Notice of AGM & Annual Report

RNS Number : 0833C

Barr(A.G.) PLC

26 April 2012

 



A.G. BARR p.l.c.

(the "Company")

26 April 2012

Annual Report and Accounts and Notice of Annual General Meeting

Following the release on 26 March 2012 of the Company's financial results for the year ended 28 January 2012 (the "Final Results Announcement"), the Company announces it has today published its annual report and accounts for the year ended 28 January 2012 (the "Annual Report and Accounts").

The Annual Report and Accounts contains the notice convening the Company's one hundred and eighth annual general meeting (the "AGM") (the "Notice of AGM"). The AGM will be held at the offices of KPMG LLP, 191 West George Street, Glasgow G2 2LJ on Monday, 21 May 2012 at 9.30 a.m.

At the AGM, two matters of special business will be considered.  The first concerns the re-approval of the Company's All Employee Share Ownership Plan (the "AESOP").  The second concerns the proposed subdivision of the Company's ordinary share capital.

Re-approval of the AESOP

At the Company's annual general meeting held in 2001, shareholders were asked to approve the terms of the AESOP.  The rules of the AESOP allow the Company to make share awards for up to 80 years - with the authority to do so expiring in 2081.  Principles of good corporate governance now recommend that schemes such as the AESOP should only exist for a period of 10 years before they end and a company asks its shareholders to consider putting in place a new scheme.  Rather than terminating the existing AESOP and incurring the cost of setting up a new scheme, the Company has decided to seek shareholder approval for the continued operation of the AESOP.  This year is the first year shareholders will be asked to re-approve the AESOP and the Company intends to seek a similar shareholder approval every 10 years.

Share subdivision

The board of directors of the Company (the "Board") proposes that the Company's ordinary share capital be subdivided (the "Share Subdivision").  It is proposed that each of the Company's issued ordinary shares of 12.5 pence each (together, the "Existing Ordinary Shares") be subdivided into three ordinary shares of 4 1/6 pence each (together, the "New Ordinary Shares").

The Share Subdivision will triple the number of ordinary shares in issue and, the Board believes, may improve the liquidity and marketability of the ordinary shares. In addition, the Board believes that the Share Subdivision may enable the Company to attract more private investors and broaden its shareholder base.

The Company operates various employee share schemes and share saving schemes (together, the "Share Schemes").  Currently, awards are made under the Share Schemes in Existing Ordinary Shares.  Following the Share Subdivision, current and future awards under the Share Schemes will be in New Ordinary Shares rather than Existing Ordinary Shares.  Although no amendments are required to any of the Share Schemes, the Company will be required to modify the exercise price of any options granted, and the number of ordinary shares to be awarded, under the Share Schemes.  Certain administrative changes will also be required in respect of each of the Share Schemes to allow for New Ordinary Shares to be issued or transferred (as appropriate) instead of Existing Ordinary Shares.

As some of the Share Schemes are schemes which have been 'approved' by HM Revenue & Customs ("HMRC"), the Company has sought approval from HMRC for the Share Subdivision.  As at today's date, HMRC has not yet approved the consequential adjustments to the Share Schemes required as a result of the Share Subdivision (the "HMRC Approval").  Without the HMRC Approval, the 'approved' status of the relevant Share Schemes may be prejudiced by the Share Subdivision.  As a result, the Share Subdivision is conditional upon receiving HMRC Approval.

Subject to the passing of the proposed resolution and the Company receiving HMRC Approval, the Official List of the UK Listing Authority (the "UKLA") will be amended to reflect the Share Subdivision - it is intended that this will be done as soon as practicable after HMRC Approval is received.  The Company will make an announcement once HMRC Approval has been received and confirm the date on which the amendment to the Official List of the UKLA and other related matters will take place. 

Conditional upon the Share Subdivision becoming effective, shareholders will receive a new share certificate which records the number of New Ordinary Shares held.  If Existing Ordinary Shares are held in uncertificated form, a shareholder's CREST account will be credited with New Ordinary Shares on the day the Official List of the UKLA is amended.

The New Ordinary Shares will have the ISIN code GB00B6XZKY75.

A copy of the Annual Report and Accounts, which includes the Notice of AGM, is available to view on the Company's website: www.agbarr.co.uk

In accordance with Disclosure and Transparency Rule 6.3.5(2)(b), additional information is set out in the appendices to this announcement.

The Final Results Announcement included a set of condensed financial statements and a fair view of the development and performance of the business and the position of the Company.

A copy of the Annual Report and Accounts, including the Notice of AGM, together with a copy of the proxy form in relation to the AGM will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do 

Appendices

Where used in the following appendices, the term the "Group" means the Company together with its subsidiaries.

Appendix A: Directors' responsibility statement

The following directors' responsibility statement is extracted from the Annual Report and Accounts (page 57):

Directors' statement pursuant to the Disclosure and Transparency Rules

Each of the directors, whose names and functions are set out on pages 38 and 39 of this report, confirm that, to the best of their knowledge:

•      the financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and parent Company; and

•      the Business Review on pages 2 to 35 includes a fair review of the development and performance of the business and the position of the Group and parent Company, together with a description of the principal risks and uncertainties that they face.

Appendix B: A description of the principal risks and uncertainties that the Company faces

The following description of the principal risks and uncertainties that the Company faces is extracted from the Annual Report and Accounts (pages 22 - 25):

Principal Risks and Uncertainties

The Group's risk management framework is designed to support the process for identifying, evaluating and managing risk. The risk framework, which is the responsibility of the Finance Director, governs the management and control of both financial and non-financial risks.

There is an ongoing process in place for identifying, evaluating and managing the significant risks faced by the Group, which has operated throughout the financial year.  This process involves regular assessment of the Group's risk register by the Audit Committee. In line with best practice the register includes an assessment of the impact and likelihood of each risk together with the controls in place to manage the risk.

The Group's risk management framework is designed to support this process and is the responsibility of the Finance Director.  The risk framework governs the management and control of both financial and non-financial risks.

Internal audit is undertaken by an independent firm of chartered accountants who develop an annual internal audit plan having reviewed the Group's risk register and following discussions with external auditors, management and members of the Audit Committee.

During the period the Audit Committee has reviewed reports covering the work undertaken as part of the annual internal audit plan. This has included assessment of the general control environment, identification of control weaknesses, quantification of any associated risk together with a review of the status of actions to mitigate these risks.

The Audit Committee has also received reports from management in relation to specific risk items together with reports from external auditors, who consider controls only to the extent necessary to form an opinion as to the truth and fairness of the financial statements. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and it must be recognised that it can only provide reasonable and not absolute assurance against material misstatement or loss.

The principal risks and corresponding mitigation set out below represent the principal uncertainties that may impact the Group's ability to effectively deliver its strategy in the future.

Risks relating to the Group

Risk	Impact	Mitigating actions
A decline in the sales of certain key brands, a deterioration in the relationship with a specific customer or a consolidation or reduction of the customer base.	A decline in sales of key brands or a failure to renew trading agreements on favourable terms could have an adverse impact on the Group's sales and operating profits.	The Group offers a range of brands that it manufactures and distributes through a cross section of trade channels and retailers. Performance is monitored closely by the board and management committee. This includes monitoring and tracking of metrics which review brand equity strength, together with monitoring of financial and operational performance. The Group focuses heavily on delivering high quality products and invests heavily in building brand equity.    Regular contact is maintained with all of the Group's customers and members of the senior management team meet with customers throughout the year.
Adverse publicity in relation to the Group or its brands.	Adverse publicity in relation to the Group or its brands could have an adverse impact on the Group's reputation, sales and operating profits.	It remains the Group's policy to ensure that employees operate within the boundaries of compliance in the areas of legislation, health and safety and ethical working standards and these are continually reviewed by the board and management committee. Within the Group there is a clearly defined and communicated Corporate Social Responsibility Policy. Quality standards, both at our sites and those of suppliers, are well defined, implemented and measured.
Failure or unavailability of the Group's operational infrastructure.	The Group would be affected if there was a catastrophic failure of its major production or distribution facilities which led to a loss in capacity or capability.	Assets within the Group are proactively managed whether this be intangible brand assets, plant and equipment, people or IT systems. Robust disaster recovery and incident management plans exist and are formally tested. Contingency measures are in place and are regularly tested.
Interruption in, or change in the terms of, the Group's supply of packaging and raw materials.	The packaging and raw material components that the Group uses for the production of its soft drink products are largely commodities that are subject to price and supply volatility that could have an adverse impact on the Group's sales and operating profits.	The Group adopts centralised purchasing arrangements to ensure the best possible terms are negotiated. Contingency measures exist and are tested regularly. Supplier performance is reviewed on a monthly basis and audits are undertaken for major suppliers. Overall commodity risks are reviewed and managed by the Treasury Committee whose remit and authority levels are set by the board. The Treasury Committee's remit focuses on the unpredictability of the cost of supply and seeks to minimise potential related adverse effects on the Group's financial performance through either forward purchasing or hedging known commodity requirements.
Failure of Information Technology systems.	The maintenance and development of Information Technology systems may result in systems failures which may adversely impact the Group's ability to operate.	IT assets within the Group are proactively managed and procedures exist that support rapid and clean recovery. Robust disaster recovery and incident management plans exist and are formally tested. Contingency measures are in place and are regularly tested.
Inability to protect the intellectual property rights associated with current and future brands.	Failure to maintain the Group's intellectual property rights could result in the value of our brands being eroded.	The Group invests considerable effort in proactively protecting the intellectual property rights associated with its current and future brands, through trademark registration and legal enforcement as and when required.
Financial Risks.	The Group's activities expose it to a variety of financial risks which include market risk (including medium term movements in exchange rates, interest rate risk and commodity price risk), credit risk and liquidity risk. In the poor economic climate the risk of customer insolvency is increased.	Financial risks are reviewed and managed by the Treasury Committee whose remit and authority levels are set by the board. The Treasury Committee seeks to minimise adverse effects on the Group's financial performance through hedging known currency exposures whilst reviewing the appropriateness of the interest rate hedging policy throughout the year. The Group's finance team reviews cashflow forecasts throughout the year, with headroom against banking covenants assessed regularly. The finance team uses external tools to assess credit limits offered to customers, manages trade receivable balances vigilantly and takes prompt action on overdue accounts.
Change programmes may not deliver the benefits intended.	A number of change programmes designed to improve the effectiveness and efficiency of the end to end operating, administrative and financial systems and processes continue to be undertaken. There is a risk that these programmes will not fully deliver the expected operational benefits within the timescales expected. There is also the risk that the change programmes lead to disruption to production, administrative and financial processes and could impact customer service or operating margins.	Appropriate governance structures are put in place to provide the required structures and frameworks to supervise, monitor, control, direct and manage change programmes. These structures review the scope, project plan, resources and monitor progress against set deliverables. External support is utilised when the Group is unable to support the project solely from internal resources.
Increasing funding needs or obligations in respect of the Group's pension scheme arrangements.	The triennial valuation of the Group's defined benefit pension scheme may highlight a worsening funding position that requires the Group to invest additional cash contributions to meet future liabilities.	The Group's Finance team works closely with the Pension Trustees to ensure that an appropriate Investment Strategy is in place to fund future pension requirements at acceptable risk levels.

Risks relating to the market

Risk	Impact	Mitigating actions
Changes in consumer preferences, perception or purchasing behaviour.	Consumers may decide to purchase and consume alternative brands or spend less on soft drinks.	The Group offers a range of branded products across a range of flavours, subcategories and geographies which offer choice to the end consumer. Changing consumer preferences are reviewed annually by the board with reference to external research.
Changes in regulatory requirements.	Changing legislation may impact our ability to market or sell certain products or could cause the Group to incur additional costs or liabilities that could adversely affect its business.	The Group proactively engages with the relevant authorities, including the British Soft Drinks Association, The Food Standards Agency and the General Counsel of Scotland to ensure full participation in the future development of and compliance with relevant legislation. It remains the Group's policy to ensure that employees are aware of their responsibilities under all applicable regulatory requirements. Formal training sessions are undertaken throughout the year.
Potential impact of taxation changes.	Changes to legislation may vary the taxation levels associated with the sale or consumption of soft drinks which could impact sales and operating profits.	The impact of changes to the taxation legislation is reviewed regularly. The Group will seek to remain commercially competitive by passing on any resulting cost differential through price amendments to customers.

Appendix C: Related party transactions

The following related party transactions are extracted from the Annual Report and Accounts (pages 101 - 102):

Related party transactions

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation. Details of transactions between the Company and related parties are as follows:

	Sales of goods and                  services		Purchase of goods         and services
	2012 £000	2011 £000	2012 £000	2011 £000
Rubicon Drinks Limited	37,317	33,232	47,864	45,129
Taut (U.K.) Limited	-	83	-	60
Findlays Limited	-	-	189	234
Barr Leasing Limited	-	-	183	218

The amounts disclosed in the table below are the amounts owed to and due from subsidiary companies that are trading subsidiaries. The difference between the total of these balances and the amounts disclosed as amounts due by (note 16) and to subsidiary companies (note 19) are balances due by and due to dormant subsidiary companies.

	Amounts owed by related parties		Amounts due to related parties
	2012	2011	2012	2011
	£000	£000	£000	£000
Rubicon Drinks Limited	-	-	21,390	14,207
Taut (U.K.) Limited	1,194	1,194	-	-
Findlays Limited	-	-	1,636	1,469
Barr Leasing Limited	-	281	991	-

Compensation of key management personnel

The remuneration of the executive directors and other members of key management (the management committee) during the year was as follows:

			2012	2011
			£000	£000
Salaries and short term benefits			2,071	2,499
Pension and other costs			263	266
Share-based payments			24	24
			2,358	2,789

Retirement benefit plans

The Group's retirement benefit plans are administered by an independent third party service provider. During the year the service provider charged the Group £492,171 (2011: £418,364) for administration services in respect of the retirement benefit plans. At the year end £nil (2011: £nil) was outstanding to the service provider on behalf of the retirement benefit plans.

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