TIDMBAG

RNS Number : 6019D

Barr(A.G.) PLC

27 April 2017

A.G. BARR p.l.c. (the "Company")

27 April 2017

Annual Report and Accounts and Notice of Annual General Meeting

Following the release on 28 March 2017 of the Company's financial results for the year ended 28 January 2017 (the "Final Results Announcement"), the Company announces it has today published its annual report and accounts for the year ended 28 January 2017 (the "Annual Report and Accounts").

The Annual Report and Accounts contains the notice convening the Company's one hundred and thirteenth annual general meeting (the "AGM") (the "Notice of AGM"). The AGM will be held at the offices of Deloitte LLP, 110 Queen Street, Glasgow, G1 3BX on Wednesday, 31 May 2017 at 11.00 a.m.

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.morningstar.co.uk/uk/nsm

Appendices

Where used in the following appendices, the term "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 77):

Directors' statement pursuant to the disclosure and transparency rules

Each of the directors, whose names and functions are set out on pages 36 to 37 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 and financial position of the Group and parent Company and of the consolidated profit;

-- the Annual Report and Accounts includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties faced by the Group; and

-- they 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 Company's performance, business model and strategy.

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 31 - 35):

Risk management approach

The Board is responsible for the Group's risk management and internal control systems and for reviewing their effectiveness, supported by the Audit Committee and the Risk Committee. A risk management framework is in place which sets out the ongoing processes for the identification, assessment and management of risks, and for their ongoing monitoring and review. The Board has defined its risk appetite in a number of key areas for the business - this sets out the relative level of risk that the Group is prepared to seek or accept in the pursuit of its strategic objectives. The aim is to ensure that the risks taken by the Group fall within its defined risk appetite.

Effective risk management is essential to enable us to achieve our operational and strategic objectives and deliver long-term value creation. During the reporting period we have continued to focus on embedding a culture of risk management throughout the organisation which will contribute towards successful strategy execution.

Robust risk assessment

The risk management framework sets out a systematic approach to risk management which is designed to identify risks to the business, regardless of source. Once identified, risks are assessed according to the likelihood and impact of the risk occurring and an appropriate risk response is determined in line with the Group's risk appetite. Risks are re-assessed based on the strength of the mitigating controls implemented. The implementation of risk mitigation plans is subject to ongoing monitoring and review. A risk scoring matrix is used to ensure that a consistent approach is taken across the business at both a corporate and functional level. This risk assessment and review process is documented in the appropriate risk register. Risks are constantly reviewed on an ongoing basis; the Group's risk register is formally reviewed by the Risk Committee quarterly and by the Board and the Audit Committee twice each year.

Risk control assurance

Internal audit work is undertaken by an independent organisation which develops an annual internal audit plan having reviewed the Group's risk register and following discussions with the external auditors, management and members of the Audit Committee.

During the year the Audit Committee has reviewed reports covering the internal audit work. This has included assessment of the general control environment, identification of any control weaknesses and quantification of any associated risk, together with a review of the status of mitigating actions. The Audit Committee has also received reports from management in relation to specific risk items together with reports from external auditors, who consider controls to the extent necessary to form an opinion as to the truth and fairness of the financial statements.

The Group's internal control and risk management systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable but not absolute assurance against material misstatement or loss.

The report of the Audit Committee can be found on page 48.

Principal risks and uncertainties

The Board has carried out a robust, systematic assessment of the principal risks facing the Group during the period, including those which would threaten its business model, future performance, solvency or liquidity. The principal risks as determined by the Board are listed in the table below, together with corresponding mitigating actions. This is not intended to be an exhaustive list of all risks and uncertainties that may arise.

The UK's decision to leave the European Union has created a volatile and uncertain economic environment. Like many other businesses, we are closely following developments in this area. We believe that it is still too early to quantify or determine with any certainty the impact on the Group of the UK leaving the European Union. However, given that the Group is a UK based group whose sales are predominantly made in the UK, our current assessment is that Brexit will not have a significant impact on the Group, other than through its effect on foreign exchange rates to which it is exposed through the purchase of certain commodities. We will continue to monitor developments and adapt our strategy as the impact of the UK exit from the European Union becomes clear.

Principal risks and uncertainties

Risks relating to the Group

 
Risk                    Impact                     Mitigating actions 
----------------------  -------------------------  ----------------------------------- 
Changes in              Consumers may              The Group offers a broad 
 consumer preferences,   decide to purchase         range of branded products 
 perception              and consume alternative    across a range of flavours, 
 or purchasing           brands or spend            subcategories and markets 
 behaviour               less on soft drinks.       which offer choice to the 
                                                    end consumer. 
 
                                                    Changing consumer attitudes 
                                                    and behaviours are monitored 
                                                    on an ongoing basis and 
                                                    inform our brand plans and 
                                                    new product development. 
======================  =========================  =================================== 
Changing consumer       Consumers may              The Group offers a broad 
 attitudes               decide to purchase         range of branded products, 
 towards sugar/further   and consume alternative    many of which are low sugar 
 government              brands or spend            or sugar free. We announced 
 intervention            less on sugared            on 1 March 2017 that we 
 on sugar                soft drinks.               will accelerate our long-standing 
                                                    sugar reduction programme 
                                                    so that over 90% of our 
                                                    Company owned soft drinks 
                                                    portfolio by volume will 
                                                    contain less than 5g of 
                                                    total sugars per 100ml by 
                                                    the autumn of 2017. 
 
                                                    Our new product development 
                                                    activity is focused on development 
                                                    of lower calorie products 
                                                    and our marketing programmes 
                                                    incorporate our lower calorie 
                                                    choices. 
 
                                                    We are working constructively 
                                                    with the government in relation 
                                                    to the proposed sugar tax, 
                                                    with the aim of ensuring 
                                                    the optimal outcome for 
                                                    the Group. 
======================  =========================  =================================== 
Adverse publicity       Adverse publicity          Our risk management process 
 in relation             in relation to             is designed to identify 
 to the soft             the soft drinks            and monitor events that 
 drinks industry,        industry, the              may impact the Group as 
 the Group               Group or its brands        a result of adverse publicity 
 or its brands           could have                 and to ensure that controls 
                         an adverse impact          are in place to manage these 
                         on the                     risks. 
                         Group's reputation, 
                         consumer consumption       We liaise with relevant 
                         patterns, sales            industry bodies who work 
                         and operating              with government and policy 
                         profits.                   makers. 
 
                                                    Nutritional information 
                                                    is shown on all of our products 
                                                    and we have signed up to 
                                                    the UK Government's voluntary 
                                                    front-of-pack nutritional 
                                                    labelling scheme. 
 
                                                    Processes are in place to 
                                                    ensure compliance with health 
                                                    and safety legislation and 
                                                    ethical working standards 
                                                    and these are regularly 
                                                    reviewed by the Board and 
                                                    management committee. Quality 
                                                    standards are well defined, 
                                                    implemented and monitored. 
                                                    A Corporate Social Responsibility 
                                                    Committee is in place, with 
                                                    a clearly defined and communicated 
                                                    Corporate Social Responsibility 
                                                    Policy. The Group maintains 
                                                    and develops ISO 9001 and 
                                                    14001 systems and BRC standards 
                                                    which are subject to annual 
                                                    external audits, with any 
                                                    non-conformances addressed 
                                                    in a timely manner. 
======================  =========================  =================================== 
Failure to              Failure to maintain        The Group offers a broad 
 maintain customer       appropriate customer       range of brands that it 
 relationships           relationships              manufactures and distributes 
 or take account         or a reduction             through a variety of trade 
 of changing             in the customer            channels and customers. 
 market dynamics         base could have            Performance is monitored 
                         an adverse impact          closely by the Board and 
                         on the Group's             management committee by 
                         sales and operating        trade channel and customer 
                         profits.                   as appropriate. This includes 
                                                    monitoring of metrics which 
                                                    review brand equity strength, 
                                                    financial and operational 
                                                    performance. 
 
                                                    The Group focuses on delivering 
                                                    high quality products and 
                                                    invests heavily in building 
                                                    brand equity. We work closely 
                                                    in partnership with our 
                                                    customers on an ongoing 
                                                    basis. Members of the senior 
                                                    management team meet with 
                                                    key customers throughout 
                                                    the year. 
======================  =========================  =================================== 
Inability               Failure to protect         The Group invests considerable 
 to protect              the Group's intellectual   effort in proactively protecting 
 the Group's             property rights            its intellectual property 
 intellectual            could result in            rights, for example through 
 property rights         a loss of                  trademark and design registrations 
                         brand value.               and vigorous legal enforcement 
                                                    as and when required. 
======================  =========================  =================================== 
Failure of              A catastrophic             Assets within the Group 
 the Group's             failure of the             are proactively managed 
 operational             Group's major              and maintained. Risk assessments 
 infrastructure          production or              are carried out on a regular 
                         distribution facilities    basis and appropriate actions 
                         could lead                 taken. Robust business continuity 
                         to a sustained             plans are in place and are 
                         loss in capacity           regularly tested. 
                         or capability. 
======================  =========================  =================================== 
Loss of continuity      The loss of continuity     There is a robust supplier 
 of supply               of supply                  selection process in place. 
 of major raw            of major raw material      Supplier performance is 
 materials               ingredients and/or         monitored on an ongoing 
                         packaging materials        basis and audits are undertaken 
                         could impact our           for major suppliers. Multiple 
                         ability to manufacture,    sources of supply are sourced 
                         with an adverse            wherever possible. Commodity 
                         impact on the              risks are managed by the 
                         Group's sales              procurement team and reviewed 
                         and operating              by the Treasury and Commodity 
                         profits.                   Committee. Contingency measures 
                                                    are in place and are tested 
                                                    regularly. 
======================  =========================  =================================== 
Loss of product         A loss of product          Appropriate risk assessments 
 integrity               integrity in the           are carried out on a regular 
                         manufacturing              basis and robust quality 
                         supply chain               controls and processes are 
                         could lead to              in place to maintain the 
                         a product                  high quality of our products. 
                         withdrawal or              Product recall procedures 
                         recall.                    are tested regularly. 
======================  =========================  =================================== 
Failure of              A failure of critical      IT assets within the Group 
 critical IT             IT systems could           are proactively managed 
 systems                 result in a loss           and procedures exist that 
                         of key systems,            support rapid and clean 
                         business interruption,     recovery. Robust business 
                         lost sales or              continuity plans and contingency 
                         lost production.           measures are in place and 
                                                    are regularly tested. 
======================  =========================  =================================== 
Financial               The Group's activities     Our underlying objective 
 risks                   expose it                  is to secure budgeted exchange 
                         to a variety               rates and thereby reduce 
                         of financial risks         the volatility through our 
                         which include              cost of goods. Financial 
                         market risk (including     risks are reviewed and managed 
                         medium term movements      by the Treasury and Commodity 
                         in exchange rates,         Committee, which seeks to 
                         interest rate              minimise adverse effects 
                         risk and commodity         on the Group's financial 
                         price risk), credit        performance through hedging 
                         risk and                   known currency exposures 
                         liquidity risk.            throughout the year. 
 
                                                    The Group's finance team 
                                                    reviews cash flow 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. 
                                                    The Group's financial control 
                                                    environment is subject to 
                                                    review by both internal 
                                                    and external audit. Internal 
                                                    audit's focus is to work 
                                                    with and challenge management 
                                                    to ensure an appropriate 
                                                    control environment is maintained. 
======================  =========================  =================================== 
 

Viability statement

In accordance with provision C.2.2 of the UK Corporate Governance Code 2014, the directors have assessed the viability of the Company over a three year period to January 2020, taking account of the Group's current position and the Group's principal risks, as detailed in the Strategic Report. Based on this assessment, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to January 2020.

In making this statement, the directors have considered the resilience of the Group in severe but plausible scenarios, taking account of its current position and prospects, the principal risks facing the business and how these are managed. This assessment has considered the potential impact of these risks on the Company's business model, future performance, solvency and liquidity over the three year period. The following four principal risks were selected for enhanced stress testing: changing consumer preferences, loss of product integrity, major raw material supply disruption and the sugar tax. These are the principal risks assessed to have the highest probability of occurrence or the most severe impact; they were stress tested both individually and in combination, taking account of the Group's current position, the Group's experience of managing adverse conditions in the past and the mitigating actions available to the business. A reverse stress test was also performed, allowing the Board to assess scenarios and circumstances that would render its business model unviable and enabling the identification of potential business vulnerabilities and the development of appropriate mitigating actions.

The Board selected the period of three years as an appropriate period for the Company's viability statement for the following reasons:

   --      the Company operates on a three year business cycle; and 

-- management currently use three year forecasts as part of the business planning process and capital investment cycle.

Appendix C: Related party transactions

The following related party transactions are extracted from the Annual Report and Accounts (pages 126-127):

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        Purchase of 
                               services          goods and services 
                         --------------------  --------------------- 
                              2017       2016        2017       2016 
                              GBPm       GBPm        GBPm       GBPm 
-----------------------  ---------  ---------  ----------  --------- 
Rubicon Drinks Limited        41.1       40.3        53.4       52.4 
Funkin Limited                   -        0.5           -          - 
=======================  =========  =========  ==========  ========= 
 

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 20) and to subsidiary companies (note 22) are balances due by and due to dormant subsidiary companies.

 
                                                     Amounts due 
                          Amounts owed by related     to related 
                                  parties              parties 
                         -------------------------  ------------- 
                                 2017         2016    2017   2016 
                                 GBPm         GBPm    GBPm   GBPm 
-----------------------  ------------  -----------  ------  ----- 
Rubicon Drinks Limited              -            -    72.0   62.2 
Funkin Limited                    0.5          0.5       -      - 
Findlay's Limited                   -            -     2.9    2.9 
=======================  ============  ===========  ======  ===== 
 

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:

 
                                    2017   2016 
                                    GBPm   GBPm 
---------------------------------  -----  ----- 
Salaries and short term benefits     3.2    3.3 
Pension and other costs              0.5    0.5 
Share-based payments                   -    0.1 
=================================  =====  ===== 
                                     3.7    3.9 
=================================  =====  ===== 
 

The Directors' Remuneration Report can be found on pages 51 to 76.

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 GBP0.4m (2016: GBP0.3m) for administration services in respect of the retirement benefit plans. At the year end GBPnil (2016: GBPnil) was outstanding to the service provider on behalf of the retirement benefit plans.

END.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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