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
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