RE: Rns6 May 2020 09:53
Contingent Liability
Subsequent to year end the Group identified an issue regarding an aspect of certain process development work performed on behalf of a customer in 2018 and 2019 which potentially could give rise to a material claim against the Group. The Group has been in communication with the third party but is not yet in a position to verify or validate any information relating to this matter due to the very recent timing of this issue being identified.
As at 31 December 2019, the Group regards this matter as an adjusting post Statement of financial position event (IAS10) and has assessed the performance obligations for which the revenue has been recognised and reversed all potentially affected revenues relating to the work packages with the liability recognised within Contract liabilities due within one year.
In addition, the Group expects that the potential liability arising with regards to the affected work packages will be extinguished either through re-performance of the affected work packages, or ultimately form part of any potential claim. If a claim were to materialise, the Group estimates the range of all potential costs could be between £250,000 and £1,000,000. However, as there is no such claim to date and given the early stage of the investigation into the cause, no liability has been recognised at the Statement of financial position date, as in management's opinion it is too early to consider the above estimate sufficiently reliable to recognise a provision (if any) in respect of this matter. The assessment required is inherently judgemental, and there is a risk that the final settlements are materially different to the range provided above or do not include all claims and therefore the amounts may be understated.
A contingent asset could potentially exist within the financial statements for the insurance cover that the group maintains, however the Group cannot determine the extent of any cover until further investigation is undertaken as necessary. On this basis it is too early to assess the likelihood of an asset arising, therefore no contingent asset has been recognised.
No other amounts have been provided for in respect of this matter.
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