCompany:

% at

8 February

2023

Alantra Asset Management 17. 3 8

Aberforth Partners 8.71

Heronbridge Investment Management 5.97

Columbia Threadneedle Investments 4.91

Vanguard Group 4.63

BlackRock 4.48

Janus Henderson Investors 3.30

Legal & General Investment

Management 3.25

So far as is known, no other shareholder had a

notifiable interest amounting to 3% or more of

the issued share capital of the Company, and

the Directors believe that the close company

provisions of the Income and Corporation

Taxes Act 1988 (as amended) do not apply

to the Company.

Annual General Meeting

The Notice of Annual General Meeting

describes the business to be considered at the

AGM to be held at 11.30 am on Friday 21 April

2023 at Ironmongers’ Hall, Off Shaftesbury Pl,

Aldersgate St, Barbican, London EC2Y 8AA.

Please see the Notice of Annual General

Meeting 2023 for the details of the AGM;

acopyof the Notice can be found on the

Company’swebsite.

96 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

97SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / NOMINATIONS COMMITTEE REPORT

COMPOSITION,

SUCCESSION

ANDEVALUATION

"The Group seeks to ensure

diversity in the composition

ofthe Board, including gender,

ethnicity, personal and cognitive

skills.”

Ian King

Chair

NOMINATIONS

COMMITTEE REPORT

Dear Shareholder,

Overview

The Nominations Committee is chaired by

meand comprises all non-executive Directors.

The Group Company Secretary acts as

Secretary to the Committee. Senior members

of management and advisers are invited to

attend meetings, as appropriate. There were

four scheduled meetings of the Committee

in2022. Two members constitute a

quorumfor the Nominations Committee.

TheCommittee’s attendance records are

shown on page 89.

The Committee is tasked with administering

the process for appointments, considering

succession planning, regularly reviewing such

processes and overseeing the composition

ofthe Board. The Nominations Committee’s

Terms of Reference can be found on the

Company’s website.

Appointments to the Board

In 2021, two consultancy firms were

engagedto assist with the recruitment of

twonew Board members, as part of the

Board’s succession planning process. The

Nominations Committee sought confirmation

that candidates under consideration would

have sufficient time to perform their duties as

a Director of the Board, if appointed. The time

commitment of the Directors is kept under

review and the potential for over-boarding

monitored and discouraged. Following a

diligent interview process, Mary Waldner was

appointed to the Board on 1 December 2021

and Barbara Jeremiah was appointed to the

Board on 1 January 2022.

A full and comprehensive induction

programme was provided to Mary and

Barbara. The induction process covered areas

such as financial forecasts, Group strategy

and values, corporate ethics and training on

the Group’s Code of Conduct, together with

other relevant topics. Visits to some of the

Group’s operations by the newly appointed

Directors were also undertaken.

The Nominations Committee and the Board

are supportive of the aim to increase diversity

and the level of female representation in

Board and senior leadership positions. Five of

the nine Directors are female (55%).

In addition, the Nominations Committee

andthe Board have ensured the Board’s

composition is diverse in terms of the

Directors’ ethnic backgrounds, as

recommended by the Parker Review;

furtherdetail can be found on page 89.

At 31 December 2022, there were seven

members of the Group's Executive

Committee, of which two are female (29%).

On 1 January 2023, Amy Legenza joined the

Executive Committee and therefore at the

time of signing this report 38% of that

committee are female.

The Nominations Committee regularly

discusses the benefits of diversity with

regardto the Board and its Committees.

Extension of appointments to the Board

In 2022, Celia Baxter and Giles Kerr reached

their nine year anniversary with Senior;

theirappointments were extended until the

conclusion of the 2023 AGM to support

theinduction of Mary Waldner and Barbara

Jeremiah, when it has been announced they

willretire from the Board.

Succession planning

The Committee regularly considers succession

planning for Board-level and the Group’s senior

management roles. Cognisant of the length of

the terms of Celia Baxter and Giles Kerr, the

Committee followed its recruitment process,

described above, and appointed Mary Waldner

and Barbara Jeremiah to the Board in December

2021 and January 2022 respectively, thereby

allowing for a suitable transition period between

them and the two departing Board members.

Mary’s and Barbara’s skills and previous work

experience make them a good fit for the

Company and complement those of the existing

Board members; a summary of their biographies

can be found on pages 90 to 92.

The Group continues to focus on maximising

thepotential of its employees and improving

succession planning. The Group's Executive

Committee, supported by the Group HR

Director, conducted an extensive review of

senior executive succession plans. The review

identified key employees who are considered

capable of being developed into leadership

roles, which is critical to the success of the

Group. Appropriate plans are in place to

ensurethere is a mix of employees within

theGroup who could fill key roles in the short

and longerterm.

In 2022, the Nominations Committee also

reviewed the Group, divisional and operating

business level succession plans, and maintained

its focus on further strengthening diversity in

these plans, particularly gender diversity in

operational roles.

Independence

The Nominations Committee and the Board

consider all of the non-executive Directors to

befully independent and free from conflicting

interests which could cause difficulties whilst

performing their duties. Senior considers its

non-executive Directors to be proactive in

contributing their respective experiences and

skills gained from a range of sectors. Conflicts

ofinterest are fully disclosed by Directors upon

appointment and are reviewed on a regular

basisthroughout each year.

I am confident that Senior has the requisite

diversity of skills, people, and experience that

will guide the Company in delivering shareholder

value. This Report was reviewed and approved

by the Nominations Committee and signed on

its behalf by:

Ian King

Chair of the Nominations Committee

24 February 2023

GOVERNANCE / NOMINATIONS COMMITTEE REPORT CONTINUED

Nominations Committee

The Company’s Nominations Committee

leads the process for Board appointments

andsupervises leadership development

andsuccession planning. It also makes

recommendations to the Board on all new

Board appointments and re-appointments.

The Committee, which consists entirely of

non-executive Directors, is chaired by Ian

King; its composition is shown on page 89.

Details of the Directors’ external statutory

appointments can be found in their

biographies on pages 90 to 92. The Board

believes that the Directors’ experience of

working with other companies adds value to

their contribution to the Company’s Board

andCommittee meetings. In compliance with

the Corporate Governance Code, all Directors

offered themselves for re-election at the

Company’s 2022 AGM. All continuing

Directors will again offer themselves for

re-election at the 2023 AGM. The resolutions

to be put to shareholders at the 2023 AGM

can be found in the Notice of Annual General

Meeting, which is available on the

Company’swebsite.

The Board confirms that in 2022 all Directors

in office at the time worked assiduously and

diligently. Each Board member made a very

positive contribution to the running of the

Company and the Board confirms that they

will all continue to work to ensure its

long-term success.

Nominations Committee Activities

In February 2022, the Nominations

Committee discussed the composition of the

Board and the performance of the Directors

and recommended to the Board that all

Directors currently in office stand for election

or re-election at the 2022 AGM. At this

meeting, the Nominations Committee also

reviewed and discussed the draft 2021

Nominations Committee Report contained

within the Annual Report & Accounts 2021

and the draft Board Diversity and Inclusion

Policy and recommended to the Board that

they both be approved. In June 2022, the

Nominations Committee met and discussed

the succession plans at Group, Divisional and

Operating Business levels. In July 2022, the

Nominations Committee held a meeting to

discuss possible updates to the Board

Diversity and Inclusion Policy, to bring it in

linewith an amendment made to the FCA’s

Listing Rules and the Disclosure and

Transparency Rules; the Nominations

Committee recommended to the Board that

itapproved the updates. The Nominations

Committee convened to review the

ExecutiveCommittee’s succession plans

inDecember2022.

Following the 2022 year end, the Nominations

Committee held a meeting to discuss and

make recommendations to the Board

concerning the Directors to stand for election

at the AGM 2023 and the draft 2022

Nominations Committee Report, as contained

within the Annual Report & Accounts 2022.

Remuneration

The Remuneration Committee Report on pages

108 to 128 fully describes the Board’s approach

to remuneration matters.

Board effectiveness

The Board is structured under a non-executive

Chair and currently comprises two executive

Directors and six independent non-executive

Directors, who were each selected for

appointment because of their wide industrial

and commercial experience. The Directors

believe that the Board and its committees have

the appropriate balance of skills, experience and

knowledge to enable them tofulfil their duties

and responsibilities effectively. The Nominations

Committee reviews the composition of the

Board at leastannually.

Board diversity and inclusion

The Group seeks to ensure diversity in the

composition of the Board, including, amongst

other qualities, diversity of gender, ethnicity,

personal and cognitive skills. The Company’s

female representation on the Board complies

with the recommendations of the Hampton-

Alexander Review, and meets the proposals on

ethnic diversity outlined by the Parker Review.

Furthermore, we endeavour to incorporate

diversity into our recruitment process by

engaging, wherever possible, with recruitment

firms that have committed to follow the

Voluntary Code of Conduct for Executive Search

Firms, and by widening the pool of candidates

from diverse backgrounds.

We confirm that the Company has met the

targets stipulated in the Listing Rule 9.8.6R(9)

asat 31 December 2022. The numerical data

onthe ethnic background and the gender

identity of the individuals on the Board of the

Company and in its Executive Committee as at

31 December 2022 is set out on pages 89 to 94.

There have been no changes to the Board since

31December 2022. Data used for the purpose

of making the disclosures was collected through

the Company’s diversity monitoring forms

completed by the individuals on the Board of

theCompany and in its Executive Committee.

98 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

99SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / NOMINATIONS COMMITTEE REPORT CONTINUED

Directors' succession had been handled

smoothly and it was agreed that process

should be extended to hire an additional

non-executive Director with relevant industrial

and business experience aligned to our

strategy. The Board is to also review the

structure of the Board meetings schedule

andagendas to ensure adequate time is

givento debate and engagement.

The Board continued its momentum during

2022, building on further strengthening the

business as it emerged from the difficult

conditions encountered during the COVID-19

pandemic. The findings of the 2022 evaluation

will add to the Board’s development as the

recovery phase of our end markets and the

strategic growth of the Company continue

tomake timely progress.

Clare Chalmers Limited has no other

connection with the Company or its Directors.

In addition, the Chair undertakes individual

reviews of each Director and provides

feedback and guidance on their performance

and contribution to the Board. The Senior

Independent Director, in consultation with the

non-executive Directors, undertakes a similar

review process of the Chair.

Board induction and development

Appointments to the Board are made following a

rigorous, formal, recruitment process supported

by professional consultants. All Directors

receiveinduction upon joining the Board and

areencouraged to update their knowledge

andskills on a frequent basis. The Nominations

Committee arranged for Mary Waldner and

Barbara Jeremiah, our most recently appointed

non-executive Directors, to receive early and

appropriate induction. The Group Company

Secretary provides the Board with statutory

andregulatory updates at every Board meeting

and notifies them of any pressing points that

arerelevant between meetings.

The Directors are cognisant of the fact that the

Board, and its Committees, should have the

appropriate combination of skills, experience

and knowledge to enable them to perform their

duties effectively. Membership of the Board and

its Committees is kept under regular review and

refreshed when appropriate, taking into account

the Directors’ lengths of service and their ability

to devote sufficient time to Company matters.

Evaluation of the Board and the Directors

In 2022, the Directors felt that it was again

appropriate to undergo an external Board

evaluation process and chose to engage a

different firm to bring a new perspective when

undertaking the evaluation. Clare Chalmers

Limited undertook the evaluation which included

attending a full Board meeting and conducting

individual confidential interviews with each

Board Director, the Group Company Secretary,

the Group HR Director and the ChiefExecutives

of the Aerospace and FlexonicsDivisions.

The Board had operated and made only a

limitednumber of recommendations for the

Board to consider.

The Board was found to be functional, effective,

engaged and motivated and with clear progress

being made against prior actions. Non-executive

Succession planning

The Nominations Committee met four times

during the year and considered succession plans

for Board-level and senior management roles.

The Group has continued to increase its focus

on maximising the potential of its employees

and improving succession planning. The Group

Chief Executive Officer and Group HR Director

present a detailed Executive Succession

Planforeach Executive Committee role, to

theNominations Committee twice a year. This

ensures that the Nominations Committee is able

to undertake a detailed review of the succession

plans for the Executive Committee, the talent

pipeline, and a talent profile for each member of

the Executive Committee. The review includes

discussions regarding individuals’ strengths

andareas for development plans. As a result,

development activities are identified, for

example, supporting the Executives in pursuing

external non-executive director roles. Prior to

the2022 Nominations Committee review, the

Executive Committee, supported by the Group

HR Director, conducted an extensive review

ofthe Group’s operating business leadership

succession plans. Utilising skills and talent

mapping, assists both the Executive

Committee and, ultimately, the Nominations

Committee in identifying any gaps, taking

intoaccount the Group’s long-term strategy

toprovide a solid foundation for Senior’s

growthaspirations.

When reviewing succession plans, the

Committee recognises the benefits of a diverse

workforce, diversity of thought and employing

individuals from diverse backgrounds and

experience across the organisation, including

Board members and senior managers.

Ethics and Avoiding Conflicts of Interest.

Allemployees and Directors were required

toachieve a Pass grade, as a minimum.

Typically, all the Group’s operations are visited

by the Group Chief Executive Officer, the

GroupFinance Director or other members of

the Executive Committee on an annual basis

and make presentations to local senior

management, reinforcing the Code and the

importance of maintaining an absolute

commitment to the highest possible standards

of ethics and a zero tolerance towards bribery

and corruption. Until travel restrictions imposed

as a result of COVID-19 were lifted, site visits

by the Executive Directors and members of

theExecutive Committee were not possible;

however, they reinforced the Code at meetings

held at Divisional and local levels and monitored

the progress of the training programme across

the Group. The Board verifies compliance with

the Code through its internal audit programme,

ensuring that employees have received the

mandatory training and that the Group’s

businesses operate with integrity at all times

and in compliance with the Code.

Operating with integrity and in an ethical

mannerbuilds trust with customers and other

stakeholders and underpins the Board’s

strategic objectives.

Human rights

The Group recognises the importance of the

Universal Declaration of Human Rights and

adheres to the core principles and values

defined within it. The majority of countries in

which Senior operates have their own laws

banning child labour and promoting human

rights. Senior monitors the ages of its workforce

across the world to ensure compliance and

identify any potential succession issues.

Senior is committed to preventing slavery

andhuman trafficking in its corporate activities

and throughout its supply chain. Senior does

notrestrict any of its employees in any of the

countries in which it operates from joining a

trade union if they wish to do so. Senior also

works closely with its suppliers to ensure that

they at least meet internationally recognised

minimum requirements for workers’ welfare

andconditions of employment. Senior publishes

a Modern Slavery Act Statement, which is

keptunder review and updated as necessary.

The current statement has been signed by

theGroup Chief Executive Officer and was

AUDIT, RISK AND

INTERNAL CONTROL

Resources, internal controls

andriskmanagement

The Board has ultimate accountability for

theGroup’s risk management process.

The Board determines the nature and extent

of the significant actions necessary to achieve

its strategic objectives and maintains a sound

system of internal control. The Company’s

Audit Committee reports to and, for certain

matters, advises the Board of Directors. The

Audit Committee Report on pages 102 to 107

describes the role and activities of the Audit

Committee, together with the significant risks

and judgments that it considered in relation

tothe 2022 Financial Statements and its

relationship with the internal and External

Auditors. Details of the Group’s approach to

risk management and its Risk and Assurance

Framework can be found on pages 60 to 62.

Communicating the Senior plc Code of

Conduct and operating with integrity

In 2021, the executive Directors published

anupdated booklet for issue to all employees

and relevant third parties, explaining the

Group’s Code of Conduct (the Code) and

Senior’s Values; these values can be found

onpage 38. The booklet includes a message

from the Group Chief Executive Officer,

explaining that it is his unshakeable belief that

how you do business is as important as what

you do in business. It contains work-related

scenarios, together with a selection of

questions and answers, to help employees

tounderstand the Code and relate it to their

individual roles and working environment.

Copies of the Code are issued to all new

employees and reissued periodically to

continuing employees to remind them

oftherequired level of conduct.

Senior trains its employees on the

requirements of the Code upon induction,

educating them on what they can and cannot

do, and how to address any ethical dilemmas

they may face. A compulsory 2022 Global

Code of Conduct online training course was

rolled out across the Group to all employees

during the year. The 2022 course contained

training modules on: Anti-bribery, Preventing

Harassment & Promoting Respect, Business

published in February 2023, it can be found

onthe Company’s website.

Reporting and investigating concerns

andwhistle-blowing

As part of its internal control procedures, the

Company has a Whistle-blowing Policy that is

communicated throughout the Group. This

policy provides employees with the opportunity

to report suspected unethical or illegal corporate

conduct confidentially and anonymously.

Senior is committed to maintaining high ethical

standards across the Group. Employees and

representatives of Senior have an obligation to

act honestly, with integrity, and to comply with

applicable laws. Consequently, employees are

encouraged to report any suspected unethical

orillegal corporate conduct in accordance with

this policy.

Senior will not tolerate the harassment or

victimisation (including the application of

informal pressure) of a person reporting

corporate conduct in good faith. In addition to

the legal protection provided to such employees,

Senior will treat retaliatory conduct in violation

ofthis policy as a serious disciplinary offence.

The Group encourages its employees to discuss

any ethical concerns that they may have with

local management, or at Group level if more

appropriate. Where an employee feels unable

toapproach local or Group management, or are

dissatisfied with the response, they can contact

Senior’s third-party whistle-blowing service

provider by telephone, a web reporting tool or, in

some languages, an app. The provider will pass

on information to an investigating officer within

Senior, maintaining anonymity of the individual,

if requested.

All reports of suspected unethical or illegal

corporate conduct are independently

investigated and tracked from inception to

resolution and, where necessary, actions are

taken to rectify any weakness in systems that

may have been identified. These actions, and

the overall integrity of the reporting system,

aresubject to regular scrutiny by the Audit

Committee. This process is also available to

third parties, such as suppliers and customers.

Subject to confidentiality considerations, the

outcome of each investigation is provided,

insofar as it is possible, to the individual who

reported the concern. All reported whistle-

blowing incidents are reviewed by the Board

GOVERNANCE / NOMINATIONS COMMITTEE REPORT CONTINUED

100 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

101SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

ofDirectors, which the Company believes

tobethe most appropriate forum.

Celia Baxter is the Company’s Senior

Independent Director, providing employees

andthird parties with an alternative channel of

communication to resolve issues if they have

aconcern that the Chair, Group Chief Executive

Officer or Group Finance Director have failed

toresolve the issues, or where such contact

with them is not appropriate.

Managing external sales agents and

representatives

Senior has in place a Responsible Sourcing

Policy which establishes the minimum

standards expected of our supply chain.

Senioris committed to the highest possible

standards of environmental, ethical and social

responsibility performance in respect of all its

products and services. Senior strives to be the

best for its customers and its people and looks

to make a positive contribution to society

wherever it operates. Adherence to this policy

ismandatory and all Group operations are

required to ensure that they are aware of the

requirements of the policy.

The Board recognises the potential bribery and

corruption risks posed by the markets in which

the Group operates and, in particular, the use of

third-party intermediaries it engages. All external

sales agents and representatives working on

behalf of Senior across the world are required to

operate in compliance with Senior’s Code of

Conduct or have their own code of conduct of

an equivalent high standard. Local management

is required to conduct a due diligence and risk

assessment process prior to engaging or

re-appointing any sales agents and to issue

them with a copy of the Code, ensuring that

they understand, acknowledge and accept

itsrequirements.

International trade compliance

The Code of Conduct includes a section

dedicated to Complying with International

Sanctions and Trade Compliance Requirements.

It states “Senior will conduct its business in

fullcompliance with all global trade laws and

regulations and all relevant sanctions for the

import and export of goods and services in

thecountries within which it operates.”

Managing gifts and hospitality

The Board recognises that gifts and hospitality

have the potential to create a conflict of interest,

or the perception of a conflict of interest. As a

result, there is a Group policy restricting the

receiving and giving of gifts and hospitality from,

and to, third parties. This policy requires that all

gifts and hospitality must be recorded annually

through a self-declaration process. The Internal

Audit Manager assesses adherence with the

Group’s gifts and hospitality policy during

internal audit visits, which are carried out

physically or virtually.

Group information and operations business

security policy and data protection

The Group’s confidential information is valued

highly by the Board. In early 2022, the Group

Head of Information Security departed the

Group and his successor appointed, with a

suitable handover period arranged to ensure

continuity. In 2019, a three-year roadmap

wasdeveloped, which contained a prioritised,

risk-based, improvement plan. Linked to the

three-year roadmap, a tactical execution plan

was created annually, building on the activity

todate; the incoming Group Head of Information

Security continued this work. In September

2022, the Group Head of Information Security

was invited to present to the Board meeting,

providing an update on the 2019 to 2022

maturity journey. The key focus areas on the

journey included the external security posture,

the risk management framework, patch and

vulnerability management, security event

monitoring and incident response and

networksecurity.

In 2022, all Group employees continued to

receive regular updates on information security,

supported by circulation of weekly tips of the

week. The aim of these weekly communications

was to provide small, bitesize recommendations

and guidance on all matters information security

related. These included informing employees

how to protect themselves both in their personal

lives as well as when at work.

An Acceptable Use Policy is in place to provide

guidelines for the acceptable and appropriate

use of the Group's information technology

andoperational technology assets by all Group

employees. The policy sets out the controls

thatare in place to help reduce risk associated

with the inappropriate use of the Group's

information technology and operational

technology assets, which could lead to data

loss, manufacturing disruption, virus or malware

infection or other issues that could have a

negative financial or reputational impact on the

Group. In compliance with the Data Protection

(Charges and Information) Regulations 2018,

theCompany is registered with the Information

Commissioner’s Office.

To ensure compliance with the General Data

Protection Regulations (GDPR), both in the

EUand the UK, the Company and all relevant

Group operations have in place a GDPR policy

and breach incident procedure which have been

communicated to their employees. As the

Company is not a public authority, its core

activities do not require regular and systematic

monitoring of individuals on a large scale and it

does not process special categories of personal

data, criminal convictions or offences data on

alarge scale, it is not required to appoint a data

protection officer. However, the Company and

relevant Group operations each have a Data

Protection Champion, whom employees

canapproach for guidance if they have any

queries or concerns relating to data protection.

Compliance with data protection regulations will

continue to be monitored on an ongoing basis.

GOVERNANCE / NOMINATIONS COMMITTEE REPORT CONTINUED

GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT

"Collectively, the members of the

Audit Committee have

significant commercial and

financial experience at a senior

management level.”

Giles Kerr

Chair of the Audit Committee

• approving the appointment or termination

ofappointment of the Director of Risk and

Assurance (formerly the Head of Risk

&Compliance);

• reviewing the effectiveness of the internal

audit function (currently headed by the

Director of Risk and Assurance, formerly the

Head of Risk and Compliance); considering

the major findings of internal audit activities

and management’s response; ensuring

co-ordination between the internal audit

function and the External Auditor; reviewing

and approving the role and mandate of the

internal audit function. Annually approving

theInternal Audit Charter, ensuring it is

appropriate for the Group’s current needs,

that the function is adequately resourced and

has appropriate standing within the Group;

• ensuring the internal audit function has

unrestricted scope, the necessary resources

and access to information to enable it to

fulfilits mandate, ensuring there is open

communication between different functions

and that the internal audit function evaluates

the effectiveness of these functions as part

ofits internal audit plan, and ensuring that the

internal audit function is equipped to perform

in accordance with appropriate professional

standards for internal auditors;

• ensuring the internal Auditor has direct

accessto the Board Chair and to the Audit

Committee Chair, providing independence

from the Executive and accountability to

theAudit Committee;

• carrying out an annual assessment of the

effectiveness of the internal audit function;

• reviewing the effectiveness of the Group’s

internal controls systems that identify,

assess,manage and monitor financial risks,

and other internal control and risk

managementsystems;

• developing and recommending to the Board

the Group’s Policy for the Provision of

Non-Audit Services by the External Auditor,

including specifying permitted non-audit

services and their approval requirements;

• ensuring the External Auditor’s remuneration

fee level is appropriate to enable an effective

and high quality audit;

• monitoring the External Auditor’s

processesfor maintaining independence,

itscompliancewith relevant law, regulation,

other professional requirements and the

EthicalStandard;

• ensuring the co-ordination of the External

Auditor and the internal audit function;

• agreeing with the Board a Policy on the

Employment of Former Employees of the

Group’s External Auditor, taking into account

the Ethical Standard and legal requirements,

and monitoring the application of this Policy;

• understanding the strategy at both Group

andoperational levels to ensure that business

risks and other relevant issues are effectively

identified and communicated to the Board;

• assessing the Audit Committee’s capabilities

in relation to diversity, risk experience and

thefinancial expertise of its members;

AUDIT COMMITTEE

REPORT

Dear Shareholder,

The Audit Committee has been established

by the Board and consists entirely of

independent non-executive Directors. The

primary role of the Audit Committee is to

maintain the integrity of the financial reporting

of the Group and to ensure appropriate risk

management and internal control procedures.

To enable the Audit Committee to fulfil this

role, its main responsibilities include:

• conducting the process for selecting

theExternal Auditor and making

recommendations to the Board, and

ultimately shareholders for approval, of the

appointment of the External Auditor, the

audit fee, initiating tender processes in

accordance with regulatory requirements,

and the resignation or dismissal of the

External Auditor;

• if an External Auditor resigns, investigating

the issues leading to this and deciding

whether or not any action is required;

• monitoring and assessing annually the

independence and objectivity of the

External Auditor, its compliance with

regulatory requirements, the effectiveness

of the external audit process and

authorising the provision, if any, of

non-audit services and the impact this

mayhave on independence;

• monitoring the integrity of the Company,

including its annual and the half-yearly

reports, preliminary announcements and

related formal statements. Reviewing

andreporting to the Board on significant

financial reporting issues and judgments

which those statements contain, having

regard to matters communicated to it

bythe Auditor. Reviewing any other

statements requiring Board approval

whichcontain financial information where

practicable and consistent with any prompt

reporting requirements. Where the

Committee is not satisfied with any aspect

of the proposed financial reporting by the

Company, it shall report its views to

theBoard;

• reviewing the Company’s statement on

theAnnual Report & Accounts prior to

endorsement by the Board, that taken as a

whole the Annual Report & Accounts is fair,

balanced and understandable and provides

the information necessary to assess the

Group’s position and performance,

business model and strategy;

• discussing with the External Auditor issues

and reservations, if any, arising from the

year-end audit and the half-year review,

andany other matters the External Auditor

may raise;

• reviewing and approving the terms of the

External Auditor’s engagement, including

the management representation letter

addressed to the External Auditor at the

start of each audit;

• reviewing the longer-term viability and

thegoing concern basis of accounting in

preparation of the Financial Statements

ofthe Group;

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GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT

• understanding the implications of changes

toaccounting standards;

• ensuring the Company’s corporate ethics,

anti-bribery and compliance procedures are

up to date in terms of addressing the potential

risks of fraud and misconduct;

• reviewing the Group’s Whistle-blowing Policy,

to ensure that appropriate procedures are in

place for employees, contractors and external

parties to raise, in confidence, any concerns

that they may have relating to suspected

malpractice, illegal acts, omissions or other

unethical corporate conduct, regarding

financial or other matters; and ensuring that

arrangements are in place for investigation

ofsuch matters and follow-up action;

• giving due consideration to all relevant laws

and regulations, the provisions of the Code

and published guidance, the requirements of

the FCA’s Listing Rules, Prospectus Rules and

Disclosure Guidance and Transparency Rules

sourcebook, and any other applicable rules;

• after each Audit Committee meeting, the

Audit Committee Chair formally reports

totheBoard on its proceedings and how

theCommittee has discharged its duties;

• working and liaising with all other Board

Committees, ensuring interaction between

the Committees and the Board is reviewed

regularly; and

• considering any other topics specifically

delegated to the Audit Committee by the

Board from time to time.

The Audit Committee is required to report its

findings to the Board, identifying any matters

where it considers that action or improvement

isneeded, and to make recommendations as

tothe steps taken.

Composition of the Audit Committee

The Terms of Reference for the Audit

Committee state that the Audit Committee

shallbe appointed by the Board from amongst

the independent non-executive Directors of the

Company, excluding the Company Chair, at least

one of whom shall have recent and relevant

financial experience. The Audit Committee shall

consist of not less than three members, of

which all shall be independent of any business

connection with the Group. Appointments to

theAudit Committee shall be for a period of

upto three years, which may be extended by a

maximum of two additional three-year periods,

subject to the members remaining independent.

The Audit Committee is composed entirely

of independent non-executive Directors,

asshown in the table above.

Member Appointment date Retirement date

Giles Kerr (Committee Chair) 2 September 2013 –

Celia Baxter 2 September 2013 –

Susan Brennan 1 January 2016 –

Barbara Jeremiah 1 January 2022 –

Rajiv Sharma 1 January 2019 –

Mary Waldner 1 December 2021 –

Two members constitute a quorum for the Audit

Committee. The Group Company Secretary acts

as Secretary to the Audit Committee.

There was full attendance at every Audit

Committee Meeting held during 2022.

Collectively, the members of the Audit

Committee have significant commercial and

financial experience at a senior management

level. I have the recent and relevant financial

experience required by the UK Corporate

Governance Code to chair the Audit Committee.

Mary Waldner will succeed me as Chair of the

Audit Committee, upon my retirement following

the conclusion of the 2023 AGM; Mary too has

the recent and relevant financial experience

required by the Code.

For details of the qualifications of members

ofthe Audit Committee, please refer to the

Board of Directors’ biographies shown on

pages90 to 92.

No member of the Audit Committee has any

connection with the company’s External Auditor,

KPMG LLP.

Audit Committee’s Terms of Reference

Periodically, the Audit Committee’s Terms of

Reference are reviewed to take into account

current views on good practice and recent

updates to the UK Corporate Governance Code.

The UK Corporate Governance Code 2018 was

adopted by the Audit Committee from the

accounting period beginning on 1 January 2019.

The Audit Committee’s Terms of Reference

were updated in December 2022.

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.

GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT CONTINUED

Activities of the Audit Committee

The Audit Committee met on 22 February 2022 to consider the 2021 year-end report and during the subsequent 12 months conducted the following

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

26 May 2022 27 July 2022

• Discussed and approved the external audit plan and strategy proposed by

KPMG LLP for the 2022 audit, including materiality, scope, significant risks

and other areas of audit focus, the audit cycle and auditor reporting.

• Reviewed KPMG LLP’s 2022 Audit Fee Estimate.

• Reviewed and approved the terms of the proposed letter of engagement

addressed to the External Auditor.

• Received and reviewed KPMG LLP’s assessment on its objectivity

andindependence

• Received and considered an Internal Audit Report including Risk & Assurance

and Mapping reports presented by the Head of Risk &Compliance (now the

Director of Risk and Assurance).

• Received and reviewed KPMG LLP’sassessment on its objectivity and

independence

• Reviewed the accounting presentation and judgmental issues, and the funding

and liquidity reports for the half-year ended 30 June 2022..

• Reviewed, challenged and agreed the basis for going concern to be adopted

forthe 2022 Interim Results.

• Reviewed the Tax Memorandum for the half-year ended 30 June 2022.

• Reviewed and accepted KPMG LLP’s Report to the Audit Committee on the

half-year review for the six months ended 30 June 2022.

• Reviewed and approved the terms of the management representation letter

addressed to the External Auditor.

• Discussed the Group’s draft Announcement of the 2022 Interim Results

together with the draft slides for the analysts’ presentation.

• Approved KPMG LLP’s proposed fees for the 2022 Audit.

• Noted the FRC’s Audit Quality Review of KPMG LLP’s audit work in 2021/22.

29 September 2022 21 February 2023

• Reviewed the effectiveness of the external audit process.

• Assessed the significant risks that are considered by the Audit Committee,

agreeing they would broadly unchanged from 2021, subject to review at the

next meeting.

• Addressed Government agency recommendations on the Company’s Annual

Report & Accounts 2021, agreeing areas that could be better signposted in

the Annual Report & Accounts 2022.

• Received and considered an Internal Audit Report presented by the Head

ofRisk & Compliance (now the Director of Risk and Assurance).

• Received an update on the Group’s cyber risk communications programme

and on 2022 Code of Conduct training..

• Reviewed the effectiveness and quality of the 2021 external audit.

• Approved the existing Policy for the Provision of Non-Audit Services by the

External Auditor and the Policy on the Employment of Former Employees

ofthe Company’s External Auditor, with no changes required.

• Reviewed the draft updated Terms of Reference of the Audit Committee

withone small update agreed.

• Approved the Group’s existing Whistle-blowing Policy, with

nochangesrequired.

• Reviewed the accounting presentation and judgmental issues, and the viability

assessment report for the year ended 31 December 2022, which included

consideration of compliance with all debt covenants at all measurement dates

out to 31December 2025.

• Reviewed and approved the addition of acquisition accounting as a significant

risk and a risk assessment change of inventory net realisable value risk from

significant riskto other focus area.

• Reviewed and approved the statements included in the Annual Report &

Accounts 2022 concerning internal control, risk management, including the

assessment of principal risks and emerging risks, TCFD and theViability

Statement.

• Reviewed, challenged and agreed the going concern basis to be adopted for

the2022 Accounts.

• Reviewed the Tax Memorandum for the year ended 31 December 2022.

• Reviewed and accepted KPMG LLP’s Report to the Audit Committee on the

audit of the Financial Statements for the year ended 31 December 2022.

• Reviewed KPMG LLP’s confirmation of its objectivity and independence,

including identification of a prohibited non-audit service which was provided to

aresidual component from 2018 to 2022. The Audit Committee was satisfied

with the conclusions and actions taken by the Auditor.

• Reviewed and approved the terms of the management representation letter

addressed to the External Auditor.

• Approved the Audit Committee Report for 2022.

• Reviewed the effectiveness of the Group’s risk management and internal

control systems and disclosures madein the Annual Report & Accounts2022.

• Reviewed the draft Annual Report &Accounts 2022 and reviewed the

Company’s statement on the draft Annual Report & Accounts prior to

endorsement by the Board, that, taken as a whole, the draft Annual Report

&Accounts is fair, balanced and understandable and provides the information

necessary to assess the Group’s position and performance, business model

and strategy.

• Discussed the Group’s draft Announcement of the 2022 Final Results

togetherwith the draft slides for the analysts’ presentation.

• Reviewed the Notice of Meeting for the 2023 AGM and the Proxy Form

forthe2023 AGM.

• Received and considered a report presented by the Director of Risk

&Assurance, which included the proposed 2023 internal audit plan.

• Reviewed and approved the Internal Audit Charter.

• Assessed the effectiveness of the internal audit function.

The Audit Committee held a private meeting with the External Auditor and a private meeting with the Group’s Director of Risk and Assurance

(formerlythe Group’s Head of Risk & Compliance) on 27 July 2022 and 21 February 2023, without executive management being present.

In addition to the four scheduled meetings summarised above, meetings were held in January 2022 to approve the Full-year 2021 PostClose Trading

Update and in November 2022, to approve the draft Trading Update for the 10-month period ended October 2022, subject tofinalconfirmation by

theDisclosure Committee.

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GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT CONTINUED

Audit Committee Attendance and Separate Discussions

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

theGroup’s Director of Tax & Strategic Finance, the Group’s Director of Risk and Assurance (formerly the Head of Risk & Compliance) and senior

representatives of the external audit firm to attendits meetings, although it reserves the right to request any of these individuals to withdraw from

anymeeting.

During 2022, the Audit Committee also held separate discussions withthe External Auditor and the Group’s Director of Risk and Assurance, without

executive management being present. In addition, the Chair of the Audit Committee held separate meetings with each of these during the course

ofthe year.

Significant risks considered by the Audit Committee

The table below summarises the significant risks considered by the AuditCommittee, including significant judgments and estimates:

Significant risks considered by the Audit Committee How the risk was addressed by the Audit Committee

Other provisions

Provisions are held where management considers there is an obligation,

payment is probable and the amount payable can be reliably estimated.

Provisions held by the Group include but are not limited to:

• those held against legal claims and contractual matters, product

warranties; and

• tax provisions for uncertain risk exposures.

There is a risk that other provisions overstate or understate the

associated liability.

The Audit Committee considered the basis upon which management had

made its accounting judgments to determine the level of other provisions.

The Audit Committee receives a separate report from the Group Head

ofTax that sets out the various uncertain risk exposures and any related

provisions that are based on the best estimate of the amounts likely to

bepayable. The Audit Committee carefully considers the assumptions

applied and provides appropriate challenge including an assessment of

the related sensitivities. These were further discussed with the

ExternalAuditor.

The Audit Committee believes there are no further reportable issues

arising from these significant areas.

Acquisition accounting

On 25 November 2022, the Group acquired substantially all of the

assets of Spencer Aerospace Manufacturing, LLC, for total

consideration of $100m split between initial, deferred and contingent

payments (See Note 31 for further details). There is judgment in

determining the valuation of the intangible assets and associated

goodwill with the acquisition.

The Group recognised goodwill of £42.0m and intangible assets of

£31.0m on the acquisition date. The Audit Committee held discussions

with executive management regarding the procedures performed to fair

value the assets and liabilities acquired. The Committee noted the use

ofexternal valuation experts in order to form the necessary judgments.

Theexternal auditor provided the Audit Committee with details of the

audit work performed to assess that the assets and liabilities are held at

fair value. The Audit Committee was satisfied that the assumptions used

were appropriate and that the assets and liabilities are valued at fair value.

Inventory net realisable value, which was a significant risk in the Annual Report & Accounts 2021, is no longer considered a significant risk

bytheAudit Committee given strengthening demand and subsequent impact on expected utilisation of inventory. It is now a focus area

asoutlinedbelow.

Other judgments and estimates

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

2022 Financial Statements. These areas of focus and how they were addressed by the Audit Committee are described below:

Other focus area considered by the Audit Committee How these were addressed by the Audit Committee

Other key judgments and estimates

These include, but are not limited to, judgments and estimates in areas

not covered by significant risks such as inventory net realisable value,

going concern and viability, goodwill impairment assessment,

retirement benefits, leases and tax (excluding provisions for uncertain

tax which is a significant risk).

The Audit Committee reviewed the accounting presentation and

judgmental issues paper, including a funding and liquidity report, for the

related reporting period from the Group Financial Controller. In addition,

the Audit Committee received a tax memorandum paper for the related

reporting period from the Group’s Head of Tax.

In its review of these presentation papers, the Audit Committee

challenged management on the critical accounting judgments, and

thekey sources of estimation and uncertainty that were taken in the

preparation of the Financial Statements, and concluded that they

wereappropriate.

The Audit Committee believes there are no further reportable issues

arising from these other key judgments and estimates.

GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT CONTINUED

Presentation of results

The Board presents adjusted key measures of

profit, in addition to reported measures, where

items are significant in size and either they do

not form part of the trading activities of the

Group or their separate presentation enhances

understanding of the underlying financial

performance. The Audit Committee assessed

the presentation to ensure a fair and balanced

treatment of what is and is not included as

anadjusting item.

The Audit Committee considered the accounting

policy applied to exclude adjusted items by

reference to guidance issued by the FRC and

the European Securities and Markets Authority

(“ESMA”), and the need to ensure

anyalternative performance measures are

presented with equal prominence to reported

figures and on a consistent basis year-on-year.

The Audit Committee discussed the

presentation of adjusted items with the External

Auditor, and concurs with management’s view

that the presentation of items excluded from

adjusted results provides useful disclosure to

aidthe understanding of the performance of

theGroup.

External audit

Independence of the External Auditor and

policy on the provision of non‑audit services

To fulfil its responsibility regarding the

independence of the External Auditor, the Audit

Committee reviewed:

• a report from the External Auditor describing

the arrangements that had been made to

identify, report and manage any conflicts of

interest and to maintain its independence; and

• the FRC’s Audit Inspection Unit public report

on KPMG LLP.

The Audit Committee’s policy in respect of

services provided by the External Auditor and

itsPolicy on the Provision of Non-Audit Services

by the External Auditor are as follows:

• The External Auditor is invited to provide

services which, in its position as auditor,

itmust or is best placed to undertake. This

includes formalities relating to borrowings,

shareholder and other circulars, various other

regulatory reports and certain work in

respectof larger acquisitions and disposals;

• The Company has a Policy on the Provision

ofNon-Audit Services by the External Auditor,

which is in line with the recommendations

setout in the Financial Reporting Council’s

(“FRC”) Guidance on Audit Committees

(2016) and the requirements of the

FRC’sRevised Ethical Standard (2019)

(the“Ethical Standard”). In line with these

recommendations and requirements, the

external audit firm is only appointed to

perform a service when doing so would be

consistent with both the requirements and

the overarching principles of the Ethical

Standard, and when its skills and experience

make it the most suitable supplier. In addition,

the Ethical Standard requires an assessment

of whether it is probable that an objective,

reasonable and informed third party would

conclude independence is not compromised.

The approval of the Audit Committee must

beobtained before the External Auditor is

engaged to provide any non-audit services

and these services are limited to activities

which feature on the approved Permitted

Non-Audit Services list. The total fees for

non-audit services shall be limited to no more

than 70% of the average of the statutory

auditfee for the Company, of its controlled

undertakings and of the consolidated Financial

Statements paid to the External Auditor in

thelast three consecutive financial years;

• Other services may not be provided where

precluded by law, regulation, or Ethical

Standards or where the Audit Committee

believes that it would compromise audit

independence and objectivity; and

• All proposed contracts for permitted services

to be provided by the External Auditor require

the Audit Committee’s approval. Approval

forpermitted services below £0.050m has

been delegated by the Audit Committee to

itsChairand below £0.025m to the Group

Finance Director.

In 2022, the level of permitted services

undertaken by KPMG LLP was broadly

unchanged, as set out in the table below.

TheAudit Committee considered that it was

beneficial for the Company to retain KPMG LLP

for a small amount of permitted non-audit work

and audit related services, because of the firm’s

knowledge of the Group and our requirements

that the Interim audit to be performed by the

External Auditor. The Audit Committee

continues to closely monitor the nature and

levelof such permitted non-audit work.

Fees 2022 2021

Interim review £0.06m £0.05m

Auditor assessment of tax

incentives in Malaysia

andcertification of

expenses in France £0.01m £0.01m

Total audit-related services: £0.07m £0.06m

Non-audit related services: £nil £0.1m

Apart from the matter noted below, KPMG have

not performed any non-audit services during the

year ended 31 December 2022 or subsequently

which are prohibited by the FRC Ethical

Standard. In early 2023, KPMG identified that a

KPMG member firm had provided preparation

oflocal GAAP financial statement services over

the period 2018 to 2022 to an entity which was

a residual component and therefore not in scope

for the Group audit. The services, which have

been terminated, were administrative in nature

and did not involve any management decision-

making or bookkeeping. The work had no direct

or indirect effect on Senior plc's Consolidated

Financial Statements. KPMG sent a letter to the

Audit Committee explaining the cause, analysis

of implications and actions taken. The Audit

Committee reviewed the letter and following

discussions, have concurred with KPMG's

professional judgment, that based on the

assessment of the breach, KPMG's integrity

andobjectivity as Auditor has not been

compromised and believe that an objective,

reasonable and informed third party would

conclude that the provision of this service would

not impair KPMG's integrity or objectivity for

anyof the impacted financial years.

Policy on tendering

In order to maintain auditor independence

andcomply with FRC, EU guidance and the

provisions of the CMA Order 2014 on audit

tendering, the Group undertook a formal tender

of its external audit during the first half of 2016,

led by the Audit Committee. The appointment

ofKPMG LLP as the Group External Auditor for

the financial year commencing 1 January 2017

received approval by shareholders at the Annual

General Meeting held in April 2017. The Audit

Committee reviews annually whether it is

appropriate to put the external audit out to

tender and concluded in 2022 that it was not

appropriate to do so. In 2022, the Group's

AuditPartner was rotated off the Senior account

and anew Audit Partner appointed, in line with

regulatory rotation requirements. The Audit

Committee fully evaluates auditor performance

and independence annually but does not favour

mandatory five-year rotation.

Assessment of external audit quality

andeffectiveness

The Audit Committee reviewed the

effectiveness of the External Auditor and the

external audit process, including an assessment

of the quality of the audit, at its September

2022meeting.

In 2022, the effectiveness of the external audit

process was again performed by assessing

arange of key areas through a formal

questionnaire that was individually distributed

toall the members of the Audit Committee and

all other executive and non-executive Directors.

This framework required consideration of

performance areas which needed future focus

by the External Auditor, the areas where the

External Auditor was meeting expectations

andthose where it was considered to have

aspecialstrength.

Senior management received answers and

comments from all questionnaires and

consolidated them into a report. The Audit

Committee used this report to facilitate a

debateat its September 2022 meeting and to

assist in assessing the level of external audit

effectiveness. The Audit Committee discussed:

the calibre of the external audit firm, the

robustness of the external audit process and

degree of challenge to matters of significant

audit risk and areas of management subjectivity,

the degree of professional scepticism applied

bythe External Auditor, the quality of delivery

ofthe audit and the service provided by the

External Auditor, the Audit Partner, the audit

approach and planning, the role of management,

the communication by the Auditor to the Audit

Committee, the provisions of support for the

work of the Audit Committee by the Auditor,

thesharing of insights and adding value by

theAuditor, the audit fee, the Auditor’s

independence and objectivity, and the quality

offormal reporting by the Auditor to the Audit

Committee. Feedback about the effectiveness

of the external audit process from the local

management teams was also considered by

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GOVERNANCE / DIRECTORS’ DUTIES / AUDIT COMMITTEE REPORT CONTINUED

theAudit Committee. The Audit Committee

concluded that the External Auditor had

challenged the thinking of the Company and of

the Audit Committee on a number of significant

issues and had maintained its independence,

notwithstanding the provision of an insignificant

non-audit service to a residual component of

theGroup as discussed in the previous section.

In July 2022, the Financial Reporting Council

(FRC) published its 2021/2022 Audit Quality

Inspection Reports (AQIR) for each of the

largest audit firms, including KPMG. Five of the

largest firms had no audits requiring significant

improvements and the FRC had found KPMG’s

individual audit inspections to have improved

significantly. The Audit Committee noted the

FRC was to continue to closely monitor KPMG

LLP’s banking audits. Following completion of

the assessment process outlined above, the

Audit Committee concluded that it was satisfied

with the effectiveness of the External Auditor;

as a consequence, the Audit Committee has

recommended to the Board that KPMG LLP

bere-appointed as Auditor for 2023.

Specific areas referred to the

ExternalAuditor

In 2022, the Audit Committee has not asked

theAuditor to explicitly review any specific areas

because the significant risks and other focus

areas considered by the Auditor where aligned

with the significant risks considered by the

AuditCommittee. The Audit Committee was

satisfied with the results of the Auditor's

resultsand findings.

Internal audit

The Audit Committee is required to assist

theBoard in fulfilling its responsibilities relating

to the effectiveness, resourcing and the plans

ofthe Group internal audit function, which

wereheaded by the Group Head of Risk

&Compliance (now the Director of Risk and

Assurance) throughout 2022. The Internal

AuditManager reports to the Director

ofRiskand Assurance.

In 2022, as set out on pages 60 to 62, the

Groupfurther strengthened its risk management

procedures and these have been reviewed by

the Audit Committee. Risk has been assessed

on a top down and bottom up basis and the

consideration of emerging risks has been

formally added to the process. A risk-based

programme of internal audit has been

conductedin the year. In 2022, the internal

auditprogramme was delivered through

acombination of face-to-face and remote

workingmethods.

The Chair and non-executive Directors are

actively encouraged to visit the Group’s

operating businesses unaccompanied by

executive Directors and such visits were able

torecommence in 2022, following the lifting

oftravel restrictions imposed by governments

during the pandemic. Such visits enable the

Directors to meet the local management teams

and employees and also undertake site tours to

review matters including production methods,

health and safety and the status of internal audit

findings. These visits are viewed by the Audit

Committee as making a positive contribution

tothe internal control framework.

Conclusion

As a result of its work during the year, the

AuditCommittee has concluded that it has

acted fully in accordance with its Terms of

Reference. At its meeting held on 21 February

2023, the Audit Committee considered each

section of the Annual Report & Accounts 2022,

and the document as a whole, as proposed by

the Company; it reached a conclusion and

advised the Board that it considered the Annual

Report & Accounts 2022 to be fair, balanced

andunderstandable and that it provided the

information necessary for shareholders to

assess the Group’s position and performance,

business model and strategy. As the Chair of the

Audit Committee, I will be available at the 2023

AGM to answer any shareholders’ questions

about the work of the Audit Committee.

Aspreviously announced, I shall be retiring from

the Board of Directors following the conclusion

of the 2023 AGM and Mary Waldner will

succeed me as Chair of the Audit Committee;

Mary too will be attending the 2023 AGM.

Change of Audit Committee Chair

During 2022, I have been working with Mary

Waldner who will be taking over from me as

Audit Committee Chair after the AGM in April

2023. I wish her every success in the role and

thank everyone for their support over the

previous nine years.

Approval

This Report was reviewed and approved by the

Audit Committee and signed on its behalf by:

Giles Kerr

Chair of the Audit Committee

24 February 2023

GOVERNANCE / REMUNERATION: CHAIR’S ANNUAL STATEMENT

REMUNERATION

CHAIR’S ANNUAL

STATEMENT

“The implementation of our

Remuneration Policy seeks

to motivate and support

outperformance.”

Celia Baxter

Chair of the Remuneration Committee

REMUNERATION REPORT:

ANNUAL STATEMENT

FROM THE CHAIR OF THE

REMUNERATION

COMMITTEE

Dear Shareholder

I am pleased to present the Report of the

Remuneration Committee for the financial year

ended 31 December 2022. This statement sets

out the work of the Committee during the year

and provides the context for the decisions taken.

Remuneration is linked to our strategy

and operational performance

Senior’s vision is to be a trusted and

collaborative high value-added engineering and

manufacturing company producing sustainable

growth in operating profit, free cash flow and

shareholder value.

Our Remuneration Policy (“Policy”) and

practices support this vision, with our bonus

plans incentivising earnings growth and free

cash flow, and our long-term plans rewarding

the creation of shareholder value, earnings

growth and return on capital. We regularly

consider the alignment of our performance

metrics with the business strategy. Following

feedback from some of our shareholders we

continue to include ROCE as a third measure

within our LTIP for awards granted from 2021

onwards. This recognises the need to build the

business back to healthy returns and brings

consideration of capital deployment into

sharperfocus.

Sustainability is a key element of our strategy,

and the Board continues to be satisfied with

theongoing progress of the Group in this area.

Senior was the first company in its sector to

setscience-based greenhouse gas emission

reduction targets, committing to net zero

targetsand our health and safety performance

isexcellent. Although our Policy allows the

Committee to include in the bonus, strategic

measures limited to 25% of the bonus

opportunity, this facility has not been used nor

have we included an ESG target within the long

term incentive plan. Having carefully considered

shareholder feedback, current market conditions

and the stage of recovery of the business, we

continue to believe that it is more important at

this stage of our rebuilding to incentivise the

executive Directors on delivering the core

financial performance of EPS, ROCE, Free Cash

Flow and TSR. Part of our thinking is that it is

clear from past and current performance, that

our sector-leading Environmental, Social and

Governance (ESG) metrics and progress has

been achieved without the need to incentivise,

due to our core values. We have therefore

decided once again not to introduce a

sustainability metric for incentives, but we

willcontinue to keep this matter underreview.

Senior’s performance during 2022

As explained in the Chair’s Statement and the

Group Chief Executive Officer’s Statement,

Senior has continued to make good strategic,

operational and financial progress, with strong

delivery across the Group. This is reflected in

significantly improved profitability, excellent free

cash flow generation, further strengthening of

the balance sheet and improved its sector-

leading sustainability progress. This has been

achieved while navigating through the impact of

the pandemic, the disruption and deglobalisation

of the supply chain, exacerbated by the conflict

in Ukraine and the consequent energy crisis.

Keyheadlines include:

• the Group’s revenue increased by 20%

(on a constant currency basis);

• adjusted operating profit increased by 285%

(on a constant currency basis);

• the Group’s adjusted operating margin

increased by 250 basis points, to 3.4% for

thefull year;

• adjusted earnings per share increases by

2,465%, to 4.36 pence; and

• the Group generated excellent free cash flows

of £27.7m, double that of the prior year.

The restructuring of the Group to meet our

strategy and purpose continued in a focused

manner with the acquisition of Spencer

Aerospace, as well as an ongoing review of

theportfolio within the Group, and continued

investment in technologies for emissions

reduction and environmental efficiency.

108 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

109SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / REMUNERATION: CHAIR’S ANNUAL STATEMENT

Consultation with stakeholders

duringthe year

Consultation with employees regarding

executive remuneration

During 2022, Ionce again consulted with

employees by holding a video conference with

representatives from Senior’s six UK operating

businesses. Wereminded them of the

structureof our Board of Directors’ pay and

explained the outcome of the AGM voting on

the Remuneration Policy and Remuneration

Report. We asked them if they thought that

ourexecutive Directors should have ESG

targetslinked to their bonus, any suggestions

they hadfor changes to the remuneration policy

which would be subject to shareholder vote

in2024 and their views on the clarity of the

Remuneration Report within the Annual Report.

The consensus view was that they would be

supportive of introducing an ESG element within

the remuneration of the executives. There were

no suggestions for remuneration policy change,

and it was commented that the Remuneration

Report was clear and well laid out. We will

continue to run these sessions in the coming

year as we are keen to get input from our

employees in thisarea.

This was the fourth year of running employee

focus groups. In 2021, we were unable to travel

to the US when we had planned due to travel

restrictions and therefore, we focused on the UK

operations only. In 2022, the Group HR Director

and I have undertaken a further 15 focus groups

at four of our West Coast US locations, together

with four focus groups in Germany, thereby

meeting and talking to over 200 people from

across section of each business. There were

noquestions raised related to executive pay.

Consultation with shareholders

As previously reported, following extensive

consultation with major shareholders and the

major governance agencies during 2021, the

executive Directors offered and the Committee

agreed that the alignment of their pension

contributions to that available to the UK

workforce, would be brought forward to the

endof 2022. This has now been implemented.

During 2022, I have undertaken a number

ofdiscussions regarding executive

remunerationand will continue to do so with

individual shareholders as per their request.

Further in early 2023 I have consulted our

majorshareholders and the major governance

agencies with regard to the implementation

ofour 2023 Long Term Incentive which I detail

in the relevant section below. We listened to

theviews of shareholders and have made

changes to our proposals to take account

oftheirfeedback.

Executive Directors’ remuneration 2022

The basic salaries of the Group Chief Executive

Officer and Group Finance Director were

increased by 3.15% and 4.99% respectively

with effect from 1 January 2022, broadly

inlinewith the increase applied to the wider

workforce. In line with the Remuneration Policy,

the executive Directors were eligible for a

maximum bonus equivalent to 125% of basic

salary, payable subject to the satisfaction of

performance targets linked to Adjusted EPS

andFree Cash Flow targets.

For the Annual Bonus Plan, we set Adjusted

EPS and Free Cash Flow targets in January

2022 which were viewed as appropriately

challenging. The proportion of bonus related to

the achievement of EPS targets and Free Cash

Flow targets remained unchanged from 2021

60% and 40% respectively, reflecting the

continued importance of earnings growth

andFree Cash Flow to thebusiness.

The Committee retains an overriding discretion

in relation to the amount of bonus it awards

notwithstanding any formulaic calculations

andtargets. The targets are disclosed in the

Annual Report on Remuneration on page 123.

LTIP awards were granted to both executive

Directors and senior management and are

subject to the satisfaction of challenging

three-year targets linked to Adjusted EPS

growth, relative TSR and ROCE to align with

ourbusiness strategy and due to the importance

of building the business back to healthy levels

ofreturns. The executive Directors' LTIP awards

were subject to a two-year holding period on

vested awards and the enhanced malus and

clawback conditions. The LTIP awards to the

Group Chief Executive Officer and the Group

Finance Director were at a level of 150% of

basic salary. As a matter of best practice, before

finalising the LTIP awards, the Committee

considered the movements in the share price

since the beginning of 2021 financial year. As

the share price had increased over the period,

itwas felt appropriate to grant the LTIP awards

to the executive Directors based on the normal

percentage of salary of 150% of basicsalary.

Incentive scheme outcomes for 2022

After the end of the financial year, the

Committee reviewed the extent to which

thetargets under the Annual Bonus Plan had

been achieved. In considering the outcome,

theCommittee took into account the ongoing

performance of the management team who

continue to:

• lead the Group's recovery of profitability

andhealthy revenue growth;

• manage efficiently and diligently the

pressuresacross the business due to supply

chain disruptions and the energy crisis;

• reshape the structure and strategy of the

Group moving forward;

• maintain liquidity;

• lead the sector in sustainability progress

andcommitments; and

• invest in technology to ensure that the

business and its customers meet carbon

reduction targets.

The Committee decided that the annual bonus

outturn was appropriate taking into

consideration the attainment of continued cash

generation within the business, maintaining the

savings post-restructuring, and further progress

in meeting sustainability targets. Therefore, the

executive Directors’ bonus awards for the year

shall be 100 % of the maximum bonus

opportunity (representing 125% of the 2022

base salary), of which one third will be

deliveredin shares deferred for three years

andtwo thirds will be delivered in cash.

Awards made under the LTIP in 2020 were

subject to Adjusted EPS and TSR performance

measured over three years up to the end of

2022. Unfortunately, the Adjusted EPS and the

TSR performance was below threshold as a

result of the impact of the COVID pandemic

onSenior's markets and customers, and

therefore there was no vesting of this award.

The Committee is satisfied that the above

outcomes were a fair reflection of the

performance of the Company over the relevant

performance periods for the incentive schemes.

The Committee did not have to exercise any

discretion in agreeing the outcome of the

incentive plans and no adjustments were made

relating to the acquisition of Spencer Aerospace

nor as a consequence of the impact of the

pandemic on the Group's ability to meet its

LTIPtargets.

The current economic environment and

the wider workforce’s remuneration

Recognising the impact of high rates of inflation,

Senior has taken steps to help the broader

workforce including salary settlements that

reflected regional costs of living pressures.

Theimpact of this has been particularly felt

byour more junior employees and therefore

although approaches vary between businesses,

these employees have been targeted for higher

salary increases or other initiatives such as:

• Introducing or extending bonus plans;

• One-off special ‘cost of living’ payments; and

• Support with travel costs.

In addition, there were changes made for the

benefit of the wider workforce, such as:

• Offering an increased level of pension

contributions to the majority of the

UKworkforce;

• Introducing a more flexible approach to

working hours; and

• Promoting employee assistance programmes

and wellbeing initiatives.

Implementation of the Policy for 2023

The basic salaries of the Group Chief Executive

Officer and Group Finance Director were

increased by 5.4% and 5.5% respectively

witheffect from 1 January 2023. Typically,

payof employees at our UK operations

increased by 6% or higher, depending upon

skills and geographic location.

As previously reported, the pension

contributions of the executive Directors were

reduced from 1 January 2023 to 15% which

aligns with the pension contribution available

tothe majority of the UK workforce.

GOVERNANCE / REMUNERATION: CHAIR’S ANNUAL STATEMENT CONTINUED

• Relative TSR – Our approach to measuring

TSR against a broad group of FTSE 350

companies will remain unchanged. Threshold

for vesting will continue to require median

performance against the peer group. For

maximum vesting of the enhanced award, we

will require upper quintile (rather than upper

quartile) performance against the peer group.

• Adjusted EPS – We will assess this based on

the absolute level of adjusted EPS reported in

2025. Threshold for vesting will be adjusted

EPS of 11.77p and maximum vesting will be at

18.50p, more than quadrupling adjusted EPS,

compared to 2022.

The Committee remains confident that a mix of

ROCE, relative TSR and adjusted EPS provides

abalanced approach to measuring performance

over the next three-year period which aligns

with Senior’s strategy for recovery and growth.

We have again reflected on the potential use of

a specific sustainability measure, recognising

the expectations of some investors in this

space. Sustainability is central to the strategy

ofthe business and taken very seriously by the

executive Directors and other senior leaders,

and we remain of the view that Senior’s

sector-leading ESG performance demonstrates

that we do not need to include an explicit ESG

target within the incentive schemes to ensure

appropriate focus on these matters. As a result,

we are not changing our approach for 2023

butwe will consider this again later in the year

as we review the Remuneration Policy ahead

ofits renewal at the AGM in 2024.

We have also considered the LTIP proposal, and

executive Directors’ remuneration more broadly,

very carefully in the context of the remuneration

of the wider workforce. As noted above, a key

feature of the proposal is its application to all

LTIP participants, ensuring consistency across

the senior executive population. Given Senior’s

decentralised nature, it is important that we align

all leaders with a consistent award structure

andset of targets which focuses them on the

performance of the overall Group. More broadly,

the Committee has reflected on the specific

challenges facing the wider workforce in an

environment when inflation has returned and

many are experiencing cost-of-living pressures,

as outlined above.

The Remuneration Committee believes that

theenhanced award is in the best interests of

the Group and its shareholders. The Committee

retains the discretion to adjust the level of

vesting if it considers the outcome to be

anomalous or is not reflective of the underlying

performance of the Group over the period,

taking into account the resilience of the markets

in which Senior operates and trends in the

underlying equity markets.

Annual bonus plan 2023

Having considered the priorities for the

yearwewill be maintaining the same bonus

performance conditions and weightings as

in2022: Adjusted EPS (60% weighting) and

Free Cash Flow (40% weighting).

The Committee has set targets that are both

stretching and challenging in the current

environment and retains an overriding discretion

in relation to the amount of bonus it awards

notwithstanding any formulaic calculations

andtargets. We also have malus and clawback

arrangements in place.

At the AGM in April 2023, shareholders will

beasked to vote on the Annual Remuneration

Report. I hope that the decisions the

Committeehas taken in respect of 2022

willhave your support.

Change of Remuneration

CommitteeChair

During 2022, I have been working with

BarbaraJeremiah who will be taking over from

me as Remuneration Committee Chair after

theAGM in April 2023. I wish her every success

in the role and wish to thank everyone for their

support over the previous nine years.

Celia Baxter

Chair of the Remuneration Committee

LTIP 2023

Senior’s markets have been impacted by a

number of external events since the grounding

of the Boeing 737 Max, the effects on

profitability have been huge. We remain

confident in the resilience and recovery of these

markets and in our ability to recover profitability

from our products and technology over the

medium term. This rationale was the reason

behind why the Board rejected the Lone Star bid

as it was not good value for our shareholders.

Inorder to deliver on this commitment we need

to retain and motivate the leaders through this

key period of recovery.

Senior has a decentralised business model,

comprised of discrete business units run by

senior managers each with their own profit and

loss account. These senior managers are key to

our success and to meet our aspirations we will

require a stable and highly motivated leadership

team. The LTIP is an important tool to achieve

this, ensuring the ongoing recovery is built on

and outperformance delivered.

For the reasons set out above, the Committee

intends to provide a special long-term incentive

to drive material outperformance through the

next stage of the recovery, by enhancing the

LTIP for 2023 by granting awards at higher than

normal levels to all participants in the LTIP

(approximately 50 senior leaders), with awards

granted at a value that will typically be one-third

higher than granted in 2022. For the executive

Directors, this means they will receive LTIP

awards at a level of 200% of basic salary,

upfrom the normal level of 150%.

The Committee appreciates that an LTIP

awardat a level higher than normal must be

accompanied by particularly challenging and

stretching performance targets. For the 2023

award, we have decided to retain the same

overall construct in our plan design, i.e. using

three equally-weighted performance metrics:

ROCE, relative TSR and adjusted EPS. Targets

for each metric will be measured based on

performance up to the end of the financial year

ending 31 December 2025, with a range of

targets from threshold to maximum. For the

amount of each award above the normal

grantlevel, we have incorporated additional

“super-stretch” targets. Participants will

therefore only receive the full benefit of their

enhanced award if performance is delivered

above and beyond what would be required

innormal circumstances, as follows:

• ROCE – The maximum of the enhanced

award will vest only in the event of ROCE in

2025 being at a level materially higher than

our stated target of 13.5% over the medium

term. Threshold for vesting will require

achieving 12.5% ROCE and maximum will

require achieving 17.0% ROCE.

110 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

111SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / 2022 REMUNERATION REPORT AT A GLANCE

2022 REMUNERATION REPORT

AT A GLANCE

Overview of our remuneration framework for 2022

Element of remuneration Key features

Salary and employment benefits Market competitive to attract and retain high quality executives (including fully expensed car or car allowance,

private medical insurance, life insurance, income protection, and defined contribution retirement benefits

orallowances)

Annual bonus:

Adjusted EPS 60%

Free Cash Flow 40%

Rewards achievement against annual performance objectives:

• Maximum bonus is 125% of salary

• 1⁄3 of any award is paid in shares, deferred for three years

• Group Chief Executive Officer and Group Finance Director target: 62.5% of salary

Long-Term Incentive Plan:

Adjusted EPS (33.3%)

TSR (33.3%)

Return on Capital Employed (33.3%)

Supports the Company’s longer-term strategic aims to create sustainable growth in shareholder value

andtoincentivise, motivate and retain senior talent:

• Maximum award is 200% of salary and normal awards are 150% of salary

• 25% vesting at “threshold”

Shareholding requirements Equivalent to 200% of executive Directors’ salary

Post-employment shareholding requirement applies for a period of two years following cessation,

as set out on page 116

Clawback and malus provisions Cash Bonus Awards subject to clawback

Share awards (LTIP and unvested deferred shares) subject to clawback, malus and post-employment

shareholding requirement

Performance highlights and incentive outcomes

Annual bonus Target Actual

Achieved

(% of

maximum)

Performance condition

Free Cash Flow – full year £6.0m £27.7m 100%

Adjusted EPS – full year internal target

(1)

2.91p 3.88p 100%

Bonus award to Group Chief Executive Officer and Group Finance Director: 100% of maximum

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

Long-Term Incentive Plan (2020 award) Targets (threshold – maximum) Actual

Adjusted EPS (50%) 13.5p (minimum threshold) to 16.5p (maximum

threshold) for the final Financial Year of the three-year

performance period

4.36p (below threshold)

Total Shareholder Return (50%) TSR ranking: 50th percentile (minimum threshold)

to75th percentile (maximum threshold)

24th percentile (below threshold)

Targets for the 2020 Awards were not achieved and therefore the awards shall lapse in full.

Below

Target

Max. Actual Below

Target

Max. Actual

Group Chief Executive Officer 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

3,500

Long-Term Share Price Growth

81% 43% 23%

22%

45%

41%

82% 43% 23%

22%

45%

42%

26%

49%

49%27%

26%

27%

722

1,364

3,18 0

1,419

488

925

2,162

962

GOVERNANCE / 2022 REMUNERATION REPORT AT A GLANCE CONTINUED

Application of Remuneration Policy

The chart below shows how the composition of each of the executive Directors’ packages varies at different levels of performance under

theRemuneration Policy. The assumptions noted for “target” performance in the graph below are provided for illustration purposes only.

This chart is based on the following assumptions:

Threshold Target Maximum

Fixed pay Salary is the 2023 basic salary

The value of Benefits and Pension is taken from the single

total figure of remuneration for 2022

Annual

bonus

Nil 62.5% of 2022

basicsalary

125% of 2022

basicsalary

Long-term

awards

Nil 25% vesting under

the LTIP (i.e. 25%

of(200% x 2023

basicsalary)) and

set out at face value,

assuming no share

price growth or

dividend.

100% vesting under

the LTIP (i.e. 100%

of (200% x 2023

basic salary)) and

set out at face value,

assuming 50% share

price growth and no

dividend.

Changes made in 2022

There were no changes to the Remuneration Policy in 2022. The Pension section of the Remuneration Policy was changed in 2021 in line with

shareholder feedback. In accordance with the changes made in 2021 to the Pension section of the Remuneration Policy, the pension contributions

orpension allowance for executive Directors were reduced from the end of 2022 to 15% which aligns with the pension contribution available to the

majority of the UK workforce. The details of the full Remuneration Policy are for ease of reference is laid out on pages 114 to 116.

About this Report

The Report on Remuneration on pages 119 to 128 is produced in accordance with the 2013 Regulations and the relevant provisions of the Listing Rules

of the Financial Conduct Authority. Parts of the Annual Report on Remuneration are subject to audit, as indicated within this Report.

The rest of the Report covers the following key areas:

• Remuneration Policy:

– How shareholder views are taken into account

– Discretions of the Remuneration Committee

– Policy for non-executive Directors

• Annual Report on Remuneration

112 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

113SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / 2022 REMUNERATION REPORT: POLICY

2022 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 effect from 1 January 2021. The revised policy was reviewed in

the context of the business strategy and the evolving expectations of our

shareholders and stakeholders, which included pension alignment and

post-employment shareholding provisions.

When developing policies and practices, the Remuneration Committee

regularly considers the approach to remuneration and makes decisions

toensure it is aligned to the business strategy. We do this by developing

an overall package that reflects the skills and experience of the

individualsand appropriate short- and long-term incentive plans. The key

performance metrics for both the bonus plan and the long-term incentive

plan are directly linked to the delivery of the strategy and the creation of

shareholder value. Currently the bonus incentivises free cash flow and

earnings growth; Adjusted EPS, TSR and ROCE are included in the

long-term incentive plan. We continue to believe that it is more important

at this stage of our rebuilding to incentivise the executive Directors and

senior managers on delivering the core financial performance of EPS,

ROCE, Free Cash Flow and TSR. We have therefore decided once again

not to introduce a sustainability metric for incentives, as it is clear from

past and current performance, that our sector-leading Environmental,

Social and Governance (ESG) metrics and progress has been achieved

without the need to incentivise; rather it is something driven by our

corevalues, but we will continue to keep this matter underreview.

Factors considered in reviewing the Policy

The Committee is comfortable that the Policy and its implementation

arefully consistent with the factors set out in Provision 40 of the 2018

UKCorporate Governance Code (set out below):

• Clarity – The Policy and the way it is implemented is clearly disclosed

in this policy section of the Directors’ Remuneration Report, with full

transparency of all elements of Directors’ remuneration.

• Simplicity – The Policy is simple and straightforward, based on a mix of

fixed and variable pay. The annual bonus and LTIP include performance

conditions which are aligned with Senior’s business strategy.

• Risk – The Committee believes that the performance targets in place

for the incentive schemes provide appropriate rewards for stretching

levels of performance without driving behaviour which is inconsistent

with the Company’s risk profile and values. Potential reward is aligned

with market levels of peer companies and the reputational risk from a

perception of “excessive” pay-outs is limited by the maximum award

levels set out in the Policy and the Committee’s discretion to adjust

formulaic remuneration outcomes.

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

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

page112 which set out potential pay-outs in the event of different

levelsof performance, based on a number of reasonable assumptions.

Any discretion exercised by the Committee in implementing the

Policywill be fully disclosed.

• Proportionality – The link between the delivery of strategy, long-term

performance, shareholder return and the remuneration of the executive

Directors is set out in the Remuneration Report.

• Alignment to culture – The approach to Directors’ remuneration is

consistent with the Group’s culture and values.

Summary of Decision-Making Process for Policy Changes

In determining and implementing the Policy, the Committee follows a

robust process which includes discussions on the content of the Policy

at Remuneration Committee meetings. To support this process, the

Committee receives advice from independent advisers. It also considers

representations from other key stakeholders, including shareholders,

executive management and employees (whilst ensuring potential conflicts

of interest are suitably managed), in the context of the evolving corporate

governance landscape. The Committee monitors changes in corporate

governance guidance and regulations to ensure the Policy remains

compliant. The implementation of the Policy takes account of the

remuneration of the wider workforce and is aligned with the Group’s

strategy by appropriately incentivising the executive Directors to deliver

the strategic objectives.

Policy for executive Directors

The Policy which was approved by shareholders at the 2021 AGM can be

found on page 114. Following shareholder feedback after the 2021 AGM,

the Pension section of the Policy was updated to bring forward the

alignment of the pension contributions or pension allowance for executive

Directors with the majority of the UK workforce to the end of 2022.

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 effect from

1January

• Benchmarked periodically

against companies with

similarcharacteristics and

sector companies

• Normally positioned within a

range around the mid-market

level taking into account the

experience and performance

inthe role of the individual,

complexity of the role, market

competitiveness and the

impact of salary increases

ontotal remuneration

• 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

• Different performance

conditions may be set when

recruiting an executive Director

• The Committee may review

the performance conditions

from time to time

• The Committee has the

discretion in certain

circumstances to grant and/or

settle an award in cash. In

practice, this will only be used

in exceptional circumstances

for executive Directors

• The Committee has the

discretion to adjust bonus

targets or outcomes if deemed

appropriate, where the bonus

outcome feels perverse. In

practice, this will only be used

in exceptional circumstances

for executive Directors

• 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

GOVERNANCE / 2022 REMUNERATION REPORT: POLICY CONTINUED

114 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

115SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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

three-year performance period

in respect of vested LTIP awards

• All awards are subject to the

discretions contained in the

planrules

• The Committee may review the

performance conditions from

time to time

• The Committee has the

discretion in certain

circumstances to grant and/or

settle an award in cash. In

practice, this will only be used

inexceptional circumstances

forexecutive Directors

• A two-year post-vesting holding

period applied to LTIP awards

from the March 2018 award,

creating a five-year period

between the grant of the

awardsand their final release

• 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

• From the end of 2022, the

pension contributions or

allowances for executive

Directors reduced to 15%

which aligns with the

pension contribution

available to the majority

of the UK workforce

• N/A

GOVERNANCE / 2022 REMUNERATION REPORT: POLICY CONTINUED

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 offer a below median salary initially, the

Committee will have the discretion to allow phased salary increases

overtime for newly appointed directors, even though this may involve

increases in excess of the rate for the wider workforce and inflation.

Benefits will be provided in line with those offered to other employees,

with national or international relocation expenses/arrangements (e.g.

schooling, tax equalisation) provided for if necessary.

The aggregate incentive offered to new recruits will be no higher than

thatoutlined in the Policy on pages 114 to 116. The Remuneration

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

upon recruitment. Different performance measures may be set initially

forthe annual bonus and LTIP, taking into account the responsibilities

ofthe individual, and the point in the financial year that they joined.

Current entitlements (benefits, bonus, share schemes) may be bought

out on terms that are no more favourable than a like-for-like basis

(withacomparable time horizon, fair value and subject to performance

conditions). Existing incentive arrangements will be used to the fullest

extent possible, although awards may also be granted outside these

schemes if necessary and as permitted under the Listing Rules. In the

case of an internal hire, any outstanding variable pay awarded in relation

tothe previous role will be allowed to pay out according to its terms of

grant (adjusted as relevant to take into account the Board appointment).

Rationale behind performance metrics and targets

The performance-related elements take into account the Company’s risk

policies and systems and are designed to align the Directors’ interests

with those of shareholders. Variable pay elements aim to reward

executive Directors for performance at the highest levels and, as such,

the Committee aims to set targets that are both stretching and achievable.

All targets are set on a sliding scale. The Committee reviews the annual

bonus measures set for all the Company’s senior executives (not only

theexecutive Directors) every year in order to ensure that they are

alignedwith the Company’s strategy and annual goals and to ensure

thatbonus arrangements amongst the Company’s senior executive

teamare consistent.

The annual bonus may include a mix of financial and non-financial

measures reflecting the key annual priorities of the Group. The financial

metrics currently include two of the Company’s KPIs: Free Cash Flow,

which is a key measure of the business’s ability to fund future

acquisitions; and Adjusted EPS, which will reflect the Group’s ability

toexpand into new regions and product markets and increase the

profitability of the existing operations. Adjusted EPS is measured on

aconstant currency basis to reduce the impact of exchange rate

movements on bonus outcomes. If non-financial measures are selected,

these may include reference to the Group’s sustainability, safety and

organisational goals.

The Free Cash Flow measure applies to 40% of the total bonus award,

and the Adjusted EPS measure applying to the remaining 60% of the

totalbonus, reflecting the importance of both measures to the running

ofthe Group.

The performance measures used in the LTIP awards consist of Adjusted

EPS, TSR and ROCE; with ROCE being added as a third performance

measure for awards granted from 2021 onwards, given its importance in

the M&A evaluation process, capital investment decisions and customer

bid evaluations. In line with the Policy, the Committee retains the ability

toamend performance measures to reflect changes in market conditions

and business strategy.

The targets will be reviewed prior to each grant by taking account

ofinternal and external expectations. The targets for awards granted

under this Remuneration Policy are set out in the Annual Report on

Remuneration.

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GOVERNANCE / 2022 REMUNERATION REPORT: POLICY CONTINUED

Relationship between executive Director and employee pay

The Remuneration Policy for the executive Directors is designed taking

into account the policy for employees across the Group as a whole. There

are some differences in the structure of the Remuneration Policy for the

executive Directors and other senior employees, which the Remuneration

Committee believes are necessary to reflect the different levels of

responsibility of employees across the Company and reflect different

market norms for different roles. The key differences in remuneration

policy between the executive Directors and employees across the Group

are the increased emphasis on performance-related pay and the inclusion

of a share-based long-term incentive plan for executive Directors.

Executive Directors are provided with a competitive package of benefits

that includes (depending on role) participation in the Group’s occupational

pension arrangements, and/or receipt of pension allowance, provision of

afully expensed car or car allowance, private medical insurance, life

insurance and income protection.

The majority of senior managers are eligible to participate in annual bonus

arrangements with challenging targets tied to the performance of their

operating business, Division and, for the most senior executives, the

Group’s performance.

Long-term incentives are provided to the most senior executives and

those anticipated as having the greatest potential to influence

performance levels within the Company. A lower aggregate incentive

quantum operates below the senior executive level, with levels driven

bythe impact of the role and market comparatives.

Awards under the Restricted Share Award Plan, a deferred share award

plan without performance conditions, are a retention tool and are made

toselected individuals who do not benefit from other long-term incentives

but are considered to have significant potential or are key contributors.

In order to encourage wider employee share ownership, the Company

operates a Sharesave Plan in which employees in the UK, North America

and continental Europe, including executive Directors, may participate.

How employees’ pay is taken into account when setting

executive Director remuneration

The Committee also reviews the salaries of corporate, divisional and

senior operational managers and therefore is fully cognisant of pay levels

in the Group when determining the pay of the executive Directors.

In addition, the Committee’s policy is that salary increases for the

executive Directors and senior executives should not normally be greater

than the general level of increases awarded to other senior managers in

Europe and North America, other than when an executive changes role

orwhen it is necessary in order to ensure levels of remuneration remain

market competitive.

Recognising the impact of high rates of inflation, Senior has taken steps

tohelp the broader workforce including salary settlements that reflected

regional costs of living pressures. The impact of this has been particularly

felt by our more junior employees and therefore although approaches vary

between businesses, these employees have been targeted for higher

salary increases. effect from 1 January 2023. Typically, pay of employees

at our UK operations increased by 6% or higher, depending upon skills

and geographic location. As previously reported, the pension contributions

of the executive Directors were reduced from 1 January 2023 to 15%

which aligns with the pension contribution available to the majority of the

UK workforce.

As laid out in the Remuneration Committee Chair’s Annual Statement,

theCompany consulted with employees in 2022 regarding executive

Directorremuneration.

Policy on outside appointments

The Remuneration Committee believes that it is beneficial both for the

individual and the Company for an executive Director to take up one

external non-executive appointment. Fees paid for the appointment

maybe retained by the executive.

Executive Directors’ service agreements and loss

ofofficepayments

The table below summarises the key provisions of each executive

Director’s contract:

Provision Detailed terms

Employment

contract dates

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 Office during

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

termination of employment is set out below.

GOVERNANCE / 2022 REMUNERATION REPORT: POLICY CONTINUED

Policy on payment for departure from office

On termination of an executive Director’s service contract, the Committee will take into account the departing executive Director’s duty to mitigate

hisor her loss when determining the amount of compensation. The Committee’s policy in respect of the treatment of executive Directors leaving the

Group is described below and is designed to support a smooth transition from the Company, taking into account the interests of shareholders:

Component

of pay

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 on the

AGM voting of the Remuneration Policy and Remuneration Report

resolutions. As a result of the consultation, an amendment was made

tothe Remuneration Policy regarding pension alignment. Consultation

with shareholders has always been constructive.

During 2022, I have undertaken a number of discussions regarding

executive remuneration and will continue to do so with individual

shareholders as per their request. Further in early 2023 I have consulted

our major shareholders and the major governance agencies with regard

tothe implementation of our 2023 Long Term Incentive which I detail in

the relevant section below. We listened to the views of shareholders and

have made changes to our proposals to take account of their feedback.

Discretions of the Remuneration Committee

The Committee operates the Group’s various incentive plans according to

their respective rules and in accordance with HMRC rules where relevant.

To ensure the efficient administration of these plans, the Committee

mayapply certain operational discretions. These include the following:

• selecting the participants for the annual bonus plan and LTIP awards;

• determining the timing of grants and/or payments;

• determining the quantum of grants and/or payments (within the limits

set out in the policy table commencing on page 114);

• adjusting the constituents of the TSR comparator group;

• 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.

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119SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION

2022 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sufficient 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 effective from

1 January

• The Chair of the Board and non-executive Directors do not

participate in any pension, bonus, share incentive or other

share option plans

• The remuneration of the non-executive Directors is

determined by the Board of Directors. The non-executive

Directors do not participate in any discussion or decisions

relating to their own remuneration

• Any reasonable business-related expenses (including tax

thereon) can be reimbursed

• 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 Office 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 April 2023

(1)

Susan Brennan January 2016 January 2022 December 2024

Barbara Jeremiah January 2022 January 2022 December 2024

Giles Kerr September 2013 September 2019 April 2023

(1)

Rajiv Sharma January 2019 January 2022 December 2024

Mary Waldner December 2021 December 2021 November 2024

(1) In September 2022, Celia Baxter and Giles Kerr reached the ninth anniversary of their respective appointments to the Board. Both Directors are to retire from the Board at the

conclusion of the AGM in April 2023; at which time Barbara Jeremiah will become Senior Independent Director and Chair of the Remuneration Committee, and Mary Waldner

will become Chair of the Audit Committee and the Director nominated for Employee Engagement.

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Summary of the Committee’s Terms of Reference

The Terms of Reference of the Remuneration Committee, available in full

on the Company’s website, are summarised below:

• determine and agree with the Board the framework or broad policy

forthe remuneration of the Chair of the Board, the executive Directors

and other members of the executive management as it is designated

toconsider;

• within the terms of the agreed Policy and in consultation with the Chair

of the Remuneration Committee and/or Group Chief Executive Officer,

as appropriate, determine the total individual remuneration package of

the Chair of the Board, each executive Director, and other designated

senior executives including bonuses, incentive payments and share

options or other share awards;

• approve the design of, and determine targets for, any performance

related pay plans operated by the Company and approve the total

annual payments made under such plans;

• review the design of all share incentive plans for approval by the Board

and shareholders. For any such plans, determine each year whether

awards will be made and, if so, the overall amount of such awards, the

individual awards to executive Directors, and other designated senior

executives and the performance targets to be used; and

• oversee any major changes in employee benefits structures throughout

the Group.

Members

The Remuneration Committee consists entirely

of non-executiveDirectors.

Member

Number of

meetings during

term

(1)

Number of

meetings

attended

Celia Baxter – Chair 5 5

Susan Brennan 5 5

Barbara Jeremiah 5 5

Giles Kerr 5 5

Ian King 5 5

Rajiv Sharma 5 5

Mary Waldner 5 5

(1) The full Committee met five times in 2022. In addition, authority was delegated to

two members of the Committee, Celia Baxter and Ian King, to hold one additional

meeting to confirm the granting and vesting of share awards.

Other attendees at Remuneration Committee meetings

The Group Chief Executive Officer and Group HR Director attend

meetings by invitation and the Group Company Secretary acts as

secretary to the Committee but no executive Director or other employee

is present during discussions relating to his or her own remuneration.

Advisers

Before recommending proposals for Board approval, the Remuneration

Committee may seek advice from external remuneration consultants

toensure that it is fully aware of comparative external remuneration

practice as well as shareholder, legislative and regulatory developments.

The Committee also considers publicly available sources of information

relating to executive remuneration.

All advisers to the Remuneration Committee are appointed and instructed

by the Committee. During the year, the Committee was advised by

KornFerry in relation to remuneration advice, LTIP performance

monitoring and the provision of LTIP advice, and by FIT Remuneration

Consultants in relation to the provision of LTIP advice. During 2022, the

Company incurred fees of £6,408 from Korn Ferry and of £8,784 from

FITRemuneration Consultants, and these costs were based on a

combination of hourly rates and fixed fees for specific items of work.

The Committee does not have a formal policy of subjecting its

remuneration consultants to a regular fixed-term rotation, although

theCommittee remains cognisant of the need to seek objective advice

and good value whilst also benefiting from the consultants’ knowledge

ofthe Company. Other than described above, neither remuneration

consultants have other connections with the Company or its Directors.

TheCommittee is satisfied that the advice it has received during 2022

hasbeen objective and independent.

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121SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Principal activities and matters addressed during 2022

The Committee has a calendar of standard items within its remit and in addition it held in-depth discussions on specific topics during the year.

TheCommittee typically meets four times each year. In addition, authority was delegated to two members of the Committee, Celia Baxter and

IanKing, to hold one additional meeting to confirm the grant and vesting of share awards. The table below shows the items considered at each

meeting, leading up to the meetings in February and March where the key decisions regarding performance, outcomes and grants for the

comingyearare determined.

Standard agenda items Ad hoc items

January Preliminary review of performance and outcomes under the Annual Bonus and Deferred

Bonus Award.

Preliminary Review of performance and vesting under long-term incentives.

Discuss incentive structure and targets for the 2022 financial year.

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 2022 financial year including finalisation of targets.

Review and approve draft Remuneration Report.

Review gender pay gap reporting

andCEO Pay Ratio.

March Confirmation of grants of LTIP, Deferred Bonus Awards and Restricted Share Awards.

Confirmation of vestings of Deferred Bonus Awards and Restricted Share Awards.

September Discuss options relating to the existing

share-based executive award plans,

andcurrent shareholder thinking and

topical matters, including the use of

ESGtargets.

December

(two meetings)

Review and approval of Directors’ and senior managers’ salary and total remuneration

packages for the following financial year taking into consideration available salary market data.

Performance update on outstanding incentive and bonus awards.

Discussion on 2023 LTIP and bonus targets; and associated shareholder consultation.

Determine remuneration of Chairman.

Review of Committee’s Terms of Reference.

Review feedback from UK

employeeconsultation.

Statement of voting at General Meeting

At the AGM held on 21 April 2022, shareholder votes on the Directors’ Remuneration Report were cast as follows:

Voting For Against Total Withheld

(1)

Reason for vote

against, (if known)

Action taken by

Committee

Remuneration Report Votes 308,019,668 30,221,012 338,240,680 6,954,222 See below N/A

% 91.07% 8.93% 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 2022 AGM concerning executive remuneration. A large proportion of the votes

cast against the Remuneration Report related to a single large shareholder's objection to a Total Shareholder Return performance condition being

included in the executive Directors’ LTIP awards. A TSR performance condition has been used in executive Directors’ LTIP awards for many years, in

conjunction with the EPS and (since the 2021 awards) Return of Capital Employed performance conditions. The Remuneration Committee considers

these performance metrics provide an appropriate balance of targets to properly incentivise the executives to deliver long-term value for shareholders.

The Committee will continue to review the suitability of these and other potential performance conditions in advance of the granting of each year’s

LTIP awards.

Single total figure of remuneration (Audited information)

The following table shows a single total figure of remuneration in respect of qualifying service for the 2022 financial year for each Director, together

with comparative figures for 2021. Aggregate Directors’ emoluments are shown at the end of the Single Total Figure of Remuneration section.

Salaries and

fees

£000s

Taxable benefits

and allowances

(1)

£000s

Bonus

(2)

£000s

Long-term

incentives

(3)

£000s

Pension benefits

including cash in

lieu of pension

£000s

Total fixed

remuneration

£000s

Total variable

remuneration

£000s

Total

£000s

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2022 2022 2021

Executives

David Squires 557 540 24 27 696 675 0 0 111 108 692 696 1,388 1,350

Bindi Foyle 379 361 12 22 474 451 0 0 76 72 467 474 941 906

Total remuneration 936 901 36 49 1,170 1,126 0 0 187 180 1,159 1,170 2,329 2,256

Non-executives

Ian King (Chairman) 197 191 2 1 – – – – – – 199 – 199 192

Celia Baxter 73 71 – – – – – – – – 73 – 73 71

Susan Brennan 55 53 – – – – – – – – 55 – 55 53

Barbara Jeremiah

(5)

55 – – – – – – – – – 55 – 55 –

Giles Kerr 64 62 – – – – – – – – 64 – 64 62

Rajiv Sharma 55 53 – – – – – – – – 55 – 55 53

Mary Waldner

(5)

55 4 – – – – – – – – 55 – 55 4

Total remuneration 554 434 2

1 – – – – – – 556 – 556 435

(1) Taxable benefits for executive Directors include the provision of a fully expensed company car or car allowance and private medical insurance. Taxable benefits for non-executive

Directors are travel expenses.

(2) Awards for the deferred share element of the Bonus in respect of 2022 performance will be granted following the announcement of the 2022 results. The deferred bonus

element that is to be granted in the form of shares to David Squires and Bindi Foyle following the announcement of the 2022 results, is included in the Bonus figure and will

beequivalent in value to one-third of the Bonus figure, namely £232,083 and £157,917 respectively.

(3) The performance conditions attached to David Squires’ and Bindi Foyle’s 2020 LTIP Awards were not achieved, and this award will lapse in March 2023. Further details on

theperformance conditions can be found on page 111.

(4) The aggregate amount of remuneration paid to or receivable by Directors in respect of qualifying services as per paragraph 9 of SI 2008/40 Schedule 5 was £2,696,061.

(5) Mary Waldner was appointed to the Board on 1 December 2021 and her 2021 fee is the amount paid from that date. Barbara Jeremiah was appointed to the Board on

1January2022.

Fees received for outside appointments

The Board supports executive Directors taking up appointments outside the Company to broaden their knowledge and experience. Each executive

Director is permitted to accept one non-executive appointment from which they may retain any fee. Any external appointment must not conflict with

aDirector’s commitments to Senior plc.

David Squires does not hold any outside appointments for which he is remunerated. Bindi Foyle was appointed to the Board of Avon Protection plc

asa non-executive director with effect from 1 May 2020 and retained fees of £60,000 for the year ending 31 December 2022 (£59,205 for the year

ended 31 December 2021). Prior to her taking up this appointment, the Nominations Committee considered the time commitment required for this

new role and was supportive of her taking up that appointment.

Annual fees of non-executive Directors

The non-executive Directors do not participate in any pension, bonus, share incentive or other share option plans. Their remuneration reflects both

thetime given and the contribution made by them to the Company’s affairs during the year, including membership or chairing of the Board or its

Committees. The remuneration of the non-executive Directors is determined by the Board of Directors. The non-executive Directors do not participate

in any discussion or decisions relating to their own remuneration.

Having considered Senior’s financial performance, the then current market conditions experienced by the Group and its 2022 outlook, the Board

agreed that the salaries and fees paid to the Directors would increase in 2022 as follows:

Fees

2022

2021

Percentage

change

Chairman 197,000 191,000 3.14%

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

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%

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Senior managers’ emoluments

In addition to setting the remuneration of the executive Directors, the Remuneration Committee oversees the remuneration of other senior managers.

The table below shows the cumulative benefits of the two Divisional CEOs, the two Divisional CFOs and the most senior corporate managers. For the

purpose of valid comparison, the benefits and payments that had been made to one of the senior corporate managers who had retired in December

2021 and was not replaced in 2022, have been excluded from the prior year comparator.

2022

Total

£000s

2021

Total

£000s

Short-term employee benefits 3,325 2,926

Post-employment benefits 55 42

Share-based payments 1,356 881

Total 4,736 3,849

Performance against performance targets for annual bonus (audited information)

Bonuses are earned by reference to the financial year and paid in March following the end of the financial year. Consistent with recent years, the

bonuses accruing to the executive Directors in respect of 2022 have been determined by Adjusted EPS and Free Cash Flow performance as set out

inthe table below. The acquisition of Spencer Aerospace completed on 25 November 2022; the Committee determined that this acquisition had no

material impact on the achievement of the maximum thresholds of the Free Cash Flow and Adjusted EPS targets and that no adjustment to the 2022

bonus payments was required.

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

2022 2021

Threshold Target Maximum

Actual

achieved

Maximum

bonus

achievable

Percentage

of maximum

achieved

Bonus

payable

(% of 2022

salary)

(1)

Maximum

bonus

achievable

Percentage

of maximum

achieved

Bonus

payable

(% of 2020

salary)

(1)

Free Cash Flow targets – full year £4.0m £6.0m £15.0m £27.7m 50.00% 100% 50% 50.00% 100.00% 50%

Adjusted EPS targets

(2)

– full year

internal target 2.63p 2.91p 3.56p 3.88p 75.00% 100% 75% 75.00% 100.00% 75%

Totals 125.00% 100% 125% 125.00% 100.00% 125%

(1)

When bonus is payable, this is paid two-thirds in cash and one-third in deferred shares. The deferred share element of the 2021 bonus was awarded on 8 March 2022 based on

ashare price of £1.21 and shall ordinarily vest on the third anniversary of the award on 8 March 2024. The deferred element of any 2022 bonus shall be awarded following the

announcement of the 2022 annual results in 2023 and the details disclosed in the 2023 Remuneration Report.

(2) The internal Adjusted EPS target is calculated on a constant currency basis.

Total pension entitlements (audited information)

The 2022 single figure remuneration for pension benefits for David Squires and Bindi Foyle consisted of a cash allowance of £111,400 (2021 –

£108,000) and £75,800 (2021 – £72,200) respectively, this being 20% of the respective base salaries.

The pension contributions or pension allowance for executive Directors were reduced to 15% from the end of 2022 which aligns with the pension

contribution available to the majority of the UK workforce.

Further detail may be found on page 115 of the Remuneration Report: Policy section.

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Payments for loss of office (audited information)

There were no payments made in the year for loss of office.

Performance against performance conditions for LTIP vesting

The performance conditions are set out below.

By reference to performance in the financial year (audited information)

Set out below are the performance conditions attached to the 2020 LTIP award. Neither performance condition was achieved and therefore the 2020

LTIP awards shall lapse in full.

Performance condition

Target

(25%vesting)

Maximum

(100% vesting) Actual

Percentage

of total award

achieved

Total shareholder return percentile ranking (50% of Award) 50th 75th 24th 0%

Adjusted earnings per share for the final Financial Year of the

Performance Period (50% of Award) 13.5p 16.5p 4.36p 0%

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 836 25% 690,495 31 December 2024

Bindi Foyle

(1)

LTIP Annual award 569 25% 469,834 31 December 2024

(1) The face value of the awards represented 150% of the executive Directors’ respective 2022 base salaries.

Current position on outstanding LTIP awards (non-audited information)

The following table shows the current position against performance targets for LTIP awards outstanding from 2021 and 2022.

Conditional share awards granted in 2022 Conditional share awards granted in 2021

Performance condition

Threshold

(25% vesting)

Maximum

(100% vesting) Actual to date

Threshold

(25% vesting)

Maximum

(100% vesting) Actual to date

Total shareholder return ranking 50th percentile 75th percentile 52nd percentile 50th percentile 75th percentile 98th percentile

Adjusted EPS performance for

the final Financial Year of the

performance period 10.05p 12.35p 4.36p

(2)

5.67p 7.5 6 p 4.36p

(1)

Return on Capital Employed 10.0% 13.5% 4.7%

(4)

9.8% 11.0% 4.7%

(3)

(1) Actual to date figure of 4.36p represents the Adjusted EPS during the first two years of the three-year performance period for the 2021 LTIP award.

(2) Actual to date figure of 4.36p represents the Adjusted EPS during the first year of the three-year performance period for the 2022 LTIP award.

(3) Actual to date figure of 4.7% represents the Return on Capital Employed during the first two years of the three-year performance period for the 2021 LTIP award.

(4) Actual to date figure of 4.7% represents the Return on Capital Employed during the first year of the three-year performance period for the 2022 LTIP award.

To ensure a suitably broad peer group, the TSR comparator group applicable to LTIP awards is the FTSE 350 index, excluding sectors with limited

direct relevance to Senior and those exhibiting high volatility. TSR is averaged over three months prior to the start and end of the performance period.

The acquisition of Spencer Aerospace completed on 25 November 2022; the Committee reviewed the potential impact of the acquisition on the three

performance targets for the outstanding LTIP awards: Total Shareholder Return; Earnings per Share; and, for the awards granted in 2021 and 2022,

Return on Capital Employed, and agreed that the original targets for the outstanding LTIP awards should remain unaltered.

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Shareholder dilution

Percentage of issued shares

Discretionary

schemes

(maximum 5%)

All schemes

(maximum 10%)

3.57%

6.43%

Shares awarded as % of issued shares

Headroom

2.15%2.85%

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

At 31 December 2022, awards outstanding and shares issued in the previous 10 years under the Senior plc 2005 Long-Term Incentive Plan (the 2005

LTIP), the Senior plc 2014 Long-Term Incentive Plan (the 2014 LTIP), and the 2006 Savings-Related Share Option Plan (the Sharesave Plan)) amounted

to 3.57% of the issued ordinary share capital of the Company. At 31 December 2022, awards outstanding and shares issued in the previous 10 years

under executive (discretionary) plans (the 2005 LTIP and 2014 LTIP) amounted to 2.85% of the issued ordinary share capital of the Company.

During 2022, all share awards were satisfied using market-purchased shares. The Remuneration Committee monitors the flow rates of the Company’s

share plans, in particular before new share awards are made, to ensure the flow rates remain within the Investment Association dilution guidelines.

Statement of Directors’ shareholding and share interests (audited information)

The Remuneration Committee encourages Directors to own shares in the Company and, in support of this policy, it expects executive Directors

toretain at least 50% of the shares that vest under the LTIP awards and the deferred share element of the Bonus, after allowing for tax liabilities,

untilashareholding equivalent in value to 200% of base salary is built up. Included within the Directors’ holdings are 325,000 shares and 38,788

shares that David Squires and Bindi Foyle purchased respectively.

The table below shows how each Director complies with this requirement. Shares are valued using the Company’s closing share price on

31December 2022 of 125.2p (31 December 2021 – 147.03p). No options under the Sharesave Plan were exercised by the executive Directors

duringthe year.

Executive Directors

Number of shares

required to be held

(equivalent to 200%

of basic salary at 31

December 2022)

Number of shares

held (including

unvested deferred

shares net of tax) at

31 December 2022

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 889,776 809,003 No – 90.9% 1,891,412 0 355,940

Bindi Foyle 605,431 354,843 No – 58.6% 1,272,669 0 237,78 5

(1) The minimum thresholds were not reached for the two performance conditions attached to David Squires’ and Bindi Foyle’s 2020 LTIP awards over 482,832 shares,

and322,782 shares respectively (included within their respective LTIP award figures above) and therefore these awards shall lapse in full in March 2023.

The interests of Directors have remained unchanged between the date of the review and the date of the signing of the Annual Report and Accounts.

Number of shares

owned outright

(including connected

persons) at

1 January 2022

Shares vested

during 2022

(1)

Shares retained

from 2022

vested shares

Shares purchased

during 2022

Number of shares

owned outright

(including connected

persons) at

31 December 2022

Executive Directors

David Squires 512,125 73,230 73,230 35,000 620,355

Bindi Foyle 202,887 49,013 25,930 – 228,817

Non-executive Directors 

Ian King 514,297 – – 300,000 814,297

Celia Baxter 31,653 – – – 31,653

Susan Brennan 5,900 – – – 5,900

Barbara Jeremiah

(2)

– – – 25,000 25,000

Giles Kerr 10,000 – – – 10,000

Rajiv Sharma – – – – –

Mary Waldner – – – 10,000 10,000

(1) In 2022, the following gains were made by David Squires and Bindi Foyle: £90,122 and £60,319 respectively upon the vesting of the deferred share element of the Bonus and

dividend equivalent shares. The gains were calculated by multiplying the number of shares that vested by the average share price secured by all recipients that sold vested

shares on the vesting day of 8 March 2022 of 123.07p.

(2) Barbara Jeremiah was appointed to the Board on 1 January 2022.

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Performance graph

Share price performance

The closing middle market price of the shares at 31 December 2022 was 125.2p (2021 – 147.03p). During 2022, the shares traded in the range

of111.0p to 152.1p.

Senior plc total shareholder return

The following TSR graph compares the total shareholder return of the Company’s shares against the FTSE All-Share, Aerospace & Defence index,

andthe FTSE 250 Index over a ten-year period (where dividends are included gross of tax). This graph allows a comparison to be made against

organisations facing broadly similar economic and market conditions as the Company.

100

150

200

250

300

Dec 21 Dec 22Dec 20Dec 19Dec 18

Dec 17

Dec 16Dec 15Dec 14Dec 13Dec 12

FTSE All-Share A&DSenior FTSE250

Source: Refinitiv Eikon Datastream

Remuneration of Group Chief Executive Officer

2013 2014 2015

(1)

2016 2017 2018

(2)

2019 2020 2021 2022

CEO single figure of total remuneration (£000s) 1,726 1,316 1,020 790 1,009 1,107 1,203 917 1,350 1,388

Annual variable element award rates against maximum

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

Long-term incentive vesting rates against maximum

opportunity (%) 100 91.8 21 0 0 0 28 0 0 0

(1) During 2015, Mark Rollins retired from the Board on 31 May 2015 and David Squires was appointed a Director on 1 May 2015. The CEO single figure of total remuneration

includes the combined 2015 values for Mark Rollins and David Squires.

(2) The annual variable maximum bonus opportunity increased from 105% to 125% in 2018.

Percentage change in remuneration of Directors

The table below shows how the percentage changes in Directors’ salary, benefits and bonus between 2020 and 2021 and between 2021 and 2022

compare with the percentage change in the average of each of those components of pay for Senior plc employees. During 2020, the executive

Directors, the Chair and the non-executive Directors voluntarily reduced their salaries and fees by 20% for a three-month period in recognition of the

disruption caused by the pandemic. The percentage change of Salary figures in the table below are calculated using the 2020 salaries before the

voluntary reduction in salaries and fees for the Directors and some Senior plc employees. Employees who joined or left in either year have been

excluded to prevent distortion.

2021 vs 2022 2020 vs 2021

Salary

Taxable

benefits and

allowances Bonus Salary

Taxable benefits

and allowances Bonus

Percentage

change

(1)

Percentage

change

(2)

Percentage

change

Percentage

change

(1)

Percentage

change

Percentage

change

Executive Directors

David Squires 3.2% -12.3% 3.2% 0% 3.4% 150.0%

Bindi Foyle 5.0% -44.3% 5.0% 0% 4.8% 150.0%

Non-executive Directors

Ian King 3.1% – – 0% – –

Celia Baxter 2.1% – – 0% – –

Susan Brennan 2.8% – – 0% – –

Barbara Jeremiah

(3)

N/A – – N/A – –

Giles Kerr 2.4% – – 0% – –

Rajiv Sharma 2.8% – – 0% – –

Mary Waldner

(3)

N/A – – N/A – –

Senior plc Employees, excluding Directors 6.7% 7.0% 6.7% 3.3% 2.0% 158.6%

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

(2) Bindi Foyle’s Taxable benefits and allowances reflects the transition from having a car allowance to having a company car during 2022.

(3) Mary Waldner was appointed to the Board on 1 December 2021 and Barbara Jeremiah was appointed to the Board on 1 January 2022.

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127SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

CEO Pay Ratio narrative

The CEO Pay Ratio is calculated using Option B, by taking the gender pay gap data (based on Senior’s largest UK employer, Senior UK Limited) and

adding the data for Senior’s two additional UK employing entities. For the purpose of making a valid comparison, leavers were excluded. Using the

same principles as the gender pay data, the best equivalents were identified, namely: the 25th, 50th and 75th percentile. The full-time equivalents

payand benefits figures for the year ending December 2022 were calculated, and then reviewed to ensure that the selected best equivalents were

reasonably representative. The modest change compared to prior year was mainly due to the increase in the number of employees receiving a bonus

during 2022.

Pay ratio

Year Method

(1)

25th percentile 50th percentile 75th percentile

2022 B 51 : 1 44 : 1 36 : 1

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.

Year 2022 25th percentile 50th percentile 75th percentile

Base salary £21,286 £24,801 £33,910

Total £27, 3 9 2 £31,484 £38,692

Relative importance of spend on pay

The following table sets out the percentage change in profit, dividends and overall spend on pay in the financial year ended 31 December 2022

compared with the financial year ended 31 December 2021.

2022

£m

2021

£m

Percentage

change

Employee remuneration costs (excluding social security)

(1)

234.7 198.9 18.0%

Adjusted profit/ (loss) before tax 20.1 (1.9) 1,15 8%

Dividends paid 1.2 – N/A

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

2023 Remuneration (non-audited information)

Salaries and fees for 2023

Recognising the impact of high rates of inflation, Senior has taken steps to help the broader workforce including salary settlements that reflected

regional costs of living pressures. The impact of this has been particularly felt by our more junior employees and therefore although approaches vary

between businesses, these employees have been targeted for higher salary increases or other initiatives, more broadly described in the Chair's Annual

Statement on page 108. When determining the 2023 basic salaries of the Group Chief Executive Officer and Group Finance Director, which were

increased by 5.4% and 5.5% respectively, the Committee was cognisant of the increases applied to the wider UK workforce, which were typically 6%

or higher, depending upon skills and geographic location.

Although determined by the Board, rather than the Remuneration Committee, the 2023 fees for the Non-executive Directors were increased by 5.5%

and had been determined after considering the increasing time commitment of the non-executive Directors, and the increases applied to the wider UK

workforce, and to those for the executive Directors. The fees for the roles of the Chairs of the Audit and Remuneration Committees and for the Senior

Independent Director were last increased in 2016.

2023

2022

Percentage

change

Executive Directors

David Squires 587,000 557,000 5.39%

Bindi Foyle 400,000 379,000 5.54%

Non-executive Directors

(1)

Chairman 208,000 197,000 5.58%

Non-executive Directors 57,50 0 54,500 5.50%

Chair of Audit Committee 10,000 9,000 11.11%

Chair of Remuneration Committee 10,000 9,000 11.11%

Senior Independent Director 10,000 9,000 11.11%

Director with responsibility for employee engagement

(2)

6,000 – N/A

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

(2) The Committee considered the significant time commitment required of the non-executive Director with designated responsibility for employee engagement and determined

that it would be appropriate for a fee of £6,000 p.a. be paid for this role with effect from 1 January 2023.

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

Annual bonus for 2023

The maximum bonus opportunity remains unchanged for the 2023 annual bonus and is 125% of basic salary, with two-thirds payable in cash

andone-third in deferred shares. The individual weightings of the KPIs for the executive Directors for the annual bonus are set out below.

2023 2022

Maximum possible

cash award

Maximum share

award

Maximum

possible cash

award

Maximum share

award

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

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

Totals 83.33% 41.67% 83.33% 41.67%

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

Fulldisclosure of the 2023 targets will be in the 2023 Annual Report.

LTIP Awards for 2023

Senior’s markets have been impacted by a number of external events since the grounding of the Boeing 737 Max, the effects on profitability

havebeen huge. We remain confident on the resilience and recovery of these markets and our ability to recover profitability from our products

andtechnology over the medium term. This rationale was the reason behind why the Board rejected the Lone Star bid as it was not good value

forourshareholders. In order to deliver on this commitment we need to retain and motivate the leaders through this key period of recovery.

Senior has a decentralised business model, comprised of discrete business units run by senior managers each with their own profit and loss account.

These senior managers are key to our success and to meet our aspirations we will require a stable and highly motivated leadership team. The LTIP

isan important tool to achieve this, ensuring the ongoing recovery is built on and outperformance delivered.

The Remuneration Committee intends to provide a special long-term incentive to drive material outperformance through the next stage of the

recovery, by enhancing the LTIP for 2023 by granting awards at higher than normal levels to all participants in the LTIP (approximately 50 senior

leaders), with awards granted at a value that will typically be one-third higher than granted in 2022. For the executive Directors, this means they

willreceive LTIP awards at a level of 200% of basic salary, up from the normal level of 150%.

We have also considered the LTIP proposal, and executive Directors’ remuneration more broadly, very carefully in the context of the remuneration

ofthe wider workforce. As noted above, a key feature of the proposal is its application to all LTIP participants, ensuring consistency across the senior

executive population. Given Senior’s decentralised nature, it is important that we align all leaders with a consistent award structure and set of targets

which focuses them on the performance of the overall Group. More broadly, the Committee has reflected on the specific challenges facing the wider

workforce in an environment when inflation has returned and many are experiencing cost-of-living pressures, as outlined above.

Adjusted EPS, TSR and ROCE metrics will be retained as the performance measures in the LTIP and have equal weighting of 33.3%: 33.3%: 33.3%.

The Adjusted EPS target has been set to be stretching and challenging. The target is expressed as absolute growth achieved in 2025 compared to

2022. TSR performance will continue to be measured against the FTSE 350 (excluding companies in the following sectors: Banks; Financial Services

(other than Closed End Investments); Life and Non-life Insurance; Oil, Gas & Coal; Precious Metals & Mining; Industrial Support Services; and Real

Estate Investment Services and Trusts). The excluded sectors remain the same to those used in previous years. The Company has consistently stated

that its medium-term ROCE target is a minimum of 13.5% pre-tax, post IFRS 16 and this has not changed. The ROCE targets set for the 2023 LTIP

award have been increased from those set in 2022 to reflect where we are on our recovery. The targets are set at a stretching level that takes account

of market conditions and the minimum medium-term target.

The Thresholds and Maximum for 2022 and 2023 are set out in the table below:

2023 2022

Weighting

(%)

Threshold

(25% vesting)

Maximum

(100% vesting)

Weighting

(%)

Threshold

(25% vesting)

Maximum

(100% vesting)

Return on Capital Employed 33.33% 12.5% 17.0% 33.33% 10.0% 13.5%

Total Shareholder Return ranking 33.33%

Median

or higher

Upper quintile

or higher 33.33%

Median

or higher

Upper quartile

or higher

Adjusted earnings per share 33.33% 11.77p 18.5p 33.33% 10.05p 12.35p

Approval of the Directors’ Remuneration Report

The Directors’ Remuneration Report was approved by the Board on 24 February 2023.

Signed on behalf of the Board

Celia Baxter

Chair of the Remuneration Committee

24 February 2023

GOVERNANCE / 2022 REMUNERATION REPORT: ANNUAL REPORT ON REMUNERATION CONTINUED

128 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

STATEMENT OF DIRECTORS’

RESPONSIBILITIES IN RESPECT

OF THE ANNUAL REPORT AND

THEFINANCIAL STATEMENTS

The Directors are responsible for keeping

adequate accounting records that are sufficient

to show and explain the Parent Company’s

transactions and disclose with reasonable

accuracy at any time the financial position of

theParent Company and enable them to ensure

that its Financial Statements comply with the

Companies Act 2006. They are responsible

forsuch internal control as they determine is

necessary to enable the preparation of Financial

Statements that are free from material

misstatement, whether due to fraud or error,

and have general responsibility for taking such

steps as are reasonably open to them to

safeguard the assets of the Group and to

prevent and detect fraud and other irregularities.

Under applicable law and regulations, the

Directors are also responsible for preparing a

Strategic Report, Directors’ Report, Directors’

Remuneration Report and Corporate

Governance Statement that complies with

thatlaw and those regulations.

The Directors are responsible for the

maintenance and integrity of the corporate and

financial information included on the Company’s

website. Legislation in the UK governing the

preparation and dissemination of Financial

Statements may differ from legislation in

otherjurisdictions.

The Directors are responsible for preparing

theAnnual Report and the Group and Parent

Company Financial Statements in accordance

with applicable law and regulations.

Company law requires the Directors to prepare

Group and Parent Company Financial

Statements for each financial year. Under that

law they arerequired to prepare the Group

Financial Statements in accordance with

UK-adopted international accounting standards

and applicable law and have elected to prepare

theParent Company Financial Statements in

accordance with UK accounting standards

andapplicable law, including FRS 101

ReducedDisclosure Framework.

Under company law the Directors must not

approve the Financial Statements unless they

aresatisfied that they give a true and fair view

ofthe state of affairs of the Group and Parent

Company and of the Group’s profit or loss for

that period. In preparing each of the Group

andParent Company Financial Statements,

theDirectors are required to:

• select suitable accounting policies and

thenapply them consistently;

• make judgements and estimates that are

reasonable, relevant, reliable and prudent;

• for the Group Financial Statements, state

whether they have been prepared in

accordance with UK-adopted international

accounting standards;

• for the Parent Company Financial Statements,

state whether applicable UK accounting

standards have been followed, subject to any

material departures disclosed and explained

inthe Parent Company Financial Statements;

• assess the Group and Parent Company’s

ability to continue as a going concern,

disclosing, as applicable, matters related

togoing concern; and

• use the going concern basis of accounting

unless they either intend to liquidate the

Group or the Parent Company or to cease

operations, or have no realistic alternative

butto do so.

Responsibility statement of the Directors

in respect of the annual financial report

We confirm that to the best of our knowledge:

• the Financial Statements, prepared in

accordance with the applicable set of

accounting standards, give a true and fair

viewof the assets, liabilities, financial position

and profit or loss of the Company and the

undertakings included in the consolidation

taken as a whole; and

• the Strategic Report includes a fair review of

the development and performance of the

business and the position of the issuer and

the undertakings included in the consolidation

taken as a whole, together with a description

of the principal risks and uncertainties that

they face.

We consider the Annual Report and Accounts,

taken as a whole, is fair, balanced and

understandable and provides the information

necessary for shareholders to assess the

Group’s position and performance, business

model and strategy.

David Squires Bindi Foyle

Group Chief Executive Officer Group Finance Director

24 February 2023 24 February 2023

129SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC

1. Our opinion is unmodified

We have audited the financial statements of

Senior plc (“the Company”) for the year ended

31 December 2022 which comprise the

Consolidated Income Statement, the

Consolidated Statement of Comprehensive

Income, Consolidated and Company Balance

Sheet, Consolidated and Company Statement

ofChanges in Equity, Consolidated Cash Flow

Statement and the related notes, including

theaccounting policies in note 2.

In our opinion:

• the financial statements give a true and fair

view of the state of the Group’s and of the

parent Company’s affairs as at 31 December

2022 and of the Group’s profit for the year

then ended;

• the Group financial statements have

beenproperly prepared in accordance

withUK-adopted international

accountingstandards;

• the parent Company financial statements

have been properly prepared in accordance

with UK accounting standards, including FRS

101 Reduced Disclosure Framework; and

• the financial statements have been prepared

in accordance with the requirements of the

Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (“ISAs

(UK)”) and applicable law. Our responsibilities

are described below. We believe that the audit

evidence we have obtained is a sufficient and

appropriate basis for our opinion. Our audit

opinion is consistent with our report to the

auditcommittee.

We were first appointed as auditor by the

shareholders on 21 April 2017. The period of

total uninterrupted engagement is for the

6financial years ended 31 December 2022.

Wehave fulfilled our ethical responsibilities

under, and we remain independent of the Group

in accordance with, UK ethical requirements

including the FRC Ethical Standard as applied

tolisted public interest entities.

Apart from the matter noted below, we have

notperformed any non-audit services during

theyear ended 31 December 2022 or

subsequently which are prohibited by the

FRCEthical Standard.

In early 2023, we identified that a KPMG

member firm had provided preparation of local

GAAP financial statement services over the

period 2018 to 2022 to an entity which was

aresidual component and therefore not in

scopefor the group audit. The services, which

have been terminated, were administrative in

nature and did not involve any management

decision-making or bookkeeping. The work

ineach case had no direct or indirect effect on

Senior plc’s consolidated financial statements.

In our professional judgment, we confirm that

based on our assessment of the breach, our

integrity and objectivity as auditor has not been

compromised and we believe that an objective,

reasonable and informed third party would

conclude that the provision of this service

wouldnot impair our integrity or objectivity for

any of the impacted financial years. The audit

committee have concurred with this view.

Overview

Materiality:

Group financial

statements as

awhole

£3.2m (2021: £3.2m)

0.4% (2021: 0.5%) of

Group revenue

Coverage

• 75%(2021: 72%) of Group revenue

• 80%(2021: 89%) of Total losses/profit

before tax

• 84%(2021: 82%) of Group total assets

Key audit matters vs 2021

Event driven • New:

Business

combination

accounting

Recurring risks • Provision for

uncertain tax

positions



• Recoverability

of the Parent

Company’s

investment in

its subsidiary



130 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT

2. Key audit matters: our assessment

ofrisks of material misstatement

Key audit matters are those matters that,

inourprofessional judgement, were of

mostsignificance in the audit of the financial

statements and include the most significant

assessed risks of material misstatement

(whether or not due to fraud) identified by us,

including those which had the greatest effect

on: the overall audit strategy; the allocation of

resources in the audit; and directing the efforts

of the engagement team. We summarise below

the key audit matters, in decreasing order of

The risk Our response

Business combination accounting

Valuation of intangible assets acquired of

£31m and contingent consideration of

£28.7m in respect of Spencer Aerospace

Manufacturing LLC (“Spencer Aerospace”)

(2021: £nil).

Refer to the Audit Committee Report in

theGovernance section on pages 105,

Note 2 (significant accounting policies) and

Note31 (acquisition and disposal activities).

Subjective estimate

The acquisition of Spencer Aerospace on

25November 2022 required the net assets

acquired to be recorded at fair value and for

intangible assets to be separately identified

from goodwill.

Estimation was required to value the part of

the consideration paid that was contingent

on the future revenue of Spencer Aerospace.

This estimation is dependent on significant

estimates and assumptions management

makes related to the sales forecasts of

Spencer Aerospace.

The fair value of intangible assets acquired

are determined through complex valuation

methods including by forecasting and

discounting future cash flows (based on

assumptions such as growth rates, and

expected revenue opportunities), which

areinherently highly judgemental.

The effect of these matters is that, as part

ofour risk assessment, we determined

thatthe valuation of intangible assets

acquired on acquisition and determination

ofthe contingent consideration of Spencer

Aerospace contain a high degree of

estimation uncertainty, with a potential range

of reasonably possible outcomes greater

than our materiality as a whole, and possibly

many times that amount.

Our procedures included:

• Assessing the valuer’s credentials: We evaluated

the competence and independence of the expert

engaged by the Directors and whether they had

been appropriately instructed and were provided

with complete, accurate data on which to base

their valuations.

• Our corporate finance expertise and our sector

knowledge: We evaluated the basis upon

whichthe Directors identified the intangible

assets acquired. We assessed whether the

measurement basis used to estimate the fair

values of the intangible assets were reasonable,

taking account of our experience of similar

assetsin other comparable situations and our

assessment of the work performed by the

thirdparty expert.

• Benchmarking assumptions: We challenged the

appropriateness of discount rates, growth rates,

and expected revenue opportunities which have

been used to value acquired intangible assets

and contingent consideration with reference

toassumptions developed by our own

valuationspecialists, post acquisition trading,

andmarket data.

• Assessing transparency: We assessed whether

the appropriate disclosures have been provided

on the judgements and estimates applied in

arriving at the fair values.

We performed the tests above rather than seeking

to rely on any of the Group’s controls because the

nature of the balance is such that we would expect

to obtain audit evidence primarily through the

detailed procedures described.

Our results

• We found the fair values adopted for the

intangible assets acquired and contingent

consideration to be acceptable.

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.

131SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED

The risk Our response

Provision for uncertain tax positions

The Group recorded a provision for

uncertain tax position totalling £16.2m

asat31 December 2022 (2021: £16.7m)

Refer to the Audit Committee Report in

theGovernance section on pages 105,

Note 2 (significant accounting policies)

andNote21 (tax balance sheet).

Subjective estimate

The Group operates in a number of different

tax jurisdictions and judgment is required to

determine tax provisions across the Group,

principally in the US.

Determination of provisions for tax

uncertainties is subject to judgment in

assessing the probable outflow of taxes that

will be borne by the entity relating to matters

where the relevant tax authority’s final

assessment of the tax treatment is uncertain.

The tax risk provisions held in connection

with transfer pricing, including inter-company

royalty charges, is a key risk due to its size

and the subjective nature of the arm’s length

basis to which the pricing should adhere to.

The effect of these matters is that, as part of

our risk assessment, we determined that the

provision for uncertain tax positions has a

high degree of estimation uncertainty, with a

potential range of reasonable outcomes

greater than our materiality for the Financial

Statements as a whole. The Financial

Statements (Note 21) disclose the range

estimated by the Group.

Our procedures included:

• Our tax expertise: We have used our own tax

specialists to assess the Group’s tax positions,

the Company’s correspondence with the relevant

tax authorities, and to analyse and challenge the

assumptions used to determine provisions for tax

uncertainties. This is based on our knowledge

and experiences of the application of the tax

legislation, and our understanding of the

production activities at the sites where royalty

charges are applied. We challenged the Directors

on the adequacy of the Group’s provision for

transfer pricing risks particularly arising in the US.

• Assessing transparency: We assessed the

adequacy of the Group’s disclosures in respect of

tax and uncertain tax positions and the range of

possible outcomes.

We performed the tests above rather than seeking

to rely on any of the Group’s controls because the

nature of the balance is such that we would expect

to obtain audit evidence primarily through the

detailed procedures described.

Our results

• We found the level of provisions for tax

uncertainties to be acceptable. (2021

result –acceptable.)

Recoverability of the Parent Company’s

investment in its subsidiary

The parent Company recorded an

investment carrying value of £259.9m as

at31December 2022 (2021: £259.9m).

Refer to Note 36 (accounting policies)

andNote 38 (financial disclosures) and

Parent Company Balance Sheet.

Low risk, high value:

The carrying amount of the Parent

Company’s investment in its subsidiary

represents 59% of its total assets. Its

recoverability is not at a high risk of

significant misstatement or subject to

significant judgment. However, due to its

materiality in the context of the Parent

Company Financial Statements, this is

considered to be the area that had the

greatest effect on our overall Parent

Company audit.

Our procedures included:

• Tests of detail: We compared the carrying

amount of the investment with the relevant

subsidiary’s draft statutory balance sheet to

identify whether its net assets, being an

approximation of its minimum recoverable

amount, was in excess of its carrying amount

and assessed whether the subsidiary has

historically been profit-making.

We performed the tests above rather than seeking

to rely on any of the Group’s controls because the

nature of the balance is such that we would expect

to obtain audit evidence primarily through the

detailed procedures described.

Our results:

• We found the company’s conclusion that there is

no impairment of its investment in it’s subsidiary

to be acceptable. (2021 result –acceptable.)

3. Our application of materiality and

anoverview of the scope of our audit

Materiality for the Group financial statements

asa whole was set at £3.2m (2021: £3.2m),

determined with reference to a benchmark of

Group revenue of which it represents 0.4%

(2021: 0.5%).

We consider total revenue to be the most

appropriate benchmark in 2022 as it provides

amore stable measure year on year than

Groupprofit before tax.

Materiality for the parent Company financial

statements as a whole was set at £2.9m

(2021:£2.9m), which is the component

materiality for the parent company determined

by the group audit engagement team. This is

lower than the materiality we would otherwise

have determined by reference to parent

Company total assets of which it represents

0.7% (2021:0.7%).

In line with our audit methodology, our

procedures on individual account balances

anddisclosures were performed to a lower

threshold, performance materiality, so as

toreduce to an acceptable level the risk that

individually immaterial misstatements in

individual account balances add up to a material

amount across the financial statements

as awhole.

Performance materiality was set at 75% (2021:

75%) of materiality for the financial statements

as a whole, which equates to £2.4m (2021:

£2.4m) for the Group and £2.2m (2021: £2.2m)

for the parent Company. We applied this

percentage in our determination of performance

materiality because we did not identify any

factors indicating an elevated level of risk.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC CONTINUED

132 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED

We agreed to report to the Audit Committee

anycorrected or uncorrected identified

misstatements exceeding £160,000 (2021:

£160,000), in addition to other identified

misstatements that warranted reporting

on qualitative grounds.

Of the Group’s 31 (2021: 30) reporting

components (excluding the Parent Company),

we subjected 10 to full scope audits for group

purposes and 4 to specified risk-focused audit

procedures (2021: 14 combined). The latter

were not individually financially significant

enough to require a full scope audit for group

purposes, but we performed specified

procedures across all material accounts in

linewith those components subject to full

scopeaudit.

The components within the scope of

ourworkaccounted for the percentages

illustratedopposite.

The remaining 25% (2021: 28%) of total Group

revenue, 20% (2021: 11%) of total profits and

losses that made up Group profit before tax

and16% (2021: 18%) of total Group assets

isrepresented by 17 (2021: 16) reporting

components, none of which individually

represented more than 5% (2021: 5%) of any

oftotal Group revenue, total profits and losses

that made up Group profit before tax or total

Group assets. For these components, we

performed analysis at an aggregated group level

to re-examine our assessment that there were

no significant risks of material misstatement

within these.

The Group team instructed component auditors

as to the significant areas to be covered,

including the relevant risks detailed above and

the information to be reported back. The Group

team approved the component materialities,

which ranged from £0.4m to £1.76m (2021:

£0.4m to £1.76m), having regard to the mix

ofsize and risk profile of the Group across

thecomponents. The work on 10 of the 14

components (2021: 9 of the 14 components)

was performed by component auditors and the

rest, including the audit of the parent Company,

was performed by the Group team.

The scope of the audit work performed was

fully substantive as we did not rely upon the

Group’s internal control over financial reporting.

The Group team visited 5 component locations

in the US and UK to assess the audit risk and

strategy. Video and telephone conference

meetings were also held with these component

auditors and all others that were not physically

visited. At these visits and meetings, the

findings reported to the Group team were

discussed in more detail, and any further

workrequired by the Group team was then

performed by the component auditor.

Group materiality

Revenue Group materiality

Group revenue

£848.4m (2021: £658.7m)

£3.2m (2021: £3.2m)

£3.2m

Whole financial statements

materiality (2021: £3.2m)

£2.4m

Whole financial statements

performance materiality

(2021: £2.4m)

£1.76m

Range of materiality at 14

components (£0.4m-£1.76m)

(2021: £0.4m-£1.76m)

£0.16m

Misstatements reported to the

audit committee (2021: £0.16m)

Group revenue

51%

24%

72%

75%

(2021 – 72%)

25%

28%

54%

26%

89%

80%

(2021 – 89%)

Total profits and losses that

made up Group profit before tax

20%

11%

Specified risk-focused audit purposes 2022

Group total assets

70%

14%

82%

84%

Full scope for group audit purposes 2022

Full scope for group audit purposes 2021

Residual components

(2021 – 82%)

18%

16%

133SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC CONTINUED

5. Going concern

The directors have prepared the financial

statements on the going concern basis as

theydo not intend to liquidate the Group or the

Company or to cease their operations, and as

they have concluded that the Group’s and the

Company’s financial position means that this

isrealistic. They have also concluded that there

are no material uncertainties that could have

cast significant doubt over their ability to

continue as a going concern for at least a year

from the date of approval of the financial

statements (“the going concern period”).

We used our knowledge of the Group, its

industry, and the general economic environment

to identify the inherent risks to its business

model and analysed how those risks might

affect the Group’s and Company’s financial

resources or ability to continue operations over

the going concern period. The risks that we

considered most likely to adversely affect the

Group’s and Company’s available financial

resources and/or metrics relevant to debt

covenants over this period were:

• The impact of a global economic downturn

onthe Group’s key end markets, including

increasing inflationary pressures;

• The volatility of and disruption to supply chain

affecting critical materials or components; and

• The uncertainty of the recovery following the

impact of COVID-19.

We considered whether these risks could

plausibly affect the liquidity or covenant

compliance in the going concern period by

comparing severe, but plausible downside

scenarios that could arise from these risks

individually and collectively against the level

ofavailable financial resources and covenants

indicated by the Group’s financial forecasts.

We considered whether the going concern

disclosure in Note 2 to the financial statements

gives a full and accurate description of the

Directors’ assessment of going concern,

including the identified risks and dependencies.

We assessed the completeness of the going

concern disclosure.

Our conclusions based on this work:

• we consider that the directors’ use of

thegoing concern basis of accounting in

thepreparation of the financial statements

isappropriate;

• we have not identified, and concur with

thedirectors’ assessment that there is not,

amaterial uncertainty related to events or

conditions that, individually or collectively,

may cast significant doubt on the Group’s

orCompany’s ability to continue as a going

concern for the going concern period;

• we have nothing material to add or draw

attention to in relation to the directors’

statement in Note 2 to the financial

statements on the use of the going concern

basis of accounting with no material

uncertainties that may cast significant

doubtover the Group and Company’s use

ofthat basis for the going concern period,

andwefound the going concern disclosure

inNote 2 to be acceptable; and

• the related statement under the Listing

Rulesset out on page 82 is materially

consistent with the financial statements

andour audit knowledge.

However, as we cannot predict all future events

or conditions and as subsequent events may

result in outcomes that are inconsistent with

judgements that were reasonable at the time

they were made, the above conclusions are

nota guarantee that the Group or the Company

will continue in operation.

4. The impact of climate change on

ouraudit

We have considered the potential impacts of

climate change on the financial statements as

part of planning our audit.

Climate change impacts the Group in a variety of

ways including the impact of climate risk on the

substitution of existing products and services

with lower emissions options, increased costs

to transition to lower emissions technology

andthe impact on useful lives of assets from

physical and obsolescence risks. There is also

potential reputational risk associated with the

Group’s delivery of its climate related initiatives,

and greater emphasis on climate related

narrative and disclosure in the annual report.

As part of our audit we have made enquiries

ofmanagement to understand the extent of

thepotential impact of climate change risk

onthe Group’s financial statements. We have

performed a risk assessment of how the impact

of climate change may affect the financial

statements and our audit. We held discussions

with our own climate change professionals to

challenge our risk assessment, including the

goodwill impairment assessment, the estimates

made regarding useful economic lives of

property, plant and equipment, and the valuation

of inventory, recoverability of trade receivables

and going concern. Taking into account the

extent of headroom on goodwill, the expected

remaining useful lives of property, plant and

equipment, the nature of customers and

products, our assessment is that the climate

related risks to the Group’s business, strategy

and financial planning did nothave a significant

impact on our key audit matters given the nature

of the Group’s operations and knowledge gained

of its impact on critical accounting estimates

during our riskassessment procedures

andtesting.

We have read the Group’s and the Parent

Company’s disclosure of climate related

information in the front half of the annual report

as set out on pages 30 to 31, and considered

consistency with the financial statements and

our audit knowledge.

134 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED

6. Fraud and breaches of laws and

regulations – ability to detect

Identifying and responding to risks of

material misstatement due to fraud

To identify risks of material misstatement due

tofraud (“fraud risks”) we assessed events

orconditions that could indicate an incentive

orpressure to commit fraud or provide an

opportunity to commit fraud. Our risk

assessment procedures included :

• Enquiring of Directors, the audit committee,

internal audit and inspection of policy

documentation as to the Group’s high-level

policies and procedures to prevent and detect

fraud, including the internal audit function,

andthe Group’s channel for “whistleblowing”,

as well as whether they have knowledge of

any actual, suspected or alleged fraud.

• Reading Board and audit committee minutes.

• Considering remuneration incentive schemes

and performance targets for management

and Directors including the long-term

incentive plan for Management remuneration.

• Using analytical procedures to identify any

unusual or unexpected relationships.

We communicated identified fraud risks

throughout the audit team and remained alert

toany indications of fraud throughout the audit.

This included communication from the Group

audit team to full scope component audit teams

of relevant fraud risks identified at the Group

level and request to full scope component audit

teams to report to the Group audit team any

instances of fraud that could give rise to a

material misstatement at the Group level.

As required by auditing standards, and taking

into account possible pressures to meet profit

targets and market consensus, we perform

procedures to address the risk of management

override of controls and the risk of fraudulent

revenue recognition. In particular the risk that

revenue is overstated through recording

revenues in the wrong period and the risk that

Group and component Management may be

ina position to make inappropriate accounting

entries, and the risk of bias in accounting

estimates and judgements such as the

valuationof acquired intangibles, contingent

consideration, provisions for uncertain tax

provisions and pension assumptions.

We did not identify any additional fraud risks.

We also performed procedures including:

• Identifying journal entries and other

adjustments to test for all full scope

components based on risk criteria and

comparing the identified entries to supporting

documentation. These included those posted

by senior finance management, those posted

and approved by the same user and those

posted to unusual accounts.

• Assessing whether the judgements made

inmaking accounting estimates are indicative

of a potential bias.

Identifying and responding to risks of

material misstatement due to non-

compliance with laws and regulations

We identified areas of laws and regulations that

could reasonably be expected to have a material

effect on the financial statements from our

general commercial and sector experience and

through discussion with the Directors (as

required by auditing standards), and discussed

with the Directors the policies and procedures

regarding compliance with laws and regulations.

As the Group is regulated, our assessment

ofrisks involved gaining an understanding

ofthecontrol environment including the

entity’sprocedures for complying with

regulatory requirements.

We communicated identified laws and

regulations throughout our team and remained

alert to any indications of non-compliance

throughout the audit . This included

communication from the Group audit team to

full-scope component audit teams of relevant

laws and regulations identified at the Group

level, and a request for full scope component

auditors to report to the Group audit team any

instances of non-compliance with laws and

regulations that could give rise to a material

misstatement at the Group level.

The potential effect of these laws and

regulations on the financial statements

variesconsiderably.

Firstly, the Group is subject to laws and

regulations that directly affect the financial

statements including financial reporting

legislation (including related companies

legislation), distributable profits legislation,

pension scheme legislation and taxation

legislation, and we assessed the extent of

compliance with these laws and regulations

aspart of our procedures on the related

financialstatement items.

Secondly , the Group is subject to many other

laws and regulations where the consequences

of non-compliance could have a material effect

on amounts or disclosures in the financial

statements, for instance through the imposition

of fines or litigation or the loss of the Group’s

license to operate. We identified the following

areas as those most likely to have such an

effect: health and safety, environmental laws

and regulations, anti-bribery and corruption,

employment law and export laws and

regulations, recognising the financial and

regulated nature of the Group’s activities.

Auditing standards limit the required audit

procedures to identify non-compliance with

these laws and regulations to enquiry of the

directors and inspection of regulatory and legal

correspondence, if any. Therefore if a breach

ofoperational regulations is not disclosed to

usor evident from relevant correspondence,

anaudit will not detect that breach.

Context of the ability of the audit to detect

fraud or breaches of law or regulation

Owing to the inherent limitations of an audit,

there is an unavoidable risk that we may not

have detected some material misstatements

inthe financial statements, even though we

have properly planned and performed our

auditin accordance with auditing standards.

Forexample, the further removed non-

compliance with laws and regulations is from

the events and transactions reflected in the

financial statements, the less likely the

inherently limited procedures required by

auditing standards would identify it.

In addition, as with any audit, there remained

ahigher risk of non-detection of fraud, as these

may involve collusion, forgery, intentional

omissions, misrepresentations, or the override

of internal controls. Our audit procedures are

designed to detect material misstatement.

Weare not responsible for preventing non-

compliance or fraud and cannot be expected

todetect non-compliance with all laws

andregulations.

135SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF SENIOR PLC CONTINUED

7. We have nothing to report on the

otherinformation in the Annual Report

The directors are responsible for the other

information presented in the Annual Report

together with the financial statements. Our

opinion on the financial statements does not

cover the other information and, accordingly,

wedo not express an audit opinion or, except

asexplicitly stated below, any form of

assuranceconclusion thereon.

Our responsibility is to read the other

information and, in doing so, consider whether,

based on our financial statements audit work,

the information therein is materially misstated

orinconsistent with the financial statements or

our audit knowledge. Based solely on that work

we have not identified material misstatements

in the other information.

Strategic report and directors’ report

Based solely on our work on the

other information:

• we have not identified material

misstatements in the strategic report

andthedirectors’ report;

• in our opinion the information given in those

reports for the financial year is consistent

withthe financial statements; and

• in our opinion those reports have been

prepared in accordance with the Companies

Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’

Remuneration Report to be audited has been

properly prepared in accordance with the

Companies Act 2006.

Disclosures of emerging and principal risks

and longer-term viability

We are required to perform procedures

toidentify whether there is a material

inconsistency between the directors’

disclosures in respect of emerging and principal

risks and the viability statement, and the

financial statements and our audit knowledge.

Based on those procedures, we have nothing

material to add or draw attention to in relation to:

• the directors’ confirmation within the Viability

Statement page 82 that they have carried out

a robust assessment of the emerging and

principal risks facing the Group, including

those that would threaten its business model,

future performance, solvency and liquidity;

• the Risks and uncertainties disclosures

describing these risks and how emerging

risksare identified, and explaining how they

are being managed and mitigated; and

• the directors’ explanation in the Viability

Statement of how they have assessed the

prospects of the Group, over what period

theyhave done so and why they considered

that period to be appropriate, and their

statement as to whether they have a

reasonable expectation that the Group will

beable to continue in operation and meet

itsliabilities asthey fall due over the period

oftheir assessment, including any related

disclosuresdrawing attention to any

necessary qualifications or assumptions.

We are also required to review the Viability

Statement, set out on page 82 under the

ListingRules. Based on the above procedures,

we have concluded that the above disclosures

are materially consistent with the financial

statements and our audit knowledge.

Our work is limited to assessing these matters

in the context of only the knowledge acquired

during our financial statements audit. As we

cannot predict all future events or conditions

andas subsequent events may result in

outcomes that are inconsistent with judgements

that were reasonable at the time they were

made, the absence of anything to report on

these statements is not a guarantee as to the

Group’s and Company’s longer-term viability.

Corporate governance disclosures

We are required to perform procedures

toidentify whether there is a material

inconsistency between the directors’ corporate

governance disclosures and the financial

statements and our audit knowledge.

Based on those procedures, we have concluded

that each of the following is materially

consistent with the financial statements and

our audit knowledge:

• the directors’ statement that they consider

that the annual report and financial

statements taken as a whole is fair, balanced

and understandable, and provides the

information necessary for shareholders to

assess the Group’s position and performance,

business model and strategy;

• the section of the annual report describing the

work of the Audit Committee, including the

significant issues that the audit committee

considered in relation to the financial

statements, and how these issues were

addressed; and

• the section of the annual report that

describesthe review of the effectiveness

ofthe Group’s risk management and internal

control systems.

We are required to review the part of the

Corporate Governance Statement relating to

theGroup’s compliance with the provisions of

the UK Corporate Governance Code specified

by the Listing Rules for our review. We have

nothing to report in this respect.

136 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

GOVERNANCE / INDEPENDENT AUDITOR’S REPORT CONTINUED

8. We have nothing to report on the other

matters on which we are required to

report by exception

Under the Companies Act 2006, we are

required to report to you if, in our opinion:

• adequate accounting records have not been

kept by the parent Company, or returns

adequate for our audit have not been received

from branches not visited by us; or

• the parent Company financial statements

andthe part of the Directors’ Remuneration

Report to be audited are not in agreement

with the accounting records and returns; or

• certain disclosures of directors’ remuneration

specified by law are not made; or

• we have not received all the information

andexplanations we require for our audit.

We have nothing to report in these respects.

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set

out on page 129, the directors are responsible

for: the preparation of the financial statements

including being satisfied that they give a true

and fair view; such internal control as they

determine is necessary to enable the

preparation of financial statements that are free

from material misstatement, whether due to

fraud or error; assessing the Group and parent

Company’s ability to continue as a going

concern, disclosing, as applicable, matters

related to going concern; and using the going

concern basis of accounting unless they either

intend to liquidate the Group or the parent

Company or to cease operations, or have

norealistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable

assurance about whether the financial

statements as a whole are free from material

misstatement, whether due to fraud or error,

and to issue our opinion in an auditor’s report.

Reasonable assurance is a high level of

assurance, but does not guarantee that an

auditconducted in accordance with ISAs (UK)

will always detect a material misstatement

when it exists. Misstatements can arise from

fraud or error and are considered material if,

individually or in aggregate, they could

reasonably be expected to influence the

economic decisions of users taken on the

basisof the financial statements.

A fuller description of our responsibilities

isprovided on the FRC’s website at

www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these

financial statements in an annual financial report

prepared using the single electronic reporting

format specified in the TD ESEF Regulation.

This auditor’s report provides no assurance over

whether the annual financial report has been

prepared in accordance with that format.

10. The purpose of our audit work and

towhom we owe our responsibilities

This report is made solely to the Company’s

members, as a body, in accordance with

Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken so

that we might state to the Company’s members

those matters we are required to state to them

in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do

notaccept or assume responsibility to anyone

other than the Company and the Company’s

members, as a body, for our audit work, for this

report, or for the opinions we have formed.

Mike Barradell

(Senior Statutory Auditor)

for and on behalf of KPMG LLP,

Statutory Auditor

Chartered Accountants

15 Canada Square, London, E14 5GL

24 February 2023

137SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

140 Consolidated Income Statement

141 Consolidated Statement of Comprehensive Income

142 Consolidated Balance Sheet

143 Consolidated Statement of Changes in Equity

144 Consolidated Cash Flow Statement

145 Notes to the Consolidated Financial Statements

184 Company Balance Sheet

185 Company Statement of Changes in Equity

186 Notes to the Company Financial Statements

192 Five-year Summary

IN THIS SECTION

“Senior delivered a strong set of results

in2022.”

Bindi Foyle

Group Finance Director

FINANCIAL

STATEMENTS

Accumulators and Reservoirs

Accumulators and reservoirs

manage operating pressures in

fluid systems to account for

fluctuating working fluid volumes

throughout the aircraft. Senior is a

leading designer and manufacturer

of maintenance free accumulators

and reservoirs for demanding

applications like those found on all

three variants of the F-35 Lightning.

138 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

Tube and Duct Assemblies

A modern 5th-generation fighter jet

like the F-35 has extremely

challenging thermal management

requirements, satisfied by

thousands of complex tubes and

ducts carrying fuel, hydraulic fluid,

oxygen, and various coolants

throughout the aircraft. These

components range from 0.25

inches up to 3 inches in diameter

and are manufactured from multiple

materials and must conform to

precise geometry to take up as little

space in the aircraft as possible.

Accumulators and Reservoirs

139SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022 139

Notes

Year ended

2022

£m

Year ended

2021

£m

Revenue 3 84 8.4 6 5 8 .7

Trading profit 3 2 .1 10 . 3

Share of joint venture profit 15 0. 4 0. 2

Operating profit

(1)

5 32.5 10 . 5

Investment income 7 1. 9 0. 5

Finance costs 8 (1 0 . 6) (8 .5)

Corporate undertakings 9 (1. 4) 21. 2

Profit before tax

(2)

22.4 2 3 .7

Tax (charge)/credit 10 (2 . 2) 0.5

Profit for the period 20. 2 24. 2

Attributable to:

Equity holders of the parent 20. 2 24. 2

Earnings per share

Basic

(3)

12 4.86p 5 .8 2p

Diluted

(4)

12 4 .7 3p 5.73p

(1)

Adjusted operating profit 9 28.5 6 .1

(2)

Adjusted profit/(loss) before tax 9 2 0 .1 (1. 9)

(3)

Adjusted earnings per share 12 4.36p 0 .1 7p

(4)

Adjusted and diluted earnings per share 12 4.24p 0 .1 7p

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

140 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

Notes

Year ended

2022

£m

Year ended

2021

£m

Profit for the period 20. 2 24. 2

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss:

Losses on foreign exchange contracts – cash flow hedges during the period (4. 5) (2 .1)

Reclassification adjustments for losses/(gains) included in profit 2.2 (1. 3)

Losses on foreign exchange contracts – cash flow hedges 28 (2 . 3) (3. 4)

Foreign exchange (gain) recycled to the Income Statement on disposal and restructuring (business closures) 28 – (2. 9)

Exchange differences on translation of overseas operations 28 24.5 (3.8)

Tax relating to items that may be reclassified 10 0 .7 0.8

22.9 (9.3)

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

Actuarial (losses)/gains on defined benefit pension schemes 34 (2 3 .1) 19 .7

Tax relating to items that will not be reclassified 10 5.7 (6.4)

(1 7. 4) 13 . 3

Other comprehensive income for the period, net of tax 5.5 4.0

Total comprehensive income for the period 25. 7 28. 2

Attributable to:

Equity holders of the parent 25. 7 28. 2

141SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

Notes

Year ended

2022

£m

Year ended

2021

£m

Non-current assets

Goodwill 13 19 9.7 15 0 . 2

Other intangible assets 14 36.2 4.2

Investment in joint venture 15 4.4 3.9

Property, plant and equipment 16 3 0 7. 2 2 9 4.6

Deferred tax assets 21 10. 9 5 .7

Retirement benefits 34 51. 8 72.2

Trade and other receivables 18 0.4 0 .1

Total non-current assets 610. 6 53 0.9

Current assets

Inventories 17 1 94.3 14 5 . 2

Current tax receivables 21 2 .1 2.6

Trade and other receivables 18 12 6 .7 9 8.0

Cash and bank balances 32c 43. 2 5 1 .1

Total current assets 366.3 296.9

Total assets 976. 9 827 .8

Current liabilities

Trade and other payables 23 191. 2 14 3 . 0

Current tax liabilities 21 1 7. 7 14 . 6

Lease liabilities 22, 32c 12 .7 0.4

Bank overdrafts and loans 19 0.5 1 4.8

Provisions 24 16 .7 13 .8

Deferred consideration 31 2 3.4 –

Total current liabilities 262. 2 18 6 . 6

Non-current liabilities

Bank and other loans 19 14 3 . 2 11 6 . 2

Retirement benefits 34 1 2 .1 11 . 0

Deferred tax liabilities 21 4 .7 10 . 5

Lease liabilities 22 6 5 .7 7 2.8

Provisions 24 2.9 2.2

Contingent consideration 31 28.9 –

Others 23 7. 8 3.4

Total non-current liabilities 265.3 2 1 6 .1

Total liabilities 5 2 7. 5 402. 7

Net assets 44 9.4 4 2 5 .1

Equity

Issued share capital 25 41 . 9 4 1 .9

Share premium account 26 14 . 8 1 4.8

Equity reserve 27 6.4 5.8

Hedging and translation reserve 28 51. 5 2 8.6

Retained earnings 29 34 6.5 34 3.2

Own shares 30 (11 . 7) (9. 2)

Equity attributable to equity holders of the parent 4 49. 4 4 2 5 .1

Total equity 4 49. 4 4 2 5 .1

The Financial Statements of Senior plc (registered number 282772) were approved by the Board of Directors and authorised for issue on 24 February

2023. They were signed on its behalf by:

David Squires Bindi Foyle

Director Director

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2022

142 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

CONSOLIDATED STATEMENT

OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

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 2021 41. 9 14 . 8 5 .1 (37 .2) 7 5 .1 3 0 5 .1 (11 . 5) 3 9 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 differences 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

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 (37.2) 6 5 . 8 3 4 3. 2 (9.2) 4 2 5 .1

Profit for the year 2022 – – – – – 20. 2 – 20. 2

Losses on foreign exchange contracts –

cash flow hedges 28 – – – (2 . 3) – – – (2 . 3)

Foreign exchange loss/(gain) recycled to the Income

Statement on disposal 28 – – – – – – – –

Exchange differences on translation of

overseas operations 28 – – – – 2 4. 5 – – 2 4. 5

Actuarial losses on defined benefit pension schemes 34 – – – – – (2 3 .1) – (2 3 .1)

Tax relating to components of other

comprehensive income 10 – – – 0 .7 – 5.7 – 6. 4

Total comprehensive income/(expense)

for the period – – – (1. 6) 24 .5 2 . 8 – 2 5 .7

Share-based payment charge 33 – – 4 .3 – – – – 4. 3

Purchase of shares held by employee benefit trust 30 – – – – – – (4 . 5) (4 . 5)

Use of shares held by employee benefit trust 30 – – – – – (2 .0) 2 .0 –

Transfer to retained earnings 29 – – (3 .7) – – 3 .7 – –

Dividends paid 11 – – – – – (1. 2) – (1. 2)

Balance at 31 December 2022 41. 9 14 . 8 6 .4 (38 . 8) 9 0. 3 3 46 . 5 (11 . 7) 4 4 9. 4

143SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

Notes

Year ended

2022

£m

Year ended

2021

£m

Net cash from operating activities 32a 5 7. 7 2 7. 0

Investing activities

Interest received 0.7 0 .1

Proceeds on disposal of property, plant and equipment 0.5 0.2

Purchases of property, plant and equipment 16 (2 8 .7) (20. 2)

Purchases of intangible assets 14 (1 . 8) (1.1)

Acquistion of Spencer 31 (25.3) –

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

Net cash (used)/generated in investing activities (5 4.6) 3 0 .7

Financing activities

Dividends paid 11 (1 . 2) –

New loans 90. 8 20.0

Repayment of borrowings (9 0. 4) (41.1)

Purchase of shares held by employee benefit trust (4 . 5) –

Repayment of lease liabilities (9 .1) (8. 4)

Net cash used in financing activities (14 . 4) (2 9.5)

Net (decrease)/increase in cash and cash equivalents (11 . 3) 28. 2

Cash and cash equivalents at beginning of period 5 1 .1 23. 2

Effect of foreign exchange rate changes 2.9 (0.3)

Cash and cash equivalents at end of period 32c 4 2 .7 5 1 .1

144 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

1. General information

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

Companies Act 2006. The address of the registered office is given on the

inside back cover. The nature of the Group’s operations and its principal

activities are set out in Note 3 and on pages 1 to 83.

Items included in the Financial Statements of each of the Group’s entities

are measured using the currency of the primary economic environment in

which the entity operates (the functional currency). These Financial

Statements are presented in Pounds Sterling, which is the Company’s

functional and the Group’s presentation currency.

2. Significant accounting policies

Basis of accounting

These Financial Statements have been prepared in accordance with

UK-adopted international accounting standards. They have been prepared

on the historical cost basis, except for the revaluation of certain financial

instruments and retirement benefit costs measured in accordance

with IAS 19.

Going concern

In determining the appropriate basis of preparation of the Financial

Statements for the year ended 31 December 2022, the Directors are

required to consider whether the Group and Parent Company can

continue in operational existence for the foreseeable future, being a period

of at least 12 months from the date of approval of these Financial

Statements (the “going concern period”).

The Board has applied a robust process to assess the resilience of the

forecast out-turns. This assessment included applying severe but

plausible downside risks as set out in the Viability Statement on page 82.

To address these risks the Board has considered mitigating factors that

could be employed that would address the impact and provide options to

the Group and Parent Company.

The Group has two covenants for committed borrowing facilities, which

are tested at June and December: the Group’s net debt to EBITDA

(defined in the Notes to the Financial Headlines on page 2) must not

exceed 3.0x and interest cover, the ratio of EBITDA to interest must

be higher than 3.5x. At 31 December 2022, the Group’s net debt to

EBITDA was 1.47x and interest cover was 9.4x, both comfortably

within covenant limits.

Based on the above assessment, the Board has concluded that the Group

will continue to have adequate financial resources to realise its assets and

discharge its liabilities as they fall due over the going concern period.

Accordingly, the Directors have formed the judgement that it is

appropriate to prepare these Consolidated Financial Statements on the

going concern basis.

Changes in accounting policies

At the date of authorisation of these Financial Statements, there are no

relevant and material new standards, amendments to standards or

interpretations which are effective for the year ended 31 December 2022.

Basis of consolidation

The Consolidated Financial Statements incorporate the Financial

Statements of Senior plc and the entities controlled by it (its subsidiaries)

made up to 31 December 2022. Control is achieved when Senior plc has

the power to govern the financial and operating policies of an invested

entity so as to obtain benefits from its activities.

Acquisitions of subsidiaries and businesses are accounted for using the

acquisition method. The consideration transferred for each acquisition is

the aggregate of the fair values (at the date of exchange) of assets

transferred, liabilities incurred or assumed, and equity interests issued by

the Group. The consideration transferred includes the fair value of any

asset or liability resulting from a contingent consideration arrangement.

Acquisition-related costs are expensed as incurred. Identifiable assets

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 effective date of

acquisition or up to the effective date of disposal, as appropriate.

The results of joint ventures are accounted for using the equity

accounting method.

Where necessary, adjustments are made to the Financial Statements of

subsidiaries to bring the accounting policies used in line with those used

by the Group.

All intra-group transactions, balances, income and expenses are

eliminated on consolidation.

Goodwill

Goodwill arising on consolidation, which was acquired in a business

combination, is measured as the excess of the consideration transferred,

the amount of any non-controlling interest in the acquiree and the

acquisition date fair value of any previous equity interest in the acquiree

over the fair value of the Group’s share of the identifiable net assets

acquired. Goodwill is recognised as an asset and allocated, at acquisition,

to the group of cash-generating units (CGU groups) that are expected to

benefit from that business combination. If the consideration transferred,

the amount of any non-controlling interest in the acquiree and the

acquisition date fair value of any previous equity interest in the acquiree is

less than the fair value of the net assets acquired (i.e. bargain purchase),

the difference is credited to the Consolidated Income Statement in the

period of acquisition.

CGU groups to which goodwill has been allocated are tested for

impairment at least annually and reviewed for indicators of impairment at

the Balance sheet date. If impairment indicators exist, the individual

assets within the CGUs, and the individual CGUs excluding goodwill, are

tested for impairment before the CGU group is tested for impairment. Any

impairment is recognised immediately through the Consolidated Income

Statement and is not subsequently reversed. The determination of the

recoverable amount of the CGU group is disclosed in the Notes to the

Financial Statements (Note 13). If the recoverable amount of the CGU

group is less than its carrying amount, the impairment loss is allocated

first to reduce the carrying amount of any goodwill allocated to the CGU

group and then to the other assets of the CGU group pro rata on the basis

of the carrying amount of each asset in the CGU group.

On disposal of a subsidiary or part thereof, the attributable amount of

goodwill is included in the determination of the profit or loss on disposal.

Goodwill acquired in a business combination prior to the date of transition

to IFRS has been retained at the previous UK GAAP amount subject to

being tested for impairment at that date. Goodwill written off to reserves

under UK GAAP prior to 1998 has not been reinstated and is not included

in determining any subsequent profit or loss on disposal.

Revenue recognition

The Group predominantly has one revenue stream relating to engineered

components or systems (products), which are customer specific, with

a secondary revenue stream of funded development revenue. Both

streams have identifiable customer contracts and pricing specific

performance obligations.

The transaction price is the amount of consideration to which an entity

expects to be entitled in exchange for transferring promised goods or

services to a customer. Revenue is recognised net of discounts, VAT and

other sales related taxes. The determination of the transaction price is

based upon pricing specified in the customer contract i.e. a price per unit.

145SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

Revenue is recognised as the identified performance obligations

are satisfied.

The performance obligation for goods is a specific point in time when the

customer obtains control, which is upon delivery or when available for

collection. Allocation of transaction price to performance obligations is

given in the contract i.e. a unit delivered or available for collection.

The performance obligation for development revenue is a specific point

in time when the customer obtains control of the output, for example a

first article good, which is the acceptance milestone specified in the

customer contract.

Dividend income from investments is recognised when the shareholders’

legal rights to receive payment have been established.

Interest

Interest receivable/payable is credited/charged to the Consolidated

Income Statement using the effective interest method.

Leasing

At inception of a contract, the Group assesses whether a contract is, or

contains, a lease. A contract is, or contains, a lease if the contract conveys

a right to control the use of an identified asset for a period of time in

exchange for consideration. The assessment of control includes whether

the Group has a right to obtain substantially all of the economic benefits

from the use of the asset throughout the period of use and the right to

direct the use of the asset.

As a lessee, the Group recognises a right-of-use asset and lease liability at

the lease commencement date. The right-of-use asset is initially

measured at cost, which comprises the initial amount of the lease liability

adjustment for any lease payments made at or before the

commencement date, plus any initial direct costs incurred and an estimate

of costs to dismantle or restore the underlying asset, less any lease

incentives received.

Lease payments comprise fixed payments and variable lease payments

based on an index or rate. The right-of-use asset is subsequently

depreciated using the straight-line method from the commencement date

to the earlier of the end of the useful life of the asset or the end of the

lease term. The lease term includes optional extensions or terminations

which are reasonably certain to be exercised by the Group. These optional

terms are reassessed periodically or when there is a significant event

which affects the lease. The estimated useful lives of the right-of-use

assets are determined on the same basis as those of property, plant and

equipment. Periodically the right-of-use asset is reduced for impairment,

if necessary, as well as re-measurements of the lease liability.

The lease liability is measured at amortised cost using the effective

interest method, which is initially equal to the present value of lease

payments that are not paid at the commencement date, discounted using

an incremental borrowing rate determined on a lease portfolio basis. The

lease liability is re-measured either as a modification or reassessment.

Modification occurs where there is a change in terms, such as rental

payments, which did not form part of the original terms of the contract. In

this case, the lease liability is re-measured using the revised terms and a

revised incremental borrowing rate at the modification date.

Reassessment occurs where there are changes within the scope of the

original terms of the contract, such as rental payments changes with

reference to an index. For reassessment changes, the lease liability is

re-measured in the same way as for a modification, except for the

incremental borrowing rate, which is not changed from the original

commencement date of the contract.

The Group has elected not to recognise right-of-use assets and lease

liabilities for short-term leases which have a lease term of 12 months or

less and leases of low-value assets. The Group recognises the lease

payments associated with these leases as an expense on a straight-line

basis over the lease term. When the Group acts as a lessor, it determines

at lease inception whether each lease is a finance lease or an operating

lease. To classify each lease, several indicators are assessed, such as the

present value of the lease payments amounting to at least substantially all

of the fair value of the asset. When the Group is an intermediate lessor, it

accounts for its interest in the head lease and the sub-lease separately.

The Group assesses the classification of the sub-lease with reference to

the right-of-use asset arising from the head lease. The Group recognises

lease payments received under operating leases as income on a straight-

line basis over the lease term.

Foreign currencies

Transactions in currencies other than the functional currency are recorded

at the rates of exchange prevailing on the date of the transaction. At each

Balance Sheet date, monetary assets and liabilities that are denominated

in foreign currencies are retranslated at the rates prevailing on the Balance

Sheet date. Non-monetary items carried at fair value that are denominated

in foreign currencies are translated at the rates prevailing at the date when

the fair value was determined. Non-monetary items that are measured at

historical cost in a foreign currency are not retranslated. Gains and losses

arising on retranslation are included in profit or loss for the period, except

for exchange differences arising on non-monetary assets and liabilities

where the changes in fair value are recognised directly in equity, subject

to meeting the requirements under IAS 21.

In order to hedge its exposure to certain foreign exchange risks, the Group

enters into forward exchange contracts (see section below on derivative

financial instruments and hedging for details of the Group’s accounting

policies in respect of such derivative financial instruments).

On consolidation, the assets and liabilities of the Group’s overseas

operations are translated at exchange rates prevailing on the Balance

Sheet date. Income and expense items are translated at the average

exchange rates for the period. Exchange rate differences arising, if any,

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

Such translation differences are recognised as income or expense in the

period in which the operation is disposed.

Goodwill and fair value adjustments arising on the acquisition of a foreign

entity are treated as assets and liabilities of the foreign entity and

translated at the closing rate on the relevant Balance Sheet date.

The exchange rates for the major currencies applied in the translation of

results were as follows:

Average

rates

2022

Average

rates

2021

Year-end

rates

2022

Year-end

rates

2021

US Dollar 1.24 1.38 1.21 1.35

Government grants

Government grants received for items of a revenue nature are recognised

as income over the period necessary to match them with the related

costs, which are deducted in reporting the related expense and presented

net of the costs to which they relate. The Group recognises a COVID-19

grant when it has reasonable assurance that it will comply with the

relevant conditions and the grant will be received. If the conditions are

met, then the Group recognises income in the profit or loss on a

systematic basis and in line with its recognition of the expenses that the

grants are intended to compensate.

Government grants relating to investment in property, plant and

equipment are deducted from the initial carrying value of the related

capital asset.

2. Significant accounting policies continued

146 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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146 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

Retirement benefit costs

Payments to defined contribution retirement plans are charged as an

expense as they fall due. Payments made to state-managed retirement

benefit plans are dealt with as payments to defined contribution plans

where the Group’s obligations under the plans are equivalent to those

arising in a defined contribution retirement plan.

For defined benefit retirement plans, the cost of providing benefits is

determined using the Projected Unit Method, with full actuarial valuations

being carried out on a triennial basis, and updated at each Balance

Sheet date. Actuarial gains and losses are recognised in full in the period

in which they occur. They are recognised outside the Consolidated

Income Statement and are presented in the Statement of

Comprehensive Income.

Past service cost is recognised as an expense at the earlier of a plan

amendment, curtailment, or restructuring.

The retirement benefit obligation recognised in the Consolidated Balance

Sheet represents the present value of the defined benefit obligation, and

as reduced by the fair value of scheme assets.

Taxation

Provisions for uncertain tax positions are included within current tax

liabilities on the Consolidated Balance Sheet representing Management’s

best estimate of the likely cash outflow related to the uncertainty. There

are transactions and activities that the Group engages in where the

ultimate tax determination is uncertain and a provision may be made

against the tax benefit. For example, the Group seeks to price

transactions between Group companies on an arms length basis and in

compliance with OECD transfer pricing principles and the laws of the

relevant jurisdictions. The application of OECD principles and local tax

laws require interpretation, and accordingly involves the application of

judgment and is open to challenge by the relevant tax authorities. This

gives rise to a level of uncertainty. Provisions for uncertain tax positions

are established in accordance with IFRIC 23 based on an assessment of

the range of likely tax outcomes in open years and reflecting the strength

of technical arguments. Amounts are provided for individual tax

uncertainties based on Management’s assessment of whether the most

likely amount or an expected amount based on a probability weighted

methodology is the more appropriate predicter of amounts that the

company is ultimately expected to settle. When making this assessment,

the Group utilises specialist in-house tax knowledge and experience and

takes into consideration specialist tax advice from third party advisers on

specific items.

Deferred tax is the tax expected to be payable or recoverable on

differences between the carrying amounts of assets and liabilities in the

Financial Statements and the corresponding tax bases used in the

computation of taxable profit, and is accounted for using the Balance

Sheet liability method. Deferred tax liabilities are generally recognised for

all taxable temporary differences, including for taxable temporary

differences arising on investments in subsidiaries and associates, and

interests in joint ventures, except where the Group is able to control the

reversal of the temporary difference and it is probable that the temporary

difference will not reverse in the foreseeable future.

Deferred tax assets are recognised to the extent that it is probable that

future taxable profits will be available for their utilisation before their

expiry. Amounts will be recognised first to the extent that taxable

temporary differences exist and it is considered probable that they will

reverse and give rise to future taxable profits against which losses or

other assets may be utilised before their expiry. Assets will then be

recognised to the extent that forecasts or other evidence support the

availability of future profits against which assets may be realised.

Deferred tax assets and liabilities are not recognised if the temporary

difference arises from goodwill or from the initial recognition of goodwill

(other than in a business combination) of other assets and liabilities in a

transaction that affects neither the Group’s taxable profit nor its

accounting profit.

The carrying value of deferred tax assets is reviewed at each Balance

Sheet date and reduced to the extent it is no longer probable that

sufficient taxable profits will be available to allow all or part of the deferred

tax asset to be recovered. Deferred tax is calculated at the tax rates that

are expected to apply in the period when the liability is settled or the asset

is realised based on tax laws and rates that have been enacted at the

Balance Sheet date. Deferred tax is charged or credited in the

Consolidated Income Statement, except when it relates to items charged

or credited to Other Comprehensive Income or directly to Equity, in which

case the deferred tax is also dealt with in Other Comprehensive Income

or Equity.

Property, plant and equipment

Land and buildings held for use in the production or supply of goods or

services, or for administrative purposes, are stated in the Balance Sheet

at their historical cost, or at modified historical cost, being a revaluation

undertaken in 1988 which has been taken as the effective cost on

transition to IFRS. Land and buildings were revalued to fair value at

the date of revaluation. The Group does not intend to conduct

annual revaluations.

Plant and equipment are stated at cost less accumulated depreciation and

any recognised impairment loss. Depreciation is charged to write off the

cost of an asset on a straight-line basis over the estimated useful life of

the asset, and is charged from the time an asset becomes available for its

intended use. Annual rates are as follows:

Freehold land 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 office equipment, vehicles and manufacturing

equipment, with lease terms typically ranging from one to four years.

The gain or loss arising on the disposal or retirement of an asset is

determined as the difference between the sale proceeds and the carrying

amount of the asset at disposal and is recognised in the Consolidated

Income Statement.

2. Significant accounting policies continued

147SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

Internally generated intangible assets – development expenditure

An intangible asset arising from unfunded development work shall be

recognised if the following can be demonstrated:

i. the asset can be separately identified.

ii. it is probable that the asset created will generate future economic

benefits.

iii. the development cost of the asset can be measured reliably during its

development.

iv. it is technically feasible to complete the asset so that it will be available

for use or sale.

v. there is intention to complete the asset and use or sell it.

vi. the Group has ability to use or sell the asset.

vii. the Group has availability of adequate technical, financial and other

resources to complete the development work and to use or sell

the asset.

Internally generated intangible assets are amortised on a straight-line

basis over their useful lives. Costs incurred in relation to funded

development work are accumulated in inventory and are recognised when

the related billings are made. Any amounts held in inventory are subject to

normal inventory valuation principles. Expenditure on research, design and

other development activities, that do not meet the capitalisation criteria

above, is recognised as an expense in the period in which it is incurred.

Other intangible assets

Other intangible assets include computer software and intangible assets

acquired as part of a business combination. The cost of acquiring

computer software (including associated implementation and

development costs where applicable) is classified as an intangible asset.

Costs associated with maintaining computer software programs are

recognised as an expense as incurred. Capitalised computer software is

amortised over its estimated useful life of between three and five years

on a straight-line basis, and is stated at cost less accumulated

amortisation and impairment losses. Intangible assets acquired as part of

a business combination principally comprise qualified parts list, customer

relationships, contracts and trade names. They are shown at fair value at

the date of acquisition less accumulated amortisation at the rates of

between one and eighteen years on a straight-line basis.

Impairment of tangible and intangible assets excluding goodwill

At each Balance Sheet date, the Group reviews the carrying amounts of

its tangible and intangible assets to determine whether there is any

indication that those assets have suffered an impairment loss. If any such

indication exists, the recoverable amount of the asset is estimated in

order to determine the extent of the impairment loss (if any). Where the

asset does not generate cash flows that are independent from other

assets, the Group estimates the recoverable amount of the cash-

generating unit to which the asset belongs.

The recoverable amount is the higher of the fair value less the costs to sell

and the value in use. In assessing the value in use, the estimated future

cash flows are discounted to their present value using a pre-tax discount

rate that reflects current market assessments of the time value of money

and the risks specific to the asset for which the estimates of future cash

flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its

carrying amount, the carrying amount of the asset is reduced to its

recoverable amount. An impairment loss is recognised as an expense

immediately, unless the relevant asset is carried at a revalued amount, in

which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of

the asset is increased to the revised estimate of its recoverable amount,

so that the increased carrying amount does not exceed the carrying

amount that would have been determined had no impairment loss been

recognised for the asset in prior years. A reversal of an impairment loss is

recognised as income immediately, unless the relevant asset is carried at

a revalued amount, in which case the reversal of the impairment loss is

treated as a revaluation increase.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs

comprise direct materials and, where applicable, direct labour costs and

an appropriate allocation of production overheads. Cost is calculated using

the first-in, first-out method. Net realisable value represents the estimated

selling price less the estimated costs of completion and the costs to be

incurred in marketing, selling and distribution.

Financial instruments

Financial assets and liabilities are recognised when the Group becomes a

party to the contractual provisions of the relevant instrument and

derecognised when it ceases to be a party to such provisions.

Financial instruments are classified as cash and cash equivalents, bank

overdrafts and loans, lease liabilities, trade receivables, trade payables,

deferred consideration payable, contingent consideration payable, other

receivables and other payables, as appropriate.

Non-derivative financial assets are categorised as “Financial assets at

amortised cost” and non-derivative financial liabilities are categorised as

“Financial liabilities at amortised cost”. Derivative financial assets and

liabilities that are not designated and effective as hedging instruments are

categorised as “financial assets at fair value through profit or loss” and

“financial liabilities at fair value through profit or loss”, respectively. The

classification depends on the nature and purpose of the financial assets

and liabilities and is determined at the time of initial recognition.

Trade receivables

Trade receivables do not carry any interest and are stated at their nominal

value as reduced by loss allowance. The Group has elected to measure

loss allowance for trade receivables at an amount equal to the lifetime

expected credit losses (”ECLs”), which are based on quantitative and

qualitative credit risk assessments, using historical and forward looking

information. Changes in the carrying amounts of the loss allowance are

recognised in the Consolidated Income Statement.

Trade receivables in default are considered uncollectible and are written

off against the loss allowance. The Group considers a trade receivable to

be in default when the customer is experiencing significant financial

difficulties, bankruptcy, financial reorganisation or is in default or

delinquent in paying its credit obligations to the Group in full. Subsequent

recoveries of amounts previously written off are credited against the

loss allowance.

Trade receivables are derecognised when reverse factored, without

recourse, through schemes with financial institution counterparties who

assume the risk of non-payment by the customer. Derecognition occurs

when cash is received from the financial institution (less reverse factoring

discount). For further details, see Strategic Report and the financial

instrument credit risk section in the notes to the Consolidated

Financial Statements.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and other short-term

highly liquid investments that are readily convertible to a known amount

of cash and are subject to an insignificant risk of changes in value.

Non-derivative financial liabilities

Non-derivative financial liabilities are stated at amortised cost using the

effective interest method. The effective interest method is a method of

calculating the amortised financial liability and of allocating interest over

the relevant period. The effective interest rate is the rate that exactly

discounts estimated future cash payments through the expected life of

2. Significant accounting policies continued

148 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

148 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

the financial liability, or, where appropriate, a shorter period, to the net

carrying amount on initial recognition. For borrowings, their carrying value

includes accrued interest payable, as well as unamortised issue costs.

Contingent consideration payable is measured at fair value through profit

or loss.

Equity instruments

Equity instruments issued by the Company are recorded at the value of

the proceeds received, net of direct transaction costs.

Derivative financial instruments and hedging

The Group’s activities expose it primarily to the financial risks of changes

in foreign currency exchange rates and interest rates. The Group uses

foreign exchange contracts and, on occasion, interest rate swap contracts

to hedge these exposures. The use of financial derivatives is governed by

the Group’s Treasury Policies as approved by the Board of Directors,

which provides written principles on the use of derivatives. The Group

does not use derivative financial instruments for speculative purposes.

Certain derivative instruments do not qualify for hedge accounting. These

are categorised as “fair value through profit or loss” and are stated at fair

value, with any resultant gain or loss recognised in the Income Statement.

The Group designates certain hedging instruments in respect of foreign

currency risk as cash flow hedges. At the inception of the hedge

relationship, the Group documents the relationship between the hedging

instrument and the hedged item, along with its risk management

objectives and strategy for undertaking various hedging transactions. The

Group also documents, both at hedge inception and on an ongoing basis,

whether the hedging instrument that is used in a hedging relationship is

highly effective in offsetting changes in fair values or cash flows of the

hedged item.

For the Group’s cash flow hedges of highly probable forecast transactions

in foreign currencies, the hedged risk is always considered to be 1:1. If the

underlying exposure changes over time, either due to commercial factors

or timing differences, the hedging instruments will be rebalanced to

ensure that the hedge ratio of 1:1 is maintained.

Changes in the fair value of derivative financial instruments that are

designated and are effective as a cash flow hedge are recognised directly

in equity and the ineffective portion is recognised immediately in the

Consolidated Income Statement. If the cash flow hedge of a firm

commitment or forecasted transaction results in the recognition of an

asset or a liability, then, at the time the asset or liability is recognised, the

associated gains or losses on the derivative that had previously been

recognised in equity are included in the initial measurement of the asset

or liability. For hedges that do not result in the recognition of an asset or a

liability, amounts deferred in equity are recognised in the Income

Statement in the same period in which the hedged item affects profit

or loss.

For an effective hedge of an exposure to changes in fair value, the hedged

item is adjusted for changes in fair value attributable to the risk being

hedged with the corresponding entry in the Consolidated Income

Statement. Gains or losses from remeasuring the derivative are also

recognised in the Consolidated Income Statement. If the hedge is

effective, these entries will offset in the Consolidated Income Statement.

Changes in the fair value of derivative financial instruments that do not

qualify for hedge accounting are recognised in the Consolidated Income

Statement as they arise.

Hedge accounting is discontinued when the hedging instrument expires

or is sold, terminated, exercised, or no longer qualifies for hedge

accounting. At that time, any cumulative gain or loss on the hedging

instrument recognised in equity is retained in equity until the forecasted

transaction occurs. If a hedged transaction is no longer expected to occur,

the net cumulative gain or loss recognised in Equity is transferred to the

Consolidated Income Statement for the period.

Gains and losses accumulated in Equity are recognised in the

Consolidated Income Statement on disposal of the overseas business.

Assets and disposal groups held for sale

Assets are classified as held for sale if their carrying amount will be

recovered by sale rather than by continuing use in the business. Where a

group of assets and their directly associated liabilities are to be disposed

of in a single transaction, such disposal groups are also classified as held

for sale. For this to be the case, the asset or disposal group must be

available for immediate sale in its present condition, and Management

must be committed to and have initiated a plan to sell the asset or

disposal group which, when initiated, was expected to result in a

completed sale within 12 months. Assets that are classified as held for

sale are not depreciated. Assets or disposal groups that are classified as

held for sale are measured at the lower of their carrying amount and fair

value less costs to sell.

Provisions

Provisions are recognised when the Group has a present obligation (legal

or constructive) as a result of a past event, it is probable that the Group

will be required to settle that obligation and a reliable estimate can be

made of the amount of the obligation. Provisions are measured at the

Directors’ best estimate of the expenditure required to settle the

obligation at the Balance Sheet date, taking into account the risks and

uncertainties (such as timing or amount) surrounding the obligation. They

are not discounted to present value if the effect is not material.

Provisions for restructuring are recognised when the Group has a detailed

formal plan for the restructuring and the plan has been communicated to

the affected parties. Provisions for the expected cost for warranty

obligations under local sale of goods legislation are recognised at the date

of sale of the relevant products.

Share-based payments

The Group applies the requirements of IFRS 2 Share-based payments.

The Group issues equity-settled share-based payments to certain

employees. The fair value (excluding the effect of non-market-related

conditions), as determined at the grant date, is expensed on a straight-line

basis over the vesting period, based on the Group’s estimate of the

number of shares that will eventually vest and adjusted for the effect of

non-market-related conditions.

Fair value is measured by use of a Black-Scholes model for the share

option plans, and a binomial model for the share awards under the 2005

Long-Term Incentive Plan.

The liability in respect of equity-settled amounts is included in Equity .

Critical accounting judgments

IAS 1 requires disclosure of the judgments Management makes when

applying its significant accounting policies and that have the most

significant effect on amounts that are recognised in the Group’s Financial

Statements. In the course of preparing the Financial Statements, no

significant critical judgments have been made in the process of applying

the Group’s accounting policies, other than leases and those involving

estimations, which are dealt with separately below. Management makes

other judgments in the normal course of conducting business, such as

those in relation to legal claims and contractual matters (see Note 24 for

further details).

Leases

Where a lease includes the option for an extension to the lease term,

Management makes a judgment as to whether they are reasonably

certain the option will be taken. This will take into account the length of

2. Significant accounting policies continued

149SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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149SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

time remaining before the option is exercisable, current and forecasted

plans for utilising the asset and the level and type of planned future capital

investment. As at 31 December 2022, these extension options have an

approximate average remaining lease term of seven years. These

judgments are reassessed at each reporting period or when there is a

significant event affecting the lease, which could result in a recalculation

of the lease liability and a material adjustment to the associated balances.

Key sources of estimation and uncertainty

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

assumptions and estimates concerning the future that affect the carrying

amounts of assets and liabilities at the Balance Sheet date and the

amounts of revenue and expenses recognised during the period. Such

assumptions are based upon factors including historical experience, the

observance of trends in the industries in which the Group operates, and

information available from the Group’s customers and other external

sources. The key sources of estimation and uncertainty at the Balance

Sheet date that have a significant risk of causing a material adjustment to

the carrying amounts of assets and liabilities within the next financial year

and beyond include:

Income taxes

In determining the Group provisions for income tax and deferred tax, it is

necessary to consider transactions in a small number of key tax

jurisdictions for which the ultimate tax determination is uncertain. To the

extent that the final outcome differs from the tax that has been provided,

adjustments will be made to income tax and deferred tax provisions held

in the period the determination is made. The carrying amount of net

current tax liability and deferred tax asset/liability at 31 December 2022

was £15.6m (2021 – £12.0m) and £6.2m asset (2021 – £4.8m liability),

respectively. Further details on these estimates are set out in Notes 10

and 21.

Retirement benefits

Management makes assumptions and estimates, for the next financial

year and beyond, which affect the value of the carrying amount of the UK

Plan retirement benefit obligation at 31 December 2022. Management

follows actuarial advice from a third party when determining estimation

uncertainty on the valuation of the UK gross defined benefit obligation,

the significant assumptions being discount rate, inflation and life

expectancy (see Note 34). The carrying amount of the UK Plan’s

retirement benefits at 31 December 2022 was a surplus of £51.8m (2021

– surplus of £72.2m), being the present value of the defined benefit

obligations of £198.4m (2021 – £294.9m) and fair value of plan assets of

£250.2m (2021 – £367.1m). Further details and sensitivities from changes

in estimates are set out in Note 34g.

Acquisition accounting

On 25 November 2022, the Group acquired substantially all of the assets

of Spencer Aerospace Manufacturing, LLC, for total consideration of

$100m split between initial, deferred and contingent payments (See Note

31 for further details). There is judgment in applying assumptions and

estimates which determine the valuation of the intangible assets and

associated goodwill. The fair value of contingent consideration is based on

the expected present value technique, using risk-adjusted discount rate to

discount probability weighted cashflows. Intangible valuation is based on

a hybrid cost/income approach, which is predominantly based on future

income streams of the acquiree. The contingent consideration is subject

to fair valuation reviews each reporting period.

Consideration of climate change

In preparing the Financial Statements, the Directors have considered the

impact of climate change, particularly in the context of the risks identified

in the TCFD disclosure on pages 26 to 31. There has been no material

impact identified on the financial reporting judgements and estimates. In

particular, the Directors considered the impact of climate change in

respect of the following areas:

• Useful lives of assets – The useful lives of assets could be reduced by

climate-related matters, for example as a result of physical risks,

obsolescence or legal restrictions. The change in useful lives would

have a direct impact on the amount of depreciation or amortisation

recognised each year from the date of reassessment. The Directors’

review of useful lives has taken into consideration the impacts of the

Group’s net zero commitments and has not had a material impact on

the results for the year.

• Inventory valuation – Climate-related matters may affect the value of

inventories as they could become obsolete as a result of a decline in

selling prices or a reduction in demand. After consideration of the

typical inventory days compared to the rate of change in the market the

Directors consider that inventory is appropriately valued.

• Going concern and viability – risks identified in the TCFD disclosures in

pages 26 to 31 have been factored into the going concern and viability

assessment. See page 82 further details.

• Goodwill Impairment assessment – cash flow forecasts used in the

impairment assessment of goodwill have considered potential changes

in demand over the next 5 years as a result of changing customer

preferences on Senior’s products. This is not expected to have a

material impact on the cashflows, with longer term growth rates based

on forecasted market demand. Aerospace market rates were used for

the Aerospace CGU and long-term GDP rates for advanced economies

were used for the Flexonics CGU. Sensitivity analysis (See Note 13)

shows that a 1 percent decrease in growth rate would not result in the

carrying amount of CGU groups exceeding their recoverable amount.

• Recoverability of trade receivables – After consideration of the typical

receivable days compared to the rate of change in the market, the

Directors consider that receivables at 31 December 2022 are not

adversely affected by climate change.

• Valuation of the UK Plan retirement gross benefit olibgation - there is no

material impact on key financial assumptions which are set according to

market yields. Mortality assumptions take account of current views of

possible climate pathways that may develop. Asset values are set

according to market valuations which incorporate market expectations

of climate impacts.

The Directors are aware of the ever-changing risks attached to climate

change and will regularly assess these risks against judgements and

estimates made in preparation of the Group’s financial statements.

3. Revenue

Total revenue is disaggregated by market sectors as follows:

Year ended

2022

£m

Year ended

2021

£m

Civil Aerospace 339.4 244.5

Defence 122.1 125.0

Other 92.1 69.8

Aerospace 553.6 439.3

Land Vehicles 16 4.1 118.8

Power & Energy 131.5 101.1

Flexonics 295.6 219.9

Eliminations (0.8) (0.5)

Total revenue 848.4 658.7

2. Significant accounting policies continued

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150 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

Other Aerospace comprises space and non-military helicopters and other markets, principally including semiconductor, medical, and

industrial applications.

The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance obligations that

have original expected durations of one year or less.

Applying the practical expedient in paragraph 94 of IFRS 15, the Group recognises the incremental costs of obtaining contracts as an expense when

incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.

4. Segment Information

The Group reports its segment information as two operating Divisions according to the market segments they serve, Aerospace and Flexonics, which

is consistent with the oversight employed by the Executive Committee. The chief operating decision-maker, as defined by IFRS 8, is the Executive

Committee. The Group is managed on the same basis, as two operating Divisions.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 2 and the sales between

segments are carried out at arm’s length. Adjusted operating profit, as described in Note 9, is the key measure reported to the Group’s Executive

Committee for the purpose of resource allocation and assessment of segment performance. Investment income, finance costs and tax are not

allocated to segments, as this type of activity is driven by the central tax and treasury functions.

Segment assets include directly attributable computer software assets, property, plant and equipment (including right-of-use assets), working capital

assets, goodwill and intangible assets from acquisitions. Cash, deferred and current tax and other financial assets (except for working capital) are not

allocated to segments for the purposes of reporting financial performance to the Executive Committee.

Segment liabilities include directly attributable working capital liabilities and lease liabilities. Debt, retirement benefits, deferred and current tax

and other financial liabilities (except for working capital) are not allocated to segments for the purposes of reporting financial performance to the

Executive Committee.

Central costs, assets and liabilities are corporate items not allocated to segments, which is consistent with the format used by the chief operating

decision-maker.

Segment information for revenue, operating profit/loss and a reconciliation to entity and profit/loss after tax is presented below:

Notes

Aerospace

Year ended

2022

£m

Flexonics

Year ended

2022

£m

Eliminations/

central

costs

Year ended

2022

£m

Total

Year ended

2022

£m

Aerospace

Year ended

2021

£m

Flexonics

Year ended

2021

£m

Eliminations/

central

costs

Year ended

2021

£m

Total

Year ended

2021

£m

External revenue 553.0 295.4 – 848.4 438.9 219.8 – 658.7

Inter-segment revenue 0.6 0.2 (0.8) – 0.4 0.1 (0.5) –

Total revenue 553.6 295.6 (0.8) 848.4 439.3 219.9 (0.5) 658.7

Adjusted trading profit 20.3 25.4 (17.6) 28.1 7.9 12.9 (14.9) 5.9

Share of joint venture profit – 0.4 – 0.4 – 0.2 – 0.2

Adjusted operating profit 20.3 25.8 (17.6) 28.5 7.9 13.1 (14.9) 6.1

Amortisation of intangible assets

from acquisitions 9 (0.2) – – (0.2) – – – –

Net restructuring income 9 4.2 – – 4.2 2.2 2.2 – 4.4

Operating profit 24.3 25.8 (17.6) 32.5 10.1 15.3 (14.9) 10.5

Investment income 1.9 0.5

Finance costs (10.6) (8.5)

Corporate undertakings 9 (1.4) 21.2

Profit before tax 22.4 23.7

Tax (charge)/credit (2.2) 0.5

Profit after tax 20.2 24.2

Trading profit and adjusted trading profit is operating profit and adjusted operating profit respectively before share of joint venture profit. See Note 9 for

the derivation of adjusted operating profit.

3. Revenue continued

151SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

151SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

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

Assets

Year ended

2022

£m

Year ended

2021

£m

Aerospace 647.8 506.6

Flexonics 217.3 184.9

Segment assets for reportable segments 865.1 691.5

Unallocated

Central 3.6 4.6

Cash 43.2 51.1

Deferred and current tax 13.0 8.3

Retirement benefits 51.8 72.2

Others 0.2 0.1

Total assets per Consolidated Balance Sheet 976.9 827.8

Liabilities

Year ended

2022

£m

Year ended

2021

£m

Aerospace 189.5 148.1

Flexonics 79.7 63.9

Segment liabilities for reportable segments 269.2 212.0

Unallocated

Central 19.2 15.4

Loans and Overdrafts 143.7 131.0

Deferred and current tax 22.4 25.1

Retirement benefits 12.1 11.0

Deferred and Contingent consideration 52.3 –

Others 8.6 8.2

Total liabilities per Consolidated Balance Sheet 527.5 402.7

Additions to

non-current

assets

Year ended

2022

£m

Additions to

non-current

assets

Year ended

2021

£m

Depreciation

and

amortisation

Year ended

2022

£m

Depreciation

and

amortisation

Year ended

2021

£m

Aerospace 18.6 12.9 35.9 35.1

Flexonics 13.5 10.3 13.4 12.2

Sub total 32.1 23.2 49.3 47.3

Central 0.4 0.1 0.5 0.5

Total 32.5 23.3 49.8 47.8

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

Year ended

2022

£m

Year ended

2021

£m

Aerospace – Structures 242.6 178.9

Aerospace – Fluid Systems 310.4 260.0

Aerospace total 553.0 438.9

Land vehicles 16 4.1 118.8

Power & Energy 131.3 101.0

Flexonics total 295.4 219.8

Group total 848.4 658.7

No individual customer accounted for more than 10% of external revenue in 2022 or 2021.

4. Segment Information continued

152 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

152 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

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

2022

£m

Sales

revenue

Year ended

2021

£m

Segment

non-current

assets

Year ended

2022

£m

Segment

non-current

assets

Year ended

2021

£m

USA 417.1 316.4 296.5 202.5

UK 140.6 105.0 158.8 181.8

Rest of the World 290.7 237.3 144.4 140.9

Sub total 848.4 658.7 599.7 525.2

Unallocated amounts – – 10.9 5.7

Total 848.4 658.7 610.6 530.9

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

5. Operating profit

Operating profit can be analysed as follows:

Year ended

2022

£m

Year ended

2021

£m

Revenue 848.4 658.7

Cost of sales (698.7) (555.7)

Gross profit 149.7 103.0

Distribution costs (6.3) (5.4)

Administrative expenses (111.4) (87.3)

Profit on sale of fixed assets 0.1 –

Share of joint venture profit 0.4 0.2

Operating profit 32.5 10.5

Operating profit for the period has been arrived at after charging:

Year ended

2022

£m

Year ended

2021

£m

Net foreign exchange losses/(gains) 4.6 (1.7)

Research and design costs 19.8 19.2

Depreciation of property, plant and equipment 48.1 46.3

Amortisation of intangible assets included in administration expenses 1.7 1.5

Cost of inventories recognised as expense 698.7 555.7

Provision for loss allowance against receivables 1.5 0.6

Restructuring: provision (release)/charge for impairment of property, plant and equipment and inventories (1.4) 2.3

Restructuring: staff and other costs 1.2 2.5

COVID-19 grant (income) – (0.3)

Aerospace manufacturing grant (income) (4.0) (4.2)

Staff costs are disclosed in Note 6. The majority of research and design costs incurred during the year have been expensed in line with Note 2 Group’s

accounting policies.

4. Segment Information continued

153SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

153SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

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

Year ended

2022

£m

Year ended

2021

£m

Fees payable to the Company’s Auditor and their associates for the audit of the Company’s annual accounts 0.5 0.3

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

– The audit of the Company’s subsidiaries 1.7 1.5

Total audit fees 2.2 1.8

Fees payable to Company’s Auditor and their associates for non-audit services to the Company are not required to be disclosed because the

Consolidated Financial Statements are required to disclose such fees on a consolidated basis.

The Group paid £0.06m (2021 – £0.06m) to the Company’s Auditor for audit related services and £nil (2021 – £0.1m) for non-audit related services

during 2022, in line with the Company’s policy on the use of Auditors for non-audit services.

Details of the Company’s policy on the use of auditors for non-audit services, the reasons why the Auditor was used rather than another supplier and

how the Auditor’s independence and objectivity were safeguarded are set out in the Audit Committee Report on pages 102 to 107. No services were

provided pursuant to contingent fee arrangements.

6. Staff costs

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

Year ended

2022

Number

Year ended

2021

Number

Production 5,297 4,850

Distribution 64 63

Sales 249 252

Administration 495 473

Total 6,105 5,638

The actual number of employees at 31 December 2022 was 6,361 (2021 – 5,664).

Notes

Year ended

2022

£m

Year ended

2021

£m

Their aggregate remuneration comprised:

Wages and salaries 234.7 198.9

Social security costs 26.9 22.6

Termination benefits – 1.0

Other pension costs – defined contribution 34a 8.9 8.6

Other pension costs – defined benefit 34e 0.8 0.7

Share based payments 33 4.3 3.5

Aggregate remuneration 275.6 235.3

The Group also incurred medical and other employee benefit expenses during the year of £24.6m (2021 – £20.9m) and received £nil (2021 – £0.3m)

COVID-19 grant income related to government assistance schemes to compensate for furloughing of employees.

7. Investment income

Year ended

2022

£m

Year ended

2021

£m

Interest on bank deposits 0.7 0.1

Net finance income of retirement benefits (Note 34e) 1.2 0.4

Total income 1.9 0.5

5. Operating profit continued

154 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

154 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

8. Finance costs

Notes

Year ended

2022

£m

Year ended

2021

£m

Interest on bank overdrafts and loans 2.0 1.0

Interest on other loans and other finance costs 5.8 4.9

Interest on lease liabilities 2.5 2.6

Interest unwind on acquistion consideration 9, 31 0.3 –

Total finance costs 10.6 8.5

9. Adjusted operating profit and adjusted profit/(loss) before tax

The presentation of adjusted operating profit and adjusted profit before tax measures, derived in accordance with the table below, have been included

to identify the performance of the Group prior to the impact of amortisation of intangible assets from acquisitions, net restructuring income and the

costs and income associated with corporate undertakings. The Board has adopted a policy to separately disclose those items, where significant in size,

that it considers are outside the results for the particular year under review and against which the Board measures and assesses the performance of

the business.

The adjustments are made on a consistent basis and also reflect how the business is managed on a day-to-day basis.

The amortisation charge relates to acquisition of Spencer Aerospace. It is charged on a straight-line basis and reflects a non-cash item for the reported

year. The Group implemented a restructuring programme in 2019, which continued through 2020 and 2021 in response to the impact of the COVID-19

pandemic on some of the Group’s end markets. Some residual restructuring activity has continued in 2022. The aerospace manufacturing grant, within

net restructuring income, represents incentives specific to only part of the Group for a limited time period. Corporate undertakings relate to business

acquisition activities, gain on disposal of a business, bid defence and other costs relating to corporate activities. None of these charges are reflective

of in year performance. Therefore, they are excluded by the Board and Executive Committee when measuring the operating performance of

the businesses.

Notes £m

Year ended

2022

£m £m

Year ended

2021

£m

Operating profit 32.5 10.5

Amortisation of intangible assets from acquisitions 0.2 –

Net restructuring income (4.2) (4.4)

Adjusted operating profit 28.5 6.1

Profit before tax 22.4 23.7

Adjustments to profit/loss before tax as above (4.0) (4.4)

Corporate undertakings 31 1.4 (21.2)

Corporate undertakings – interest 0.3 –

Total Corporate undertakings 1.7 (21.2)

Adjusted profit/(loss) before tax 20.1 (1.9)

Net restructuring income

In 2020 the Group had focused on taking actions to conserve cash to manage through the pandemic, including curtailing capital expenditure, tightly

managing working capital and implementing further cost cutting actions. In 2022 there were still some residual activities associated with that. The

decisive actions which we took on restructuring and cost management delivered the expected benefits. In addition, the Group has continued to review

inventory and asset exposures on programmes that have been reduced, cancelled or where the Group will no longer participate. As part of the

restructuring focus, we have assessed critically any inventory or asset exposures on these programmes and written down the carrying values on

excess holdings and assets where there is no alternate use. Where demand has picked up on previously reduced or cancelled programmes, inventory

impairments have been reversed to the extent that there are confirmed orders in place.

The restructuring resulted in net income of £4.2m (2021 - £4.4m). Of this, £4.0m income (2021 - £4.2m) related to an aerospace manufacturing grant

and £1.2m net charge related to consultancy and other costs (2021 - £0.4m net charge). For certain specific programmes, and in conjunction with the

focus on restructuring, management has also identified inventory impairment reversals of £2.7m (2021 - £1.4m) where customer demand has

increased, and further impairment provisions on property, plant and equipment in 2022 with a charge of £1.3m (2021 - £0.8m) to cover the risk where

there are no alternative uses.

Net cash inflow related to restructuring activities was £2.1m (2021 - £0.9m net cash outflow). At 31 December 2022, a restructuring provision of

£0.2m (31 December 2021: £1.3m) was recognised and is expected to be utilised in 2023.

Corporate undertakings

Costs associated with corporate undertakings were £1.7m in 2022, of which £1.2m of acquisition costs and £0.3m interest unwind of deferred and

contingent consideration relates to the acquisition of Spencer Aerospace in November 2022 and £0.2m costs relate to other corporate activities. In

2021, net income of £21.2m was recognised, of which £24.2m gain relates to the disposal of Senior Aerospace Connecticut in April 2021, partly offset

by £3.0m bid defence and costs relating to other corporate activities. See Note 31 to the Financial Statements for further details.

155SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

155SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

10. Taxation

Year ended

2022

£m

Year ended

2021

£m

Current tax:

Current year 8.2 7.0

Adjustments in respect of prior periods (1.9) (6.0)

6.3 1.0

Deferred tax (Note 21):

Current year (3.5) (1.7)

Adjustments in respect of prior periods (0.6) 0.2

(4.1) (1.5)

Total tax charge/(credit) 2.2 (0.5)

On 24th May 2021, a future increase in UK corporation tax rate from 19% to 25% was substantially enacted with an effective date of 1 April 2023.

Deferred tax assets and liabilities are measured at the rates that are expected to apply to the year when the asset is realised or the liability is settled,

based on tax rates (and tax laws) that have been enacted or substantially enacted at the Balance Sheet date. The impact of the tax rate change to 25%

on deferred tax assets and liabilities has been reflected at the Balance Sheet date and this has resulted in a current year charge of £0.2m recognised in

the Income Statement and a credit of £1.4m through Other Comprehensive Income. Taxation for other jurisdictions is calculated at the rates prevailing

in the respective jurisdictions.

The total charge for the year can be reconciled to the profit before tax per the Consolidated Income Statement as follows:

Year ended

2022

£m

Year ended

2022

Year ended

2021

£m

Year ended

2021

Profit before tax 22.4 23.7

Expected tax charge/(credit) at the UK standard corporation tax rate 19% 4.3 4.5

Effect of different statutory rates in overseas jurisdictions a 0.3 0.9

Tax incentives and credits b (1.2) (1.1)

Tax losses not recognised c (0.4) 0.3

Impact of share options d 0.2 0.1

Effect of difference in treatment of financing activities between jurisdictions e (0.4) (0.3)

Non-deductible expenses and other permanent differences f 1.5 1.4

Effect of changes in UK tax rate on deferred tax items g 0.2 (0.6)

Withholding taxes h 0.2 0.1

Adjustments in respect of prior periods – current tax items i (1.9) (6.0)

Adjustments in respect of prior periods – deferred tax items j (0.6) 0.2

Tax charge / (credit) and effective tax rate for the year 2.2 9.8% (0.5) (2.1%)

a. Mainly attributable to a higher rate of tax in the US.

b. Includes a £1.2m benefit from enhanced US R&D deductions and the UK capital allowance super-deduction.

c. Tax losses utilised in the year includes £0.3m of UK tax losses whose use is uncertain and therefore unrecognised for deferred tax. Unrecogised amounts in 2021 included

£0.5m of State tax losses in the US which have restricted use, net of tax losses utilised of £0.2m.

d. Impact of non-tax deductible share based payment charges net of current tax deductions for share exercises in the year and the deferred tax asset recognition for

future exercises.

e. Effect of different rates of tax between jurisdictions on internal financing activities.

f. Non-deductible expenses and other permanent differences, includes a £1.7m charge in respect of uncertain tax positions in accordance with IFRIC 23 principles.

g. Relates to the Income Statement impact of the retranslation of UK deferred tax assets and liabilities following the substantial enactment of the future 25% tax rate effective

from 1 April 2023.

h. Arises from irrecoverable withholding taxes.

i. Includes a credit in respect of the uncertain tax positions which have been been resolved, settled or released in accordance with IFRIC 23 principles of £3.8m as well as prior

year items arising from the true up of tax accruals in line with local tax filings which in many cases have an equal and opposite prior year item in deferred tax.

j. Arises from the true up of deferred tax estimates following the finalisation of entity statutory accounts and local tax returns.

156 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

156 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

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:

2022

£m

2021

£m

Deferred tax:

Items that will not be reclassified subsequently to profit and loss

Tax on actuarial items 4.3 (3.7)

Effect of change in UK tax rate 1.4 (2.7)

Items that may be reclassified subsequently to profit or loss

Tax on foreign exchange contracts – cash flow hedges 0.7 0.8

Total tax credit/(charge) recognised directly in other comprehensive income 6.4 (5.6)

In addition to the amount charged to the Consolidated Income Statement and Other Comprehensive Income, the following amounts relating to tax

have been recognised directly in equity:

Year ended

2022

£m

Year ended

2021

£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) 6.4 (5.5)

11. Dividends

Year ended

2022

£m

Year ended

2021

£m

Amounts recognised as distributions to equity holders in the period:

Final dividend for the year ended 31 December 2021 of £nil per share (2020 – £nil) – –

Interim dividend for the year ended 31 December 2022 of 0.30p per share (2021 – £nil) 1.2 –

1.2 –

Proposed final dividend for the year ended 31 December 2022 of 1.00p per share (2021 – £nil) 4.1 –

12. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

Number of shares

Year ended

2022

Million

Year ended

2021

Million

Weighted average number of ordinary shares for the purposes of basic earnings per share 415.3 415.7

Effect of dilutive potential ordinary shares:

Share options 11.6 6.8

Weighted average number of ordinary shares for the purposes of diluted earnings per share 426.9 422.5

10. Taxation continued

157SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL ST ATEMENTS /

157SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

Year ended 2022 Year ended 2021

Earnings and earnings per share Notes

Earnings

£m

EPS

pence

Earnings

£m

EPS

pence

Profit for the period 20.2 4.86 24.2 5.82

Adjust:

Amortisation of intangible assets from acquisitions net of

tax of £nil (2021 – £nil) 0.2 0.05 – –

Net restructuring income net of tax of £0.7m (2021 – £0.2m tax credit) 9 (3.5) (0.84) (4.6) (1.11)

Corporate undertakings net of tax of £0.5m (2021 – £2.9m) 31 1.2 0.29 (18.3) (4.40)

Non-cash tax credit 10 – – (0.6) (0.14)

Adjusted earnings after tax 18.1 4.36 0.7 0.17

Earnings per share

– basic 4.86p 5.82p

– diluted 4.73p 5.73p

– adjusted 4.36p 0.17p

– adjusted and diluted 4.24p 0.17p

The denominators used for all basic, diluted and adjusted earnings per share are as detailed in the table above.

The presentation of adjusted earnings per share, derived in accordance with the table above, has been included to identify the performance of the

Group prior to the impact of amortisation of intangible assets from acquisitions, net restructuring income, the costs and income associated with

corporate undertakings and non-cash tax credit. The Board has adopted a policy to separately disclose those items, where significant in size, that it

considers are outside the earnings for the particular year under review and against which the Board measures and assesses the performance of the

business. See Note 9 for further details.

13. Goodwill

Notes

Year ended

2022

£m

Year ended

2021

£m

Cost

At 1 January 308.5 322.9

Corporate undertakings 31 42.0 (15.1)

Exchange differences 9.9 0.7

At 31 December 360.4 308.5

Accumulated impairment losses

At 1 January 158.3 157.9

Exchange differences 2.4 0.4

At 31 December 160.7 158.3

Carrying amount at 31 December 199.7 150.2

In 2022, goodwill has increased by £49.5m, of which £42.0m relates to the acquisition of Spencer Aerospace (see Note 31), with £7.5m net foreign

exchange differences.

Goodwill is allocated to the group of CGUs (CGU groups), namely Aerospace and Flexonics, reflecting the lowest level at which management exercises

oversight and monitors the Group’s performance. The table below highlights the carrying amount of goodwill allocated to these CGU groups, all of

which are considered significant in comparison with the total carrying amount of goodwill.

Year ended

2022

£m

Year ended

2021

£m

Aerospace 143.6 98.0

Flexonics 56.1 52.2

Total 199.7 150.2

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The timing of the annual

assessment at 30 September 2022 coincided with the Board’s review of the most recent financial strategy. Management applied the value in use

methodology to assess impairment. The key assumptions on which the value in use calculations were based relate to business performance over the

next five years, long-term growth rates beyond 2027 and the discount rates applied. The discount rates were pre-tax measures based on the rate of

10-year government bonds issued in the relevant market and in the same currency as the cash flows, adjusted for a risk premium to reflect both the

increased risk of investing in equities generally and the systematic risk of the CGU group. The key estimates were the level of revenue and operating

12. Earnings per share continued

158 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

158 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

margins anticipated, the proportion of operating profit converted into cash flow in each year, long-term growth rates and discount rates applied. The

forecast compound annual growth rate in revenue from 2022 to 2027 was 8% (2021 – 2021 to 2026 was 9%), reflecting continued market recovery

post COVID-19 pandemic.

Forecasts used in the cash flow were based on the most recent financial strategy, as approved by Management for the next five years to 2027. These

estimates up to 2027, where appropriate, take account of the current economic environment as set out in the Strategic Report on pages 1 to 83.

Cash flows after 2027 have been extrapolated based on estimated long-term growth rates into perpetuity, which has been determined by the lower of

the long-term market growth rates and the historical forecast compound annual growth in revenue to 2027. For Aerospace, the long-term market

growth rate is 3.7% per annum (2021 – 3.0%), which does not exceed the long-term average growth rate forecast for the aerospace market as

included in market outlooks from Boeing and Airbus. For Flexonics, the long-term market growth rate is 1.5% per annum (2021 – 1.4%), which is base d

on the world long-term forecast GDP growth for advanced economies.

The pre-tax discount rates applied to discount the pre-tax cash flows for Aerospace and Flexonics are 10.9% and 13.7% respectively (2021 – 10.7%

and 11.8%); these discount rates include CGU group specific risk adjustments which are the measurements used by Management in assessing

investment appraisals specific to each CGU group. The increase in discount rates is mainly driven by changes in 10-year UK and US government

bond yields.

Sensitivities reflecting reasonable possible changes have also been considered for each CGU group in relation to the value in use calculations: the

long-term growth rate assumption was reduced to 1 percentage point and the discount rate was increased by a 1 percentage point. Neither these

sensitivities or a reasonable possible change in the cash flows results in the carrying amount of the CGU groups exceeding their recoverable amount.

Further to the 30 September 2022 annual impairment test, the Board considered whether there were any triggering events as at the 31 December

2022 reporting date. The Board concluded that the market factors considered as at 30 September were largely unchanged and remained relevant for

the year end reporting date, with no new triggers identified for impairment.

14. Other intangible assets

Intangible

assets

from

acquisitions

Year ended

2022

£m

Computer

software

and others

Year ended

2022

£m

Total

Year ended

2022

£m

Intangible

assets

from

acquisitions

Year ended

2021

£m

Computer

software

and others

Year ended

2021

£m

Total

Year ended

2021

£m

Cost

At 1 January 117.5 22.8 140.3 121.0 23.0 144.0

Additions – 1.8 1.8 – 1.1 1.1

Acquired on acquisition 31.0 – 31.0 – – –

Disposals – (1.2) (1.2) (3.5) (0.6) (4.1)

Restructuring impairment and disposal – (0.4) (0.4) – (0.6) (0.6)

Reclassification – 0.6 0.6 – – –

Exchange differences 8.8 1.7 10.5 – (0.1) ( 0.1)

At 31 December 157.3 25.3 182.6 117.5 22.8 140.3

Amortisation

At 1 January 117.5 18.6 136.1 121.0 18.2 139.2

Charge for the year 0.2 1.5 1.7 – 1.5 1.5

Disposals – (1.2) (1.2) (3.5) (0.6) (4.1)

Restructuring impairment and disposal – (0.4) (0.4) – (0.6) (0.6)

Exchange differences 8.8 1.4 10.2 – 0.1 0.1

At 31 December 126.5 19.9 146.4 117.5 18.6 136.1

Carrying amount at 31 December 30.8 5.4 36.2 – 4.2 4.2

The carrying amount of intangible assets from acquisitions as at 31 December 2022 relates to the acquistion of Spencer Aerospace and consists of

£23.8m relating to Qualified parts list, £6.5m relating to Customer relationships and £0.5m relating to Order backlog. These are being amortised over

periods of 18 years and 1 month, 16 years and 1 month and 1 year and 1 month respectively.

13. Goodwill continued

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NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

15. Investment in joint venture

The Group has a 49% interest in Senior Flexonics Technologies (Wuhan) Limited, a jointly controlled entity incorporated in China, which was set up in

2012. Senior Flexonics Technologies (Wuhan) Limited is a precision manufacturer of automotive components.

The results of the joint venture are accounted for using equity accounting.

The Group’s investment of £4.4m represents the Group’s share of the joint venture’s net assets as at 31 December 2022 (2021 – £3.9m). The

following amounts represent the aggregate amounts relating to the revenue and expenses and assets and liabilities of Senior Flexonics Technologies

(Wuhan) Limited for the years ended 31 December 2022 and December 2021.

2022

£m

2021

£m

Revenue 7.0 6.6

Expenses (6.2) (6.1)

Profit 0.8 0.5

Total assets 11.5 10.0

Total liabilities (2.6) (2.0)

Net assets 8.9 8.0

Group's share of profit 0.4 0.2

Group's share of net assets 4.4 3.9

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FINANCIAL STATEMENTS

16. Property, plant and equipment

Freehold

land and

buildings

Year ended

2022

£m

Leasehold

building

improve-

ments

Year ended

2022

£m

Plant

and

equipment

Year ended

2022

£m

Right-of-

use

Land and

Buildings

Year ended

2022

£m

Right-of-

use

Plant and

equipment

Year ended

2022

£m

Total

Year ended

2022

£m

Freehold

land and

buildings

Year ended

2021

£m

Leasehold

building

improve-

ments

Year ended

2021

£m

Plant

and

equipment

Year ended

2021

£m

Right-of-

use

Land and

Buildings

Year ended

2021

£m

Right-of-

use

Plant and

equipment

Year ended

2021

£m

Total

Year ended

2021

£m

Cost or

valuation

At 1 January 104.6 4.5 518.8 88.2 6.5 722.6 111.7 4.2 536.7 86.1 6.2 744.9

Additions 1.2 0.3 27.2 0.8 1.2 30.7 0.3 0.3 19.6 0.9 1.1 22.2

Acquired

on acquisition – – 1.1 2.6 2 .1 5.8 – – – – – –

Lease

Modifications – – – 2.7 (0.5) 2.2 – – – 3.7 (0.2) 3.5

Exchange

differences 9.4 0.5 46.2 6.3 0.5 62.9 (1.1) – (5.0) (0.5) – (6.6)

Disposed

on disposal

activities – – – – – – (3.1) – (16.6) – – (19.7)

Disposals (0.3) – (11.2) (1.5) (0.5) (13.5) (0.1) – (11.0 ) (0.4) (0.2) (11.7)

Reclassification – 3.0 (6.7) – – (3.7) – – – – – –

Restructuring

impairment

and disposal (1.9) – (5.2) – – (7.1) (3.1) – (4.9) (1.6) (0.4) (10.0)

At 31 December 113.0 8.3 570.2 9 9.1 9.3 799.9 104.6 4.5 518.8 88.2 6.5 722.6

Accumulated

depreciation

and impairment

At 1 January 36.3 3.5 360.9 23.6 3.7 428.0 35.8 3.2 355.6 16.8 3.0 414.4

Charge for

the year 2.6 0.3 34.9 8.7 1.6 48.1 2.5 0.3 34.0 8 .1 1.4 46.3

Lease

Modifications – – – 0.3 (0.4) (0.1) – – – – (0.1) (0.1)

Exchange

differences 3.9 0.5 32.2 1.8 0.3 38.7 (0.3) – (2.3) (0.1) – (2.7)

Eliminated on

disposal activities – – – – – – (0.9) – (11.3) – – (12.2)

Eliminated

on disposals (0.3) – (10.8) (1.5) (0.5) (13.1) (0.1) – (10.8) (0.4) (0.2) (11.5)

Reclassification – 1.1 (4.2) – – (3.1) – – – – – –

Restructuring

impairment

and disposal (1.9) – (3.9) – – (5.8) (0.7) – (4.3) (0.8) (0.4) (6.2)

At 31 December 40.6 5.4 40 9.1 32.9 4.7 492.7 36.3 3.5 360.9 23.6 3.7 428.0

Carrying

amount at

31 December 72.4 2.9 161.1 66.2 4.6 307.2 68.3 1.0 157.9 64.6 2.8 294.6

As part of the restructuring programme (see Note 9), £1.3m (2021 – £3.8m) of property, plant and equipment has been impaired in 2022, of which

£1.3m relates to Aerospace and £nil relates to Flexonics. The recoverable amount of the assets was determined based on value-in-use for assets with

confirmed orders, or fair value less costs to sell, where assets are to be disposed.

At 31 December 2022, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to £1.9m

(2021 – £3.4m).

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FINANCIAL STATEMENTS /

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FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

17. Inventories

Year ended

2022

£m

Year ended

2021

£m

Raw materials 77.5 56.5

Work-in-progress 80.6 60.1

Finished goods 36.2 28.6

Total 194.3 145.2

Inventory releases in 2022 were £1.9m (2021 – write-down of £2.5m), after releases of £2.7m (2021 – £1.5m) relating to restructuring (see Note 9).

18. Trade and other receivables

Trade and other receivables at 31 December comprise the following:

Year ended

2022

£m

Year ended

2021

£m

Non-current assets

Foreign exchange contracts 0.3 –

Other receivables 0.1 0.1

0.4 0.1

Current assets

Trade receivables 110.6 85.2

Value added tax 2.9 1.9

Foreign exchange contracts 2.4 0.8

Prepayments 10.7 10.0

Other receivables 0.1 0.1

126.7 98.0

Total trade and other receivables 127.1 9 8.1

Credit risk

The Group’s principal financial assets are bank balances and cash and trade receivables. The credit risk on liquid funds and derivative financial

instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the Consolidated Balance Sheet are net of loss

allowances. There are no other credit or impairment losses for other classes of financial assets.

Further disclosures on credit risk are included in Note 20.

The average credit period taken on sales of goods is 55 days (2021 – 52 days). An allowance has been made for estimated irrecoverable amounts from

the sale of goods of £3.3m (2021 – £2.0m). In determining the recoverability of trade receivables, the Group considers any change in the credit quality

of the trade receivable from the date credit was initially granted up to the reporting date. At 31 December 2022, the carrying amount of the receivable

from the Group’s most significant customer was £8.3m (2021 – £6.7m from the same customer). The Group has no other significant concentration of

credit risk, with exposure spread over a large number of counterparties and customers. Accordingly, the Directors believe that there is no further credit

provision risk in excess of the loss allowance.

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FINANCIAL STATEMENTS

Expected credit loss

Year ended

2022

£m

Year ended

2021

£m

Movements in loss allowance:

At 1 January 2.0 1.6

Provision for impairment 1.5 0.6

Amounts written off as uncollectible (0.2) (0.2)

Amounts recovered (0.2) –

Exchange differences 0.2 –

At 31 December 3.3 2.0

Ageing analysis of past due, net of loss allowance:

Up to 30 days past due 10.4 9.3

31 to 60 days past due 3.0 3.2

61 to 90 days past due 1.5 0.9

91 to 180 days past due 1.9 1.6

Total past due, net of loss allowance 16.8 15.0

Not past due

93.8 70.2

Total current trade receivables 110.6 85.2

There are no items past due in any other class of financial assets except for trade receivables.

The Directors consider that the carrying amount of trade and other receivables approximates their fair value. The maximum exposure to credit risk at

the reporting date is the fair value of each class of receivable above. The Group does not hold any collateral as security.

19. Bank overdrafts and loans

Year ended

2022

£m

Year ended

2021

£m

Bank overdrafts 0.5 –

Bank loans 17.4 (0.5)

Other loans 125.8 131.5

143.7 131.0

The borrowings are repayable as follows:

On demand or within one year 0.5 14.8

In the second year – –

In the third to fifth years inclusive 118.5 70.7

After five years 24.7 45.5

143.7 131.0

Less: amount due for settlement within 12 months (shown under current liabilities) (0.5) (14.8)

Amount due for settlement after 12 months 143.2 116 . 2

At 31 December 2022, bank loans of £18.6m are drawn and there are £1.2m of capitalised revolving credit facility transaction costs. At 31 December

2021, bank loans were undrawn, and there were £0.5m of capitalised revolving credit facility transaction costs.

18. Trade and other receivables continued

163SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

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FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

Analysis of borrowings by currency

31 December 2022

Total

£m

Pound

Sterling

£m

Euros

£m

Dollars

£m

Bank overdrafts 0.5 – 0.5 –

Bank loans 17.4 (1.2) – 18.6

Other loans 125.8 26.9 24.7 74.2

143.7 25.7 25.2 92.8

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

The weighted average interest rates paid were as follows:

Year ended

2022

Year ended

2021

Bank loans and overdrafts 3.64 1.51

Other loans 3.07 3.10

Bank loans and overdrafts of £19.1m (2021 – £nil) are arranged at floating rates, thus exposing the Group to cash flow interest rate risk. Other

borrowings are mainly arranged at fixed interest rates and expose the Group to fair value interest rate risk. No interest rate swaps were taken out in

2021 or 2022.

The Directors estimate the fair value of the Group’s borrowings to be as follows:

Year ended

2022

£m

Year ended

2021

£m

Bank loans and overdrafts 17.9 (0.5)

Other loans 116.3 133.8

134.2 133.3

The fair value of Other loans has been determined by applying a make-whole calculation using the prevailing treasury bill yields plus the applicable

credit spread for the Group (level 2 of the fair value hierarchy as defined in Note 20).

The other principal features of the Group’s borrowings are as follows:

Bank overdrafts are repayable on demand. The effective interest rates on bank overdrafts and loans are determined based on SONIA, SOFR and

appropriate LIBOR rates plus applicable margins.

The Group’s main loans are unsecured guaranteed loan notes in the US private placement market and revolving credit facilities.

a) Loan notes of €28m, 2022 £24.8m (2021 – £23.5m) were taken out in January 2017, carry interest at the rate of 1.51% and mature on

1 February 2027.

b) Loan notes of $20m, 2022 £nil (2021 – £14.8m) were taken out in October 2015 and were repaid in October 2022. The loan notes carried interest at

the rate of 3.42% per annum.

c) Loan notes of $60m, 2022 £49.6m (2021 – £44.5m) were taken out in October 2015 and are due for repayment in October 2025. The loan notes

carry interest at the rate of 3.75% per annum.

d) Loan notes of £27m were drawn down in January 2018, carry interest at a rate of 2.35% and are due for repayment in January 2025.

e) Loan notes of $30m, 2022 £24.8m (2021 – £22.2m) were taken out in September 2018, carry interest at the rate of 4.18% and are due for

repayment in September 2028.

Transaction costs of £0.4m, directly attributable to the GBP notes (£0.1m), the Euro notes (£0.1m) and the US Dollar notes (£0.2m), have been

deducted from their carrying value.

The Group also has two revolving credit facilities.

19. Bank overdrafts and loans continued

164 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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164 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

A committed multi-currency revolving credit facility in the UK of £115m (2021 – £120m) was amended and extended in November 2022 and matures

in November 2026. At 31 December 2022, a loan of $20m (£16.5m) with reference to USD LIBOR was outstanding under the £115m facility. At 31

December 2021, £nil was drawn under the £120m facility. The refinancing of the Group’s main UK revolving credit facility demonstrates the strong

ESG commitments made by Senior and its lenders in agreeing appropriate sustainability linked Key Performance Indicators (“KPIs”). The first testing

period on these KPIs is not until the year ended 31 December 2023, which could have a small impact on the UK RCF interest margin.

A committed $50m single bank (£41.3m) loans and letter of credit facility was extended in June 2022 and matures in June 2025. There were $2.6m

(£2.1m) loans with reference to Term SOFR which are drawn under the facility on 31 December 2022 and $nil (£nil) loans drawn on 31 December 2021

and there were letters of outstanding credit of $3.1m (£2.6m) (2021 – £1.1m).

As at 31 December 2022, the Group had available £135.1m (2021 – £155.9m) of undrawn committed borrowing facilities in respect of which all

conditions precedent had been met. The weighted average maturity of the Group’s committed facilities at 31 December is 3.5 years (2021 – 3.0 years).

20. Financial instruments

Capital risk management

The Group manages its capital structure to safeguard its ability to continue as a going concern whilst maximising the return to stakeholders through the

optimisation of the balance between debt and equity. In considering the appropriate level of net debt, the Group pays close attention to its level as

compared to the cash generation potential of the Group, measured by EBITDA (defined in the Notes to the Financial Headlines). The Group also

monitors capital on the basis of a gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is derived in Note 32c. Lease

liabilities are excluded from net debt in calculating the gearing ratio. Total capital is the equity shown in the Consolidated Balance Sheet.

The Group’s strategy in respect of gearing is to target a long-term gearing ratio within the range of 30% to 60%. The gearing ratio for the Group at the

end of 2022 was 22% (2021 – 19%).

All of the Group’s external borrowing facilities at 31 December 2022 have a requirement for the ratio of net debt to EBITDA to be less than 3.0x (US

Private Placements) or 3.5x (UK RCF and US RCF). IFRS 16 does not impact the Group’s lending covenants as these are currently based on frozen

GAAP, hence figures quoted below exclude the impact of IFRS 16 on net debt, interest and EBITDA. As required by the covenant definition, net debt is

restated using 12-month average exchange rates (consistent with EBITDA definition).

The Group has two covenants for committed borrowing facilities, which are tested at June and December: the Group’s net debt to EBITDA (defined in

the Notes to the Financial Headlines) must not exceed 3.0x and interest cover, the ratio of EBITDA to interest must be higher than 3.5x.

At 31 December 2022, the Group’s net debt to EBITDA was 1.47x (31 December 2021 – 1.87x) and interest cover was 9.4x (31 December 2021 –

7.3x), both comfortably within the covenants limits.

Financial risk management

The Group’s activities expose it to a variety of financial risks including foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Group’s

overall treasury risk management programme focuses on the unpredictability of financial markets, and seeks to minimise potential adverse effects on

the Group’s financial performance.

The Group uses derivative financial instruments to hedge certain risk exposures. The use of financial derivatives is governed by the Group’s policies

approved by the Board, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and

non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the Group’s

Treasury Committee on a regular basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for

speculative purposes.

Foreign exchange risk management

The Group enters into forward foreign exchange contracts to hedge the exchange risk arising on the operations’ trading activities in foreign currencies.

Where commented on below, the sensitivity analysis of the Group’s exposure to foreign currency risk at the reporting date has been determined based

on the change taking place at the beginning of the financial year and left unchanged throughout the reporting period, with all other variables held

constant (such as interest rates). The sensitivity assumptions are based on analysis reviewed by the Group’s Treasury Committee.

Translation risk

The Group derived 83% of its revenue from businesses outside the United Kingdom, with 59% relating to operations in North America. Fluctuations in

the value of the US Dollar and other currencies in relation to Pound Sterling have had, and may continue to have, a significant impact on the results of

the Group’s operations when reported in Pound Sterling. The Group decided not to hedge this translation risk. In addition, the majority of assets are

denominated in foreign currency, particularly in US Dollars. In order to provide a hedge against volatility in the value of these assets compared to the

Group’s earnings, and hence provide a natural hedge against the Group’s principal lending covenant (the ratio of net debt to EBITDA), the Group aims

to borrow in foreign currencies in similar proportions to its generation of foreign currency EBITDA, where practical and economic. A 10% appreciation

(or depreciation) of all other currencies against the Pound Sterling would have increased (or decreased) 2022 Group adjusted operating profit by £4.3m

(£2.6m of which would have been due to the US Dollar movement) and would have increased (or decreased) equity by £31.1m (£18.9m of which

would have been due to the US Dollar movement).

Transaction risk

The Group has a number of transaction-related foreign currency exposures, particularly between the US Dollar and the Pound Sterling, Thai Baht and

Malaysian Ringgit. The Group seeks to hedge between 0% to 100% of transaction-related exposures mainly on a rolling 15 to 18-month forward basis,

but in some cases for periods of up to 60 months and applies hedge accounting where the forwards can be designated in a qualifying cash flow hedge

relationship. Based on the net of the annual sales and purchase-related exposures, all transaction-related foreign currency exposures to Group profit

19. Bank overdrafts and loans continued

165SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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165SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

after hedging in existence at 31 December 2022 are immaterial. The impact on equity is determined by the unrecognised portion of open forward

contracts at the year-end. A 10% appreciation (or depreciation) of the US Dollar against the Pound Sterling, Thai Baht and the Malaysian Ringgit would

have decreased (or increased) equity by £5.3m, £2.0m and £1.3m, respectively.

Interest rate risk management

The Group has a policy of maintaining approximately 60% of its borrowing costs at fixed interest rates. The Group generally borrows long-term in fixed

rates but at times may borrow at floating rates and swap into fixed depending on credit market conditions. Occasionally a portion of fixed debt interest

is swapped into floating rates. The combination of maintaining an acceptable balance of fixed and floating rate debt, and the Group’s policy of

borrowing in foreign currency in proportion to its generation of foreign currency earnings, provides an effective hedge against the impact of interest

rate and foreign currency volatility on total interest costs. As at year end 2022, the percentage of debt at fixed interest was 87% (2021 – 100%),

excluding IFRS 16 lease liabilities from debt.

The following sensitivity analysis of the Group’s exposure to interest rate risk in 2022 has been retrospectively determined based on the exposure to

applicable interest rates on financial assets and liabilities held throughout the financial year, with all other variables held constant (such as foreign

exchange rates). The sensitivity assumptions are based on analysis reviewed by the Group’s Treasury Committee. If variable interest rates had been

0.5% lower (or higher), the Group’s profit before tax would have increased (or decreased) by £0.1m. Any fixed interest debt is held to maturity and not

fair value adjusted through the Consolidated Income Statement. An increase (or decrease) of 0.5% in the market interest rate for the fixed rate debt

held up to maturity would have decreased (or increased) the fair value of the Group’s borrowings by £1.8m. The Group’s sensitivity to interest rates has

remained broadly consistent with prior period due to the high proportion of fixed debt.

Credit risk management

The Group’s credit risk is primarily attributable to its trade receivables. The credit quality of customers is assessed taking into account their financial

position, past experience and other factors. Further details on determining the recoverability of trade receivables is provided in Note 18. The Group is

guarantor under one lease of a current subsidiary entity in the UK. Credit risk on liquid funds and derivative financial instruments is limited because the

counterparties are financial institutions with high credit ratings assigned by international credit rating agencies. The carrying amount of financial assets

recorded in the Financial Statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk.

The Group participates in some non-recourse reverse factoring schemes which are arranged by customers. These are a form of non-recourse factoring

that are common practice within the aerospace sector and with large customers in the Flexonics Division. In a reverse factoring scheme, a financial

counterparty commits to pay supplier invoices ahead of due date in exchange for a discount interest charge. It is a funding solution initiated by the

customer to provide the supplier with an alternative financing arrangement. The Group participates in reverse factoring schemes as a way of reducing

credit risk. The trade receivables reverse factored at 31 December 2022 were £24.9m (2021 – £16.8m). The net impact of reverse factoring on 2022

was a cash inflow in working capital of £6.2m (2021 – £0.9m outflow) and the discount interest presented within other finance costs is a charge of

£0.6m in 2022 (2021 – £0.2m).

Liquidity risk management

Liquidity risk reflects the risk that the Group will have insufficient resources to meet its financial liabilities as they fall due. The Group manages liquidity

risk by maintaining adequate reserves, banking facilities and revolving credit facilities, by continuously monitoring forecast and actual cash flows and

matching the maturity profiles of financial assets and liabilities. Cash flow forecasts are produced monthly, together with appropriate capacity planning

and scenario analysis, to ensure that bank covenant and liquidity targets will be met. The Directors also regularly assess the balance of capital and debt

funding of the Group, as part of a process to satisfy the Group’s long-term strategic funding requirements.

As noted in the Financial Review on pages 78 to 81, the Group is currently in a well-funded position, with significant headroom under its committed

borrowing facilities. It is considered unlikely that the Group will face any significant funding issues in the foreseeable future.

20. Financial instruments continued

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166 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

Categories of financial instruments

Year ended

2022

£m

Year ended

2021

£m

Carrying value of financial assets:

Cash and cash equivalents 43.2 51.1

Trade receivables 110.6 85.2

Other receivables 0.2 0.2

Financial assets at amortised cost 154.0 136.5

Foreign exchange contracts – cash flow hedges 2.5 0.7

Foreign exchange contracts – held for trading 0.2 0.1

Total financial assets 156.7 137. 3

Carrying value of financial liabilities:

Bank overdrafts and loans 143.7 131.0

Lease liabilities 78.4 73.2

Trade payables 103.4 68.3

Deferred consideration 23.4 –

Other payables 65.1 54.6

Financial liabilities at amortised cost 414.0 327.1

Contingent Consideration - fair value through profit or loss 28.9 –

Foreign exchange contracts – cash flow hedges 8.5 3.6

Foreign exchange contracts – held for trading 0.1 –

Total financial liabilities 451.5 330.7

Undiscounted contractual maturity of financial liabilities at amortised cost:

Amounts payable:

On demand or within one year 228.9 152.3

In the second to fifth years inclusive 149.1 118.8

After five years 81.5 108.7

459.5 379.8

Less: future finance charges (45.5) (52.7)

Financial liabilities at amortised cost 414.0 327.1

The contingent consideration which is potentially payable in more than one year but less than five years has a gross value at 31 December 2022 of

$40m (£33.1m) and a discounted value of $35m (£28.9m). There was no contingent consideration payable as at 31 December 2021.

The carrying amount is a reasonable approximation of fair value for the financial assets and liabilities, excluding leases, noted above except for bank

overdrafts and loans, disclosure of which are included within Note 19.

An ageing analysis of trade receivables is disclosed within Note 18.

20. Financial instruments continued

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167SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS 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

2022

£m

Year ended

2021

£m

Notional amounts:

Foreign exchange contracts – cash flow hedges 159.4 128.9

Foreign exchange contracts – held for trading 0.5 4.1

Total 159.9 133.0

Less: amounts maturing within 12 months (99.4) (79.1)

Amounts maturing after 12 months 60.5 53.9

Contractual maturity:

Cash flow hedges balances due within one year:

Outflow (101.5) (76.8)

Inflow 99.9 75.2

Cash flow hedges balances due between one and two years:

Outflow (22.9) (22.4)

Inflow 22.0 22.0

Cash flow hedges balances due between two and five years:

Outflow (42.5) (32.1)

Inflow 38.6 32.1

Held for trading balances due within one year:

Outflow (0.5) (4.0)

Inflow 0.5 4.1

Fair values:

Foreign exchange contracts – cash flow hedges (6.0) (2.9)

Foreign exchange contracts – held for trading 0.1 0.1

Total liability (5.9) (2.8)

These fair values are based on market values of equivalent instruments at the Balance Sheet date, comprising £2.7m (2021 – £0.8m) assets included in

trade and other receivables and £8.6m (2021 – £3.6m) liabilities included in trade and other payables. The fair value of currency derivatives that are

designated and effective as cash flow hedges amounting to £4.9m loss (2021 – £2.6m loss) has been deferred in equity.

Fair values

The following table presents an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels

1–3 based on the degree to which the fair value is observable:

Level 1 those fair values derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 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).

There has not been any transfer of assets or liabilities between levels. There are no non-recurring fair value measurements. Level 2 fair values are

derived from future cash flows, of open forward contracts at 31 December, translated by the difference between contractual rates and observable

forward exchange rates.

20. Financial instruments continued

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168 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

31 December 2022

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Assets

Foreign exchange contracts – cash flow hedges – 2.5 – 2.5

Foreign exchange contracts – held for trading – 0.2 – 0.2

Total assets – 2.7 – 2.7

Liabilities

Contingent Consideration – fair value through profit or loss – – 28.9 28.9

Foreign exchange contracts – cash flow hedges – 8.5 – 8.5

Foreign exchange contracts – held for trading – 0.1 – 0.1

Total liabilities – 8.6 28.9 37.5

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

Contingent Consideration – fair value through profit or loss – – –

Foreign exchange contracts – cash flow hedges – 3.6 – 3.6

Foreign exchange contracts – held for trading – – – –

Total liabilities – 3.6 – 3.6

An amount of £0.8m loss (2021 – £0.1m gain) has been transferred to the Consolidated Income Statement, and is included within operating profit.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure

that an economic relationship exists between the hedged item and hedging instrument. The Group enters into hedge relationships where the critical

terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If

changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the

hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness.

Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the designated component value of the hedging instrument

exceeds on an absolute basis the change in value of the hedged item attributable to the hedged risk. In hedges of the above foreign exchange

contracts this may arise if the timing of the transaction changes from what was originally estimated.

The hedged forecast transactions denominated in foreign currency are expected to occur at various dates during the next 60 months. Amounts

deferred in equity are recognised in the Consolidated Income Statement in the same period in which the hedged items affect profit or loss, which is

generally within 12 months from the Balance Sheet date.

In 2021 and 2022 some cash flow hedging relationships were discontinued because forecast foreign currency transactions were no longer highly

probable and no longer expected to occur. Previously accumulated gains or losses on the forward contracts were immediately reclassified to the

income statement. These forward contracts, and the forward contracts entered to unwind the position, that remained at 31 December 2021 and

31Dece31 December 2022 were presented in the balance sheet as held for trading assets.

The fair value of contingent consideration is based on the expected present value technique, using risk-adjusted discount rate to discount probability

weighted cashflows.

20. Financial instruments continued

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FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

21. Tax balance sheet

Current tax

The current tax receivable of £2.1m (2021 – £2.6m) includes excess tax paid to tax authorities that is expected to be recovered within 12 months by

way of offset against future tax liabilities orrefund.r refund.

The majority of the Group’s taxable profits arise in countries, including the US, where the estimated tax liabilities are paid in on-account instalments

during the year to which they relate and are largely paid at the Balance Sheet date. The current tax liability of £17.7m (2021 – £14.6m) includes £1.5m

(2021 – £1.3m) tax due on profits of the current and prior years as well as £16.2m (2021 – £16.7m) provisions for tax uncertainties that represent

amounts expected to be paid but by their nature, there is uncertainty over timing and eventual settlement. Amounts receivable of £2.8m (2021 –

£3.4m) that are considered to have a right of offset against provisions for tax uncertainties are also included within the current tax liability.

The Group recognises provisions for tax items which are considered to have a range of possible tax outcomes and separately accounts for interest that

may be due thereon. The range of reasonably possible outcomes considered by the Board could increase those tax liabilities by £10.4m (2021 –

£8.6m). These uncertainties exist due to a number of factors including differing interpretations of local tax laws and the determination of appropriate

arm’s length pricing in accordance with OECD transfer pricing principles on internal transactions and financing arrangements. In calculating the carrying

amount of provisions, Management estimates the tax which could become payable as a result of differing interpretations and decisions by tax

authorities in respect of transactions and events whose treatment for tax purposes is uncertain. In accordance with IFRIC 23, individual provisions are

established based on an assessment of whether it is the most likely individual outcome, or the expected outcome on a probability basis that is likely to

best reflect the resolution of the uncertainty.

Deferred tax liabilities and assets

The following are the deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period:

Accelerated

tax

depreciation

£m

Unrealised

gains

£m

Goodwill and

intangible

amortisation

£m

Retirement

benefits

£m

R&D

tax credits

£m

Tax

losses

£m

Other

temporary

differences

£m

Total

£m

At 1 January 2021 (16.7) (0.7) (7.5) (6.4) 6.0 3.4 21.1 (0.8)

(Charge)/credit 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 differences 0.2 – (0.1) – 0.1 (0.2) – –

At 1 January 2022 (13.2) 0.4 (5.6) (15.6) 5.8 4.6 18.8 (4.8)

(Charge)/credit to Consolidated

Income Statement (2.6) – (1.4) (0.6) (3.1) 0.3 11.5 4.1

(Charge)/credit to other

comprehensive income – 0.7 – 5.7 – – – 6.4

(Charge)/credit direct to equity – – – – – – – –

Exchange differences (1.7) – (0.7) 0.3 – (0.7) 3.3 0.5

Asset/(liability) at

31 December 2022 (17.5) 1.1 (7.7) (10.2) 2.7 4.2 33.6 6.2

Other temporary differences include assets in the US of £15.6m (2021 – £13.6m) in respect of inventory provisions, accruals and other expenses

where tax relief is only available when items are realised or paid as well other timing differences for interest costs of £2.3m (2021 – £nil) and R&D

expenditure expected to be deductible in future periods of £4.8m (2021 – £nil). Also included are assets held in respect of IFRS16 of £1.9m (2021

– £1.5m) and share based compensation of £1.9m (2021 – £1.1m).

The deferred tax liability in respect of Retirement benefits relates primarily to the Senior plc UK defined benefit pension plan £12.9m (2021 – £18.0m),

net of deferred tax assets on other schemes.

UK deferred tax assets and liabilities at the Balance Sheet date have been stated at the future rate of UK corporation tax of 25% at which assets are

expected to be realised or liabilities settled. This has resulted in an overall increase in the net deferred tax liability at 31 December 2022 of £0.9m with

a current year charge of £0.2m in the Income Statement, £1.4m credit through Other Comprehenisive Income and a £2.1m charge recognised in the

opening balance at 1 January 2022.

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances, after offset:

Year ended

2022

£m

Year ended

2021

£m

Deferred tax assets 10.9 5.7

Deferred tax liabilities (4.7) (10.5)

6.2 (4.8)

170 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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FINANCIAL STATEMENTS

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available, including those arising from the reversal

of other taxable temporary differences, against which the assets can be utilised.

At the Balance sheet date the Group has recognised deferred tax assets in respect of losses of £4.2m (2021 – £4.6m), including £3.1m (2021 – £3.2m)

recognised against deferred tax liabilities and £1.1m (2021 – £1.4m) recognised based on anticipated profits in the Group’s five year forecast to 2027 as

approved by the Board. Due to uncertainty as to the availability of future profits against which tax losses may be utilised, £24.0m (2021 – £23.6m) of

losses have not been recognised. Included in unrecognised tax losses are losses of £12.2m (2021 – £13.8m) that will expire over a period of one to

nine years. Other losses may be carried forward indefinitely. Also, at the Balance Sheet date, a deferred tax liability of £0.2m (2021 – £0.2m) has been

recognised in respect of the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries expected to reverse in

the foreseeable future. No temporary difference has been recognised in respect of £35.1m (2021 – £34.5m) of undistributed earnings, which may be

subject to a withholding tax, as the Group is in a position to control the timing of the reversal of the temporary differences and it is not probable that

such differences will reverse in the foreseeable future.

At the Balance Sheet date, the Group had £5.0m (2021 – £5.0m) of surplus Advanced Corporation Tax (‘ACT’), previously written off, for which no

deferred tax asset has been recognised as it is unlikely to be recovered in the foreseeable future due to the UK earnings profile. The Group also has

£18.0m (2021 – £18.0m) of unused capital losses.

22. Lease liabilities

When measuring lease liabilities, the Group discounts lease payments using incremental borrowing rates, determined on a lease portfolio basis.

Undiscounted contractual maturity of lease liabilities:

Year ended

2022

£m

Year ended

2021

£m

Amounts payable:

On demand or within one year 12.9 10.8

In the second to fifth years inclusive 38.1 35.6

After five years 55.7 60.9

106.7 107.3

Less: future finance charges (28.3) ( 3 4.1)

Lease liabilities 78.4 73.2

Amounts recognised in the Consolidated Income Statement:

Year ended

2022

£m

Year ended

2021

£m

Interest on lease liabilities 2.5 2.6

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 – –

2.5 2.6

Amounts recognised in the Consolidated Cash Flow Statement

Year ended

2022

£m

Year ended

2021

£m

Cash outflow for Leases (including interest) 11.6 11.0

23. Trade and other payables

Trade and other payables at 31 December comprise the following:

Year ended

2022

£m

Year ended

2021

£m

Current liabilities

Trade payables 103.4 68.3

Social security and PAYE 4.8 5.7

Value added tax 1.6 1.6

Foreign exchange contracts 3.9 3.6

Accrued expenses 77.5 63.8

Total trade and other payables 191.2 143.0

Foreign exchange contracts of £4.7m (2021 - £nil) is included in Others, under Non-current liabilities on the Consolidated Balance Sheet.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

The average credit period taken for trade purchases is 63 days (2021 – 56 days).

21. Tax balance sheet continued

171SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

171SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

24. Provisions

Warranty

£m

Restructuring

£m

Legal claims

and contractual

matters

£m

Total

£m

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 differences 0.1 (0.3) (0.1) (0.3)

At 1 January 2022 6.9 1.3 7.8 16.0

Additional provision in the year 3.7 1.2 6.2 11.1

Utilisation of provision (0.1) (2.3) (2.5) (4.9)

Release of unused amounts (0.3) – (3.3) (3.6)

Exchange differences 0.6 – 0.4 1.0

At 31 December 2022 10.8 0.2 8.6 19.6

Included in current liabilities 8.1 0.2 8.4 16.7

Warranty

Provisions for warranty costs are based on an assessment of future claims with reference to past experience. £8.1m of costs are expected to settle

within the next 12 months.

Restructuring

The Group continued to implement further restructuring in 2022, discussed in further detail in Note 9. The amount recorded is expected to be fully

utilised in 2023.

Legal claims and contractual matters

Provisions at 31 December 2022 comprise £8.6m (2021- £7.8m) relating to contractual matters that have arisen in the ordinary course of business, the

settlement of which are subject to ongoing discussions. Management exercises judgment to determine the best estimate of the most likely outcome,

having considered each provision separately and the possible range of outcomes. Amounts are recorded for known issues based on past experience

of similar items and other known factors and circumstances. As with any judgment there is a high degree of inherent uncertainty, particularly with legal

proceedings and claims, and the actual amounts of the settlement could differ from the amount provided.

25. Share capital

Year ended

2022

£m

Year ended

2021

£m

Issued and fully paid:

419.4 million ordinary shares of 10p each 41.9 41.9

No shares were issued during 2022 and 2021.

The Company has one class of ordinary shares which carry no right to fixed income.

26. Share premium account

Year ended

2022

£m

Year ended

2021

£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

2022

£m

Year ended

2021

£m

Balance at 1 January 5.8 5.1

Transfer to retained earnings reserve (3.7) (2.8)

Movement in year 4.3 3.5

Balance at 31 December 6.4 5.8

The transfer to retained earnings reserve is in respect of equity-settled share-based payments that vested during the year.

The movement in the year of £4.3m (2021 – £3.5m) is in respect of the share-based payment charge for the year.

172 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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FINANCIAL STATEMENTS

28. Hedging and translation reserves

Hedging

reserve

Year ended

2022

£m

Translation

reserve

Year ended

2022

£m

Total

Year ended

2022

£m

Hedging

reserve

Year ended

2021

£m

Translation

reserve

Year ended

2021

£m

Total

Year ended

2021

£m

Balance at 1 January (37. 2) 65.8 28.6 (37.2) 75.1 37.9

Exchange differences on translation of overseas operations – 24.5 24.5 – (3.8) (3.8)

Foreign exchange losses/(gains) recycled to the Income

Statement on disposal – – – 2.6 (5.5) (2.9)

Change in fair value of hedging derivatives (2.3) – (2.3) (3.4) – (3.4)

Tax on foreign exchange contracts – cash flow hedges 0.7 – 0.7 0.8 – 0.8

Balance at 31 December (38.8) 90.3 51.5 (37.2) 65.8 28.6

Hedging Reserve

At 31 December 2022, the hedging reserve comprises net investment hedging losses of £35.2m (2021 – £35.2m), foreign exchange contracts – cash

flow hedge losses of £4.9m (2021 – £2.6m) and related tax gains of £1.3m (2021 – £0.6m).

Movement in fair value of foreign exchange contracts – cash flow hedges:

Derivatives at

fair value

through

Hedging

Reserve

Year ended

2022

£m

Derivatives at

fair value

through

Income

Statement

Year ended

2022

£m

Total

Year ended

2022

£m

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

Balance at 1 January (2.6) (0.2) (2.8) 0.8 (0.3) 0.5

Fair value movement recognised in Hedging reserve (4.5) – (4.5) (2.1) – (2.1)

Fair value movement recognised in Income Statement – 1.4 1.4 – (1.2) (1.2)

Fair value movement recognised in Hedging reserve

and Income Statement 2.2 (2.2) – (1.3) 1.3 –

Balance at 31 December (4.9) (1.0) (5.9) (2.6) (0.2) (2.8)

The Group uses foreign currency forward contracts to manage its foreign currency risk associated with its highly probable forecast transactions. These

contracts are designated as cash flow hedge relationships. To the extent these hedges are effective, the change in fair value of the hedging instrument

is recognised in the hedging reserve. The sum of the fair value of foreign exchange contracts deferred in the hedging reserve and recognised in the

Income Statement is presented as foreign exchange contracts – cash flow hedges. See Note 20 for further details.

Costs of Hedging

The group designates the forward component of foreign currency forward contracts as hedging instruments in cash flow hedge relationships .

29. Retained earnings

Year ended

2022

£m

Year ended

2021

£m

Balance at 1 January 343.2 305.1

Dividends paid (1.2) –

Profit for the year 20.2 24.2

Pension actuarial (loss)/gain (23.1) 19.7

Transfer from equity reserve 3.7 2.8

Transfer from own share reserve (2.0) (2.3)

Tax on deductible temporary differences 5.7 (6.3)

Balance at 31 December 346.5 343.2

173SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

173SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

30. Own shares

Year ended

2022

£m

Year ended

2021

£m

Balance at 1 January (9.2) (11.5)

Transfer to retained earnings reserve 2.0 2.3

Purchase of new shares (4.5) –

Balance at 31 December (11.7) (9.2)

The own shares reserve represents the cost of shares purchased in the market and held by the Senior plc Employee Benefit Trust to satisfy options

under the Group’s share option schemes (see Note 33).

At 31 December 2022, the number of own shares held by the Senior Plc Employee Benefit Trust is 5,716,834 (2021 – 3,463,455).

31. Acquisition and disposal activities

Acquisition of Spencer Aerospace Manufacturing, LLC

On 25 November 2022, the Group acquired substantially all of the assets of Spencer Aerospace Manufacturing, LLC, a leading manufacturer of highly

engineered, high-pressure hydraulic fluid fittings for use in commercial and military aerospace applications, located in Valencia, California, USA. This

acquisition enhances Senior’s industry leading fluid conveyance capabilities and is an important step in our strategy to optimise our portfolio and

maximise value for shareholders.

The initial consideration was $30m (£24.8m) paid in cash at completion, with a net working capital adjustment of $0.2m (£0.2m), of which $0.6m

(£0.5m) was paid in cash initially and $0.4m (£0.3m) cash adjustment was received in January 2023. A further $30m (£24.8m) is to be paid 12 months

after completion. Additionally, there is contingent consideration of $40m (£33.1m) potentially payable, in milestone amounts, dependent on the

financial performance of Spencer Aerospace during the period between completion and 31 December 2026. The most likely range of this contingent

element is estimated between $30m and $40m. The amortised cost of deferred consideration is £23.2m and the fair value of contingent consideration

is £28.7m at the acquisition date. The fair value of contingent consideration assumes expanding the relationship with Spencer’s established customers

and leveraging Senior’s strong relationships with OEMs, Tier 1 integrators, and aftermarket customers around the world to exploit opportunities for

Spencer Aerospace. The acquisition was funded using the Group’s existing borrowing facilities.

Set out below is a summary of the fair value of identified assets acquired and liabilities assumed:

£m

Identifiable intangible assets 31.0

Property, plant and equipment 5.8

Inventories 2.2

Financial assets, excluding cash and cash equivalents 1.7

Cash and cash equivalents –

Lease liabilities (4.7)

Other Financial liabilities (1.1)

Net Assets Acquired 34.9

Goodwill 42.0

Total Consideration 76.9

Consideration satisfied by:

Cash paid 25.3

Working capital adjustment receivable (0.3)

Deferred and Contingent consideration payable 51.9

Total Consideration 76.9

Net cash outflow arising on acquisition:

Cash consideration 25.3

Less: Cash and cash equivalents acquired –

Net cash outflow arising on acquisition 25.3

The goodwill of £42.0m represents the premium paid in anticipation of future profitability from assets that are not capable of being separately identified

and separately recognised such as the assembled workforce as well as the expectation that the Group will be able to leverage its wider market access

and strong financial position to generate sustainable financial growth beyond what Spencer would have potentially achieved as a stand-alone company.

The strong customer relationships that the Group has with OEMs, Tier 1 integrators, and aftermarket customers around the world, will open new

opportunities for Spencer Aerospace. The combined capabilities will provide greater access to developing market opportunities such as hydrogen

infrastructure and fluid handling. There are strong synergies with Senior’s existing fluid conveyance businesses, and the combination of expertise will

accelerate growth in aerospace and adjacent markets. Goodwill is expected to be fully tax deductible in accordance with US tax rules.

The intangible assets acquired as part of the acquisition relate mainly to qualified parts lists and customer relationships, the fair value of which is

dependent on estimates of attributable future revenues, profitability and cash flows, and are being amortised over 18 and 16 years (see Note 14). The

174 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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174 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

fair value has also been assigned to the order backlog which are being amortised over 1 year.

The financial assets acquired include trade receivables with a fair value of £1.6m and a gross contractual value of £1.6m, all of which is currently

expected to be collectible.

Acquisition-related costs of £1.2m are included within corporate undertakings in the Group’s Consolidated Income Statement for the 12 months ended

31 December 2022 (See Note 9).

From the date of acquisition to 31 December 2022, Spencer contributed £0.7m of external revenue and £(0.1)m to the Group’s operating profit before

amortisation of intangible assets from the acquisition of £0.2m. If the acquisition had been completed on 1 January 2022, Group revenue for the 12

months ended 31 December 2022 would have been £855.9m and Group operating profit would have been £31.2m.

Disposal activities

On 22nd April 2021, the Group sold its stand alone, build-to-print helicopter structures operating company, Senior Aerospace Connecticut, based in the

USA. The decision to sell was based on its primary focus on build-to-print parts for the rotary sector, with proceeds from the sale strengthening the

Group’s balance sheet and providing greater flexibility for the Group to operate within its capital deployment framework. For the year ended 31

December 2021, Senior Aerospace Connecticut external revenue was £8.1m and operating profit was £0.8m.

A gain of £24.2m arose on disposal after taking fair value of net assets disposed (£28.4m including £15.1m of goodwill, £7.5m property, plant and

equipment and £5.8m of working capital), offset by net cash consideration of £49.7m after £1.8m disposal costs, and the previously recorded foreign

exchange gain that had been recycled to the Income Statement of £2.9m.

In 2021, the Group received £0.2m deferred consideration relating to the disposal of its Aerospace business Senior Aerospace

Absolute Manufacturing.

32. Notes to the consolidated cash flow statement

A) Reconciliation of operating profit to net cash from operating activities

Year ended

2022

£m

Year ended

2021

£m

Operating profit 32.5 10.5

Adjustments for:

Depreciation of property, plant and equipment 48.1 46.3

Amortisation of intangible assets 1.7 1.5

Profit on sale of fixed assets (0.1) –

Share-based payment charges 4.3 3.5

Pension payments in excess of service cost (1.4) (5.1)

Corporate undertaking costs (1.4) (4.8)

Share of joint venture (0.4) (0.2)

Increase in inventories (34.2) ( 7. 2)

Increase in receivables (18.8) (16.1)

Increase in payables and provisions 37.5 11.6

Restructuring impairment of property, plant and equipment and software 1.3 3.8

US class action lawsuits – (2.3)

Working capital and provisions currency movements 1.8 (1.1)

Cash generated by operations 70.9 40.4

Income taxes paid (3.5) (5.3)

Interest paid (9.7) (8.1)

Net cash from operating activities 57.7 27.0

31. Acquisition and disposal activities continued

175SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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175SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

B) Free cash flow

Free cash flow, a non-statutory item, enhances the reporting of the cash-generating ability of the Group prior to corporate activity such as acquisitions,

restructuring, disposal activities, financing and transactions with shareholders. It is used as a performance measure by the Board and Executive

Committee and is derived as follows:

Notes

Year ended

2022

£m

Year ended

2021

£m

Net cash from operating activities 57.7 27.0

Corporate undertaking costs 9 1.4 4.8

Net Restructuring cash (received)/paid (2.1) 0.9

US class action lawsuits 24 – 2.3

Interest received 0.7 0.1

Proceeds on disposal of property, plant and equipment 0.5 0.2

Purchases of property, plant and equipment (28.7) (20.2)

Purchase of intangible assets (1.8) (1.1)

Free cash flow 27.7 14.0

C) Analysis of net debt

Notes

1 January

2022

£m

Net

Cash

flow

£m

Non

Cash

£m

Exchange

movement

£m

Other

Lease

Movements

£m

31 December

2022

£m

Cash and bank balances 51.1 (10.8) – 2.9 – 43.2

Overdrafts – (0.5) – – – (0.5)

Cash and cash equivalents 51.1 (11.3) – 2.9 – 42.7

Debt due within one year (14.8) 17. 2 – (2.4) – –

Debt due after one year (116.2) (17.6) – (9.4) – (143.2)

Lease liabilities

(1)

22 (73.2) 9.1 – (5.3) (9.0) (78.4)

Liabilities arising from financing activities (204.2) 8.7 – (17.1) (9.0) (221.6)

Total (15 3.1) (2.6) – (14.2) (9.0) (178.9)

(1) The change in lease liabilities in the year ended 31 December 2022 includes lease rental payments of £11.6m (£2.5m of these payments relates to lease interest), £5.3m

exchange movement and £9.0m other movements, which comprise £4.3m related to lease additions and modifications and £4.7m related to lease acquired on acquisition.

Following a review of the lease liability disclosures in 2022, the presentation of current and non-current liabilities within the Consolidated Balance Sheet for 31 December 2022

now reflects the timing of the underlying lease payments. Comparative information has not been restated as the adjustment is not deemed material.

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.

32. Notes to the consolidated cash flow statement continued

176 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

176 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

Year ended

2022

£m

Year ended

2021

£m

Cash and cash equivalents comprise:

Cash and bank balances 43.2 51.1

Overdrafts (0.5) –

Total 42.7 51.1

Cash and cash equivalents (which are presented as a single class of assets on the face of the Consolidated Balance Sheet) comprise cash at bank and

other short-term highly liquid investments with a maturity of three months or less. The Directors consider that the carrying amount of cash and cash

equivalents approximates to their fair value.

D) Analysis of working capital and provisions

Working capital comprises the following:

Year ended

2022

£m

Year ended

2021

£m

Inventories 194.3 145.2

Trade and other receivables 126.7 98.0

Trade and other payables (191.2) (143.0)

Working capital, including derivatives 129.8 100.2

Items excluded:

Foreign exchange contracts 1.5 2.8

Total 131.3 103.0

Working capital and provisions movement, net of restructuring items, a non-statutory cash flow item, is derived as follows:

Year ended

2022

£m

Year ended

2021

£m

Increase in inventories (34.2) ( 7. 2)

Increase in receivables (18.8) (16.1)

Increase in payables and provisions 37.5 11.6

Working capital and provisions movement, excluding currency effects (15.5) (11.7)

Items excluded:

Decrease in restructuring related inventory impairment 2.7 1.5

Decrease in net restructuring provision and other receivables 0.7 7.6

Total (12.1) (2.6)

33. Share-based payments

The Group recognised total expenses of £4.6m (2021 – £3.8m) related to share-based payments, of which £4.3m (2021 – £3.5m) related to equity-

settled share-based payments, and £0.3m (2021 – £0.3m) related to social security costs on share-based payments. As at 31 December 2022, the

Group had a liability of £0.6m (2021 – £0.3m) arising from share-based payments relating to social security costs.

A) 2014 Long-Term Incentive Plan

Equity-settled Long-Term Incentive Plans

On 8 March 2022, 4,307,035 shares were awarded under the 2014 Long-Term Incentive Plan. Awards made under this plan have a three-year vesting

period, and are subject to the following equally weighted performance conditions: adjusted earnings per share (EPS), total shareholder return (TSR),

and for awards granted from 2021, there is also a return on capital employed (ROCE) performance condition. The adjusted EPS and ROCE

performance conditions’ targets are expressed as absolute numbers for the final financial year of the three-year performance period. The threshold

ofthe Tof the TSR performance condition requires the Company’s TSR performance to fall within the top half of a comparator group at the end of the

three-year performance period. Vesting levels increase with higher performance. The awards are settled by delivering shares to the participants.

The estimated fair value for the awards granted in the year, excluding for the Executive Directors, with EPS and ROCE conditions is 121.00p, which

isthe shais the share price at the date of grant. The estimated fair value for the awards granted in the year, excluding for the Executive Directors, with TSR

conditions is 81.30p per share reflecting an adjustment of 33% to the fair value of the awards with EPS conditions due to the stringent TSR condition.

The respective fair values for awards made to the Executive Directors is 96.80p and 65.00p reflecting the two year retention period.

32. Notes to the consolidated cash flow statement continued

177SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

177SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

These fair values were calculated by applying a binomial option pricing model. This model incorporates a technique called “bootstrapping”, which

models the impact of the TSR condition. The model inputs at the date of grant were the share price (121.00p for the main award), expected volatility of

59% per annum, and the performance conditions as noted above. Expected volatility was determined by calculating the historical volatility of the

Group’s share price over the previous three years.

The following share awards were outstanding as at 31 December 2022 and 2021:

Year ended

2022

Number of

Year ended

2021

Number of

Outstanding at 1 January 9,434,241 7,0 8 9,5 67

Granted 4,307,035 4,455,281

Exercised – (58,743)

Forfeited (2,703,064) (2,051,864)

Outstanding at 31 December 11,038,212 9,434,241

B) Enhanced SMIS Deferred Share Award

On 8 March 2022, 1,333,546 shares were awarded under the Enhanced SMIS Deferred Share Award. Shares earned under this award have a

three-year deferral period and would be subject to forfeiture by a “bad leaver” over that deferral period. There are no performance criteria for this

award. The awards are settled by delivering shares to the participants.

The estimated fair value for the awards granted in the year is 121.00p per share, which is the share price at the date of grant.

The following share awards were outstanding as at 31 December 2022 and 2021:

Year ended

2022

Number of

Year ended

2021

Number of

Outstanding at 1 January 2,003,691 1,734,683

Granted 1,353,612 758,551

Exercised (677,19 3) (425,422)

Forfeited (137,747) (6 4,121)

Outstanding at 31 December 2,542,363 2,003,691

C) Savings-Related Share Option Plan

The Company operates a Savings-Related Share Option Plan for eligible employees across the Group. There are no performance criteria for this

arrangement and options are issued to all participants in accordance with the HM Revenue & Customs rules for such savings plans. Savings-Related

Share Options were last issued on 26 May 2021.

The following options were outstanding as at 31 December 2022 and 2021:

Year ended 2022 Year ended 2021

Number of

options

Weighted

average

exercise

price

Number of

options

Weighted

average

exercise

price

Outstanding at 1 January 4,253,504 144.61p 1,94 4,121 217.67p

Granted – – 3,247,159 118. 4 0 p

Exercised (1,905) 118.40p – –

Forfeited (545,138) 148.81p (676,596) 204.63p

Expired (749,847) 219.30p (261,18 0) 207.20p

Outstanding at 31 December 2,956,614 124.90p 4,253,504 144.61p

Exercisable at 31 December 190,580 219.30p – –

1,905 shares were exercised in 2022. No shares were exercised in 2021. The options outstanding at 31 December 2022 had exercise prices of

118.40p and 219.30p per share, and a weighted average remaining contractual life of 1.8 years. The options outstanding at 31 December 2021 had

exercise prices of 118.40p and 219.30p per share, and a weighted average remaining contractual life of 2.4 years.

33. Share-based payments continued

178 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

178 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

D) Restricted Share Awards

On 8 March 2022, 205,000 shares were awarded under this plan. Shares granted under this award have a three-year deferral period and would be

subject to forfeiture by a “bad leaver” over that deferral period. There are no performance criteria for this award. The awards are settled by delivering

shares to the participants.

The estimated fair value for the awards granted in the year is 121.00p per share, which is the share price at the date of grant.

The following share awards were outstanding as at 31 December 2022 and 2021:

Year ended

2022

Number of

Year ended

2021

Number of

Outstanding at 1 January 1,930,115 2,208,538

Granted 205,000 110,000

Exercised (60,000) (388,423)

Forfeited (251,165) –

Outstanding at 31 December 1,823,950 1, 9 3 0,115

34. Retirement benefit schemes

The Group operates a number of pension plans in the UK, North America and Europe. These include both defined contribution arrangements and

defined benefit arrangements. The Senior plc Pension Plan (”the UK Plan”), which is a funded scheme in the UK and closed to future accrual at the

end of 6 April 2014, has the largest pension obligation in the Group and Company. This plan provides benefits based on final pensionable emoluments

for the employees of the Group and Company. The latest full actuarial valuation was carried out as at 5 April 2022 and, for the purposes of accounting

under IAS19, this valuation has been rolled forward to 31 December 2022.

In addition, the Group operates two defined benefit plans in the US, one of which was closed to future accrual from October 2009. The second plan

was closed to future participants from September 2013, and the Executive section was also closed to future accruals from December 2013. Separate

disclosure is made for the funded UK and US defined benefit arrangements. In both the UK and US, the assets of funded plans are held in separate

trustee administered funds managed by independent financial institutions and have pension costs assessed by consulting actuaries using the

Projected Unit Method. The Trustees are required to act in the best interests of the plans’ beneficiaries.

The Group also has a small number of unfunded post-retirement plans, including a closed healthcare scheme in the US. Separate disclosure is provided

for these arrangements.

Further details on the arrangement of the UK Plan are given below.

The Trustee of the UK Plan is Senior Trustee Limited. The appointment of the Directors to the Board is determined by the Articles of Association of

Senior Trustee Limited. There are seven Trustee Directors in total and in accordance with statutory requirements under the Pensions Act 2004, at least

one-third of trustees must be a Member Nominated Director. Currently, there are three Member Nominated Directors and four Directors who have

been nominated by the Company, of which the Chairman and one other Director are viewed as independent.

The UK Plan exposes the Company to a number of risks. In particular:

• Uncertainty in benefit payments – the value of the obligations will ultimately depend on the amount of benefits paid out. This in turn will depend on

factors such as the level of inflation and how long individuals live.

• Volatility in asset values – the value of the assets held to meet future benefit payments is volatile, for example due to changes in stock markets and

interest rates.

• Uncertainty in cash funding – movements in the value of the UK Plan’s obligations or assets may result in the Company being required to provide

higher levels of cash funding.

The investment strategy for the UK Plan is decided by the Trustee in consultation with Senior plc. The primary investment objective is for the Plan to

be able to meet benefit payments as they fall due. The UK Plan’s average duration is around 12 years and benefits are expected to be paid for the next

60 years. These cash flow payments are expected to reach a peak around 2031, and gradually decline thereafter as the membership matures. In

setting this strategy, the Trustee considers a wide range of asset classes, the risk and rewards of a number of possible asset allocation options, the

sustainability of each asset class within each strategy, and the need for appropriate diversification between different asset classes. The Trustee’s

current investment strategy is to invest 100% in lower risk assets, consisting of corporate bonds, liability driven investments (‘LDI’), gilts and cash. The

LDI allocation helps to mitigate investment risk for the UK Plan by minimising the fluctuations in the UK Plan’s funding levels arising from changes in

the value of the liabilities. This is achieved through hedging movements in the funding liabilities caused by changes in interest rates and inflation

expectations. The Trustee continues to review its investment strategy and adjust it in response to changes in the Plan’s funding position and/or

market conditions.

The UK Plan was in a surplus position of £24.5m as at 5 April 2022 when measured on the Trustee’s funding basis and is in a surplus position of

£51.8m as at 31 December 2022 (2021 – £72.2m surplus) when measured on an IAS 19 basis. The difference between the triennial funding and

annual IAS 19 valuation relates to the assumptions used. For example, the funding discount rate is based on the UK Plan’s stated investment strategy,

as opposed to the yields available on corporate bonds for the IAS 19 discount rate.

33. Share-based payments continued

179SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

179SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

The IAS 19 surplus position on the UK Plan is recognised as an asset in the Consolidated and Company Balance Sheet, with no requirement to

recognise an additional liability on the UK Plan, on the grounds that the Company has an unconditional right to a refund, assuming the gradual

settlement of Plan liabilities over time until all members have left. In considering this, the Company has taken into account that the Trustees do not

have unilateral powers to wind up the Plan or modify benefits.

Cash contributions to the UK Plan are set by agreement between the Company and the Trustee of the UK Plan. These are set in accordance with

legislation and take account of the intention to further reduce the risk associated with the UK Plan’s investment strategy, as set out above. The

contributions were last reviewed as at 5 April 2022 and were based on a forecast surplus at that time, as part of the 2022 triennial funding valuation.

The Company agreed with the Trustee of the UK Plan to make scheduled contributions in respect of administrative expenses and PPF levies from 5

April 2022 until 30 June 2022, with no further contributions after this date. The estimated contributions expected to be paid during 2023 in the US

funded plans is £2.3m.

The Group is ultimately responsible for making up any shortfall in the UK Plan over a period agreed with the Trustees. To the extent that actual

experience is different from that assumed, the funding position will be better or worse than anticipated. As such, the contributions required by the

Group could vary in the future.

a) Defined contribution schemes

The Group has a number of different defined contribution and government-sponsored arrangements in place in the countries in which it operates.

None of these are individually material to the Group and the aggregate cost of such schemes for the period was £8.9m (2021 – £8.6m).

b) Defined benefit schemes

The amount included in the Consolidated Balance Sheet arising from the Group’s obligations in respect of its defined benefit plans is set out below.

31 December 2022 31 December 2021

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 (198.4) (49.4) (5.4) (253.2) (294.9) (56.2) (5.7) (356.8)

Fair value of plan assets 250.2 42.7 – 292.9 3 67.1 50.9 – 418.0

Plan surplus/(deficit) per Consolidated

Balance Sheet

51.8 (6.7) (5.4) 39.7 72.2 (5.3) (5.7) 61.2

c) Movements in the present value of defined benefit obligations were as follows:

31 December 2022 31 December 2021

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 294.9 56.2 5.7 356.8 317.7 58.8 6.2 382.7

Current service cost – 0.5 0.3 0.8 – 0.4 0.3 0.7

Past service cost – – – – – – – –

Interest cost 5.5 1.7 – 7. 2 3.8 1.5 – 5.3

Experience on benefit obligations 0.8 1.2 – 2.0 2.5 – – 2.5

Actuarial (gains)/losses – financial (89.6) (12.1) (0.5) (102.2) (15.8) (1.8) – (17.6)

Actuarial (gains)/losses – demographic (1.4) – – (1.4) (0.3) 0.2 – (0.1)

Benefits paid (11.8) (4.3) (0.4) (16.5) (13.0) (3.7) (0.4) (17.1)

Disposal activities – – – – – – – –

Exchange differences – 6.2 0.3 6.5 – 0.8 (0.4) 0.4

At 31 December 198.4 49.4 5.4 253.2 294.9 56.2 5.7 356.8

34. Retirement benefit schemes continued

180 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

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180 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

d) Movements in the fair value of plan assets were as follows:

31 December 2022 31 December 2021

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 367.1 50.9 – 418.0 364.2 54.1 – 418.3

Interest on plan assets 6.9 1.5 – 8.4 4.4 1.3 – 5.7

Actual return on plan assets less interest (113.4) (11.3) – (124.7) 6.1 (1.6) – 4.5

Contributions from employer 2.1 0.4 – 2.5 6.0 – – 6.0

Benefits paid (11.8) (4.3) – (16.1) (13.0) (3.7) – (16.7)

Running costs (0.7) – – (0.7) (0.6) – – (0.6)

Exchange differences – 5.5 – 5.5 – 0.8 – 0.8

At 31 December 250.2 42.7 – 292.9 3 67.1 50.9 – 418.0

e) Amounts recognised in the Consolidated Income Statement in respect of these defined benefit schemes are as follows:

31 December 2022 31 December 2021

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

profit – 0.5 0.3 0.8 – 0.4 0.3 0.7

Running costs 0.7 – – 0.7 0.6 – – 0.6

Past service cost – – – – – – – –

Charge included within operating profit 0.7 0.5 0.3 1.5 0.6 0.4 0.3 1.3

Included within finance income (1.4) 0.2 – (1.2) (0.6) 0.2 – (0.4)

Amount recognised in the Income Statement (0.7) 0.7 0.3 0.3 – 0.6 0.3 0.9

f) Amounts recognised in other comprehensive income are as follows:

31 December 2022 31 December 2021

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 (losses)/gain in the year due to:

– Change in financial assumptions 89.6 12.1 0.5 102.2 15.8 1.8 – 17.6

– Change in demographic assumptions 1.4 – – 1.4 0.3 (0.2) – 0.1

– Experience adjustments on benefit obligations (0.8) (1.2) – (2.0) (2.5) – – (2.5)

Actual return on plan assets less interest on

benefit obligations (113.4) (11.3) – (124.7) 6 .1 (1.6) – 4.5

(Losses)/gains recognised in other

comprehensive income (23.2) (0.4) 0.5 (23.1) 19.7 – – 19.7

Actuarial losses of £23.1m (2021 – gains of £19.7m) have been recognised in the Statement of Comprehensive Income. The cumulative amount of

actuarial losses recognised in the Statement of Comprehensive Income as at 31 December 2022 is £46.1m (2021 – £23.0m).

g) Assets and assumptions in funded plans

UK plans funded US plans funded

2022

£m

2021

£m

2022

£m

2021

£m

Fair value of plan assets

Equities – 28.6 – –

Bonds 102.4 126.6 42.7 50.9

Gilts 139.3 157.9 – –

Diversified growth fund – 37.7 – –

Cash and other assets 8.5 16.3 – –

Total 250.2 3 67.1 42.7 50.9

Actual return on plan assets (106.5) 10.5 (9.8) (0.3)

34. Retirement benefit schemes continued

181SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

181SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS CONTINUED

The UK Plan’s assets are invested in pooled funds, which are invested exclusively within instruments with quoted market prices in an active market,

with the exception of the Plan’s holdings in insurance annuity policies, valued at £4.0m (2021 – £4.7m). The value of the invested assets has been

measured at bid value and the value of the scheme benefits covered by the insurance annuity policies has been set equal to the value of the

corresponding obligations.

The Plan’s corporate bond allocation is split between an actively managed mandate and a “buy and maintain” mandate, which seeks to hold a high

quality portfolio while minimising portfolio turnover. Both mandates are predominantly invested in investment grade UK corporate bonds and are

exposed to a fairly typical range of UK businesses. The majority of the Plan’s gilts are passively invested in a range of UK fixed-interest and

index-linked government bonds, with the remainder actively invested in a range of swap instruments linked to movements in government bond

prices. The risks associated with the Plan’s bond and gilt investments are largely offset by corresponding risks present within the pricing of the

Plan’s benefit obligations.

The UK Plan does not invest directly in property occupied by the Company or in financial securities issued by the Company.

UK plans funded US plans funded

2022 2021 2022 2021

Major assumptions (per annum %)

Inflation 3.40% 3.50% N/A N/A

Increase in salaries N/A N/A N/A N/A

Increase in pensions 3.20% 3.30% 0.00% 0.00%

Increase in deferred pensions 3.40% 3.50% 0.00% 0.00%

Rate used to discount plan liabilities 4.80% 1.90% 4.78% 2.76%

Life expectancy of a male aged 65 at the year-end 20.6 20.8 19.7 19.6

Life expectancy of a male aged 65, 20 years after the year-end 22.0 22.2 21.2 21.2

Benefits under the US funded plans are not linked to inflation.

The UK Plan retirement benefit obligation is discounted at a rate set by reference to market yields at the end of the reporting period on high quality

corporate bonds. Estimation is required when setting the criteria for bonds to be included in the population from which the yield curve is derived. The

most significant criteria considered for the selection of bonds include the issue size of the corporate bonds, quality of the bonds and the identification

of outliers which are excluded. The assumption for estimating future Retail Prices Index (RPI) inflation is based on the difference in yields on fixed-

interest and index-linked gilts. Demographic assumptions are set broadly in line with the most recent actuarial valuation of the UK plan. The mortality

assumption is 95% of the standard mortality tables with an allowance for future improvements in line with the CMI 2021 enhanced projections, with a

long-term annual rate of improvement of 1.25% for males and for females, with no weighting on 2020 mortality data and a 10% weighting on 2021

mortality data to make an allowance for the impact of Covid-19.

For the UK Plan, the estimated impact on the plan surplus at 31 December 2022 for changes in assumptions is as follows:

Increase/

(decrease)

in plan surplus

£m

0.5% decrease in the discount rate (11.7 )

One-year increase in life expectancy (7.7)

0.5% increase in inflation (7. 2)

These sensitivities have been calculated to show the movement in the surplus, including allowance for an increase to the value of insured annuity

assets, but assuming no other changes in assets as at 31 December 2022. This is unlikely in practice – for example, a change in discount rate is

unlikely to occur without any movement in the value of the assets held by the Plan.

h) Other post-retirement liabilities

This balance comprises an unfunded German pension plan of £2.7m (2021 – £3.3m), unfunded closed pension and post-retirement healthcare plans in

the US of £0.3m (2021 – £0.3m), a provision for post-retirement payments in France of £1.5m (2021 – £1.4m) and £0.9m for post-retirement payments

in Thailand (2021 – £0.7m).

The closed pension and post-retirement healthcare plans in the US have been valued on a Projected Unit Method using a discount rate of 4.8% (2021

– 2.8%). No participants were eligible for medical benefits under the healthcare plan in 2022. The German plan has been subject to formal actuarial

valuation on a Projected Unit Method with the following assumptions: discount rate 3.5%, salary growth nil% and pension increase 2.2% (2021 –

1.1%, nil% and 1.8%). In France, the provision arises from a legal obligation to make payments to retirees in the first two years post-retirement. Hence,

it is not subject to discounting to the same extent as the other longer-term post-retirement liabilities. The Thailand plan has been subject to a formal

actuarial valuation on a Projected Unit Method with the following assumptions: discount rate 2.8%, inflation rate 2.8% and salary growth 6.0% (2021

– 2.8%, 2.8% and 6.0%).

34. Retirement benefit schemes continued

182 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

182 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

35. Contingent liabilities

The Group is subject to various claims which arise from time to time in the course of its business including, for example, in relation to commercial

matters, product quality or liability, and tax audits. Where the Board has assessed there to be a more likely than not outflow of economic benefits,

provision has been made for the best estimate as at 31 December 2022 (see Note 24). For all other matters, the Board has concluded that it is not

more likely than not that there will be an economic outflow of benefits. While the outcome of some of these matters cannot be predicted with any

certainty, the Directors do not expect any of these arrangements, legal actions or claims, after allowing for provisions already made where appropriate,

to result in significant loss to the Group.

183SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

183SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

Notes

Year ended

2022

£m

Year ended

2021

£m

Non-current assets

Investment in subsidiaries 38 259.9 259.9

Property, plant and equipment 39 1.1 1.3

Other intangible assets 37 0.1 0.1

Other receivables 40 3.3 25.7

Retirement benefits 49 51.8 72.2

Total non-current assets 316.2 359.2

Current assets

Other receivables 40 121.1 65.4

Cash and bank balances 46 1.6 4.7

Total current assets 122.7 70.1

Total assets 438.9 429.3

Current liabilities

Trade and other payables 42 61.8 70.1

Lease liabilities 47 0.2 –

Bank overdrafts and loans 41 – 14.8

Total current liabilities 62.0 84.9

Non-current liabilities

Bank and other loans 41 116.4 94.1

Lease liabilities 47 0.9 1.2

Deferred tax liabilities 48 8.8 14.2

Total non-current liabilities 126.1 109.5

Total liabilities 188.1 194.4

Net assets 250.8 234.9

Equity

Issued share capital 43 41.9 41.9

Share premium account 14.8 14.8

Equity reserve 6.4 5.8

Retained earnings 44 199.4 181.6

Own shares 45 (11.7) (9.2)

Total equity 250.8 234.9

The Profit for the Company for the year ended 31 December 2022 was £34.8m (2021 – £31.9m).

The Financial Statements of Senior plc (registered number 282772) were approved by the Board of Directors and authorised for issue on 24 February

2023. They were signed on its behalf by:

David Squires Bindi Foyle

Director Director

COMPANY BALANCE SHEET

AS AT 31 DECEMBER 2022

184 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

All equity is attributable to equity holders of the Company

Notes

Issued

capital

£m

premium

account

£m

Equity

reserve

£m

Retained

earnings

£m

Own

£m

Total

equity

£m

Balance at 1 January 2021 41.9 14.8 5.1 135.8 (11.5) 186.1

Profit for the year 2021 – – – 31.9 – 31.9

Actuarial gains on defined benefit pension schemes – – – 19.7 – 19.7

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

Use of shares held by employee benefit trust 45 – – – (2.3) 2.3 –

Transfer to retained earnings 44 – – (2.8) 2.8 – –

Dividends paid 11 – – – – – –

Balance at 31 December 2021 41.9 14.8 5.8 181.6 (9.2) 234.9

Profit for the year 2022 – – – 34.8 – 34.8

Actuarial losses on defined benefit pension schemes – – – (23.2) – (23.2)

Tax relating to components of other comprehensive income – – – 5.7 – 5.7

Total comprehensive income for the period – – – 17.3 – 17.3

Share-based payment charge – – 4.3 – – 4.3

Purchase of shares held by employee benefit trust 45 – – – – (4.5) (4.5)

Use of shares held by employee benefit trust 45 – – – (2.0) 2.0 –

Transfer to retained earnings 44 – – (3.7) 3.7 – –

Dividends paid 11 – – – (1.2) – (1.2)

Balance at 31 December 2022 41.9 14.8 6.4 199.4 (11.7) 250.8

COMPANY STATEMENT OF

CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

185SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

185SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE COMPANY

FINANCIAL STATEMENTS

36. Accounting policies

Basis of accounting (company only)

These Financial Statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). In

preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted international

accounting standards (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act 2006 and has taken

advantage of the FRS 101 disclosure exemptions for share-based payments, financial instruments, fair value measurements, capital management,

presentation of a cash flow statement and disclosure of related party transactions.

The Financial Statements have been prepared on the historical cost basis. They have also been prepared on the going concern basis, as set out in the

basis of preparation, Note 2 to the Consolidated Financial Statements. The principal accounting policies adopted are the same as those set out in Note

2 to the Consolidated Financial Statements, except in respect of investments in subsidiaries, which are stated at cost less, where appropriate,

provisions for impairment. The carrying values of investments in subsidiaries are reviewed for impairment if events or changes in circumstances

indicate the carrying values may not be recoverable.

The Company is incorporated in England and Wales under the Companies Act.

37. Other intangible assets

Year ended

2022

Computer

software

£m

Year ended

2021

Computer

software

£m

Cost

At 1 January 1.0 1.0

Additions – –

Disposal (0.2) –

At 31 December 0.8 1.0

Amortisation

At 1 January 0.9 0.9

Charge for the year – –

Disposals (0.2) –

At 31 December 0.7 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

194 to 195.

Year ended

2022

£m

Year ended

2021

£m

At 1 January and 31 December 259.9 259.9

186 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

39. Property, plant and equipment

Year ended

2022

Plant and

equipment

£m

Year ended

2021

Plant and

equipment

£m

Cost

At 1 January 2.4 2.4

Additions 0.1 –

Disposals (0.2) –

At 31 December 2.3 2.4

Accumulated depreciation

At 1 January 1.1 0.9

Charge for the year 0.3 0.2

Eliminated on Disposals (0.2) –

At 31 December 1.2 1.1

Carrying amount at 31 December 1.1 1.3

The carrying amount includes £1.0m of right-of-use assets (2021– £1.1m)

40.Other receivables

Other receivables comprise the following:

Year ended

2022

£m

Year ended

2021

£m

Other receivables: amounts due more than one year

Due from subsidiaries 3.3 25.7

3.3 25.7

Other receivables: amounts due within one year

Value added tax 0.3 0.2

Prepayments and accrued income 1.1 1.0

Due from subsidiaries 119.7 64.2

121.1 65.4

Total other receivables 124.4 91.1

The Directors consider that the carrying amount of debtors approximates to their fair value. The maximum exposure to credit risk at the reporting date

is the fair value of each class of receivable above. The Company does not hold any collateral as security.

The carrying amounts due from subsidiaries approximates to their fair value. There are no past due receivable balances and expected credit losses are

immaterial (2021 – immaterial).

As at 31 December 2022, other receivables due in more than one year consist of £3.3m (2021 – £2.2m) due in accordance with the vesting periods of

share-based payments and £nil (2021 – £23.5m) of loans to subsidiaries at market rates of interest.

187SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

NOTES TO THE COMPANY

FINANCIAL STATEMENTS CONTINUED

41. Bank overdrafts and loans

Year ended

2022

£m

Year ended

2021

£m

Bank overdrafts – –

Bank loans 15.3 (0.5)

Other loans 101.1 109.4

Total 116.4 108.9

The borrowings are repayable as follows:

On demand or within one year – 14.8

In the second year – –

In the third to fifth years inclusive 116.4 70.7

After five years – 23.4

116.4 108.9

Less: amount due for settlement within 12 months (shown under current liabilities) – (14.8)

Amount due for settlement after 12 months 116.4 94.1

At 31 December 2022, bank loans are £16.5m and there are £1.2m of capitalised revolving credit facility transaction costs. At 31 December 2021, bank

loans were undrawn, and there were £0.5m of capitalised revolving credit facility transaction costs.

Analysis of borrowings by currency

31 December 2022

Pound

Sterling

£m

Euros

£m

Dollars

£m

Total

£m

Bank overdrafts – – – –

Bank loans (1.2) – 16.5 15.3

Other loans 26.9 24.7 49.5 101.1

25.7 24.7 66.0 116.4

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 5 9.1 109.4

26.4 23.4 5 9.1 108.9

The weighted average interest rates paid were as follows:

Year ended

2022

Year ended

2021

Bank loans and overdrafts 3.93 1.26

Other loans 2.83 2.88

Bank loans of £16.5m (2021 – £nil) are arranged at floating rates, thus exposing the Company to cash flow interest rate risk. Other borrowings are

mainly arranged at fixed interest rates and expose the Company to fair value interest rate risk. No interest rate swaps were taken out in 2021 or 2022.

Transaction costs of £1.2m (2021- £0.5m) have been deducted from the bank loans carrying value. Transaction costs of £0.3m (2021- £0.4m),

directly attributable to the GBP notes (£0.1m), the Euro notes (£0.1m) and the US Dollar notes (£0.1m) have been deducted from the carrying value

of Other loans.

The Directors estimate the fair value of the Company’s borrowings to be as follows:

Year ended

2022

£m

Year ended

2021

£m

Bank loans and overdrafts 15.3 (0.5)

Other loans 93.4 110.4

108.7 109.9

188 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

188 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

42. Trade and other payables

Trade and other payables comprise the following:

Year ended

2022

£m

Year ended

2021

£m

Trade and other payables: amounts falling due within one year

Trade payables 1.6 0.9

Social security and PAYE 0.2 0.2

Other payables and accruals 7.1 6.8

Due to subsidiaries 52.9 62.2

Total trade and other payables 61.8 70.1

The Directors consider that the carrying amount of trade payables approximates to their fair value.

43. Issued share capital

Year ended

2022

£m

Year ended

2021

£m

Issued and fully paid:

419.4 million ordinary shares of 10p each 41.9 41.9

No shares were issued during 2021 and 2022.

The Company has one class of ordinary shares, which carry no right to fixed income.

44. Retained earnings

Year ended

2022

£m

Year ended

2021

£m

Balance at 1 January 181.6 135.8

Dividends paid (1.2) –

Profit for the year 34.8 31.9

Pension actuarial (loss)/gain (23.2) 19.7

Transfer from equity reserve 3.7 2.8

Transfer from own share reserve (2.0) (2.3)

Tax on deductible temporary differences 5.7 (6.3)

Balance at 31 December 199.4 181.6

£7.5m (2021 – £7.5m) of the Company’s retained earnings are considered undistributable.

In accordance with Section 408 of the Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income, including

the Income Statement and related Notes.

45. Own shares

Year ended

2022

£m

Year ended

2021

£m

Balance at 1 January (9.2) (11.5)

Transfer to retained earnings 2.0 2.3

Purchase of new shares (4.5) –

Balance at 31 December (11.7) (9.2)

The own shares reserve represents the cost of shares purchased in the market and held by the Senior plc Employee Benefit Trust to satisfy options

under the Group’s share option schemes (see Note 33).

The nominal value of each share is £0.1 (2021 – £0.1). The total number of treasury shares at 31 December 2022 is 5,716,834 (2021 – 3,463,455).

189SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

189SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

NOTES TO THE COMPANY

FINANCIAL STATEMENTS CONTINUED

46. Cash and bank balances

Year ended

2022

£m

Year ended

2021

£m

Cash and cash equivalents comprise:

Cash 1.6 4.7

Cash and bank balances held by the Company (which are presented as a single class of assets on the face of the Balance Sheet) comprise cash at

bank and other short-term highly liquid investments with a maturity of three months or less. The Directors consider that the carrying amount of cash

and cash equivalents approximate to their face value.

47. Lease liabilities

When measuring lease liabilities, the Company discounts lease payments using incremental borrowing rates, determined on a lease portfolio basis.

Undiscounted contractual maturity of lease liabilities:

Year ended

2022

£m

Year ended

2021

£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

1.1 1.3

Less: future finance charges – (0.1)

Lease liabilities 1.1 1.2

In 2022, the Company recognised income of £0.1m (2021 – £0.1m) in the Company Income Statement from sub-leasing right-of-use assets and had

lease cash outflow of £0.2m (2021 – £0.2m).

As at the date of approving the accounts, the Company has guaranteed £0.4m (2021 – £0.5m) of annual lease commitments of a current

subsidiary entity.

48. Tax balance sheet

Current tax

The current tax receivable is £nil (2021 – £nil).

Deferred tax liabilities

The following are the major deferred tax liabilities and assets recognised by the Company and movements thereon during the current and prior

reporting period:

Accelerated

tax

depreciation

£m

Retirement

benefits

£m

based

payments

£m

Tax

Losses

£m

Total

£m

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 – – – – –

At 1 January 2022 (0.3) 18.0 (0.4) (3.1) 14.2

Charge to income – 0.7 (0.4) – 0.3

Charge to equity – (5.7) – – (5.7)

Credit to other comprehensive income – – – – –

As at 31 December 2022 (0.3) 13.0 (0.8) (3.1) 8.8

Deferred tax assets and liabilities are offset where the Company has a legally enforceable right to do so. The following is the analysis of the deferred

tax balances, after offset:

Year ended

2022

£m

Year ended

2021

£m

Deferred tax liabilities 8.8 14.2

At the Balance Sheet date, the Company has unused capital losses of £15.6m (2021 – £15.6m) available for offset against future capital gains. No

deferred tax asset has been recognised as no such capital gains are anticipated to arise in the foreseeable future.

190 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

190 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

49. Retirement benefit scheme

The Company’s defined benefit scheme is shown in Note 34 in the “UK plans funded” column.

50. Related party transactions

The remuneration of the Directors and Senior Managers, who are the key management personnel of the Group, is set out in the Remuneration Report

on pages 108 to 128. In 2022, the Company recognised share-based payment expense of £1.1m (2021 – £0.7m) in relation to the executive Directors.

The Group has related party relationships with a number of pension schemes. Transactions between the Group and these pension schemes are

disclosed in Note 34.

51. Share-based payments

The Company has a number of share-based payment arrangements that existed during 2022, the details of which can be found in Note 33.

For the savings-related share option plan, 1,905 shares were exercised in 2022 and no shares were exercised in 2021. The options outstanding at 31

December 2022 had exercise prices of 118.40p per share, and a weighted average remaining contractual life of 2.0 years. The options outstanding at

31 December 2021 had exercise prices of 118.40p and 219.30p per share, and a weighted average remaining contractual life of 2.1 years.

Share-based payment costs relating to subsidiaries are recharged from the Company.

191SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

191SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS

FIVE-YEAR SUMMARY

2022

£m

2021

£m

2020

£m

2019

£m

2018

£m

Group income statement

Revenue

Continuing operations 848.4 658.7 733.6 1,110.70 1,0 8 2.10

Adjusted operating profit

Continuing operations 28.5 6.1 3.7 89.4 91.6

Amortisation of intangible assets from acquisitions (0.2) – ( 7.7) (13.1) (15.4)

Goodwill impairment and write-off – – (134.3) – –

Net restructuring income/(cost) 4.2 4.4 (39.0) (12.1) –

US class action lawsuits – – – (2.6) (3.9)

Operating profit/(loss) 32.5 10.5 (17 7. 3) 61.6 72.3

Investment income/finance costs, net (excluding lease liabilities) (7.4) (5.8) (7.8) (8.1) (8.8)

Interest on lease liabilities (2.5) (2.6) (3.0) (3.5) –

Net finance income of retirement benefits 1.2 0.4 0.9 0.7 0.2

Corporate undertakings (1.4) 21.2 (4.6) (22.0) –

Profit/(loss) before tax 22.4 23.7 (191.8) 28.7 63.7

Tax (2.2) 0.5 33.3 0.5 (7.8)

Profit/(loss) for the year 20.2 24.2 (158.5) 29.2 55.9

Depreciation and amortisation of intangibles excluding right-of-use assets 39.5 38.3 51.4 57. 5 56.9

Depreciation on right-of-use assets 10.3 9.5 10.2 10.2 –

Gross capital expenditure 30.5 21.3 26.8 64.8 56.3

Basic earnings/(loss) per share 4.86p 5.82p (38.20)p 7.0 4p 12.81p

Diluted earnings/(loss) per share 4.73p 5.73p (38.20)p 7.01p 12.63p

Adjusted earnings/(loss) per share 4.36p 0.17p (0.84)p 16.17p 16.08p

Dividends in respect of years – per share 1.30p 0.0p 0.0p 2.28p 7. 42p

– value 5.3 – – 9.5 30.9

Group Balance Sheet

Non-current assets excluding right-of-use assets 539.8 463.5 482.7 651.4 662.0

Right-of-use assets IFRS 16 70.8 67.4 72.5 82.3 –

Non-current assets 610.6 530.9 555.2 733.7 662.0

Net current assets 10 4.1 110. 3 89.2 102.5 131.0

Non-current liabilities (265.3) (216.1) (251.1) (276.6) (221.2)

Net assets 449.4 425.1 393.3 559.6 571.8

Net debt pre IFRS 16 (100.5) (79.9) (129.4) (145.9) (153.0)

Lease liabilities IFRS16 (78.4) (73.2) (76.5) (83.7) –

Net debt (178.9) (15 3.1) (205.9) (229.6) (153.0)

Group cash flow

Net cash from operating activities 57.7 27.0 48.9 115.9 100.7

Corporate undertaking costs 1.4 4.8 4.6 3.4 –

Net Restructuring cash (received)/paid (2.1) 0.9 15.2 2.9 –

US class action lawsuits – 2.3 3.9 – –

Interest received 0.7 0.1 0.2 0.2 0.4

Proceeds from disposal of property, plant and equipment 0.5 0.2 0.5 0.7 0.5

Purchase of property, plant and equipment – cash (28.7) (20.2) (25.2) (63.0) (54.6)

Purchase of intangible assets (1.8) (1.1) (1.6) (1.8) (1.7)

Free cash flow 27.7 14.0 46.5 58.3 45.3

Dividends paid (1.2) – – (31.2) (29.6)

Acquisition costs/Disposal proceeds (25.3) 51.7 0.4 2.9 –

Corporate undertaking costs (1.4) (4.8) (4.6) (3.4) –

Net Restructuring cash received/(paid) 2.1 (0.9) (15.2) (2.9) –

US class action lawsuits – (2.3) (3.9) – –

Loan to joint venture – – – – 0.5

Purchase of shares held by employee benefit trust (4.5) – – (6.3) (7.2)

Increase/(decrease) in loans 0.4 (21.1) (7.2) (3.2) (2.4)

Decrease in lease liabilities (9.1) (8.4) ( 7. 9) (7.8) (0.3)

(Decrease)/increase in cash and cash equivalents (11.3) 28.2 8.1 6.4 6.3

192 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL STATEMENTS /

194 Group Undertakings

196 Additional Shareholder Information

197 Officers and Advisers

IN THIS SECTION

ADDITIONAL

INFORMATION

ADDITIONAL INFORMATION /

193SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

ADDITIONAL INFORMATION / GROUP UNDERTAKINGS

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,

Hertfordshire, 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,

Hertfordshire, 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 Soufflets, 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 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 &

Lewiston, Maine

Senior Aerospace Spencer Valencia, California

Steico Industries, Inc. Senior Aerospace Steico

Industries

Oceanside, California USA 818 West Seventh St., Ste. 930,

LosAngeles, CA90017, USA

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 Ltd Senior Flexonics Upeca

(China)

Tianjin, China China No. 12 QuanHe Road, Wu Qing

Development Area, Tianjin 301700,

PR China

194 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

195SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

Operating Companies Business Units Locations Country of Incorporation

Atlas Composites Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Flexonics Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Lymington Precision Engineering

(LPE) Limited

England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Aerospace Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Americas One Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Americas Two Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Automotive Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Engineering Investments

Limited

England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Finance Four Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Finance Seven Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Finance Six Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Five Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Flexonics Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior Trustee Limited England & Wales 59/61 High Street, Rickmansworth,

Hertfordshire, WD3 1RH, UK

Senior France SAS France 11 Rue des Soufflets, 91410,

Dourdan, France

Senior Investments (Deutschland)

GmbH

Germany Frankfurter Strasse 199, 34121

Kassel, Germany

Upeca Technologies Sdn Bhd Malaysia 10th Floor, Menara Hap Seng,

No1&3, Jalan P. Ramlee, 50250

W.P – Kuala Lumpur, Malaysia

Senior Aerospace Bosman B.V. Netherlands Bergen 6, 2993 LR Barendrecht,

Netherlands

Senior Investments GmbH Switzerland Fronwagplatz 10, CH-8200,

Schaffhausen, Switzerland

Senior IP GmbH Switzerland Fronwagplatz 10, CH-8200,

Schaffhausen, Switzerland

Flexonics, Inc. USA Corporation Trust Center,

1209Orange Street, Wilmington,

DE19801, USA

Senior Holdings LLC 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

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.

ADDITIONAL INFORMATION / GROUP UNDERTAKINGS

ADDITIONAL INFORMATION / ADDITIONAL SHAREHOLDER INFORMATION

ADDITIONAL SHAREHOLDER INFORMATION

Analysis of shareholders at 31 December 2022

Shareholders

Number

Shareholders

Issued Shares

Millons

Issued Shares

By category

Corporate bodies 402 19.51 411.05 98.00

Other shareholders 1,659 80.49 8.37 2.00

2,061 100.00 419.42 100.00

By range of holdings

1 – 24,999 1,758 85.30 6.15 1.46

25,000 – 49,999 71 3.45 2.48 0.59

50,000 – 249,999 106 5.14 12.23 2.92

250,000 – 499,999 34 1.65 12.61 3.01

500,000 – 999,999 34 1.65 23.93 5.71

1,000,000 – and over 58 2.81 362.02 86.31

Operating (loss)/profit 2,061 100.00 419.42 100.00

The number of shares in issue at 31 December 2022 was 419,418,082.

Share Registrars

All shareholder records are maintained by Equinti and all correspondence should be addressed to the Registrar, Senior plc at the Equniti address

shown on the inside back cover, quoting the reference number starting with 0228 detailed on your dividend vouchers. The registrar should be notified

regarding changes to name or address, loss of share certificate, or request for, or change to, a dividend mandate.

Equiniti provides a range of shareholder information on-line. Shareholders can check their holdings, update details and obtain practical help on

transferring shares at: www.shareview.co.uk.

Instead of payment by post to your registered address, dividends can be paid through the BACS system direct into a UK bank or building society

account, with the dividend voucher still sent to your registered address. If you wish to use this facility and have not previously applied, then please

apply direct to Equiniti and request a dividend mandate form. Shareholders who are currently receiving duplicate sets of Company mailings, as a result

of any inconsistency in name or address details, should write direct to Equiniti so holdings can be combined, if appropriate.

CREST Proxy Voting

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General

Meeting to be held on 21 April 2023 and any adjournment(s) thereof by using the procedures described in the CREST manual. Further details relating

to voting via CREST may be found on the 2023 AGM Notice of Meeting and Form of Proxy.

196 SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

197SENIOR PLC ANNUAL REPORT AND ACCOUNTS 2022

OFFICERS AND ADVISERS

Secretary and registered office

Andrew Bodenham

Senior plc

59/61 High Street, Rickmansworth, Hertfordshire WD3 1RH

Registered in England and Wales No. 00282772

Registrars

Equiniti Ltd

Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA

Auditor

KPMG LLP

15 Canada Square, London E14 5GL

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

Bankers

HSBC UK Bank plc

71 Queen Victoria Street, London EC4V 4AY

KBC Bank NV, London Branch

111 Old Broad Street, London EC2N 1BR

Financial advisers

Lazards & Co., Limited

50 Stratton Street, London W1J 8LL

Financial Public Relations

FGS Global

The Adelphi

1-11 John Adam Street

London WC2N 6HT

Corporate Brokers

Jefferies International Limited

100 Bishopsgate

London EC2N 4JL

Design and production

Printed by Park Communications

SENIOR PLC

59/61 High Street,

Rickmansworth,

Hertfordshire

WD3 1RH

United Kingdom

www.seniorplc.com

T +44 (0) 1923 775547