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Share Name Share Symbol Market Type Share ISIN Share Description
Barr (A.G.) LSE:BAG London Ordinary Share GB00B6XZKY75 ORD 4 1/6P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +3.00p +0.36% 826.00p 826.00p 828.00p 833.00p 815.00p 815.00p 60,854 13:24:03
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Beverages 279.0 44.5 31.5 26.2 940.23

Barr(A.G.) PLC Annual Report and Accounts and Notice of AGM

17/04/2019 9:24am

UK Regulatory (RNS & others)

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RNS Number : 4784W

Barr(A.G.) PLC

17 April 2019

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

17 April 2019

Annual Report and Accounts and Notice of Annual General Meeting

Following the release on 26 March 2019 of the Company's financial results for the year ended 26 January 2019 (the "Final Results Announcement"), the Company announces it has today published its annual report and accounts for the year ended 26 January 2019 (the "Annual Report and Accounts").

The Annual Report and Accounts contains the notice convening the Company's one hundred and fifteenth annual general meeting (the "AGM") (the "Notice of AGM"). The AGM will be held at the offices of Ernst and Young LLP, 5 George Square, Glasgow, G2 1DY on Friday, 31 May 2019 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


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 87):

Directors' statement pursuant to the disclosure and transparency rules

Each of the directors, whose names and functions are set out on pages 44 to 45 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 38 - 43):

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 the successful execution of the Group's strategy.

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 reviewed on an ongoing basis; the Group's risk register is formally reviewed by the Risk Committee every two months 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 the 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 52.

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 table below sets out the Group's principal risks as determined by the Board, the gross risk movement from the prior year and examples of corresponding controls and mitigating actions. This represents the Group's current risk profile and is not intended to be an exhaustive list of all risks and uncertainties that may arise.

The volatile and uncertain economic environment created by the UK's decision to leave the European Union ('EU') has continued over the past twelve months. Like many other businesses, we have continued to monitor developments in this area. Overseen by the Risk Committee, the Company's Brexit working group has continued to monitor the potential impact of Brexit on the Group and to take appropriate actions to ensure that the business is as well prepared as possible for Brexit. The Brexit working group has prepared for a range of Brexit outcomes, including "no deal". Given the continuing uncertainty regarding the outcome of Brexit, it is challenging to quantify or determine the impact of Brexit on the Group. However, given that the Group is a UK-based Group whose sales are predominantly made in the UK, our ongoing assessment is that Brexit will not have a significant impact on the Group. We do not therefore consider Brexit to be a principal risk. Key potential Brexit-related impacts on the business and mitigating actions taken are as follows:

-- Brexit's impact on foreign exchange rates to which the Group is exposed through the purchase of certain commodities - this risk is closely monitored and managed by the Treasury and Commodity Committee, which has a hedging strategy in place to manage the Group's exposure to foreign currency fluctuations.

-- Border disruption, which could impact the supply of certain raw materials and finished products - we are working closely with relevant suppliers to understand their Brexit plans and have increased our stock levels of key raw materials and finished products in preparation for Brexit.

-- The introduction of trade tariffs for imports to the UK from the EU could impact the Group - we have assessed the Group's potential exposure to trade tariffs and expect this impact to be manageable.

-- Brexit's impact on the free movement of people - working with our key third party logistics supplier, Eddie Stobart Limited, we have undertaken a detailed risk assessment of EU nationals at our key sites and do not expect this impact to be significant.

-- Brexit's impact on regulation - the extent to which the UK may diverge from EU regulations post-Brexit remains unclear. We will monitor the situation ongoing and determine the likely impact on the Group in the event of specific regulatory divergence. We do not expect any related impact to be significant.

We will continue to monitor developments and adapt our strategy as the impact of Brexit becomes clear.

The gross risk movement from the prior year for each principal risk is presented as follows:

          No change  Increased  Decreased  New risk 

Principal risks and uncertainties

Risks relating to the Group

Risk                     Impact                     Controls and mitigating actions            Movement 
=======================  =========================  =========================================  =========== 
Changes in consumer      Consumers may              The Group offers a broad range             No Change 
 preferences,             decide to purchase         of branded products across a 
 perception or            and consume alternative    range of flavours, subcategories 
 purchasing behaviour     brands or spend            and markets which offer choice 
                          less on soft               to the end consumer. 
                                                     Changing consumer attitudes and 
                                                     behaviours are monitored on an 
                                                     ongoing basis and inform our 
                                                     brand plans and new product development. 
                                                     Through increased focus and investment 
                                                     in both reformulation and innovation 
                                                     across the year we have adapted 
                                                     our portfolio to align with these 
                                                     changing consumer needs. 
=======================  =========================  =========================================  ========= 
Consumer rejection       Consumers may              Over a number of years we have             No Change 
 of reformulated          decide to purchase         implemented our extensive innovation 
 products                 and consume alternative    and reformulation programme, 
                          brands or spend            which was completed prior to 
                          less on soft               the introduction of the Soft 
                          drinks.                    Drinks Industry Levy in April 
                                                     2018. We reached the position 
                                                     of 99% of our Barr Soft Drinks 
                                                     portfolio produced by volume 
                                                     containing less than 5g of total 
                                                     sugars per 100ml. As disclosed 
                                                     last year, we recognised the 
                                                     risk of consumer rejection of 
                                                     our reformulated products. We 
                                                     continue to closely monitor consumer 
                                                     acceptance levels and brand performance 
                                                     across our total portfolio and 
                                                     consumer rejection of our reformulated 
                                                     products therefore remains a 
                                                     principal risk. 
                                                     The risk of further government 
                                                     intervention on sugar remains, 
                                                     however we do not currently consider 
                                                     this to be a principal risk. 
=======================  =========================  =========================================  ========= 
Loss of product          A loss of product          Appropriate risk assessments               No Change 
 integrity                integrity in               are carried out on a regular 
                          the manufacturing          basis and robust quality controls 
                          supply chain               and processes are in place to 
                          could lead to              maintain the high quality of 
                          a product withdrawal       our products. Product recall 
                          or recall.                 procedures are tested regularly. 
=======================  =========================  =========================================  ========= 
Loss of continuity       The loss of continuity     There is a robust supplier selection       No Change 
 of supply of             of supply of               process in place. Supplier performance 
 major raw materials      major raw material         is monitored on an ongoing basis 
                          ingredients and/or         and audits are undertaken for 
                          packaging materials        major suppliers. Multiple sources 
                          could impact               of supply are sourced wherever 
                          our ability to             possible. Last year a second 
                          manufacture,               supplier of carbon dioxide was 
                          with an adverse            appointed and additional carbon 
                          impact on the              dioxide tanks were placed at 
                          Group's sales              Milton Keynes and Bellshill. 
                          and operating 
                          profits.                   Commodity risks are managed by 
                                                     the procurement team and reviewed 
                                                     by the Treasury and Commodity 
                                                     Committee. Contingency measures 
                                                     are in place and are tested regularly. 
                                                     Brexit's potential impact on 
                                                     the supply of certain raw materials 
                                                     is referred to above. 
=======================  =========================  =========================================  ========= 
Adverse publicity        Adverse publicity          Our risk management process is             No Change 
 in relation              in relation to             designed to identify and monitor 
 to the soft              the soft drinks            events that may impact the Group 
 drinks industry,         industry, the              as a result of adverse publicity 
 the Group or             Group or its               and to ensure that controls are 
 its brands               brands could               in place to manage these risks. 
                          have an adverse 
                          impact on the              Processes are in place to ensure 
                          Group's reputation,        compliance with health and safety 
                          consumer consumption       legislation and ethical working 
                          patterns, sales            standards and these are regularly 
                          and operating              reviewed by the Board and Management 
                          profits.                   Committee. Quality standards 
                                                     are well defined, implemented 
                                                     and monitored. Corporate Social 
                                                     Responsibility champions are 
                                                     in place and we have clearly 
                                                     defined sustainability commitments. 
                                                     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. 
                                                     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. 
=======================  =========================  =========================================  ========= 
Government intervention  Government intervention    This risk has been introduced              New Risk 
 on packaging             on packaging               as a new principal risk this 
 waste                    waste, e.g. the            year, given the increased pace 
                          introduction               of change and level of environmental 
                          of a Deposit               lobbying in relation to packaging 
                          Return Scheme              waste during the year, particularly 
                          or a plastics              in relation to single use plastic 
                          tax, could have            bottles. We are working constructively 
                          an adverse impact          with the British Soft Drinks 
                          on consumer consumption    Industry, the UK and Scottish 
                          patterns, sales            governments, and other key stakeholders 
                          and operating              in relation to potential interventions, 
                          profits.                   such as the planned introduction 
                                                     of a Deposit Return Scheme ('DRS') 
                                                     in Scotland, the possible introduction 
                                                     of a DRS in England and Wales, 
                                                     and the possible introduction 
                                                     of a single use plastics tax. 
                                                     We have created a working group 
                                                     to proactively manage packaging 
                                                     related risks in a holistic manner 
                                                     ongoing, overseen by the Risk 
=======================  =========================  =========================================  ========= 
Failure to maintain      Failure to maintain        The Group offers a broad range             Increased 
 customer relationships   appropriate customer       of brands that it manufactures 
 or take account          relationships              and distributes through a variety 
 of changing              or a reduction             of trade channels and customers. 
 market dynamics          in the customer            Performance is monitored closely 
                          base could have            by the Board and Management Committee 
                          an adverse impact          by trade channel and customer 
                          on the Group's             as appropriate. This includes 
                          sales and operating        monitoring of metrics which review 
                          profits.                   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. 
                                                     The ongoing consolidation in 
                                                     the retail grocery market has 
                                                     increased the level of gross 
                                                     risk in this area. A project 
                                                     commenced last year to determine 
                                                     the potential impact of this 
                                                     consolidation in the retail grocery 
                                                     market on the Group and to take 
                                                     appropriate actions; this has 
                                                     continued to be a focus area 
                                                     during the year. 
=======================  =========================  =========================================  ========= 
Inability to             Failure to protect         The Group invests considerable             No Change 
 protect the              the Group's intellectual   effort in proactively protecting 
 Group's intellectual     property rights            its intellectual property rights, 
 property rights          could result               for example through trademark 
                          in a loss of               and design registrations and 
                          brand value.               vigorous legal enforcement as 
                                                     and when required. 
=======================  =========================  =========================================  ========= 
Failure of the           A catastrophic             Assets within the Group are proactively    No Change 
 Group's operational      failure of the             managed and maintained. Risk 
 infrastructure           Group's major              assessments are carried out on 
                          production or              a regular basis and appropriate 
                          distribution               actions taken. Robust business 
                          facilities could           continuity plans are in place 
                          lead to a sustained        and are regularly tested. 
                          loss in capacity 
                          or capability. 
=======================  =========================  =========================================  ========= 
Failure of critical      A failure of               IT assets within the Group are             Increased 
 IT systems or            critical IT systems        proactively managed and procedures 
 a breach of              could result               exist that support rapid and 
 cyber security           in a loss of               clean recovery. Robust business 
                          key systems,               continuity plans and contingency 
                          business interruption,     measures are in place and are 
                          lost sales or              regularly tested. 
                          lost production. 
                          A cyber security           The risk of cyber attacks increases 
                          breach could               on an ongoing basis. A cyber 
                          lead to operational        security maturity assessment 
                          disruption, financial      was completed during the year 
                          loss and reputational      by our internal auditor, who 
                          damage.                    concluded that our approach is 
                                                     generally in line with industry 
                                                     practice. We have continued to 
                                                     improve our cyber security controls 
                                                     and have upweighted our internal 
                                                     cyber security resource. Employee 
                                                     awareness campaigns and training 
                                                     continued during the year to 
                                                     increase employee cyber risk 
                                                     awareness. A new Digital Governance 
                                                     Group was created during the 
                                                     year, overseen by the Risk Committee, 
                                                     the purpose of which is to manage 
                                                     the risks related to the Group's 
                                                     externally facing digital properties. 
=======================  =========================  =========================================  ========= 
Financial risks          The Group's activities     Our underlying objective is to             No Change 
                          expose it to               reduce foreign currency related 
                          a variety of               volatility through our cost of 
                          financial risks            goods. Financial risks are reviewed 
                          which include              and managed by the Treasury and 
                          market risk (including     Commodity Committee, which seeks 
                          medium term movements      to minimise adverse effects on 
                          in exchange rates,         the Group's financial performance 
                          interest rate              through hedging known currency 
                          risk and commodity         exposures throughout the year. 
                          price risk),               Brexit's potential impact on 
                          credit risk and            foreign exchange rates to which 
                          liquidity risk.            the Group is exposed through 
                                                     the purchase of certain commodities 
                                                     is referred to above. 
                                                     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. 
=======================  =========================  =========================================  ========= 
Third party              Termination of             We have robust strong relationships        No Change 
 relationships            existing partnerships      with our various partners and 
                          or renewal on              proactively manage the effective 
                          less favourable            building of our partners' brands. 
                          terms could result 
                          in lost brand 
                          and under-recovery 
                          of supply chain 
=======================  =========================  =========================================  ========= 

Viability statement

In accordance with provision C.2.2 of the UK Corporate Governance Code 2016, the directors have assessed the viability of the Company over a three year period to January 2022, taking account of the Group's current financial and market position, future prospects and the Group's principal risks, as detailed in the Strategic Report.

The directors have determined that a three year period is an appropriate timeframe for the assessment given the dynamic nature of the FMCG sector and given that this is in line with the Group's strategic planning period. The starting point for the viability assessment is the strategic and financial plan which makes assumptions relating to the economic climate, market growth, input cost inflation and growth from the Group's performance drivers. The prospects of the Group have been taken into account, including the size of the current market, the strength of the Group's brands and past production capacity investment. The model was then subject to a series of theoretical "stress test" scenarios based on the materialisation of principal risks.

The directors have considered the impact of a number of severe but plausible scenarios associated with the principal risks, including significant changes in consumer preferences and governmental impact in relation to sugar and plastics, as well as the financial impact from a significant supply chain disruption (Brexit, technology or material supply). Within our Brexit scenario our considerations have included Supply Chain disruption and macroeconomic assumptions like FX. In addition, the directors measured the impact of a number of scenarios occurring together. These tests were then reviewed against the Group's current and projected future net cash/debt and liquidity position. Subsequent to the end of the financial year, the Group reached agreement on 18 March 2019 with its lenders to extend its current facilities, which expire in 2020 and 2022, by a further two years. This ensures the Group's facilities remain at the current level throughout the viability period. In each of the Group's downside scenarios, there is no indication that the Group will be required to obtain additional facilities above those recently extended. In addition, there is no breach of any covenants.

Finally a reverse "stress test" was performed, allowing the Board to assess scenarios and circumstances that would render its business model unviable.

The results of these tests were reviewed, taking into account the Group's current position, the Group's experience of managing adverse conditions in the past and mitigating actions available to the Group. Based on this assessment, the directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three year period to January 2022.

Appendix C: Related party transactions

The following related party transactions are extracted from the Annual Report and Accounts (pages 142 - 143):

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    Purchase of goods 
                           and services        and services 
                         ================  =================== 
                            2019     2018       2019      2018 
                            GBPm     GBPm       GBPm      GBPm 
=======================  =======  =======  =========  ======== 
Rubicon Drinks Limited         -     44.3        4.9      57.6 
Funkin Limited                 -      0.9          -         - 
=======================  =======  =======  =========  ======== 

The amounts disclosed in the table below are the amounts owed to and due from subsidiary companies that are trading subsidiaries. In the year to 26 January 2019 new trade terms were agreed between the Company and Rubicon Drinks Limited ('RDL'). The purchase and sale of goods and services with RDL has now been replaced with a royalty agreement for the use of the RDL trademarks.

The balances are unsecured and are due on demand. The difference between the total of these balances and the amounts disclosed as amounts due by (Note 17) and to subsidiary companies (Note 19) are balances due by and due to dormant subsidiary companies.

                          Amounts owed by      Amounts due to 
                           related parties     related parties 
                         ==================  ================== 
                             2019      2018      2019      2018 
                             GBPm      GBPm      GBPm      GBPm 
=======================  ========  ========  ========  ======== 
Rubicon Drinks Limited          -         -       2.4      82.8 
Funkin Limited                0.4       0.2         -         - 
=======================  ========  ========  ========  ======== 

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:

                                    2019   2018 
                                    GBPm   GBPm 
=================================  =====  ===== 
Salaries and short term benefits     5.3    4.2 
Post employment benefits             0.5    0.6 
Share-based payments                   -    0.1 
=================================  =====  ===== 
                                     5.8    4.9 
=================================  =====  ===== 

The Directors' Remuneration Report can be found on pages 56 to 81.

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 (2018: GBP0.4m) for administration services in respect of the retirement benefit plans. At the year end GBPnil (2018: GBPnil) was outstanding to the service provider on behalf of the retirement benefit plans.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.



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