TIDMBAG

RNS Number : 3336K

Barr(A.G.) PLC

21 April 2020

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

21 April 2020

Annual Report and Accounts

Following the release on 8 April 2020 of the Company's financial results for the year ended 25 January 2020 (the "Final Results Announcement"), the Company announces it has today published its annual report and accounts for the year ended 25 January 2020 (the "Annual Report and Accounts").

A copy of the Annual Report and Accounts 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 will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

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 101):

Directors' statement pursuant to the disclosure and transparency rules

Each of the directors, whose names and functions are set out on pages 48 to 49 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 42 - 47):

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 and Risk Committee (the "ARC") 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 long-term 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 long-term 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 ARC twice each year.

The Board and the ARC carry out a robust assessment of the Group's emerging risks twice each year using a horizon scanning approach together with internal and external insights. The purpose of these assessments is to identify key emerging risks for further evaluation, monitoring and action planning. Emerging risks are captured on the Group's emerging risk register and are subject to ongoing review. Emerging risks are also assessed at a functional level and captured on the relevant function's risk register, and are also subject to ongoing review. The Risk Committee assesses emerging risks at a Group level and reviews the Group's emerging risk register on a bi-monthly basis. The Risk Committee has annual oversight of emerging risks at a functional level. Emerging risks remain on the relevant emerging risk register until they are captured on an appropriate risk register or are no longer deemed to be an emerging risk. The Board has completed a robust assessment of the Group's emerging risks, including those related to climate change and technology, during the period.

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 ARC.

During the year the ARC 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 ARC 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 ARC can be found on pages 62 to 65.

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 Steering 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 on 31 December 2020. The Brexit Steering Group has continued to prepare for a range of Brexit outcomes, including "no deal". Given the continuing uncertainty regarding the final 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 continues to be 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 continue to work closely with relevant suppliers to understand their Brexit plans and will ensure that we have appropriate stock levels of key raw materials and finished products in place 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 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 will continue to monitor developments and adapt our strategy as the impact of Brexit becomes clear.

Coronavirus

As the situation around the COVID-19 virus outbreak continues to evolve, our primary concern is for the welfare of our people, their families and the communities in which we operate. Since the news of the virus broke in February, we have followed the advice from the Government and the NHS at all times and will continue to do so. We have taken action as appropriate to protect our people and our operations. We are following the situation closely, however at this time it is unclear how the outbreak will develop and it is therefore difficult to fully assess the potential impact on our business. The impact on our business will depend on the severity and duration of the COVID-19 pandemic. There is the potential for an adverse impact on our operations and on the demand for our products and we are taking action to mitigate possible consequences. We will continue to follow developments closely and will take further action to protect our people and business as appropriate.

For more details on the Board's consideration of the impact of COVID-19, please refer to the Chief Executive's statement on page 15, and the viability disclosures on page 47.

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

 
Movement 
          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      No Change 
 preferences,             decide to purchase                                 range 
 perception or            and consume alternative                            of branded products across a 
 purchasing behaviour     brands or spend                                    range of flavours, 
                          less on soft                                       subcategories 
                          drinks.                                            and markets 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. 
                                                                             Through 
                                                                             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     No Change 
 of reformulated          decide to purchase                                 have 
 products                 and consume alternative                            implemented our extensive 
                          brands or spend                                    innovation 
                          less on soft                                       and reformulation programme, 
                          drinks.                                            which was completed prior to 
                                                                             the introduction of the Soft 
                                                                             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 
                                                                             take appropriate action, 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. 
                          manufacture, 
                          with an adverse                        Commodity risks are managed by 
                          impact on the                          the procurement team and reviewed 
                          Group's sales                          by the Treasury and Commodity 
                          and operating                          Committee. Contingency measures 
                          profits.                               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 Executive 
                          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                The increased pace of change  Increased 
 on climate change                     on climate change                     and level of environmental 
 and environmental                     and environmental                     campaigning 
 issues,                               issues, e.g.                          in relation to climate 
 e.g. packaging                        the introduction                      change 
 waste                                 of a Deposit                          and areas such as packaging 
                                       Return Scheme                         reported 
                                       or a plastics                         last year has continued 
                                       tax, could have                       during 
                                       an adverse impact                     the year, particularly in 
                                       on consumer consumption               relation 
                                       patterns, sales                       to single use plastic 
                                       and operating                         bottles. 
                                       profits                               We have clearly defined 
                                                                             responsibility 
                                                                             commitments with regard to 
                                                                             waste, 
                                                                             water, energy and packaging. 
                                                                             We are working 
                                                                             constructively 
                                                                             with the British Soft Drinks 
                                                                             Association, the UK and 
                                                                             Scottish 
                                                                             governments, and other key 
                                                                             stakeholders 
                                                                             in relation to potential 
                                                                             interventions, 
                                                                             such as the planned 
                                                                             introduction 
                                                                             of a Deposit Return Scheme 
                                                                             ("DRS") 
                                                                             in Scotland, the possible 
                                                                             introduction 
                                                                             of a DRS in England, and the 
                                                                             possible introduction of a 
                                                                             single 
                                                                             use plastics tax. During the 
                                                                             year we have completed 
                                                                             consultations 
                                                                             on a range of environmental 
                                                                             proposals, 
                                                                             including DRS, plastics tax 
                                                                             and 
                                                                             extended producer 
                                                                             responsibility. 
 
                                                                             We have created a working 
                                                                             group 
                                                                             to proactively manage 
                                                                             packaging 
                                                                             related risks in a holistic 
                                                                             manner 
                                                                             ongoing, overseen by the 
                                                                             Risk 
                                                                             Committee. Internally, 
                                                                             various 
                                                                             projects and environmental 
                                                                             initiatives 
                                                                             are being progressed to 
                                                                             mitigate 
                                                                             the potential impact of 
                                                                             government 
                                                                             intervention on packaging. 
=======================  =====================================  =========================================  ========= 
Failure to maintain      Failure to maintain                                 The Group offers a broad      No Change 
 customer relationships   appropriate customer                               range 
 or take account          relationships                                      of brands that it 
 of changing              or a reduction                                     manufactures 
 market dynamics          in the customer                                    and distributes through a 
                          base could have                                    variety 
                          an adverse impact                                  of trade channels and 
                          on the Group's                                     customers. 
                          sales and operating                                Performance is monitored 
                          profits.                                           closely 
                                                                             by the Board and Executive 
                                                                             Committee 
                                                                             by trade channel and 
                                                                             customer 
                                                                             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. 
 
                                                                             The ongoing consolidation in 
                                                                             channels and route to market 
                                                                             has increased the level of 
                                                                             gross 
                                                                             risk in this area. A project 
                                                                             commenced in 2018 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    No Change 
 IT systems or            critical IT systems                                are 
 a breach of              could result                                       proactively managed and 
 cyber security           in a loss of                                       procedures 
                          key systems,                                       exist that support rapid and 
                          business interruption,                             clean recovery. Robust 
                          lost sales or                                      business 
                          lost production.                                   continuity plans and 
                          A cyber security                                   contingency 
                          breach could                                       measures are in place and 
                          lead to operational                                are 
                          disruption, financial                              regularly tested. 
                          loss and reputational 
                          damage.                                            The risk of cyber attacks 
                                                                             increases 
                                                                             on an ongoing basis. An 
                                                                             assessment 
                                                                             of our cyber security 
                                                                             maturity 
                                                                             against the UK Government's 
                                                                             "10 
                                                                             Steps to Cyber Security" was 
                                                                             completed during the year by 
                                                                             our internal auditor, which 
                                                                             showed 
                                                                             improvement in our cyber 
                                                                             security 
                                                                             controls since the previous 
                                                                             maturity 
                                                                             assessment carried out in 
                                                                             2018 
                                                                             and concluded that our 
                                                                             approach 
                                                                             is generally in line with 
                                                                             industry 
                                                                             practice. Employee awareness 
                                                                             campaigns and training 
                                                                             continued 
                                                                             during the year to increase 
                                                                             employee 
                                                                             cyber risk awareness. A 
                                                                             Digital 
                                                                             Governance Group is in 
                                                                             place, 
                                                                             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   No Change 
                          expose it to                                       to 
                          a variety of                                       reduce foreign currency 
                          financial risks                                    related 
                          which include                                      volatility through our cost 
                          market risk (including                             of 
                          medium term movements                              goods. Financial risks are 
                          in exchange rates,                                 reviewed 
                          interest rate                                      and managed by the Treasury 
                          risk and commodity                                 and 
                          price risk),                                       Commodity Committee, which 
                          credit risk and                                    seeks 
                          liquidity risk.                                    to minimise adverse effects 
                                                                             on 
                                                                             the Group's financial 
                                                                             performance 
                                                                             through hedging known 
                                                                             currency 
                                                                             exposures throughout the 
                                                                             year. 
                                                                             Brexit's potential impact on 
                                                                             foreign exchange rates to 
                                                                             which 
                                                                             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 
                          contribution 
                          and under-recovery 
                          of supply chain 
                          infrastructure 
                          costs. 
=======================  =====================================  =========================================  ========= 
 

Viability statement

In accordance with provision 31 of the UK Corporate Governance Code 2018, the directors have assessed the viability of the Company over a three year period to January 2023, taking account of the Group's current nancial 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 time frame 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 nancial plan which makes assumptions relating to the economic climate, market growth, input cost in ation 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, with input from the business functions.

The directors have considered the impact of a number of severe but plausible scenarios associated with the principal risks, including:

-- Signi cant changes in consumer preferences and governmental impact in relation to sugar, plastics and the introduction of a Deposit Return Scheme, specifically in Scotland.

-- Financial impact from a signi cant supply chain disruption (Brexit, technology or material supply).

   --     In addition the directors measured the impact of a number of scenarios occurring together. 

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

These tests were then reviewed against the Group's current and projected future net cash/debt and liquidity position. During the viability period, 2 out of 3 of the Group's current facilities, totaling GBP40m, will expire, however given the Group's current covenant strength and that no current covenant breaches are anticipated under the tests above, the Group anticipates it would be able to renew or extend facilities if it was required or desirable.

COVID-19

In addition to these scenarios due to the emergence of COVID-19 and the ongoing health emergency linked to the global pandemic, the directors considered the impact of the current COVID-19 environment on the business for the next 12 months, the viability period and the longer term. Whilst the situation evolves daily, making scenario planning difficult, we have considered a number of impacts on sales, profits and cash flows. We have assumed that our operations remain open and that we will continue to be able sell our products to customers, consistent with DEFRA guidance. Whilst the virus may impact across many functions of the business from supply chain to the ability of our customers to service consumers, it would most likely manifest itself in lost volumes and require significant action in relation to operational cost reductions.

Impact on the business

The major variables are the depth and the duration of COVID-19 measures. The 2 main divisions will be impacted differently, with Barr Soft Drinks operating mainly in multiple retail (take home) and convenience (out of home) outlets and Funkin mainly within the on-trade and leisure sectors. Overall, we scenario planned several out turns with volumes dropping significantly (in the range of 30-40%) and the impact lasting for a significant part of 2020. The revenue and operational leverage impact of such a volume loss would have a major negative impact on Group profitability however the scenario modelling would indicate that the Group would remain profitable over the next 12 months and we would anticipate a recovery in the following years.

Impact on costs and potential mitigations

The test has been based on the most severe but plausible scenario currently envisaged by the Board with a significant volume reduction being mitigated with identifiable cost savings, particularly discretionary spend but including government support and longer term options that recognise the relatively fixed cost nature of the soft drinks operation. While we have curtailed capital investment in 2020 we have maintained our investment in our asset base in line with current strategy over the medium term, again we will look closely at all capital plans to ensure the spend is realistic given the external environment.

Credit facilities

The Group has access to liquidity and has facilities to meet its needs over the next 36 months as follows: 12-24 months GBP60m, 24-36 months GBP20m as 2 facilities expire. These take the form of revolving credit facilities. As noted on page 15 since the year end these have been fully drawn down. In addition the Group has access to an overdraft facility which, as an on-demand facility, has been ignored in relation to the viability testing. The revolving credit facilities have two financial covenants, relating to interest cover and leverage, and a material adverse change clause.

Result of stress test

The result of the stress test carried out as a response to COVID-19 shows that the Group has adequate headroom over the next 12 and 36 months and does not breach any financial covenant. We will closely monitor cash conversion and covenants over this period.

Government support for business

We welcome the announcement made by the Chancellor of the Exchequer on Tuesday 17th March 2020, pledging government support which will go far to stabilise many businesses through this troubled time. Given the significant impact of COVID-19 on our business it would be our intention to access this support, including, but not limited to, delaying payment of taxes and employee cost support.

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 2023.

Appendix C: Related party transactions

The following related party transactions are extracted from the Annual Report and Accounts (page 159):

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:

 
                                                          Purchase of goods and 
                           Sales of goods and services                 services 
                         =============================  ======================= 
                                   2020           2019         2020        2019 
                                   GBPm           GBPm         GBPm        GBPm 
=======================  ==============  =============  ===========  ========== 
Rubicon Drinks Limited                -              -          4.2         4.9 
=======================  ==============  =============  ===========  ========== 
 
 

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

 
                          Amounts owed by related    Amounts due to related 
                                  parties                    parties 
                         =========================  ======================== 
                                 2020         2019         2020         2019 
                                 GBPm         GBPm         GBPm         GBPm 
=======================  ============  ===========  ===========  =========== 
Rubicon Drinks Limited              -            -          5.6          2.4 
Funkin Limited                    0.5          0.4            -            - 
=======================  ============  ===========  ===========  =========== 
 

Compensation of key management personnel

The remuneration of the management directors, non-executive directors, non-management directors and other members of key management (the Executive Committee) during the year was as follows:

 
                                    2020   2019 
                                    GBPm   GBPm 
=================================  =====  ===== 
Salaries and short term benefits     3.1    5.3 
Post employment benefits             0.5    0.5 
                                     3.6    5.8 
=================================  =====  ===== 
 

The Directors' Remuneration Report can be found on pages 66 to 95.

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 (2019: GBP0.4m) for administration services in respect of the retirement benefit plans. At the year end GBPnil (2019: GBPnil) was outstanding to the service provider on behalf of the retirement benefit plans

END.

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END

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April 21, 2020 04:27 ET (08:27 GMT)

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